Ares’ big play in private equity
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Hey guys, it's Mark checking in from my time off. I wanted to let you know about the FT Weekend Festival happening on Saturday, September 5th at Kenwood House Gardens in London or online wherever you are. Spend the day with FT journalists, leading voices, and forward thinkers across business, politics, economics, culture, and the arts. As a podcast listener, you're going to save 10% on tickets with the code FT podcast. Just visit ft.com slash festival to find out more. We'll have that link in the show notes.
Good morning from the Financial Times. Today is Tuesday, July 28th, and this is your FT News Briefing. A French energy company is benefiting from a U-turn on Russia sanctions, and Aries management wants to compete with private equity giants. Plus, big institutional investors are scooping up homes in the UK. I'm Sonia Hudson in for Mark Filippino, and here's the news you need to start your day.
The French company Total Energies is going to be able to keep selling gas to Asia that comes from its Russian plant. That's because the EU last week agreed to allow European companies to keep shipping Russian liquefied natural gas to countries outside the bloc. Greece had demanded the carve-out in exchange for an unrelated group of sanctions against Moscow. Greece has a large shipping industry. And now, three people familiar with the matter said they expect total energies to benefit from the decision, too. And EU officials said the move was justified because vessels transferring the gas would otherwise have been taken by Chinese operators. And that would mean the ban wouldn't impact the flow of Russian oil.
Total Energy's declined to comment.
The private capital group Aries Management has held talks to acquire the private equity firm Leonard Green and Partners. The deal would more than quadruple the size of Aries' PE business. That's according to people familiar with the discussions. It's part of a wave of consolidation that's happening at an interesting time. Private equity is really struggling. Here to tell us more is the FT's Antoine Gara. He's our U.S. private equity and deals editor. Hi, Antoine.
Hi, how are you?
Doing well. So how significant of an acquisition would this be for Aries?
Well, Aries is one of the premier private credit firms. It's arguably the dominant company private credit lender out there. And it's also one of the large private capital firms that's listed. But when you think about their business, it's just a lot smaller than rivals KKR, Blackstone and Apollo when it comes to private equity. So this would really solve a weakness for them when you compare them to the absolute titans of the industry.
Would Aries acquiring Leonard Green get them close to competing with those titans?
It would. Leonard Green is one of the premier independent private equity firms. It's been around for many decades. It's widely considered to be one of the most profitable private equity firms in the world. And they've had some really recent epic windfalls, like the sale of a business they owned to Home Depot for $18 billion. So this is a really high quality private equity firm.
Well, let's talk a little bit about what's going on in the private equity space as Aries is thinking about this deal.
Sure. What's happening is the industry is stuck with a logjam of about $4 trillion in unsold assets. And the investors in private equity are getting really frustrated because funds that they invested in, let's say, six to eight years ago, they've gotten almost no money back. And normally cash is supposed to come back to them fairly quickly, five to seven years. So they're refusing to make new investments until they get that money back. So fundraising across the industry has slowed. It's down 40% this year, according to some data providers. That being said, The money is going to the biggest, most established, best known brands in the world. And that's the firms like Blackstone, Apollo, KKR, so on and so forth.
And so you want to be in that pantheon. And that's really one of the real reasons that firms are considering all of this consolidation.
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