Multi-boutique asset manager Victory Capital has agreed to acquire USAA Asset Management for $850 million.
Victory had $63.6 billion in assets under management as at the end of September and will pay $850 million, plus conditional contingent payments based on future performance, for USAA Asset Management, which has $69.2 billion in assets under management and 53 funds.
Victory Capital said it expected to finance the transaction through a combination of debt and cash.
The purchase will make USAA Victory Capital’s 11th affiliate or what the firm calls ‘investment franchise’ and boost Victory Capital’s overall firm-wide assets to approximately $144.4 billion at the close of transaction.
In September, Victory Capital agreed to acquire the $12 billion derivative specialist Harvest Volatility Management for $300 million.
San Antonio, Texas-based USAA Asset Management Company is part of the wider USAA group, which was formed to serve the advice, insurance and investment needs of the military community and their families.
The transaction is expected to close in the second quarter of 2019, and is subject to regulatory and other customary approvals, conditions and consents, including approval by USAA mutual fund and ETF shareholders and board of trustees.
USAA Asset Management is a part of the USAA group of companies, which provides insurance, banking, investments, retirement products and advice services to more than 12.7 million current and former members of the US military and their families.
Upon close of the transaction, USAA will continue to have the rights to offer products and services using the USAA brand. As part of Victory Capital, USAA asset management's investment teams will continue to focus on serving the investment needs of the military community and their families.
Victory Capital said the acquisition of USAA represented a substantial expansion and diversification of the firm’s investment platform, particularly in fixed income as well as target date and target risk strategies, managed volatility mutual funds and active fixed income ETFs.
Through the acquisition, Victory Capital will also be able to add to its line-up of asset allocation portfolios and smart beta equity ETFs as well as subadvised and multi-manager equity funds offered by USAA.
‘The acquisition of USAA Asset Management is a strong diversifier for us with the addition of quality investment teams and products and provides us entry into a new distribution channel with a loyal member base,’ said David Brown, chief executive of Victory Capital.
‘It increases our size and scale, enhances our ability to attract and retain top investment talent, and leverages our investments in critical components of our business, such as technology, operations, investment support and client service, across a broader base of assets,’ he added.