Opportunity for Atlas
We believe that there are unprecedented opportunities in today's market for investments into operating companies in the financial services sector, but that these opportunities will require dedicated investors with operating and technical expertise in financial services, a long-term perspective, and a partnership approach.
Large Market ...
The financial services industry – including banks, insurers, broker-dealers, service providers, asset managers, and consumer finance companies – is a large, fragmented and diversified sector of the global economy and provides a rich transaction environment for investors. As of 2016, financial services companies represented approximately 13% of S&P 500 and approximately 7% of U.S. private gross domestic product.
Facing Significant Changes ...
Post-financial crisis regulatory changes are causing significant divestitures and transaction opportunities. Market volatility and management refocus are creating a steady flow of balance-sheet-driven opportunities. In general, financial services companies have not experienced the same level of market recovery as other sectors.
With Limited Investor Attention
Atlas believes that many traditional investors lack the capital and expertise to navigate the large and complex financial services industry. Barriers to entry for generalist investors include complex regulatory environments, lack of operational expertise, limited sector knowledge and sourcing capabilities, and an inability to incur debt to the same extent as other industries. Financial services remains one of the few sectors under-represented in private equity transactions relative to public equity market capitalization: As of June 2016, financials constituted 13% of the S&P 500 but less than 8% of private equity investments.