Ares closes Special Situations fund targeting market distress on $3.5b, K1 makes second exit during market downturn, Opportunity Zone fundraising appears to weather coronavirus storm

Ares racks up $3.5 billion for its special opportunities fund and Aurora acquires marketing FMG Suite from K1.


Big close announced this morning … Ares Management closed its Special Opportunities fund on $3.5 billion, beating its $2 billion target. Ares Special Opportunities Fund targets private and public opportunities regardless of state of the market, focusing on companies that are stressed or going through transitional change and need additional capital.

The Ares team has been focused on private deals up to March 2020, deploying about $400 million, the firm said in a statement. Once the virus downturn swung into full gear, the Special Opps team began focusing on the public markets, Ares said.

Since then, Ares deployed about $1.3 billion in during the market downturn.

Special Opportunities is Ares’s first distressed-focused fund since it shifted its distressed and special situations strategy in 2017, Private Debt Investor wrote last year. Ares hired Scott Graves, head of Special Opportunities and co-head of private equity, from Oaktree Capital Group. Read more here on PE Hub.

Deal: Strattam Capital’s portfolio company MHC Software added-on Ecrion Software, which provides software to manage and automate customer communications. Strattam’s platform, MHC, provides payment and process management software for companies in healthcare, government and other sector, writes Milana Vinn on PE Hub.

The add-on is Strattam’s first since coronavirus shuttered markets in March. Ecrion’s capabilities help address the remote work environment created by governments locking down people and businesses to slow the spread of covid-19, Milana writes.

“We are hearing a lot from our clients that communicating with their customers now that we can’t see each other in person is a huge need and a huge problem,” said Bob Morse, co-founder and managing partner at Strattam. “So bringing that capability to our 500+ hospitals we thought is going to be a very exciting idea.” Read Milana’s story here.

Strattam acquired MHC last year in a deal that simultaneously included MHC buying Vanguard Systems, which provides workflow and process automation services.

Also last year, Strattam closed its second fund on $230 million to invest in founder-led IT companies. At close, Strattam had already deployed about a quarter of the fund into three platfrom deals. All told, the firm expected to make three more platform deals. Strattam closed its debut fund on $157 million in 2016.

Morse and Adrian Polak launched Strattam in 2013.

Top Scoops
We haven’t had an update on Opportunity Zones in a while. Fundraising for Opportunity Zones has picked up after an initial slowdown in March along with all other kinds of private markets fundraising.

Cresset closed its first opportunity zone fund on $460 million and launched Fund II in March. So far, the second fund raised about $20 million, Nick Parrish, a managing director at Cresset, told Justin Mitchell on Buyouts. Read the story here.

Aurora Capital Partners acquired marketing automation software provider FMG Suite from K1 Investment Management. The deal is K1’s second exit during the coronavirus downturn, the firm said in a statement. Read the news brief here on PE Hub.

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