Nuveen Investments Inc., the asset manager owned by Madison Dearborn Partners, agreed to buy the stock and bond funds of U.S. Bancorp's FAF Advisors unit for $80 million in cash and a 9.5 percent stake in Nuveen.
Nuveen, the largest manager of closed-end funds, will get $25 billion in investments from FAF Advisors, which runs the First American family of mutual funds, the Chicago-based company said Thursday in a statement. Nuveen will manage $175 billion when the transaction is completed this year. Minneapolis-based U.S. Bancorp will hold on to about $62 billion in assets in money funds.
Tom Schreier, CEO of FAF Advisors, will be vice chairman of wealth management at Nuveen Investments. Bill Huffman, co-head of Nuveen Asset Management, a municipal bond unit that oversees about $75 billion, will be president of the combined businesses.
U.S. Bancorp, the nation's fifth-biggest bank, didn't disclose a value for the Nuveen stake it's receiving. Nuveen's shareholder equity at the end of December was $969 million, according to Bloomberg data.
FAF Advisors is one of five parts of U.S. Bancorp's wealth- management segment, which contributed about 17 percent of the bank's net income in 2009, according to company reports and Bloomberg data.
"We determined that we did not have the scale and distribution necessary to appropriately grow the long-term asset-management business," U.S. Bancorp spokeswoman Teri Charest wrote in an e-mail. "The opportunity to sell the business to Nuveen while maintaining an equity stake was an attractive alternative."