Special Opportunities

Overview

We employ an all-weather, flexible capital strategy that targets private and public debt and non-control equity investments in middle market companies undergoing transformational change or stress. Our strategy targets a broad spectrum of non-distressed special-situation, stressed and distressed investments, primarily in North America and Europe. To further enhance flexibility, our strategy employs an industry, enterprise value and capital structure (i.e., debt or equity) agnostic approach to seek to identify in our view mispriced opportunities across various market environments.

 

 

 

Overview

Private Markets


In the private markets, we seek to leverage the substantial resources of Ares Management's private equity and direct lending franchises by partnering with companies and management teams to provide flexible capital solutions.

This process of providing companies with private capital solutions that offer leadership, flexibility and distressed expertise in the form of incremental liquidity and/or covenant relief can empower a business going through distress or transformational change by improving cash flows, reducing leverage and returning the business to corporate health.

We expect to flex more significantly into public market stressed and distressed debt investments in circumstances where we see what we believe to be attractive value relative to what can be achieved in the private market.

Targeted Investments

Targeted Investments

We seek to deploy capital across a broad range of non-control private market and public market transaction types with respect to companies undergoing transformational change or stress.

We search for companies that are being challenged by one or more of the following:

  • The business model or management team is undergoing a significant transition;
  • The industry is broadly out-of-favor in the capital markets and/or is going through secular or cyclical change; or
  • The balance sheet has become overly cumbersome, complex and/or unsustainable.

Targeted Investment Types

Private Markets
Opportunistic Financing

Opportunistic Special Situations 

  • Provide non-distressed companies with bespoke debt and structured equity solutions at the operating asset level and/or holding company level to unlock debt capacity and/or support growth initiatives.
  • Examples include: Secured/unsecured debt, preferred/common equity, warrants
Rescue Direct Lending

Rescue Financings

  • Provide companies with debt and structured equity solutions with a strict focus on (i) asset and/or cash flow coverage and (ii) downside protection
  • Examples include: 1st/2nd lien secured debt, non-recourse SPV debt financings, convertible/straight preferred equity
Comprehensive Recapitalization Solutions

Comprehensive Recapitalization Solutions 

  • Provide companies with "end-to-end" capital solutions across the capital structure which in turn can provide management with flexibility, liquidity and runway to seek to execute strategic initiatives and realize growth
  • Examples include: Secured/unsecured debt, preferred/common equity, warrants
public to private

Public-to-Private Conversions 

  • (i) Convert public debt investments into non-control private equity investments via restructuring, and (ii) potentially utilize public debt position to negotiate a private opportunities financing.
  • Examples include: Fulcrum debt securities (restructurings), various (private opportunities financing)
Public Markets
Public-to-Private Candidates

Public-to-Private Candidates

Purchase stressed / distressed debt in middle market companies which Ares believes will either (i) need rescue financing or have to be restructured due to disruptive industry change, over-leverage, liquidity duress and/or macroeconomic headwinds or (ii) potentially benefit from growth capital to play offense

Post-Reorg Equities

Public-Only Opportunities

Purchase stressed debt, hung financing syndications and post-reorganization equities in middle market companies or stressed securitized / structured assets that Ares believes will remain healthy enough to avoid needing rescue capital or being restructured

Opportunistic Purchases

Opportunistic Purchases

Purchase securities in large or middle market, high-quality companies trading inefficiently, which Ares believes will rebound in price quickly

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Value Proposition

For Management Teams

We seek to partner with management teams, sponsors and board of directors as they evaluate growth and capital structure initiatives. Both public and private market opportunities require collaborative approaches to fill the “void of sponsorship,” especially in highly complex and distressed situations. Our team conducts thorough, private equity-style diligence to gain a deep understanding of each specialized situation, the needs of the management team and dynamics of the investment's ecosystem. We employ a flexible capital approach which enables us to provide companies with highly flexible, structured capital to support growth and capital structure initiatives.

Our capital can provide companies runway to potentially avoid a restructuring. In situations where a restructuring process is necessary, we seek to work effectively with other constituents to reach a quick resolution and minimize the impact on the company's business. We seek to “right-size” each company's balance sheet to enable the company to grow and compete without the constraints of an over-leveraged capital structure. We have the ability to leverage the knowledge and resources of the broader Ares Management platform to support the company throughout the restructuring process. We do not seek day-to-day control of businesses in which we invest.

For Investors

We employ a flexible capital strategy to target non-control positions across a broad spectrum of non-distressed special-situation, stressed and distressed investments. We seek to deploy our flexible capital across a broad range of both private market and public market transaction types. We utilize a proprietary relative value framework to optimize team capacity utilization, portfolio construction and risk management objectives. Our team conducts thorough, private equity-style diligence utilizing an objective, consistent and repeatable investment process.