Ares said in advanced talks on deal with GLP Capital Partners

(Bloomberg) — Ares Management Corp. is in advanced talks to acquire the non-China operations of GLP Capital Partners Ltd., people familiar with the matter said, in a deal that could be one of the largest recent mergers in the alternative asset management industry.

Ares and GCP are finalizing details of the transaction, which could be agreed as early as the next few weeks, the people said. They have discussed a deal that would include about $3.5 billion up front, with the total value rising over time to about $5 billion if certain milestones are met, 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 because the talks are private. The parties are focused on securing the long-term retention of GCP’s management and staff, one of the people said.

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

Bloomberg News reported in June that Ares was considering an acquisition. GCP manages about $66 billion in assets outside China, spread across Japan, Southeast Asia, Europe, the U.S. and Brazil. Ares Chief Financial Officer Jarrod Phillips said at a conference this week that the company could expand in Asia through acquisitions and also sees opportunities to expand in infrastructure capital.

Alternative asset managers are looking to merge to increase scale and expand into new sectors and geographies, becoming one-stop shops offering a range of investment strategies. The deal would expand Ares’s footprint in one of Wall Street’s hottest areas: infrastructure.

GCP is betting on data centers and renewable energy as investors look for ways to tap growing demand for infrastructure and resources to power what they hope will be an artificial intelligence boom.

The terms of the deal could still change, and the announcement could be pushed back, the people said. The talks are ongoing and there’s no certainty they’ll result in a transaction. A GCP spokesman declined to comment, while Ares representatives didn’t respond to requests for comment.

The deal 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 acquisition of Oak Hill Advisors in 2021 for about $4.2 billion. Ares also recently acquired lending fund Riverside Credit Solutions for an undisclosed amount.

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

Since then, GLP itself has struggled under a debt burden and falling profits amid a prolonged real estate crisis. The company has been seeking to shed some of its Chinese logistics assets in an attempt to reduce its debt and move toward a less asset-heavy business model.

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

Investors have been cheering Ares’ rapid growth. Its shares are up about 380% over the past five years, the most among the five largest U.S. alternative asset managers.

Ares’ assets under management in Asia-Pacific, the company’s smallest geographic segment, total about $15 billion, according to an investor-day presentation. Real estate and infrastructure assets account for less than $100 million of that.

–With assistance from Dong Cao and Allison McNeely.

(Updated with Ares shares in fourth paragraph.)

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