Private equity firms Genstar Capital and Aquiline Private Equity LLC have teamed up and are in exclusive negotiations to buy Genworth Financial Inc's wealth management business and its San Francisco-based alternative investment business, two sources familiar with the situation said.
Genworth is working with Goldman Sachs Group Inc , according to the sources, who declined to be identified because talks are confidential.
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Genstar and Aquiline are working with Deutsche Bank AG , said one of the sources, who estimated that the deal for both businesses would be valued at $400 million to $450 million.
A Deutsche Bank spokeswoman declined to comment, as did spokesmen with Genstar and Goldman.
Spokespeople for New York-based Aquiline and Richmond, Virginia-based Genworth did not immediately return requests for comment.
Genworth, once part of conglomerate General Electric Co , is offloading the businesses as it faces increased scrutiny from ratings agencies, largely due to losses in its mortgage business. Reuters first reported in October that it was selling the two businesses [ID:nL1E8LCCCR].
Genworth bought its turnkey assets management platform, which was called AssetMark Investment Services, in 2006 and merged it with Genworth Financial Asset Management to form Genworth Financial Wealth Management. The wealth management business has more than $20 billion in assets under management and sells its portfolios through about 6,000 third-party advisers across the country, according to the firm's website.
Genworth bought its San Francisco-based Altegris business in 2010 for $35 million plus additional performance-based payments. The firm has $3.47 billion in client assets.
This month, Genworth Financial posted fourth-quarter profit that topped Wall Street estimates, but the insurer reported a sharp drop in earnings from long-term care insurance.
Net income available to common shareholders rose to $166 million, or 34 cents per diluted share, for the quarter ended December 31, from $142 million, or 29 cents per diluted share, a year ago.
Operating earnings at the firm's long-term care insurance unit fell 75 percent to $7 million in the fourth quarter.
(Reporting by Jessica Toonkel; Editing by Gerald E. McCormick, Dale Hudson and David Gregorio)