Santander Sells 50% Stake in Asset-Management Arm to Investment Firms

Banco Santander said on Thursday that it had sold a 50 percent stake in its asset-management arm to two investment firms, Warburg Pincus and General Atlantic, as the bank continues to raise money to bolster its balance sheet.

At the same time, the infusion of cash into the asset manager is meant to help it expand and compete, especially in regions like Latin America.

Under the terms of the agreement, Santander will reorganize the unit’s 11 subsidiaries into a new holding company, with the private equity firms claiming half. The business was valued at about 2 billion euros, or nearly $2.7 billion.

Santander will receive a net cash payment of about 700 million euros, helping add to the bank’s coffers as it continues to struggle with economic difficulties at home. The Spanish bank has been divesting assets for several months, including its Mexican arm.

“This partnership puts Santander Asset Management at the forefront of the industry’s consolidation process,” Javier Marín, Banco Santander’s chief executive, said in a statement. “It will help Banco Santander strengthen its relationship with our banking clients with a more competitive offering to address their investment needs.”

The deal came about in part because of a longstanding familiarity between Santander and Warburg Pincus, which are already joint owners of an auto finance business in the United States. The two had been looking for additional ways to team up before hitting upon a deal involving the asset-management business, a person briefed on the matter said. General Atlantic was brought on as a respected firm with experience investing in financial businesses.

The new venture, Santander Asset Management, currently manages about 152 billion euros worth of assets.

The two private equity firms intend to help the asset manager become more independent from its parent. But the unit is also expected to take advantage of Santander’s presence in markets like Mexico, Chile and Brazil, where the asset-management business has largely been restricted to firms tied to banks.

Santander Asset Management could eventually be in line for an initial public offering to help its owners cash out. It could also serve as a roll-up vehicle to buy smaller rivals, though the person briefed on the matter said that was a secondary objective.

“We are pleased to once again partner with Banco Santander and work closely with Juan and the rest of the S.A.M.’s talented management team to accelerate the company’s growth plans in Latin America, Europe and beyond,” Daniel Zilberman, a managing director of Warburg Pincus, said in a statement.

Jonathan Korngold, the head of General Atlantic’s financial services group, added in a statement: “We are excited to help S.A.M. further extend its leadership position globally and to enable the company to pursue the exciting set of new growth opportunities that will be available to it as an independent entity.”