Charles Schwab Corp. said Monday that it has agreed to buy Windward Investment Management Inc. of Boston for $150 million in stock and cash.
Windward, which had $3.9 billion of assets under management on July 31, manages three investment portfolios consisting primarily of exchange-traded fund securities. Its clients include investment advisers, nonprofit organizations, endowments, retirement plans and individuals.
Through a combination of strong organic growth and strong investment performance, Windward has had 56% compound annual growth over the past five years.
"Among independent advisers and retail investors, there is a growing interest in the kind of value Windward can provide — portfolio construction which puts risk management at its core — an ideal approach for today's world," Walt Bettinger, Schwab's president and chief executive officer, said in a press release.
He continued: "A number of Schwab Advisor Services clients currently rely on Windward for cost-effective and highly diversified core portfolio holdings for their clients, and we think that upon closing, streamlined access and improved pricing from Schwab will further fuel Windward's growth and enable us to add significant client value for advisers. Windward's straightforward, scalable strategies are also a natural and consistent fit with Schwab's existing approach to portfolio management for our traditional retail clients."
The deal is expected to close in the fourth quarter. Schwab, which is based in San Francisco, said the acquisition would be modestly accretive to earnings per share in the first 12 months.
Stephen J. Cucchiaro, Windward's founder, president and chief investment officer, and his investment team would remain at Schwab. Windward's products would be made available to independent registered investment advisers through the Schwab Advisor Services platform and to retail clients through Schwab's managed portfolios strategy.
According to Cerulli, assets in separately managed account programs grew nearly 30% in the past year, and investment advisers are one of Windward's fastest-growing client segments.
Schwab will begin waive transaction commission costs for Windward managed accounts custodied on Schwab's Advisor Services platform.
