Legg Mason will acquire a controlling 75% stake in RARE Infrastructure Ltd., a Sydney-based manager of $7.6 billion in global listed infrastructure assets, from the firm's employees and minority owner Treasury Group/Northern Lights Capital Group, a multiboutique investment firm.
Separate announcements Wednesday by the three parties said Legg Mason will pay up to A$200 million ($146 million) for the majority stake, which would see the share held by employees drop to 15% from 64% and Treasury Group/Northern Lights’ share fall to 10% from 36%.
The deal — which calls for an upfront cash payment of A$112 million and earn-outs of up to A$42 million over a three-year period — should close by the end of November, said a Treasury Group/Northern Lights' news release.
A spokeswoman for Treasury Group/Northern Trust couldn't immediately explain the gap between those combined payments of up to A$153 million and the A$200 million figure offered as the total consideration for the transaction.
The news release by Legg Mason said the acquisition will expand the holding company’s offerings in the high-growth area of “equity liquid alternative investments.”
Affiliate Martin Currie Investment Management offers two listed infrastructure funds, said a Legg Mason spokeswoman.
The announcements by all three parties noted that Legg Mason's global network would facilitate the expansion of RARE Infrastructure's business, especially in the U.S. and Europe.
The Legg Mason spokeswoman said the firm will have the option to buy out Treasury Group/Northern Light’s remaining stake at some point in the future.
In August 2014, Treasury Group, a Sydney-based multiboutique holding company, and Northern Lights Capital Group, a Seattle-based private equity firm focused on the money management sector, agreed to form a jointly owned platform. As of June, that platform had 19 boutique managers with combined assets under management of A$49 billion.
The Treasury Group/Northern Lights announcement said the sale would offer the firm the opportunity to “monetize the RARE investments at an attractive point in the infrastructure cycle” — providing capital to repay debt and make new investments.