Ares eyes first closes on credit and infra funds amid busiest fundraising year

The firm is also seeing 'exciting opportunities' in the opportunistic side of the business including real estate secondaries and structured equity, according to chief executive Michael Arougheti.

Ares Management expects to hold first closes on its two latest secondaries vehicles by year-end, the firm’s chief executive said on its third quarter results call on Tuesday.

The firm is in the market with its inaugural secondaries fund, which has an undisclosed target, and its third infrastructure secondaries fund, which is seeking $2 billion, Secondaries Investor data shows. Both funds were launched this year.

It is unclear how much Ares has raised thus far for the vehicles.

Secondaries Infrastructure Solutions III will target an 11-14 percent net internal rate of return, according to documents prepared for the Boston Retirement System’s June board meeting. Capital raised for the fund will pick up stakes in infrastructure funds, partnerships and other structured investment vehicles that own infrastructure and real assets related assets, Secondaries Investor reported previously.

Michael Arougheti, chief executive of Ares, said on the call accompanying earnings results that the firm has over 30 funds in the market and along with first closes for its two latest secondaries offerings, closes are expected for its seventh corporate private equity fund as well as the recent vintages of its climate infrastructure and European direct lending funds, among others.

The Los Angeles-headquartered firm’s move into secondaries is marked by its acquisition of Landmark Partners two years ago.

Ares is seeing one its busiest years for fundraising despite overall market slowdown. The firm gathered nearly $58 billion across strategies in the year to October and expects to exceed $65 billion of inflows by the end of 2023, Arougheti said on the result call.

“While our core fundraising continues to be supported by expanding within the global institutional market, our strategically important insurance and wealth management channels are also poised for growth,” Arougheti said. Its wealth management unit is also set to market a number of core semi-liquid products in the coming months, he added.

Arougheti added that in real estate, “most of the exciting stuff is going to be happening… in a combination of real estate lending solutions, real estate secondaries and structured equity”, he said in response to an analyst’s question about the asset class.

“Most of what is happening now – and it goes back to what I just talked about with real estate – is going to be in and around the opportunistic sides of the business, rescue lending, opportunistic refinancing, secondaries, structured equity, etc… Because the new issue volumes, both in corporate private equity and institutional real estate are slow, we continue to have a competitive advantage just given our incumbency and the size of our portfolio.”