Victory Capital Holdings, Inc. (NASDAQ: VCTR) (“Victory Capital” or
the “Company”) today reported that its planned acquisition of USAA
Asset Management Company, which includes USAA’s Mutual Fund and ETF
businesses and its 529 College Savings Plan, is on target and
expected to close effective July 1, 2019. USAA Asset Management
Company had assets under management (AUM) of $70 billion as of
March 31, 2019. The transaction also includes $10 billion in AUM
that is invested in USAA Mutual Funds through the managed money
product offered by USAA’s brokerage business – for a total of $80
billion of AUM, as of March 31, 2019, to be acquired.
“The acquisition of USAA Asset Management
Company will meaningfully diversify our asset mix and investment
capabilities and transform our business in terms of size and scale.
It will also significantly expand our distribution platform to
include a direct channel for USAA members,” said David Brown,
Chairman and Chief Executive Officer of Victory Capital. “This is a
tremendous opportunity for us, and we are extremely excited to
welcome this business onto our platform.”
The Company also reported that its USAA Asset
Management Company integration plans are progressing well, and it
is currently on target to accomplish the $100 million synergy goal
for the acquisition within the previously communicated
timeframes.
Separately, in light of recent adverse market
conditions affecting Harvest Volatility Management’s (“Harvest”)
largest investment strategy, Victory Capital and Harvest have
mutually agreed to terminate their previously announced agreement
for Victory Capital to acquire Harvest. As a result of these
conditions, it became unlikely that the acquisition could be
completed in accordance with its terms on the timetable specified
in the Harvest agreement. Victory Capital and Harvest continue to
have great respect for each other’s businesses, principals and
employees. Neither Victory Capital nor Harvest will be responsible
for any termination fee to the other party as a result of the
termination.
Victory Capital continues to have fully
committed debt financing for the USAA Asset Management Company
acquisition. The Company plans to raise less debt than originally
planned due to the termination of the Harvest agreement. Pro-forma
Net Debt / EBITDA ratio at the close of the USAA Asset Management
Company transaction is expected to be approximately 2.9x.
The acquisition of USAA Asset Management Company
is subject to regulatory and other customary approvals, conditions
and consents, including approval by USAA mutual fund and ETF
shareholders.
About Victory Capital
Victory Capital is a global investment
management firm operating a next-generation, integrated
multi-boutique business model with $58.1 billion in assets under
management as of March 31, 2019.
Victory Capital’s differentiated model is
comprised of nine Investment Franchises, each with an independent
culture and investment approach. Additionally, the Company offers a
rules-based Solutions Platform, featuring the VictoryShares ETF
brand, as well as custom and multi-asset class solutions. The
Company’s Investment Franchises and Solutions Platform are
supported by a centralized distribution, marketing and operational
environment, in which the investment professionals can focus on the
pursuit of investment excellence.
Victory Capital provides institutions, financial
advisors and retirement platforms with a variety of asset classes
and investment vehicles, including separately managed accounts,
collective trusts, mutual funds, ETFs, UCITs and UMA/SMA
vehicles.
For more information, please visit www.vcm.com.
Go to www.victorysharesliterature.com for ETF prospectuses or
www.victoryfundliterature.com for mutual fund prospectuses.
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,
CFADirector, Investor Relations216-898-2412mdennis@vcm.com
Media:Tricia
Ross310-622-8226tross@finprofiles.com
Victory Capital is not acquiring the USAA
brokerage business.
Victory Funds are distributed by Victory Capital
Advisers, Inc. (VCA). VictoryShares ETFs are distributed by
Foreside Fund Services, LLC. Victory Capital Management Inc. (VCM)
is the adviser to VictoryShares ETFs and Victory Funds. VCM and VCA
are affiliated. They are not affiliated with Foreside Fund
Services, LLC.
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