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.

Core Viewpoint - Virtus Investment Partners has announced a definitive agreement to acquire a majority interest in Keystone National Group, enhancing its offerings in private markets with asset-backed lending capabilities [1][3]. Company Overview - Virtus Investment Partners operates a multi-manager asset management business and is committed to the long-term success of individual and institutional investors [8]. - Keystone National Group, founded in 2006, specializes in asset-centric private credit and has managed $2.5 billion as of October 31, 2025, deploying over $6 billion in more than 750 transactions [2][7]. Transaction Details - The acquisition involves a purchase price of $200 million at closing, with an additional $170 million in deferred consideration based on future revenue targets [3]. - The transaction is expected to close in the first quarter of 2026, subject to customary closing conditions, and is anticipated to be accretive to earnings in 2026 [5]. Strategic Implications - The partnership with Keystone allows Virtus to offer innovative asset-centric private credit strategies, catering to clients seeking alternative income sources and diversification beyond direct lending [3][5]. - Keystone will maintain its autonomy over investment processes and day-to-day operations, preserving its culture and brand identity post-acquisition [4]. Management and Team - Keystone's management team will retain significant equity and enter into long-term employment agreements, ensuring continuity in leadership and operations [4]. Market Position - Keystone's flagship fund, the Keystone Private Income Fund, has strong support from wealth managers due to its stable performance compared to other private credit and income-oriented funds [2]. - The acquisition positions Virtus to capitalize on increasing investment opportunities in the asset-backed credit space [5].