Legg Mason to buy Clarion for $585m

The acquisition of 83 percent of Clarion sees the Baltimore-based global asset manager break into the real estate investment market.

Legg Mason has agreed to acquire a majority interest in Clarion Partners, the New York-based real estate investment firm, for $585 million.

The acquisition will see the Baltimore-based global asset management giant move into the real estate space. The New York-listed firm has $671.5 billion in assets under management as of December 31, 2015 and has been steadily expanding its offerings to investors. Last July, for instance, it acquired Australian infrastructure investment firm RARE Infrastructure, which manages $7.6 billion of infrastructure assets globally.

Clarion Partners, which manages approximately $40 billion across the real estate risk/return spectrum, will operate as the primary real estate investment arm for Legg Mason.

Under the terms of the transaction, Legg Mason will acquire an 83 percent ownership stake in Clarion Partners; the Clarion management team will retain a 17 percent stake in the business. Clarion’s previous majority partner, Lightyear Capital, will sell its entire ownership stake in the transaction.

Lightyear bought a 75 percent interest in Clarion from Dutch financial services company ING Group in June 2011 in an approximately $100 million deal. Clarion’s management, which spun out of ING at the time, acquired the other 25 percent.

“Clarion Partners, with a focus on strong performance through market cycles, a positive growth profile and differentiated product offerings, brings an important alternative asset class to our portfolio of investment managers,” commented Joe Sullivan, chairman and chief executive of Legg Mason.

Steve Furnary, chairman and chief executive of Clarion Partners, who will continue in his current role, said: “We remain investors in our business, and the partnership gives us investing and operating autonomy so that we can continue to serve our clients in the same way we always have. We are pleased to be a part of such an outstanding organization.”

RBC Capital Markets and Azrack & Company served as financial advisors to Legg Mason. Morgan Stanley acted as financial advisor to Clarion Partners.