What does Ares Credit do?
Hi, current college freshmen who is trying to become more knowledgeable in the field.
I am particularly interested in what a Credit team on a company like Ares does?
I understand that Ares is an alt asset manager and has different investment sectors including PE and infrastructure, but I am particularly confused on what their Credit team does and where they fit within the overall world on Investment.
As I currently understand they help provide funding for PE companies who are trying to do an LBO. However I think that understanding may easily be incorrect and is definitely not as throughout as I want my knowledge of the subject to be.
If anyone can give me a somewhat detailed does description of different tasks they perform and where they fit in the investment picture, it would be much appreciated.
Thank you
The credit team can be broken into multiple parts: Opportunistic / Distressed / Vanilla. As you mentioned one group could be underwriting LBO debt to make a return on high yield bonds/other junior debt. Another might be buying undervalued bonds from a company in distress and other might be direct lending to safer companies "IG" companies.
Probs being stupid but can you elaborate on distinction between opportunistic and distressed?
Taking a step back (and apologies if this is too simplistic), there are a lot of investment firms which take direct exposure to the DEBT of companies rather than the better-known EQUITY. Think of it almost like the credit equivalent to private equity. A lot of LPs will be glad to accept lower returns than what private equity offers in exchange for getting a "safer" investment (higher in the capital stack).
Of course there's a huge amont more nuance to this and a range of different strategies as the previous poster suggested but essentially at its core there'll be deal teams that seek exposure to debt in all its various forms (from direct lending to companies undergoing LBOs to buying into high yield debt issuances) and running those investments past an investment committee, aiming to make a return on behalf of LPs.
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