Piper Cuts Virtus (VRTS) Target but Stays Positive on Credit Fundamentals

Core Viewpoint - Virtus Investment Partners, Inc. is actively expanding its presence in the private credit market through the acquisition of Keystone National Group, which is expected to enhance its asset management capabilities and provide innovative investment strategies to clients [3][4]. Group 1: Company Developments - Piper Sandler analyst Crispin Love has lowered the price target for Virtus to $218 from $225 while maintaining an Overweight rating, indicating a positive outlook on the company's credit fundamentals [2]. - Virtus has reached a definitive agreement to acquire a majority stake in Keystone National Group for $200 million at closing, with potential additional payments of up to $170 million based on future revenue targets [4]. - The acquisition is expected to close in the first quarter of 2026, with RBC Capital Markets and Goodwin Procter LLP advising Virtus on the transaction [5]. Group 2: Market Context - Deal activity in the asset management sector is increasing, with a focus on private credit amid concerns over rising defaults; however, these fears are viewed as overblown due to solid loan-to-value ratios of 30%-40% [3]. - The acquisition of Keystone allows Virtus to offer innovative asset-centric private credit strategies, catering to clients seeking alternative income sources and diversification beyond direct lending [4].