Good morning and welcome to the Victory Capital conference call on the closing of its transaction with Amundi. All callers are in a listen-only mode. Following the company's prepared remarks, there will be a question-and-answer session. I will now turn the call over to Mr. Matthew Dennis , Chief of Staff and Director of Investor Relations. Please go ahead, Mr. Dennis.
Thank you. Before I turn the call over to David Brown, I would like to remind you that during today's conference call, we may make a number of 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. It is now my pleasure to turn the call over to David Brown, Chairman and CEO. David?
Thanks, Matt. Good morning and welcome to today's call. I'm joined today by Michael Policarpo , our President, Chief Financial and Administrative Officer, as well as Matt Dennis, our Chief of Staff and Director of Investor Relations. Following my prepared remarks, Mike, Matt, and I will be available to answer your questions. We are very pleased to have successfully closed on our transaction with Amundi. This multifaceted partnership includes numerous strategic elements that will drive future growth and create shareholder value. We've been extremely impressed with the investment professionals and the operating results of the Amundi US business throughout the integration and closing process. We have become even more optimistic regarding the long-term benefits of this transaction. The business is performing very well, with run rate EBITDA up more than 10% from this time last year when we announced the MOU.
Our original guidance for low double-digit accretion of run rate adjusted EPS by the end of our first year of ownership is conservative given the business's impressive performance, increase in net expense synergies, and with less time required to achieve those anticipated net expense synergies. A benefit of the closing process associated with this transaction was our ability to thoroughly plan and begin executing on integration activities. As we progressed through our integration work, we discovered additional cost-saving opportunities. As such, we are increasing our net expense synergy guidance and accelerating the anticipated timing to achieve those net expense synergies. We are increasing our net expense synergy estimate from $100 million to 110 million. We also anticipate approximately $35 million of associated one-time costs to achieve these net expense synergies.
As far as the timing is concerned, at closing, we have achieved approximately $50 million of net expense synergies and expect to achieve another $30 million over the following six months. By the end of our first year of ownership, we expect to have realized more than $100 million of net expense synergies, with the remaining balance expected to be realized in our second year of ownership. As a result of the transaction, our balance sheet has strengthened substantially by bringing on these earnings without any corresponding debt. This enhanced financial condition prepares us well for additional inorganic growth opportunities, which we are currently working intensely on. From an operating standpoint, the increased size and scale of our U.S. intermediary and marketing teams resulting from this transaction are strategically important.
We now have more salespeople, platform partnerships, marketing, and data resources to better serve our existing clients and to seek out new ones. We have also added complementary investment strategies with excellent investment performance, which deepens our product set and will allow us to offer more choices to our clients. With the closing now behind us, we are reintroducing the Pioneer Investments brand. Consistent with our proven acquisition model, there will be no changes to the investment team or their investment processes. The primary motivation of this partnership for Amundi was the desire to expand the product set of U.S.-manufactured investment strategies that they can offer outside of the U.S. As of today and for the next 15 years, Victory Capital is the exclusive provider of U.S.-manufactured traditional active investment products for Amundi's distribution networks outside of the U.S.
As the exclusive distributor of Amundi's products in the U.S., we are also looking forward to offering their strong-performing products to U.S. investors. The number of Victory Capital shares used as consideration for the Amundi U.S. business will ultimately be established by the final level of consenting client revenue. At closing, Amundi received a total of 17.6 million shares, or 21.2% of fully diluted equity in Victory Capital, inclusive of 4.9% voting interest. As the transaction adjustments conclude, additional shares are expected to be issued monthly over the next six months to Amundi in accordance with the Contribution Agreement, whereby Amundi's total equity interest is expected to reach 26.1%. The voting percentage will remain below 5% regardless of the final number of shares issued. The final tranche of shares will be issued six months after closing.
