8-K - ARES - Equibles

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

______________________________________________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported) March 30, 2021

ARES MANAGEMENT CORPORATION

(Exact Name of Registrant as Specified in Charter)

Delaware	001-36429	80-0962035
(State or Other Jurisdiction<br><br>of Incorporation)	(Commission<br><br>File Number)	(IRS Employer<br><br>Identification No.)

2000 Avenue of the Stars, 12th Floor, Los Angeles, CA 90067

(Address of principal executive office) (Zip Code)

(310) 201-4100

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, par value $0.01 per share	ARES	New York Stock Exchange
7.00% Series A Preferred Stock, par value $0.01 per share	ARES.PRA	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Item 3.02 Unregistered Sale of Equity Securities.

On March 30, 2021, Ares Management Corporation (“Ares” or the “Company”) agreed that in connection with the Transaction (as defined below), Ares Holdings, L.P. (“Buyer”), a subsidiary of Ares, will deliver up to an aggregate of 5,523,746 of operating group units of Buyer (“OGUs”) at the closing of the Transaction, subject to certain adjustments. Assuming a full exchange of all outstanding OGUs for shares of Class A common stock of the Company (together with the OGUs and the total number shares of Class A common stock of the Company outstanding as of March 29, 2021, “Total Equity”), the OGUs to be issued in connection with the Transaction represent approximately 2% of the outstanding Total Equity as of March 29, 2021.

The OGUs will be issued in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended, in partial consideration for the sellers’ equity interests in Landmark. Subject to acceleration in certain instances, certain of the OGUs to be delivered at the closing of the Transaction (“Closing”) vest 50% on each of the first and second anniversaries of the Closing and all OGUs will be exchangeable on a one-for-one basis for shares of Class A common stock of the Company upon the election of the holders thereof as follows: (i) 50% following the first anniversary of Closing, (ii) 75% following the secondary anniversary of Closing and (iii) 100% following the third anniversary of Closing, in each case subject to certain exceptions.

Item 7.01 Regulation FD Disclosure.

On March 30, 2021, Buyer entered into a definitive agreement with a subsidiary of BrightSphere Investment Group Inc., BrightSphere (Landmark) LLC (the “BrightSphere Seller”) and Landmark Investment Holdings LP to acquire 100% of Landmark Partners, LLC (collectively with its subsidiaries, “Landmark”) (the “Transaction”). The total consideration for the Transaction is $1.08 billion, comprised of approximately $787 million of cash consideration and $293 million of equity consideration, in each case subject to certain adjustments. The agreement relating to the Transaction contains customary representations, warranties and agreements by the parties, conditions to closing, and termination provisions. The Buyer has also agreed to acquire the BrightSphere Seller’s co-investments and carried interest in Landmark’s funds on the date of closing of the Landmark Purchase Agreement for approximately $34 million, subject to adjustment for certain related cashflow. The Transaction is subject to customary closing conditions, and is expected to close in the second quarter of 2021.

In addition, in connection with the Transaction, Ares has established a management incentive plan (“Landmark MIP”) for Landmark partners and other senior professionals of up to $340 million. The substantial majority of the Landmark MIP is expected to be comprised of performance-based Restricted Unit grants under the Company’s 2014 Equity Incentive Plan and such performance-based Restricted Units will be granted subject to the employee’s continued employment with Ares and upon achievement of certain fundraising and revenue targets. If achieved, any performance-based Restricted Units will be granted in 2023 based on a volume weighted average price per share of Ares’ Class A Common Stock at the time of grant, and will be subject to four additional years of vesting tied to continued employment, subject to certain exceptions. Ares also has the option to settle the performance-based Restricted Units in cash.

On March 31, 2021, Ares issued an investor presentation discussing the Transaction. The materials used in connection with such presentation have been posted on the Company’s website under the heading “Investor Resources—Events and Presentations—Ares Management Agrees to Acquire Landmark Partners,” posted March 31, 2021 http://www.ares-ir.com/news-events-presentations/events-and-presentations/default.aspx. On March 31, 2021, the Company issued a press release announcing the Transaction. The text of the press release is included as Exhibit 99.1 to this Form 8-K. The information disclosed under this Item 7.01, including Exhibit 99.1 is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 and shall not be deemed incorporated by reference into any filing made under the Securities Act of 1933, except as expressly set forth by specific reference in such filing.

Item 8.01 Other Events.

The disclosure set forth in the first two paragraphs of Item 7.01 of this Form 8-K is incorporated by reference into this Item 8.01.

