Ares reduces the size of its one-billion-euro private credit fund following investor reluctance
Article excerpt
Ares Management ARES.N was forced to scale back a one-billion-euro (1.15 billion dollar) private credit fund after investors challenged the valuation of loans intended for this "continuation fund," the Financial Times reported on Thursday, citing sources familiar with the matter. * The private credit manager reduced the size of the vehicle to approximately 400 million euros (461.84 million dollars) after potential investors in the new entity demanded a larger discount on the loans than Ares was willing to accept, the article stated. * This decision follows efforts last year by Ares to transfer the remaining loans from a ten-year-old European direct lending fund to a newly created vehicle that it would continue to manage, the Financial Times article added. * While traditional private equity funds have a limited lifespan, typically around a decade, continuation vehicles allow fund managers to attract new investors and transfer assets from older funds to a new vehicle, thereby extending the holding period while offering existing investors the option to exit. * Although long common in private equity, continuation vehicles have recently gained popularity in private credit, as fund managers seek ways to return capital to investors without outright selling assets. * Ares Management did not immediately respond to a Reuters request for comment outside of business hours. * According...
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According to the report, the asset manager is now looking to raise a 2.5 billion euro (2.89 billion dollar) continuation vehicle for loans from its 2018 European fund.
