Alternative asset managers M&A is gathering pace

Consolidation is gathering pace in the alternative asset management industry as major players assert their dominance and expand. 

In what could be one of the biggest combinations in recent years, Ares Management Corp. is exploring a potential deal for about $66 billion of GLP Capital Partners Ltd.’s assets to gain a significant presence in infrastructure and logistics-related property, Bloomberg News reported this week. That follows, among others, BlackRock Inc. acquiring Global Infrastructure Partners for some $12.5 billion in January, adding more than $100 billion in assets.

These firms are seizing the opportunity to expand, because scale matters when it comes to raising new funds. Mergers and acquisitions also offer a route into other business areas, from private equity and credit to infrastructure and ESG.

“Consolidation is primarily driven by investors’ demands for diversified and comprehensive investment solutions,” said Betty Yap, a Hong Kong-based partner at Linklaters LLP. “This is also a quick way to build scale, coverage and capability, increasing their appeal to a varied investor base.”

MORE DEALS

Ares’s potential deal with GLP Capital would follow its acquisitions of Asian private equity firm Crescent Point Capital and BootstrapLabs, an artificial intelligence-focused venture capital firm based in San Francisco. Ares aims to increase assets under management to over $750 billion by the end of 2028.

“We do see further consolidation in the industry, with the larger players with more firepower using the market backdrop to gain a comparative advantage and grow,” said Adnan Meraj, head of Asia Pacific Financial Sponsors at Bank of America Corp.

Also this year, General Atlantic agreed to acquire London-based private equity firm Actis, expanding its assets under management to about $96 billion. TPG Inc. agreed in 2023 to pay $2.7 billion for credit specialist Angelo Gordon, which had about $73 billion under management. T. Rowe Price Group Inc. acquired Oak Hill Advisors, which oversaw about $53 billion, in 2021, and EQT AB bought Baring Private Equity Asia Ltd. in 2022. 

In addition to widening their operational scale and access to capital, M&A-fueled growth helps global funds handle shifts in investment trends and position themselves to “thrive in a complex global market,” said Yap of Linklaters.