Key Takeaways
- • Ares Management closed Ares Senior Direct Lending Fund III with a total capital base of $34 billion, the largest direct lending fund in the firm's history, according to Reuters.
- • Equity commitments for the fund total a little over $15 billion, exceeding the $10 billion target and roughly doubling the size of its predecessor.
- • The fund has committed $9 billion to more than 165 companies to date, and raised about $6.4 billion in debt and equity during the second quarter of 2024.
- • The close follows a recovery in credit markets after the Federal Reserve paused interest rate hikes, and comes weeks after Goldman Sachs Asset Management reported a senior direct lending fund raised more than $20 billion in May.
Summary
Ares Management (NYSE: ARES) said on Wednesday, July 31, 2024, that it has closed its latest direct lending fund with a capital base of $34 billion, making it the largest fund in the investment manager's history, according to Reuters. The fund, known as Ares Senior Direct Lending Fund III, has total equity commitments of a little over $15 billion, which exceeds the $10 billion target and is double the size of its predecessor.
The fund has committed $9 billion in capital to more than 165 companies to date. Ares raised about $6.4 billion in debt and equity for the fund in the second quarter of 2024, while its previous fund had $14.9 billion in equity and debt commitments.
Ares' direct lending funds provide secured loans to mid-sized companies in the United States. Mark Affolter, partner and co-head of U.S. direct lending at Ares, said the middle market "continues to experience significant demand for reliable capital solutions as it remains underserved by banks and other traditional lending sources."
The fundraising comes as credit markets recover following the Federal Reserve's pause in interest rate hikes in 2023. Rising borrowing costs had derailed deal markets, particularly for transactions underpinned by high levels of debt. Reuters noted that Goldman Sachs Asset Management's alternative investments platform said in May that its latest fund raised more than $20 billion for senior direct lending. Direct lenders, including private equity firms and others, compete with banks in the syndicated loan market, which bankers estimate at more than $1.5 trillion. The direct lending market is roughly half that size, according to bankers' estimates.
The fund has committed $9 billion in capital to more than 165 companies to date. Ares raised about $6.4 billion in debt and equity for the fund in the second quarter of 2024, while its previous fund had $14.9 billion in equity and debt commitments.
Ares' direct lending funds provide secured loans to mid-sized companies in the United States. Mark Affolter, partner and co-head of U.S. direct lending at Ares, said the middle market "continues to experience significant demand for reliable capital solutions as it remains underserved by banks and other traditional lending sources."
The fundraising comes as credit markets recover following the Federal Reserve's pause in interest rate hikes in 2023. Rising borrowing costs had derailed deal markets, particularly for transactions underpinned by high levels of debt. Reuters noted that Goldman Sachs Asset Management's alternative investments platform said in May that its latest fund raised more than $20 billion for senior direct lending. Direct lenders, including private equity firms and others, compete with banks in the syndicated loan market, which bankers estimate at more than $1.5 trillion. The direct lending market is roughly half that size, according to bankers' estimates.
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