Breaking News

Reasons Driving Conversion Of Private Equities Into C-Corp

By Zacks Investment ResearchStock MarketsAug 20, 2019 08:35AM ET
Reasons Driving Conversion Of Private Equities Into C-Corp
By Zacks Investment Research   |  Aug 20, 2019 08:35AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

President Trump’s tax overhaul, which included the corporate tax-rate cut from 35% to 21% in December 2017, gave rise to a trend among large private equity firms of converting into C-corp structures. Currently, a few number of alternatives asset managers are trying to exploit the opportunity created.

Notably, Ares Management (NYSE:ARES) was the first to announce conversion in March 2018, followed by KKR & Co (NYSE:KKR) . Another large alternatives asset manager, The Blackstone Group (NYSE:BX) , completed its conversion this July.

Having gauged all the benefits from conversion, Apollo Global Management (NYSE:APO) followed suit, and recently announced its successful conversion to a corporation by Sep 5, 2019. The Carlyle Group (NASDAQ:CG) is the last one in the pipeline till date, but is making speedy progress toward its completion.

Why the Sudden Switch?

Previously, these private equity firms had gone public under the partnership format, in order to steer clear of high taxes which corporates had been paying. However, the tax overhaul left little gap between the tax benefits that come with publicly-traded partnerships relative to corporations.

Though these private equity firms will be required to pay slightly higher taxes being corporates, they are attracting a larger group of investors. Therefore, these firms’ performances are likely to escalate through improved liquidity, lower stock price volatility and eligibility to be included in major stock indexes, like FTSE Russell’s and the S&P 500. Leon Black CEO at Apollo Global said, “We believe (the conversion) will simplify our structure and enable a much broader set of shareholders to participate in the exceptional long-term growth and profitability that we have been delivering to our investors.”

These alternative asset managers will also be key picks for several mutual funds and other institutional investors who had been avoiding investments in publicly-traded partnerships, so far, partly due to their mandates.


Markets have remained favorable for asset managers so far in 2019, despite the lingering U.S.-China trade-war related uncertainty and other geopolitical concerns. Though some asset managers witnessed outflows, growth in assets under management is expected to continue in the near term, driven by expectations of speedy resolution of the above-mentioned concerns and low level of volatility.

Notably, investors have taken these conversions as good news, as suggested by the impressive performance of all the aforementioned stocks so far this year, when compared with the S&P 500 and the Zacks Investment Management industry.

Shares of Ares Management and Blackstone have surged more than 60%, while Carlyle Group rose 40.1%. Also, Apollo Global and KKR & Co have appreciated 37.2% and 26%, respectively. All these stocks have outperformed the 13.8% and 8.2% rally of the S&P 500 and the Zacks subindustry, respectively.

Year-to-Date Price Performance

Legalizing THIS Could Be Even Bigger than Marijuana

Americans spend an estimated $150 billion in this industry every year… more than twice as much as they spend on marijuana.

Now that 8 states have fully-legalized it (with several more states following close behind), Zacks has
identified 5 stocks that could soar in response to the powerful demand. One industry insider described the future as “mind-blowing” – and early investors can still get in ahead of the surge.

See these 5 “sin stocks” now >>

Blackstone Group Inc/The (BX): Free Stock Analysis Report

Apollo Global Management, LLC (APO): Free Stock Analysis Report

Ares Management L.P. (ARES): Free Stock Analysis Report

KKR & Co. Inc. (KKR): Free Stock Analysis Report

The Carlyle Group L.P. (CG): Free Stock Analysis Report

Original post

Zacks Investment Research
Reasons Driving Conversion Of Private Equities Into C-Corp
Reasons Driving Conversion Of Private Equities Into C-Corp

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email