Ares Management signed a definitive agreement to buy the international arm of GLP Capital Partners for up to $5.2 billion, reportedly one of the biggest deals in the private investment industry in a decade. This acquisition would add $44 billion to the assets that Ares manages, which brings the firm further along on its strategic objective to oversee more than $750 billion by 2028.
The buy will nearly double Ares’s real estate investment business, and substantially add to its holdings in Japan and Europe, especially. The acquisition does not include GLP Capital’s funds based in Greater China. “This deal catapults the firm into one of the three largest investors in the industrial RE segment, shoulder-to-shoulder with industry titans Blackstone and Prologis,” Ares CEO Michael Arougheti said.
Ending June, Ares manages almost $450 billion in assets, and this acquisition brings it that much closer to the scale of competitors like Blackstone, Apollo Global Management and KKR. Arougheti, a co-owner of the Baltimore Orioles baseball team, has emphasized strategic acquisitions as part of Ares’s growth, which more than doubled since the end of 2020.
The cash component of the deal structure constitutes $1.8 billion and the rest by Ares shares. Additionally, Ares has proposed a long-term incentive plan for leadership within GLP Capital. According to that, it is possible to add up to $1.5 billion into their payouts by 2027, most probably funded by stock.
Arougheti, believing that “favorable economic times” to buy into exist during this present cycle, especially with the federal reserve starting to reduce its interest rate, believes firmly that with further declining interest rates, better economic conditions will begin to be manifest and that “We’re buying in at the right time.”.
The growing demand for data centers has unleashed competition between major investment firms. This acquisition follows recent movements from competitors: Blue Owl agreed to buy IPI Partners, and BlackRock partnered with Microsoft to launch a $30 billion AI investment fund. Speaking of the undersupply of capital needed to meet escalating demand for data center infrastructure, Arougheti said that “that’s a pretty rough number.”.
