Legg Mason Inc.’s ClearBridge Advisors unit completed a $1.27 billion initial public offering for a closed-end fund, the largest in almost three years.
The ClearBridge Energy MLP Fund began trading today on the New York Stock Exchange under the symbol CEM, the Baltimore- based money manager said today in a statement. The fund invests in master limited partnerships in the energy market.
“It’s very encouraging to see retail shareholders looking again at closed-end fund offerings in such a serious way,” said Cecilia Gondor, a closed-end fund analyst at Thomas J. Herzfeld Advisors in Miami. “We’re seeing a real pick-up of offerings now.”
The IPO is the largest for a closed-end fund since Boston’s Eaton Vance Corp. raised $1.3 billion for its Risk-Managed Diversified Equity Income Fund in July 2007, Gondor said. Closed-end offerings dried up after the February 2008 collapse of the auction-rate securities market, a source of leverage finance for many funds. Nuveen Investments, a unit of Chicago- based private-equity firm Madison Dearborn Partners LLC, raised $540 million in April for its Build America Bond Term Fund.
The new fund will seek to add 20 percent to 25 percent to its total assets through bank loans, Legg Mason spokeswoman Mary Athridge said in a telephone interview.
Closed-end funds issue a fixed number of shares and trade on an exchange like stocks. The funds can raise additional money by issuing preferred shares or debt.
Master limited partnerships combine the tax benefits of a limited partnership with the liquidity of publicly traded securities, Legg Mason said in its statement today. Gondor said individuals often choose to invest in MLPs via closed-end funds because they simplify tax accounting requirements.
Legg Mason had about $658 billion in assets under management as of May 31.