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Family offices pile into $3.5bn ‘special opportunities’ fund

Family offices pile into $3.5bn ‘special opportunities’ fund

Ares Management has announced the final close of a ‘special opportunities’ fund that drew $3.5bn in capital commitments.

The Ares Special Opportunities fund, which had targeted to raise $2bn, was backed by over 70 limited partners including family offices from Asia and the Middle East. 

The regions’ private banks, pension funds, sovereign wealth funds, insurance companies and endowments, and those from North America and Europe also contributed. 

The fund is keen to partner with the management of companies it invests in, and pivots between private and public market plays.

Ares said it primarily deployed $400m into private transactions heading into March. But it has focused more on public markets with coronavirus-triggered dislocation, and invested $1.3bn since.

‘The fund’s $1.7bn of investment and committed capital to date is split almost evenly between private and public situations,’ the global alternative investment manager shared.

While Ares did not name the investments, the fund focuses on companies whose business models or management teams are undergoing a ‘significant transition’. 

It zooms into industries that are broadly out-of-favour with capital markets, or going through secular or cyclical changes. 

The fund also looks for balance sheets that are cumbersome, complex and unsustainable. This flexible stressed/distressed strategy positions it well across different market environments, said Scott Graves, Ares’ head of special opportunities.

Graves, who is also partner and co-head of Ares Private Equity Group, manages the strategy alongside 16 investment professionals. 

‘We have a broad variety of industry exposures in the fund and also a broad variety of correlations with what we’ll call ground zero of the pandemic.

‘In places where we are investing very close to the pandemic – travel, leisure, things of that nature – we are generally making sure we are secured and high-up in the capital structure to mitigate risk,’ Graves was quoted by Buyouts as saying in May. 

Ares’ had an AUM of $149bn as of 31 March. It has more than 1,200 employees in 10 countries around the world.

In May, Ares Australia Management launched a new global credit income fund for investors in Australia.

Ares Australia is a joint venture between Ares Management and Fidante Partners, a $36bn boutique asset manager.