Victory Capital (VCTR) To Buy USAA Asset Management For $850M
Zacks Investment Research | Nov 07, 2018 11:07PM ET
In an effort to expand its investment platform in fixed income and solutions asset classes, Victory Capital Holdings, Inc. (NASDAQ:VCTR) agreed to acquire USAA Asset Management Company. In addition to creating value for Victory Capital, the deal is also projected to be significantly accretive to earnings per share.
Following the announcement of the deal, shares of Victory Capital gained almost 20%.
Per the agreement, Victory Capital will pay nearly $850 million for the purchase. Along with this, it has the opportunity to make additional contingent payments, depending on future business performance. Notably, the transaction is expected to be financed through a combination of debt and cash.
David Brown, chairman and chief executive officer of Victory Capital stated, “The acquisition of USAA Asset Management Company is a strong diversifier for us with the addition of quality investment teams and products and provides us entry into a new distribution channel with a loyal member base. It increases our size and scale, enhances our ability to attract and retain top investment talent, and leverages our investments in critical components of our business, such as technology, operations, investment support and client service, across a broader base of assets.”
USAA Asset Management is a privately owned investment manager based in San Antonio, TX. It has a strong investment performance track record and a distinguished reputation for providing service to its members.
With this acquisition, Victory Capital plans expand its presence in the San Antonio region and further enhance investment services for members of USAA Asset Management. Victory Capital will be able to expand its Solutions Platform so as to include target date and target risk strategies, managed volatility mutual funds and active fixed income ETFs.
Closing of the deal is subject to regulatory and other customary approvals, including the approval of USAA mutual fund and ETF shareholders and board of trustees.
USAA Asset Management Company had $69.2 billion in assets under management (AUM) as of Sep 30, 2018. After the completion of the transaction, Victory Capital’s total AUM would be nearly $144.4 billion.
Victory Capital’s third-quarter 2018 results benefitted from higher revenues and growth in AUM. Moreover, the company experienced a decline in expenses during the quarter under review.
Shares of Victory Capital have lost 15.6% over the past year compared with 14.6% decline of the Original post
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