Why Ares' $1.08 Billion Landmark Partners Deal Signals Massive Secondaries Market Opportunity

Ares Management just dropped a $1.08 billion acquisition bomb, and it’s not just another M&A headline—it’s a statement about where big money thinks the future of alternative investing is headed.

The Deal: What You Need to Know

Ares Management finalized an agreement to acquire Landmark Partners, a 30+ year veteran in the secondaries space. The price tag: approximately $787 million in cash plus $293 million in Ares Operating Group Units. On paper, that’s a chunky investment. But when you dig into what Landmark actually controls, it starts making sense.

Landmark sits on $18.7 billion in assets under management (as of December 31, 2020), with a portfolio spanning private equity, real estate, and infrastructure secondaries across six global offices and 150 employees. More importantly, the firm has cultivated relationships with over 600 institutional fund investors and has touched more than 2,400 partnership interests over its three decades in business. That’s deep market access—exactly what Ares is buying.

Why This Matters: The Secondaries Boom Nobody’s Talking About Enough

Here’s the thing most casual observers miss: the secondaries market isn’t niche anymore. Landmark grew its AUM at a 17% compound annual growth rate over the past four years. That’s not a typo. While traditional fundraising hit headwinds, secondaries—essentially buying and selling existing fund stakes—has been accelerating quietly in the background.

The secondary market works like this: investors who need liquidity can sell their private fund stakes to buyers like Landmark instead of waiting out the full fund term. Buyers get access to seasoned portfolios with predictable cash flows already in motion. Fund sponsors also use secondaries to offer GP-led recaps or new secondary vehicles, giving their LPs extra liquidity options. It’s a win-win-win ecosystem that’s only gotten more sophisticated.

Michael Arougheti, CEO of Ares, framed this as expanding into “a segment of alternative asset management that is experiencing double-digit industry growth rates.” Translation: the secondaries market is one of the few pockets of the alternatives world consistently hitting those kinds of expansion metrics.

The Strategic Angle: Platform Consolidation

This isn’t just about adding $18.7 billion in AUM. The real play is integration. Post-acquisition, Ares’ combined platform will have over 1,600 institutional investors across all investment vehicles. More striking: currently less than 5% of these accounts invest with both Ares and Landmark. That means massive cross-selling potential within the existing investor base alone.

Ares gains direct relationships with 825 financial sponsors and regional networks spanning North America, Europe, Asia Pacific, and the Middle East. Landmark gets supercharged distribution—Ares’ infrastructure on steroids. Francisco Borges, Landmark’s Chairman, signaled confidence by accepting “significant equity in the combined firm,” suggesting the leadership sees real upside in the combined entity.

The combined platform now spans five distinct investment verticals: Credit, Private Equity, Real Estate, Strategic Initiatives, and Secondaries. That’s relevant because it creates internal deal flow. A real estate secondary opportunity Landmark uncovers might sync with Ares’ credit or PE teams. Cross-functional opportunities multiply.

The Numbers That Matter

From a financial perspective, Ares pegged this as “immediately accretive” to core earnings metrics, including after-tax realized income per common share. Michael McFerran, COO and CFO, highlighted that the deal should also improve “fee-related earnings margins and fee-related earnings composition.” In plain terms: Landmark contributes recurring management fees (the lifeblood of asset managers) while improving Ares’ profitability structure.

What This Signals About the Market

This move reflects a broader industry reality: large, diversified alternatives platforms are consolidating niche expertise into broader ecosystems. When Ares deploys $1.08 billion to acquire a pure-play secondaries specialist founded in 1989, it’s betting heavily that secondaries aren’t a fringe strategy anymore—they’re core infrastructure for institutional alternatives investors.

The transaction was expected to close in Q2 2021, subject to regulatory approvals. Advisors included RBC Capital Markets and Credit Suisse Securities for Ares, with Goldman Sachs advising Landmark.

Bottom line: Ares just signaled that secondaries are no longer a specialty play. They’re a necessity for any alternatives manager with ambitions of true platform scale.