Ares Falls in Debut After First Private-Equity IPO Since ’12

May 02, 2014 4:43 pm ET

(Updates with closing share price in second paragraph.)

May 2 (Bloomberg) -- Ares Management LP, the first alternative-asset manager to go public in two years, fell in its trading debut after pricing its initial public offering below the marketed range.

Ares dropped 2.1 percent to $18.60 at the close of trading in New York. The firm, which oversees $74 billion in credit, private-equity and real estate assets, raised $216 million by selling the shares for $19 apiece.

The IPO was the first test of investors’ appetite for a private-equity company since Carlyle Group LP’s $671 million share sale in May 2012. Los Angeles-based Ares touted a model that’s more focused on predictable management fees than its peers, which derive a greater percentage of revenue from investment profits.

Ares was co-founded in 1997 by Tony Ressler, who’s now chief executive officer and has a net worth of about $1.4 billion, owning 31 percent of the company, according to the Bloomberg Billionaires Index. Ressler and co-founder John Kissick named Ares after the Greek god of war.

Ares oversees $10 billion of private equity, $9 billion in real estate and $55 billion in direct lending and tradable credit. The company posted $478.7 million in fee revenue last year, up 43 percent from 2012.

Samsonite, GNC

The stock, which started trading today, is listed on the New York Stock Exchange under the ticker symbol ARES.

In the past 10 years, Ares has bought more than 20 companies, including luggage maker Samsonite Corp., vitamin seller GNC Holdings Inc., budget chain 99 Cents Only Stores and luxury retailer Neiman Marcus Inc., which it acquired in October for $6 billion in its largest-ever deal.

Following the offering, Ares is considered a partnership, limiting common stockholders’ voting rights and their ability to remove or elect directors of the general partnership, its prospectus shows. Ares plans to use the proceeds from the IPO to repay outstanding debt and fund growth initiatives at the company.

Abu Dhabi Investment Authority, which had planned to offer 6.8 million shares in the IPO, according to an April regulatory filing, didn’t sell the shares, data compiled by Bloomberg show.

JPMorgan Chase & Co. and Bank of America Corp. managed the sale.