Ares Management has entered the secondaries market by buying one of its most well-known operators.
The $197 billion private equity and private credit giant has entered into a definitive agreement with Landmark Partners‘ parent company, BrightSphere Investment Group, to acquire 100 percent of the Simbsury, Connecticut-based secondaries firm, according to a statement.
The deal is valued at $1.08 billion, including $787 million in cash and approximately $293 million in Ares shares.
“We are incredibly proud to announce this transaction with Landmark, a pioneer in developing the asset class of private market secondaries,” said Michael Arougheti, chief executive and president of Ares. “We believe secondary investments are only increasing in their appeal to a growing group of investors and we are excited to include these strategies in our comprehensive alternatives offering.”
“Ares’ global platform and significant resources will enhance our combined investment capabilities,” said Francisco Borges, chairman and managing partner of Landmark. He added that he looked forward to driving “transaction structuring innovation and business growth for many years to come”.
Landmark has $18.7 billion in assets under management and more than 600 fund investors, the statement noted. It will combine with Ares’ credit, private equity, real estate and strategic initiatives businesses to create a platform with 1,600 institutional investors, and with less than a 5 percent overlap between the two firms.
Landmark will benefit from Ares’ 825 sponsor relationships on its direct investment platform to “further differentiate its existing key competitive advantages in transaction sourcing, evaluation and structuring”, the statement added.
Ares’ chief operating officer Michael McFerran said in the statement that the deal is expected to be financially accretive to the firm’s core earnings, including after-tax realised income per common share and fee-related earnings margin.
The transaction is expected to close in the second quarter of 2021 and is subject to customary closing conditions, including regulatory approvals.
In February, Secondaries Investor reported that Landmark was targeting “north of $10 billion” in its latest fundraising cycle across its private equity, real estate and infrastructure funds, amid the covid-related disruption.
“We would expect to get to our target over the next couple of years – this year and 2022,” said BrightSphere chief executive Suren Rana at the time. “That sort of compares to what we did in the last vintage.”
Flagship private equity secondaries fund Landmark Equity Partners XVII was launched last July and has received a $90 million commitment from Cathay Life Insurance, according to Secondaries Investor data. The fund is targeting $6 billion, according to documents prepared for the Massachusetts Water Resource Authority.
Infrastructure Partners II is also in the market targeting $1.5 billion, Secondaries Investor reported in 2019.
Several large asset managers have entered the secondaries buy-side in recent years, including Brookfield Asset Management and TPG, Secondaries Investor reported.