Ares Joins Frenzy for Record Buyout Funds With $9.5 Billion Goal

(Bloomberg) -- Ares Management Corp., the investment firm focusing on a wide swath of credit, companies and real estate, is looking to build its biggest-ever private equity fund with plans to raise about $9.5 billion, according to a person with knowledge of the matter.

The new pool will be a successor to the money manager’s flagship private equity fund, targeting businesses in North America and Europe, the person said, asking not to be identified as the information is confidential. The Los Angeles-based firm already oversees about $142 billion across asset classes, according to its website.

A spokesman for Ares declined to comment.

Buyout firms are building some of their largest war chests yet, positioning themselves to take advantage of opportunities if the aging bull market succumbs to mounting worries about the global economy that have wracked markets this month. Large money managers also have an advantage as institutional clients -- attracted to the steady returns that private equity can generate -- allocate money to a smaller pool of established managers.

Blackstone Group LP, a leading alternative asset manager, already hauled in about $20 billion earlier this year for its latest private equity fund, heading for a record of its own. For now, the top spot for the largest single buyout fund still belongs to Apollo Global Management, which built up a more-than $24 billion pool in 2017.

Ares raised about $8 billion a few years ago for the latest member of its main private equity fund group, Ares Corporate Opportunities Fund, known as ACOF V. Recent deals include this year’s agreement to buy health-survey business Press Ganey Associates Inc. in a consortium with Leonard Green & Partners. ACOF V has invested more than half its capital since inception. An older fund, ACOF IV, has been producing a 12% annualized return after fees since 2012 and was valued at 1.6 times cost as of June 30, according to a regulatory filing.

The firm was founded more than two decades ago by former Drexel Burnham Lambert bankers Tony Ressler and John Kissick. It announced a leadership transition in December 2017, naming Michael Arougheti as chief executive officer.

Ares has been raising other funds in its private equity business, which includes a focus on China growth capital, infrastructure and a special opportunities group.

To contact the reporter on this story: Sridhar Natarajan in New York at snatarajan15@bloomberg.net

To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, David Scheer, Dan Reichl

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