Ares Management raises $5bn for private equity funds

The firm’s sixth flagship vehicle, the Ares Corporate Opportunities Fund VI, raised $3.3bn during the quarter. Another, the Ares Special Opportunities Fund, collected $1.5bn and closed to new investors with roughly $3.5bn in commitments, well above a $2bn target, Arougheti said.

During the quarter, Ares also raised $3.9bn across its various credit funds and $400m for its real estate investment vehicles, the CEO said.

The firm amassed $15.7bn in new capital this year through 30 June and is on track to have one of its “best fundraising years ever”, Arougheti said.

Ares continues to benefit from institutional investors’ increased reliance on fewer managers with broader sets of strategies, a trend that has been magnified by the coronavirus pandemic, Arougheti said. The firm raised capital directly from 139 institutional investors in this year’s first half, including 83 that had invested in earlier Ares funds and accounted for 78% of the capital collected, he said.

“In this environment, it’s been difficult for investors to [vet] new managers, which is leading investors to commit more capital with known relationships,” Arougheti said. “The case for investing in alternatives has also been strengthened, given the heightened market volatility in the traded sectors and near-zero interest rates.”

The firm’s strong fundraising haul in the second quarter helped elevate its total assets under management to $158.4bn by the end of the period, up 11.5% from a year earlier. The fundraising drive is also boosting revenue from managing capital, as the firm recorded its 13th consecutive quarter of growth in fee-related earnings, to $97m. That is 26% more than a year earlier.

Ares plans to continue its push to raise capital as banks and other lenders hit by the pandemic retreat, creating more investment opportunities for the firm, Arougheti said.

“While transaction activity today is generally slower, the competitive environment has significantly improved, with many competitors tending to their existing portfolios, reducing workforces or unable to access attractive forms of new capital,” he said.

The firm is seeking €9bn for a new European credit vehicle which could be the largest fund in the firm’s history, WSJ Pro Private Equity previously reported. The firm expects to hold a first close for the fund in coming weeks, Arougheti said.

“Our entire organization is highly focused on surpassing at least $30bn of capital commitments this year, which we’ve only done once before, in 2018,” he said. In that year, Ares hauled in a record $36.1bn in new capital.

Source: Wall Street Journal