Forward-Looking Statements

This Current Report on Form 8-K contains forward-looking statements within the meaning of the federal securities laws. You can identify these statements by the use of the words “assumes,” “believes,” “estimates,” “expects,” “guidance,” “intends,” “plans,” “projects,” and similar expressions that do not relate to historical matters. These statements are not guarantees of future performance, condition or results and involve a number of risks and uncertainties, including the Company’s ability to consummate the previously announced acquisition of Landmark by a wholly-owned subsidiary of the Company and to effectively integrate the acquired business into the Company’s operations to achieve the expected benefits therefrom. You should exercise caution in interpreting and relying on forward-looking statements because they involve known and unknown risks, uncertainties, and other factors which are, in some cases, beyond the Company’s control and could materially affect actual results, performance, or achievements. For a further description of such factors, you should read the Company’s filings with the Securities and Exchange Commission. The Company does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits:

Exhibit Number	Description
99.1	Press Release of Ares Management Corporation, dated March 31, 2021
104	Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		ARES MANAGEMENT CORPORATION
Dated: March 31, 2021
	By:	/s/ Naseem Sagati Aghili
	Name:	Naseem Sagati Aghili
	Title:	General Counsel and Secretary

Document

Exhibit 99.1

Ares Management Corporation Announces Agreement to Acquire Landmark Partners

A Market-Leading Secondaries Platform that has been

Delivering Attractive Investment Performance for Over 30 Years

Business Combination Expected to Enhance Investing Advantages and

Unlock Growth in the Attractive, Rapidly Expanding Secondaries Markets

Ares to Host Conference Call Today at 8:00 a.m. Eastern Time

LOS ANGELES—March 31, 2021—Ares Management Corporation (“Ares”) (NYSE: ARES) announced today that a subsidiary of Ares has entered into a definitive agreement with a subsidiary of BrightSphere Investment Group Inc. (NYSE: BSIG) and Landmark Investment Holdings LP to acquire 100% of Landmark Partners, LLC (collectively with its subsidiaries, “Landmark”), one of the largest and most experienced investors in acquiring secondary private fund ownership stakes in the alternative asset management industry. The transaction is valued at $1.08 billion, including approximately $787 million in cash and approximately $293 million in Ares Operating Group Units, in each case subject to certain adjustments.

With 150 employees across six global offices, Landmark manages private equity, real estate and infrastructure secondaries funds totaling $18.7 billion in assets under management as of December 31, 2020. Supported by a global, institutional investor base of more than 600 fund investors, Landmark is viewed as a trusted and innovative counterparty in developing flexible transaction solutions to an extensive roster of financial sponsors and institutional investors. Landmark was founded in 1989 and is led by its highly experienced management team who have capitalized on the increasing investor appetite for private market secondaries with a compound annual growth rate of 17% in its assets under management over the past four years.

“We are incredibly proud to announce this transaction with Landmark, a pioneer in developing the asset class of private market secondaries,” said Michael Arougheti, Chief Executive Officer and President of Ares. “We believe secondary investments are only increasing in their appeal to a growing group of investors and we are excited to include these strategies in our comprehensive alternatives offering. We have known Landmark’s leadership team for many years and hold them in high regard for their approach to partnership and demonstrated ability to develop creative, win-win solutions. We look forward to welcoming Frank Borges, Tim Haviland and their colleagues and we expect significant benefits for our investors, employees and other stakeholders from this combination.”

“We are excited to join forces with Ares as we enter this new chapter in Landmark’s history,” said Francisco Borges, Chairman and Managing Partner of Landmark Partners. “Ares’ global platform and significant resources will enhance our combined investment capabilities and my partners and I look forward to driving continued strong performance, transaction structuring innovation and business growth for many years to come. As a reflection of this optimism, I am very pleased that our management team has agreed to accept significant equity in the combined firm.”

“As alternative assets continue to gain share, we believe growth in the secondaries market should also continue to accelerate,” said Timothy Haviland, President and Managing Partner of Landmark Partners. “We are excited to enhance and expand our already strong market position as a new investment group within the broader Ares platform. Our approach and processes are culturally similar to Ares’ and we look forward to building on key sourcing, relative value and structuring advantages as well as unlocking new growth opportunities.”

The acquisition of Landmark further expands Ares’ product offering into a segment of alternative asset management that is experiencing double-digit industry growth rates. The secondary market provides sellers with the ability to achieve liquidity on their private market fund interests and enables buyers to invest later in a fund’s life, typically benefiting from seasoned portfolios and accelerated cash flows. Additionally, the secondary market’s growth has expanded over the last decade to enable fund sponsors to deliver liquidity to their investors through asset recapitalization and GP-led secondary funds. Along with the increase in the number of compelling investment solutions Ares can offer its clients, Ares’ client base is meaningfully expanding, creating significant fundraising opportunities. The joint platform will have over 1,600 institutional investors, where less than 5% of these accounts are currently invested with both Ares and Landmark.

