Ares Management is one of the world’s largest alternative credit managers and direct lenders. It manages more than $100 billion, of which approximately two-thirds is across a variety of credit strategies with more than half of that – around $41 billion – is direct lending. This year, Ares marks the 20th anniversary of its founding in 1997.
Having established itself in the United States as a leader in direct lending, Ares brought its direct lending expertise to Europe in 2007 as a natural complement to its US business. The firm viewed European non-bank lending as a vital and growing component of the debt capital markets, a trend that accelerated with the global financial crisis.
Ares Credit Group Managing Director Daniel Sinclair was invited to speak at the SYZ Hedge Funds Day, held in Zurich on October 31, 2017. SYZ invests in selected hedge funds, including direct lending strategies, alongside its clients. Sinclair set out Ares’ investment thesis for European Direct Lending in a presentation entitled, “The Evolution of the Direct Lending Opportunity in Europe”.
Pre-crisis, Sinclair recalls how “…the European lending market was overbanked for mid-sized companies – whether they were management-owned or sponsor-owned. Banks were doing a great job”. At that time, Sinclair was in the Financial Sponsors Group at Barclays PLC, where he originated and executed mid-market leveraged finance deals.
A decade of European direct lending
In 2007, Ares was arguably the first true direct lending platform in Europe. The firm identified the opportunity in Europe for non-bank lenders to play a pivotal part in the growth of capital markets.