First Eagle Investments’ looming transition to a third round of private equity ownership could set the stage for accelerated growth going forward, said Mehdi Mahmud, the firm’s CEO, in a March 4 interview.
The New York-based manager of roughly $145 billion in equity, fixed income, multi-asset and alternative credit strategies announced on March 3 that San Francisco-based private equity firm Genstar Capital LLC has signed a definitive agreement to acquire the controlling stake in First Eagle that Blackstone and Corsair Capital have held for most of the past decade.
Terms of the deal — due to be finalized in the second half of 2025 — weren’t disclosed.
A big chunk of the stake Blackstone and Corsair acquired in 2015 was purchased from TA Associates. The Boston-based private equity firm invested in First Eagle in 2007.
Gunnar Overstrom, a partner at Corsair, said his firm and Blackstone — which are moving to exit now as their 10th anniversary as owners approaches, the long end of a private equity investment's "natural life" — will leave First Eagle’s business considerably strengthened, with AUM up roughly 50%, the addition of attractive asset segments such as alternative credit and small-cap equities and a dramatically expanded distribution franchise.
Mahmud and Overstrom, in separate interviews, declined to say how much the deal effectively values First Eagle at now.
A decade ago, the announcement of Corsair and Blackstone’s acquisition of a controlling stake in First Eagle pegged the value of the firm at around $4 billion. Some news reports estimated that First Eagle’s current value remains in the $4 billion range — not out of line for a period which saw the rise of passive investing undercut valuations for many active managers.
Overstrom, while conceding the industry headwinds, said judging an investment's returns on an basis of the change in a company’s valuation across two points in time ignores the fact that “the business has generated a tremendous amount of free cash flow over that period, much of which has been distributed to shareholders in the form of dividends.”
For clients concerned that a change in private equity ownership could impact them adversely, Mahmud said the handoff to Genstar from Corsair and Blackstone is “about the best possible outcome,” preserving First Eagle’s autonomy, with no changes in leadership, investment teams or compensation structures.
Genstar, meanwhile, has made a number of investments in the broader wealth management space which has been a focus of First Eagle’s efforts to build out its business over the past decade under Blackstone and Corsair, Mahmud noted.
A centerpiece of those efforts: tripling the firm’s distribution sales force over that decade to around 191 professionals today, with a focus on serving as trusted advisers rather than salesmen to the intermediary gatekeepers First Eagle works with, Mahmud said.
That distribution muscle should give First Eagle a leg up in an industry ripe for consolidation, amid the broader industry trend of clients looking to work with a smaller number of advisers, he said.
First Eagle’s strategy, meanwhile, revolves around fielding a growing number of alpha-focused strategies for distribution through that network — the most recent example being the high-yield municipal bond capability the firm launched a little over a year ago. Client AUM for the muni strategy topped $5.6 billion as of Jan. 31.
“We’d like to do at least one, hopefully two or three deals a year,” said Mahmud, in an interview earlier this year.
Genstar is open to First Eagle pushing its strategy into a higher gear, Mahmud said.
The private equity firm “has taken a lot of time and very close due diligence to thoroughly understand First Eagle’s strategy, our vision, our strengths and weaknesses, how we’re executing … and they’d like to support us getting there faster" by making capital available to do more deals, launch more funds, make more investments than First Eagle has done in the past, he said.
Over the past 10 years, First Eagle has financed 100% of its investments — in alternative credit boutiques, new investment teams, distribution resources — with no injections of capital from shareholders, even as the firm distributed healthy dividends to those shareholders, Mahmud said.
“Genstar’s perspective is, they’re actually comfortable with low dividends or no dividends to accelerate the pace at which we make investments in the business. In fact, they’re encouraging us to redirect that into our business plan, to accelerate what we can achieve,” he said.
A spokeswoman for Genstar declined to make executives available for comment.
According to Genstar’s website, the firm has invested in a number of companies across the broader wealth management ecosystem, including Docupace, a leading provider of software to streamline back-office operations of wealth management enterprises and financial advisers, in 2024; Cerity Partners, a provider of financial management services to high-net-worth individuals and their families, in 2022; and independent RIA Mercer Advisors, in 2015.
While First Eagle may be Genstar’s first investment in a money manager, the private equity firm’s deep expertise in the wealth management ecosystem “positions them to understand the First Eagle business exceptionally well, which is why they were able to underwrite it the way that they did,” said Mahmud.
“Particularly in bad times, a shareholder that understands the business intimately can be very, very helpful,” he said.
