Victory Capital Holdings, Inc. (NASDAQ:VCTR) (“Victory Capital” or
“the Company”) today announced that it has completed the
acquisition of USAA Asset Management Company, which includes USAA’s
Mutual Fund and ETF businesses and its 529 College Savings Plan.
Victory Capital also announced that it has
increased cost synergy estimates for the transaction from $110
million to $120 million. Approximately $75 million of synergies
have been realized as of today’s close, ~$100 million are expected
to be in place within six months of close and the full $120 million
within 12 to 15 months of close. This schedule is accelerated from
previously communicated timeframes.
The transaction was financed by Victory Capital
through a combination of debt and cash on the balance sheet. The
Company’s pro forma Debt / EBITDA ratio as of the close of the
transaction is ~2.7x. The transaction is expected to result in
significant accretion to earnings per share (EPS). Victory Capital
expects EPS accretion of more than 100% in 2020, the Company’s
first full year of ownership. The impact on 2019 EPS accretion is
expected to be greater than 40%.
“The acquisition of USAA Asset Management
Company significantly diversifies our investment capabilities and
increases our size and scale. It also broadens our distribution
platform to include a direct channel through which we have the
unique opportunity to serve USAA members,” said David Brown,
Chairman and Chief Executive Officer, Victory Capital. “We are
pleased to welcome the USAA investment professionals to our
integrated multi-boutique platform and are honored to serve the
investment needs of the military community.”
“Our mission is to support the long-term
financial security of military members and their families,” said
Stuart Parker, Chief Executive Officer, USAA. “Victory Capital will
continue providing members quality products and service, plus a
greater variety of mutual funds and ETFs. We will work with Victory
Capital and our members to ensure a smooth transition.”
As of April 30, 2019, Victory Capital had AUM of
$61.0 billion and USAA Asset Management Company had AUM of $81.3
billion. On a pro forma basis, Victory Capital’s firmwide AUM is
estimated to be $142.3 billion.1
About Victory Capital
Victory Capital is a global investment
management firm operating a next-generation, integrated
multi-boutique business model.
Victory Capital provides specialized investment
strategies to institutions, intermediaries, retirement platforms
and individual investors, including USAA members through its direct
member channel. Through its Investment Franchises and Solutions
Platform, Victory Capital offers a diverse array of independent
investment approaches and innovative investment vehicles designed
to drive better investor outcomes. This includes actively managed
mutual funds and separately managed accounts, rules-based and
active ETFs, multi-asset class strategies, custom solutions and a
529 College Savings Plan.
For more information, please visit www.vcm.com or follow us.
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Forward-Looking Statements
This press release may contain forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. These statements may include, without
limitation, any statements preceded by, followed by or including
words such as “target,” “believe,” “expect,” “aim,” “intend,”
“may,” “anticipate,” “assume,” “budget,” “continue,” “estimate,”
“future,” “objective,” “outlook,” “plan,” “potential,” “predict,”
“project,” “will,” “can have,” “likely,” “should,” “would,” “could”
and other words and terms of similar meaning or the negative
thereof. Such forward-looking statements involve known and unknown
risks, uncertainties and other important factors beyond Victory
Capital’s control, as discussed in Victory Capital’s filings with
the SEC, that could cause Victory Capital’s actual results,
performance or achievements to be materially different from the
expected results, performance or achievements expressed or implied
by such forward-looking statements.
Although it is not possible to identify all such
risks and factors, they include, among others, the following:
reductions in AUM based on investment performance, client
withdrawals, difficult market conditions and other factors; the
nature of the Company’s contracts and investment advisory
agreements; the Company’s ability to maintain historical returns
and sustain its historical growth; the Company’s dependence on
third parties to market its strategies and provide products or
services for the operation of its business; the Company’s ability
to retain key investment professionals or members of its senior
management team; the Company’s reliance on the technology systems
supporting its operations; the Company’s ability to successfully
acquire and integrate new companies; the concentration of the
Company’s investments in long-only small- and mid-cap equity and
U.S. clients; risks and uncertainties associated with non-U.S.
investments; the Company’s efforts to establish and develop new
teams and strategies; the ability of the Company’s investment teams
to identify appropriate investment opportunities; the Company’s
ability to limit employee misconduct; the Company’s ability to meet
the guidelines set by its clients; the Company’s exposure to
potential litigation (including administrative or tax proceedings)
or regulatory actions; the Company’s ability to implement effective
information and cyber security policies, procedures and
capabilities; the Company’s substantial indebtedness; the potential
impairment of the Company’s goodwill and intangible assets;
disruption to the operations of third parties whose functions are
integral to the Company’s ETF platform; the Company’s determination
that Victory Capital is not required to register as an
"investment company" under the 1940 Act; the fluctuation of the
Company’s expenses; the Company’s ability to respond to recent
trends in the investment management industry; the level of
regulation on investment management firms and the Company’s ability
to respond to regulatory developments; the competitiveness of the
investment management industry; the dual class structure of the
Company’s common stock; the level of control over the Company
retained by Crestview GP; the Company’s status as an emerging
growth company and a controlled company; and other risks and
factors listed under "Risk Factors" and elsewhere in the Company’s
filings with the SEC.
Such forward-looking statements are based on
numerous assumptions regarding Victory Capital’s present and future
business strategies and the environment in which it will operate in
the future. Any forward-looking statement made in this press
release speaks only as of the date hereof. Except as required by
law, Victory Capital assumes no obligation to update
these forward-looking statements, or to update the reasons actual
results could differ materially from those anticipated in the
forward-looking statements, even if new information becomes
available in the future.
Contacts:
Investors: Matthew Dennis, CFA Director,
Investor Relations 216-898-2412 mdennis@vcm.com
Media: For USAA:Matthew Hartwig,
210-819-9109matthew.hartwig@usaa.com
For Victory Capital: Tricia Ross,
310-622-8226tross@finprofiles.com
1. Based on AUM for Victory Capital and USAA
Asset Management Company as of April 30, 2019. AUM for the USAA
Asset Management Company includes $10.4 billion that is invested in
USAA Mutual Funds through the managed money product offered by
USAA’s brokerage platform. Victory Capital did not acquire the
USAA brokerage business.
USAA is a trademark of United Services
Automobile Association and is being used by Victory Capital and its
affiliates under license. Victory Capital and its affiliates are
not affiliated with USAA or its affiliates.
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