Ares collects $3.2bn for first close

The firm is raising its fourth flagship fund with a $4.7bn hard-cap to target distressed investments and buyouts.

Ares Management has held a first close on at least $3.2 billion for its fourth flagship fund that is targeting $4 billion with a hard-cap of $4.7 billion, according to documents filed this week with the US Securities and Exchange Commission.

The first close amount includes a $200 million commitment from the general partner, the document said.

Ares Management will hold to the same strategy it used in prior funds, targeting controlled buyouts or growth equity investments in financially distressed companies, according to documents from the New Mexico State Investment Council, which committed up to $75 million to the fund.

The firm does not have a sector focus though it typically invests in North American companies in the aerospace, defense, building products, business services, consumer products, energy, healthcare and retail industries.

The firm’s third opportunities fund, a 2008 vintage that raised $3.5 billion, was generating a net internal rate of return of 28 percent and an investment multiple of 1.5x as of December, according to New Mexico documents.

Ares’ first and second opportunities funds are classified as top quartile by New Mexico’s consultant, LP Capital Advisors. The firm has produced an overall net pooled IRR of 16.3 percent and a net multiple of 1.4x across prior funds as of 31 October.

Ares was founded in 1997 and manages around $47 billion across private equity, private debt and capital markets investment platforms. The private equity business, headquartered in Los Angeles, is led by David Kaplan and Bennett Rosenthal.