Ares Management closed Ares Private Credit Solutions II (APCS II). APCS II was oversubscribed, gaining $5.1 billion of commitments compared with its $4 billion target, and is approximately 50% larger than its 2017 predecessor fund.
Through APCS II, Ares provides junior capital financing solutions to upper middle-market companies. The fund invests primarily in directly originated second lien, mezzanine private high yield debt and preferred equity and will also participate in common equity co-investments. The fund has already invested 20% across nine portfolio companies.
Ares’ U.S. direct lending team, which manages APCS II, has nearly 150 investment professionals across six originating offices and oversees $69 billion of assets under management as of June 30, 2021.
“We are grateful for the continued strong vote of confidence from our existing investors and we are pleased to welcome many new investors to our junior capital investment strategy,” Kipp deVeer, partner and head of Ares’ credit group, said. “As a pioneer in private credit and a global leader in direct lending, we see significant and growing interest from a range of private equity firms and other corporate owners to partner with Ares to support their investment and business development objectives.”
“APCS II provides our investors access to one of the largest and most consistently performing self-originating direct lenders in the U.S.,” Michael Smith, partner and co-head of Ares’ credit group, said. “Upper middle-market businesses are increasingly looking to scaled private credit providers to meet their financings needs. Given our comprehensive offering of solutions and differentiated partnership approach, we look forward to utilizing Ares’ deep credit expertise and scale to support the growth and development of our portfolio companies, all while delivering strong risk adjusted returns for our investors.”
“APCS II has already experienced strong deployment and will employ the same ‘all-weather’ strategy as its predecessor fund,” Jim Miller, partner and co-head of U.S. direct lending at Ares, said. “Our portfolio construction reflects our fundamental belief that credit selection, sector avoidance and lead investing are the key drivers of constructing defensive investment portfolios and mitigating risk. APCS II is designed to execute on this approach and will seek to deliver attractive returns in both healthy and dislocated market environments.”
APCS II attracted support from a group of investors from North America, Europe, Asia and the Middle East, with nearly a third of its limited partners new to the Ares platform. The global investor base is comprised of pension funds, sovereign wealth funds, insurance companies, high net worth individuals, family offices, funds-of-funds, endowments and foundations.