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March 23, 2017
Source: blake.thornberry

Ares Corporate Opportunities Fund IV (ACOF IV) stands to triple its money from its recently announced sale of oil and gas producer Clayton Williams Energy Inc. (NYSE:CWEI), according to the Wall Street Journal. Meanwhile, two of Ares’ underperforming funds that invest heavily in the oil and gas sector – Energy Investors Fund IV (EIF IV) and Special Situations Fund IV (SSF IV) – appear to have been left out of the deal.

Key Points

  • Ares built up an approximately 35% stake in CWEI in 2016 through two separate investments valued at $22 and $29.70 per share, in addition to acquiring about 1 million shares on the open market at an average price of about $16 (including brokerage commissions). CWEI shares closed at $130.25 on March 20, 2017.
  • The Wall Street Journal reported that “Ares is in line to triple its money and reap more than $1 billion in profit” from the sale.
  • Ares’ holds its investment in the Texas oil and gas company through affiliates of ACOF IV – not one of its EIF or SSF Funds.
  • Reports from limited partners in Ares EIF IV and SSF IV indicate that these funds may have had enough capital and the strategic mandate to be able to complete a portion of the CWEI investment.

The full report is available here.

Questions to Consider

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