Legg Mason will acquire Fauchier Partners from BNP Paribas Investment Partners and combine it with its subsidiary Permal Group to create a $24 billion hedge funds-of-funds money management unit.
The deal is expected to close in the first quarter next year; terms were not disclosed, said Omar Kodmani, president of Permal Group, in an interview.
“Our viewpoint from the beginning was expansionary and that Fauchier Partners would be a strategic bolt-on, rather than an industrial type of deal made to realize synergies,” Mr. Kodmani said.
Mr. Kodmani said that except for centralized functions such as IT systems and research resources, Fauchier Partners will be completely additive to Permal Group. Mr. Kodmani is based in Permal's London office and said it is likely that London-based Fauchier Partners would move in with Permal there.
Ninety-five percent of Fauchier Partners' $6 billion under management in hedge funds-of-funds strategies is managed for U.K., European, Asian and Australian institutional investors.
Permal is headquartered in New York, and 50% of its $18 billion is from institutional clients. Most of Permal's clients are North American. Among the 170 hedge fund managers the two funds of funds track between them, only 10 firms overlap, Mr. Kodmani said.
Fauchier's name will be dropped over time.
Clark Fenton, Fauchier's CEO, will head the combined investment teams as co-chief investment officer with Robert Kaplan, now executive vice president and CIO of Permal Group's New York-based investment team. Messrs. Fenton and Kaplan will continue to lead the investment management teams in their respective cities, Mr. Kodmani said.
BNP Paribas Investment Partners and Permal Group have set up a new global distribution partnership for Permal Group's commingled and customized hedge funds-of-funds strategies, said Sarah Marteleur, a BNP Paribas spokeswoman, in an e-mail.