Ares to acquire Energy Investors Funds

The Los Angeles-based asset manager will add $4bn to its portfolio with the acquisition of the energy-focused private equity firm.

A subsidiary of alternative asset manager Ares Management has agreed to acquire Energy Investors Funds (EIF), a New York private equity firm focusing on power and energy, the Los Angeles-based firm said in a statement.

The acquisition, which is expected to close by the end of 2014, will add approximately $4 billion in assets under management to Ares’ private equity group.

As a result, Ares Private Equity Group will manage approximately $14 billion of assets under management across US/Europe corporate private equity, China corporate private equity and US energy infrastructure private equity, according to the statement.

Ares did not disclose financial details of the transaction other than to say it will be financed primarily with cash.

The EIF investment team will join Ares Private Equity Group and maintain full day-to-day responsibility over EIF’s current and future private equity funds.

“The energy sector is an area of increasing importance across our business given the large, growing and contractual nature of the asset class and the differentiated risk-adjusted returns that can be generated by experienced managers,” Ares Management president Michael Arougheti said. “EIF represents exactly what we look for in pursuing accretive, strategically valuable acquisitions.”

As of September 30, 2014, EIF managed over $4 billion across four co-mingled private equity funds and related co-investment vehicles. Its funds own about 4,000 megawatts (MW) of capacity in facilities that are currently operating or under construction and an additional 6,000MW in facilities that are in various stages of development.

Founded in 1987, EIF is one of the first private equity firms to focus on independent power and the electric utility sector. Recent investments included the acquisition of an additional 50 percent stake in Newark Energy Centre, making EIF sole owner of the 705-megawatt power plant in New Jersey; as well as a 100 percent membership interest in Starfish Pipeline, a natural gas processing and pipeline transportation services company.

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 $79 billion of assets under management as of June 30, 2014. Of that total, more than $7 billion is in energy-related investments across three of its four groups.