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Victory Capital (VCTR) Closes Buyout of USAA Asset Management
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Following the acquisition of USAA Asset Management Company, shares of Victory Capital Holdings, Inc. (VCTR - Free Report) have jumped 7.68%. The purchase includes USAA’s Mutual Fund and ETF businesses as well along its 529 College Savings Plan.
Notably, Victory Capital had announced the acquisition last November to expand its investment platform in fixed income and solutions asset classes. The deal was financed through a combination of debt and cash. Victory Capital’s pro forma Debt/EBITDA ratio at the close of the transaction came in at around 2.7x.
Benefits of the Deal
In addition to creating value for Victory Capital, this deal is also projected to be significantly accretive to the company’s earnings per share. EPS accretion of more than 100% is anticipated in 2020, which will be the company’s first full year of ownership. However, EPS accretion of more than 40% is likely to occur in 2019.
Notably, Victory Capital increased the cost-synergy estimates from $110 million to $120 million. Per the company, on the close of the transaction, around $75 million of synergies were realized. Further, approximately $100 million of synergies are likely to occur within six months post-closing and total $120 million is expected to be realized within 12-15 months.
“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,” added Brown.
USAA Asset Management is a privately-owned investment manager based in San Antonio, TX. It has a stellar investment performance track record and a distinguished reputation for providing service to its members.
As of Apr 30, 2019, Victory Capital’s total AUM came in at $61 billion and USAA Asset Management Company had AUM of $81.3 billion.
Our Take
With this acquisition, Victory Capital plans to 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 in order to include target date and target risk strategies, managed volatility mutual funds and active fixed income ETFs.
Shares of Victory Capital have gained 15.3% in the past three months compared with 5.6% growth registered by the industry.
The stock currently has a Zacks Rank #5 (Strong Sell).
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Victory Capital (VCTR) Closes Buyout of USAA Asset Management
Following the acquisition of USAA Asset Management Company, shares of Victory Capital Holdings, Inc. (VCTR - Free Report) have jumped 7.68%. The purchase includes USAA’s Mutual Fund and ETF businesses as well along its 529 College Savings Plan.
Notably, Victory Capital had announced the acquisition last November to expand its investment platform in fixed income and solutions asset classes. The deal was financed through a combination of debt and cash. Victory Capital’s pro forma Debt/EBITDA ratio at the close of the transaction came in at around 2.7x.
Benefits of the Deal
In addition to creating value for Victory Capital, this deal is also projected to be significantly accretive to the company’s earnings per share. EPS accretion of more than 100% is anticipated in 2020, which will be the company’s first full year of ownership. However, EPS accretion of more than 40% is likely to occur in 2019.
Notably, Victory Capital increased the cost-synergy estimates from $110 million to $120 million. Per the company, on the close of the transaction, around $75 million of synergies were realized. Further, approximately $100 million of synergies are likely to occur within six months post-closing and total $120 million is expected to be realized within 12-15 months.
“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,” added Brown.
USAA Asset Management is a privately-owned investment manager based in San Antonio, TX. It has a stellar investment performance track record and a distinguished reputation for providing service to its members.
As of Apr 30, 2019, Victory Capital’s total AUM came in at $61 billion and USAA Asset Management Company had AUM of $81.3 billion.
Our Take
With this acquisition, Victory Capital plans to 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 in order to include target date and target risk strategies, managed volatility mutual funds and active fixed income ETFs.
Shares of Victory Capital have gained 15.3% in the past three months compared with 5.6% growth registered by the industry.
The stock currently has a Zacks Rank #5 (Strong Sell).
Stocks to Consider
Franklin Resources, Inc. (BEN - Free Report) has been witnessing upward estimate revisions for the last 60 days. Additionally, the stock has jumped more than 15% in the past six months. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Legg Mason, Inc. has been witnessing upward estimate revisions for the last 60 days. Also, the company’s shares have surged nearly 40.5% over the past six months. It flaunts a Zacks Rank #1, at present.
Eaton Vance Corporation (EV - Free Report) has been witnessing upward estimate revisions for the last 60 days. Over the past six months, the company’s share price has been up more than 21%. Currently, it carries a Zacks Rank #2 (Buy).
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>