European asset manager Amundi has agreed to merge its US arm into US-based asset management firm Victory Capital for a 26.1 per cent stake in Victory Capital, with no cash payment involved.

Under the proposals, Amundi will become a strategic shareholder of Victory Capital with two of its representatives joining the Victory Capital board of directors when the transaction closes.

Both parties will simultaneously enter into 15-year reciprocal distribution agreements. The completion of a transaction remains subject to conditions, including regulatory approvals.

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The proposed transaction would increase the range of asset classes available to clients of both firms, including actively managed fixed income, equity, and multi-asset investment strategies offered through a variety of investment vehicles including separately managed accounts, exchange-traded funds, mutual funds, undertakings for collective investment in transferable securities, collective investment trusts, and model portfolios.

Victory Capital is a fast growing, diversified US-based asset management firm with $175bn (£140.5bn) of total client assets, and a proven acquisition track record.

Amundi US currently manages $104bn of assets across a broad array of asset classes, including US and global equity, fixed income and multi-asset investment capabilities for individuals and institutions worldwide.

Under the agreement, Amundi would be the distributor of Victory Capital’s investment offering outside of the US. Victory Capital would become the distributor of Amundi’s non-US manufactured products in the US.

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Amundi US leverages Amundi’s expansive international distribution footprint, managing a significant amount of assets and portfolios on behalf of non-US retail and institutional clients.

The addition of Amundi US as Victory Capital’s largest investment franchise would enhance Victory Capital’s scale, expand its global client base, and further diversify its investment capabilities.

“The proposed transaction with Victory Capital is a unique opportunity to strengthen our presence in the US,” Amundi chief executive officer Valérie Baudson said.

“The combination would provide a significant catalyst for growth for Amundi. Overall, this is a compelling proposition for our clients and our employees; it would also be a value-creating deal for our shareholders with significant prospects for both revenue growth and synergies.”

Victory Capital chairman and chief executive officer David Brown added: “Bringing the Amundi US business on to our platform increases our size and scale, adds new investment capabilities, and further strengthens our US. distribution with the addition of new talent and relationships.

“At the same time, the distribution agreement would immediately position our products for success through Amundi’s extensive and effective distribution channels throughout the world. Financially, the transaction would create shareholder value, be accretive to earnings, and increase our financial flexibility.” 

The transaction is expected to be accretive for the shareholders of both Victory Capital and Amundi, increasing adjusted net income and earnings per share for both companies.

The parties are working toward a definitive agreement, which is expected to be announced by the end of the second quarter.

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