By Sarah White and Sophie Sassard
MADRID/LONDON April 26 Spain's biggest bank
Santander is in exclusive talks with U.S. private
equity firms Warburg Pincus and General Atlantic LLC to
sell a stake in its asset management business, three people
familiar with the discussions said.
A sale of a stake in the business would give Santander
financial backers to expand it, potentially through combinations
with other asset managers. It would also help to raise capital,
although one of the sources described the plan to sell a stake
as more of a strategic move.
The business had 161 billion euros ($210 billion) of assets
under management at the end of March.
Talks over the sale are at an advanced stage, the sources
said, but they did not say when the exclusivity period was due
to expire. They also declined to comment on the exact size or
value of the deal. The private equity firms would most likely be
minority partners, one of the people said.
Santander, Warburg Pincus and General Atlantic declined to
The Spanish bank had confirmed on Thursday that it was in
talks over the stake sale, but declined to give further details.
Santander has been looking to bulk up or sell its asset
management unit for several years, one of the sources familiar
with the current plans, and two others who have worked with the
bank before, said.
The business was first put on the block in 2008. Earlier
talks fell apart when the financial crisis hit and due to
differences over price.
"It's always a tough business to find partners for as there
are usually problems over how you split the fees when you try
and bring trade partners in and give your clients access to
their funds," one of the sources said.
Fund firms are usually sold for around 2.5 or 3 percent of
assets under management, although this can vary a lot depending
on market conditions and the quality of the assets.
Santander, which relies on South America for about half its
profit, on Thursday reported a 26 percent drop in first quarter
net profit, weighed down by weaker lending income in Brazil and
recession in its home market.
The bank has worked on similar partnerships with U.S private
equity firms before, including with Warburg.
In 2011, Santander booked a $1 billion gain from selling a
25 percent stake in its U.S. consumer finance business to
Warburg, KKR and CenterBridge Partners. It is looking to
list that business this year.