SunTrust Banks Inc. will sell RidgeWorth Capital Management Inc. to the unit’s employees and investors led by Lightyear Capital LLC for as much as $265 million.
The deal for the asset-management firm includes a $245 million price tag and as much as $20 million in additional proceeds based on retention of certain holdings, Atlanta-based SunTrust said today in a statement. The bank estimated the after-tax gain on the transaction will be $50 million.
Chief Executive Officer William Rogers is realigning SunTrust’s businesses, boosting middle-market investment banking while reducing asset management. The bank agreed in 2010 to sell $17 billion in managed liquidity assets to Federated Investors Inc. following a strategic review of its RidgeWorth unit, while deciding at the time to retain the division’s long-term asset-management business.
“This transaction marks an inflection point which positions RidgeWorth to become a premier independent asset-management company,” Ashi S. Parikh, RidgeWorth’s CEO and chief investment officer, said today in a separate statement.
RidgeWorth oversees about $50.6 billion in assets, according to the statement, and added about $25 million to SunTrust’s $884 million of net income in the first nine months of this year.
SunTrust fell 0.5 percent to $35.33 at 11:16 a.m. in New York. The shares have gained 25 percent this year, compared with the 29 percent advance of the 81-company Standard & Poor’s 500 Financials Index.
The sale is expected to be completed in the second quarter of 2014, SunTrust said. Credit Suisse Group AG and SunTrust Robinson Humphrey were the bank’s financial advisers, and Sullivan & Cromwell LLP provided legal advice.
Lightyear Capital, based in New York, is a private-equity firm that makes controlling investments in middle-market financial-services companies. Its portfolio companies include Piedmont Community Bank Holdings Inc. and Cascade Bancorp, according to its website.