Ares Management Corporation announced that its subsidiary, Ares Capital Management LLC, has entered into a definitive agreement to acquire, on behalf of funds managed by the Ares Credit Group, the Middle Market Lending portfolio (the “Portfolio”) from Annaly Capital Management for  approximately $2.4 billion.

Ares’ Credit Group believes that it is familiar with a significant number of the investments in the Portfolio either through overlapping portfolio companies or through the historical review of these companies. In addition, there is substantial overlap with the financial sponsors backing the Portfolio as well as opportunities to strengthen ties with sponsors new to Ares. Overall, the addition of the Portfolio is expected to provide significant incumbency benefits through incremental investment opportunities as well as relationship benefits with these new and existing sponsors.

“We are pleased to enter into this transaction, which further reinforces Ares’ position as a global leader in direct lending by adding an attractive portfolio of diversified borrowers of upper middle market companies,” said Mitchell Goldstein and Michael Smith, Partners and Co-Heads of Ares’ Credit Group. “This acquisition provides significant incumbency and deal sourcing advantages and relationship benefits, which we believe will lead to enhanced returns for our investors.”

The transaction is expected to be completed by the end of the second quarter of 2022, subject to customary closing conditions.