Welcome to today's call announcing Ares Management Corporation's planned acquisition of Landmark Partners. At this time, all participants are in a listen only mode. As a reminder, this conference call is being recorded on Wednesday, March 31, 2021. I will now turn the call over to Carl Drake, Head of Public Company Investor Relations and Communications for Ares Management.
Good morning and thank you for joining us today to hear more about our planned acquisition of Landmark Partners. I am joined today by Michael Arougheti, our Chief Executive Officer and Michael McFerran, our Chief Operating Officer and Chief Financial Officer, who will provide some prepared remarks on the strategic rationale and the financial impact of the transaction. We will also hold a question and answer session and Francisco Borges, Landmark's Chairman and Managing Partner and Timothy Haviland, Landmark's President and Managing Partner will also be available for questions. This morning, we posted a press release and an investor presentation on our website with details on the transaction. You can find the press release and presentation on our website at www.aresmgmt.com under the Investor Resources section of our website.
Before we begin, I want to remind you that comments made during this call contain forward looking statements and are subject to risks and uncertainties. All statements other than historical facts, including statements regarding the expected timing of the closing of the proposed transaction and the expected benefits of the proposed transaction, are forward looking statements. Our actual results could differ materially, and we undertake no obligation to update any such forward looking statements. Please also note that past performance is not a guarantee of future results. During this call, we will refer to certain non GAAP financial measures, which should not be considered in isolation from or as a substitute for measures prepared in accordance with generally accepted accounting principles.
Now, I'll turn the call over to Michael Arougheti to discuss the transaction.
Thank you, Carl. Good morning, everyone. We are absolutely delighted to gather this morning to announce that we've entered into a definitive agreement with BrightSphere Investment Group Inc. And Landmark Investment Holdings LP to acquire 100% of Landmark Partners LLC. Founded in 1989, Landmark is one of the largest and most experienced investors in the fast growing secondaries industry.
As we've outlined in the past, we have 3 main criteria whenever we look at new acquisition opportunities. First, the acquisition must be strategically accretive to Ares, meaning that the acquisition needs to expand our capabilities, our product offering and the market opportunity set. We also need high conviction in our ability to use the Ares platform to enhance and grow the acquired business. 2nd, the acquisition must be financially accretive to our earnings. And finally, there must be a strong cultural fit given our focus on collaboration, entrepreneurship, responsible investing and driving value for all of our stakeholders.
I'm excited that this transaction checks all of these boxes as it will add a high growth new product that strategically aligns with our existing sponsor and client relationships. The transaction will be immediately accretive to our earnings and senior management team and employees of Landmark share the same set of core values that drive our firm. Landmark is a unique and valuable platform that will instantly bring us scale and capabilities in an attractive and growing global market. Over the last several years, the secondary's market has evolved to become more institutionalized, increasing from a limited number of bespoke transactions over a decade ago to more than $88,000,000,000 in GP and LP secondary market transactions per year. As transaction volumes have accelerated, capital has slowed and secondary fund AUM has grown at a compound annual growth rate of 15% since 2,007.
While the trajectory of this growth has been impressive, we believe that we are still in the early days of the development of this market. For example, the secondary's market volume is only 5% of primary market new fund volume and to date, and over 90% of the transaction volume has been in one asset class, private equity. As secondary market solutions continue to grow and as product capabilities expand into a broader universe of alternative assets beyond PE, such as real estate, infrastructure and credit, we believe that there's a long and visible runway for significant growth. The continued move towards GP led secondaries plays to our combined strength and should be an area of potential significant future growth as well. We believe that these market trends combined with Landmark's market tenure, trusted leadership and extensive track record of product innovation position the Landmark platform for strong future growth as part of Ares.
Over the past 30 years, Landmark has developed deep secondary market investing capabilities with $28,000,000,000 in cumulative capital raised and transactions involving more than 2,400 underlying partnership interests across 800 plus different sponsors. Today, Landmark manages approximately $19,000,000,000 in AUM across PE, real estate and infrastructure strategies. The company is led by a team of 150 professionals across 6 offices in the U. S, Europe and Asia and has developed a loyal investor base of more than 600 global institutional investors. With its significant investment experience and an expansive network, Landmark is a go to partner for financial sponsors and institutional LPs looking for secondary market transactions.
