LEGG MASON ANNOUNCES ACQUISITION OF RARE INFRASTRUCTURE LIMITED
Experienced specialist asset manager focused on global listed infrastructure with $7.6 billion in AUM
Legg Mason, Inc. (NYSE:LM), today announced that it has agreed to acquire a majority equity interest in RARE Infrastructure, Ltd., (RARE) a pioneer in global listed infrastructure investing headquartered in Sydney, Australia.
The firm, with offices in Sydney, Melbourne, London and Chicago, specializes in global listed infrastructure investments, managing $7.6 billion for institutional and retail clients. The acquisition expands Legg Mason’s offerings in equity liquid alternative investments, adding an experienced manager in a high-growth asset class.
The transaction is expected to be accretive to earnings on a GAAP and adjusted net income basis in the first year after closing, which is expected in the 4th calendar quarter of 2015.
Under the terms of the transaction, Legg Mason will acquire a 75% ownership stake, the firm’s management team will retain a 15% equity stake and The Treasury Group, a previous minority owner, will retain 10%.
RARE will operate as a core independent investment affiliate along with Brandywine Global, ClearBridge Investments, Martin Currie, the Permal Group, QS Investors, Royce and Associates, and Western Asset Management.
Established in 2006, RARE is one of the largest alternative asset managers in the infrastructure asset class category. The firm’s investment approach is centered on risk adjusted returns on equity (RARE) and its investment process focuses on detailed analysis of cash flows of infrastructure assets that provide stable, predictable returns combined with the underlying macro and economic valuation drivers. RARE has:
• A focus on global listed infrastructure companies and invests in the listed equity securities of major infrastructure projects and developments such as airports, gas, electricity, water and roads in both developed countries and emerging markets.
• Products that provide the opportunity for stable and predictable returns, low correlation to other asset classes and reasonable inflation protection.
• Established investment process with strong performance relative to peers and an experienced portfolio management team with deep industry knowledge and support from sector focused research teams. The 15-person investment team has global reach across listed infrastructure categories and markets.
• A global institutional client base spanning Australasia, the US, the UK and Europe. Canada and the Middle East, consisting of large corporate and government pension funds, municipals and endowments.
• An extensive investment record and leading presence in the retail markets in Australia and Canada, with the ability to leverage Legg Mason’s Global Distribution to accelerate their growth.
• Strong relationships with institutions and consultants globally.
Joseph A. Sullivan, Chairman and CEO of Legg Mason, said, “RARE’s investment expertise has strong relevance for many clients today, meeting important investment objectives including income, growth, diversification and capital preservation. The market for infrastructure investing has grown significantly over the past few years and RARE has participated in this growth, particularly in early adopter markets like Australia and Canada. We believe that global demand for these liquid, long-dated assets will continue to grow and that we can leverage RARE’s existing geographic presence into additional important markets that Legg Mason’s global distribution platform serves in the US, Asia and Europe. This is an important investment capability addition for our clients and we welcome the RARE team to Legg Mason”.
Richard Elmslie, Founder and co-CEO said “I am very excited by the opportunity to form a partnership with Legg Mason, as their goals and culture are highly aligned with RARE’s vision. Their affiliate model allows management to run the business independently with governance and oversight from the board. This partnership provides continuity and sustainability for our clients with no change to the investment team or process”.
Nick Langley, Founder and co-CEO said “For our staff and business, this provides a number of opportunities including for enhanced career progression, equity participation in the business, and access to a deep, well -resourced support team. Overall, this is a great strategic and cultural fit for RARE”.
The senior management team at RARE has signed long-term contracts in conjunction with the transaction, and will retain a 15% equity stake in the firm. The senior team will invest a portion of the proceeds from the sale into the firm’s products.
RARE Infrastructure, Ltd. was advised by UBS Investment Bank.