Ares Management has raised $15.3 billion in equity commitments for its latest senior lending fund, beating its initial target of $10 billion.
Including commitments to related vehicles and anticipated leverage, the new vehicle—Ares Senior Direct Lending Fund III—has a capital base of $33.6 billion. The fund’s predecessor collected $14.9 billion in total debt and equity commitments at its close in 2021.
This new fund is the largest private debt vehicle since Oaktree Capital closed Oaktree Opportunities Fund XI, a distressed debt vehicle, in 2021 on $15.9 billion. The next biggest private lending fund after that was raised by Blue Owl Capital in 2019, with a close of $14.8 billion.
The latest fund provides directly originated senior secured loans to middle-market companies in North America with $10 million to over $150 million of EBITDA. It has already committed $9 billion to over 165 companies.
According to PitchBook’s 2023 Annual Global Private Debt Report, direct lending strategies accounted for 31.8% of the overall mix of funds closed in 2023. However, the proportion is edging down as the asset class continues to diversify.
Private debt remains an attractive asset class as investment managers are keen to fill the gaps left by the retreat of traditional banks.
It is the second-largest private market strategy by annual fundraising, having overtaken venture capital.
However, the composition of the market is showing a change. Fundraising for private debt from the traditional institutional channel slowed in H2 2023 as more liquid alternatives with comparable yields rebound.
Non-traditional capital sources, including semi-liquid funds for retail investors and separately managed accounts for insurers, accounted for nearly half of the credit fundraising of the seven largest US-listed managers last year, according to the 2023 Annual Global Private Debt Report.
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