Their leadership position has led to strong sourcing and underwriting advantages, which has resulted in a long term track record of attractive investment performance for their investors. This long term track record is demonstrated through both Landmark's PE secondary strategy, which has generated over a 15% net IRR since inception in 1990, and its real estate secondary strategy which has generated over a 25% net IRR since its inception in 1996. On the heels of this strong investment performance, Landmark has generated significant AUM growth including a 17% compound annual growth rate over the past 4 years under BrightSphere's ownership. We believe the many advantages of the Ares platform can be a further catalyst to accelerate the growth of the Landmark business. First of all, we believe that Landmark's unique secondary solutions will be very attractive to our institutional and retail client base.
In addition, Landmark has a significant number of deep client relationships where Ares has limited interaction. In our analysis of Ares' 1100 institutional clients and Landmark's 600 institutional clients, there is less than a 5% overlap of institutional clients invested with both firms. As you know, over the past 5 years, we focused on deepening our relationships and expanding our wallet share with our clients. Since 2015, we've increased the amount of capital committed by our clients to 6 or more funds by 24% annually and the amount invested by clients in 2 or more product groups by 23% annually. So we expect to be able to help Landmark meaningfully grow its flagship funds.
We have a strong track record of integrating and expanding new LP relationships gained from strategic acquisitions and we're very enthusiastic about the opportunity to offer Ares products to Landmark's 600 LP relationships. For example, when we acquired the real estate platform, Ares Property Partners in 2013, there were 130 LP clients that were new to the Ares platform, totaling nearly $3,000,000,000 in commitments. Since then, the AUM for those same relationships has nearly quadrupled to over $11,000,000,000 in commitments today or a 20% compound annual growth rate over the past 7 years. We also believe that Ares' long standing and deep relationships with over 8 25 financial sponsors and 1100 LPs will drive new sourcing opportunities for Landmark's investment teams. This should be further enhanced by our large global presence.
We believe that a large sourcing funnel is the key to strong and lasting investment performance and we believe that Landmark's investment team will be able to see even more investment opportunities through the Ares platform supporting continued growth in their core strategies as well as new product offerings. Finally, as I mentioned earlier, a key component to any acquisition is the cultural fit. We've known Landmark's leadership team for many years and their focus on stewardship and collaboration aligns well with our firm's core values. One of the key components of value for this transaction is the Landmark team that will be joining Ares. The leadership team led by Frank and Tim have been with the company for an average of 17 years and all of Landmark's 16 partners are joining Ares and will continue to manage the Landmark funds.
Importantly, the management team at Landmark will receive a majority of the consideration in the form of Ares Equity, which we believe highlights their confidence in the opportunity and our strong alignment of interest. There really are relatively few opportunities to acquire this kind of scale, market leadership and cultural alignment in such an attractive high growth industry. We expect the combination of Landmark and Ares will drive meaningful investing advantages across Ares' platform, which will expand now to include 5 distinct but complementary investment groups in credit, private equity, real estate, strategic initiatives and now secondaries. We look forward to both Frank and Tim leading this new product group for us, and we welcome the entire Landmark team to our firm. And now I'm going to turn the call over to Mike McFerran just to walk through the financial terms of the deal.
Mike?
Thank you, Mike, and good morning. As Mike mentioned, we believe this acquisition will be both strategically and financially accretive to the Ares platform. Landmark has approximately $18,700,000,000 in assets under management, which will bring Ares total AUM to $216,000,000,000 and fee paying AUM to $143,000,000,000 as of December 31, 2020, based on combined year end financials. In addition, the acquisition will grow our available capital for deployment to over $64,000,000,000 as of the end of the year. Last year, Landmark generated $147,000,000 of management fees and an estimated $67,000,000 in fee related earnings.
