| March 27
March 27 Ares Management LLC, the credit
investment and private equity firm that has been pitched on the
idea of an initial public offering for more than a year, is
finally close to registering to go public, according to two
people familiar with the matter.
A filing with the U.S. Securities and Exchange Commission
registering Ares for an IPO is expected in the coming days or
weeks, the people said on Thursday. JPMorgan Chase & Co
and Bank of America Corp will be among the underwriters,
Ares, JPMorgan and Bank of America representatives declined
to comment. The sources asked not to be identified because the
matter is confidential.
It could not be immediately established why Ares decided the
timing was right now to go public. Shares of Ares' publicly
listed peers rallied in 2013 but have been relatively flat and
some have even declined since the start of the year, suggesting
valuations for these firms may have reached a temporary peak
after red-hot capital markets enabled them to post bumper
Reuters reported in December, based on people familiar with
the matter, that Ares had been resisting calls from investment
banks for an IPO because it did not believe at the time it
needed to be public in order to grow.
But creating a publicly traded stock to use as currency to
fund its growth and potential acquisitions could tempt it to go
public, the people said at the time.
Demonstrating the value of its stock as currency, publicly
traded rival KKR & Co LP said in December it would
acquire its specialty finance company for $2.6 billion, paid for
with newly issued KKR shares. Shareholders of that specialty
finance company, called KKR Financial Holdings LLC, are
due to vote on that deal on April 30.
Alternative asset managers also use their shares to
incentivize staff, as publicly traded stock can be sold and
bought much more easily than stakes in private firms. This also
allows founders to gradually cash out on their stakes over time.
But these firms also have to add a battery of compliance and
other staff to ensure they are meeting listing rules and are
obliged to reveal much more about their performance publicly.
They also have to reassure their fund investors that they remain
a top priority.
Since the stock market debuts of Blackstone Group LP
and Fortress Investment Group LLC in 2007, four other
major U.S. alternative asset managers have gone public - KKR,
Apollo Global Management LLC, Oaktree Capital Group LLC
and Carlyle Group LP. Carlyle was the last of
them, having gone public in May 2012.
Bloomberg reported earlier on Thursday that Ares is
preparing to file for an IPO within days.
The Los Angeles-based firm has in the past snubbed an IPO in
favor of a private placement. Last July, it sold a 6.25 percent
equity stake in the firm to insurer Alleghany Corp for
$250 million. The deal valued Ares at $4 billion.
It was the second major private placement that Ares had
accepted. In 2007, Abu Dhabi Investment Authority acquired a 20
percent stake in Ares for $375 million, giving it a valuation of
$1.9 billion at that time.
Ares had $74 billion of assets under management as of the
end of December, $55 billion of which were in private and public
Its stronghold in direct lending and wider credit
investments can be traced to the roots of its founders, Antony
Ressler, John Kissick, Bennett Rosenthal and David Kaplan.
Ressler and Kissick worked as bond traders in the 1980s at
Drexel Burnham Lambert, and in 1990 co-founded Apollo alongside
Leon Black, Marc Rowan and Joshua Harris.
At Apollo, Ressler and Kissick led the firm's capital
markets business and in 1997 spun it out into Ares, which became
independent in 2002. Rosenthal joined Ares in 1998 from Merrill
Lynch & Co's global leveraged finance group while Kaplan joined
in 2003 from investment firm Shelter Capital Partners LLC.
(Reporting by Greg Roumeliotis in New York; Editing by Bernard