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HedgeCo.Net \u2014 Ares Management has raised \u20ac3.3 billion, or about $3.6 billion, for its largest credit continuation fund, one of the biggest transactions to date in the market for secondhand private credit stakes, Bloomberg News reported. The vehicle closed in early November, with secondaries specialist Coller EQT leading the investment and Evercore advising, according to the report.<\/p>\n
The new vehicle holds a portfolio of 24 loans transferred from Ares Capital Europe Fund IV, a European direct lending fund that closed at \u20ac6.5 billion in 2018. As the loans moved across, investors in the older fund received roughly 150% of their original capital, the report said. Ares, Evercore and Coller EQT declined to comment, according to people familiar with the transaction.<\/p>\n
Continuation funds have become a standard exit tool in private equity, but their use in private credit is newer. The structure allows a manager to keep running a seasoned loan book in a new vehicle with fresh capital, while giving the original limited partners the option to take liquidity rather than wait for loans to be repaid or sold into a soft market.<\/p>\n
The trade-offs are familiar to allocators. Because the manager sits on both sides of the transfer, the price at which loans move is set largely by the manager’s own valuation rather than by a competitive auction, which puts the onus on independent pricing support and the lead secondary buyer’s diligence. A lead investor of Coller EQT’s scale helps answer that concern, but limited partners will still scrutinize marks, fees and the terms offered to those who choose to roll.<\/p>\n
The size of the Ares deal signals how quickly the credit secondaries market is maturing. With exits from sponsor-backed companies still slow and many 2017-2019 vintage direct lending funds approaching the end of their terms, managers have a growing inventory of performing loans to recapitalize. A transaction of this size gives buyers and sellers a reference point that could accelerate GP-led activity across the asset class.<\/p>\n","protected":false},"excerpt":{"rendered":"
HedgeCo.Net \u2014 Ares Management has raised \u20ac3.3 billion, or about $3.6 billion, for its largest credit continuation fund, one of the biggest transactions to date in the market for se\u2026 Continue reading