US Bancorp has said that it will receive a 9.5% stake in Chicago-based Nuveen Investments and cash consideration in exchange for the long-term asset management business of FAF Advisors (FAF).
FAF, an affiliate of US Bancorp, is adviser to the First American Funds family of mutual funds.
According to US Bancorp, this transaction will add approximately $25bn of long-term assets under management, which are currently managed by FAF Advisors, to Nuveen Asset Management, which manages $75bn in municipal fixed income assets and serves as the adviser of the Nuveen funds.
Upon completion of the transaction, Nuveen Investments, which currently manages $150bn of assets, will manage a combined total of $175bn in institutional and retail assets.
FAF and Nuveen Asset Management will operate under the name of Nuveen Asset Management with operations in Chicago and Minneapolis once the strategic alliance is completed. The majority of the employees of FAF joining the combined business will remain located in Minneapolis.
US Bancorp said that it will retain the investment products and capabilities to support custom cash management, securities lending, stable value and advisory services to the First American Money Market Funds. The investment products and services will continue to be provided by the same team that provided them prior to the transaction.
US Bancorp added that the team will operate under the new name, US Bancorp Asset Management, and will be led by Joseph Ulrey, who will be named CEO of US Bancorp Asset Management.
Tom Schreier, who currently is CEO of FAF, will become a vice chairman of Nuveen Investments and oversee the firm’s efforts to further scale and develop its business. Nuveen Asset Management will report into Nuveen Investments through Mr Schreier.
Lee Mitau, executive vice president and general counsel of US Bancorp, who oversees FAF Advisors, said: “Our new strategic alliance with Nuveen Asset Management will significantly enhance the long-term value of US Bancorp’s investment in the asset management business.”