initial public offerings (IPOs) trading on American exchanges

Saturday, April 5, 2014

Ares Management files for $100 million IPO

  • The Ares IPO is the latest in a boom that began in 2007 when the Blackstone Group (BX) raised a staggering $4 billion in its offering. Since then, other heavy hitters including Kohlberg Kravis Roberts (KKR),  Apollo Management (APO), and the Carlyle Group (CG) have also gone public.
  • Apollo shares have jumped 70% since going public in 2011, while KKR has soared 130% since its 2010 IPO. Carlyle, which went public in 2012, is up more than 60% from its offering price.

Ares Management filed to raise $100 million in the largest initial public offering of an alternative-asset manager in almost two years.

The figure is a placeholder used to calculate fees and may change. Los Angeles-based Ares oversees $74 billion in credit and private equity assets, and plans to use the proceeds from the IPO to repay debt, according to yesterday’s filing.

Michael Arougheti, president of private equity firm Ares Management

At the $100 million amount, the IPO would be the biggest of a private-equity firm since Carlyle Group LP (CG) raised $671 million in May 2012. Stock prices of Ares’ private-equity peers are surging: Blackstone Group LP (BX) reached a record high this month, while Apollo Global Management LLC has more than doubled over the last two years.

BX monthly chart

Two other alternative-asset management firms are also weighing IPOs. TPG Capital, which has about $59 billion in assets, would consider going public, the firm’s founding partner David Bonderman said in February. Barry Sternlicht, the chairman and chief executive officer of Starwood Capital Group LLC, has spoken with banks as he prepares to sell shares of the property-investment firm, a person familiar with the matter said Feb. 18.

Founder Salaries

Ares oversees $10 billion of private equity, $9 billion in real estate and $55 billion in direct lending and tradable credit, the filing showed. The company posted $478.7 million in fee revenue last year, an increase of 43 percent from the prior year, the filing showed.

Ares paid co-founders Tony Ressler, Michael Arougheti, David Kaplan and Bennett Rosenthal salaries of $1.8 million each last year, according to the filing. The firm didn’t disclose the carried interest, or share of investment profit, allocated to the executives or the units they will own after the IPO.

Following the offering, Ares will be considered a partnership limiting common stockholders’ voting rights and their ability to remove or elect directors of the general partnership, the filing showed.

JPMorgan Chase & Co. and Bank of America Corp. are managing the sale, the document shows. Ares listed 13 banks in its prospectus, including Goldman Sachs Group Inc., Morgan Stanley and Wells Fargo & Co. The company intends to apply to list its shares on the New York Stock Exchange under the symbol ARES, the filing shows.

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