Ares Management issues $750 million in senior notes

Ares Management Corporation (NYSE:ARES) has announced the issuance of $750 million in senior notes, carrying a 5.600% interest rate and maturing in 2054. The offering, made under an effective shelf registration statement filed on February 27, 2023, was detailed in a prospectus supplement dated October 9, 2024.

The Los Angeles-based investment firm, which operates under Delaware incorporation, entered into the material definitive agreement on Monday, October 9, 2024. The notes were offered through an underwriting agreement with Morgan Stanley & Co. LLC and Citigroup Global Markets Inc.

Ares Management's senior notes are unsecured and rank equally with its other unsecured and unsubordinated debt. The notes are guaranteed by several of the company's subsidiaries, including Ares Finance Co. LLC and Ares Management LLC, among others.

Interest on the notes is payable semi-annually, with the first payment due on April 11, 2025. The notes may be redeemed before maturity, with the redemption price equal to the greater of 100% of the principal amount or a specified formula involving the Treasury Rate plus 20 basis points.

The indenture governing the notes contains covenants restricting the company's and guarantors' ability to incur certain secured indebtedness and undertake mergers or asset sales, among other limitations. Events of default include standard provisions, with acceleration clauses for the unpaid principal if certain conditions are met.

This financial move creates a direct financial obligation for Ares Management Corporation and is reported in accordance with SEC regulations. The information disclosed is based on the SEC filing and is intended to provide investors with factual data on the company's latest financial undertaking.

In other recent news, Ares Management Corporation has been making significant strides in the investment sector. The company's recent activities include the acquisition of GLP Capital Partners Limited's international business, excluding its Greater China operations, for a sum of $3.7 billion.

This strategic acquisition, which involves a $44 billion asset under management, is expected to nearly double Ares Real Estate's assets under management to about $96 billion.

Moreover, Ares Management has also initiated a public offering of 27 million shares of Series B Mandatory Convertible Preferred Stock. This move is primarily aimed at funding the acquisition of GLP Capital Partners Limited's international business. The offering includes an option for underwriters to purchase an additional 3 million shares to cover over-allotments.

Ares Management has also acquired Walton Street Capital Mexico, adding approximately $2 billion in industrial real estate assets to its portfolio. In terms of analyst coverage, TD Cowen maintains a bullish stance on Ares, reiterating a Buy rating, while CFRA raised its price target for Ares to $170. On the other hand, Redburn-Atlantic initiated coverage on Ares Management with a Neutral rating.

The company's total assets under management increased by 18% year-over-year, reaching $447.2 billion in the second quarter of 2024. Additionally, the company saw a 21% increase in its third-quarter common dividend.

Further, the National Football League approved Ares Management, among other private equity firms, to acquire up to 10% stakes in its teams. These are recent developments that reflect the ongoing activities within the company.

InvestingPro Insights

Ares Management Corporation's recent issuance of $750 million in senior notes aligns with its strong financial position and growth trajectory. According to InvestingPro data, the company boasts a substantial market capitalization of $51.12 billion, reflecting its significant presence in the investment management industry.

InvestingPro Tips highlight that Ares has maintained dividend payments for 11 consecutive years and has raised its dividend for 4 consecutive years. This consistent dividend policy, coupled with a current dividend yield of 2.36%, may appeal to income-focused investors considering the new long-term debt issuance.

The company's profitability is underscored by its positive earnings over the last twelve months, with analysts predicting continued profitability this year. However, it's worth noting that Ares is trading at a high P/E ratio of 81.72, which investors should consider in light of the new debt offering.

For those seeking a more comprehensive analysis, InvestingPro offers 7 additional tips that could provide valuable insights into Ares Management's financial health and market position.

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