With a little private equity help, Victory Capital Management's [profile] employees are spinning the company off from KeyCorp. Today New York City-based private equity shop Crestview Partners revealed a $246 million buyout of the $22.1 billion Cleveland-based asset manager and mutual fund shop.

Upon completion of the transaction, Victory will be an independent firm with the senior management team, PMs and other employees owning a significant amount of the outstanding equity. Under the new ownership structure, David Brown and Christopher Ohmacht will continue to lead Victory and will be appointed to the company's new board of directors, along with two representatives from Crestview and three independent directors. Brown will become the CEO, and Ohmacht will become president.

The $246-million purchase price corresponds to a 1.11 percent of Victory's assets under management. The transaction is expected to close in the third quarter.

As of December 31, Victory managed and advised approximately $22.1 billion in equity and fixed income assets on behalf of its institutional and individual investors. It is also the investment advisor to The Victory Funds, a collection of 19 mutual funds, offering a variety of share classes. The firm also offers retail and retirement clients Separately Managed Accounts through wrap fee programs and access to its investment models through Unified Managed Accounts. Victory had $7.4 billion in retail assets under management and advisement as of December 31.

Victory was previously owned by banking conglomerate KeyCorp

According to a statement by Keycorp., the sale price consists of $201 million of cash at closing and a seller note. The initial face amount of the note will be $45 million, with its final value determined at the end of 2013. �KeyCorp estimates the after-tax gain on the closing of the transaction in the range of $145 to $155 million, subject to final valuation of the note. The business to be sold represented $112 million in revenue and $88 million in expense of KeyCorp's financial results in 2012.

"For Key, the divestiture is consistent with our strategic focus on businesses that leverage the competitive advantages of our core relationship banking model," stated Key chair and chief executive Beth Mooney.� "In addition, this transaction partners Victory with a widely recognized acquirer, allowing Victory to operate as a pure play investment management business, with management owning an equity position."

Morgan Stanley & Co. LLC acted as exclusive financial advisor and Sullivan & Cromwell LLP provided legal advice to KeyCorp.

The sale is expected to close during the third quarter of 2013.� It was approved by the Victory Mutual Fund Board of Directors, and is subject to customary closing conditions and consents of the Victory Mutual Fund shareholders and certain investment advisory clients.

Company Press Release

Crestview Partners Teams with Victory Capital Management's Employees to Acquire Firm from KeyCorp

NEW YORK, Feb. 21, 2013 -- Crestview Partners, a leading private equity firm based in New York, has teamed with employees of Victory Capital Management to acquire Victory for $246 million. Upon completion of the transaction, Victory will be an independent firm with the senior management team, portfolio managers and other employees owning a significant amount of the outstanding equity. The transaction is expected to close in the third quarter.

As of December 31, 2012, Victory managed and advised approximately $22.1 billion in equity and fixed income assets on behalf of its institutional and individual investors. Under the new ownership structure, David Brown and Christopher Ohmacht will continue to lead Victory and will be appointed to the company's new Board of Directors along with two representatives from Crestview and three independent directors. Brown will become the Chief Executive Officer, and Ohmacht will become President.

Victory will continue to operate under its present brand name and remain headquartered in Cleveland, Ohio with offices in New York, NY, Cincinnati, OH, Denver, CO and Tampa, FL.

David Brown stated, "We are pleased to partner with Crestview, a firm that is well known and respected for its asset management expertise and integrity. This new ownership structure will preserve our successful multi-boutique operating model and provide an opportunity for real equity ownership to our employees that will align our interests with those of our clients, today and well into the future."

Mr. Brown continued, "From the day-to-day perspective of our clients and investment professionals, nothing significant will change. Strategically, we will have an ownership structure that provides our firm with the ability to drive future growth and to continue delivering leading investment performance and high quality service to our clients."

Richard DeMartini, a Partner at Crestview, added, "We are very pleased to be partnering with the Victory team. Victory is an outstanding firm with excellent investment talent and distribution expertise. The company is very well managed, under the leadership of David Brown and Christopher Ohmacht. Victory has a team of outstanding portfolio managers with a history of strong investment performance."

For many years Victory has operated with autonomy over its strategic business and investment processes. Recently, Victory completed several meaningful enhancements to its technology and operations infrastructure, including outsourcing its technology platform to Citi. These changes have minimized the company's reliance on its parent company and will enable the team to complete this transaction in a seamless manner.

Victory will continue to operate with nine autonomous investment teams, each retaining authority for investment decision making while being supported by the broader Victory organization for risk management, trading, research, sales, client service, compliance, technology and operations. The individual Chief Investment Officer and team that manage each portfolio will not experience any significant change in the resources received from Victory.

