LONDON - Global advisory, broking, and solutions company WTW (NASDAQ:WTW) has announced its acquisition of a stake in atomos, a UK-based wealth management firm. The investment follows a year-long strategic alliance between the two companies, which began at the end of 2022. WTW's investment engine has been a key component in powering atomos' multi-asset investment solutions, providing access to a wider range of asset classes and investment choices for atomos’ clients.
The collaboration has now evolved into part ownership, with WTW also infusing additional capital to support atomos' growth trajectory. This move is set to strengthen WTW's foothold in the UK's wealth market, which is valued at approximately £2.2 trillion.
Mark Calnan, Head of Investments for Europe at WTW, commented on the development, highlighting the strategic importance of the wealth market to WTW's growth and their commitment to enhancing services for individual savers in the UK. He emphasized the alignment between WTW's and atomos' visions of integrating high-quality financial planning with institutional-quality investment portfolios.
Federico Alvarez-Demalde of Oaktree, which has backed atomos, remarked on the competitive nature of the UK wealth management sector and endorsed atomos' business model and growth potential. Jonathan Polin, CEO of atomos, expressed enthusiasm for the expanded relationship with WTW, noting the transformation in client investment propositions since the alliance's inception.
WTW's Investments business boasts over 900 colleagues worldwide, with assets under advisory exceeding US$4.2 trillion and US$167 billion of assets under management. atomos, originating from the Sanlam Wealth UK business and led by CEO Jonathan Polin, manages approximately £7 billion in assets and offers clients a digital and personalized approach to wealth management.
Financial advisory for the transaction was provided by Houlihan Lokey (NYSE:HLI) for WTW and Fenchurch Advisory Partners for atomos. Legal advice was offered by Herbert Smith Freehills LLP and White & Case respectively.
The statement is based on a press release and contains forward-looking statements that involve risks and uncertainties. Actual results may differ from those predicted in the forward-looking statements.
In other recent news, Willis Towers Watson (NASDAQ:WTW) has announced a co-brokerage partnership with The J. Morey Company, aiming to offer customized risk management solutions to North American companies with headquarters in Japan. In other significant developments, WTW has agreed to sell its TRANZACT operation to private equity firms GTCR and Recognize for $632 million, a move expected to result in impairment charges estimated between $1.6 billion to $2.1 billion in the third quarter.
Several analyst firms have updated their outlook on WTW in light of these changes. Truist Securities has increased its price target from $335.00 to $365.00, maintaining a Buy rating. Roth/MKM also raised its price target to $345.00, reiterating its Buy rating, while BMO Capital maintained its Market Perform rating with a steady price target of $298.00.
Barclays, however, initiated coverage on WTW with an Underweight rating due to concerns about the company's ability to meet its organic growth estimates. Despite the varying perspectives, these recent developments suggest a significant shift in WTW's business structure, with the sale of TRANZACT seen as a strategic move to enhance shareholder value and simplify operations.
InvestingPro Insights
WTW's strategic investment in atomos aligns well with the company's strong financial position and growth trajectory. According to InvestingPro data, WTW boasts a substantial market capitalization of $30.0 billion, reflecting its significant presence in the global advisory and solutions market.
The company's revenue growth of 6.7% over the last twelve months, coupled with a robust EBITDA growth of 9.82%, indicates a healthy expansion of its business operations. This growth is particularly relevant in the context of WTW's move to strengthen its position in the UK's £2.2 trillion wealth market through the atomos investment.
InvestingPro Tips highlight that WTW has raised its dividend for 7 consecutive years and has maintained dividend payments for 22 consecutive years. This consistent dividend policy suggests financial stability and a commitment to shareholder returns, which could be attractive to investors in the wealth management sector.
The company's profitability is also noteworthy, with InvestingPro data showing a gross profit margin of 45.03% and an operating income margin of 21.28% for the last twelve months. These strong margins indicate WTW's ability to efficiently convert revenue into profit, which could support its expansion efforts in the wealth management space.
It's worth noting that WTW is trading near its 52-week high, with a price that is 97.36% of its 52-week high. This performance, combined with a year-to-date price total return of 23.65%, suggests investor confidence in the company's strategic direction, including moves like the atomos investment.
For readers interested in a deeper dive into WTW's financials and future prospects, InvestingPro offers 7 additional tips, providing a more comprehensive analysis of the company's investment potential.
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