About Ares

• Founded: 1997

• Headquarters: Los Angeles, California, United States

• AUM: $447bn as of September 2024

• Strategy: Global alternative investment manager across credit, private equity, real estate, and secondaries

• Track record: Manages more than 50 active funds globally; approximately $255bn in credit AUM, $41bn in private equity AUM

• Leadership: Michael Arougheti (CEO and co-founder), Kipp deVeer (President), David Kaplan (co-founder)

Ares closed its inaugural structured solutions fund at $4.2bn, more than four times its $1bn initial target. The vehicle finances private equity managers directly through solutions including GP-led secondaries, LP portfolio restructurings, and continuation fund backstops. The raise positions Ares alongside Blackstone, Partners Group, and Goldman Sachs in a market segment that has expanded rapidly since 2021.

The oversubscription reflects a structural shift in how LPs approach portfolio liquidity. Structured solutions—GP stakes, secondaries, continuation vehicles—raised roughly $30bn in 2023 across dedicated funds, up from $12bn in 2020, according to preqin data. Demand accelerated as traditional secondaries pricing fell and LPs sought alternatives to fund write-downs. Ares entered the market later than Blackstone ($22bn raised for Strategic Partners Fund II in 2023) or Goldman's Vintage Funds platform, but the size relative to target signals room remains for scale entrants.

The test for Ares is deployment pace against fund size. A $4.2bn fund backing GP transactions typically targets 15–25 positions over 3–4 years. If LP appetite cools as exit windows reopen in 2025–2026, structured solutions funds may face pressure to increase check sizes into fewer deals or extend deployment timelines beyond investor expectations. Ares's credit platform gives it distribution advantage for hybrid structures, but the fund's internal return hurdle will depend on entry multiples it accepts relative to peers who entered the strategy earlier.

Source: AltAssets