Ares launches new Asia private credit fund targeting buyouts

[SYDNEY] Ares Management is seeking investors for its latest Asia private credit fund, according to people familiar with the matter, as global alternative asset managers increasingly compete for a slice of the region’s burgeoning private market.

The new fund, Asia Direct Lending II, is targeting financing deals for leveraged buyouts across Asia-Pacific, the people said, asking not to be identified discussing private matters. The planned size could be more than the US$1.7 billion raised for its first fund, though details aren’t set and could change given the fluid nature of fundraising situations, the people added.

Ares declined to comment.

Private credit funds are pursuing increased investments in the Asia-Pacific, which still makes up only a small fraction of the global US$1.8 trillion market, but the asset class is growing fast in countries such Australia and India. The region has also avoided the kind of elevated redemption requests witnessed this year at US funds that target primarily wealthy retail clients, which caused managers including Ares to limit withdrawals.

Private credit managers in Asia-Pacific typically use investment vehicles with a defined, finite lifespan, so-called closed-end funds, that have helped the region skirt a spike in such redemption claims.

Ares’ launch plans comes as competition is hotting up with a number of new Asia-Pacific-focused funds in the pipeline. These include a US$1 billion private credit fund from Varde Partners and Elham Credit Partners’ second fund, according to people familiar with the matter.

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KKR closed its second Asia-focused credit fund in late December, securing US$2.5 billion in total investments. BLOOMBERG