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Rating:Virtus Buys a PE-Backed Multi-Boutique For $513MM Not Rated 0.0 Email Routing List Email & Route  Print Print
Friday, December 16, 2016

Virtus Buys a PE-Backed Multi-Boutique For $513MM

Reported by Neil Anderson, Managing Editor

George Aylward and his team are paying $513 million for his shop's biggest acquisition yet: a $40.2-billion-AUM, multi-boutique asset manager.

Ashi Parikh
RidgeWorth Investments
Chief Executive Officer and Chief Investment Officer
This morning Aylward confirms that Hartford, Connecticut-based Virtus Investment Partners [profile] has signed a deal to buy private-equity-backed, Atlanta, Georgia-based RidgeWorth Investments [profile]. The deal, which is expected to close in the middle of 2017, would nearly double Virtus' AUM, to $86.8 billion.

RidgeWorth is currently owned by LightYear Capital and by RidgeWorth employees, and key RidgeWorth employees on the investment side of the business will become stakeholders in Virtus as part of the deal. There is no word yet on the fate of the RidgeWorth brand or of the rest of the RidgeWorth team.

Barclays Capital and Morgan Stanley advised Virtus on the deal, and they're also committing up to $475 million in debt financing. RBC Capital Markets advised RidgeWorth.

Legal advisors on the deal were Willkie Farr & Gallagher (for Virtus) and Davis Polk & Wardwell (for RidgeWorth).

The $513-million price tag includes a "value" for RidgeWorth of $472 million, plus "certain investments" that Virtus will also acquire "at their fair value" accounting for the difference. That $513 million translates into 1.28 percent of AUM.

"The acquisition of RidgeWorth will give us increased scale, a wider range of strategies for institutional and individual investors, and broader distribution and client service resources, particularly for institutional clients," states Aylward, president and CEO of Virtus. "This transaction will provide continuity for RidgeWorth's clients, who will continue to partner with the same investment teams they respect and appreciate while benefiting from the enhanced support of a larger, better resourced organization."

Ashi Parikh, CEO and chief investment officer of RidgeWorth, praises Virtus as "a firm that shares [RidgeWorth's] vision, culture and approach to offering investment solutions from boutique affiliates." He calls the deal "an important milestone in RidgeWorth's journey."

Virtus already works with a variety of subadvisors, while RidgeWorth has three wholly-owned boutiques (Ceredex Value Advisors, Seix Investment Advisors, and Silvant Capital Management). RidgeWorth also owns a minority stake in another boutique, Zevenbergen Capital Investments. Per this morning's statement from Virtus and RidgeWorth, RidgeWorth's boutiques "will continue to operate independently, maintaining their teams, culture and distinctive investment processes."

Lightyear Capital helped RidgeWorth spin out of SunTrust in 2014, in a deal valued at up to $265 million.

"It's a nice company, and we think it'll be a good fit with the buyer," Donald Marron, chairman of Lightyear, tells MFWire.

Looking ahead, watch for Marron and the rest of the Lightyear team to do more asset management deals.

"We love the asset management business," Marron says. 

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