Ares’ PE and RE secondaries fundraising fortunes diverge

Ares Management's private equity secondaries product, managed by the Landmark Partners team, has suffered key departures in the past year.

Fundraising for Ares Management‘s private equity secondaries fund appears to be lagging compared with that for its real estate product.

The listed asset manager raised $200 million for its flagship PE secondaries fund during the first quarter of this year, according to a presentation accompanying the firm’s latest earnings. This compares with $300 million in the fourth quarter of last year and $1.5 billion for full-year 2021.

Landmark Equity Partners XVII came to market as late as July 2020 with a $6 billion target, according to Secondaries Investor data. The total amount the fund has raised is not clear.

In contrast, the firm’s real estate secondaries fund is marching steadily towards its target. Landmark Real Estate Partners IX collected $900 million in the most recent quarter and $800 million in the fourth quarter of 2021.

Fund IX is targeting $3.5 billion, which would knock its predecessor off the top of the list of the largest RE secondaries vehicles ever raised.

Ares did not wish to comment on the fundraises.

Ares acquired Landmark Partners and its $19 billion of assets under management in June. At the time, Ares chief executive Michael Arougheti said that Landmark would target at least $10 billion in its latest fundraising cycle across PE, RE and infrastructure funds.

Landmark has lost several senior PE executives in the past year. Secondaries Investor reported last week that London-based partner Charlie Tingue had left the firm. A key person on both Landmark Equity Partners XVI and Landmark Equity Partners XVII, his departure is understood to not have triggered a key person event.

Partner John Stott left the firm in July. It is unclear where he was headed.

Ares’ private equity secondaries funds generated gross returns of 4.6 percent for the quarter and 43.5 percent for the trailing 12-month period, according to the presentation. Real estate generated gross returns of 12.2 percent for the quarter and 54.5 percent over the trailing 12 months.

In January, Ares completed its acquisition of Spring Bridge Partners, bringing former Coller Capital investment professionals Sebastien Burdel and Luca Salvato on board to focus on GP-led processes.

This month, it launched a $250 million 40 Act fund aimed primarily at individual investors. The non-traded, closed-end Ares Private Markets Fund will invest in a portfolio of private assets acquired primarily on a secondary basis.

On the Q1 earnings call, Arougheti described the vehicle as a “nice complement” to its flagship secondaries funds.