Private Equity News & Analysis

Side Letter: Ares’ mega-inflows; AlpInvest’s above-$10bn target; Bluestone’s sporting chance

Ares doesn't seem fazed by a challenging private equity fundraising environment. Plus: AlpInvest has set a healthy target for its next secondaries programme; and yet another sports firm has thrown its hat in the ring. Here’s today's brief, for our valued subscribers only.

-

Just happened

Ares-on to smile
Ares Management reckons 2023 will be one of its best fundraising years ever. The firm expects inflows this year to surpass the $57 billion it gathered in 2022 and approach the $77 billion record set in 2021, our colleagues at Buyouts report (subscription required).

Fundraising will be driven by about 30 commingled and perpetual-life offerings, Ares said on a Thursday earnings call. These will include its seventh corporate private equity fund, as well as credit, real assets and secondaries strategies. Fund VII, which will target both distressed for control investments and traditional buyouts, has an undisclosed target. Its 2020-vintage predecessor gathered $5.7 billion.

Ares’ fundraising optimism stems from a belief in a “flight to larger, higher-quality managers”, chief executive Michael Arougheti said on the call. Arougheti said the firm’s scale “enhances” its competitive advantage as others have less capital to deploy.

Ares isn’t the only firm bullish about 2023. Carlyle Group also expects 2023 to be a “better fundraising year than 2022”, while Blackstone “feels good” about fundraising, particularly in life sciences, real estate debt and green energy.

AlpInvest’s next fund
It’s just as well that Carlyle is among those expecting a decent fundraising year, because its investment solutions unit, AlpInvest Partners, is seeking at least $10 billion for its latest flagship secondaries programme, our colleagues at Secondaries Investor report (registration required). Its predecessor, AlpInvest Secondaries Program VII, closed on $9 billion in 2020. ASP VIII is expected to also include separate accounts, though it is unclear whether this would be as part of, or on top of, the roughly $10 billion figure.

On Carlyle’s full-year earnings call last week, interim chief executive Bill Conway said the firm’s investment solutions business is “well positioned to see growth in this segment as we begin fundraising for our flagship products, including next vintages in our co-investment and secondary strategies”.

Secondaries market veterans have long posited that secondaries funds should, in theory, be even larger than buyout funds as they provide liquidity to LPs in those funds. It’s no surprise that firms like AlpInvest – which is just one of at least five firms in market seeking more than $10 billion for their latest secondaries funds – are continuing to push their programme sizes towards the sky.

Essentials

Bluestone’s playbook
Private Equity International has written plenty about the tightening link between private markets and sports over recent years. In 2020, we conducted a Deep Dive into PE’s growing interest in sports investments, while our look at the industry’s most active PE owners was one of 2021’s most-read articles.

With appetites growing, it’s little coincidence that sports-focused GPs are cropping up with increasing regularity. Among the most recent of these is Bluestone Equity Partners, a PE firm targeting sports, media and entertainment. Led by Bobby Sharma, a former executive with the National Basketball Association and entertainment agency IMG Worldwide, Bluestone has collected $300 million for its first growth equity fund, per a statement. The closing comprised entirely institutional-grade capital.

LP interest in sports and entertainment-focused funds has burgeoned since the pandemic. Arctos Sports Partners, for example, closed its inaugural fund, Arctos Sports Partners Fund I, on $2.9 billion against a $1.8 billion target in 2019, marking one of PE’s largest first-time fundraises.

Toshiba takeover
A consortium of buyers led by Japanese PE firm Japan Industrial Partners is attempting to strike one of the country’s largest take-privates. JIP has submitted a final buyout offer of about ¥2 trillion ($15.2 billion; €14.4 billion) for electronics and heavy machinery giant Toshiba, Nikkei reported on Thursday. The mammoth bid comes after JIP reportedly secured financing from lenders such as Sumitomo Mitsui Banking Corp, Mizuho Bank and MUFG Bank.

In a Thursday statement, Toshiba said it will assess the proposal and continue to act in the best interests of its shareholders and other stakeholders. The move follows reported interest from the likes of CVC Capital Partners, Bain Capital, Brookfield Asset Management and KKR to acquire the company during its restructuring plan.

Japan deal value shot up last year as a weaker yen, a raft of corporate carve-outs and hesitancy over China spurred PE appetites even further. If the Toshiba deal gets over the line, 2023 could be even larger.

Dig deeper

LP meetings. It’s Monday, so here are some LP meetings to watch out for this week.

14 Feb

15 Feb

16 Feb

17 Feb

Today’s letter was prepared by Alex Lynn with Carmela Mendoza, Helen de Beer and Madeleine Farman