Ares closes largest direct lending fund to date at $34bn
Ares Management Corporation has closed its latest direct lending fund at a record $33.6bn (£26.1bn).
The Ares Senior Direct Lending Fund III (SDL III), which is the largest private credit fund in the market, attracted equity commitments of $15.3bn (£11.9bn), beating its initial target of $10bn.
The $33.6bn figure includes equity commitments in related vehicles and anticipated leverage.
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The fund is nearly double the size of SDL II, its 2021 predecessor, which had $14.9bn in total debt and equity commitments. Approximately $6.4bn in debt and equity commitments for SDL III were raised during the second quarter of 2024 alone.
“Over the last twenty years, Ares has developed significant scale, relationships, and deep investment experience within direct lending, all of which have continued to support our leadership position in the market,” said Mitch Goldstein, partner and co-head of the Ares Credit Group.
“We appreciate the strong vote of confidence from our growing investor base, and we look forward to executing on our longstanding strategy of providing flexible capital solutions to our borrowers while seeking to generate attractive risk adjusted returns for our investors.”
Through its US direct lending strategy, Ares provides directly originated senior secured loans to middle market companies in North America. It has deployed the same strategy in SDL III as its predecessor funds, SDL I and SDL II, with investments in companies with $10m to more than $150m of EBITDA where Ares funds act primarily as the lead provider of capital.
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Ares seeks to invest in companies that maintain a strong competitive position in their respective markets with experienced management teams and strong free cash flow characteristics.
SDL III has already deployed significant capital with the fund committing $9bn of capital to more than 165 companies to date.
“The middle market continues to experience significant demand for reliable capital solutions as it remains underserved by banks and other traditional lending sources,” said Mark Affolter, partner and co-head of US direct lending.
“Our extensive origination capability enables us to see a broad set of potential opportunities to lend to high quality small, medium and large-sized companies. We are pleased to have already deployed nearly one third of the fund’s capital to date in what we believe are compelling investment opportunities.”
As of 31 March 2024, Ares Management Corporation’s global platform had approximately $428bn of assets under management.
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