Legg Mason, Inc. recently announced that it has entered into an agreement to combine their hedge fund platform, Permal, with EnTrust Capital. Based out of New York City, EnTrust Capital is an asset management firm with over $10 billion in assets. EnTrust Capital manages assets for different accounts, with billions of dollars invested in different partnerships, including duration opportunistic capital.
This new business combination between Permal and EnTrust Capital will help create a new firm worth over $30 billion. The firm will feature a unique offering of products featuring a large amount of wealthy investors. As part of the collaboration, Legg Mason will own over 60% of the new entity with the remains share going to Gregg Hymowitz, EnTrust’s Co-founder. EnTrust Capital is very excited about the partnership.
Hymowitz will lead EnTrust Permal, becoming the chairman and CEO. Important investment and business people representing Permal and EnTrust Capital will work in the best interests of this new partnership. EnTrust Permal will have the infrastructure from around the World, investment professionals, investment managers, and resources to research, source and structure investment opportunities throughout the World, representing an international client base.
The collaboration will create a platform with the appropriate scale and leadership team to expand and evolve its capabilities and offerings. Some of these capabilities include a larger investment platform, increased sources of investment opportunities, and an evolution of innovative products and different segments of business, such as private debt offerings. This collaboration gives both firms the ability to manage their existing account platform. There is potential for massive growth in the first two years of the merger.
The merger will close by the end of the year. The transaction is expected to help Legg Mason’s revenue in their initial year, after looking at estimated cost savings that year, as well as restructuring charges. Legg Mason is expecting EnTrust Permal to achieve savings of almost %40 million per year. Legg Mason expects to incur costs through 2016 and into the 2017 Fiscal Year. Morgan Stanley has been Legg Mason’s financial advisor throughout this transaction. Goldman Sachs represented EnTrust Capital throughout the deal.