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Rating:What Would a Victory-Amundi Combo Look Like? Not Rated 0.0 Email Routing List Email & Route  Print Print
Tuesday, April 16, 2024

What Would a Victory-Amundi Combo Look Like?

Reported by Neil Anderson, Managing Editor

The folks at an 11-boutique asset manager are preparing for their biggest acquisition yet, and they plan to seal the deal this year.

David C. "Dave" Brown
Victory Capital Holdings, Inc.
Chairman, CEO
"This is a momentous day in the history of Victory Capital," Dave Brown, chairman and CEO of Victory Capital [profile], told analysts on a conference call this morning about the San Antonio, Texas-based fund firm's proposed acquisition of Boston-based Amundi U.S. [profile]. Paris-based Amundi and Victory have signed a non-binding memorandum of understanding about the all-stock deal, and they expect to have a definitive agreement by June 30, as previously reported.

Brown confirms that that deal is expect to close by the end of 2024. He confirms that Amundi would gain a 26.1-percent economic stake in Victory, plus two board seats (out of nine total), while noting that Amundi's shares give it voting rights at 4.9 percent.

The Amundi and Victory teams have offered some predictions about what Victory would look like after the deal, which would turn Amundi U.S. into the multi-boutique's 12th (and biggest) investment franchise. The deal would boost Victory's AUM (by 59 percent) to $279 billion, would boost annual revenue and adjusted net income (on a pro forma basis, using 2023 numbers) to more than $1.2 billion and about $400 million, respectively, before cost synergies. (By comparison, Victory brought in $821 million in revenue and $269.7 million in adjusted net income in 2023.)

Yet the Victory and Amundi folks expect significant "cost synergies," too.

"We expect to realize annualized expense synergies of about $100 million," fully realized within two years, Brown said on the call. He notes that the cost savings will come from things like "vendor consolidations, improved economies of scale, and elimination of redundancies."

Victory currently has a team of about 490 people. Amundi has a team of about 5,400 employees worldwide, including about 480 at Amundi U.S. Geoff Smith, an Amundi spokesperson, declined to comment on what the deal will mean for the Amundi U.S. team.

"We don't have any additional information to share at this stage," Smith tells MFWire via email.

Yet the Amundi and Victory teams do offer hints as to the proposed deal's expected impact on the two teams. Mike Policarpo, president and chief financial officer of Victory, told analysts on the call that the acquirer has "a pretty solid and robust integration playbook," one that focuses on "minimizing client impact and investment team impact."

"All of the current Amundi U.S. investment teams will remain in place," Policarpo said on the call.

Brown addressed Amundi U.S.'s hometown, too.

"We fully intend to maintain a significant presence in Boston," Brown said on the call. (Amundi U.S. also has offices in Durham and Miami.)

"Victory Capital is committed to having a significant office presence in Boston across business functions and sees tremendous opportunity to leverage best practices from both organizations," Smith writes. "The leadership of Victory Capital and Amundi are committed to being fair and transparent with employees as the process moves forwward. For many employees, this will be an opportunity to do more and grow in their careers."

The Amundi deal would also significantly change Victory's asset class mix and distribution profile, according to estimates from both firms. The Victory team expects that the Amundi deal would boost fixed income to accounting for about 24 percent of AUM (up from 14 percent now). And the Amundi team expects the deal would boost Victory's non-U.S. distribution to 15 percent and advisor-sold U.S. distribution to 43 percent (up from 3 percent and 37 percent now, respectively).

"Their investment platform has minimal overlap with our existing investment strategies," Brown said on the call.

The proposed deal also involves a 15-year distribution alliance between Amundi and Victory, which Brown expects to be a big boost as he notes that "Amundi's global distribution network is vast." And looking ahead, Brown predicts that the deal would not put a damper on Victory's future acquisition efforts, either

"Amundi is very supportive of us continuing our long history of M&A activity," Brown said. 

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