Ares Management Corp. has raised A$2.6 billion ($1.7 billion) for a credit fund for Australia and New Zealand, as it seeks to capitalize on opportunities created by banks retreating from leveraged lending.
The Ares Asia Direct Lending fund, the company’s first leveraged buyout vehicle for the region, has deployed over A$1.04 billion of first lien, senior secured loans. Recipients include: Australian funeral home operator InvoCare Ltd. as it was delisted by private equity firm TPG Inc.; Allegro Funds as it acquired fuel retailer Gull New Zealand; and BGH Capital’s payments platform Pushpay, the firm said.
Financing of leverage buyouts in Australia and New Zealand has typically been done through banks due to the lack of an institutional capital market for high-yield borrowers. But banks have been dialing back on leveraged loans — meaning credit funds can step in.
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“Australia and New Zealand don’t have a high yield bond market and have a nascent institutional syndicated term loan B market, so the private debt, direct lending product is arguably even more valuable to borrowers, financial sponsors and corporates,” said Peter Graf, Ares’ head of sponsor direct lending Asia, in an interview on Friday.
Graf remains cautiously optimistic about the deal pipeline, despite the difficulties encountered by firms including Silver Lake and Brookfield Asset Management last year in completing transactions.
“All market participants are busy working on prospective opportunities,” he said. “But if there’s one thing that we’ve learned over the last 24 months, it’s good to be busy — but you have to get the deal across the finish line as well.”
The new fund comprises around A$850 million from investors and the balance in loans from Sumitomo Mitsui Banking Corp. and Citigroup Inc.
Investors include two Asia Pacific sovereign wealth funds, pension funds, insurance companies, family offices and high net worth individuals, according to Ares, without identifying them.
Source: Yahoofinance
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