Ares Said in Advanced Deal Talks With GLP Capital Partners

(Bloomberg) — Ares Management Corp. is in advanced talks on an acquisition of GLP Capital Partners Ltd.’s operations outside of China, according to people familiar with the matter, in what could rank as one of the biggest recent combinations in the alternative asset management industry.

Ares and GCP are finalizing details of a transaction that could be agreed as soon as the next few weeks, the people said. They have been discussing a deal that would feature a roughly $3.5 billion upfront payment, with the total value climbing to around $5 billion over time if certain targets are hit, some of the people said.

Los Angeles-based Ares is considering using a mix of cash and stock to fund the acquisition, the people said, asking not to be identified as the talks are private. The parties are focused on ensuring the long-term retention of GCP’s leadership and staff, one of the people said.

Shares of Ares rose 2.1% to $146.86 at 1:02 p.m. in New York trading Friday, giving the company a market value of more than $46 billion. 

Bloomberg News reported in June that Ares was exploring the acquisition. GCP has about $66 billion of assets under management outside China, spread across Japan, Southeast Asia, Europe, the US and Brazil. Ares Chief Financial Officer Jarrod Phillips said at a conference this week that the firm could grow in Asia through acquisitions, and also sees opportunities to expand in infrastructure equity. 

Alternative asset managers are pursuing mergers to gain scale and expand into new sectors and geographies, turning into one-stop shops offering a range of investment strategies. The deal would expand Ares’ business in one of Wall Street’s hottest areas: infrastructure. 

GCP has made bets on data centers and renewable energy just as investors are looking to ways to ride on growing demand for infrastructure and resources to power what they hope will be an artificial intelligence boom. 

Terms of a deal may still change, and it’s possible the timing of any announcement could get pushed back, the people said. Talks are ongoing and there’s no certainty they will lead to a transaction. A spokesperson for GCP declined to comment, while representatives for Ares didn’t respond to requests for comment. 

An agreement would top recent deals including TPG Inc. paying $2.7 billion for credit specialist Angelo Gordon & Co. last year, and T. Rowe Price Group Inc.’s 2021 acquisition of Oak Hill Advisors for about $4.2 billion. Ares recently also acquired direct lending fund Riverside Credit Solutions for an undisclosed sum.

GCP has traditionally invested in areas such as real estate tied to logistics, digital infrastructure and renewable energy. The firm grew out of Singapore-based GLP Pte, a developer and operator of warehouses that has benefited from the boom in e-commerce. GLP set up a fund management arm to invest third-party money in the sector, and it became a separate entity — GLP Capital Partners — after a series of transactions in 2022. 

Since then, GLP itself has been grappling with a debt burden and slumping earnings amid a prolonged property slump. It has been pursuing divestments of some Chinese logistics assets as it tries to cut debt and move toward a more asset-light business model.

Ares highlighted Asia-Pacific real estate equity, global infrastructure equity and digital infrastructure equity at its investor day earlier this year as high priority areas of growth for the $447 billion alternative asset manager. The firm, still best known as a US credit manager, has pegged the market opportunity for Asia real estate at $3.4 trillion.

Investors have cheered Ares’ rapid growth. Its stock has risen roughly 380% over the past five years, the most of the big five US alternative asset managers. 

Ares has about $15 billion in assets under management in Asia Pacific, the smallest geographic segment of its business, with real estate and infrastructure assets making up less than $100 million, according to its investor day presentation.

–With assistance from Dong Cao and Allison McNeely.

(Updates with Ares shares in fourth paragraph.)

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