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Capital Calls: Ares throws down gauntlet in private credit stadium

A man counts U.S. dollar banknotes in Beirut, Lebanon, March 23, 2021.Concise insights on global finance.———————————————–ART OF WAR. Ares Management (ARES.N) is upping the ante in the booming market for private credit. The asset manager that oversees $197 billion has just raised 11 billion euros for a fund that will lend directly to European medium-sized…

A guy counts U.S. dollar banknotes in Beirut, Lebanon, March 23, 2021.

Concise advice on global finance.

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ART OF WAR. Ares Management (ARES.N) is upping the ante in the flourishing market for personal credit. The asset manager that manages $197 billion has only increased 11 billion euros for a fund which will lend directly to European medium-sized businesses. It’s the biggest of its kind, with total firepower reaching 15 billion euros such as leverage. That is over half of the total Ares has given in the area because it came in 2007.

So-called direct lenders are shrugging off the pandemic. They contribute to companies that are too small to get debt markets, while offering bigger ones more flexible funding packages and increased certainty. Ares reckons capital rules and losses from Covid-19 will prompt banks to keep shunning medium-sized borrowers. The direct lending sector is growing rapidly: private debt supervisors manage $975 billion in September 2020, over double the amount in 2014, Preqin states . And funds are now competing directly with bond markets, where conditions are loose. Deciding the right borrowers will be important — and harder — than ever. (By Neil Unmack)

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