In what will be seen as a clever business move, Legg Mason, Inc. has signed new deals with three firms, agreeing to acquire equity interests in those firms. The three firms, Clarion Partners, EnTrust Capital and Precidian Investments are involved in real estate, exchange traded funds and hedge funds respectively. This move is likely to bolster Legg Mason as one of the top asset management firms in the world.
Legg Mason will acquire a majority equity interest in Clarion Partners and a minority stake in Precidian Investments. EnTrust Capital will be merged with Legg Mason’s Permal Group, resulting in an increase in hedge business assets to about 26 billion US dollars. Mary Athridge confirmed these business deals. Mary is a spokesperson for Legg Mason.
Legg Mason will part with 585 million US dollars to acquire 83 percent ownership stake in Clarion Partners. Clarion Partners will become the real estate investment subsidiary of Legg Mason and will operate independently as a private equity and debt real estate investment manager.
The remaining 17 percent ownership stake will be retained by the management team of Clarion partners. Most members of Clarion’s management team will retain their roles after the deal is completed, including the chairman, Stephen J. Furnary.
To merge Permal Group with Entrust Capital, Legg Mason will pay an amount in the region of about 400 million US dollars. The merger will give birth to a new company, EnTrustPermal. Combining Permal Group’s 14.5 billion US dollars and EnTrust Capital’s 12 billion US dollars will make the new company one of the world’s largest hedge fund investors. Precisely, EnTrustPermal will become the fifth largest hedge fund investors in the world, according to data obtained from an annual survey by Pensions & Investments.
Gregg S. Hymowitz, the managing partner of EnTrust Capital, will get a 35 percent ownership stake from the merger. Mr. Hymowitz will also manage the new company in the position of chairman and chief executive officer. The merger is expected to finalize by the end of 2016.
In the deal with Precidian Investments, Legg Mason purchased preferred equity for an undisclosed amount. This will make Legg Mason a holder of 19.9 percent common equity, with an option to purchase more without limits. Mary Athridge did not disclose any additional details of this particular deal.