Ares Management Corporation announced the final closing of Ares Private Credit Solutions II (“APCS II” or the “Fund”). APCS II was oversubscribed with $5.1 billion of commitments compared to its $4.0 billion target and is approximately 50% larger than its 2017 predecessor fund.
Through APCS II, Ares provides tailored junior capital financing solutions to upper middle market companies. The Fund invests primarily in directly originated second lien, mezzanine private high yield debt and preferred equity, and will also participate in common equity co-investments. APCS II seeks to partner with businesses that, among other characteristics, maintain a leading market position, have demonstrated operational excellence, are led by high quality management teams and operate in defensive industries. The Fund is off to a strong start with 20% already invested across nine portfolio companies.
With market leading capabilities across North America, Europe and Asia Pacific, Ares is one of the world’s largest originators of private credit investments. Ares’ U.S. direct lending team, which manages APCS II, has nearly 150 investment professionals across six originating offices and oversees $69 billion of assets under management as of June 30, 2021. The team’s robust sourcing networks, incumbent relationships, structuring expertise, portfolio management and market knowledge are anticipated to be key advantages for APCS II.
“We are grateful for the continued strong vote of confidence from our existing investors and we are pleased to welcome many new investors to our junior capital investment strategy,” said Kipp deVeer, Partner and Head of the Ares Credit Group. “As a pioneer in private credit and a global leader in direct lending, we see significant and growing interest from a range of private equity firms and other corporate owners to partner with Ares to support their investment and business development objectives.”
“APCS II provides our investors access to one of the largest and most consistently performing self-originating direct lenders in the U.S.,” said Michael Smith, Partner and Co-Head of the Ares Credit Group. “Upper middle market businesses are increasingly looking to scaled private credit providers to meet their financings needs. Given our comprehensive offering of solutions and differentiated partnership approach, we look forward to utilizing Ares’ deep credit expertise and scale to support the growth and development of our portfolio companies, all while delivering strong risk adjusted returns for our investors.”
“APCS II has already experienced strong deployment and will employ the same ‘all-weather’ strategy as its predecessor fund,” said Jim Miller, Partner and Co-Head of U.S. Direct Lending at Ares. “Our portfolio construction reflects our fundamental belief that credit selection, sector avoidance and lead investing are the key drivers of constructing defensive investment portfolios and mitigating risk. APCS II is designed to execute on this approach and will seek to deliver attractive returns in both healthy and dislocated market environments.”
APCS II attracted strong support from a broad and diverse group of investors from North America, Europe, Asia and the Middle East, with nearly a third of its limited partners new to the Ares platform. The global investor base is comprised of pension funds, sovereign wealth funds, insurance companies, high net worth individuals, family offices, funds-of-funds, endowments and foundations.