Ares Management Corp., a global asset manager based in Century City, will buy a controlling stake in Asian asset manager SSG Capital Management Ltd., the two companies said.
SSG, which said it had $6.2 billion in assets under management as of September 2019 and operations across Asia, focuses on private credit and special situations funds.
Financial terms of the deal were not disclosed, but Ares said SSG shareholders will be paid largely in Ares stock.
“This transaction significantly builds upon our established Asian presence and will serve as a foundation for our future expansion,” Ares Partner Eric Vimont said in a written statement.
Vimont called Asia the world’s fastest-growing market, but one beset by structural inefficiencies that have left middle-market companies with inadequate funding.
Ares said it found SSG an attractive fit for tapping that market because of SSG’s regional relationships, strong investment track record and alignment with Ares’ corporate culture. Ares said it expects to see minimal returns from the investment for at least one year.
Analysts said they largely view the move as a positive one for Ares.
“The addition of SSG’s investment and sourcing capabilities should accelerate growth of Ares’ Asian business, adding a well-regarded credit offering to its existing PE (private equity) strategies,” James Fotheringham, an analyst at BMO Capital Markets Corp., wrote in a report. He also said SSG’s historical growth of fund sizes, along with performance across market cycles, boded well for its future.
SSG’s fifth flagship fund closed at $2.7 billion in December, up from a $1.7 billion fund two years prior.
Robert Lee, of investment banking firm Keefe Bruyette & Woods Inc., predicted the acquisition would well serve Ares’ ambition to grow in Asia. In a report on the purchase, he said SSG shareholders’ acceptance of Ares stock as payment was “a positive and endorsement of Ares’ growth profile.”
SSG, headquartered in Hong Kong, was founded in 2009 by a team of former Lehman Brothers Asia Special Situations Group employees. It currently has about 40 professionals across the region, according to the company.
Ares, founded in 1997, has more than 1,200 employees across 10 countries. Its assets under management in last year’s third quarter were about $144 billion, up more than 15% from the same quarter in 2018. It was the firm’s 10th consecutive quarter of growth in assets under management.
