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Rating:Near Gotham, a $4.3B-AUM Fund Firm Sells Not Rated 0.0 Email Routing List Email & Route  Print Print
Tuesday, February 02, 2021

Near Gotham, a $4.3B-AUM Fund Firm Sells

Reported by Neil Anderson, Managing Editor

A publicly traded, multiboutique asset manager is poised to buy a 41-year-old mutual fund firm near New York City. Meanwhile, the acquirer is closing another deal and releasing earnings.

George Robert Aylward
Virtus Investment Partners, Inc.
President, CEO
Yesterday, George Aylward, president and CEO of Virtus Investment Partners, Inc. [profile], confirmed that Hartford, Connecticut-based Virtuas has agreed to buy Valhalla, New York-based Westchester Capital Management [profile]. Westchester Capital specializes in event-driven strategies like its flagship offering, the Merger Fund, which accounted for $3.6 billion of the firm's roughly $4.3 billion in AUM as of December 31. (Virtus, by comparison, had $130.7 billion in AUM on December 31.)

Separately, yesterday the Virtus team confirmed the close of their long-awaited Allianz Global Investors deal, adopting AllianzGI's retail asset management offerings and bringing over one of its boutiques while keeping AllianzGI on as a subadvisor. Then this morning Virtus released its Q4 2020 earnings report.

The Virtus-Westchester Capital deal comes a decade after PMs Roy Behren and Michael Shannon, with help from Lincoln Peak Capital Management, bought out Westchester Capital's retiring founder, Frederick Green. As of Westchester Capital's most form ADV, filed last week, Shannon and Behren each indirectly owned between 25 and 49 percent of the company, while a Lincoln Peak affiliate owned between 10 and 24 percent. According to the Virtus team, Behren and Shannon are staying on after the deal (with "long-term employment agreements") and they're investing much of the money from the sale into Westchester Capital's own strategies.

The deal is expected to close in the second half of 2021. UBS advised Virtus on the deal, while Piper Sandler & Co. advised Westchester Capital. On the legal side, Goodwin Procter LLP advised Virtus, while Berkowitz, Trager & Trager, LLC and Morgan, Lewis & Bockius LLP advised Westchester Capital.

Westchester Capital, which Green founded in 1980 and which launched its first mutual fund in 1989, now has 18 employees (not counting clerical staff), according to its form ADV. Per the Virtus statement, the Westchester Capital folks will be able to maintain their own "independent team, culture and brand identity."

Aylward lauds Westchester Capital as "the premier provider of event-driven strategies with a long, proven track record of attractive investment performance." For their part, Shannon and Behren praise Virtus as "an extraordinarily high-quality institution."

"Becoming an affiliate of Virtus will be seamless and smooth transition, giving us access to Virtus' scale, resources and efficiencies," Behren and Shannon state. "Virtus' multi-boutique model is the perfect environment to allow our portfolio team to focus exclusively on investment management and also allow our product specialist team to continue providing the information flow and manager access that our investors have enjoyed over the past three decades." 

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