Ares Management and Kayne Anderson Announce Merger

Jul 24 2015 | 10:54am ET

Ares Management and Kayne Anderson Capital Advisors announced that they have entered into a definitive merger agreement to create Ares Kayne Management., one of the largest and most diversified alternative asset managers with a combined $113 billion of assets under management as of March 31. 

Under the terms of the agreement, Ares will provide $2.55 billion in consideration, the majority of which will be in the form of Ares Operating Group Units. The transaction is expected to close on or around January 1, 2016, subject to customary regulatory approvals, Kayne Anderson investor consents and other closing conditions.

“In addition, Kayne Anderson adds long-lived capital and significantly increases our fee-related earnings, which we expect will make this merger meaningfully accretive to Ares’ unit holders.”

Ares Kayne combines Ares Management, a global alternative asset manager with $87 billion in assets under management, with Kayne Anderson, a U.S. energy and energy infrastructure investor with $26 billion in assets under management, to form a diversified global asset manager that will invest across five investment groups: Tradable Credit, Direct Lending, Energy, Private Equity and Real Estate. 

The combined firm will have approximately 450 investment professionals in more than 20 global offices serving more than 2,700 direct investors, and will be a leading manager of publicly traded yield-oriented vehicles with more than 400,000 retail account holders in eight public companies, including the largest business development company and the largest MLP-focused closed end fund in the United States. 

“We have long known and admired Kayne Anderson as an industry leader in energy, energy infrastructure, real estate and other asset classes, and this merger will make us a differentiated investment manager with five market-leading businesses. We expect the combination will make us better investors by greatly enhancing our expertise in these compelling sectors and will create new opportunities as we leverage each other’s complementary investor bases to expand our distribution,” said Tony Ressler, Ares Chairman and CEO. “In addition, Kayne Anderson adds long-lived capital and significantly increases our fee-related earnings, which we expect will make this merger meaningfully accretive to Ares’ unit holders.”

Founded in 1984, Kayne Anderson has approximately 110 investment professionals across eight U.S. offices managing investments across energy and energy infrastructure, specialty real estate, middle market credit and growth private equity. Upon closing, Kayne Anderson Chairman and Founder Richard Kayne and Ares Chairman and CEO Ressler will serve together as Co-Chairmen of Ares Kayne Management.

“We have always held a value of being above-average investors for ourselves and, most importantly, for our clients. We place great emphasis on the development of competitive advantages and believe we have achieved them in our core strategies, allowing us to generate attractive, risk-adjusted returns for our investors,” Mr. Kayne said. “Merging with Ares, whom we have admired for years, adds more competitively advantaged strategies for our clients, in addition to fortifying the firm’s long-term management capabilities. I am delighted by, and committed to, the future of Ares Kayne as evidenced by my willingness to essentially swap equity for equity.”

Kayne Anderson President and CEO Robert Sinnott will become Chairman of the newly-formed Energy Group at Ares Kayne, which will include all of Kayne’s energy investment activities including energy private equity, private energy income and energy infrastructure marketable securities.

Substantially all of Kayne Anderson’s non-energy investment professionals will join Ares’ existing investment groups in Private Equity, Real Estate and Direct Lending. The two companies will continue to manage their existing funds and operate under their existing brand names.


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