Buyouts Snapshot: Debt specialist Ares returns with fifth PE fund

Ares Management is back in the market with its first flagship private equity fund since its May 2014 initial public offering. The $88 billion asset management firm set a $6.5 billion target for Ares Corporate Opportunities Fund V, a $1.8 billion increase over the $4.7 billion it raised through its previous fund in 2012.

Early investors in Fund V include the New Mexico State Investment Council, which committed $100 million in September, and the Nebraska Investment Council, which committed $50 million to the fund, according to Nebraska CIO Michael Walden-Newman.

“They’ve grown [in size] a little bit with each subsequent fund,” said New Mexico spokesman Charles Wollmann. “We’re frequent flyers in that fund … They’ve done very well.”

Ares’ previous four private equity funds netted a cumulative internal rate of return of 17 percent and a 1.6x multiple, according to fund presentation documents made public by New Mexico. Ares Corporate Opportunities Fund III has been a particularly strong performer, netting a 23 percent IRR as of June 30.

Ares began marketing Fund V in the second quarter and will likely continue fundraising through the end of this year. The firm expects to hold a final close next year, Ares President and co-founder Michael Arougheti said on a second-quarter earnings call.

“We’re seeing significant early demand for this fund,” Arougheti said. “We’re very excited about our fundraising prospects for flagship funds and we expect that this will meaningfully improve our growth and earnings profile in the coming quarter.”

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