Lightyear Capital to sell RidgeWorth after nearly three-year hold

Lightyear Capital will more than double its money with its sale of RidgeWorth Holdings LLC.

Virtus Investment Partners said Dec. 16 that it’s buying RidgeWorth, the holding company for RidgeWorth Capital Management, for $472 million. The transaction is expected to close in mid-2017.

Lightyear, a financial services focused PE firm, acquired RidgeWorth in June 2014. It agreed to pay up to $265 million, implying that Lightyear will at least double its money with the sale. “We will do a little better than that,” Mark Vassallo, Lightyear’s managing partner, said in an interview with Buyouts.

Virtus is also buying certain investments which, at their fair value at the close, will boost the deal value to about $513 million, a statement said. Morgan Stanley Senior Funding Inc and Barclays Capital are providing $475 million in debt financing.

Atlanta-based RidgeWorth invests bonds and stocks for retail clients. It had about $40.2 billion in assets under management as of Sept. 30. The sale to Virtus includes three boutiques owned by RidgeWorth: Seix Investment Advisors, Ceredex Value Advisors and Silvant Capital Management. RidgeWorth also owns a minority stake in Zevenbergen Capital Investments, a growth equity boutique. Virtus said it plans to operate the boutiques separately.

New York-based Lightyear targets middle market financial services, including asset management, financial technology and insurance companies in North America. Chairman Donald Marron founded Lightyear in 2000. Marron is the former chairman and CEO of Paine Webber Group, which was sold to UBS AG in 2000 for $10.8 billion.

Lightyear’s sale of RidgeWorth was not an auction, Vassallo said. Virtus approached Lightyear in the fall, which spurred sale talks, he said. “It was the right time” to sell the business, Vassallo said.

The PE firm used its third fund to invest in RidgeWorth. Lightyear Fund III collected $950 million in capital commitments in 2012.

“We’re pleased with the outcome for the fund and employees and the company,” he said.

Lightyear is fundraising for its fourth fund, which has a $1.2 billion hard cap, Buyouts has reported. Vassallo declined comment on the fundraising.

Peter Spinelli of RBC Capital Markets was financial adviser for RidgeWorth while Davis Polk & Wardwell was its attorney. Barclays Capital and Morgan Stanley & Co were financial advisers to Virtus and Willkie Farr & Gallagher offered legal advice.

Action Item: To contact Virtus email Jeanne Hess here

A man wears U.S. dollar sign rings in a jewelry shop in Manhattan on Nov. 6, 2014.  Photo courtesy REUTERS/Mike Segar