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Victory Capital (VCTR) Closes the Buyout of WestEnd Advisors

·4 min read

Victory Capital Holdings, Inc. VCTR acquired 100% of WestEnd Advisors, LLC on Dec 31, 2021. The deal, previously announced in November, represents VCTR’s third acquisition that closed in 2021. The transaction adds a dimension of growth and diversification to VCTR’s portfolio. WestEnd will become VCTR’s 12th investment franchise.

WestEnd provides financial advisors with turnkey, core model allocation strategies serving as holistic solutions and complementary sources of alpha. It offers four primary exchange-traded fund (ETF) strategies and one large-cap core strategy, all in tax-efficient separately managed account (SMA) structures.

With Victory Capital’s strong presence on major financial intermediary platforms and an extensive distribution coverage, it remains well-positioned to continue supporting WestEnd’s growth trajectory. Apart from adding a high-quality and proven investment platform, both companies see great potential in launching product capabilities and solutions in a fast-growing market segment.

When the deal was announced, management had noted that Victory Capital would pay WestEnd $480 million at completion. Besides, there will be deferred earn-out payments over a number of years upon the satisfaction of certain revenue growth targets. Pro forma, adjusted net income accretion with a tax benefit of 9% is expected in 2022.

David Brown, chairman and CEO of Victory Capital said, “We are looking forward to deepening WestEnd’s penetration on existing platforms and introducing them to new financial intermediaries and platforms where we have long-standing relationships. We are excited to leverage the complementary capabilities of both organizations and maximize the opportunity ahead of us.”

Over the past six months, shares of Victory Capital have gained 10.3% compared with 4.9% growth recorded by the industry.

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Currently, Victory Capital carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Inorganic Growth Efforts by Other Firms

Several companies from the finance sector are making consolidation efforts to counter the low-interest-rate environment and high costs of investments in technology.

In December, to expand into the alternative credit markets, T. Rowe Price Group, Inc. TROW acquired one of the major alternative credit managers Oak Hill Advisors, L.P. (OHA). The move complemented TROW’s current global platform, the ongoing strategic investments in its distribution competencies and core investments. The cash-and-stock transaction, valued at $4.2 billion, was announced in October 2021.

Through this acquisition, T. Rowe Price will leverage its access to OHA’s 30-year track record and $56 billion of assets under management across private, distressed, special situations, liquid, structured credit and real-asset strategies. OHA also has a large and diversified customer base.

FirstCash Holdings, Inc. FCFS completed the previously-announced acquisition of American First Finance, a technology-driven, virtual lease-to-own (LTO) and retail finance provider for the underserved, non-prime customers. This cash-and-stock deal, valued at $916 million (based on FCFS’s closing stock price on Dec 3, 2021), was announced this October.

FirstCash will also be able to accommodate feasible payment options for its retail customers at pawn locations that will provide the firm with a new source of revenues. Specifically, American First’s LTO platform will widen the options for customers beyond FirstCash’s current layaway program by permitting them to take home leased merchandise immediately.

In early December, United Bankshares, Inc. UBSI announced the completion of its merger deal with the Community Bankers Trust Corporation.

The buyout brought together two high-performing banking companies. It also bolsters United Bankshares’ position as one of the largest and the best-performing regional banking companies in the Mid-Atlantic and the Southeast. The combined entity will now operate across 250 locations in the opportunistic markets of the United States.

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