Victory Capital has been sold (free registration required) by parent KeyCorp Bank to Crestview Partners and management for $246 million. Victory had been a player in the DCIO market, beginning when KeyCorp not only owned a record keeper (which was sold to Principal in 2002; see our Consolidation List), but also broker dealer McDonald Securities (which was active in the DC market and was sold to UBS in 2006).
While some banks like Bank of America are doubling down on the retirement market and seeing record sales, it seems like KeyCorp has cashed out altogether with the sale of their their DCIO firm — their final chip on the DC table.
Assets at Victory were reported to be $22.1 billion, with a mix of equities and fixed income. Will the sale to a private equity firm revive Victory, which seemed to be retreating — with DCIO head John Kutz leaving in 2011 for Legg Mason — or will there be pressure to squeeze out more earnings by Crestview, limiting investments? Generally, Wall Street and private equity firms have not been bullish on long-only actively managed equity groups — a possible opportunity for private equity firms flush with cash.
Scott T. Neeb, National Manager, Retirement Sales at Victory Capital Management Inc., said, “Having spent 16 years in the retirement business, I am proud of Victory's commitment to the DCIO space, and our sales are stronger than ever. In 2012, our retirement business had a record breaking year, with total gross mutual fund sales of more than $1.46 billion versus approximately $1.02 billion in 2011, a 43% increase. We are excited about our new partnership with Crestview and look forward to continuing to grow our retirement business.”
For plan advisors using Victory or thinking of using them, the question is whether they’re committed to the DCIO market, which is only getting rougher and more expensive to navigate — especially as TDFs take a greater percentage of the DC pie.
Editor’s Note: This post, originally written on Feb. 22, was revised to add the second-to-last paragraph on Feb 25.
