Ares Management Set to Announce First Close on Fund IV

A senior executive at Ares Management said the firm plans to announce a first close on its new $4 billion buyout and growth capital fund, Ares Corporate Opportunities Fund IV LP, during the first quarter of 2012. Ares is known for investing in such high profile firms as GNC Holdings, 99-Cent Only Stores and the Serta and Simmons Bedding Companies.

As first reported in Buyouts, peHUB’s sister publication, Matthew Cwiertnia, the senior partner of Ares’s private equity group, made the disclosure in a panel discussion at the Super-Investor private equity conference last week.

Among the investors that have already committed to Fund IV is the New Mexico State Investment Council, which authorized a pledge of $75 million. New Mexico is a repeat investor in Ares, having invested $50 million in Fund III. That fund, which raised $3.5 billion has so far produced a net IRR of 28 percent and a 1.5x return multiple.

The fund has also received a commitment from the Kansas Public Employees Retirement System, which pledged $25 million. It is that fund’s first investment with Ares.

Ares, along with the Ontario Teachers’ Pension Plan, bought GNC, the marketer of food supplements, from Apollo Global Management in 2007. The new owners took GNC public last April at $16.75 per share, and since then, it has risen 70 percent. As of early February, the stock trades at $28.47 per share.

In another partnership with Ontario Teachers, Ares bought Simmons Bedding Co. from a bankruptcy auction. The two investors now own both Simmons and its rival Serta, which are now part of the National Bedding Co., a jointly owned holding company.

And in January, Ares completed the purchase of 99 Cent Only Stores, paying $1.6 billion in a deal with the Canada Pension Plan Investment Board. The two investors won the bidding for the discount store chain over a rival bid from Leonard Green & Partners.

Los Angeles-based Ares, which was founded in 1997, manages about $6 billion in private equity capital, a small fraction of the $46 billion managed by the firm overall. Most of the Ares’s money is managed by the firm’s private debt and capital markets groups.