MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication
an InvestmentWires' Publication
|
|
MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication |
|
Friday, January 27, 2017 Virtus Raises RidgeWorth Cash, and a Hedge Fundster Speaks Out George Aylward is taking key steps towards his transformational deal, even as an activist shareholder is speaking out on the financing.
"As a significant Virtus shareholder we are sensitive to the Company's limited disclosure on how it plans to finance the proposed acquisition of RidgeWorth, creating uncertainty about the magnitude of value creation," states Shawn Badlani, a partner at Marcato. "We believe management, the Board, and the investment community would benefit from reviewing our analysis on how Virtus can best maximize value." Reuters reported on Marcato's public request and presentation, describing the firm as an "activist hedge fund" and estimating that it owns about a 1.4 percent stake in Virtus. The RidgeWorth deal, expected to close in the middle of this year, is a huge one for Virtus. Last month, shortly after unveiling the deal, Virtus CEO Aylward told MFWire that buying RidgeWorth "obviously is a more transformational opportunity" for Virtus. Indeed, adding RidgeWorth's $40.2 billion in AUM would boost Virtus to $86.8 billion in AUM, nearly double its current size. And the $513-million overall price tag on the deal amounts to a whopping 75.9 percent of Virtus' current $675.97-million market capitalization. Put another way, the $513-million price is nearly three times the $180.22 million in cash that Virtus had at the end of Q3 2016. Virtus describes the secondary offerings as one of four pieces to the deal's payment puzzle. The other three pieces are: cash on hand ($180.22 million at the end of Q3, as noted above), "proceeds from the sale of investments," and debt financing. The Marcato folks want Virtus to rely mostly on cash on hand to solve that puzzle. On the flip side of the Virtus-RidgeWorth deal, the pricing looks pretty good for RidgeWorth's current primary backer, Lightyear Capital. Lightyear helped RidgeWorth spin out of SunTrust in 2014 in an up to $265-million deal. Three years later, the $513-million price tag is nearly double that $265-million valuation. Printed from: MFWire.com/story.asp?s=55603 Copyright 2017, InvestmentWires, Inc. All Rights Reserved |
