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Ares, Kayne Anderson form $113bn firm

The two Los Angeles-based alternatives firms have confirmed reports from last month that they are to merge, meaning a new ownership structure for Al Rabil and Kayne Anderson Real Estate Advisors (KAREA)

Kayne Anderson Real Estate Advisors is coming under a new ownership structure under a deal announced between parent company Kayne Anderson Capital Advisors and Ares Management.

Los Angeles-based Ares and Kayne Anderson confirmed they are to merge to create a $113 billion alternative asset manager. Ares is paying $2.55 billion for the group in a share swap arrangement and the transaction is expected to close in January 2016.

The new name for the enlarged organization is Ares Kayne Management which combines Ares Management’s $87 billion in AUM with Kayne Anderson and its $26 billion.

Yesterday's announcement did not detail how individual asset groups within the new Ares Kayne platform would operate. However, it is understood there will be no change to Kayne Anderson Real Estate Advisors’ headquarters location in Boca Raton, Florida, and that its head of real estate, Al Rabil remains in situ. 

In a statement, Ares said substantially all of Kayne Anderson’s non-energy investment professionals would join Ares’ existing investment groups in private equity, real estate and direct lending. The two companies will continue to manage their existing funds and operate under their existing brand names, said Ares.

Ares’ real estate group is split between real estate equity investing and real estate debt. The equity division manages around $7 billion of AUM in the US and Europe. 

Key figures in the real estate equity group include Lee Neibart, Bill Benjamin and Steve Wolf. Todd Schuster heads the debt business, which manages $3 billion of assets.

Kayne Anderson Real Estate Advisors employs around 40 people. It has $2 billion of AUM in niche property sectors and was established in 2007.

In a general statement, Ares said it was forming “a uniquely diversified global asset manager” that would invest across five “complementary, market leading investment groups: Tradable Credit, Direct Lending, Energy, Private Equity and Real Estate”.

The combined firm will have approximately 450 investment professionals in more than 20 offices.

In addition to expanded product offerings for the combined firm, the deal also means an expanded investor base. The “complementary distribution channels across Ares’ deep institutional relationships” are combining with Kayne Anderson’s retail, high net worth, family office, and institutional investors, said Ares.

The enlarged firm will also have “more stable, high-quality and diverse revenue streams” and meaningful growth driven by strong investment performance.

“We have long known and admired Kayne Anderson as an industry leader in energy, energy infrastructure, real estate and other asset classes, and this merger will make us a differentiated investment manager with five market-leading businesses,” said Tony Ressler, Ares chairman and chief executive officer. “In addition, Kayne Anderson adds long-lived capital and significantly increases our fee-related earnings, which we expect will make this merger meaningfully accretive to Ares’ unit holders.”

Founded in 1984, Kayne Anderson has approximately 110 investment professionals across eight US offices. When the deal closes, Kayne Anderson chairman and founder, Richard Kayne, and Ares chairman and CEO Ressler will serve together as co-chairmen of Ares Kayne Management.

Kayne said: “Merging with Ares, whom we have admired for years, adds more competitively advantaged strategies for our clients, in addition to fortifying the firm’s long-term management capabilities.”