Northstar Group and its founders have agreed to indemnify Ares Management against future losses tied to Indonesian aquaculture startup eFishery, under a deal in which the US private equity giant acquired three of the Southeast Asian firm’s funds and staff.
The promise for indemnification excludes any reduction in value of the investments in eFishery, according to a document reviewed by DealStreetAsia.
An eFishery-dedicated sub-clause became part of the deal terms as negotiations between Northstar and Ares earlier this year following the unraveling of eFishery’s financial misconduct, which most recently led to the detention of its co-founder and senior executives, as reported by DealStreetAsia this week.
In practical terms, this means Northstar would reimburse Ares for any extraordinary losses tied to eFishery’s financial troubles, but would not compensate for routine depreciation of the stake. Such indemnity provisions are standard in private equity deals, serving as legal safeguards to protect buyers from unforeseen liabilities in acquired portfolios. Northstar’s pledge, introduced amid revelations of eFishery’s financial misconduct, is viewed as a precautionary measure and does not imply the firm had prior knowledge of the irregularities.
When contacted on the development, Northstar’s General Counsel, Chris Flosi, said: “Indemnities are a standard feature in M&A transactions. Northstar was happy to provide Ares with this indemnity because we are fully confident that there is no risk.”
Northstar’s fourth and fifth private equity funds, which are invested in the once-high-profile Indonesian unicorn, were among the vehicles that Ares had agreed to take over alongside another venture capital fund and its 21 employees in a deal that closed last week.
Northstar has a combined stake of about 6% in eFishery Pte, according to DealStreetAsia’s DATA VANTAGE.
The indemnity provision comes as part of a broader transaction in which Ares Management agreed to take over three of Northstar Group’s funds and its remaining employees, in a deal finalised earlier this month. Northstar, one of Southeast Asia’s oldest private equity firms with over $2.6 billion in committed capital, joins Ares’s $546-billion global alternatives platform as part of the US giant’s push to expand its Asia presence through acquisitions.
The agreement marks Ares’s fourth such move in the region in recent years, following its purchases of GLP’s $44-billion overseas real assets business in 2024, Asia-focused private equity firm Crescent Point in 2023, and credit investor SSG in 2020.
Separately, in an unrelated development, Northstar Equity Partners IV, which counts GIC and Temasek among the largest backers, was subject to a clawback of $26.3 million earlier this year, before the deal was finalised with Ares, according to the document and a source close to the situation.
This suggests that the fund, which has invested in GoTo, Bank Jago, Topica Holdings, and Innovalues, may have underperformed as clawback is a contractual obligation for the general partner to repay carry that was overpaid, typically triggered when the fund’s overall performance falls below the agreed hurdle rate at the end of the fund’s life.
Among the investors, GIC made at least $200 million in commitments, while Temasek, which has a direct investment in eFishery, also put in at least $50 million in the fund. Other investors in the fund that likely received the giveback include Asia Alternatives; Ardian (then AXA Private Equity); The University of Texas System; Federated Hermes; LGT Capital Partners; and National University of Singapore, among others.
DealStreetAsia has reached out to Ardian, Federated Hermes, LGT, and NUS for confirmation. GIC and Asia Alternatives declined to comment. The University of Texas System could not be reached.
