Legg Mason is planning to increase its stake in Precidian Investments in a process that could result in Legg owning as much as 75% of Precidian.
The process could take as long as nine months, with an estimated cost of up to $25 million, according to a Legg Mason spokesperson, who added that Legg Mason has begun the due diligence process for the transaction. Legg currently has a nearly 20% stake in Precidian.
Precidian is one of a handful of firms that has developed a SEC-approved structure for nontransparent actively managed ETFs. The “ActiveShares” structure has been licensed by 14 firms that currently represent one-quarter of the assets in U.S. equity mutual funds, according to Legg Mason CEO Joe Sullivan.
“We notified Precidian last week of our intent to exercise our option to acquire a majority stake in the company [Precidian] and we will be working very closely with them to continue the buildout of this important capability for our industry,” Sullivan said on a Jan. 29 earnings call.
Legg Mason’s Clearbridge affiliate has filed for an ETF using the “ActiveShares” structure that could be the first nontransparent fund to launch.
The Clearbridge Focus Value ETF (CFCV) will invest in large-cap U.S. stocks with the intention of achieving long-term capital appreciation, according to its prospectus.
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