Victory Capital Holdings’ 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 1 July, 2019.
USAA Asset Management Company had assets under management (AUM) of USD70 billion as of 31 March, 2019. The transaction also includes USD10 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 USD80 billion of AUM, as of 31 March, 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,” says David Brown (pictured), 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 USD100 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.