Ares Climbs Most Ever on Possible Kayne Anderson Merger

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Ares Management LP, the credit and private equity firm with $87 billion under management, rose the most in its 13 months as a public company as it weighs acquisitions.

Ares gained 4.8 percent to $20.21 at the close of trading in New York. The Los Angeles-based firm, which has a market capitalization of about $4.3 billion, extended its gain this year to 18 percent.

The company is in discussions to buy Kayne Anderson Capital Advisors, a private equity firm with $29 billion in assets, two people with knowledge of the talks told Bloomberg on Wednesday. The companies are discussing the potential combination and haven’t finalized a deal, said the people, who asked not to be named because the talks are ongoing. The acquisition would be paid for in stock and cash, they said.

Bill Mendel, a spokesman for Ares at Mendel Communications, and Paul Blank, a managing director at Kayne Anderson, declined to comment on a possible transaction.

Ares is also seeking to buy part of General Electric Co.’s U.S. private equity lending unit, people familiar with the matter said this week, after GE agreed to sell a chunk of the arm to Canada Pension Plan Investment Board. Ares is pursuing a deal for the $8 billion Senior Secured Loan Program it co-manages with GE, said the people, who requested anonymity because the details aren’t public.

The merger with Kayne Anderson, rare in the private equity industry, would accelerate Ares’s growth and bolster its energy-related efforts. Los Angeles-based Kayne Anderson focuses on oil and gas operators, energy infrastructure, real estate, middle-market credit, growth private equity and distressed municipal securities. Founded in 1984 by Ric Kayne and John Anderson, it has expanded to 290 investment professionals in eight U.S. offices.

Kayne, 70, would take a senior role such as co-chairman at the combined firm, which may be renamed to incorporate the Kayne Anderson brand, the people said.