US private equity firms Warburg Pincus and General Atlantic have agreed to buy a 50 per cent stake in the asset management arm of Santander, Spain’s largest bank, confirming media reports earlier this week
that a deal had been done.

“Santander
reaches agreement with Warburg Pincus and General Atlantic to grow its global
asset management business,” the bank said in a statement today.

This is not the first foray by Warbug Pincus into a
Santander-owned operation. In October 2011, Warburg Pincus led a $1 billion
investment in Banco Santander's Santander Consumer USA, a US automotive finance lending business.

General Atlantic Partners also has a history of investing in
financial services companies, such as First Republic Bank.

“Warburg Pincus and General Atlantic will have a 50 per cent
stake in a holding company that will integrate Santander Asset Management’s
eleven asset management companies, primarily in Europe and Latin
America,” it said.

The transaction values the asset management operation at €2.047
billion ($2.66 billion) and will generate a net capital gain for Santander
Group of €700 million, it said. SAM currently manages €152 billion in assets, mainly in
Europe and Latin America.

“The transaction will improve SAM’s ability to compete with
the leading international independent asset managers, while leveraging Banco
Santander’s deep on-the-ground knowledge and experience in the markets where
the bank operates,” it said.

Under the agreement, Banco Santander will distribute
products managed by SAM in the countries in which the group has a retail
network. The Spanish bank said it will “benefit from the broader, enhanced
range of products and services it will be able to offer its customers.”