Ares Said is in advanced negotiations with GLP Capital Partners

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

Ares and GCP are finalizing details of a transaction that could close in the coming weeks, the people said. They have been discussing a deal that would include an upfront payment of about $3.5 billion, with the total value rising to about $5 billion over time if certain milestones are met, some of the people said.

Los Angeles-based Ares is considering using a combination of cash and stock to fund the acquisition, said the people, who asked not to be identified because 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.

Ares shares rose 2.1% to $146.86 as of 1:02 p.m. in New York trading on 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 in assets under management 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 firm could grow in Asia through acquisitions and also sees opportunities to expand in the infrastructure capital market.

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

GCP has bet on data centers and renewable energy just as investors look for ways to take advantage of rising demand for infrastructure and resources to fuel what they expect to be an artificial intelligence boom.

The terms of a deal could still change and the timing of any announcement may be delayed, the people said. Talks are ongoing and there is no certainty that they will lead to a transaction. A GCP spokesman declined to comment, while representatives for Ares did not respond to requests for comment.

A deal would top recent deals such as TPG Inc.’s $2.7 billion payment 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 direct lending fund Riverside Credit Solutions for an undisclosed sum.

GCP has traditionally invested in areas such as logistics-linked real estate, digital infrastructure and renewable energy. The firm was spun out of Singapore-based GLP Pte, a warehouse developer and operator that has benefited from the rise of e-commerce. GLP set up a fund management division to invest third-party money in the sector and became a separate entity (GLP Capital Partners) after a series of transactions in 2022.

Since then, GLP has had to deal with a debt load and falling profits amid a prolonged property market slump. It has been trying to divest some Chinese logistics assets as it tries to reduce debt and move toward an asset-light business model.

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

Investors have cheered Ares’ rapid growth. Its shares have risen roughly 380% in the past five years, the biggest gain among the big five U.S. 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 accounting for less than $100 million, according to its investor day presentation.

–With assistance from Dong Cao and Allison McNeely.

(Updated with Ares actions in the fourth paragraph.)

More stories like this are available at bloomberg.com