In one of the most significant divestments of its M&T Bank Corp. tenure, Wilmington Trust, a wholly owned subsidiary of M&T, will sell its $115bn collective investment trust (CIT) business to Chicago-based private equity firm Madison Dearborn Partners (MDP).

Financial terms of the transaction were not disclosed. The CIT business will become an independent company with a new brand name owned by funds affiliated with MDP when the deal closes by the middle of 2023.

CITs are investment vehicles similar to mutual funds that are held by banks and trusts. Retail investors cannot invest in them directly like a mutual fund, but they do pool investments from employer-sponsored retirement plans like 401(k)s, pension plans, and insurance companies.

The business currently manages $115bn in assets for more than 550 funds across a family of about 45 subadvisors, including AllianceBernstein, BlackRock, Franklin Templeton, MetLife, Neuberger Berman and Raymond James.

Current Wilmington Trust Executive Vice President Rob Barnett will take over the yet-to-be-named new company

Raymond James is acting as financial advisor to M&T Bank, and Debevoise & Plimpton is serving as its legal counsel. UBS Investment Bank and J.P. Morgan Securities LLC are acting as financial advisors to MDP, and Latham & Watkins LLP and Eversheds Sutherland (US) LLP are providing legal counsel.