Victory Capital has agreed to acquire New York-based Harvest Volatility Management LLC, a derivative asset management firm. No financial terms were disclosed. RBC Capital Markets and Barclays Capital Inc served as financial advisers to Victory Capital on the deal while Willkie Farr & Gallagher LLP provided legal advice. And, Seward & Kissel LLP acted as legal adviser to Harvest Volatility Management.
CLEVELAND, Sept. 24, 2018 (GLOBE NEWSWIRE) — Victory Capital (NASDAQ:VCTR) (the “Company”) today announced that it has entered into a definitive purchase agreement to acquire Harvest Volatility Management, LLC (“Harvest”). Harvest, which had approximately $12 billion in assets under management (AUM) as of July 31, 2018, is a leader in derivative asset management, specializing in yield enhancement overlay, risk reduction, alternative beta and absolute return investment strategies. Based on AUM for both firms as of July 31, 2018, Victory Capital would on the closing of the transaction have approximately $75 billion in firmwide AUM. This includes approximately $16 billion, or 21% of total AUM, in its Solutions Platform strategies.
Harvest, which is based in New York City, was founded in 2008 by Chief Executive Officer and Portfolio Manager Richard L. Selvala, Jr. and Managing Partner and Chief Risk Officer Curtis F. Brockelman, Jr. Harvest has established a strong track record in managing strategies that enhance yield and reduce asset class risk exposures. Client demand for the firm’s strategies has been strong, resulting in meaningful growth in AUM since the firm’s inception. Harvest was recently named 2017 “Overlay Manager of the Year” by EQDerivatives.
Victory Capital’s integrated multi-boutique business model will enable Harvest to continue to employ its structured and disciplined investment process while remaining an independent brand. Harvest’s seasoned investment team will continue to leverage its proprietary technology platform, which supports its analytic, trading and risk management functions.
“Harvest offers a cutting-edge suite of strategies that are designed to provide investors with risk-managed sources of income, absolute return and varying levels of market exposure,” said David Brown, Chairman and Chief Executive Officer of Victory Capital. “The addition of Harvest as our 10th Investment Franchise aligns squarely with our stated acquisition strategy. The firm is a strong organic grower with highly specialized investment capabilities, which are outcome-oriented, highly customizable and address a specific need in client portfolios.”
“We are excited to become part of Victory Capital’s platform, with its substantial operational resources, highly complementary distribution network, and track record of supporting boutique investment firms,” said Mr. Selvala. “As always, our team will continue to seek to generate attractive risk-adjusted returns for our clients.”
Victory Capital and Harvest are both committed to employee ownership as a means to ensure alignment with current and future clients. Following the acquisition, Harvest’s senior management will be meaningful equity investors in Victory Capital. They also will continue to be significant investors in the strategies that they manage.
Mr. Brockelman added, “Harvest and Victory Capital share a strong entrepreneurial culture and commitment to technology and product innovation. We look forward to leveraging the Victory Capital team’s expertise and capabilities as we evaluate attractive opportunities and solutions for our clients.”
The transaction, which is expected to be accretive to earnings per share, will be financed through a combination of debt, equity and cash on the balance sheet, with the potential for an earn-out, payable to the sellers, over time if certain growth objectives are met. The acquisition is expected to close by the end of the first quarter of 2019, and is subject to regulatory and other customary approvals, conditions and consents, including approval by Harvest’s clients.
Investor Conference Call
Victory Capital will host a conference call and webcast at 10:00 a.m. Eastern Time today, September 24, 2018, to discuss this transaction. The call can be accessed via telephone at 866-465-5145 (domestic) or 409-220-9945 (international). Please reference the Victory Capital Conference Call.
A recorded replay of the conference call will be available shortly after the conclusion of the live call and can be accessed through October 8, 2018 by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international), and entering the Conference ID Number 3198266.
The slide presentation and webcast of the conference call can be accessed on the Events and Presentations page of the Victory Capital’s investor relations website at https://ir.vcm.com.
RBC Capital Markets and Barclays Capital Inc. served as financial advisors and Willkie Farr & Gallagher LLP acted as legal advisor to Victory Capital in this transaction. Seward & Kissel LLP acted as legal advisor to Harvest Volatility Management, LLC.
About Victory Capital
Victory Capital is a global investment management firm operating a next-generation, integrated multi-boutique business model with $63.2 billion in assets under management as of July 31, 2018.
Victory Capital’s differentiated model is comprised of nine Investment Franchises, each with an independent culture and investment approach. Additionally, the Company offers a rules-based Solutions Platform, featuring the VictoryShares ETF brand, as well as custom and multi-asset class solutions. The Company’s Investment Franchises and Solutions Platform are supported by a centralized distribution, marketing and operational environment, in which our investment professionals can focus on the pursuit of investment excellence.
Victory Capital provides institutions, financial advisors and retirement platforms with a variety of asset classes and investment vehicles, including separately managed accounts, collective trusts, mutual funds, ETFs, UCITs and UMA/SMA vehicles.
For more information, please visit www.vcm.com.
About Harvest Volatility Management
Founded in 2008, Harvest Volatility Management is one of the world’s leading derivative asset management firms with approximately $12 billion in assets under management as of July 31, 2018. Harvest is comprised of an expert team with many decades of experience advising on, structuring, and managing volatility and option related strategies. To learn more about the firm, please visitwww.hvm.com.