Truist keeps downsizing with deal to sell asset-management business
Truist Financial intends to sell an asset-management subsidiary, marking the latest step in the superregional bank's effort to realign and simplify its operations.
Charlotte, North Carolina-based Truist confirmed Friday that it has reached an agreement to sell Sterling Capital Management to Guardian Capital Group in Toronto for $70 million, plus future payout incentives.
The deal's announcement came one day after a media report that Truist was close to offloading its larger insurance brokerage business. The sale of Truist Insurance Holdings has long been rumored.
Sterling Capital, which had $76 billion of assets under management at the end of December, will operate as a standalone entity and continue to be led by its current management team, Guardian said in a press release. The deal is expected to close in the second quarter.
"This path forward is a win-win-win for Sterling Capital, Guardian, and Truist," Sterling Capital CEO Scott Haenni said in the release.
"It allows Sterling Capital to grow as an independently-managed investment management firm poised for continued long-term growth under Guardian's strategic oversight," Haenni said. He added that Sterling Capital will "partner with Truist on shared relationships and opportunities."
Truist has been in reorganization mode for several months as it seeks to become a simpler, more profitable company.
As part of a $750 million cost-cutting program announced last fall, the company has reduced its workforce by 4%, consolidated several business lines and created a single enterprise-wide payments group. It has also shrunk the size of its board of directors and expanded its executive management team, and it plans to close 4% of its branches in March.
Truist is also remixing its balance sheet. Last summer, it sold a $5 billion student loan portfolio.
In response to a request for comment about the sale of Sterling Capital, which Truist inherited from predecessor BB&T Corp., a Truist spokesperson said in an email Friday that the company "regularly assesses opportunities … and makes adjustments to [its] business in order to invest in areas of growth."
Sterling Capital was founded in 1970 as Nisbet and renamed Sterling Capital Management in 2001, according to its website. BB&T, which merged with SunTrust Banks in 2019 to form Truist, acquired a majority equity ownership stake in 2005, the website said.
Questions still linger about if and when the $540 billion-asset Truist will sell all or part of its 80% stake in Truist Insurance Holdings.
On Thursday, the industry publication Insurance Insider reported that Truist was nearing a deal to sell the unit to Stone Point Capital, a private equity firm in Greenwich, Connecticut, and Clayton Dubilier & Rice, a private investment firm in New York City.
Stone Point acquired 20% of Truist's insurance business in the spring of 2023 — one of several deals last year where banks offloaded their insurance units amid skyrocketing insurance valuations and banks' need to shrink their balance sheets.
A Truist spokesperson declined Friday to comment on the report that the company is nearing the sale of its insurance brokerage unit.
One analyst noted Friday that the sale of Sterling Capital is much smaller than a potential sale of Truist Insurance Holdings.
"Today's transaction seems a bit like a sideshow in comparison to that transaction, which could reportedly be valued around $15 billion," Scott Siefers, an analyst at Piper Sandler, wrote in a research note.
Truist executives have said several times that the company's 80% stake in Truist Insurance Holdings offers flexibility to generate more capital.
During the company's fourth-quarter earnings call last month, CEO Bill Rogers said: "We've said clearly that we're always evaluating alternatives, and we're going to do the best thing for the insurance business and the best thing for Truist going forward.
"As it relates to any specific timing … I don't think I should really comment," he added.