Two of Amundi's appointees have been added to our Board of Directors, as detailed in the Contribution Agreement. One fills an existing Class III vacancy, and the other has replaced Robert Hurst, who retired from the board as planned. We would like to thank Bob for his counsel and support as a director of our company since we became a publicly listed issuer in 2018. As we look ahead, we are confident that together we have aligned the incentives of both organizations to enhance the likelihood of success in this new strategic partnership and look forward to a long and mutually beneficial relationship. Turning to slide 4, as I mentioned earlier, we are relaunching the Pioneer Investments brand. The business we acquired had approximately $119 billion of assets under management at the end of February. When we began discussions in 2023, the business was managing just over $90 billion.
Since then, assets under management have grown by more than 25%, driven by strong positive net flows and market action. In 2024, the business we are acquiring achieved $5.5 billion in positive net flows, which is a 5.5% organic growth rate based on their assets under management at the beginning of the year. This includes $2.6 billion of positive net flows into their mutual funds, with the balance of the positive flows coming from U.S. institutional clients and from Amundi sales of Pioneer's products outside of the U.S. This momentum accelerated in 2025, with year-to-date positive net flows of $2.7 billion across their entire business, inclusive of all channels, through the end of February. Overall, we could not be more pleased with the performance of the business and are looking forward to sustaining this momentum.
On slide 5 , you can see the diversification of our nearly $300 billion of assets under management across several dimensions. First is by asset class, where fixed income increased as a percentage of assets under management from 13% previously to 27% today. This is an asset class we like very much and where we believe we can compete effectively over the long term. Looking at vehicle structures, separately managed accounts and other pooled vehicles rose to account for approximately 40% of our assets under management. From a channel standpoint, the proportion of intermediary assets rose from just under 40% to 55%. The percentage of institutional client assets did not change materially, and the proportion of our assets under management from the direct channel declined from 34% to 21%. Finally, assets under management managed on behalf of clients located outside of the U.S. rose to 16% of total assets under management.
This was up from just 4% previously. Looking ahead, we could not be more pleased with how this transaction has transformed our business and positioned us for the future. 2025 is shaping up to be a monumental year, and we look forward to continuing executing on our growth strategy to better serve clients and create value for our shareholders. With that, we will open the call for questions. Operator, please assemble the Q&A roster.
[Operator's Instruction] . Your first question comes from the line of Michael Cyprys from Morgan Stanley. Your line is open.
Hey, good morning. Thanks for taking the question, and congratulations on closing the strategic transaction here today. Maybe just kicking off with a question on the synergies. Great to see that that's coming in a bit better than initially expected and also a bit sooner. Maybe you could help unpack some of the key drivers and the key sources of where these incremental synergies are coming from relative to initial expectations, as well as maybe unpacking a bit on the timeframe around that. Now that the deal has closed, maybe you could talk a little bit about the priorities for you as you look out over the next 12 months from here. Thank you.
Hey, Michael. Good morning. It's Mike. I'll take the first part with respect to the synergies and the timing. Just to echo the timing from the prepared remarks, we expect to have $50 million of the run rate expense synergies as of closing. Within an additional six months post-closing, we should have an incremental $30 million. By the end of the first 12 months post-closing, we'll have $100 million. Within the full two-year timeframe post-closing, the new number of $110 million that we highlighted in the prepared remarks. Those are, I would remind everybody, net expense synergies. Those really take into account the investments that we're making as part of the transformative transaction around distribution, product, data, technology, and people. That is a net number.
Really, as we went through the last six to eight months kind of from signing to closing, we really just evaluated the opportunity set and found incremental efficiencies as we thought about the onboarding onto Victory's operating model. We saw really just incremental economies of scale, vendor consolidation, and just additional redundancy as we went through different processes. Pretty general across the board. Nothing specific jumped out. Again, I think we are confident with the numbers that we had put out there and feel really strong about the opportunity to continue to invest in the business for not just the short-term, but long-term growth as well.
Yeah. Good morning, Michael. I'll take the last part of that question around looking out over the next year. I think first, we're going to be very focused on continuing to integrate and execute on our integration of Pioneer into our business and onto our platform. I think there's a lot of opportunity. The business is in tremendous shape, and I think bringing that business onto our platform, I think we have a real chance to really accelerate what they're doing today. We will be very focused on that over the next year. We'll also focus our efforts on distributing the legacy Victory product outside of the U.S. through the Amundi distribution networks, getting products launched, getting vehicles launched, marketing, educating their salesforce. We will focus very much on that as well.
