Legg Mason has acquired Entrust in a merger involving hedge funds. This is important news for as it expands Legg Mason Permal (the new company) investment opportunities and assets. The firm will now have a diverse offering of investment products for institutional and high net worth investors. The new firm will have $26 billion in assets under management. Legg Mason will own 65% of the new entity, after the new deal is structured. Both firms see themselves as bringing something to the table.
Legg Mason Permal will now have a global investment outlook and outreach. Expanded investment capabilities include a 55 person investment team, more offerings and a larger platform. Also including is a more alternate investment products.
Legg Mason CEO John Sullivan says there is significant growth potential for the company and that Entrust has seen 20% growth since the financial downturn of 2008. New CEO of the combined company Gregg Hymowitz agrees saying there complimentary investment strategies mean that both companies may benefit.
Morgan Stanley advised Legg Mason on the deal with Entrust advised by Goldman Sachs. Analysts believe that Legg Mason is acquiring new avenues of engine growth with the deal. John Sullivan said he wanted to add more alternative investments to the mix. It looks as though the acquisition may have benefits for both parties according to analysts and the CEO.
Direct hedge funds and private debt offerings will be part of the new investments available and this should help investors and Legg Mason clients. Both firms have global outreach and Legg Mason now has an entry into alternate investments. Hymowitz will take over the new company and as noted above seems positive about the potential for Legg Mason Permal to expand and increase performance in the markets.
Part of this could be seen as part of Sullivan’s larger plan to engage in alternate investments as Legg Mason has engaged in other deals (such as acquisition of Clarion Partners- a real estate firm) and it will be interesting to see the firm’s future path. For now, Legg Mason has an entry to an expanded investment opportunity base through Entrust.