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This document is page 23 of a Morgan Stanley research report titled 'North America Insight,' focusing on a Sum-of-the-Parts (SOTP) and sensitivity analysis of Ares Management (ARES). It includes financial modeling tables (Exhibits 33, 34, and 35) projecting share prices based on 'C-Corp Conversion' scenarios using Q3 2017 data and 2018 estimates. The document bears the Bates stamp 'HOUSE_OVERSIGHT_025573', indicating it was produced as evidence for the House Oversight Committee, likely as part of an investigation into financial institutions connected to Epstein or general private equity scrutiny.
Organizations (4)
| Name | Type | Context |
|---|---|---|
| Morgan Stanley | ||
| Ares Management (ARES) | ||
| Thomson Reuters | ||
| House Oversight Committee |
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Morgan Stanley Research report analyzing Ares Management valuation.
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Morgan Stanley | RESEARCH
NORTH AMERICA INSIGHT
NORTH AMERICA INSIGHT
Ares Management SOTP and Sensitivity Analysis
Exhibit 33:
SOTP for ARES
Ares Management (ARES)
SOTP for ARES
Ares Management (ARES)
Sum-of-the-Parts Components (ARES) | Pro Forma Price | Current Price SOTP | Downside Case C-Corp Conversion | Change | Upside Case C-Corp Conversion | Change
Fee Related Earnings
2018e Pre-Tax Core FRE / Sh | $1.12 | $1.12 | $1.12 | 0% | $1.12 | 0%
Tax Rate | 24% | 24% | 24% | 0% | 24% | 0%
2018e After-Tax Core FRE / Sh | $0.85 | $0.85 | $0.85 | 0% | $0.85 | 0%
FRE Multiple | 15.0x | 18.4x | 15.0x | -3.4x | 22.5x | 4.1x
Core FRE Value | $12.82 | $15.72 | $12.82 | -18% | $19.23 | 22%
2018e Pre-Tax Core FRE / Sh | $1.12 | $1.12 | $1.12 | 0% | $1.12 | 0%
Tax Rate | 24% | 24% | 24% | 0% | 24% | 0%
2018e After-Tax Core FRE / Sh | $0.85 | $0.85 | $0.85 | 0% | $0.85 | 0%
FRE Multiple | 15.0x | 18.4x | 15.0x | -3.4x | 22.5x | 4.1x
Core FRE Value | $12.82 | $15.72 | $12.82 | -18% | $19.23 | 22%
+
Balance Sheet
Balance Sheet Net Cash and Investments / Sh (as of 3Q17) | $0.69 | $0.69 | $0.69 | 0% | $0.69 | 0%
Balance Sheet Net Cash and Investments / Sh (as of 3Q17) | $0.69 | $0.69 | $0.69 | 0% | $0.69 | 0%
+
Accrued Carry
Net Accrued Carry / Sh (as of 3Q17) | $1.03 | $1.03 | $0.78 | -24% | $0.78 | -24%
Net Accrued Carry / Sh (as of 3Q17) | $1.03 | $1.03 | $0.78 | -24% | $0.78 | -24%
+
Market Implied Carry Value
Avg Net Carried interest / Sh (2018e-2020e) | $0.63 | $0.63 | $0.48 | -24% | $0.48 | -24%
Multiple | 11.6x | 11.6x | 7.7x | -3.9x | 13.6x | 2.0x
Market Implied Carry Value | $7.26 | $7.26 | $3.65 | -50% | $6.47 | -11%
Avg Net Carried interest / Sh (2018e-2020e) | $0.63 | $0.63 | $0.48 | -24% | $0.48 | -24%
Multiple | 11.6x | 11.6x | 7.7x | -3.9x | 13.6x | 2.0x
Market Implied Carry Value | $7.26 | $7.26 | $3.65 | -50% | $6.47 | -11%
=
Valuation
Total Value | $21.80 | $24.70 | $17.95 | -27% | $27.17 | 10%
2018e EPS | $1.73 | $1.73 | $1.42 | -18% | $1.42 | -18%
P/E | 12.6x | 14.3x | 12.6x | -1.7x | 19.1x | 4.8x
Total Value | $21.80 | $24.70 | $17.95 | -27% | $27.17 | 10%
2018e EPS | $1.73 | $1.73 | $1.42 | -18% | $1.42 | -18%
P/E | 12.6x | 14.3x | 12.6x | -1.7x | 19.1x | 4.8x
Source: Company Data, Morgan Stanley Research estimates
Exhibit 34:
ARES Estimated Potential Share Price in C-corp Conversion
Multiple on Future Performance Fees
Fee Related Earnings Multiple
[Table Data: Matrix of Fee Related Earnings Multiple (12.5x to 30.0x) vs Multiple on Future Performance Fees (7.7x to 14.6x). Values range from 16 to 34]
ARES Estimated Potential Share Price in C-corp Conversion
Multiple on Future Performance Fees
Fee Related Earnings Multiple
[Table Data: Matrix of Fee Related Earnings Multiple (12.5x to 30.0x) vs Multiple on Future Performance Fees (7.7x to 14.6x). Values range from 16 to 34]
Source: Thomson Reuters, Company Data, Morgan Stanley Research estimates
Exhibit 35:
ARES Estimated % Change in Current Share Price
Multiple on Future Performance Fees
Fee Related Earnings Multiple
[Table Data: Matrix of Fee Related Earnings Multiple (12.5x to 30.0x) vs Multiple on Future Performance Fees (7.7x to 14.6x). Values range from -36% to 38%]
ARES Estimated % Change in Current Share Price
Multiple on Future Performance Fees
Fee Related Earnings Multiple
[Table Data: Matrix of Fee Related Earnings Multiple (12.5x to 30.0x) vs Multiple on Future Performance Fees (7.7x to 14.6x). Values range from -36% to 38%]
Source: Thomson Reuters, Company Data, Morgan Stanley Research estimates
MORGAN STANLEY RESEARCH
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HOUSE_OVERSIGHT_025573
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