Ares Seals €4.5 Billion Direct Lending Fund - Ares Capital Europe VI (ACE VI)

Ares Management Corporation, a global alternative investment manager, has announced the final close of its sixth European direct lending fund, Ares Capital Europe VI (ACE VI), with total commitments of €17.1 billion, surpassing its €15 billion target and reaching its hard cap. This makes ACE VI the largest institutional fund in the global direct lending market.

Key Highlights

ACE VI secured €17.1 billion in commitments, exceeding its target and reaching its hard cap. This represents a 53% increase compared to its predecessor, Ares Capital Europe V, which closed in 2021 at €11.1 billion.

Including related vehicles and leverage, the total capital available for the Ares European Direct Lending strategy is expected to be around €30 billion.

Combined with the recently closed Senior Direct Lending Fund III (SDL III), which raised $33.6 billion, Ares has secured approximately $64.5 billion across both strategies, solidifying its global market leadership.

Investment Strategy:

ACE VI aims to provide flexible financing solutions to high-quality, market-leading European companies in defensive industries with EBITDA exceeding €10 million.

The fund will focus on senior-secured loans and prioritize capital preservation, maintaining a sole or lead lender position, and seeking low volatility.

To date, ACE VI has already committed €6.4 billion across over 50 investments.

Leadership and Expertise:

Ares's European Direct Lending strategy boasts a team of 90 investment professionals based in major European cities, including London, Paris, Frankfurt, Stockholm, Amsterdam, and Madrid.

The team leverages its deep regional and sector experience, along with long-established relationships with sponsors and partners, to source attractive investment opportunities with high-quality borrowers.

Ares’s European direct lending business has completed nearly 380 investments, totaling over €70 billion since its inception.

Key Market Insights for US Lenders

Ares' European expansion reveals critical market signals:

• Origination volume increased 3.7x in first half of 2024

• Weighted average senior loan yield of 10.8%

• Senior loan yield premium of 220 basis points over benchmark market

• Demonstrates continued institutional appetite for alternative lending

• Signals potential spillover effects on US mid-market lending rates

• Indicates strong performance in challenging credit environments

Impact on the Competitive Environment

• Robust equity subordination (higher than previous cycles)

• Lower loan-to-value ratios enhancing downside protection

• Non-accrual rates declining to just over 1% in Q3-2024

Operational Innovations

• Flexible capital approach

• Targeting essential infrastructure assets

• Stable cash flow profiles through long-term contracts

• Emphasis on value creation across asset life cycle

Performance Metrics

Strategic Takeaways for US Lenders

• Monitor cross-market lending dynamics

• Observe innovative financing structures

• Assess potential competitive pressures

• Evaluate risk management strategies

The Federal Communications Commission (FCC) has issued a critical warning about a sophisticated scam called "Green Mirage" targeting homeowners across all 50 states. This fraudulent operation involves callers posing as mortgage lenders to deceive vulnerable homeowners.

Key Characteristics of the “Green Mirage” Scam:

• Scammers impersonate over 400 mortgage institutions

• Callers spoof the caller ID of the victim's actual lending institution

• Targets homeowners who have previously sought financial relief

• Operates from both the United States and India

Scam Tactics:

• Callers know detailed personal information about homeowners

• Threaten foreclosure and then offer false relief

• Demand payments through unusual methods like:

  • Mailing money orders to third-party "attorneys"

  • Uploading funds to Walmart Green Dot Money Card accounts

Financial Impact:

• Estimated losses exceed $400,000

• Many victims only discover the fraud when their actual lender initiates foreclosure proceedings

• Some individual victims have lost significant amounts, such as one who reported losing $13,500

FCC Response:

The FCC has classified Green Mirage as a Consumer Communications Information Services Threat (C-CIST) to heighten awareness and encourage telecom networks to block these fraudulent calls.

Continue to read more about Key Fraud Prevention Imperatives for Alternative Lenders Against “Green Mirage” Scam

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