The business combination is expected to drive meaningful investing advantages across Ares’ platform, which will expand to include five distinct but complementary investment verticals in Credit, Private Equity, Real Estate, Strategic Initiatives and now Secondaries. For Landmark, Ares’ extensive direct lending relationships with approximately 825 financial sponsors, well-established regional networks across North America, Europe, Asia Pacific and the Middle East and marketplace insights from across asset classes should serve to further differentiate its existing key competitive advantages in transaction sourcing, evaluation and structuring.

“The acquisition of Landmark is not only highly strategic, but it is also expected to be immediately financially accretive to Ares’ core earnings metrics, including after-tax realized income per common share, and it should be a meaningful driver of our growth in the years ahead,” said Michael McFerran, Chief Operating Officer and Chief Financial Officer of Ares. “In addition, the transaction is expected to be accretive to our fee related earnings margins and further enhances our fee related earnings composition within our realized income.”

The transaction is expected to close in the second quarter of 2021 and is subject to customary closing conditions, including regulatory approvals.

RBC Capital Markets, LLC and Credit Suisse Securities (USA) LLC acted as financial advisors to Ares and Kirkland & Ellis LLP served as legal counsel. Morgan Stanley & Co LLC acted as financial advisor to BrightSphere. Goldman Sachs & Co. LLC acted as financial advisor to Landmark Partners LLC. Ropes & Gray served as legal counsel to both Landmark and BrightSphere.

Conference Call and Webcast Information

Ares will host a conference call on Wednesday, March 31, 2021 at 8:00 a.m. (Eastern Time) to discuss the transaction. A supplemental presentation that illustrates the transaction is available on the Investor Resources section of Ares’ website at www.aresmgmt.com.

All interested parties are invited to participate via telephone or the live webcast, which will be hosted on a webcast link located on the Home page of the Investor Resources section of our website at www.aresmgmt.com. Domestic callers can access the conference call by dialing 1-888-317-6003. International callers can access the conference call by dialing +1 412-317-6061. All callers will need to enter the Participant Elite Entry Number 7513238 followed by the # sign and reference “Ares Management Corporation” once connected with the operator. All callers are asked to dial in 10-15 minutes prior to the call so that name and company information can be collected. For interested parties, an archived replay of the call will be available through April 30, 2021 to domestic callers by dialing 1-877-344-7529 and to international callers by dialing +1 412-317-0088. For all replays, please reference conference number 10153612. An archived replay will also be available through April 30, 2021 on a webcast link located on the Home page of the Investor Resources section of our website.

About Ares Management Corporation

Ares Management Corporation (NYSE: ARES) is a leading global alternative investment manager operating integrated groups across Credit, Private Equity, Real Estate and Strategic Initiatives. Ares Management’s investment groups collaborate to deliver innovative investment solutions and consistent, attractive investment returns for fund investors throughout market cycles. As of December 31, 2020, Ares Management's global platform had approximately $197 billion of assets under management with more than 1,450 employees operating across North America, Europe, Asia Pacific and the Middle East. For more information, please visit www.aresmgmt.com.

About Landmark Partners

Founded in 1989, Landmark is a leading investment manager focused on the secondary markets. Landmark has six offices globally with 150 employees, including over 65 investment and research professionals. Over the course of its 30+ year history, Landmark has invested across over 2,400 partnership interests, driving unique and proprietary transactions through its deeply established relationships with institutional investors, fund sponsors, and market advisors. The firm has formed an aggregate of over 30 funds and related vehicles capitalized with over $28 billion in commitments while maintaining a consistent investment philosophy: Landmark’s “thought partner” approach to investing through which it provides unique and customized liquidity solutions, while capitalizing on the potential benefits of secondary investing. For more information, please visit www.landmarkpartners.com.

Forward-Looking Statements

Statements included herein may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, which relate to future events or our future performance or financial condition. These statements are not guarantees of future performance, condition or results and involve a number of risks and uncertainties, including the ability of Ares to consummate the Landmark acquisition and to effectively integrate the acquired business into our operations and to achieve the expected benefit therefrom. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in our filings with the Securities and Exchange Commission. Ares Management Corporation undertakes no duty to update any forward-looking statements made herein.

Ares Management Corporation

Media:

Brunswick Group

Jonathan Doorley / Alex Yankus, 212-333-3810

ARES@brunswickgroup.com

Ares Management

Priscila Roney, 212-808-1185

proney@aresmgmt.com

Investors:

Carl Drake, 888-818-5298

cdrake@aresmgmt.com or

Greg Mason, 314-282-2533

gmason@aresmgmt.com

Landmark Partners:

Chad Alfeld

chad.alfeld@landmarkpartners.com