Legg Mason mulls private equity

The global asset management firm is seeking private equity capabilities, although not as a limited partner.

Baltimore-based asset management giant Legg Mason is considering building or acquiring a private equity programme for its growing alternative investments platform. 

“We know we need to do more. Two of the biggest gaps we see from a product standpoint are in international equity and alternatives,” said Legg Mason’s Chief Financial Officer, Peter Nachtwey, during Keefe, Bruyette & Woods’ Asset Management Conference earlier this month. 

The alternatives businesses and platforms fit well with the firm’s model, Nachtwey said during the conference, according to a webcast of the event. 

Legg Mason has no timetable for adding a private equity programme and does not necessarily consider it a near-term event, a Legg Mason spokesperson told Private Equity International.  While it’s not clear what form the firm’s private equity model could take, it is unlikely the institution will become a limited partner.  “We would look to add a private equity capability rather than be an LP,” the spokesperson said.

“We already have strong global fixed income and US equity capabilities, so private equity, real estate and other sleeves make sense in terms of building out our capabilities,” the spokesperson said. “At the moment, we have a strong capability in fund of hedge funds.”

Legg Mason may consider expanding the platform of its alternatives manager, Permal, a fund of hedge funds that also provides some private equity fund of funds capabilities, according to the spokesperson. Permal manages about $24 billion for pension funds, insurance companies, family offices, private banks and foundations, according to its website. 

Founded in 1899, Legg Mason has $654 billion assets under management as of 31 May, according to its website. It is operated by Joseph Sullivan, president and chief executive officer, and Nachtwey. Sullivan became permanent CEO only three months ago, Nachtwey said during the conference.
 
Legg Mason manages 11 investment firms including ClearBridge Investments and four namesake affiliates that mange long-term valuation, global equities, Australian equities and security portfolios in Poland, according to the firm’s website.