Overview
Before the market opened on December 11, Ares Management — a private-credit powerhouse with nearly $600 billion under management — slid into the S&P 500. It shoved out snack giant Kellanova, which is being bought by Mars in a $35.9 billion deal, while Vital Farms replaced soon‑to‑be‑private Heidrick & Struggles in the S&P SmallCap 600.
This isn’t just housekeeping. In two years, Blackstone, KKR, Apollo and now Ares have turned alternative asset managers into core S&P 500 holdings, while classic consumer and professional‑services names are taken private. Trillions in index-tracking money now funnels more directly into private-credit risk, and the shape of the U.S. stock market quietly tilts toward Wall Street’s dealmakers.
Key Indicators
People Involved
Organizations Involved
Ares is a global alternative investment firm whose private credit engine just earned it a spot in the S&P 500.
Kellanova, home to Pringles and Cheez‑It, is leaving the S&P 500 via a Mars buyout.
Mars is using its private balance sheet to roll up marquee snacking brands that once anchored public indexes.
S&P Dow Jones Indices runs the S&P 500 and quietly shapes where trillions of passive dollars flow.
Heidrick is another public services firm leaving equity benchmarks via a private‑equity‑backed buyout.
Vital Farms is a mission‑driven food brand promoted into the S&P SmallCap 600.
Advent is using abundant private capital to pull listed companies like Heidrick off public markets.
Timeline
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Ares enters S&P 500; Kellanova and Heidrick exit key indexes
Market EventBefore the U.S. market opens, Ares Management officially joins the S&P 500, displacing Kellanova as Mars prepares to close its acquisition. In parallel, Vital Farms joins the S&P SmallCap 600 in place of Heidrick & Struggles. Index‑tracking and benchmark‑aware investors rebalance, sending fresh flows into Ares and Vital Farms and out of the departing names.
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EU signs off on Mars–Kellanova deal; S&P announces Ares index switch
Regulatory / Index ChangeThe European Commission clears Mars’s $36 billion Kellanova takeover, removing the last major antitrust obstacle and allowing closing on December 11. That same day, S&P Dow Jones Indices announces that Ares will replace Kellanova in the S&P 500, while Vital Farms will replace Heidrick & Struggles in the S&P SmallCap 600.
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Advent and Corvex strike $1.3 billion deal to take Heidrick private
M&AHeidrick & Struggles agrees to an all‑cash take‑private led by Advent International and Corvex Private Equity at $59 per share. The deal continues a resurgence in private-equity buyouts and sets up Heidrick’s removal from the S&P SmallCap 600 once the transaction closes.
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S&P raises size thresholds for index additions
RulesS&P Dow Jones Indices hikes the required unadjusted market cap for new S&P 500 additions to $20.5 billion, with higher bands for the MidCap 400 and SmallCap 600. The change makes it harder for smaller companies to graduate into the benchmarks and entrenches today’s large‑cap leaders.
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Apollo Global Management added to S&P 500
Index ChangeS&P Dow Jones Indices slots Apollo and Workday into the S&P 500, removing Qorvo and Amentum. With Apollo joining Blackstone and KKR, alternative asset managers become a visible cluster within the index’s financials sector.
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Mars agrees to buy Kellanova in $35.9 billion snacks megadeal
M&AMars announces a cash deal to acquire Kellanova, the Kellogg spinoff behind Pringles and Cheez‑It, for $83.50 a share. The transaction, among the snack sector’s largest, sets up Kellanova’s eventual removal from major indexes once regulatory approvals arrive.
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KKR joins S&P 500 at June 2024 rebalance
Index ChangeAt its June rebalance, S&P adds KKR, CrowdStrike and GoDaddy to the S&P 500 and removes Robert Half, Comerica and Illumina. The move deepens the index’s exposure to private equity and private credit via KKR’s diversified platform.
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Blackstone becomes first mega private-equity firm in S&P 500
Index ChangeS&P Dow Jones Indices adds Blackstone and Airbnb to the S&P 500 at the quarterly rebalance, booting Lincoln National and Newell Brands. It’s the first time a giant listed private‑equity group joins the benchmark, signaling that alternative managers have grown too big to ignore.
