Our Credit Group is a leading manager of credit strategies across the non-investment grade credit universe, with approximately $64.1 billion of assets under management (“AUM”) and approximately 135 funds as of December 31, 2016(1). We offer a range of investment strategies across the liquid and illiquid credit spectrum. Since the firm’s founding in 1997, Ares has been a leader in providing credit solutions to investors searching for yield and for less correlated returns, particularly relevant in today’s relatively low interest rate and volatile investment environment. We are additionally one of the largest self-originating direct lenders to the U.S. and European middle markets, providing one-stop financing solutions for small-to-medium sized companies, which we believe are increasingly underserved by traditional lenders. We provide investors access to our broad credit capabilities through several vehicles, including commingled funds, separately managed accounts, joint venture lending programs for institutional investors, publicly traded vehicles and sub-advised funds for retail investors.
We are experienced credit pickers who take a value-oriented approach, using fundamental bottom-up research to identify investments that offer attractive relative value in comparison to their fundamental credit risk profile. Our portfolio managers average approximately 22 years of relevant experience investing in liquid credit, in many cases since the inception of an asset class. As a long-term, patient direct lender, we leverage our flexibility, structuring expertise and self origination capabilities to invest across capital structures and meet the full spectrum of our clients’ financing needs. Members of our direct lending investment committees average more than 23 years of relevant middle-market lending and leveraged finance experience.
Our investment solutions help traditional fixed income investors access the syndicated loan and high yield bond markets and capitalize on opportunities across traded corporate credit. We additionally provide access to directly originated fixed and floating rate credit assets and the ability to capitalize on illiquidity premiums across the credit spectrum. Our strategies include syndicated loans, high yield bonds, institutional credit, structured credit investments and U.S. and European direct lending.
Syndicated Loans: This strategy delivers a diversified portfolio of liquid, traded non-investment grade secured loans to corporate issuers including an allocation to syndicated middle market loans. Loans are one of the few floating rate fixed income alternatives and can be especially suitable for investors with a view of rising short term rates. Our funds include both North American and European issuers. We include a sleeve of high yield bonds (up to 25%) as an accent and typically benchmark our loan strategy against the Credit Suisse Leveraged Loan Index.
High Yield Bonds: This strategy seeks to deliver a diversified portfolio of liquid, traded non-investment grade corporate bonds. This incorporates secured, unsecured and subordinated debt instruments of issuers in both North America and Europe. We include a sleeve of syndicated corporate loans (up to 25%) which can be used to manage duration and is intended to deliver an accent to performance. We benchmark our high yield strategy against the BofA Merrill Lynch US High Yield Master II Constrained Index.
Institutional Credit: Our Institutional Credit strategy combines both syndicated loans and high yield bonds into a single portfolio and is designed to offer investors a flexible solution to credit by allowing Ares to tactically allocate between both asset classes in various market conditions. This incorporates issuers in both North America and Europe and is designed to “go anywhere” within the liquid non-investment grade corporate debt universe. We benchmark our strategy against a 50/50 blend of the Credit Suisse Leveraged Loan Index and the BofA Merrill Lynch US High Yield Master II Constrained Index.
Structured Credit: We invest across the capital structure of syndicated collateralized loan obligation vehicles and in directly-originated asset-backed investments comprised of diversified portfolios of consumer and commercial assets. We seek to construct portfolios of asset-backed investments that benefit from having downside protection, less correlation with the broader credit markets and diversification.
Direct Lending: In the wake of banking industry consolidation over the past 20 years and institutionalization of the leveraged lending market, Ares has capitalized on the opportunity to provide financing solutions to middle market companies. With a team of approximately 150 investment professionals in offices across the U.S. and Europe, we self-originate our investment opportunities in senior secured loans, private high yield, mezzanine and select minority equity investments. We can provide creative structures, hold large and control positions and offer sponsors and management teams increased certainty of execution, which we believe gives us a competitive advantage in the market.
U.S.: We conduct our U.S. corporate lending activities primarily through Ares Capital Corporation (NASDAQ: ARCC), a leading specialty finance company, and certain private accounts. ARCC is the largest business development company by both market capitalization and total assets. We also manage a commercial finance business that provides asset-based and cash flow loans to small and middle-market companies, as well as asset-based facilities to specialty finance companies.
Europe: Our European direct lending platform is one of the most significant participants in the European middle-market, focusing on self-originated investments in illiquid middle-market credits. We manage multiple commingled funds, separately managed accounts and joint venture lending programs.
Asset manager specializing in liquid and illiquid credit strategies investing primarily in North America and Europe.
Los Angeles, New York, Chicago, Atlanta, Dallas, San Francisco, Washington, D.C., London, Paris, Frankfurt, Stockholm, Luxembourg
Non-investment grade corporate credit and structured credit investments across the U.S. and Europe.
Syndicated loans, high yield bonds, institutional credit, structured credit, direct lending: corporate direct lending (non-syndicated senior debt, mezzanine debt and non-control equity to middle market companies), project finance (high yield senior and mezzanine debt to finance power generation projects), venture finance (senior secured loans to early stage and emerging growth companies backed by venture capital firms, commercial finance (asset-based and cash flow loans to small and middle-market companies, asset-based facilities to specialty finance companies).
(1) Effective July 1, 2016, we moved our Special Situations strategy from our Credit Group into our Private Equity Group.