(Adds details, background)
By Tanya Agrawal and Anil D'Silva
May 2 Shares of Ares Management LP, the
first U.S. private equity firm to go public in about two years,
fell as much as 5.3 percent in their trading debut on Friday,
adding to the list of underperforming IPOs over the past month.
More than half of the 27 companies that went public in April
raised less than expected, making it the weakest month for IPOs
since June 1998, according to Thomson Reuters data.
Ares' stock fell even after the size of its offering was
slashed by 37 percent and priced well below the expected range,
in another sign that IPO investors are becoming pickier.
The company's shares fell to a low of $18 in early trading
on the New York Stock Exchange, $1.00 below their offer price.
The stock had been expected to price in a range of $21-23.
At the low, Ares was valued at $3.8 billion, while CEO and
co-founder Tony Ressler's stake was worth about $1.2 billion.
Ares is the seventh U.S. private equity firm to go public
since 2007, when Blackstone Group started the trend, but
it is the first since 2012 when Carlyle Group listed on
Shares of private equity firms rallied in 2013 but have
fallen since the start of the year, suggesting valuations may
have reached a peak for now, analysts have said.
The shares of companies launching IPOs have also experienced
mixed fortunes in recent months. An exchange traded fund created
by Renaissance Capital that tracks the performance of IPOs
, has fallen about 2 percent since the start of the year.
TIES TO APOLLO
Ressler, 53, retains a 23 percent stake in the company he
co-founded with John Kissick, Bennett Rosenthal and David Kaplan
and he is the company's second-biggest shareholder.
A veteran of junk bond pioneer Drexel Burnham Lambert,
Ressler also co-founded Apollo Global Management LLC
with brother-in-law Leon Black, among others. Black remains
Apollo's chairman and chief executive.
Ressler and Kissick led Apollo's capital markets business,
which was spun out as Ares in 1997.
Ares became independent of Apollo in 2002 but is often
compared to its former parent.
Like Apollo, the company is known for its credit
investments, rather than high-profile leveraged buyouts.
Ares' highest profile deal was its $6 billion purchase of
luxury department store operator Neiman Marcus with Canada's
national pension fund last year.
The company had $74 billion of assets under management as of
the end of December, of which $55 billion was in private and
public credit funds rather than private equity.
Ares' also controls Ares Capital Corp, a direct
lender to developing small and mid-sized businesses.
Ares' biggest shareholder is AREC Holdings Ltd, a wholly
owned subsidiary of the Abu Dhabi Investment Authority, which
owns almost half of the company. AREC had originally planned to
sell some of its shares in the offering.
J.P. Morgan and BofA Merrill Lynch were lead underwriters.
(Additional reporting by Neha Dimri; Editing by Ted Kerr)