Global asset manager Legg Mason Inc. announced that it has agreed to acquire a majority interest in Clarion Partners, the New York-based real estate firm that manages approximately $40 billion across the real estate risk/return spectrum. Under the terms of the deal, Legg Mason will acquire an 83% ownership stake in Clarion Partners for $585 million, and pay for its portion of certain co-investments on a dollar for dollar basis, estimated at $16 million. Clarion Partners was represented by Morgan Stanley, King & Spalding and Davis Polk & Wardwell LLP, and advised by Grail Partners. RBC Capital Markets and Azrack & Co. served as financial advisors to Legg Mason.
"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. Whether they seek growth, capital preservation or income, we are further able to offer our clients investments with attractive solutions. Most importantly, the experienced management team at Clarion Partners shares our passion for innovation, the creation of exceptional value through responsible investing principles and focus on excellence for clients. We welcome them to Legg Mason," said Joe Sullivan, Chairman and CEO of Legg Mason.
Clarion's previous majority partner, private equity firm Lightyear Capital, will sell its entire ownership stake in the transaction. Lightyear will continue to be "very active in the asset management space," said Mark Vassallo, managing partner of Lightyear Capital. Clarion will join Legg Mason as one of its independent investment management affiliates, and the management team (a significant number of which have signed long term contracts in conjunction with the transaction) will retain 17% of the outstanding equity in Clarion Partners. The deal is expected to close in the second quarter of 2016.
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