Is Legg Mason leaning towards making a run at private equity?
Yes, according to CFO Peter Nachtwey.
While the Baltimore-based money manager isn’t looking to do big transformational acquisitions, it would be interested in adding teams to invest in those areas, Nachtwey said yesterday at the Keefe, Bruyette & Woods Asset Management Conference in New York. There are opportunities to replace aging infrastructure in developed markets and the need to build it in emerging markets, he said.
“We think just about any of the mainstream alternative models out there fit pretty well with our model, which is high-talent, independent affiliates,” Nachtwey said.
Legg Mason, led by CEO Joseph Sullivan, is reviewing its business and relationships with affiliates as it enters its sixth year of client redemptions. In March, Legg Mason acquired fund-of-hedge-funds unit Fauchier Partners, which added about $5 billion in assets. Sullivan has said Legg Mason is looking to buy a non-U.S. equity unit to expand the firm’s market share.
“Management remains on ‘front foot’ for deals,” using a combination of cash or leverage for transactions such as smaller “bolt-ons,” Citigroup analysts led by William Katz wrote in a research note yesterday.
Nachtwey also said today cost savings resulting from a review of the firm by a third-party consultant will be reallocated to selling and distributing the firm’s funds. Legg Mason still has a “tremendous amount” of distribution to build out globally, including in countries such as Japan, and has so far achieved about 60% of its goal, Nachtwey said.