Legg Mason, Baltimore, plans to increase its ownership stake in Precidian Investments, a firm that specializes in ETF and mutual fund development, to include its active semi-transparent ETF structure, ActiveShares, that received SEC approval last spring, the company has confirmed.
Legg Mason notified Bedminster, N.J.-based Precidian on Jan. 21 that it had begun the process of exercising its option to increase its current 19.9% ownership stake in the company to as much as 75%, a Legg Mason spokeswoman said Friday in an email.
Legg Mason expects to pay $25 million to increase its stake in Precidian, which it acquired in January 2016, the spokeswoman added.
"We have up to nine months to conduct our due diligence and we expect the deal to conclude within that nine-month period," she said.
Precidian is currently working with Legg Mason affiliate ClearBridge Investments to launch products using the ActiveShares structure, the spokeswoman said.
Legg Mason chairman and CEO Joseph A. Sullivan said Wednesday during the company's latest earnings call that American Century Investments and Legg Mason affiliate ClearBridge are expected to be the first to market with new ETF products using ActiveShares.
On Friday, the Legg Mason spokeswoman said of the expected deal with Precidian: "We think there is great potential in ActiveShares as evidenced by the interest we're seeing. There are now 14 signed licensees of ActiveShares; Goldman Sachs was the most recent company to file for exemptive relief on Jan. 16. Licensees represent 26% of active U.S. equity mutual fund assets. It's a blue-chip list of asset managers."
Legg Mason had $803.5 billion in assets under management as of Dec. 31.