Ares Uses $850M Continuation Fund
Ares Management has closed an $850 million continuation vehicle for a single asset it has held for eight years. The deal highlights a popular sponsor-side strategy to extend ownership and seek more upside amid a sluggish M&A market for traditional exits.
The asset at the center of the deal is Convergint, a global systems integrator for security, fire, and life safety solutions. Since Ares' initial investment in 2018, Convergint has quadrupled its adjusted EBITDA, fueled by strong organic growth and the completion of more than 40 add-on acquisitions. This transaction was led and fully underwritten by Leonard Green & Partners' (LGP) Sage Fund, a new $3.6 billion vehicle specifically raised to invest in single-asset continuation funds sponsored by other GPs. Goldman Sachs Alternatives also participated as a new investor, highlighting the growing institutional appetite for concentrated secondary deals involving high-quality, sponsor-backed companies. For existing investors (LPs) in the original Ares fund, this deal provided a choice: either cash out and realize returns after an eight-year hold or roll their stake into the new vehicle to maintain exposure to Convergint's future growth. This structure offers a crucial liquidity option in a market where traditional exits like IPOs and M&A have been sluggish. The deal is a prime example of a GP-led secondary transaction, a market segment that has surged to represent nearly half of all secondary market volume. Single-asset vehicles, in particular, have grown at a ~48% compound annual growth rate since 2019, evolving from niche solutions to a mainstream strategy for sponsors to manage their "trophy assets." Ares, alongside existing co-sponsors LGP and Harvest Partners, will retain shared control of Convergint and even made a new investment in the company. This demonstrates their conviction in the company's growth, which is buoyed by secular tailwinds like increased technological advancements and rising awareness of security threats.
