Victory Capital Holdings, a San Antonio-based publicly traded asset manager of $348.8 billion, has agreed to buy First Eagle Investments, an independent, privately held global asset manager, for about $7 billion.
The addition of New York-based First Eagle, with $222 billion in assets under management, will create a global giant managing about $571 billion in total client assets, Victory said in its news release. When the firms are combined, the new entity will also have annual revenue of about $3.2 billion.
Victory Capital is buying First Eagle from private equity firm Genstar Capital and First Eagle employees, paying $4.4 billion in cash and $2 billion in newly issued Victory Capital equity.
Following the expected close of the transaction in the first quarter of next year (pending regulatory approval and other conditions), Genstar is expected to own about 14.6% of Victory Capital on a fully diluted, as-converted basis, according to the release.
Adding First Eagle will make Victory Capital one of the largest publicly traded traditional asset managers in the U.S., expanding its distribution reach across several channels while broadening its investment capabilities.
First Eagle’s diversified product lineup spans global multi-asset, equities, fixed income, and a scaled alternatives platform that includes collateralized loan obligations and alternative credit, Victory Capital noted in the release.
Furthermore, Victory Capital said it’s adding an asset manager that has produced positive net cash flows in each of the last three years, and the deal could be about 35% accretive or additive to adjusted earnings per share estimate for 2027.
First Eagle will operate on Victory Capital’s platform, while retaining its brand, investment autonomy and existing investment processes.
Victory Capital’s chairman and CEO, David Brown called the transaction “transformational” and will add “highly complementary” investment capabilities.
“It makes our company better, more competitive and more resilient through all market cycles,” said Brown, who will remain CEO and chairman of a board of directors that will be expanded to 11 members. “Our clients gain access to a broader set of investment capabilities and deeper resources, and our shareholders benefit from the enhanced scale and earnings power of the combined company.”
In the release, First Eagle’s president and CEO, Mehdi Mahmud, emphasized the benefit to his firm’s clients and the ability of his investment team to continue to operate freely while adhering to the investment philosophies and processes it has always followed.
“I expect the combined company’s scale, status as a publicly traded company, and ability to invest in the business for the long term will be a source of strength in the years ahead,” he said. “The key stakeholders in our business have enthusiastically affirmed their support for this transaction.”
PJT Partners is acting as lead financial advisor to Victory Capital, with RBC Capital Markets as an additional financial advisor, according to the release. The firm’s legal advisor is Willkie Farr & Gallagher LLP.
First Eagle is using UBS Investment Bank as lead financial advisor and BofA Securities as an additional advisor, according to the release. Ropes & Gray LLP is acting as legal advisor to First Eagle and Davis Polk & Wardwell LLP is acting as legal advisor to its management.