Pension administrator WTW is set to take approximately a 25 per cent stake in wealth manager Atomos, which brings to a close a two-year process of “strategic partnership” before the deal could be done, according to people on both sides of the transaction.
Two years ago Atomos, an investment management firm with assets under management of around £7bn, announced a partnership with WTW, the bulk of whose assets are in institutional pension mandates, for WTW to contribute asset allocation and fund research to the Atomos investment process.
From WTW’s perspective, Mark Calnan, head of investments for Europe at the firm, told FT Adviser: “We knew there were a number of potential options for how we proceeded, and as we got to know and understand the Atomos business, we saw many ways we could contribute to the growth of the business.”
According Calnan there was a natural synergy between pensions and wealth management, which meant both businesses could serve the UK wealth management market together.
He said the advent of defined contribution pensions as the default in the UK market has meant the line between a pension client and a wealth client has become “fuzzy”.
He explained: “clients that have pensions with us may also have Isas or other investments that we don’t manage.
"The UK wealth management market is very large, at around £2trn. Demographics mean it is growing, and we want to be part of that. We work with employers and pension schemes that combined have millions of underlying clients, and that is an exciting opportunity for us.”
He expects that clients of WTW’s defined benefit pensions business will be offered access to Atomos wealth management services for the rest of their assets.
A great opportunity
Jonathan Polin, chief executive of Atomos, said one of the rationales for his firm partnering with WTW was “the opportunity to do more in the workplace. The business-to-business-to consumer market represents a great opportunity.”
WTW’s acquisition of approximately 25 per cent of the shares of Atomos can be seen in the context of the latest accounts for the firm, filed with companies house on October 2, and covering the year to the end of 2023, examined by FT Adviser.
The company produced a post tax profit of £1.48mn on fee income of £26.6mn.
That profit number was £80,000 higher than the previous year, with the firm spending more than £2.7mn in “ongoing investment”, though this number was down on the £3.8mn spent in this way the year before that.
The £2.7mn is listed in the accounts as "projects costs" and as a one-off cost.
This may relate to the company's investment in its platform, which at the end of December 2023 had assets of £700mn. The company has 120 staff.
One representative of WTW will sit on the board while Oaktree Capital Management, the private-equity majority owner of Atomos, will also have a board seat.
Organic growth
Calnan said he expected to help Atomos grow “organically” in the near-term rather than use the company as a vehicle to acquire more businesses.