As a result, on a combined basis, we estimate our fee related earnings would have been $492,000,000 in 2020 after giving effect to completion of the transaction. In addition, Landmark generated strong estimated FRE margins of approximately 46% for 2020, so we anticipate the acquisition will be accretive to our FRE margins going forward. Overall, upon closing, we expect the transaction would have been immediately accretive to our 2020 FRE, FRE margins and our after tax realized income per share. Ares will provide $1,080,000,000 of total consideration to Bright Sphere and to Landmark's current owners. The consideration consists of approximately $293,000,000 in Ares operating group units and $787,000,000 in cash.
We have access to significant liquidity to fund the cash portion of the transaction, including $530,000,000 of cash on our balance sheet as of year end, over $1,000,000,000 of borrowing capacity on our undrawn credit facility, as well as have further access to the capital markets. We estimate the transaction will be mid single digit accretive to our after tax realized income per common share regardless of how we elect to finance the transaction. In addition to being immediately accretive to earnings, we are excited about the growth prospects of Landmark over the coming years. As we have previously stated, Ares expects to generate year over year FRE growth of 15% or higher in the years ahead, and we expect similar growth for Landmark's business. We are excited about partnering with Frank and Tim and the entire team at Landmark.
We expect the transaction to close in the Q2 of 2021 and is subject to customary closing conditions, including investor consents and regulatory approvals. With that, I'll hand it back over to Mike for some closing comments.
Thanks, Mike. I just want to end by reiterating how excited we all are to be partnering with Frank, Tim and the entire team at Landmark. This transaction is highly strategic for Ares and we believe that Landmark will be an area of dynamic growth into the future. The combination of Landmark's leadership and the rapidly growing secondaries market and our significant global sponsor and client relationships provides product and fundraising opportunities that should accelerate the growth of the business. Lastly, as I said, the team at Landmark is just full of great people with a culture that's well aligned with our values and we're looking forward to working with all of them in the many years to come.
So thanks everyone for your time and support this morning. And operator, we'll now open up the line for questions.
Thank
Today's first question comes from Adam Beatty with UBS. Please go ahead.
Thank you and good morning. Just wanted to ask about some of the emerging areas that might flag in the opening in the secondaries market, particularly the GP led solutions and how you see the growth dynamics there. Obviously, the growth of the core landmark businesses has been quite strong, but just interested in how you see that unfolding so far and what you expect going forward? Thanks.
Thanks, Adam. As you mentioned, we think that there are a number of meaningful growth opportunities, expansion into credit, which is an emerging part of the market, leveraging Landmark's first mover position in real estate and infra, the globalization of the business away from the U. S. Into Europe and the APAC region, but probably most important as you point out is the emergence of GP led and single asset secondaries. This is a fairly new, but rapidly growing part of the market, and one that requires deep relationships, in the sponsor community, deep structuring capabilities, and significant capital scale, which is one of the things that led us to this acquisition.
I think most of the folks on the phone are aware that Ares actually executed on its first GP led secondary transaction last year in our extended value fund in our private equity business and that was a transaction of roughly $1,000,000,000 and we've been exploring this as a GP across the platform. So when you look at the growth of the business, this GP led piece of it, we think is going to be driving a disproportionate amount of the growth in the market relative to the traditional LP. To put that in perspective, if you just look at transaction volumes, I referenced about $88,000,000,000 of volume that was in 2019. Of that $88,000,000,000 about $26,000,000,000 was GP led. 5 years prior, there was only $8,000,000,000 and 5 years prior to that, the asset class didn't exist.
So as we continue to see the amount of dry powder in the primary market continue to grow. And as we see the lifecycle or duration of some of these funds extend, I think that's where you're going to start to see the explosion in growth in the GP side of the business.
That's great, Mike. Thanks for the historical context. Appreciate
it. Thanks.
And our next question today comes from Mike Carrier with BLA. Please go ahead.
Hi, good morning. Thanks for taking the questions. It seems like a deal that makes a lot of sense. Since these businesses tend to be so much about talent, just can you explain both the incentives in place to the Landmark team? And maybe for the Landmark team, can you just provide some context on the investment team structure, like ages and the expected retirement and then just the process of ensuring strong investment talent over time?
