Last updated: 13:08 / Tuesday, 26 January 2016
And two other positions

Legg Mason Acquires Clarion Partners

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Legg Mason Acquires Clarion Partners
  • Clarion Partners manages $40 billion and will operate as an independent affiliate. Steve Furnary, Chairman and CEO of the firm, will continue in his current role
  • Legg Mason will acquire an 83% ownership stake in Clarion Partners for $585 million and will pay another $16 millionfor its portion of certain co-investments, while the management team will retain 17% of the outstanding equity
  • The company also announced it has entered into a definitive agreement to combine Permal, Legg Mason's existing hedge fund platform, with EnTrust Capital in a new company branded EnTrustPermal
  • Legg Mason also announced that it has acquired a minority equity position in Precidian Investments,

As we published earlier this month, Legg Mason has announced that it has agreed to acquire a majority equity interest in Clarion Partners, a leading diversified real estate investment firm based in New York that manages approximately $40 billion across the real estate risk/return spectrum.  Clarion Partners will operate as the primary independent real estate investment affiliate for Legg Mason and Steve Furnary, Chairman and CEO of the firm, will continue in his current role.

Under the terms of the transaction, Legg Mason will acquire an 83% ownership stake in Clarion Partners for $585 million. In addition, Legg Mason will pay for its portion of certain co-investments on a dollar for dollar basis, estimated at $16 million as of December 31, 2015. The management team will retain 17% of the outstanding equity in Clarion Partners. Legg Mason's ownership percentage and the purchase price may be adjusted lower if the management team elects before the closing to retain more than 17% (not exceeding 20%). The firm's previous majority partner, Lightyear Capital, will sell its entire ownership stake in the transaction. The deal is expected to close in the second calendar quarter of 2016.

The company also announced it has entered into a definitive agreement to combine Permal, Legg Mason's existing hedge fund platform, with EnTrust Capital. EnTrust is an independent hedge fund investor and alternative asset manager headquartered in New York with approximately $12 billion in total assets and complementary investment strategies, investor base and business mix to Permal.  The business combination will create a global alternatives firm with over $26 billion in pro-forma AUM and total assets of $29 billion.  As a result of the combination, Legg Mason will own 65% of the new entity, branded EnTrustPermal, with 35% being owned by Gregg S. Hymowitz, EnTrust's Co-founder and Managing Partner. The new company will be led by Mr. Hymowitz, who will become its Chairman and Chief Executive Officer.  Key investment and business professionals from both firms will continue to serve the investors of the new organization. 

And, last, the same day Legg Mason also announced that it has acquired a minority equity position in Precidian Investments, a firm specializing in creating products and solutions related to market structure issues, particularly with regard to the ETF marketplace. Precidian powers its own ETF products subadvised by unaffiliated managers and works with financial services firms to jointly develop solutions, structures and products to meet investor needs. Under the terms of the transaction, Legg Mason purchased a new class of preferred equity, entitling it to the rights of a holder of 19.9% of common equity, with the option to acquire a majority interest in the common equity.  Other terms of the transactions were not disclosed.

 

 

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