Clarion Partners, a private equity real estate firm that has gone through many iterations, is due to be recapitalized once again.
PERE broke the news last month that Clarion’s majority owner, private equity firm Lightyear Capital, was believed to be receiving bids for its majority stake in the New York-based real estate investment manager.
Lightyear, also New York-based, had acquired a 75 percent interest in Clarion in June 2011 for approximately $100 million, as part of the latter firm’s management buyout from Dutch financial services company ING Group. ING, which had owned Clarion for 12 years, sold the business as it sought to divest its real estate operations, among a number of other businesses, following the global financial crisis.
Clarion’s management, which spun out of ING at the time, acquired the other 25 percent. The firm’s management is not thought to be looking to sell its interest.
Clarion is a real estate investment manager that has spent the vast majority of its history with the involvement of one outside investor or another. Indeed, the firm has only spent three years of its history as an entirely independent business.
Clarion was founded in 1982 by former Citibank executives Stephen Furnary and John Weisz. At the time, the business was known as Jones Lang Wootton Realty Advisors, with property services firm Jones Lang Wootton as its corporate partner and minority investor. In 1995, the firm’s partners bought out Jones Lang’s interest, and with 100 percent ownership of the business, renamed it Clarion Partners.
However, only three years later, Clarion agreed to sell a majority stake in its business to ING. Furnary has said that the firm chose to give up complete independence in order to expand its business outside of the US through its partnership with ING. Indeed, during its years with ING, Clarion began investing in Mexico and opened its Brazil office. It also launched its opportunistic funds series and flagship open-end fund, as well as established industrial, apartment and hospitality platforms, during that time.
That expansion continued under Lightyear, with Clarion both opening a London office and establishing a debt investment business a year after its management buyout from ING. Under Lightyear’s ownership, Clarion has grown from approximately $22 billion of assets under management in June 2011 to $38 billion in assets today.
The private equity real estate industry has been rife with speculation on potential bidders for Lightyear’s stake in Clarion, with names such as The Man Group, Massachusetts Mutual Life Insurance Company and Legg Mason having been floated.
The firm declined to comment on the matter. What is clear, however, is whichever firm ends up buying Lightyear’s interest, Clarion will be keen to continue on its growth path with its new investor.