Ares Management Corp. has taken over three funds previously managed by Northstar Group, an Indonesian private equity firm, according to sources.

This transition follows extensive discussions and due diligence by Ares, which manages US$546 billion in assets globally.

Around 20 staff members from Northstar, including investment professionals, will move to Ares. However, co-founders Patrick Walujo and Glenn Sugita will not be joining the Los Angeles-based firm.

The transfer occurs amid Northstar’s involvement in eFishery, an aquaculture startup that recently went into liquidation due to fraud allegations.

This collapse resulted in losses exceeding US$300 million for investors. Research provider Alternatives.pe reported that Northstar sold some of its eFishery shares before the investigations began.

Representatives from Ares and Northstar declined to comment on the transaction.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ The eFishery collapse shows systemic challenges in startup oversight

eFishery’s downfall represents a significant governance failure that went undetected despite multiple funding rounds and sophisticated investors’ involvement.

The startup’s founder admitted to manipulating financial reports since 2018, maintaining dual books that significantly inflated revenues, claiming $752 million for the first nine months of 2024 when actual figures were only $157 million 1.

Forensic auditors investigating the collapse determined the company is no longer commercially viable, with investors potentially recovering only about 10 cents on the dollar 2.

The fraud persisted through multiple investment rounds, including a $200 million Series D in 2023 that valued the company at $1.4 billion, raising questions about due diligence effectiveness when 84% of fraud cases reportedly show early warning signs 3.

This pattern of financial manipulation continued for years before discovery, highlighting vulnerabilities in investor oversight mechanisms even when substantial capital is at stake.

2️⃣ Ares Management’s systematic Asia expansion strategy transcends regional setbacks

Ares’ acquisition of Northstar funds despite the eFishery scandal demonstrates the firm’s commitment to building a comprehensive Asian platform through strategic acquisitions.