Ares Management LLC is preparing to sell stock in the biggest initial offering of an alternative-asset manager since Carlyle Group LP went public in 2012, according to two people with knowledge of the matter.
The Los-Angeles based investment firm, which oversees $74 billion in credit and private equity, is set to disclose its plan in a filing with the U.S. Securities and Exchange Commission within days, said the people, asking not to be identified because the information is private. The firm is working with JPMorgan Chase & Co. and Bank of America Corp.
Chief Executive Officer Tony Ressler, who co-founded Ares in 1997 after working at Drexel Burnham Lambert Inc. and Apollo Global Management LLC (APO), is taking advantage of a five-year stock-market rally that pushed shares of peers near record highs. Apollo, run by Ressler’s brother-in-law Leon Black, and Blackstone Group LP (BX) more than doubled in the past two years. Ares last year made its biggest private-equity investment, buying luxury retail chain Neiman Marcus Inc. from TPG Capital and Warburg Pincus LLC for $6 billion.
“Having watched the performance of other management firms like Blackstone and Apollo, Ares probably sees strong potential stock performance,” said Adam Goldman, the founder of Red Rocks Capital LLC, which manages $1.3 billion invested in listed private-equity vehicles. “We think publicly listed private equity is just starting and has a long way to run.”
Bill Mendel, a spokesman for Ares at Mendel Communications LLC, JPMorgan spokeswoman Jessica Francisco and John Yiannacopoulos, a spokesman at Bank of America, declined to comment on the IPO process.
Fortress Investment Group LLC was the first alternative investment firm to go public after selling shares to the public in 2007, followed by Blackstone. Washington-based Carlyle sold stock to the public in May 2012 at $22 each and has gained more than 50 percent since then.
With $74 billion under management, Ares would be bigger than Fortress, which oversees about $62 billion and has a market value of $3.1 billion. It would trail distressed debt investor Oaktree Capital Group LLC (OAK), which has $84 billion in assets under management and a market capitalization of $9.1 billion.
“Fund managers have watched jealously while colleagues at other funds converted their illiquid personal wealth into liquid wealth,” said Erik Gordon, a business professor at the University of Michigan in Ann Arbor. “Ares won’t be the last one to go public while the IPO window is open.”
Begun as a capital markets business that issued and managed debt for corporations, Ares has since expanded into private equity, real estate and private debt. The firm started its buyout business in 2003 and oversees about $10 billion in private-equity assets, raised through five funds, including one dedicated to deals in Asia. Current investments include 99 Cents Only Stores and Simmons Bedding Co., according to the firm’s website.
Ares’s largest businesses are tradable credit, or buying and selling leveraged loans and high-yield bonds, and direct lending, a group that provides financing to mid-sized companies. The two units together manage assets worth $55 billion, according to the website. The firm’s real estate group manages about $9 billion in assets and its business development company oversees $8.1 billion. It also manages a real estate investment trust and other publicly traded investment pools.
Ressler helped lead the capital markets business at New York-based Apollo after its founding in 1990. Before Apollo, he traded bonds at Drexel Burnham Lambert, the pioneering junk bond firm. Ressler is a co-owner of Major League Baseball’s Milwaukee Brewers.
To contact the editors responsible for this story: Christian Baumgaertel at email@example.com Pierre Paulden