Ares Management Closes Latest Direct Lending Fund at Record $34 Billion, According to Reuters

Ares Management has announced the closure of its latest direct lending fund, achieving a record capital base of $34 billion, the largest in the company’s history. The total equity commitments for the fund exceed $15 billion, which is double the size of its predecessor and surpasses the initial target of $10 billion.

Following a pause in interest rate hikes by the U.S. Federal Reserve last year, credit markets have shown signs of recovery. Rising borrowing costs had previously disrupted deal markets, particularly affecting transactions reliant on high levels of debt.

Goldman Sachs Asset Management recently reported that its latest fund raised over $20 billion for senior direct lending. In the competitive syndicated loan market, traditional banks are vying with direct lenders like private equity firms.

Banking industry estimates suggest that the direct lending market is approximately half the size of the more than $1.5 trillion syndicated loan market. Ares’ direct lending funds focus on providing secured loans to mid-sized companies across the United States.

Mark Affolter, partner and co-head of U.S. direct lending at Ares, emphasized that the middle market continues to show strong demand for dependable capital solutions, as it remains underrepresented by banks and conventional lending sources.

The Ares Senior Direct Lending Fund III has committed $9 billion in capital to over 165 companies to date. In the second quarter of 2024, Ares secured about $6.4 billion in debt and equity for this fund, following its previous fund that had commitments totaling $14.9 billion.