Ares Management closed Ares Senior Direct Lending Fund II (SDL II). With total equity commitments of approximately $8 billion, SDL II was oversubscribed relative to its initial target of $4.5 billion. The fund is more than 2.6 times the size of its 2018 predecessor fund of $3 billion. Including anticipated leverage, the total capital base for SDL II is expected to be approximately $14 billion. SDL II, together with the recently announced final close of Ares Private Credit Solutions II (PCS II) at $5.1 billion in October of 2021, brings the total commingled fund capital raised by the Ares’ U.S. direct lending team for the second vintages of these two flagship fund families to more than $19 billion, including anticipated leverage.
Through SDL II, Ares provides directly originated senior secured loans to middle-market companies primarily in North America. Ares has deployed the same strategy in SDL II as its predecessor fund, SDL I, with investments in companies of $10 million to more than $150 million of EBITDA, with Ares acting primarily as the lead investor. SDL II has already deployed capital, with the fund committing more than 30% of its investable capital base across a portfolio of more than 70 companies.
Ares operates a global direct lending platform with more than $125 billion in assets under management in North America, Europe and the Asia-Pacific region. Ares’ U.S. direct lending platform has added more than 380 portfolio companies and invested more than $85 billion of capital since its inception.
“We are thankful for the continued support of both new and existing investors for our second senior direct lending fund,” Kipp deVeer, partner and head of Ares’ credit group, said. “The over $19 billion of capital between PCS II and SDL II is a testament to the capabilities, scale and market leading position of the Ares U.S. direct lending platform.”
“Ares’ established investment approach, which emphasizes direct origination and lending to businesses with high quality management teams and strong sponsorship, has remained consistent over the last 17 years,” Mitch Goldstein, partner and co-head of Ares’ credit group, said. “We believe our senior team’s experience of investing together through multiple cycles and prolonged dislocations is a strong differentiator in the market today.”
“As investors continue their hunt for yield, we believe directly originated senior secured loans in North American middle-market companies offer attractive relative value in a low interest rate environment while also providing investors with opportunities for attractive current income with reduced volatility,” Mark Affolter, partner and co-head of U.S direct lending for Ares, said.
“We are pleased to provide our flexible capital solutions to our borrowers, who increasingly seek to partner with lenders of scale such as Ares,” Dave Schwartz, partner and co-head of U.S direct lending for Ares, said. “We look forward to continuing to be a capital provider of choice to leading financial sponsors and middle-market companies.”
