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Big deals not enough to keep Willis M&A business open

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Big deals not enough to keep Willis M&A business open

Willis Towers Watson PLC is pulling the plug on its M&A advisory business even though the unit worked on a half-dozen $1 billion-plus deals in recent years, including one announced in August valued at more than $2 billion.

The company confirmed an Insurance Insider report that the broking giant will shutter its M&A advisory business by the close of 2018.

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"After eight years of investment banking activity, Willis Towers Watson has concluded that Willis Towers Watson Securities existing as a separate business does not fit the strategic direction of the company," spokeswoman Colleen McCarthy said in a statement to S&P Global Market Intelligence.

In 2009, Willis Group Holdings added talent in an effort to build up an M&A advisory and capital markets business focused on the insurance sector. From the start, some questioned whether the M&A business would gain traction because it faced conflict-of-interest hurdles given that it was owned by one of the world's largest brokerages. Yet in 2010, the unit landed a role advising Achilles Netherlands Holdings BV in its $1.36 billion deal to acquire Brit Insurance Holdings BV.

In 2014, the business was an adviser on six transactions with a combined value of $2.20 billion, according to S&P Global Market Intelligence data. The largest of those deals was Onex Corp.'s $1.33 billion acquisition of York Risk Services Group Inc. Willis Capital Markets advised the seller on that transaction.

Tony Ursano led the unit from April 2009 until 2015. Willis built the business while investment banks were cutting back as the sector reeled from the shock of the financial crisis in 2008. Ursano himself was listed as a banker on 15 deals, including the York Risk Services acquisition, during his time at the helm of the advisory unit. He left the company in April 2015, later joining TigerRisk Partners LLC as president.

Two other bankers listed on the York Risk Services deal were Jarad Madea, who is now with TigerRisk, and Matthew Morris, who has since joined Greenhill & Co. Inc. Morris is listed on 16 Willis Towers Watson advisory assignments announced from August 2010 through February 2018.

After Ursano's departure, Willis in April 2015 hired Rafal Walkiewicz and Michael Guo as co-CEOs to fill the vacant leadership role.

That year, Willis Capital Markets and Advisory reached its post-recession apex in both the number of deals it worked on and in total deal value. The business logged $4.71 billion in announced deal value on eight transactions, including CMIG International Holding Pte Ltd.'s $2.24 billion purchase of Sirius International Insurance Group Ltd., in which Willis Capital represented the selling side.

The advisory unit, renamed Willis Towers Watson Securities after a merger between Willis Group Holdings and Towers Watson & Co., scored its largest deal when it helped advise China Oceanwide Holdings Group Co. Ltd. in its $2.75 billion bid to acquire Genworth Financial Inc. That deal has yet to close as the parties attempt to navigate the maze of regulatory approvals in a number of U.S. states including Delaware, and in Washington, D.C., and Beijing. The two sides are aiming for a fourth-quarter close, but the completion target has been moved a number of times.

The deal between China Oceanwide and Genworth pushed the Willis advisory unit's 2016 deal value up to $3.51 billion across four combinations.

But the unit was listed as an adviser for just two deals in each of 2017 and 2018. The latter year included one of its largest of all time, however, as it was part of the advisory team for Apollo Global Management LLC in its $2.60 billion proposed acquisition of Aspen Insurance Holdings Ltd. During the business's post-recession run, its overall deal value was heavily concentrated among its large-transaction assignments; six of its biggest deals have accounted for 68% of its announced deal value since 2009.

Despite the advisory unit closing, Willis Towers Watson will not completely exit the capital markets sector. McCarthy said the company will maintain its insurance-linked securities business, which it will fold into its reinsurance unit Willis Re.

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