Ares raises $4.2bn for first structured solutions secondaries fund

Ares Management has raised $4.2bn for its first structured solutions secondaries fund, more than four times the vehicle’s original target, as demand grows for alternative forms of capital among private equity managers, according to a report by Bloomberg.

The Ares Global Structured Solutions Fund will primarily provide preferred equity to private market managers seeking capital for a range of purposes, including increasing commitments to new funds, launching investment strategies and supporting succession planning.

Nate Walton, head of secondaries at Ares, said the fundraising demonstrated stronger demand from limited partners than the firm had initially anticipated, prompting it to set a substantially larger final fund size.

The vehicle, together with other Ares capital pools, has the capacity to commit more than $1 billion to an individual transaction, giving the manager scope to provide sizeable bespoke financing solutions to private investment firms.

The fund forms part of Ares’ broader expansion in providing capital directly to private equity managers. It complements the firm’s GP stakes platform, launched last year in partnership with Abu Dhabi Investment Council and the special situations business of Mubadala Investment.

According to Walton, private equity managers can use structured capital or sell minority equity interests depending on their objectives. While some managers may seek a long-term minority partner that can provide strategic support, others may prioritise access to capital without bringing in an equity investor.

Walton oversees both Ares’ structured solutions and GP stakes strategies and said the businesses can provide the firm with relationships at the senior level of private equity firms, including founding and managing partners.

The structured solutions strategy has also generated repeat business, with Walton saying around 30% to 40% of previous transactions with private managers have involved repeat investments.

The strategy sits within Ares Secondaries Group, which managed approximately $44bn at the middle of this year. Ares has deployed close to $9bn across structured solutions transactions since 2013.