Crestview Partners has acquired Victory Capital Management and its broker dealer affiliate Victory Capital Advisers (Victory) in partnership with the company’s senior management team. The purchase process was $246 million consisting of $201 million of cash at closing and a $45 million seller note. Victory Capital Management and Victory Capital Advisers are subsidiaries of KeyCorp. The transaction is expected to close in the third quarter of 2013.
Under the new ownership structure, David Brown and Christopher Ohmacht will continue to lead Victory and will be appointed to the company’s new Board of Directors along with two representatives from Crestview and three independent directors. Mr. Brown will become the Chief Executive Officer, and Mr. Ohmacht will become President.
“We are pleased to partner with Crestview, a firm that is well known and respected for its asset management expertise and integrity. This new ownership structure will preserve our successful multi-boutique operating model and provide an opportunity for real equity ownership to our employees that will align our interests with those of our clients, today and well into the future,” said Mr. Brown. “From the day-to-day perspective of our clients and investment professionals, nothing significant will change. Strategically, we will have an ownership structure that provides our firm with the ability to drive future growth and to continue delivering leading investment performance and high quality service to our clients.”
Victory provides investment advisory services to institutional clients including corporations, non profits, public funds, Taft-Hartley and sub-advisory clients. The company offers international and domestic equity and domestic fixed income products to these investors through separate accounts and commingled funds. Victory is the investment advisor to The Victory Funds, a collection of 19 mutual funds, offering a variety of share classes. The company also offers retail and retirement clients Separately Managed Accounts through wrap fee programs and access to its investment models through Unified Managed Accounts. As of December 31, 2012, Victory managed and advised approximately $22.1 billion in equity and fixed income assets on behalf of its institutional and individual investors. Victory represented $112 million in revenue and $88 million in expense for KeyCorp in 2012. The company will continue to operate under its present brand name and remain headquartered in Cleveland with offices in New York, Cincinnati, Denver, and Tampa (www.vcm.com/vcn/home.jsp).
Crestview Partners is a $4 billion private equity firm which invests from $100 million to $250 million in companies with enterprise values up to $3 billion. Sectors of interest include media, financial services, healthcare and energy. Crestview Partners is based in New York (www.crestview.com).
“We are very pleased to be partnering with the Victory team. Victory is an outstanding firm with excellent investment talent and distribution expertise. The company is very well managed, under the leadership of David Brown and Christopher Ohmacht. Victory has a team of outstanding portfolio managers with a history of strong investment performance,” said Richard DeMartini, a Partner at Crestview.
KeyCorp is one of the nation’s largest bank-based financial services companies with assets of approximately $89 billion on December 31, 2012. Key Corp. is based in Cleveland (www.key.com).
“For KeyCorp, this divestiture is consistent with our strategic focus on businesses that leverage the competitive advantages of our core relationship banking model,” said Chairman and CEO Beth Mooney. “In addition, this transaction partners Victory with a widely recognized acquirer, allowing Victory to operate as a pure play investment management business, with management owning an equity position.”
© 2013 PEPD • Private Equity’s Leading News Magazine • 2-21-13