Ares Management, L.P. ARES and Kayne Anderson Capital Advisors, L.P.
announced today that they have entered into a definitive merger agreement to
create Ares Kayne Management, L.P., one of the largest and most diversified
alternative asset managers with a combined $113 billion of assets under
management as of March 31, 2015. Under the terms of the agreement, Ares will
provide $2.55 billion in consideration, the majority of which will be in the
form of Ares Operating Group Units. The transaction is expected to close on
or around January 1, 2016, subject to customary regulatory approvals, Kayne
Anderson investor consents and other closing conditions.
Ares Kayne combines Ares Management, a leading global alternative asset
manager with $87 billion in assets under management, with Kayne Anderson, a
leading U.S. energy and energy infrastructure investor with $26 billion in
assets under management, to form a uniquely diversified global asset manager
that will invest across five complementary, market leading investment
groups: Tradable Credit, Direct Lending, Energy, Private Equity and Real
Estate. The combined firm will have approximately 450 investment
professionals in over 20 global offices serving more than 2,700 direct
investors, and will be a leading manager of publicly traded yield-oriented
vehicles with more than 400,000 retail account holders in eight public
companies, including the largest business development company ARCC
and the largest MLP-focused closed end fund KYN in the United States.
Upon closing, the merger is expected to be accretive to Ares' economic net
income, distributable earnings and fee-related earnings per unit. Ares Kayne
is expected to provide the following benefits to its stakeholders:
-- Enhanced investing expertise and advantages through a more expansive and
comprehensive investment platform
-- Complementary distribution channels across Ares' deep institutional
relationships and Kayne Anderson's retail, high net worth, family
office,
and institutional investors
-- More stable, high-quality and diverse revenue streams based on greater
long-lived capital and meaningful growth driven by strong investment
performance
"We have long known and admired Kayne Anderson as an industry leader in
energy, energy infrastructure, real estate and other asset classes, and this
merger will make us a differentiated investment manager with five
market-leading businesses. We expect the combination will make us better
investors by greatly enhancing our expertise in these compelling sectors and
will create new opportunities as we leverage each other's complementary
investor bases to expand our distribution," said Tony Ressler, Ares Chairman
and CEO. "In addition, Kayne Anderson adds long-lived capital and
significantly increases our fee-related earnings, which we expect will make
this merger meaningfully accretive to Ares' unit holders."
Founded in 1984, Kayne Anderson has approximately 110 investment
professionals across eight U.S. offices managing investments across energy
and energy infrastructure, specialty real estate, middle market credit and
growth private equity. Upon closing, Kayne Anderson Chairman and Founder
Richard Kayne and Ares Chairman and CEO Mr. Ressler will serve together as
Co-Chairmen of Ares Kayne Management, L.P.
"We have always held a value of being above-average investors for ourselves
and, most importantly, for our clients. We place great emphasis on the
development of competitive advantages and believe we have achieved them in
our core strategies, allowing us to generate attractive, risk-adjusted
returns for our investors," Mr. Kayne said. "Merging with Ares, whom we have
admired for years, adds more competitively advantaged strategies for our
clients, in addition to fortifying the firm's long-term management
capabilities. I am delighted by, and committed to, the future of Ares Kayne
as evidenced by my willingness to essentially swap equity for equity."
Kayne Anderson President and CEO Robert Sinnott will become Chairman of the
newly-formed Energy Group at Ares Kayne, which will include all of Kayne's
energy investment activities including energy private equity, private energy
income and energy infrastructure marketable securities. Substantially all of
Kayne Anderson's non-energy investment professionals will join Ares'
existing investment groups in Private Equity, Real Estate and Direct
Lending. The two companies will continue to manage their existing funds and
operate under their existing brand names.
In addition to Mr. Kayne, Mr. Sinnott and Kevin McCarthy of Kayne Anderson
will join Ares Kayne's Board of Directors and Mr. Sinnott, Mr. McCarthy and
Al Rabil will join Ares Kayne's Management Committee. Mr. Ressler, Michael
Arougheti and Michael McFerran will continue their respective roles as Chief
Executive Officer, President and Chief Financial Officer. Kayne Anderson
employees will generally be restricted until May 2016 from transferring any
equity received in connection with the transaction and will also be subject
to phased lockup restrictions on sales through 2021, similar to existing
Ares employee unit holders.
"This combination reinforces our shared views on building a uniquely
positioned, global asset manager with a comprehensive array of products, a
diverse investor base and long-lived capital to provide growth and stability
that reflect the best attributes of both alternative and traditional asset
managers," said Mr. Arougheti. "We believe the advantages of the combined
company will be beneficial to our fund investors, unit holders and
employees. We are excited that our two firms share common cultural ideals
centered on collaboration and empowerment, which we believe will continue to
make us successful."
Moelis & Company and BofA Merrill Lynch served as financial advisors to
Ares, and Wells Fargo Securities, LLC served as a financing advisor.
Proskauer Rose LLP served as Ares' legal counsel. J.P. Morgan Securities LLC
served as financial advisor to Kayne Anderson. Paul Hastings LLP served as
Kayne Anderson's legal counsel.
Conference Call and Webcast Information
Ares and Kayne Anderson will be holding a joint conference call and webcast
tomorrow to discuss the transaction at 8:30 a.m. (Eastern Time). A
presentation outlining the transaction will be posted on the home page of
the Events & Presentations section of the Ares website prior to the call.
All interested parties are invited to participate via telephone or the live
webcast, which will be hosted on a webcast link located on the Home page of
the Investor Resources section of our website at http://www.aresmgmt.com.
Domestic callers can access the conference call by dialing 1-877-317-6701
and International callers can access the conference call by dialing
1-412-317-6701. All callers will need to the Participant Elite Entry Number
2249657 followed by the # sign and reference "Ares Management, L.P." once
connected with the operator. For interested parties, an archived replay of
the call will be available through August 24, 2015 to domestic callers by
dialing 1-877-344-7529 and to international callers by dialing
1-412-317-0088. For all replays, please reference conference identification
number 10070050. An archived replay will also be available through August
24, 2015 on a webcast link located on the Home page of the Investor
Resources section of our website.
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