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Friday, December 18, 2015

Guardian Finds RS' New Home

Reported by Neil Anderson, Managing Editor

Guardian has found a new home for the folks at RS Investments [profile].

David C. Brown
Victory Capital
Chairman, Chief Executive Officer
This morning David Brown, chairman and CEO of Cleveland-based Victory Capital [profile], confirms that his shop will buy San Francisco-based RS from New York-based Guardian Life Insurance Company of America. Victory has two private-equity backers, Crestview Partners and Reverence Capital Partners.

The pricing and terms of the all-cash deal, which is slated to close by the end of Q2 2016, were not disclosed. Yet Victory does confirm that key people at both Victory and RS "will continue to be material equity investors following the acquisition," as "Victory and RS are both committed to meaningful employee ownership as a means to ensure alignment with current and future clients."

Back in June, news broke that Guardian had hired Morgan Stanley to shop RS. Then in August Reuters reported that Victory and another mutual fund shop, DoubleLine, were both bidding for RS in a deal valued at up to $275 million.

Victory already has $34.8 billion in AUM as of November 30. The RS deal could increase Victory's AUM by more than 50 percent, thanks to RS' $18.9 billion in AUM as of November 30. If the $275-million price tag for the deal held, that values RS at about 1.46 percent of AUM.

Brown, who will continue to lead Victory, puts the deal in the context of Victory's multi-boutique model. Indeed, he plans to let the RS investment teams keep their autonomy.

"Our goal is to bring on exceptional investment talent and provide those professionals with best-in-class distribution, operational, and technology support," Brown states. "We are confident that RS's culture and strategy complement ours."

Matthew Scanlan, CEO of RS, states that Victory's "multi-boutique structure is ideally suited" for RS.

"They have the ability to help take RS to the next level," Scanlan states.

This will be Victory's third acquisition in two years, after buying Munder and Compass EMP. Pre-RS, Victory has nine boutiques under its umbrella.

RS was first created in 1986 as an arm of venture capital firm Robertson Stephens & Company. Guardian bought RS in 2006, and RS adopted Guardians' funds. 

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