Sure. Tim, Frank, why don't I hit the first one and then you guys can give your perspectives. So Mike, I think the good news is we've known the team a long time in the business and as a client. And so as I mentioned, we have a very high conviction in the cultural fit. 2, there are 16 partners active in the business today.
All are taking equity as part of consideration in the transaction. All are signing meaningful restrictive covenant agreements. All as you know are locked in and retained by the incentives resident in Promote. And as we also disclosed in the transaction announcement, we have put in place a management incentive program that is aligned to future fundraising performance and profitability of the business. So we always have to get the economic and financial incentives right.
But at the end of the day, we have a young dynamic partnership group with a wonderful team of people that continue to grow through the organization that are economically aligned, but I think see the market opportunity the way that we do and are excited to get to the platform where they can grow the business more significantly. But Frank and Tim, I'll hand it over to you to give your perspective as well.
Sure. Thanks, Mike. This is Frank. Just a couple of points. I know Tim has some others.
We've got depth across our various leadership groups. We've got a discrete set of partners who focus 100% of their time on real estate. We've got a discrete group of partners that focus on private equity, on real estate, on infra. And there's tremendous debt. And we did this purposely a number of years ago.
Tim and I and the other partners, we would look at ourselves and we concluded that we're in a business where we're taking investors' capital for a significant amount of time. And that was important for us to build an organization that had depth at every level. And we've done that. We've got a dynamic seasoned and just capable group of partners and below that, managing directors and directors. So we feel pretty we feel terrific about what we have in terms of talent.
As you well know, this business is a talent business and we've been very fortunate to attract the best talent, incent them. And as Mike has indicated, we put in place an incentive program that is both attractive and one that we believe will continue to allow us to grow and expand.
Tim? Sure. There's not a lot more to add to that other than on the incentive side of things. For our team, it's always been the case that our interests are aligned with our investors primarily through our carried interest participation. As our funds do well, our investors do well, and then there's an opportunity to generate some carried interest for the team.
So that's great alignment historically and going forward.
So I'll just add one more thing just in terms of the benefits of these types of transactions is coming to a platform like Ares as large and profitable as Landmark is. I just think that we bring a whole set of relationships, capabilities and ability to invest in growth and team that is unique. So while the team is large, as we mentioned, it's 150 people deep. And while it is both the U. S.
And Europe, given the size of our P and L, as you've heard us talk about, I think we do have the opportunity to continue to grow the team in a way that they might not have been able to grow historically, which should again accelerate the growth that they're already on.
That makes sense. And just a quick follow-up, you mentioned like the LP opportunity, just given the minimum overlap. Can you provide just some context on why there's still a little overlap, meaning what type of client Landmark is focused on versus Ares? And obviously, it seems like you're going to attract Bakken.
Yes. The simplest way to describe it is Landmark's investor base has been largely U. S. Domestic. So about 90% of their LP base is U.
S. Domestic and it's historically been probably disproportionately skewed, not in a bad way, but just disproportionately skewed to the U. S. Pension system. As you know, our distribution in AUM is just much more global with 50% of our AUM being domestic and 50% coming from the rest of the world with growth coming in Asia, Europe and the Middle East.
So the simplest way to think about it is just by geography, there's no real core difference in terms of end channel, it's more of a geographic issue. Which one of the big opportunities is obviously to both take the 600 LPs that we're not deep with, although we've begun to penetrate, but as importantly, take our 1100 and introduce them to these secondary solutions as part of their portfolios.
Okay. Makes sense. Thanks a lot.
And our next question today comes from Chris Harris at Wells Fargo. Please go ahead.
Thanks, guys. So Landmark, I believe, has a pretty sizable fundraising pipeline. I think the plan was to raise kind of $10,000,000,000 of new capital over the next couple of years. Any update on that? Is that pipeline still intact, I presume, with this transaction?
Yes. Chris, as we've done with our business, we won't comment on specific funds while they're in the market. But I think it's safe to assume that the trajectory that the company was on under BrightSphere's ownership is continuing and frankly should accelerate hopefully under Ares' ownership.
