Key Takeaways
- • Ares Management is raising capital faster than its prior record-setting direct lending vintage, according to a person familiar with the matter, with first closes running 60% larger than the prior vintage at the same stage.
- • Ares Senior Direct Lending Fund IV, a closed-end fund, has secured almost $6 billion of equity, while the open-ended Ares Senior Direct Lending Core, the first of its kind at the firm, has collected more than $2 billion.
- • Together the two vehicles are set to have roughly $15 billion available to deploy with expected fund-level leverage, against a stated $10 billion equity target expected to close in 2027.
- • Ares reported third-quarter AUM of $691 billion, up 16% year over year, and management fees up 10% to $1.1 billion, both in line with Wall Street expectations.
- • Ares agreed to acquire MidCap Financial Investment Corp. from Apollo Global Management in a $2.6 billion transaction as managers consolidate within the $1.8 trillion private credit market.
Summary
Ares is gathering money for its latest U.S. direct lending funds at a faster pace than its previous record-setting vintage, according to a person familiar with the matter who discussed non-public figures. The firm opened two vehicles in April: Ares Senior Direct Lending Fund IV, a closed-end fund, and Ares Senior Direct Lending Core, an open-ended senior direct lending fund for institutional investors. Fund IV has secured almost $6 billion of equity and the evergreen Core vehicle has collected more than $2 billion. Taken together, the first close is 60% larger than the prior vintage at the same stage.
With expected fund-level leverage, the pair is set to have roughly $15 billion available to deploy. Earlier this year, Chief Executive Officer Mike Arougheti said the funds are targeting $10 billion and are expected to wrap up in 2027, matching the goal of the 2024 predecessor. That predecessor ultimately surpassed $15 billion in equity commitments, a record for the size of an institutional direct lending fund.
In results released Thursday, Ares said third-quarter assets under management reached $691 billion, a 16% increase from a year earlier, and management fees rose 10% to $1.1 billion, both in line with Wall Street expectations. Fee-earning assets totaled $416 billion, below the $426 billion consensus in a Bloomberg survey, which the article attributes to slower deployment.
The firm also said earlier in the week that it agreed to acquire MidCap Financial Investment Corp., a private credit fund, from Apollo Global Management Inc. in a $2.6 billion transaction. The article notes that across the $1.8 trillion private credit market, managers have been selling weaker funds as they shift toward lower-risk lending, and that this year's wave of investor redemptions has drawn interest from rivals seeking discounted deals.
The article concludes that a faster first close, a larger investable base with leverage, and steady fee growth point to more origination capacity across Ares's platform. If private credit remains active and consolidation continues, Ares's fundraising momentum and the MidCap deal could shape how investors think about direct lending exposure in their portfolios.
With expected fund-level leverage, the pair is set to have roughly $15 billion available to deploy. Earlier this year, Chief Executive Officer Mike Arougheti said the funds are targeting $10 billion and are expected to wrap up in 2027, matching the goal of the 2024 predecessor. That predecessor ultimately surpassed $15 billion in equity commitments, a record for the size of an institutional direct lending fund.
In results released Thursday, Ares said third-quarter assets under management reached $691 billion, a 16% increase from a year earlier, and management fees rose 10% to $1.1 billion, both in line with Wall Street expectations. Fee-earning assets totaled $416 billion, below the $426 billion consensus in a Bloomberg survey, which the article attributes to slower deployment.
The firm also said earlier in the week that it agreed to acquire MidCap Financial Investment Corp., a private credit fund, from Apollo Global Management Inc. in a $2.6 billion transaction. The article notes that across the $1.8 trillion private credit market, managers have been selling weaker funds as they shift toward lower-risk lending, and that this year's wave of investor redemptions has drawn interest from rivals seeking discounted deals.
The article concludes that a faster first close, a larger investable base with leverage, and steady fee growth point to more origination capacity across Ares's platform. If private credit remains active and consolidation continues, Ares's fundraising momentum and the MidCap deal could shape how investors think about direct lending exposure in their portfolios.
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