Ares inks $1.25bn strategic partnership

Listed investment holding company Alleghany Corporation has bought a minority stake in Ares for $250m, joining existing investor the Abu Dhabi Investment Authority, and will commit up to $1bn in various Ares funds.

Ares Management has partnered with NYSE-listed investment holding company Alleghany Corporation, which has acquired a 6.25 percent stake in the firm for $250 million. As a part of the strategic partnership, Alleghany has also committed up to $1 billion to existing and future Ares funds. 

Ares will treat the $250 million investment from Alleghany as “sponsor capital” in Ares funds, according to a statement. The partnership is not the first time Ares has sold a stake to an outside investor. In 2007, the Abu Dhabi Investment Authority invested $375 million for a minority stake in the firm. 

Alleghany specialises in insurance, asset management and “opportunistic equity investing”, according to a statement.

“We believe our two organisations will be well-positioned to serve the converging reinsurance and capital markets,” Weston Hicks, president and chief executive officer of Alleghany, said in the statement.

JP Morgan Securities and Bank of America Merrill Lynch provided financial advisory services to Ares. 

Established in 1997 by former Apollo Management partners, Ares has $59 billion of committed capital. It invests across the capital structure, from senior debt to common equity, through different blind pool funds. 

Its Private Equity Group oversees $9 billion of committed capital. Its latest vehicle, Ares Corporate Opportunities Fund IV, held a final close on $4.7 billion in August 2012.