US direct lending led fundraising activity for Ares Management with almost $3 billion committed to the asset class, according to the firm’s Q1 2018 earnings.
Announcing its first-quarter results, Ares said it had a strong start to the year with a 29 percent increase in fee-related earnings and one of its best ever fundraising quarters, taking a total of $6.9 billion in commitments.
US direct lending activity saw commitments of $2.96 billion, followed by $1.14 billion of debt commitments to its BDC, Ares Capital Corporation, and its affiliates. Overall Ares’ credit group raised a total of just over $6 billion in commitments.
Group assets under management increased by 12.7 percent year-on-year to $112.5 billion, with $77.3 billion in commitments to its credit business, while private equity and real estate AUM stood at $24.3 billion and $10.9 billion respectively.
Ares deployed $5.8 billion in Q1 2018, up from $3.6 billion in the same quarter of 2017, with $3.8 billion deployed in credit opportunities.
Management and other fees were up 9 percent in the quarter to $137.5 million, which Ares attributed to deployment of new EU and US direct lending strategies. Total fee-related earnings in credit increased by 17 percent compared to Q1 2017 to $77.6 million, while on an annualised basis fee earnings grew 15 percent to $286.8 million for the 12 months to end of March 2018.
Michael Arougheti, who took over as CEO of Ares at the beginning of 2018, said the firm will continue to invest in fund strategies to take on market expansion opportunities as a result of investors shifting towards alternative strategies.