Legg Mason and affiliate Permal are to acquire Fauchier Partners, a European-based manager of funds of hedge funds, from BNP Paribas Investment Partners. The deal, which will see Fauchier Partners combine with Permal, will create an institutionally focused platform with approximately USD24 billion in assets under management, offices in nine locations around the world, and a global investment team based in New York, London, Paris and Singapore.
The transaction is expected to close in the first quarter of 2013 and be accretive to Legg Mason’s earnings in the first year, reflecting Legg Mason’s ongoing commitment to create shareholder value. The terms of the transaction were not disclosed.
Permal and Fauchier Partners bring together two leading institutional businesses, with a global investment reach and little crossover, operating in different markets and specialising in different areas. With extensive pension fund and insurance clients in Europe, as well as Asia Pacific, Fauchier Partners also adds significant presence and capabilities to Permal’s already well established US institutional business.
Legg Mason sees the combined benefits of the Group as:
Materially deeper pool of investment talent, covering a wider range of alternative investment strategies, with Fauchier Partners particularly noted for equity hedged and event driven, and Permal for fixed income, credit and macro investing.
Formation of a global investment team with approximately 60 investment professionals, based in New York, London, Paris and Singapore, which will be led by Permal’s Robert Kaplan and Fauchier Partners’ Clark Fenton.
Continuity of respective portfolio management teams, with the additional benefits of broader research resources and capabilities of the Global Investment Team.
Opening up Permal’s USD7 billion Managed Account Platform to Fauchier Partners clients. This is currently available to Permal clients and provides greater investor control, transparency and customisation possibilities.
Leading proprietary information systems and databases, leveraging the best technology from both firms.
Shared processes and controls, which will allow the Group to deliver superior services to clients.
Continued partnership with BNP Paribas Investment Partners, facilitating and enhancing both client service and new business development, with a global distribution agreement for Fauchier and Permal products.
Joe Sullivan, Interim Chief Executive Officer of Legg Mason, says: “This transaction significantly expands Permal’s institutional business, creating a global institutional capability across geographies and client profiles. The strength of this combined platform will be an important driver of Permal’s future growth as clients in the alternatives sector increasingly look for providers with size and scale. This is an important step to growing our alternatives capabilities through Permal. This deal will be accretive to the Legg Mason shareholder in the first year, reflecting our ongoing commitment to creating shareholder value.”
Isaac Souede (pictured), Chief Executive Officer of Permal, says: “This transaction is highly beneficial for both sets of our clients, bringing together leading alternatives teams and further developing the Group’s investment resources, with significant investment presence in New York and London. Strategically, Fauchier Partners meets all of our criteria, for it accelerates the development of our institutional presence, enhances the European and Asian business, and strengthens the Permal employee talent pool. Alongside Legg Mason, we saw significant opportunities from this transaction to further our joint strategic goals and worked closely to bring this to fruition.”
Clark Fenton, Chief Executive Officer of Fauchier Partners, says: “This is a very exciting strategic development for our business. Combining Fauchier Partners with Permal gives our clients the best of both firms. We maintain our existing investment process, but have the additional benefit of a much wider pool of investment talent and resources. We get the benefits of scale, increasing our buying power and global reach. Crucially our clients will be able to access one of the industry’s largest managed account platforms, which is of particular relevance to our growing customised account offering.”