Ares $34BN Private Credit Fund???
Thoughts on Ares new record breaking $34BN direct lending fund? This beats Goldman's recent fund by $14BN, which was previously the largest PC fund. Seems like easily the hottest asset class right now.
Based on the most helpful WSO content, here are some insights on Ares and its direct lending capabilities:
Ares' Scale and Capabilities: Ares is known for its ability to self-originate and invest throughout the capital structure, which allows for more creative structuring compared to other credit shops. This capability sets Ares apart from many other direct lenders in the market.
Direct Lending Business Model: Ares' direct lending business primarily comes from its sponsor relationships. They employ a bottoms-up model where sponsors approach Ares and other direct lenders to gauge their view on specific financing opportunities. This model ensures a constant flow of deals into Ares.
Prestige and Deal Flow: Ares is considered one of the top players in the direct lending space, alongside firms like Oaktree and GSO. Their ability to commit and hold control positions in most cases allows them to dig deeper into investment opportunities compared to smaller direct lenders.
Growth and Fundraising: Ares has been successful in raising significant capital across various strategies. For instance, their recent opportunistic credit fund was larger than those of Apollo and Blackstone. This demonstrates their strong fundraising capabilities and the ability to pursue growth deals of all sizes.
Market Position: Ares is not just an asset allocator but an actual investor across multiple strategies, raising over $20 billion per quarter. This positions them uniquely in the market, allowing them to compete effectively against traditional financing arrangements from banks.
In summary, Ares' new $34 billion direct lending fund underscores their dominant position in the private credit market and highlights the growing attractiveness of this asset class. Their scale, ability to self-originate, and strong sponsor relationships make them a formidable player in the industry.
Sources: Ares vs. Golub Direct Lending, Best direct lending shops in Asia, Ares Capital Management - Culture, Status, Word on the Street, What’s the mega fund cutoff?, Special Situations Investing (BX, Apollo, Ares)
$34bn with $15bn committed capital and the rest is leverage/managed accounts. So you should really look at the $15bn and compare that to the GS fund (which is $13bn committed capital and $7bn leverage/managed accounts)
Fair but not completely true - the 13bn at GS includes SMAs, the 15bn at Ares is only commingled fund.
To make it like for like, you should either consider commingled only for GS (7bn) or include SMAs for Ares (they did not disclose amounts, but likely c5bn or so). So it would be 13bn vs 20bn
Okay thats it, I’m going to recruit for private credit and not private equity. That was the last straw
Any ideas on where to start if I have an M&A background?
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