Scott Ball / Rivard Report
USAA announced that an Ohio investment company will acquire its asset management company in a deal worth $850 million.
Victory Capital Holdings, a global investment management firm with $63.6 billion in assets under management, will acquire USAA’s mutual fund and exchange-traded fund businesses as well as the USAA 529 College Savings Plan. Under the agreement announced Tuesday, USAA Asset Management Company will become Victory Capital’s 11th investment franchise and Victory Capital will have the rights to offer products and services using the USAA brand.
The transition will improve the competitiveness of USAA’s banking and insurance products, according to a statement from the company, and is expected to be complete by the second quarter of 2019. It will take 12 to 18 months to transfer USAA mutual fund and ETF accounts to Victory Capital.
USAA members are not being asked to take any action on their accounts, and USAA will distribute what it called an “appropriate” portion of the sale to members when the company makes its annual subscriber savings dividend distribution in 2019.
In an email to members Tuesday, USAA CEO Stuart Parker said the move will provide members with double the number of mutual fund selections and triple the ETFs available at competitive prices.
As of Sept. 30, USAA Asset Management Company had $69.2 billion in assets under management in 53 investment funds.
Victory Capital is expected to establish an office in San Antonio and offer positions to more than 300 USAA employees. But about 100 additional employees whose jobs may be eliminated will receive transition support from USAA.
In a quarterly earnings call on Wednesday, Victory Capital’s leadership stated the acquisition will significantly diversify its assets under management and expand Victory’s investment capabilities as well as substantially increase the company’s size and scale. The purchase also gives Victory access to a new direct-member distribution channel “with an extremely loyal member base.”
Victory Capital said it also plans to develop a nationwide financial literacy platform designed to support the military community, USAA members, and their families.
“It increases our size and scale, enhances our ability to attract and retain top investment talent, and leverages our investments in critical components of our business, such as technology, operations, investment support and client service, across a broader base of assets,” stated David Brown, chairman and CEO of Victory Capital.
USAA is a $30 billion financial services firm that serves over 12.7 million members and employs nearly 34,000 people, an increase of 1,000 so far in 2018. In September, USAA laid off 265 employees in its mortgage lending business.
The property and casualty provider to the military that was founded in San Antonio in 1922 began offering its members homeowners and life insurance in the 1960s. It added brokerage and investment management services in the 1970s and opened the USAA Bank a decade later.
“We continually look to deliver on our mission, facilitating the financial security of members through highly competitive products and services for the military community,” Parker said. “We believe Victory Capital is well positioned to provide a broader selection of leading-edge investment solutions to our members over the long term while maintaining the high standards of service that our members expect.”