Ares Management Buying GLP’s Non-China Fund Business for $3.7B

Ares Management has agreed to buy industrial specialist GLP’s fund management business outside of China for $3.7 billion, the parties announced Tuesday.

The consideration for GLP Capital Partners’ business in Japan, Vietnam, Europe, the US and Brazil comprises $1.8 billion in cash and $1.9 billion in Ares Class A common shares, the companies said in a release. The deal includes an additional earn-out provision of up to $1.5 billion, subject to achieving certain performance objectives.

The ex-China carve-out will be called GCP International. Los Angeles-based Ares expects the acquisition to nearly double the firm’s real estate assets under management to $96 billion across North America, Europe, Asia and Latin America.

“We have long admired the global real estate experience of GCP and its capabilities in facilitating the economy of the future, which includes investing in and managing industrial, data centre and self-storage assets,” said Ares president and CEO Michael Arougheti. “As a combined business, we believe that Ares’ and GCP International’s experienced management teams, highly collaborative cultures and investment track records will create a powerhouse in global real assets investing.”

Lower Leverage

Expected to close in the first half of 2025, the transaction will bring about the separation of GCP International from GCP’s remaining business, which will continue to operate independently, based in Singapore, with a focus on investing in Greater China.

GLP will retain its ownership of GCP, with $81 billion in assets under management. Co-founder Ming Z Mei is continuing as CEO of the go-forward GLP and GCP, along with the leadership team in China and a select number of other global executives, the companies said.

“We are pleased to reach this agreement between GCP International and Ares, a pioneer in the global alternative asset management sector, and look forward to seeing the combined business continue to thrive,” Mei said. “This is a testament to our ability to build successful businesses of scale, and realise value for our stakeholders.”

In downgrading GLP and its China business to BB last November, S&P pointed to an imbalance between the company’s current assets and near-term liabilities. Cash proceeds from the Ares deal will provide meaningful liquidity, reduce liabilities and improve the balance sheet and financial metrics, GLP said. The transaction represents less than 10 percent of GLP’s core underlying EBITDA and is expected to reduce net leverage from 27 percent to 24 percent.

In unaudited financials released Tuesday, GLP disclosed a $451 million loss for the first six months of 2024, reversing a year-earlier profit of $214 million. The group reported $1.9 billion in cash on hand.

Building Up in Asia

After acquiring Hong Kong-based distressed debt specialist SSG Capital Management in 2020, Ares hired former KKR real estate executive Bryan Southergill in 2022 and has since actively sought to acquire a property fund manager in the region.

In July last year, Ares expanded its Southeast Asia footprint with the acquisition of Singapore-based private equity firm Crescent Point Capital, adding $3.8 billion in assets under management in the region.

The NYSE-listed company also joined PAG, CITIC Capital, the Abu Dhabi Investment Authority and Mubadala Investment Company earlier this year in the $8.3 billion takeover of Dalian Wanda Group’s primary shopping mall management business.