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Voya Financial Looks to Expand Client Base with Allianz GI Deal

Voya Financial Inc. (NYSE: VOYA) has signed a memorandum of understanding (MoU) under which its asset management business, Voya IM, will acquire a substantial part of Allianz Global Investors’ (AGI) U.S. business.

As per the terms of the agreement, Voya IM will takeover equity and fixed income investment teams, select client service and sales professionals, and assets under management (AUM) of nearly $120 billion of AGI U.S.

The addition of Allianz GI’s AUM, which comprises income and growth, fundamental equity, and private placement assets, would boost Voya IM’s AUM to around $370 billion.

The MoU also includes a long-term strategic-distribution partnership under which Voya IM’s investment strategies will be distributed by Allianz GI outside the U.S. In return, AGI will get an up to 24% stake in Voya IM.

Management’s Take

Rodney O. Martin, Jr., the Chairman and CEO of Voya Financial, said, “We believe this to be a unique opportunity to acquire highly complementary investment management teams and assets, at scale, while preserving our strong excess capital position for additional value-creation actions, such as continued share repurchases and dividends along with further investments in our businesses.”

Voya IM’s CEO Christine Hurtsellers said, “We have long identified increased scale and broader international distribution as attractive growth priorities, and this transaction would help us achieve those objectives while complementing our continued focus on private strategies and alternative investments, particularly given the strong global demand for these strategies that we are seeing from institutional investors and advisors.”

Based out of New York, Voya Financial offers retirement, investment, and insurance services.

Stock Rating

Overall, the stock has a Moderate Buy consensus rating based on four Buys and two Holds. VOYA’s average price target of $77 implies 18% upside potential from current levels.

Conclusion

The deal will allow Voya IM to utilize AllianzGI’s global presence to boost its client base. The announcement was received positively by the investors and the stock gained 4.8% on Tuesday to close at $65.28.

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