Ares Management Corporation (Ares) has held the final closing of its Ares Pathfinder Fund, with USD3.7 billion in total commitments. The Fund was significantly oversubscribed at its hard cap and exceeded its original target of USD2.0 billion.
Pathfinder is managed by Ares’ Alternative Credit team, which pursues a differentiated strategy of providing tailored financial solutions for owners of large, diversified portfolios of assets that generate predictable and contractual cash flows throughout market cycles. Pathfinder is the team’s flagship global Fund that invests in alternative credit assets that are often sourced in the financing gaps found between the credit, private equity and real estate sectors. As of 31 December, 2020, the Ares Alternative Credit strategy managed approximately USD13 billion in assets under management across more than 25 funds and has a dedicated team of approximately 40 investment professionals.
Pathfinder also has a unique social impact purpose. Ares and Pathfinder’s portfolio managers have committed to donating at least 10 per cent of the Fund’s carried interest profits to global health and education charities. Ares will partner with non-profit organisations that it has identified with a track record of delivering high value per charitable dollar contributed. Ares believes Pathfinder is the first institutional private investment fund to utilise a predefined structure to make such a substantial commitment to charitable activities.
Pathfinder attracted strong interest from over 80 global investors with representation across North America, Europe, Asia, Australia and the Middle East diversified by type across public and corporate pension funds, sovereign wealth funds, insurance companies, endowments and foundations, family offices and asset managers. The Fund was well-received by new and existing clients of Ares, with approximately 34 per cent of commitments representing investors new to Ares.
“We are grateful for this strong vote of confidence from our investors in our alternative credit strategy and its new flagship fund,” says Kipp deVeer, Partner and Head of the Ares Credit Group. “We see distinct similarities between today’s alternative credit market and the corporate direct lending market of ten years ago. We have strong conviction that there is a sizable and growing market to make attractive investments in this important asset class and we intend to continue to invest time, capital and resources to support this growth.”
“Since the expansion of our alternative credit strategy a few years ago, we have experienced strong demand for our strategy, leading to a doubling of our assets under management over the past two years. Investors appreciate our emphasis on downside protection and capital protection, and the uncorrelated, income-oriented returns that we seek to deliver across market cycles,” says Keith Ashton, Partner and Co-Head of Alternative Credit. “As market leaders in alternative credit investing, we look forward to continuing to provide our business partners with innovative, flexible capital solutions that fall outside of traditional, well-defined markets.”
“We are very pleased to see our investors’ shared enthusiasm for Pathfinder’s alternative credit opportunities and their support for Ares’ commitment to investing in global health and education to help save lives and drive greater equality,” says Joel Holsinger, Partner and Co-Head of Alternative Credit. “Pathfinder’s dual purpose seeks to provide compelling risk adjusted investment returns, while also delivering resources to global charities as they work to have a real impact on the lives of people who live in extreme poverty.”