KeyCorp (KEY) announced the finalization of the deal to shed Victory Capital Management and its broker dealer affiliate, Victory Capital Advisers. The company sealed the agreement with Victory and Crestview Partners – a private equity firm – for cash and debt.
KeyCorp anticipates a net after-tax gain from the sale to range from $100–$115 million. Moreover, the cash portion from the above mentioned gain is expected to range from $75–$90 million.
Further, KeyCorp has received approval from the Federal Reserve to utilize the proceeds from the sale of its subsidiary to repurchase common shares.
Earlier, in Mar 2013, following the approval from the Fed, as part of the Comprehensive Capital Analysis and Review, the board of directors of KeyCorp authorized a share repurchase program worth up to $426 million, to be completed by the end of first-quarter 2014.
Following the closure, Victory Capital has become an independent company. Moreover, the employees of the firm hold a considerable percentage of the outstanding equity.
Additionally, Victory Capital CEO David Brown and President Christopher Ohmacht would retain their existing positions. Further, Brown and Ohmacht have been named on the board of Victory Capital along with two representatives from Crestview and 3 independent directors having considerable experience in asset management.
KeyCorp’s decision to vend its subsidiary is part of its strategy to focus on the core banking operations. Further, this would enhance investors’ confidence in the stock as the company plans to utilize the cash for capital deployment.
KeyCorp currently carries a Zacks Rank #2 (Buy). Other stocks that are also worth a look include Enterprise Financial Services Corp. (EFSC) and BankUnited, Inc. (BKU) with a Zacks Rank #1 (Strong Buy) and Comerica Incorporated (CMA) with a Zacks Rank #2 (Buy).
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