Virtus Adopts a $23B-AUM U.S. Biz
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Tuesday, July 07, 2020

Virtus Adopts a $23B-AUM U.S. Biz

A multiboutique asset manager is preparing to adopt a $590-billion-AUM multinational's retail U.S. asset management offerings.

George Robert Aylward
President and CEO
Virtus Investment Partners
This morning, George Aylward, president and CEO of Virtus Investment Partners [profile], and Tobias Pross, CEO of Allianz Global Investors [profile] (AllianzGI), confirm that they've agreed to a strategic partnership under which Hartford, Connecticut-based Virtus will take over Munich-based AllianzGI's retail distribution in the U.S. (AllianzGU's U.S. business is based in New York City.) As part of the alliance, Virtus will replace AllianzGI as the investment advisor, distributor, and/or administrator on AllianzGI's U.S. retail asset management offerings, including open-end mutual funds, retail SMAs, and closed-end funds.

Meanwhile, AllianzGI's Dallas-based $7-billion-AUM value equity team, formerly known as NFJ Investment Group, will become one of Virtus' affiliated boutiques. And AllianzGI will stay on in a subadvisory capacity for the products Virtus is adopting.

The adoptions, subject to fund board and shareholder approval, are expected to close late in 2020. Overall pricing and terms of the deal were not disclosed, though a joint statement from the AllianzGI and Virtus teams confirms that the deal includes no upfront payments (i.e. at closing).

Warren Enskat Group and Paul Hastings advised AllianzGI on the deal, while Morgan Lewis Bockius advised Virtus.

Based on May 31 numbers, the deal is expected to boost Virtus' AUM to $128 billion, including a 40 percent (about $15 billion) mutual fund AUM increase to $54 billion.

Virtus' Aylward describes the AllianzGI deal as "strategically meaningful" for Virtus "in terms of scale." And he hints at AllianzGI powering new Virtus products, too.

"We look forward to bringing AllianzGI's multi-asset, thematic equity, and alternative strategies to our fund and separate account offerings, and the opportunity to partner on joint product development underscores the growth-oriented nature of the alliance," Aylward states.

AllianzGI's Pross describes the Virtus deal as "truly complementary."

"Combining AllianzGI's ongoing portfolio management expertise with Virtus' strong, focused retail distribution and administrative capabilities is a recipe for mutually beneficial growth in U.S. funds and separate accounts," Pross states. "It will allow us to focus our U.S. distribution efforts on the Institutional, Insurance, Sub-Advisory and Non-Resident markets, which are more closely aligned with our strengths in other markets."

The AllianzGI-Virtus deal comes as Malie Conway, formerly chief investment officer of global fixed income strategies at AllianzGI, is crossing to this side of the pond to take over as U.S. distribution chief after the CEO of AllianzGI's U.S. business left last month. The deal also comes as Allianz Investment Management (part of Allianz Life Insurance Company of North America, an AllianzGI sibling) is entering the ETF business.

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