Ares closes its junior capital direct lending fund at $3.4 billion

By Sarah Lizee

Olympia, Wash., Dec. 21 – Ares Management, LP closed its junior capital direct lending fund, Ares Private Credit Solutions, with $3.4 billion of total commitments, which exceeded the initial fundraising target of $2.5 billion, according to a press release.

Ares said the commitments are from a global and diverse investor base consisting of more than 50 investors. About 60% of the investors in APCS are new to the Ares platform.

The fund targets the growing junior capital needs of upper middle-market companies in North America and will focus primarily on investing in companies backed by private equity sponsors.

The company said this market segment is increasingly seeking differentiated financial solutions as more traditional financing sources, such as high-yield investors, continue to focus on larger companies.

Ares’ direct lending team has a significant track record of making debt investments and equity co-investments to middle market and upper middle market borrowers, having previously deployed about $9.5 billion in second-lien and mezzanine securities since 2004, the company said.

“We believe that the success of the fundraise, which closed well in excess of our initial target, clearly illustrates the tremendous market opportunity and our leading market position in the U.S.,” Michael Arougheti, president and chief executive officer of Ares Management, said in the release.

“APCS began investing in April of 2017 and has already experienced strong deployment with approximately 20% of investor commitments called to-date,” Jim Miller, partner and co-head of U.S. direct lending at Ares, added.

“We expect the fund will benefit from our ability to source investments from our existing relationships and our strongest incumbent portfolio companies as they graduate into the upper middle market. We appreciate the support from our new and existing investors, and we will work diligently to invest their capital with a view to generating long-term value,” Michael Smith, partner and co-head of the Ares Credit Group, said.

Ares is a Los Angeles-based asset management firm.

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