Ares Management, the first alternative money manager to go public in two years, fell in its trading debut after pricing its initial public offering below the marketed range.
Ares dropped 2.1% to $18.60 in its first day of trading. The firm, which oversees $74 billion in credit and private equity assets, sold 11.4 million shares for $19 apiece Thursday, according to data compiled by Bloomberg. The company and an existing shareholder had offered 18.2 million shares for $21 to $23.
The $773 billion Abu Dhabi Investment Authority, which had planned to offer 6.8 million shares in the IPO, according to an April regulatory filing, didn't end up selling the shares, data compiled by Bloomberg show.
The initial public offering is the first test of investors' appetite for a private equity company since Carlyle Group's $671 million share sale two years ago. Ares is touting a model that's more focused on predictable management fees than its peers, which derive a greater percentage of revenue from incentives.
Ares oversees $10 billion of private equity, $9 billion in real estate and $55 billion in direct lending and tradable credit, its prospectus shows. The company posted $478.7 million in fee revenue last year, up 43% from 2012.
Following the offering, Ares will be considered a partnership, limiting common stockholders' voting rights and their ability to remove or elect directors of the general partnership, its prospectus shows. Ares plans to use the proceeds from the IPO to repay outstanding debt and fund growth initiatives at the company.
J.P. Morgan Chase and Bank of America managed the sale.
