Overview
We target private and public market debt and non-control equity investments in healthy, stressed and distressed companies undergoing transformational change. We partner primarily with middle market companies in North America and Europe to enhance enterprise value, filling the void between for-control private equity and traditional private debt. Additionally, we aim to consistently invest in a range of private, special-situation opportunities and flex into distressed public market debt when attractive. 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 what we believe are mispriced opportunities across various market environments.
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 and strategic guidance.
Our private capital solutions can offer healthy companies the flexibility and growth capital needed to play offense (e.g., M&A, capex) and can offer stressed / distressed companies the leadership, flexibility and distressed expertise needed to play
defense (e.g., improving cash flows, reducing leverage).
We aim to deploy capital in private markets in benign and volatile markets, while layering on public market investments during periods of volatility.
Targeted Investments
We seek to deploy capital across a broad range of non-control private and public market transaction types in healthy or stressed/distressed companies undergoing transformational change.
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 going through transformational change; 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 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 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
- 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 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
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
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
Purchase securities in large or middle market, high-quality companies trading inefficiently, which Ares believes will rebound in price quickly
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 private and public 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. Given our funds have long-term capital, we can continue to support companies as they transition from playing defense to offense, providing follow-on growth capital for M&A, capex, new product lines, etc. 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.