Summary of Virtus Investment Partners Conference Call Company Overview - **Company**: Virtus Investment Partners (NYSE: VRTS) - **Acquisition Target**: Keystone National Group - **Transaction Date**: Announcement on December 5, 2025 - **Transaction Value**: $200 million for a 56% majority stake, with up to $170 million in deferred consideration over two years [11][12] Key Points and Arguments Strategic Rationale - The acquisition of Keystone National Group aims to expand Virtus's investment capabilities to include private market strategies, particularly in asset-based lending [4][5] - Keystone specializes in asset-centric private credit, which is expected to meet the growing demand for differentiated private market strategies [5][6] - The transaction is anticipated to be immediately accretive to margins and Non-GAAP EPS upon closing in Q1 2026 [6][13] Financial Performance - Keystone has shown strong financial performance with a revenue and EBITDA CAGR exceeding 35% over the past three years [5] - The firm has grown assets under management to $2.5 billion, primarily through the RIA channel [7] - Keystone's flagship fund, the Keystone Private Income Fund, has gained traction with leading wealth managers due to its attractive performance [9][10] Investment Strategy - Keystone's asset-based lending approach is characterized by secured financing, shorter durations, and strong covenants, providing more downside protection compared to traditional private credit strategies [9][18] - The firm focuses on collateralized loans, ensuring that the underlying assets are critical to the borrower's operations [33] Market Position and Growth Opportunities - The acquisition is expected to enhance Keystone's ability to manage its strategies while benefiting from Virtus's support model, including distribution and marketing capabilities [10][11] - There are significant growth opportunities in both retail and institutional channels, with plans to expand Keystone's existing capabilities [36][37] Financial Impact - The transaction is projected to improve operating margins by approximately 200 basis points and contribute about $1.50 to adjusted EPS in 2026 [13] - Anticipated annual tax savings of approximately $5 million due to intangible assets created by the transaction [13] Additional Insights - The management teams of both companies share similar philosophies, emphasizing investment excellence and long-term value creation [6] - Keystone's management will retain significant equity and has entered into long-term employment agreements to ensure continuity [6][12] - The firm has a strong track record of sourcing and origination, focusing on smaller ticket sizes in less crowded market segments [29][30] Conclusion - The acquisition of Keystone National Group represents a strategic move for Virtus Investment Partners to enhance its private market offerings and capitalize on growth opportunities in the wealth management space. The transaction is expected to provide immediate financial benefits and align with the company's long-term strategic objectives.

What banks don't know about private credit can hurt them (via @opinion) https://t.co/tRQnRF88Yb ...

Core Viewpoint - The Bank of England is conducting a stress test on the private equity sector to assess its resilience in a hypothetical financial crisis, highlighting concerns over the opacity and risks associated with the $11 trillion shadow banking market [1][2][3]. Group 1: Stress Test Overview - Major financial groups such as KKR, Blackstone, Apollo, and Goldman Sachs Asset Management are participating in the stress test [2]. - The system-wide exploratory exercise (SWES) will be conducted next year, with full conclusions expected by 2027 [3]. Group 2: Market Growth and Employment Impact - The private equity and private credit sectors have expanded from $3 trillion to $11 trillion in assets over the past decade [4]. - In the UK, 10% of private sector workers are employed by private equity-backed companies, which account for 15% of corporate debt and a significant portion of riskier lending [4]. Group 3: Recent Market Concerns - The collapse of American companies First Brands and Tricolor has raised alarms about potential risks in the private credit market, which heavily relies on lending to companies rather than banks [5]. - A downturn in private markets could adversely affect banks that lend to private equity-backed firms, potentially undermining financial stability and economic growth [5]. Group 4: Employment and Economic Risks - Private equity-owned companies currently employ approximately two million people in the UK, indicating a significant impact on employment [6]. - A rapid contraction of companies backed by private equity could lead to increased unemployment and negatively affect related markets, such as housing and mortgage lending [6]. Group 5: Industry Characteristics and Risks - The rapid growth of private credit is characterized by its opacity and illiquidity, which may lead to adverse outcomes [7].

Core Viewpoint - Treasury Secretary Scott Besson expressed concerns about the procyclical nature of private credit, suggesting that in an economic downturn, investor panic could exacerbate financial instability [1][2] Group 1: Private Credit Concerns - Besson's worry is that private credit, being investor-financed, may lead to panic during economic downturns, unlike government entities that can provide stability [2] - The procyclical nature of private credit could result in investors withdrawing during downturns, which may worsen financial conditions [1][2] Group 2: Private Credit's Role - Private credit has been a stabilizing factor in the financial markets, particularly during crises like the collapse of Silicon Valley Bank, providing necessary capital when public markets were unavailable [5][6] - Investors in private credit typically view it as a long-term allocation, with strategies spanning 5 to 20 years, rather than a short-term trade [8] Group 3: Investment Strategies - Companies like Blue Owl Capital, which manage significant assets in private credit, emphasize a conservative approach, focusing on stable returns rather than high-risk, high-reward opportunities [12][13] - The strategy involves securing long-term contracts with high-quality credits, such as those from major hyperscalers, to mitigate risks associated with technology and market fluctuations [13][16]

Treasury Secretary Scott Besson addressing investors brewing concerns about private credit yesterday at the Dealbook Summit. >> I have a different worry about private credit than other people do. My my worry is that in a downturn it could be very proyclical that because it is financed by investors I if there was a some kind of financial instability if there was a downturn in the economy Treasury through the regul and the regulators and the Fed we can give window guidance to the regulators to loosen lending ...

India’s DMI Alternatives raised $120 million for its inaugural private credit fund and hired former Ontario Municipal Employees Retirement System investor Harein Uppal to lead it. The fund’s focus is to invest in sectors that benefit from long-term growth trends driving India’s economic expansion, including health care, technology and financial services, according to the firm. It will provide financing “tailored to Indian companies well-positioned for sustainable growth.”Private credit activity is surging i ...

Apollo CEO Marc Rowan writes some media reports fail to note some facts about private credit, as fears build around the asset class. Bloomberg Chief Wall Street Correspondent Sridhar Natarajan goes over Rowan's so-called myths on "Bloomberg Markets" with Vonnie Quinn. ...

Core Insights - The article discusses recent issues affecting Private Credit options, highlighting specific hazards that have emerged in recent months and their varying relevance to different sectors [1]. Group 1: Industry Analysis - The focus is on the qualitative investigative research methods applied to Closed-End Funds and other underfollowed securities, indicating a niche area of analysis within the investment landscape [1]. - The article emphasizes the importance of understanding the unique risks associated with Private Credit, which may differ significantly across various investment vehicles [1]. Group 2: Analyst Background - Dan Plettner, the analyst, has extensive experience in investment, having started in his teenage years and holding a degree from Miami University, along with an MBA from New York University [1]. - His professional background includes a role as a Closed-End Fund Product Specialist at Morgan Stanley, showcasing a strong foundation in financial analysis and investment strategies [1].

Core Viewpoint - Ares Management presents a potential buying opportunity for investors willing to take a risk on possibly overstretched private credit [1] Group 1 - Ares Management is identified as a company that may benefit from current market conditions [1] - The private credit market is suggested to be experiencing stress, which could create investment opportunities [1]

VettaFi recently sat down with Christopher Getter of Simplify Asset Management to discuss the role of private credit in portfolios and the unique structure of the Simplify Private Credit Strategy ETF (PCR), which is currently yielding 12.27%. From an advisor's perspective, however, successfully investing in private credit entails some important considerations. There are four which I think merit mention. The first is liquidity: Private credit is a less liquid asset class and we have built in some guardrails ...