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Thursday, December 22, 2016

Aylward's Transformational Deal

Reported by Neil Anderson, Managing Editor

When Virtus [profile] acquires RidgeWorth [profile] in the middle of next year, the RidgeWorth investment boutiques will come through unscathed, but the RidgeWorth brand will not survive.

Ashi Parikh
RidgeWorth Investments
Chief Executive Officer and Chief Investment Officer
Last week, Virtus CEO George Aylward confirmed that the Hartford-based mutual fund shop is buying Atlanta-based RidgeWorth in a $513-million deal that will nearly double Virtus' AUM to $86.8 billion. Historically, Aylward says, he has been "very discriminating in terms of some minor acquisitions," but "this obviously is a more transformational opportunity."

"This is really driven by the much more strategic background of an increasingly competitive market where scale is becoming a critical component," Aylward tells MFWire. "This also makes us a more important distribution partner."

Aylward sees some key distributional synergies coming out of the RidgeWorth deal.

"We're more retail," Aylward says. "They're more institutional."

Looking ahead, Aylward isn't ruling out additional M&A further down the line.

"Our focus will be on growing the capabilities that we currently have," Aylward says. "We'll continue to keep our mind open to other M&A."

In terms of the integration, Aylward confirms that "there will be no changes in investment personnel at any of the affiliates" of RidgeWorth.

"Those affiliates will literally continue to operate exactly as they're operating now," Aylward says.

Yet, in other areas, like executive leadership, finance, human resources, and operations, Aylward adds, "there is duplication" and that will be addressed. Aylward didn't share any specific details, save about RidgeWorth CEO and chief investment officer, Ashi Parikh.

"We haven't made any specific announcements," Aylward says. "Ashi will be providing some advisory support for a period of time."

Aylward confirms that RidgeWorth's wholly-owned boutiques (Ceredex, Seix, and Silvant) will each keep their own brands. Yet Virtus will drop another brand.

"We will not be using the RidgeWorth brand," Aylward says. "The focus will really be on the affiliates' brands."

Once the deal closes, Virtus will have seven main affiliated boutiques, and work with ten outside subadvisors. The affiliates are: Ceredex, Duff & Phelps, Kayne Anderson Rudnick, Newfleet, Rampart, SEIX, and Silvant. (RidgeWorth also owns a minority stake in an outside subadvisor, Zevenbergen.) 

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