US firm buys RARE Infrastructure for $205m

New York-listed Legg Mason intends to expand the Australian manager’s client base in the US, Asia and Europe.

Legg Mason, a Maryland-headquartered asset manager, has agreed to buy a majority stake in Sydney-based RARE Infrastructure (RARE) for $205 million.

Under the terms of the deal, the US firm will own 75 percent of the company, RARE’s management will keep a 15 percent stake and The Treasury Group, a previous owner, will retain a 10 percent share. The transaction is expected to close in November.

RARE Infrastructure, which manages about $7.6 billion for institutional and retail clients, has offices in Sydney, Melbourne, London and Chicago. It invests in the listed securities of infrastructure projects in sectors including airports, gas, electricity, water and roads, both in developed and emerging markets.

“RARE's investment expertise has strong relevance for many clients today, meeting important investment objectives including income, growth, diversification and capital preservation,” said Joseph Sullivan, chairman and chief executive of Legg Mason.

“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.”

Legg Mason said RARE would operate independently alongside Brandywine Global, ClearBridge Investments, Martin Currie, the Permal Group, QS Investors, Royce and Associates, and Western Asset Management, its other affiliates. The firm had $699 billion of assets under management as at the end of June.

The news comes little more than three months after Infrastructure Investor reported that RARE was considering a move to Europe in a bid to engage with UK and European pensions and assess their appetite for listed infrastructure.