Ares acquires $2.6bn of CLO contracts

The Los Angeles-based credit manager has bolstered its CLO franchise through the purchase of a managing interest in Crestline Denali Capital.

Ares Management has added $2.6 billion in assets under management through the purchase of seven collateralised loan obligation contracts from Crestline Denali Capital.

The contracts form part of Ares’ acquisition of a managing interest in Crestline Denali, a Chicago area-based firm that specialises in the management of non-investment grade bank loans. Following the deal, it will retain its equity interest in the CLOs.

Ares’ CLOs are managed by its credit group, which had $106 billion of assets under management at the end of September 2019. The firm said it believed the all-cash transaction would boost its AUM by $2.6 billion without the assumption of any debt or headcount.

The deal is expected to complete by the end of March subject to customary closing conditions. Berkshire Global Advisors is acting as financial advisor and Winston & Strawn as legal counsel to Crestline Denali, with Latham & Watkins providing legal counsel to Ares.

Denali Capital was formed in March 2001 by five partners who had previously worked together at First Source Financial, an Illinois-based commercial finance company. In October 2014, the business entered into a strategic partnership with fund manager Crestline Management to form Crestline Denali Capital.

The latest deal comes after another high-profile acquisition for Ares last month when it acquired a majority stake in Hong Kong-based fund manager SSG Capital Management, in order to grow its footprint in Asia-Pacific.