Thoughts on Ares Alternative Credit

Does anyone have insights on the Alternative Credit group at Ares? Junior comp / strategy / culture / working hours / general thoughts / etc.

Have been seeing some job postings recently on LinkedIn, I'm currently at a BB and looking to move into the opportunistic credit and/or special sits space.

Looks like they have a pretty broad mandate across the cap structure - contractual / asset based financing, specialty finance, lender finance, leasing, etc. AuM seems to have grown a ton recently.

Would appreciate any thoughts of how they compare to other special sits / opportunistic credit strategies and what are the other most similar groups out there. Is the skillset pigeonholed or does one have the flexibility to later move to distressed / special sits / PE?

Comments (17)

  • Analyst 2 in IB - DCM
Jan 12, 2022 - 4:10pm

Mind if I ask which group you're currently in? Also looking for a similar transition, but was curious if it's common for people in dcm to move into credit 

Jan 12, 2022 - 4:30pm

You are usually lending against assets/streams of cashfows not businesses. It's somewhat more "FIG" like & NPLs. Its a great strategy and a lot of money is going into the space but you'd likely be locked in the space. Would be much harder to move into PE/Distressed…

Jan 12, 2022 - 5:14pm

I agree with Pan Euro Monkey. Not necessarily just 'securitized credit,' though, but think more asset finance. "Alternative" here means "alternative" from corporate credit solutions. This encompasses music/drug royalties, specialty finance like equipment leases, factoring, NPL portfolios, asset based finance (think asset finance teams at Castlelake/CarVal/etc). This is very different from buying sec or unsec TLs or bonds on the secondary market in hopes of trading up or taking control of a going concern operating business. 

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  • Associate 2 in PE - Other
Jan 12, 2022 - 4:51pm

I've heard with the new fundraising they're pivoting to include more opp. credit / tac. opp. style strategies. Senior team seems pretty strong, definitely securitized background (Fortress) but also some broader special opportunities lending.

Wouldn't be sure about exit opps / comp / culture. I'll defer to those who are more knowledgeable.

  • Associate 3 in PE - Other
Jan 13, 2022 - 11:05am

I think there will a line of how hairy / special situations style investing they can get since Ares has their Special Opportunities group which has crushed it (led by Scott Graves who was basically heir apparent at Oaktree).   
 

Arguably deals might be done out of special ops and then allocated to this group, or this group takes the more cash flow rather than business focused opportunities like distressed tower operators, or non-performing loan portfolios. 

Jan 13, 2022 - 3:11am

This is where the line is super tricky. Tac Opps would probably buy music royalties owning the equity and bidding for these rights at 10-15% yield and GSO/Oaktree would finance such purchases with debt at 7-8% yield. If you work at a large firm with multiple flexible strategies, you know its a headache to figure for which fund this is supposed to go to and you get conflicted internally on every other deal…

  • Associate 2 in PE - Other
Jan 13, 2022 - 2:02am

Be ready to be pigeonholed and good luck finding another opportunity if you end up not liking it since there aren't lot of other players doing this kind of stuff (other players aren't doing all that in alt credit and focus on just one to two subsets)..

Not your typical special sits skillset looking across the cap stack for value/upside or distressed paper type situation trying to figure out the fulcrum.. 

  • Associate 2 in PE - Other
Jan 13, 2022 - 12:18pm

What's the most similar group(s) out there to Ares Alt. Credit? Seems to be a lot of HFs / PE that have teams that do some of their specific strategies

  • Associate 2 in PE - Other
Jan 14, 2022 - 11:31pm

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