Ares launches fourth opportunities fund

The firm has already picked up a $75m commitment from New Mexico’s State Investment Council, whose staff cited strong returns from Funds II and III.

Ares Management has launched its fourth corporate opportunities fund and is targeting $4 billion, according to presentation materials made available by the New Mexico State Investment Council.

The fund will employ the same strategy as its predecessors, targeting private equity investments in the form of leveraged control buyouts or growth equity transactions in financially distressed companies, according to New Mexico documents.

Although the fund does not have a sector focus, Ares typically invests in North American companies in the aerospace, defense, building products, business services, consumer products, energy, healthcare and retail industries.

Ares’ third corporate opportunities fund, a 2008 vintage vehicle which 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 state documents. Both Fund II and Fund III are classified as top quartile by New Mexico's advisor, LP Capital Advisors, and Ares has generated an overall net pooled IRR of 16.3% and a net multiple of 1.4x across its prior funds as of 31 October.

New Mexico committed up to $75 million to the fund at its meeting Tuesday. The $14 billion pension system had previously committed $50 million to Fund III.

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

In October, Ares partnered with the Canada Pension Plan Investment Board to buy discount retailer 99 Cents Only Stores for $1.6 billion, beating out an offer from Leonard Green & Company that had valued the company at $1.3 billion.