About Victory Capital Management

Victory Capital Management is headquartered in Cleveland, Ohio with offices in New York, Cincinnati, Denver and Tampa. As of 12/31/12, Victory had $22.1 billion in assets under management and advisement with 144 employees.

The firm provides investment advisory services to institutional clients including corporations, non profits, public funds, Taft-Hartley and sub-advisory clients. Victory offers international and domestic equity and domestic fixed income products to these investors through separate accounts and commingled funds. Institutional assets under management at 12/31/12 totaled $14.7 billion.

Victory is the investment advisor to The Victory Funds, a collection of 19 mutual funds, offering a variety of share classes. The firm also offers retail and retirement clients Separately Managed Accounts through wrap fee programs and access to its investment models through Unified Managed Accounts. Victory had $7.4 billion in retail assets under management and advisement as of 12/31/12.

About Crestview Partners

Crestview Partners is a value-oriented private equity firm based in New York with approximately $4 billion of capital under management. The firm is led by former partners and leaders in the private equity business and senior management of Goldman Sachs and Morgan Stanley. Crestview's investment strategy is focused in four sectors: financial services, media, energy and healthcare.

Company Press Release

KeyCorp To Sell Victory Capital Management And Affiliate For $246 Million

Company Release - 02/21/2013 08:34

CLEVELAND, Feb. 21, 2013 -- KeyCorp (NYSE: KEY) announced today that it has agreed to sell the company's investment management subsidiary Victory Capital Management and its broker dealer affiliate Victory Capital Advisers to a private equity fund sponsored by Crestview Partners for $246 million in cash and debt, subject to adjustment at closing. Key intends to seek regulatory approval to use the gain from the sale to repurchase shares of its common stock.

"For Key, the divestiture is consistent with our strategic focus on businesses that leverage the competitive advantages of our core relationship banking model," said Chairman and CEO Beth E. Mooney. "In addition, this transaction partners Victory with a widely recognized acquirer, allowing Victory to operate as a pure play investment management business, with management owning an equity position."

The sale price consists of $201 million of cash at closing and a seller note. The initial face amount of the note will be $45 million, with its final value determined at the end of 2013. KeyCorp estimates the after-tax gain on the closing of the transaction in the range of $145 to $155 million, subject to final valuation of the note. The business to be sold represented $112 million in revenue and $88 million in expense of KeyCorp's financial results in 2012.

Victory Capital Management has approximately $22 billion of assets under management and offers a wide range of investment strategies and vehicles for institutional and individual clients. Victory Capital Advisors, a registered broker dealer, provides mutual fund distribution services.

Crestview Partners is a value-oriented private equity firm based in New York City, with approximately $4 billion of capital under management.

The sale is expected to close during the third quarter of 2013. It was approved by the Victory Mutual Fund Board of Directors, and is subject to customary closing conditions and consents of the Victory Mutual Fund shareholders and certain investment advisory clients.

Morgan Stanley & Co. LLC acted as exclusive financial advisor and Sullivan & Cromwell LLP provided legal advice to KeyCorp.

About KeyCorp
Key traces its history back more than 160 years and is headquartered in Cleveland, Ohio. One of the nation's largest bank-based financial services companies, Key has assets of approximately $89.2 billion on December 31, 2012.

Key provides deposit, lending, cash management and investment services to individuals and small businesses through its 14-state branch network under the name KeyBank National Association. Key also provides a broad range of sophisticated corporate and investment banking products, such as merger and acquisition advice, public and private debt and equity, syndications and derivatives to middle market companies in selected industries throughout the United States under the KeyBanc Capital Markets trade name. For more information, visit https://www.key.com/. KeyBank is Member FDIC.

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts but instead represent management's current expectations and forecasts regarding future events many of which are inherently uncertain and outside of Key's control. Key's actual results may differ, possibly materially, from the anticipated results indicated in these forward-looking statements. Factors that could cause Key's actual results to differ materially from those described in the forward-looking statements can be found in Key's Annual Report on Form 10-K for the year ended December 31, 2011, which has been filed with the SEC and is available on Key's website at www.Key.com/IR and on the SEC's website at www.sec.gov. Forward-looking statements are not guarantees of future performance and should not be relied upon as representing management's views as of any subsequent date. Key does not undertake any obligation to update the forward-looking statements to reflect the impact of circumstances or events that may arise after the date of the forward-looking statements.

SOURCE KeyCorp

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