Ares raises $2bn to invest in larger companies

The mezzanine debt fund won a $30m commitment from a South Korean pension earlier this month.

Ares Management is closing in on its $2.5 billion target for its first private junior debt fund, according to a US Securities and Exchange Commission regulatory filing.

The Los Angeles-based firm has locked down $1.99 billion for Ares Private Credit Solutions, raising almost $400 million since the end of the second quarter, when the firm had raised slightly more than $1.6 billion.

The fund will invest in larger companies, financing private high yield deals and providing mezzanine debt, Ares president Michael Arougheti said on the firm’s first-quarter earnings call. Seoul-based pension fund Korea Scientists and Engineers Mutual-aid Association committed $30 million this month, according to media reports.

Though Private Credit Solutions is the first private vehicle to invest in junior debt, the firm has provided second lien and mezzanine debt for years through its business development company, Ares Capital Corporation, which went public in October 2004.

In June, Ares Management expanded credit team in London, adding Peter Higgins as a partner and portfolio manager to help the firm expand its European leveraged finance team. He joined Ares from BlueBay Asset Management, where he was a partner and portfolio manager for the Global Leveraged Finance team.

Ares managed $104 billion in assets as of 30 June and raised $7.1 billion for credit in the first half of the year. Founded in 1997, the firm invests in credit, private equity and real estate and has two dozen offices in the US, Europe and Asia.