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Ares launches second European debt fund

The firm has come to market with its Ares Capital Europe II fund that will provide senior debt, mezzanine and co-investment equity in European mid-market companies.

Ares Management has launched its second Europe-focused debt fund, according to documents filed with the US Securities and Exchange Commission.

The target for the fund could not be determined at press time, though a previous report from Financial News listed the target as €1.5 billion. Ares’ European-based private debt division Ares Capital Europe raised $250 million for its first debt fund in 2010, according to SEC documents.  The group provides senior debt, mezzanine and co-investment equity to private equity firms investing in European mid-market companies.

Ares declined to comment. Earlier this week, the firm raised $4.7 billion for its fourth flagship fund focused on distressed companies in North America.

The launch of Ares Capital Europe II comes roughly eight months after Ares lost managing director Gordon Watters, who launched the firm’s European mid-market private debt activities in 2007. At the time of his departure, Ares was understood to be in the early stages of launching Fund II. Watters has yet to take on a new role in the financial services industry, according to his LinkedIn page, which lists his status as “Cultivating the roses!”

Ares is one of many private equity groups to focus on opportunities related to the ongoing economic chaos in Europe, as firms includingKohlberg Kravis RobertsApollo Global Management and Oaktree Capital Management have all been focusing on credit-related opportunities in the region. The Blackstone Group’s debt affiliate GSO Capital Partners is also currently in market with its second rescue lending fund, reportedly targeting more than $4 billion for investments in both Europe and the US.

Ares Capital Europe’s overall division has completed 45 transactions and invested more than €1.4 billion in European private debt, as of 31 March, 2012. The group has participated in transactions with 35 separate private equity firms, including Advent International, DLJ Merchant Banking Partners, Vision Capital and Vitruvian Partners.

London-headquartered Ares Capital Europe is a part of Ares Management’s private debt group, which manages a collection of credit-related funds that together have $18.5 billion of total committed capital, as of 31 December 2011.

Ares Management was founded in 1997 and manages around $47 billion across its private equity, private debt and capital markets investment platforms. The firm’s private equity business is led by senior partners David Kaplan and Bennett Rosenthal.