Ares enters $1.5bn asset-based finance joint venture
Ares Management is expanding in the asset-based finance (ABF) space with a new joint venture to fund prime new vehicle leases.
Under the terms of the partnership with US auto lessor Certified Automotive Lease Corp (CAL Automotive), the two parties will purchase and invest up to $1.5bn (£1.2bn) in prime new vehicle leases originated by CAL.
The booming $5tn ABF market has been heralded as the “next frontier” of private credit. It comprises lending against, or investing in, pools of contractual assets, such as equipment leases, consumer loans, residential mortgages, and royalty agreements.
“We look forward to partnering with CAL to grow their origination of prime auto leases,” said Felix Zhang, partner in the Ares Credit Group. “We believe this transaction is a great example of the scaled and tailored asset-based financing solutions Ares’ Alternative Credit strategy can bring to originators of high-quality assets.”
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CAL has originated over 100,000+ consumer leases since inception in 2016. It is a subsidiary of Auto Lenders’ Liquidation Center, a platform for financing, buying and selling automobiles.
The joint venture will serve as a complementary strategy alongside CAL’s current bank partnerships, the companies said.
“The key to Auto Lenders’ success is our participation through the entire lifecycle of an automobile, starting with providing low-mileage leases to prime customers,” said Mike Wimmer, founder and chairman of Auto Lenders. “By retaining many of these vehicles as they come off lease and sourcing additional vehicles directly from consumers, Auto Lenders consistently generates some of the highest quality, low mileage-one owner inventory in the industry, without any reliance on acquiring vehicles through auctions.”
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