Ares Amasses €30 Billion Pool for European Private Credit Fund

(Bloomberg) — Ares Management Corp. has amassed a €30 billion ($30.7 billion) pool of capital for its latest European direct lending fund, the largest of its kind ever in the region.

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With €17.1 billion of equity commitments, Ares secured the highest level of investor-demand for any private credit fund on record, according to a statement seen by Bloomberg News. Leverage and separately-managed accounts make up the remainder.

“Investors are consolidating relationships with fund managers, so having the scale to be the fund they go with is important,” said Michael Dennis, who co-leads the strategy with Blair Jacobson and Matthew Theodorakis. “Many investors have reached their private markets allocation-targets, so now for them it’s instead about optimizing those allocations.”

Globally, the top 10 direct lending funds managed about 64% of the overall assets in 2024, according to data provider Preqin, up from about 41% just two years before that.

Investors’ increasingly selective approach to managers has been a boon for market-leaders such as Ares. The Los Angeles-based firm hauled in $34 billion for a US direct lending fund over the summer last year, about $15 billion of which came from equity commitments.

Ares Capital Europe VI is now the largest direct-lending fund in Europe, ahead of Intermediate Capital Group Plc.’s €15.2 billion fund which closed last year.

Mid-market focus

Unlike many of its larger peers in Europe, Ares is still primarily a middle-market lender. Despite the €30 billion size, a business only needs earnings before interest, taxes, depreciation, and amortization threshold of €10 million to pass its size threshold.

“Our bread and butter is the middle market, which is a tremendous opportunity, both economically and in terms of asset selection,” said Ares’ Theodorakis.

The fund has already deployed about €6.4 billion over 50 investments to date, which means an average deal size of about €128 million so far.

“We think we have hit peak interest rates, though there’s still noise about higher for longer,” said Theodorakis. “The middle-market is back in growth mode, especially in the last couple quarters.”