Coller emerges as buyer on large Ares fund revamp

Coller Capital is a lead buyer on a secondary restructuring deal of an older Ares Management fund valued at more than $1 billion, three people told Buyouts.

It’s not clear if Coller is sole lead buyer or part of a group. Bill Mendel, a spokesman for Ares, did not respond to comment requests. A spokeswoman for Coller Capital declined to comment.

Ares is running the secondary process on Ares Corporate Opportunities Fund III, which closed on $3.5 billion in 2008. Lazard is working as secondary adviser on the deal.

Fund III is a strong performer, generating a 20.97 percent internal rate of return since inception as of Dec. 31, 2018, according to performance information from the Colorado Public Employees’ Retirement Association. It produced a 2.1x multiple as of Sept. 30, 2018, according to performance information from the California Public Employees’ Retirement System.

The sale process involves only several assets, so it is viewed as a concentrated bet on the underlying companies remaining in the portfolio, one of the sources said.

“Like all these deals, you get a billion-plus deal and it’s pretty concentrated; there will certainly be other participants,” a secondary source said.

Ares would move the assets into a continuation vehicle, allowing existing limited partners to cash out or roll their interests into the new fund. The deal will give Ares more time to manage the assets.

Antony Ressler co-founded Ares in 1997 along with John Kissick and Bennett Rosenthal. The firm went public in 2014, making it one of only a handful of private equity firms that have done so, including Blackstone Group, Carlyle Group, Kohlberg Kravis Roberts and Oaktree Capital Management.

Separately, Coller Capital has been in the market raising its eighth fund, targeting up to $9 billion.

Coller has been involved in several large deals this year, including a single-asset process being run by Revelstoke Capital Partners to move Upstream Rehabilitation out of its debut fund into a continuation vehicle, Buyouts previously reported. Coller also was a buyer on the large restructuring process involving Thomas H. Lee’s sixth fund, Buyouts reported earlier this year.

The Ares process is one of the largest GP-led deals in the market. It represents another example of a high-profile GP turning to the secondary market to sort out an older fund. Other such GPs include Bain Capital, Blackstone Group, Insight Venture Partners, Oaktree, TH Lee Partners, TPG and Warburg Pincus.

GP-led deals have become a larger part of the overall secondary market, which produced an estimated $42 billion of volume in the first half of this year. Evercore and Greenhill Cogent believe total secondary activity could tally more than $90 billion this year.

Action Item: See Ares’s Form ADV here: