Hartford wealth manager Virtus Investment Partners Inc. plans to take a majority stake in Stamford’s Sustainable Growth Advisers, an investment manager specializing in high-conviction U.S. and global growth equity portfolios.
Under the terms of the agreement, Virtus would buy the equity interest held by Estancia Capital Management, a private equity firm in Scottsdale, Arizona, as well as a portion of the equity held by Sustainable Growth Advisers’ partners, including its three co-founders: George Fraise, Gordon Marchand and Rob Rohn.
According to Virtus, key investment professionals will retain the remaining equity in the company, enter into long-term employment agreements and reinvest a portion of their after-tax proceeds from the transaction into the company’s investment strategies.
As a Virtus-affiliated boutique, SGA will retain autonomy over its investment process and maintain its independent structure, culture, brand identity and control over day-to-day activities.
SGA managed $11.6 billion in assets in U.S., global and international growth equity strategies as of Dec. 31. It primarily manages assets in institutional separate accounts and subadvisory mandates for clients in the U.S., Europe, the Middle East and Asia-Pacific regions.
“We knew we wanted a partner that shares our client-focused vision and would help us ensure continuity of our investment approach and company culture,” said Rohn, founding principal, analyst and portfolio manager at SGA.
The transaction is expected to close in mid-2018, subject to customary closing conditions and client approvals. Virtus expects to finance the transaction using balance sheet resources and available capacity on its credit facility, or may seek additional sources of debt financing, depending on market conditions.
Last week Virtus reported net income of $3.4 million for the three months ended Dec. 31 – down from $12.4 million from the year-ago period, and revenue of $128 million, up from the $79.9 million it reported a year earlier.
For 2017, Virtus posted net income of $28.7 million, down from its 2016 net of $48.5 million, and revenues of $425.6 million, up from $322.6 million a year ago.