Ares, Kayne call off $2.55bn merger

Despite the decision to not join forces, Ares will invest $150m in Kayne’s energy activities underscoring the mutual ‘respect and admiration’ between the two firms.

Los Angeles-based alternative assets manager Ares Management and investment firm Kayne Anderson Capital Advisors have mutually agreed to call off a deal that would have created one of the largest alternative asset managers in the world, the two firms said in a statement.

“While both companies believe in the current investment opportunities in energy, the two companies had different views as to how best to proceed with the business combination in response to the current market conditions in the energy sector,” Ares and Kayne said in the statement. “After thoughtful discussions, both sides decided it was best not to pursue the transaction at this time.”

Although the two will not be combining their businesses as they had announced last July, they both “continue to have tremendous respect and admiration for each other’s organisations,” according to the statement.

Underscoring that point is the decision by Ares and its affiliates to invest $150 million into several Kayne-managed energy funds. Furthermore, Ares and Kayne will also look to collaborate in other ways, including jointly managing separately managed accounts and other products.

New York-listed Ares Management, which in addition to its private equity group also comprises a Tradable Credit Group, Direct Lending Group and Real Estate Group, had approximately $88 billion of assets under management as of June 30, 2015.

It had sought through the merger to expand its energy platform as Kayne Anderson, an independent alternative investment firm focused on niche investing in energy and energy infrastructure, in addition to real estate, middle market credit and growth private equity.

As of September 30, 2015, Kayne had more than $22 billion of assets under management.

Neither Ares nor Kayne Anderson responded to a request for comment.