The last part is we will be focused on continuing to grow our business organically like we are today, but then inorganically as well. I think we've highlighted that this transaction actually strengthens our balance sheet, and we think there's a lot of opportunity from a consolidation standpoint in the industry, and we're going to continue to look for really good opportunities. There are great opportunities out there today, and we're going to work towards those, and we're open for business on those, really effective as of today. Those will be our priorities, and I'm really confident on our ability to execute on them.
Great. Just as a follow-up question, I think you mentioned that today you now have about 16% of AUM outside of the U.S. Maybe you could speak to the biggest countries or the countries that are the biggest contributors there. If you could maybe speak to the flows that the Amundi sales network helped contribute over the past year and year to date. When you think about the Pioneer business, how much of those sales were coming from outside the U.S. last year and year to date, and how you see that progressing. You mentioned you're bringing new products into the distribution network to sell overseas. Just which products do you prioritize, and how do you sort of approach that?
Yeah. I think on the outside of the U.S. for the Pioneer business, they had a very strong 2024. Actually, inside the U.S., their intermediary efforts really yielded them a lot of assets from a growth perspective on mutual funds and SMAs, and they had a really good year from their U.S. institutional distribution efforts as well. Outside of the U.S., of the $5.5 billion, it was about $700 million-$800 million that they raised outside the U.S. In 2025, again, off to a really strong start inside the U.S., really good institutional flows. Outside the U.S., about $500 million they have raised in 2025. I look at that going forward as something that we can build upon. I think the Pioneer products are very nicely positioned in the different networks outside the U.S.
The opportunity is to put the Victory products into those networks and get them going. From a perspective of where the assets are, Amundi has really, really good distribution in Europe, really good emerging distribution in Asia. I think it'll be very client-specific and geography-specific for what's going forward and what's happening from an investment perspective. I don't see a lot of that changing, but what I do see is our products fitting certain holes in the portfolios, and it'll really just be very client-specific and geography-specific.
Great. Thank you. Congrats again on the transaction.
Again, if you'd like to ask a question, press star one on your telephone keypad. Your next question comes from a line of Craig Siegenthaler from Bank of America. Your line is open.
Hey, good morning, Dave, Mike. Hope everyone's doing well.
Good morning.
The 5.5% organic growth at Pioneer in 2024, that was very good, especially given the overhang of a merger. What drove that? Any key asset classes, key funds? Under the surface, was there a fee mix shift to either lower fee product or higher fee product when you take a step back and look at the blended fee rate?
The $5.5 billion in flows in 2024 for Pioneer was primarily fixed income. There were different versions of fixed income. There was a multi-asset, a specialty fixed income products, as well as shorter-term fixed income. As far as fees, there was not really any change in really the themes underneath of what they were selling, but very strong in the U.S., as I said, very good intermediary distribution efforts, strong on the institutional side, and then still solid and consistent outside the U.S. That has really gone into 2025 as well. Same themes in 2025, fixed income, and also strong in the U.S., a little bit stronger on the U.S. institutional side than the intermediary side, but still all of the channels are net flow positive.
Thanks, Dave. Just as my follow-up, not necessarily a question on the merger, but I was wondering if you could provide some visibility into March net flows for legacy Victory or even the acquired Pioneer business. Markets were okay in January and February. They were very hot last year, but then corrected really hard in March. I wanted to get your perspective on what the client reaction was in the month of March.
I think, as you know, we do not disclose intra-quarter flows. Our AUM release will come out here shortly, and we will have our quarterly net flows. I would say stay tuned. Our business and the Pioneer business was still strong during March. I do not think we have seen anything really unique from any clients or any reaction to the market. Obviously, it has been a very volatile market, but from a client perspective, it has kind of been business as usual for us.
Thank you, Dave.
There are no further questions at this time. This does conclude today's conference call. We thank you for your participation, and you may now disconnect.