New York-based Guardian Life put RS Investments up for sale earlier this summer, Reuters reported. Morgan Stanley is advising. The auction is currently in the second round, a source said.
Bidders include RidgeWorth Investments, Victory Capital, Virtus Investments Partners Inc, and two private equity firms, two sources said.
The identify of the two PE firms is unclear. However, RidgeWorth is backed by Lightyear Capital. Crestview Partners, meanwhile, owns Victory Capital.
It is unclear how much Guardian is seeking for RS, whose EBITDA has been shrinking, said one of the sources, a banker. RS, of San Francisco, is an investment manager with $19.8 billion in assets under management as of July 31, the firm’s website said. Guardian Life bought RS in 2006 when the asset manager reportedly had $11.8 billion in AUM.
Crestview-backed Victory will likely be the winner of RS, the banker predicted. “They’ve made other acquisitions and already put Munder and Victory together,” the banker said.
Brooklyn, Ohio-based Victory had about $35.7 billion in AUM as of June 30. In April, Victory acquired Compass Efficient Model Portfolios. It also closed its merger with Crestview portfolio company Munder Capital Management in December. Crestview tried to sell Munder in 2013 but pulled the auction after getting low bids. It chose to merge it with Victory last year.
In May, Virtus severed ties with F-Squared Investments but its mutual funds are still seeing outflows, Barron’s reported in July, citing Goldman Sachs Group analyst Alexander Blostein. F-Squared is the ETF strategist that agreed to pay $35 million to regulators last year to settle fraud charges. Broadmeadow Capital is buying pieces of F-Squared, which filed for Chapter 11 bankruptcy protection last month.
Executives for Guardian, RS, Crestview, Morgan Stanley and Virtus declined comment. Ridgeworth, Lightyear and Victory couldn’t be reached for comment.