Scenarios
Alternative Asset Titans Become Core of the S&P 500 Financials Sector
Discussed by: Reuters, Financial Times, Zacks and sell-side strategists focused on private markets and index structure
In this path, Ares’s entry proves to be one more step in a march toward dominance. Blackstone, KKR, Apollo and Ares keep raising ever-larger funds, and perhaps one or two more alternative managers eventually clear the new $20.5 billion bar to join the S&P 500. As pensions and 401(k) plans pour money into S&P‑tracking products, a growing share of household savings effectively backs private credit and buyout firms. The index’s financials sector becomes less about banks and insurers, more about fee‑rich asset gatherers and shadow banking. Volatility spikes when private credit cycles turn, but the business model remains intact.
Regulators Clamp Down on Private Credit, Forcing Index Providers to Rebalance Again
Discussed by: Columnists at the Financial Times and Reuters Breakingviews; bank and credit analysts warning about systemic risk
Here, concerns about opaque private‑credit exposures boil over after a wave of corporate defaults or a high‑profile fund blow‑up. Regulators impose tougher capital, disclosure or leverage rules on alternative managers, or limit how much illiquid credit exposure retail‑facing funds can hold. Valuations for alt managers compress, and S&P’s index committee faces pressure to reconsider how much of the benchmark is tied to private markets and shadow banking. In an extreme case, one manager shrinks enough to be demoted back to a mid‑cap index, triggering a messy forced‑selling episode from passive investors.
Consumer Staples and Services Keep Going Private, Shrinking Their Footprint in the Index
Discussed by: Consumer-sector analysts, M&A bankers, and business press covering deals like Mars–Kellanova and Heidrick’s buyout
In this scenario, Mars’s Kellanova purchase is part of a broader wave: family‑owned groups and private equity continue snapping up mature, cash‑generative consumer and professional‑services companies at premiums public markets won’t match. Each deal forces S&P to plug the gap with smaller, faster‑growing names or with firms from totally different industries. The consumer‑staples sleeve of the S&P 500 becomes more concentrated in a handful of global giants that remain listed, while much of the everyday grocery aisle lives in private hands. Public‑market investors get more growth and cyclicality, but less steady, dividend‑rich defensiveness.
Historical Context
Blackstone’s 2007 IPO: Private Equity Steps Onto Public Markets
2007What Happened
Blackstone went public in June 2007, near the peak of the pre‑crisis buyout boom. The offering crystalized huge founder wealth and gave public investors direct exposure to private equity’s fee streams and carry, even as critics warned about cyclicality and opacity.
Outcome
Short term: The stock initially struggled through the financial crisis as deal activity and valuations collapsed, reinforcing fears about cyclicality.
Long term: Blackstone rebounded, crossed $1 trillion in AUM, and eventually earned S&P 500 membership in 2023, legitimizing private equity as a core public‑market sector.
Why It's Relevant
Ares’s S&P 500 entry is the logical next step in a journey that began when firms like Blackstone first invited public shareholders into the private‑markets business model.
Tesla Joins the S&P 500, Supercharging Passive Flows Into a Single Stock
2020What Happened
After years of debate, S&P Dow Jones Indices added Tesla to the S&P 500 in December 2020, forcing index funds and closet trackers to buy tens of billions of dollars’ worth of stock. The move intensified scrutiny of how index decisions anoint winners and shape flows.
Outcome
Short term: Tesla’s inclusion triggered significant rebalancing volume and highlighted how concentrated bets can become when a popular stock enters a major index.
Long term: The episode cemented public awareness that index construction is an active choice with market consequences, not a neutral mirror of the economy.
Why It's Relevant
Ares’s inclusion similarly channels passive flows into a specialized, controversial business model — private credit — underscoring how index committees now shape exposure to entire financial structures.
Dot‑Com Darlings Flood the S&P 500 Before the 2000 Crash
1999–2000What Happened
During the late 1990s tech boom, S&P and other indices added a wave of high‑flying internet and telecom stocks. Many soon collapsed when the bubble burst, leaving passive investors overexposed to a frothy sector at the worst possible time.
Outcome
Short term: Index investors suffered steep losses as speculative names imploded, prompting questions about whether inclusions had come too late in the cycle.
Long term: Index providers refined profitability and liquidity screens, but the episode left a lasting lesson: sector waves can distort benchmarks just as they peak.
Why It's Relevant
Today’s rise of alternative asset managers and private credit in the S&P 500 raises a similar question: are benchmarks baking in a boom sector just as its risks become systemic?