Virtus Investment Partners has entered into a definitive agreement to acquire a majority interest in Keystone National Group, a private‑credit manager that specializes in asset‑backed lending. The deal values Keystone at $200 million in cash at closing, with up to $170 million of deferred consideration tied to future revenue targets. The transaction is expected to close in the first quarter of 2026 and is projected to be accretive to Virtus earnings in 2026, with an estimated contribution of roughly $1.50 to adjusted EPS.
The acquisition is financed entirely with Virtus’s balance‑sheet resources, and the deferred consideration is structured as $65 million payable on the first anniversary, $30 million on the second, and up to $75 million contingent on meeting revenue milestones over the next two to three years. Keystone’s management will retain operational autonomy and receive equity participation, and will enter into long‑term employment agreements with Virtus, ensuring continuity of the firm’s investment expertise.
Keystone, founded in 2006 and headquartered in Salt Lake City, manages $2.5 billion of assets as of October 31 2025 and has deployed more than $6 billion across 750+ transactions. Its flagship Keystone Private Income Fund is a $2.0 billion tender‑offer fund that has attracted strong support from wealth‑channel managers for its stable, income‑focused performance. The addition of Keystone expands Virtus’s private‑markets offering and provides a differentiated asset‑backed credit platform that complements Virtus’s existing multi‑boutique model.
Virtus’s Q3 2025 earnings showed a revenue beat but an EPS miss: adjusted earnings of $6.69 fell short of the $6.83 consensus, even as revenue exceeded expectations. The miss was driven by margin compression amid higher operating costs, while the revenue gain reflected robust demand across Virtus’s core investment strategies. Management highlighted that the acquisition will help offset these headwinds by adding a high‑margin, fee‑based credit platform and by creating new distribution opportunities within Virtus’s extensive network.
The transaction aligns with a broader industry trend of asset‑management firms expanding into alternative asset classes to meet client demand and diversify revenue streams. By integrating Keystone’s asset‑backed lending expertise, Virtus positions itself to capture growth in the private‑credit market, which has seen increasing investor appetite for uncorrelated, income‑generating assets. The deal also signals Virtus’s confidence in its long‑term strategy to deepen its alternative offerings and enhance fee‑based revenue.
Management commentary underscores the strategic fit: Virtus President and CEO George R. Aylward said the partnership “allows us to offer strategies of an innovative asset‑centric private credit manager that has delivered attractive, uncorrelated returns.” Keystone co‑founder John Earl expressed excitement about the collaboration, noting that the alliance will support Keystone’s next stage of growth while preserving its culture and investment autonomy.
Overall, the acquisition is expected to strengthen Virtus’s balance sheet, broaden its product suite, and provide a new source of fee‑based income that will help offset recent earnings pressure. The deal’s accretive impact in 2026, combined with Keystone’s strong track record and complementary capabilities, positions Virtus to better serve institutional clients seeking diversified, income‑focused private‑credit solutions.
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