Ares Management Corporation and Mubadala Investment Company, a global sovereign investor, formed a joint venture to invest in global credit secondaries opportunities.
The joint venture, anchored by Mubadala, will initially aim to deploy approximately $1 billion as it seeks to capitalize on the anticipated growth and substantial demand from General and Limited Partners for customized liquidity solutions for the credit secondaries asset class. The joint venture is anticipated to scale alongside the growing market opportunity.
The joint venture represents a key milestone for both organizations and will enhance Mubadala’s positioning within the secondaries credit market, while enabling Ares to significantly scale its offering. The newly established strategy is a natural extension of Ares’ leading Credit and Secondaries platforms, which respectively had approximately $214 billion and $22 billion of assets under management as of December 31, 2022. By leveraging Ares’ track record and Mubadala’s global footprint, the joint venture will benefit from access to a broader network, differentiated market intelligence, and new transaction opportunities.
Dave Schwartz will serve as Partner and Head of the Credit Secondaries strategy and a member of the Ares Secondaries Executive Committee. He most recently served as Co-Head of Ares’ U.S. Direct Lending strategy, of which he was a founding member. The senior leadership team also includes Sebastien Burdel and Luca Salvato, both Partners in the Ares Secondaries Group and veterans of the secondaries industry, as well as Nate Walton, Partner and Head of the Private Equity Secondaries strategy and a member of the Ares Secondaries Executive Committee.
“We are pleased to announce this joint venture with Mubadala, which underscores our view that private credit secondaries offer a compelling opportunity for investors seeking diversified exposure to the attractive return profile of private credit assets,” said Michael Arougheti, CEO and President of Ares Management. “Building on our position as a leading global direct lender and a secondaries market pioneer, we believe the expansion of the Credit Secondaries strategy alongside Mubadala helps to further differentiate Ares in the market as a comprehensive solutions provider.”
“We are very pleased to partner with Ares as we expand our investment strategy into the credit secondaries market,” added Fabrizio Bocciardi, Head of Credit Investments at Mubadala. “Private credit has become a relevant and important part of institutional portfolios which has led to the growth and development of the private credit secondaries industry. We believe that Ares is particularly well-positioned as a global leader to capitalize on the growing demand for diversified credit secondaries opportunities. We look forward to working with the Ares team to realize the significant benefits of this joint venture.”
“There has been a substantial increase in credit secondaries transaction volume resulting from the growth of the primary private credit market,” added Mr. Schwartz. “Against this market backdrop, we see a meaningful supply-demand imbalance requiring dedicated capital to meet the liquidity needs of General and Limited Partners. We believe that our partnership with Mubadala combined with the scale, underwriting capabilities and experience of our private credit and secondaries businesses will allow us to take advantage of these attractive market dynamics as we seek to drive attractive risk-adjusted returns for our investors.”
Beginning in 2017, Ares and Mubadala have established a long-standing strategic relationship investing across the full spectrum of the credit sector.
Ares Secondaries Group is one of the most experienced investors in acquiring secondary private fund ownership stakes in the alternative asset management industry. The Group provides bespoke and customized liquidity solutions across the private equity, credit, real estate and infrastructure asset classes. With over 30 years of experience in the market, Ares Secondaries Group focuses on generating attractive risk adjusted returns through its leading industry analytics and research, robust deal origination, underwriting and portfolio management activities. As of December 31, 2022, Ares Secondaries Group had approximately $22 billion in assets under management with more than 65 dedicated investment professionals located in offices across the United States, Europe and Asia.
Mubadala Investment Company is a global sovereign investor managing a US $284 billion portfolio that spans six continents with interests in multiple sectors and asset classes. The company leverages its deep sectoral expertise and long-standing partnerships to drive sustainable growth and profit, while supporting the continued diversification and global integration of the economy of the United Arab Emirates.