American asset manager Legg Mason has agreed to merge its Permal hedge fund platform with EnTrust Capital, a New York based asset manager with $12bn in assets under management.
The merger will result in the creation of a new global alternatives firm with over $26bn in pro-forma AUM1 and total assets of $29bn.
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The combined firm called EnTrustPermal will provide a diverse offering of proprietary investment products with a significant number of institutional and HNW investors.
Under the deal, Legg Mason will hold 65% of EnTrustPermal, while EnTrust’s co-founder Gregg S Hymowitz will own the remaining 35%.
The new entity will be headed by Hymowitz, who will become the chairman and CEO of the new firm. The combined entity will have a team of more than 55 investment staff and over 150 investment offerings across 18 different investment-strategies.
It will also have the global infrastructure, resources, investment professionals and underlying investment managers to source, research and structure investment opportunities globally.
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By GlobalDataThe merger, which is expected to compete in mid-2016, will be accretive to Legg Mason’s earnings in the first year.
Legg Mason said that EnTrustPermal will achieve cost savings of approximately $35-$40m per year.
Through this combination, Legg Mason expects to incur restructuring and transition costs of approximately $100m during the company’s 4th fiscal quarter of 2016 and continuing throughout fiscal year 2017.
Legg Mason chairman and CEO Joseph A. Sullivan said: "The team at EnTrust has a proven track record for driving significant organic growth through product innovation, with over 20% growth annually since the financial crisis.
"We see meaningful opportunities to combine this innovation with Permal’s blue chip client base, product offering and global footprint."
EnTrust managing partner Gregg Hymowitz said: "The combination of EnTrust and Permal creates a powerful organization in the hedge fund universe. The EnTrust and Permal teams are eager to start delivering for our loyal investor base."
