Ares takes controlling stake in Asia's SSG

SSG has raised $1.9 billion for its fifth fund, plus a sidecar of $825 million, according to an Ares presentation, although it did not say whether this constitutes a final close. As of May 2019, the firm had received commitments of $1.36 billion against a target of $1.5 billion and was also seeking $750 million for a sidecar that will participate alongside the main vehicle on larger deals.

The SSG team originally ran the Asia special situations group at Lehman Brothers. They set up as an independent firm in 2009 and closed a debut fund of $100 million. Since then, the business has scaled up dramatically, with $400 million raised for Fund II, $915 million for Fund III and $1.7 billion for Fund IV. The latter vehicle comprises $1.18 billion in core equity plus a $500 million sidecar. SSG also raised two secured lending funds of $325 million and $815 million, respectively. Pension funds and sovereign wealth funds account for nearly three-quarters of the firm’s overall assets. 

Investment activity ranges from special situations – typically financing small and medium-sized enterprises that struggle to access Asia’s bank-led lending market – to stress and distress. More distressed opportunities are likely to emerge in the region as the likes of China and India look to resolve their non-performing loan (NPL) issues. India has also introduced insolvency legislation intended to clean up corporate balance sheets and drive restructuring activity.

While India has historically been SSG’s most active geography – it has dedicated onshore investment entities that provide local currency solutions – the team operates throughout the region and has invested across different cycles and transaction types in Indonesia, China and Thailand. The firm has approximately 40 investment professionals and offices in Hong Kong, Singapore and Shanghai, as well as in the Cayman Islands and Mauritius.

Ares sees the acquisition of SSG as a key component of its Asian expansion strategy. It noted that regulatory changes are creating opportunities as financial institutions are being forced to deleverage and competition has decreased in areas such as acquisition financing, working capital financing, restructurings and asset purchases. Moreover, the middle market remains underserved by banks, which means there is scope for non-bank lenders to carve out a meaningful presence.

“The region is the largest and fastest-growing global market that we believe is characterized by structural market inefficiencies that are driving the capital needs for the underserved middle market. We look forward to leveraging the SSG team’s experience and infrastructure to enhance our current activities, launch new strategies and continue to deliver attractive long-term returns,” Eric Vimont, a partner and COO for Ares in Asia, said in a statement.

Edwin Wong, SSG’s managing partner, and fellow senior executives Shyam Maheshwari, Andreas Vourloumis, and Peter Cairns will join Ares as part of the transaction. Wong added that bringing together SSG’s regional expertise and the Ares global platform should “better serve our growing investor base as many of our clients seek to increase their allocations to Asian alternative investment strategies.”

Ares had $144 billion in assets under management across credit, private equity, and real estate as of September 2019. Of this, $106.3 billion was in credit. The firm employs approximately 1,200 people with offices in 20 cities across more than 10 countries.

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• Topics
• GPs
• Credit/Special Situations
• Restructuring
• Asia
• Ares Management
• SSG Capital Partners
• M&A