Denver-based global investment firm – Janus Capital Group, Inc. (JNS) completed the acquisition of VS Holdings Inc., the parent company of VelocityShares, LLC. The deal announced in Oct 2014, included an initial upfront cash consideration of $30 million with an additional contingent cash consideration if certain revenue targets are accomplished over a period of four years.
Connecticut-based VelocityShares, founded in 2009, is a major provider of institutionally-focused exchange-traded products (“ETPs”), including exchange-traded funds (“ETFs”), that are focused on offering volatility management solutions. As of Sep 30, 2014, the company had raised around $2 billion assets across 21 investment products. VelocityShares will now stand as a wholly-owned subsidiary of Janus Capital.
Janus Capital has awarded performance stock units (‘PSUs’) worth $19 million to five employees of VelocityShares, in order to keep the interests of key employees of VelocityShares in line with the interests of Janus Capital shareholders. Janus Capital also mentioned in its release that the vesting will be based on the fulfillment of net revenue growth targets through Dec 31, 2020, with no vesting before the second anniversary of the grant date.
Janus Capital’s advisors were Wells Fargo Securities LLC, an arm of Wells Fargo & Company (WFC) and Paul, Weiss, Rifkind, Wharton & Garrison LLP. Freeman & Co. Securities LLC and Stoel Rives LLP. advised VS Holdings Inc.
The acquisition reflects Janus Capital’s efforts to tap opportunities in the growing ETF market. Chief Executive Officer of Janus Capital, Richard M. Weil earlier stated that the acquisition comes in line with the company’s strategy of “intelligent diversification.”
We remain encouraged by the company’s strategic initiatives to boost business. Janus Capital has the best-in-class investment boutique with the potential for growth in assets under management (‘AUM’) and revenue along with competitive leverage. As of Sep 30, 2014, the company reported total AUM of $174.4 billion, up from $166.7 billion as of Sep 30, 2013.
Currently, Janus Capital carries a Zacks Rank #4 (Sell). Some better-ranked stocks in this space include KKR & Co. L.P. (KKR) and Monroe Capital Corp. (MRCC). Both the stocks sport a Zacks Rank #1 (Strong Buy).
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