Posted on July 21, 2017
New Business Deals by Legg Mason in Baltimore
Growing as an investor entails diversifying your investment portfolio. This is exactly what Legg Mason did after signing deals spanning from hedge funds, exchange-traded funds (ETFs) and real estate. According to Mary Althridge, spokesperson of Legg Mason, these investments will see it become a minority shareholder at Precidian Investments which specializes in ETFs. It will own majority stake at Clarion Partners. In addition, the company made deals to merge its EnTrust Capital and Permal Group in hedge funds management.
Further details on the three deals indicate that, the $585 million buyout of Clarion Partners from former owners, Lightyear Capital, will see Legg Mason become the majority shareholder with 83%. The deal further required the latter to pay for co-investments in the real estate company to the tune of $16 billion by December 2016. Part of the deal was that the management team at Clarion Partners, will retain their 17% minority stake. These include the CEO of Clarion Partners, Stephen J. Furnary and other top-level management who have penned down long-term contracts. By the beginning of the year, Clarion Partners was a subsidiary, fully operational company, affiliated with Legg Mason. To date, Clarion Partners oversees assets worth over $40 billion.
In the second deal, Legg Mason paid $400 million in a partnership with EnTrust. Legg Mason’s Permal and Gregg S. Hymowitz’s EnTrust, were to merge in their hedge funds management. The newly formed company, EnTrustPermal, will combine its $12 billion formerly managed by EnTrust which is made up of over 450 institutional investors’ hedge funds with Permal’s European and retail clients’ $14.5 billion. The collective figure of $26.4 billion ranks EnTrustPermal Company, based on the yearly survey by Pensions & Investments, the fifth largest hedge funds-of-funds company countrywide. A management retention was also seen in this deal. Starting mid-2016, EnTrustPermal was under Gregg S. Hymowitz’s leadership who served as the CEO and also owned 35% stake of the company. Part of the newly-formed EnTrustPermal’s strategy, it will be floating 18 hedge funds strategies across its 11 offices run by 55 financial professionals. This synergetic combination is poised to save the hedge fund conglomerate up to $30-$40 million in costs.
Lastly, the ETF deal with Precidian saw Legg Mason purchase a 19.9% minority stake. The deal was flexible because it allows increase in shareholding, if the latter would want to become a majority owner at Precidian in future. As a result, the three deals have seen Legg Mason begin 2017 with an investment portfolio managing assets in excess of $671.5 billion.