Okay. And Mike, I know you guys are sort of in discussions with AMP about potentially acquiring our private markets business. Does this transaction kind of change those discussions in any way or change the thought process around that transaction in any way?
Well, as we've said about AMP, we can't really comment significantly beyond what we've put in the public markets. And what we have said and what AMP has said is that we had a non binding term sheet with exclusivity that has lapsed, but discussions are ongoing. So putting that all to the side, we feel that we have ample capacity both in terms of people, corporate development resources, financial wherewithal to do both to the extent that something actually were to materialize on the AMP transaction.
Okay. Thank you.
And our next question today comes from Craig Siegenthaler with Credit Suisse. Please go ahead.
Thanks. Good morning, everyone, and congrats on crossing $200,000,000,000 of AUM.
Thanks, Craig.
So, at Landmark, given the change in ownership 2x over the last 5 years, I was just curious, on some perspective from the Landmark team on how employee retention has trended despite having several different owners over a short time period?
Jim, do you want to take that? Sure. I think it's correct in that we've had a change in ownership. I think the original change was driven by the strategic partner that we had selected who had a change in direction themselves. And that's the case here with BrightSphere.
And so from our team's perspective and the opportunity set to team up with an organization and the quality and the depth and strength of an Ares has got our team very excited.
And Craig, I would say that the team has been very consistent. Obviously, the business is 30 years old. So if you look at the firm's history, you've seen partners some partners come and go, some partners obviously mature into retirement. This is a very deep, deep partnership, long standing track record, long standing relationships. And as I mentioned, the team is very tight knit and collaborative and the existing 16 partners are all lined up for long term opportunity here with us.
Great. Thank you, Michael.
And our next question today comes from Ken Worthington at JPMorgan. Please go ahead.
Hi, good morning. Can you talk about the carry structure of the Landmark funds, sort of what is the payout that Landmark has made to employees, level of accrued carry and basically what can Ares expect in terms of carry from the Landmark funds?
Tim, do you want to handle that one?
Sure. Happy to do that. With regards to the carried interest opportunity, we have historically we targeted to return 1.5 times the fund size. And so when you look at the size of our funds and you grow it to 1.5 times, our carried interest participation for the most part in our funds is at 10% of that excess amount. And so it's if we do a good job, it's a meaningful amount of incentive that gets paid over an extended period of time.
It takes a couple of years to deploy the capital, it takes a couple of years to harvest the capital. So for our people, it's viewed as a balance sheet building wealth creation opportunity, if we do a good job alongside for our investors.
And then in terms of splits, they have been consistent historically with our framework. Current splits are roughly 70% to the team, 30% to the parent. And I think we have an expectation that as the business continues to grow in scale, that will move it will move closer to our historical standard, which is sixty-forty, but that will take some time. And I would also just note as part of the transaction Ares is acquiring the BrightSphere GP interest and carried interest in the 2 predecessor PE and real estate funds as part of the purchase price.
Okay. And are you disclosing accrued carry?
We are not disclosing accrued carry yet, but eventually we will.
Okay. And then, I heard about not wanting to talk about landmark funds in the market. Can you disclose what the latest vintage years are for their flagship private equity real estate infrastructure products just so we can get a sense?
Sure. Tim, Frank, you want to walk people through the 3 funds and the sizes?
Sure. Frank, why don't you go ahead and do that?
Yes. For us, as you know, we've got 3 vehicles, 3 verticals. It's private equity, real estate and infra. Private equity, it's our 17th fund. With infra, it's our 2nd commingled vehicle.
And with real estate, we are in the final deployment of our 8th real estate secondary vehicle. The Private Equity Fund 16 was raised 2 plus years ago. Similarly, real estate was raised around the same time of the infra vehicle we're in the market with.
And so size of those Fund 16, the PE fund was a $5,400,000,000 fund excluding co invest. Fund 8, Real Estate 8 was a $3,300,000,000 fund and infra
2, I believe, is
already right to $1,000,000,000
So
just to give
you order of magnitude.
