Ares Management has garnered $405.22 million for the latest investment fund focused on mezzanine debt and equity in collateralised loan obligations, a vehicle more than double the size of its predecessor.
Ares ICOF III, short for Indicus Credit Opportunities Fund, has raised funds from 37 separate investors, according regulatory documents filed with the US Securities and Exchange Commission. Of the total, $205.26 million came from US investors and $199.96 million came from international investors. The fund has a $500 million fundraising target.
The firm declined to comment.
The North America-focused fund, to which Ares will make a 5 percent commitment, has an eight-year lifespan and a four-year investment period, according to documents from the Utah School & Institutional Trust Funds Office, which committed $25 million to the fund. ICOF III carries a management fee of 1.25 percent on invested capital and a 15 percent carried interest fee with a 7 percent hurdle rate. The ICOF III targets a net return of 10-12 percent.
Like its predecessors, the Ares ICOF III invests in directly originated, asset-backed debt and equity investments in US and European CLOs, while it also purchases pools of consumer or commercial loans outright, the Utah land trust documents show. The asset-backed investments will focus primarily on auto loans, timeshare, credit cards, small business loans and consumer installment loans.
The second, 2012-vintage ICOF fund raised a total of $235 million in commitments, while the first, 2008-vintage fund raised $107 million, the documents read.
The ICOF II fundraising comes as Ares has raised over a billion so far for another junior debt fund, as Private Debt Investor reported. Michael McFerran, Ares’ executive vice president and chief financial officer, said on the firm’s latest earnings call that the current market is “good for fundraising, but deployment can be more challenging, given the amount of liquidity”.
The firm’s overall credit platform’s assets under management reached $65.2 billion as of 31 March, compared to $58.3 billion the same date last year.