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Truist (TFC) to Streamline Business With Sterling Capital Sale
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Truist Financial (TFC - Free Report) has announced the divestiture of its asset-management subsidiary, Sterling Capital Management LLC, to Guardian Capital Group Limited in a $70 million deal. The move is part of the company’s broader strategy to realign and simplify operations.
Sterling Capital, headquartered in Charlotte, NC, managed almost $76 billion in assets under management as of Dec 31, 2023, serving institutional and individual investors through various investment vehicles. Guardian's acquisition of Sterling Capital can be seen as a strategic move to enhance its global asset management scale.
Guardian's president and CEO, George Mavroudis, emphasized the alignment of values and the added capabilities and investment strategies that Sterling brings to the table. The deal is expected to close in the second quarter of 2024, subject to customary consents and approvals.
Following the closure of the deal, Guardian plans to operate Sterling Capital as a standalone entity. Scott Haenni, CEO of Sterling Capital, sees the move as an opportunity for it to grow independently under Guardian's strategic oversight while maintaining collaborative relationships with TFC.
Truist’s decision to sell Sterling Capital is part of a comprehensive restructuring initiative to create a more efficient and profitable organization. The bank has been implementing various measures, including a $750 million cost-cutting program, a 4% reduction in workforce, consolidation of business lines and the creation of an enterprise-wide payments group.
The company is also reshaping its balance sheet, having sold a $415 million student loan portfolio to Carlyle (CG - Free Report) last month. "There is an opportunity for private markets to fill the gap left by traditional lenders reducing their lending to families to finance their higher education goals," said Akhil Bansal, managing director and head of credit strategic solutions at CG.
Banks have been offloading such loan portfolios as they are required to follow additional regulatory requirements and are not a core part of their business.
Further, last year, Truist divested a 20% stake in its insurance business – Truist Insurance Holdings (“TIH”) – to Stone Point Capital for $1.95 billion in cash. The cash deal, which valued TIH at $14.75 billion in the aggregate, was announced in February 2023.
Notably, the sale of Sterling Capital marks another step in TFC's ongoing efforts to simplify its operations. The company spokesperson highlighted the regular assessment of opportunities and adjustments to the business to focus on areas of growth. Truist’s commitment to becoming a simpler and more profitable company positions it for sustained success in the evolving financial landscape.
The move unlocks value for both Truist and Sterling Capital, setting the stage for continued growth and success in their respective endeavors.
In January, Ally Financial Inc. (ALLY - Free Report) announced a definitive agreement to sell Ally Lending (its point-of-sale or POS financing business), including $2.2 billion of loan receivables, to Synchrony (SYF - Free Report) . This move reflects Ally Financial's commitment to optimizing its capital allocation and prioritizing resources toward high-growth areas.
The portfolio being acquired by SYF is a strategic fit, reinforcing its position in the industry by offering both revolving credit and installment loans at the point-of-sale in the home improvement vertical. Brian Doubles, president and CEO, highlighted the significance of the deal, stating, "This accretive acquisition enhances Synchrony’s position by offering our multi-product portfolio to nearly 2,500 Ally Lending merchant locations, and enables us to achieve attractive economies of scale while further diversifying our merchant base."
For Ally Financial, this transaction is part of a broader initiative to invest resources in growing scale businesses and strengthen relationships with dealer customers and consumers. Jeff Brown, CEO, noted, "This transaction allows us to continue to be disciplined in allocating capital to optimize risk-adjusted returns as we manage through a dynamic operating environment."
Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.
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Truist (TFC) to Streamline Business With Sterling Capital Sale
Truist Financial (TFC - Free Report) has announced the divestiture of its asset-management subsidiary, Sterling Capital Management LLC, to Guardian Capital Group Limited in a $70 million deal. The move is part of the company’s broader strategy to realign and simplify operations.
Sterling Capital, headquartered in Charlotte, NC, managed almost $76 billion in assets under management as of Dec 31, 2023, serving institutional and individual investors through various investment vehicles. Guardian's acquisition of Sterling Capital can be seen as a strategic move to enhance its global asset management scale.
Guardian's president and CEO, George Mavroudis, emphasized the alignment of values and the added capabilities and investment strategies that Sterling brings to the table. The deal is expected to close in the second quarter of 2024, subject to customary consents and approvals.
Following the closure of the deal, Guardian plans to operate Sterling Capital as a standalone entity. Scott Haenni, CEO of Sterling Capital, sees the move as an opportunity for it to grow independently under Guardian's strategic oversight while maintaining collaborative relationships with TFC.
Truist’s decision to sell Sterling Capital is part of a comprehensive restructuring initiative to create a more efficient and profitable organization. The bank has been implementing various measures, including a $750 million cost-cutting program, a 4% reduction in workforce, consolidation of business lines and the creation of an enterprise-wide payments group.
The company is also reshaping its balance sheet, having sold a $415 million student loan portfolio to Carlyle (CG - Free Report) last month. "There is an opportunity for private markets to fill the gap left by traditional lenders reducing their lending to families to finance their higher education goals," said Akhil Bansal, managing director and head of credit strategic solutions at CG.
Banks have been offloading such loan portfolios as they are required to follow additional regulatory requirements and are not a core part of their business.
Further, last year, Truist divested a 20% stake in its insurance business – Truist Insurance Holdings (“TIH”) – to Stone Point Capital for $1.95 billion in cash. The cash deal, which valued TIH at $14.75 billion in the aggregate, was announced in February 2023.
Notably, the sale of Sterling Capital marks another step in TFC's ongoing efforts to simplify its operations. The company spokesperson highlighted the regular assessment of opportunities and adjustments to the business to focus on areas of growth. Truist’s commitment to becoming a simpler and more profitable company positions it for sustained success in the evolving financial landscape.
The move unlocks value for both Truist and Sterling Capital, setting the stage for continued growth and success in their respective endeavors.
Shares of this Zacks Rank #3 (Hold) company have rallied 12.8% over the past six months, outperforming the industry’s growth of 9.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Other Financial Company Taking Similar Move
In January, Ally Financial Inc. (ALLY - Free Report) announced a definitive agreement to sell Ally Lending (its point-of-sale or POS financing business), including $2.2 billion of loan receivables, to Synchrony (SYF - Free Report) . This move reflects Ally Financial's commitment to optimizing its capital allocation and prioritizing resources toward high-growth areas.
The portfolio being acquired by SYF is a strategic fit, reinforcing its position in the industry by offering both revolving credit and installment loans at the point-of-sale in the home improvement vertical. Brian Doubles, president and CEO, highlighted the significance of the deal, stating, "This accretive acquisition enhances Synchrony’s position by offering our multi-product portfolio to nearly 2,500 Ally Lending merchant locations, and enables us to achieve attractive economies of scale while further diversifying our merchant base."
For Ally Financial, this transaction is part of a broader initiative to invest resources in growing scale businesses and strengthen relationships with dealer customers and consumers. Jeff Brown, CEO, noted, "This transaction allows us to continue to be disciplined in allocating capital to optimize risk-adjusted returns as we manage through a dynamic operating environment."
Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.