Ares Management's Strategic Acquisition and Stock Offering Insights

Ares Management Launches Public Offering to Support Growth

In a significant move to boost its growth, Ares Management Corporation (NYSE: ARES), a prominent global alternative investment manager, has announced the launch of a public offering. The plan includes the issuance of 27 million shares of Series B Mandatory Convertible Preferred Stock. Additionally, underwriters are granted an option to purchase an extra 3 million shares to accommodate any over-allotments.

Purpose of the Offering

The funds raised through this public offering are primarily intended for settling part of the cash consideration associated with the acquisition of GLP Capital Partners Limited's international business, excluding its operations in Greater China. Aside from this, Ares plans to utilize these proceeds for various corporate purposes such as reducing debt, pursuing strategic acquisitions, and driving growth initiatives.

Details on the Preferred Stock Offering

Morgan Stanley and Citigroup are acting as the joint bookrunning managers for this offering. The Mandatory Convertible Preferred Stock is anticipated to carry a liquidation preference of $50 per share. Significant to note is the automatic conversion of this stock into Ares's Class A Common Stock on or around October 1, 2027, barring any prior conversion or redemption. Specific terms, including the dividend and conversion details, will be finalized at the pricing stage, and are subject to adjustments.

Acquisitions Boosting Ares Management's Portfolio

Recently, Ares Management has made headlines with substantial acquisitions. Among these, the company is in the process of acquiring GLP Capital Partners Limited for $3.7 billion while also expanding its portfolio by acquiring Walton Street Capital Mexico, a company specializing in real estate asset management. This strategic move is expected to add around $2 billion in industrial real estate assets, significantly enlarging Ares's portfolio.

Financial Impacts and Asset Management Growth

These acquisitions are set to nearly double Ares Real Estate's assets under management, ballooning it to an estimated $96 billion and enhancing its global presence in the investment market. In alignment with these developments, Jefferies has recently increased its price target for Ares Management shares to $154, maintaining a Hold rating, while TD Cowen has taken a bullish stance, reiterating a Buy rating on the stock. This contrasts with Redburn-Atlantic's neutral outlook on the firm.

Financial Highlights of Ares Management

When examining Ares Management's financial performance, there's good news for investors. The company recently reported an 18% year-over-year growth in total assets under management, totaling $447.2 billion by the second quarter of 2024. Moreover, there was a 21% hike in the common dividend declared for the third quarter. In a noteworthy achievement, the National Football League has authorized Ares, along with other private equity firms, to acquire up to a 10% stake in its teams, adding to Ares's prestigious portfolio.

Insights from Recent Financial Happenings

The analytical insights reveal that Ares holds a robust market capitalization of approximately $50.25 billion, emphasizing its strong standing within the alternative investment management sector. Despite an estimated revenue decline of 11.64% over the previous twelve months, the company's revenue stood at $3.22 billion by Q2 2024. Notable, too, is Ares's consistent approach towards dividends, having maintained payouts for 11 consecutive years and reflecting a 20.78% growth over the past year with a current yield of 2.32%.

Frequently Asked Questions

What is the purpose of Ares Management's public offering?

The public offering is aimed at raising funds for the acquisition of GLP Capital Partners Limited's international business and for various corporate needs like debt repayment.

Who are the joint bookrunning managers for this offering?

Morgan Stanley and Citigroup are the joint bookrunning managers overseeing the public offering.

What are the expected outcomes of the recent acquisitions?

The acquisitions are expected to significantly expand Ares's assets under management and enhance its global market footprint.

How has Ares's financial performance trended recently?

Ares has seen an 18% increase in total assets under management, alongside a notable dividend growth of 21% for the third quarter.

What is Ares Management's current market capitalization?

Ares Management has a market capitalization of approximately $50.25 billion, reflecting its significant stature in the investment sector.

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