Victory Capital Holdings has entered into a definitive agreement to acquire 100 per cent of WestEnd Advisors (WestEnd) for an upfront payment of USD480 million.
WestEnd will become Victory Capital’s 12th Investment Franchise and represents a new dimension of growth and diversification. Founded in 2004, and headquartered in Charlotte, North Carolina, WestEnd provides financial advisers with turnkey, core model allocation strategies serving as holistic solutions and complementary sources of alpha. With approximately USD18 billion in assets, the firm offers four primary ETF strategies and one large cap core strategy, all in tax efficient Separately Managed Account (SMA) structures.
“The acquisition of WestEnd Advisors is very strategic and transformational to our business,” says David Brown, Chairman and CEO of Victory Capital. “It adds a high-quality and proven investment platform as well as a new product capability in a fast-growing market segment.
“WestEnd is well positioned to continue benefiting from multiple secular industry tailwinds including the use of ETFs as cost effective investment delivery vehicles, increasing adoption of model portfolios by financial intermediaries, and the move by a growing number of financial advisors to fee-based revenue models.
“These ongoing trends have led to outsourced SMA models being one of the fastest growth areas in the asset management industry. WestEnd is a leader in the third-party ETF model space and, through the first three quarters of 2021, generated USD3.5 billion, or 30 per cent, net organic growth in assets. With our strong presence on major financial intermediary platforms and the wide geographic reach of our distribution coverage, we believe we are well-positioned to continue WestEnd’s growth. Longer-term, we see exciting potential to launch new products and make new solutions available to a growing client base.”
Michael Goldman, Managing Partner of WestEnd Advisors, says: “WestEnd has grown quickly as an independent company and we believe we can continue that growth by joining forces with the right partner. Victory Capital aligns culturally with WestEnd. They also possess the requisite scale and well-established distribution network to be additive to our existing distribution activities and should serve as a catalyst for future growth. There will be no changes to our proven investment process or to our team as a result of this transaction, which will provide for a smooth and seamless transition for our clients.”
Under terms of the purchase agreement, Victory Capital will acquire WestEnd for an upfront payment upon closing of USD480 million with deferred earnout payments over a number of years upon the satisfaction of certain revenue growth targets. The transaction is expected to close before the end of this year and be immediately accretive to earnings.
Closing is subject to customary approvals, conditions and consents. BofA Securities is serving as financial advisor to Victory Capital and has provided committed financing in connection with the acquisition. Willkie Farr & Gallagher LLP is serving as legal advisor to Victory Capital. PJT Partners is serving as financial advisor to WestEnd, and Alston & Bird LLP is serving as WestEnd’s legal advisor.