Ares Acquisition Corporation II (NYSE:AACT) filed its S-1 yesterday afternoon for a $400 million IPO, marking the second SPAC to file for an IPO in March and the largest since December 20, 2021, when Gores Holdings X Inc. filed for a $725 million SPAC.

While the amount of time SPACs are given initially is currently averaging 12 months in 2023, Ares II is asking for twice that amount at 24 months. The SPAC also features an overfunded trust of 101%, slightly lower than the 2022 average of 101.8%, and its units include 1/2 of a warrant.  However, we can also compare the terms to Ares I, their first SPAC which announced a definitive agreement with X Energy Reactor Company, LLC, a developer of small modular nuclear reactors and fuel technology. Ares I, which priced its IPO in a very different market environment back in February of 2021, was also a 24 month SPAC but included a 1/5 warrant and held 100% in trust.

Ares II’s terms have clearly come down to meet the current market conditions, but they are still significantly better than what we’ve seen recently.  Silver Box III, which priced in February 28, 2023, and is Ares II’s nearest comparable, was an 18 month (+ 3 month extension), 1/3 warrant SPAC with 101.0% in trust.  If we consider where warrant prices have been trading recently, most investors would probably prefer Ares II have a shorter term duration rather than a bigger warrant at Ares II’s 1/2 warrant.  Plus, $400 million is still a substantial amount of money to raise.

Nonetheless, there is pent-up demand for product and especially for tier-1 product. Citigroup and UBS should be able to sell this at $400 million, it’s just a question of where do they want it to trade day-one of pricing? A shorter duration with a built in extension might create that extra demand needed for a “tier-1” pricing result. But regardless, even with rich terms this should sell.

As for the team, Ares is led by CEO and Co-Chairman David B. Kaplan, who is a Co-Founder, Director and Partner of Ares Management Corporation. He is a member of the Ares Executive Management Committee and serves on several Ares Investment Committees including, among others, the Ares Corporate Opportunities and Ares Special Opportunities Investment Committees. Additionally, Mr. Kaplan is also the Co-Chairman and CEO of Ares Acquisition Corporation, which announced its $2.2 billion business combination with nuclear power company X-energy in December 2022.

Mr. Kaplan is joined by Co-Chairman Michael J Arougheti, a Co-Founder, CEO and President and a Director of Ares Management Corporation. Mr. Arougheti is a member of the Ares Executive Management Committee and the Ares Enterprise Risk Committee. He additionally serves as Co-Chairman of ARCC, as a director of ACRE and is on the Board of Directors of the Ares Charitable Foundation.

Jarrod Phillips will be serving as CFO of Ares II. Mr. Phillips is a Partner and CFO of Ares Management Corporation and serves on the Ares Executive Management Committee. Mr. Phillips also serves as CFO of AAC. Prior to joining Ares in 2016, Mr. Phillips was a Partner at Deloitte & Touche LLP, where he focused on financial services and asset management assurance and advisory services.

COO Allyson Satin is a Partner at Ares Management Corporation. She also serves as COO of AAC. From 2009 to 2020, Ms. Satin was an investment professional in the Ares Private Equity Group where she participated in various leveraged buyouts, growth equity and distressed debt transactions.

Peter Ogilvie will be serving as Executive Vice President of Strategy of the new company. Mr. Ogilvie is a Partner at Ares Management Corporation and Head of the Ares Corporate Strategy Group. He co-founded the Corporate Strategy Group to drive growth and development across the Ares platform through acquisitions, balance sheet investments, partnerships and new team onboarding.

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