Just to
give you a sense of that, with real estate, dollars 8,000,000,000 the target was $2,000,000,000 We ended up at $3,300,000 Similarly, we with private equity, we're looking to raise $4,000,000,000 $5,000,000,000 and we ended up at with all the affiliated elements about $7,000,000,000
dollars Our
next question today comes from Alex Blostein with Goldman Sachs.
Couple of quick ones for you guys. So I think one, you talked about Landmark's kind of targeted FRE growth. I think I heard 15% over time, so kind of similar to Ares'. Is that kind of Landmark standalone or do you guys think about this kind of in conjunction with some of the synergy opportunities you talked about on this call or would that be on top of the 15?
Just to contextualize Mike's comment, I think we expect that the base business can grow consistent with our growth rate and hopefully we can accelerate that growth.
Got you. Okay, thanks. And then another one just around the numbers. It feels like you guys might have to take on a little bit of debt for this one, nothing crazy. But if you think about sort of your debt capacity, especially in conjunction with any other sort of other potential deals out there, can you just kind of frame how you guys are thinking about this today, pro form a for this transaction, maybe in like a debt to FRE kind of terms or something like that?
That's probably the closest to kind of more traditional debt to EBITDA framework most people would think about.
Sure. Look, Alex, as you know, we've been as of year end, the company was running on very little leverage, at least by probably a kind of a peer industry and a historical context for Ares. We had mentioned we have had a fair amount of dry powder, hence, the over $500,000,000 on our balance sheet at year end as we anticipated potential strategic transactions such as this coming up. So I feel whether we look to the debt markets or not, our ratings, the openness of those markets, the different types of transactions we could do if we chose to, I think are readily available. But again, we have significant liquidity and access to liquidity just between cash and the revolver that gives us great flexibility.
As far as targeted leverage, we're sensitive to our credit rating and would want to look at leverage levels to stay inside of that. It's hard to give a long term target, but I think we would probably think 1.5x to 2x debt to FRE over the long term would probably be a rational place to be and
kind of safely within our
ratings.
Our next
question today comes from Robert Lee with KBW.
Great. Good morning, everyone. Congratulations on the transaction. Thank you, Robert. Just maybe a couple of quick questions on the are there any and I apologize if you mentioned this earlier.
The first one is, are there any other type of contingent payments based on whether it's retention or hitting AUM or growth targets that we should be thinking about over the next couple of years?
We disclosed sizing of a management incentive plan. So there's no, what I would call purchase price to BrightSphere in excess of what we have at closing. We have aligned the team to future fundraising success and therefore performance of the business. And so that's fully in the disclosures, Rob. The way you should think about the financial impact of that though is that whatever accretion exists from this transaction at closing based on the fund families that are already on the platform and the FRE, whatever actually gets paid through the incentive will come in at or better from a frequency standpoint.
So one way to think about it is while we're aligned,
it
will only improve the financial picture to the extent that we're paying out the incentives.
Okay, great. And then maybe Mike, the mid single digit accretion, that's on I assume that's on FRE or is that on realized income?
No, we said that was on ROI for sure.
ROI, okay. And then lastly, just kind of maybe a minor point, but it'd be 8,000,000 dollars of the dry powder, not $8,000,000 dry powder, but the dry powder that Landmark has, is that all currently fee earning or some amount of that kind of still available to draw down and earn fees on?
Yes. So the way to think about it is in the secondaries business is you make if you're buying portfolios or assets with unfunded commitments, that's a decent portion of the business structurally. It's why you have the dry powder number that you see. But if you look at the differential between AUM and fee paying, AUM, you'll see it's much tighter. A headline $19,000,000,000 AUM against a $17,000,000,000 fee paying.
So the bulk of the dry powder pays fees, but it's unfunded commitments within existing portfolios.
Great. That was all I had. Thanks so much.
Thanks,
Today's next question comes from Michael Cyprys with Morgan Stanley. Please go ahead.
