A groundbreaking Europe fund assists Ares’ dominance

1 Ares Management
$81.3bn

The Ares Management fundraising machine continues in top gear. In late October, we reported that the Los Angeles-based fund manager had collected $20.7 billion in fresh funding in Q3 2021. A clear majority of this – some $14.9 billion – was gathered by the firm’s credit group across strategies including direct lending, alternative credit, collateralised loan obligations and the Ares Capital business development company.

Not that the firm is sitting on its laurels. In a call with analysts, chief executive officer and co-founder Michael Arougheti said Ares intended to “meaningfully accelerate” the pace of its retail and high-net-worth fundraising in the years ahead. To this end, it recently formed Ares Wealth Management Solutions, combining its high-net-worth fundraising capabilities with Black Creek’s extensive retail distribution under one umbrella. Ares acquired the real estate advisory and distribution firm in July this year.

Ares first came out on top, in what was then the PDI 50, in 2019 and held that place in 2020. In sitting at the peak for the third year running, it has added more than $27 billion to its five-year fundraising total. Notably, towards the end of April, the firm closed its Europe-focused ACE V fund on its hard-cap of €11 billion. The fund was well in excess of its €9 billion target and claimed the accolade of private debt’s largest ever direct lending vehicle. Including expected leverage, it had €15 billion of available capital and was supported by no fewer than 180 LPs.

“We didn’t necessarily expect to raise €11 billion, but this fund needed to be larger than the predecessor [ACE Capital Europe IV, which closed on €6.5 billion in 2018] because the investment set was bigger,” Mike Dennis, partner and co-head of European credit at Ares, told Private Debt Investor in an exclusive interview. “We were seeing both increased dealflow across all the European jurisdictions we operate in and retrenchment by banks accelerate.”

Just a month prior to raising ACE V, in late March, Ares had wrapped up its Ares Pathfinder alternative credit fund on its $3.7 billion hard-cap, almost doubling a $2 billion target. The fund invests in alternative credit assets which are often asset-backed and often provides large-scale financing for those who finance other businesses.

Pathfinder was notable for the managers having committed to donating at least 10 percent of the carried interest profits to global health and education charities. Ares said it believed it was the first institutional private investment fund to use a pre-defined structure to make such a substantial commitment to charity and that its managers were hoping to set an industry trend.

2 Goldman Sachs Asset Management
$61.7bn

Goldman Sachs is a regular raiser of some of private debt’s largest funds and added another one to the tally in March 2021 when it closed its Broad Street Loan Partners IV senior credit fund on $7.1 billion, slightly ahead of a $7 billion target. At the time, Goldman Sachs said it had raised more than $25 billion for its credit platform over the prior year. “Private credit continues to be a growing asset class and investors look to us for a differentiated approach, which our platform has provided for over two decades,” said Tom Connolly, global co-head of merchant banking credit at the firm.

3 Blackstone
$56.6bn

Blackstone’s credit segment shot the lights out in the first quarter of this year, reinforcing the organisation’s reputation as one of the industry’s leading fundraisers. It pulled in no less than $13.1 billion, more than half the total amount accounted for by real estate, the second most prolific fundraising source during the quarter. The three-month period saw Blackstone’s direct lending business alone grow to $28 billion of assets under management. Lou Salvatore, Blackstone’s co-head of performing credit, said the firm had seen “a dozen billion-dollar unitranche deals” over the prior 12 months.

4 AXA Investment Managers
$53.3bn

The Paris-based firm moved with the times in 2021, launching a so-called climate-driven credit strategy which aims to mitigate risks associated with climate change while not compromising portfolio-level risk and return characteristics. The firm only nudged up its five-year total by less than $1 billion over the most recent period, meaning that it fell from second in our ranking last year to fourth this time around. However, AXA IM remains one of the heavyweights of private debt and was an active raiser of collateralised loan obligations in 2021 – including the $406 million raised for Allegro CLO XII.

5 Oaktree Capital Management
$49.8bn

One of the most prolific fundraisers and biggest brand names in private debt, Los Angeles-based Oaktree Capital Management proved its capital gathering credentials in March 2021 when closing its eighth real estate opportunities fund on $4.7 billion. The fund was the firm’s largest real estate fundraise to date and comfortably beat its original target of $3.5 billion. “The covid 19 pandemic has created a compelling set of credit-focused investment opportunities for our fund,” said John Brady, portfolio manager and head of the global real estate group. By the final closing, the fund was already around 40 percent invested in deals including distressed securities and rescue financings.

6 HPS Investment Partners
$48.9bn

Having closed HPS Mezzanine Partners with $8 billion of capital in September 2020, HPS has continued to lure investors in droves to its fundraising activities. One year later, in September 2021, the New York-based manager closed its fifth specialty loan fund – along with parallel investment funds – on $11.7 billion. The fund was backed by the likes of the New Mexico State Investment Council ($125 million) and the Indiana Public Retirement System ($100 million). At the time of the fund closing, HPS had around $75 billion of assets under management and reportedly around $9.3 billion in deployable dry powder, including leverage.

7 Intermediate Capital Group
$42.6bn

In the three months to the end of June 2021, London-based Intermediate Capital Group reported an impressive $8.2 billion of fundraising during the period. Notably, the firm closed its flagship Europe VIII fund towards the end of April, with commitments made to it of $3.1 billion during the period. However, ICG did not believe that fundraising activities would reach their optimal level until next year. “We expect FY22 to be a peak year in our four-year fundraising cycle and are pleased with how strongly the year has begun, benefiting from fundraising being front-loaded as expected,” said ICG chief executive officer and chief investment officer, Benoît Durteste, at the time.

8 Apollo Global Management
$35.6bn

Apollo has moved up the rankings as more information has become available about the extent of the New York-based manager’s fundraising activities. With dislocation having become such a hot trend in the wake of the pandemic, no surprise to find Apollo at the heart of it with its Accord Fund IV closing on $2.34 billion in February this year. It brought fundraising for the Accord strategy to more than $4.1 billion over a 10-month period. Over the coming years, Apollo will have a new strategy to raise capital for as 2021 was notable as the year in which the firm launched a credit secondaries unit.

9 Cerberus Capital Management
$34.4bn

A regular participant at the upper end of our ranking, the New York-based firm closed its flagship global opportunistic real estate fund, Cerberus Institutional Real Estate Partners V, on $2.5 billion of commitments towards the end of April 2021. In the process, it beat a target of $2 billion. As part of a range of strategies, the fund targets real estate-related debt including non-performing loan portfolios. Cerberus is one of the largest and most experienced investors in NPL portfolios. “There are market dislocations and macro trends that are driving compelling opportunities across our broad platform,” said Lee Millstein, president of Cerberus global investments and global head of real estate.

10 Sixth Street
$30.0bn

The San Francisco-based manager has moved up from number 16 in our prior ranking. In January 2021 the firm closed its second European direct lending fund on its hard-cap of €1 billion, surpassing the €800 million raised by the predecessor fund. The fund is focused on financing solutions for mid-market companies but can also do larger deals in tandem with Sixth Street’s $24 billion tactical opportunities cross-platform investing strategy. In addition to direct lending, the manager covers the likes of life sciences royalty financing, retail asset-backed lending and bespoke debt and equity capital solutions. It also has a business development company focused on mid-market lending in North America.