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Laxman Pai, Opalesque Asia:

Los Angeles-based Ares Management Corp. and Australia's AMP Ltd. have agreed to pursue a A$2.25 billion (US$1.8 billion) joint venture for AMP's private markets business.

The Australian wealth manager will retain 40 percent of AMP Capital's private markets business, worth A$900 million, which deals in infrastructure equity and debt, real estate, and other minority assets. Ares would take a 60 percent stake of the new business for $1.35 billion.

Ares would take management control and a new 10-seat board would be set up, Ares having six seats and AMP with four, said a press release from the global alternative investment manager.

The joint venture is expected to raise A$0.5 billion of debt to maximize capital efficiency which would reduce the pro-rata equity contributions for each party in the joint venture. Therefore, under this assumption, Ares would fund A$1.05 billion in equity to the joint venture and AMP would receive expected gross cash proceeds of up to A$1.55 billion (before separation costs and capital release).

"The joint venture would enable the Private Markets business to benefit from Ares' brand and global strengths in investment and distribution as well as already strong infrastructure and real estate capabilities, and continue to build upon AMP Capital's well-established processes and investment capabilities, improving its scale and potential growth trajectory," said the release.

On 31 December 2020, Ares had US$1......................

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