Hey, good morning. Thanks for taking the question and congratulations on the transaction. Just a question here maybe more for Michael. As you think about extension of the secondaries here into credit, I guess, how much that need to be done differently you think than what has been traditionally done in private equity just as you think about the structure of these funds, but also any sort of views on the economics and how that might differ as well? I think with private equity, kind of the original rationale is you have long dated funds and some people may need some form of liquidity.
But on the credit side, I think some of those funds are a bit shorter duration. The returns are also a bit different too. So just curious how you think about some of the differences there? What might need to be done a little differently?
Yes. I think you hit the nail on the head and we've seen that even if you look at the returns between PE Real Estate and infra. So as you move towards core plus infra, you start to see lower returns even with outperformance. So I think you hit the 2 things. 1, with credit, you would expect to see lower returns in the structures and 2, potentially shorter duration.
How that ultimately gets structured is going to be deal by deal and specific, but I think you'll see just more velocity in the credit book than you would in the other parts of the business. Interestingly, as I mentioned, we're getting a firsthand look at it and that we're actually working on our 1st GP led secondary out of our European direct lending business as we speak. So we're working through these various structural issues at the GP right now. Got it.
And just maybe a follow-up maybe for the other Mike on the financing of the transaction. I think I heard you about $787,000,000 or so is the cash portion. It seems like maybe some portion would come from the balance sheet and then the rest seems like would be financed. I guess is there any sort of scenario where a portion of that would be equity financed or are you just thinking through different types of debt or maybe even preferred? Just trying to understand what's in the realm of possibility here.
Yes. Listen, again, we have sufficient liquidity. So I think to the extent we think about this visavis other things we may do in the future that Mike touched on, But we think we have access broadly to capital markets, both debt and equity. And so we had a we ended the year in a very strong liquidity position with nothing drawn on our revolver. So I feel great about the flexibility, but it's hard to say what we would or wouldn't do.
It would be somewhat market dependent and somewhat opportunity dependent.
And what scenario would you or could you consider financing with any form of equity here on that cash portion?
It's hard to speculate. I mean, again, it's going to be a function of how we think about other things and different opportunities and relative opportunities in the market if we were to go to the debt or equity markets. But I it's hard to give you a fixed construct of we would do anything debt or equity under XYZ circumstances. The most important thing is we have liquidity, access to liquidity and flexibility.
Great. Thank you.
Sure.
And our final question today comes from Kenneth Lee at RBC Capital Markets. Please go ahead.
Hey, good morning. Thanks for taking my question. You talked about most of the secondary transactions being within private equity. Just wondering if you could talk about what factors could help generate potential growth more on the secondaries within the real estate and infrastructure side longer term? Thanks.
Sure, Ken. I think the simple answer is just continued growth in that primary market. So when you look at the evolution of dry powder in the institutional market and when you look at the embedded direct investment portfolios resident within institutional investor portfolios, it's just more historically heavily skewed towards PE. And so not surprisingly, as I mentioned in our prepared remarks, 90% of secondaries have historically been in and around the PE asset class. Landmark is changing that.
So if you look at the growth in real estate and infra, I think they have been meaningful first movers into those markets. The big growth driver is just going to be continued growth in those markets as well as what I would call product awareness from the larger real estate and infra GPs and LPs. But we're seeing that take root right now.
Great. Thank you very much.
And ladies and gentlemen, this concludes the question and answer session. I'd like to turn the conference back over to Mike Arougheti for final remarks.
I think that's all that we had for today. I just wanted to reiterate our excitement. Welcome the Landmark team to the Ares family, and we look forward to speaking to everybody at the end of the quarter, and we'll be farther along, and we could hopefully have some updates for everybody. So have a great rest of the week.
Thank you, sir. Thank you. Ladies and gentlemen, this concludes our conference call for today. If you missed any part of today's call, an archived replay of this conference call will be available through April 30, 2021 by dialing 1-eight seventy seven-three forty four-seven thousand five hundred and twenty nine and to international callers by dialing 1-four twelve-three seventeen-eight eighty eight. For all replays, please reference conference number 10,153,612.
An archived replay will also be available on a webcast link located on the homepage of the Investor Resources section of our website.