Ares Management Raises Nearly $10 Billion for Opportunistic Private-Credit Strategy
The firm targets credit and equity deals that provide liquidity to stressed and healthy companies
- Ares Management has raised over $9.8 billion for its opportunistic credit strategy, closing its third fund for such deals along with related transaction vehicles.
- The fund secured $8.3 billion in equity commitments, with Calpers pledging $1.5 billion and other institutional investors participating.
- Ares uses its opportunistic credit strategy for high-yield debt and equity investments in stressed public and private businesses.
Ares Management has raised over $9.8 billion for its opportunistic credit strategy, closing its third fund for such deals along with related transaction vehicles even as private credit as an asset class has come under increased scrutiny.
The fund
The firm collected $8.3 billion in equity commitments for Ares Special Opportunities Fund III, with the remaining capital coming from commitments to the related vehicles. The total doesn’t include anticipated leverage.
Ares has already committed over $1.8 billion from the new fund, according to the firm. The firm began raising the fund in May 2024 and held a first close for it in December of that year. It initially targeted $7.1 billion for the vehicle, according to Ares.
In the broader market, questions in recent months over the risks of backing some types of software businesses have rocked private-credit investment vehicles geared to individual investors. But the new Ares fund drew its capital largely from traditional institutional investors.
Participants in the fund include the California Public Employees’ Retirement System, which pledged $1.5 billion, according to the WSJ Pro Private Equity LP Commitments database. The Virginia Retirement System and the Teachers’ Retirement System of Louisiana also made commitments of $275 million and $150 million, respectively.
The firm’s predecessor fund for the strategy collected $7.1 billion by the time it closed in 2022, according to a news release.
The strategy
Ares pursues high-yield debt and equity investments in publicly traded as well as private businesses through its opportunistic credit strategy, including backing stressed or distressed companies during market dislocations.
The firm finds deal opportunities in companies stressed by temporary pressures, such as elevated borrowing costs or near-term refinancing needs. While distressed companies face more acute balance sheet or liquidity issues, Ares views them as still offering pathways to recovery with infusions of new capital, restructuring or operational improvements.
Ares’s opportunistic strategy is largely industry agnostic. Through the strategy, the firm backs midsize companies to support expansion, provide refinancing and return capital to investors in the businesses.
Target companies typically have earnings before interest, taxes, depreciation and amortization that range from $50 million to $250 million.
Ares prefers to back companies that operate in sectors undergoing transformational changes or businesses with balance sheets that have become overly complex, according to the firm’s website.
The firm writes checks averaging from $150 million to $500 million through the strategy, and can scale them up with participation of other Ares capital pools.
Ares plans to use the new fund to provide debt, equity and hybrid financing in deals that can fill gaps between private-equity control investments and more traditional corporate lending. The firm also uses the fund to purchase stressed publicly traded corporate debt.
The context
Opportunistic credit has found recent fundraising success across asset managers, with notable raises by blue-chip firms in the private-equity industry.
Blackstone raised $5.9 billion for an opportunistic credit fund that closed in January. In 2024, Carlyle Group closed its third opportunistic credit fund with more than $7 billion.
The Ares opportunistic credit strategy, co-led by Aaron Rosen and Craig Snyder, became part of the firm’s extensive credit operations in February 2024. It had been housed in the firm’s private-equity group. Ares manages over $405 billion in credit assets with a team that has more than 560 investment professionals.
Since inception, the strategy has deployed more than $17 billion.