On Monday,Wells Capital Management (WellsCap), a unit of Wells Fargo & Company (WFC) disclosed the completion of a deal with Golden Capital Management, LLC (GCM). As a part of the transaction, WFC increased its equity stake in GCM from 45% to 65%.
Golden Capital Management, LLC is a provider of investment management knowledge to institutional and high net-worth clients nationwide. It works with a team of 25 expert members in Charlotte and Boston.
In early October, a deal between GCM and Wells Capital Management (WellsCap) was completed. As part of this deal, GCM expanded geographically and increased operations with the extension of its investment capabilities. Now, GCM will be accessible to more advisory clients and team members of WellsCap’s Boston-based global strategic-products’ team.
With the completion of the transaction, GCM is enabled to take advantage of broader resources, talents, and ideas of WellsCap. Further, acquiring certain assets of WellsCap, the company’s assets under management increased to $6.2 billion. However, the financial terms of the deal were not disclosed.
Moreover, the strategic ties between WFC and GCM got strengthened with the increase in stake. At present, WFC holds majority equity stake in Golden Capital in order to expand its ownership in the investment firm.
WFC and its units are on acquisition spree. In September, Wells Fargo Insurance Services, a division of WFC, completed the acquisition of Nevada-based ISU Stetson-Beemer Insurance. The financial terms of the deal were not disclosed.
Following the closure of the deal, Wells Fargo will not only get the advantage of experienced employees of Stetson-Beemer, but also the established status of the strong insurance brokerage business in Reno and Northern Nevada. Moreover, Wells Fargo’s position will be strong in Nevada and its clients will get financial help according to their insurance needs.
Further, Wells Fargo Insurance Services alsodisclosed the completion of the acquisition of New Jersey-based Procomp Benefit Resources Inc. The financial terms of the deal were not yet disclosed.
Earlier in September, WFC alsoannounced its plan to acquire LaCrosse Global Fund Services from Cargill Inc. LaCrosse is an independent hedge-fund administration and middle-office service provider company of Cargill. The deal is subject to certain regulatory approval in several jurisdictions.
The transaction is being financed by the Structured Product Services division of Wells Fargo Corporate Trust Services (CTS), leader in providing trustee and agency services to institutional and corporate clients. The terms of the deal were not disclosed.
The completion of the acquisition will facilitate Wells Fargo in expandinghedge-fund administration business. With the expansion, WFC and CTS will be able to take advantage of LaCrosse’s strong platform in the hedge fund administration market.
Further, they will get the benefit of traditional fund administration services, derivatives processing, operational support, bank-debt processing, and cash and collateral management services provided by LaCrosse at current level.
This amalgamation gives WFC full opportunity to leverage its strong corporate trust market reputation with LaCrosse’s experience and proficiency, which in turn, would offer clients enhanced hedge fund administration services.
In July, WFC also completed the acquisition of its strategic partner, Castle Pines Capital. The buyout was part of Wells Fargo’s effort to expand its business and add channel financing capabilities.
In May, WFC announced that it would acquire substantially all of the US-based operating assets of Foreign Currency Exchange Corporation, a wholly owned subsidiary of Bank of Ireland Group (IRE), in an effort to expand its international banking capabilities. The deal would substantially strengthen Wells Fargo’s foreign currency exchange capabilities for domestic correspondent banks.
Strategic acquisitions have been part of WFC’s endeavor to strengthen its business model, expand its capabilities and diversify its footprint. Its growth plans have historically included several acquisitions, Wachovia being the largest addition in December 2008.
The company has demonstrated its ability to assimilate local franchises, offering a wider range of products compared with the acquired company, thus increasing the number of options for its customers. This has been the driving force behind its growth in the recent years.
With cross-selling as its key strength, WFC has a diverse geographic and business mix that enables it to sustain consistent earnings growth. Opportunistic acquisition and the demise of some smaller players helped the company to garner a larger share in the market. Yet top-line headwinds and regulatory issues remain a cause of concern.
WFC currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. Moreover, considering the fundamentals, we are maintaining our long-term Neutral recommendation on the stock.
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