Victory Capital Holdings, Inc. Class A Common Stock M&A announcement

Good morning, everyone, and thank you for joining us. Earlier this morning, we announced that Victory Capital has entered into a definitive agreement to acquire First Eagle Investments. The presentation we will walk through this morning and other important disclosures, including our press release on First Eagle fact sheet, are available on the investor relations section of our website at ir.vcm.com. Speaking today are David Brown, our Chairman and Chief Executive Officer, and Michael Policarpo, our President, Chief Financial Officer, and Chief Administrative Officer. Before I turn the call over to Dave, I would like to remind you that during today's call, we may make several forward-looking statements. Victory Capital's actual results may differ materially from these statements. Please refer to our SEC filings for a list of some of the risk factors that may cause actual results to differ materially from those expressed on today's call.

Victory Capital assumes no duty and does not undertake any obligation to update any forward-looking statements. One additional note, we will not be taking questions this morning. We have built additional detail into our prepared remarks and our presentation to account for this. It is now my pleasure to turn the call over to David Brown, Chairman and Chief Executive Officer.

Dave? Thank you, Carly. Good morning, everyone, and thank you for joining us today.

This morning, we announced a definitive agreement to acquire First Eagle Investments. This is a transformational acquisition for us, and when we close, Victory Capital will have $571 billion in total client assets, approximately $3.2 billion in annual revenue on a combined basis, and be one of the largest publicly traded traditional asset managers in the U.S. This is the beginning of the next chapter in a story we have been purposely building for more than a decade. Every transaction we have done, we've asked ourselves the same question: Will the transaction make our company better?

An expansion of our investment capabilities, increased distribution reach in all of our channels, increased size and scale across our platform, giving us the ability to invest even more in our business in important areas such as technology, artificial intelligence, product development, and most importantly, in our people. The answer to this question is undoubtedly yes. Moving to slide 4. We are adding approximately $222 billion of AUM, and more importantly, we're adding investment capabilities that are additive to what we have today and are managed by exceptional investment teams. We are also adding an at-scale alternatives platform that has a leading CLO business and diversified alternative credit capability with its own specialized operational infrastructure to support the entire alternative platform. The investment teams joining us will keep their brands, investment autonomy, and most importantly, their investment processes.

This methodology has been consistent with every acquisition we have made. For clients, the transition is seamless, and how their money is managed and how they are serviced does not change. This transaction meaningfully expands our distribution reach across the U.S. intermediary channel, the U.S. institutional channel, and internationally. The distribution reach we are acquiring is substantial, and I will share some of the statistics on the next page. Some of the existing relationships that First Eagle has, we already have, and those will simply get better and deeper. For the ones we do not have today, it will expand our reach to new relationships. Both are great outcomes, and together they give us a footprint materially wider than either firm has on its own. This is a very exciting element of the transaction. Regarding international distribution, both firms work with Amundi today.

First Eagle reaches international investors through the Amundi network and has been a long time investment manager for them. Our existing strategic distribution partnership with Amundi is the foundation we will build on from here, and after closing, this becomes an even larger and stronger relationship with a broader and deeper product set to leverage the relationship with. From a financial perspective, the transaction is accretive to earnings. We expect it to be approximately 35% accretive to our 2027 adjusted earnings per share, inclusive of approximately $280 million of net expense synergies. I want to drill down on the net expense synergies because I do not want it to be misunderstood. Synergies are never the reason we do a transaction. They are a byproduct of the strategic elements of the acquisition. They are not the strategic elements. The word net matters here as well.

This is not a plan to cut our way to earnings. We will continue investing in our investment franchises, technology, distribution, operations, and in client experience, as this is what makes our platform better every time we do an acquisition. The net expense synergy number you see, in this case, the projected $280 million, is what remains after we do all of that. This transaction gives us even more size and scale, which is important as the industry continues to require investments as well as operational and distribution breadth to remain competitive. We are acquiring a business that is growing and has been for several years. First Eagle has had positive net flows in each of the last three years and year to date in 2026. This speaks to the quality of their product offerings and the distribution system across the multiple channels they have built.

Slide 5 covers the profile of the business. They have approximately $222 billion in assets under management and approximately $1.5 billion of expected 2026 revenue. As I said previously, they have three consecutive years of positive net flows continuing year to date in 2026. 92% of their rated mutual funds and ETF assets are rated four or five stars overall by Morningstar as of July 31st, 2026. This is a fantastic statistic. The flagship global value multi-asset strategy is top decile over one, three, and five years. They also have a strong investment performance in their fixed income suite. This is a firm with long history, founded in 1864 and headquartered in New York since 1937, with an investment-led culture and 195 investment professionals. It offers its capabilities in multiple vehicle formats to allow clients to access them in structures that work for them.

The distribution reach is substantial, especially in the U.S. intermediary channel. Their products are used today by approximately 103,000 U.S. financial advisors and roughly 3 million end investors. They reach 83% of the Barron's top 1,500 financial advisors and approximately 740 institutional clients around the world. On slide six, you will see that we are acquiring a number of distinct investment capability sets. I would like to first highlight the global value multi-asset platform. At approximately $135 billion, it is a very scaled investment platform. The product and the investment process are unique and differentiated. It is organized around downside mitigation rather than benchmark relative returns, and they invest across asset classes, and it has a four-decade-plus track record. This is very different than any product we have on our platform today.

There are also municipal bond and U.S. small-cap equity platforms under the First Eagle name that are high quality, very differentiated, and managed by excellent investment professionals that have long track records in the industry. Under the brand Diamond Hill, which was acquired by First Eagle recently, there's a well-developed value equities platform, as well as a fixed income platform. Both will be complementary to the offerings that we currently have on our platform in their own unique way. Under the brand Napier Park, the CLO business is approximately $27 billion, and it has been in place since 2013 and is active in the U.S. and in Europe. Additionally, and also under the Napier Park brand, is the alternative credit business. It is very well diversified by underlying asset class, vehicle, and structure.

We've been evaluating alternative credit for several years and understand these asset classes well and believe they will deliver sustained growth with unique and value-added product set. This is an established team with a proven track record, with institutional relationships already in place and the full operational infrastructure to support this business. You can also see the vehicle mix at the bottom of the page. It is well diversified, and the vehicles are set up to reach a wide range of clients. Turning to slide seven, I would like to highlight that our business becomes even more diversified than it is today. You will see that the combined business will now span across even more asset classes and that no specific asset class will account for more than 27%. Our business becomes stronger, more durable, and is set up to perform well in all market environments and cycles.

Before I hand it over to Mike, I want to close on execution. We have integrated acquisitions onto our platform repeatedly, and we have done it ourselves. Our teams have done the work over the years in every phase of the process. Integration is not something we hand to a third party and hope it goes well. It is a core competency of our firm. Our senior management team averages roughly 30 years of industry experience. Approximately 80% of our current employees own the VCTR stock, and they have more than $400 million of their own money invested in Victory products as of the end of June 2026, all by choice. So when I say the team doing this work is invested in the outcome, I mean that literally. The Victory Capital platform was purposefully designed to be efficient and scalable, built on technology and smart strategic outsourcing.

On our second quarter call, we reported that the Pioneer Investments integration was complete, with the full $110 million of net expense synergies realized within 15 months of close. I also said that we are ready for the next acquisition, and we are. This transaction is larger than anything we have done in the past, but the work is the work we know how to do, done by the people who have experience doing it, and on a platform built for exactly this. That is why we are so excited about this transaction and all that it will bring. With that, I will turn it over to Mike.