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Prudential Sells Wealth Mgmt Unit

Zacks Equity Research

Prudential Financial Inc. (PRU) has entered an agreement to sell a wealth management services unit, which forms a small portion of its operations, to Envestnet Inc. (ENV) for $33 million. Envestnet provides technology enabled, Web based investment solutions and services to investment advisors.

The deal is expected to culminate in the third quarter of 2013. Initially, Prudential will receive cash worth $10 million from Envestnet and the remaining $23 million in additional cash payments over three years.

Management decided to divest the segment as it forms a very small portion of the company’s business. In 2012 Wealth Management accounted for approximately $22 billion on behalf of institutional clients. Prudential manages $1.06 trillion in assets.

Headquartered in Newark, N.J., Prudential is a leading financial institution in the United States. The wealth Management Solutions segment has been helping financial services firms and banks for more than 30 years to expand and enhance their business.

On the other hand Envestnet aims to foray into the banking channel through the acquisition. ENV will become the largest independent wealth management platform post the acquisition of Wealth management solutions from Prudential.

The divestiture is in line with the company’s strategy of strengthening profitable operations. Earlier, Prudential sought to fortify its operations through the extension of its Agency Gateway Program for multifamily properties. The company announced the deal in Mar 2013 with in order to originate $200 million in program loans in 2013.

Among others in the industry, Genworth Financial Inc. (GNW) entered into an agreement to sell its Wealth Management Business to the joint venture company of Aquiline Capital Partners and Genstar Capital for approximately in Mar 2013. The company aims at generating capital by divesting its non-core business.

Prudential currently carries a Zacks Rank #3 (Hold). Another industry major, CNO Financial Group Inc. (CNO) carries a favorable Zacks Rank #1 (Strong Buy) and is worth noting.

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