Mubadala Investment Co., Abu Dhabi, and Ares Management formed a joint venture to deploy an initial $1 billion in global credit secondaries opportunities.
Anchored by sovereign wealth fund Mubadala, the joint venture will capitalize on anticipated growth and substantial demand from general partners and limited partners for tailored liquidity solutions in the credit secondaries asset class, a joint news release said.
The size of the venture will grow alongside the market opportunities, the news release added.
The deal expands on alternatives manager Ares' existing platforms. Its credit platform had about $214 billion in assets under management and the secondaries platform had about $22 billion in AUM as of Dec. 31. The new venture will leverage Ares' track record in secondaries and Mubadala's global footprint.
Dave Schwartz was appointed partner and head of the credit secondaries strategy and a member of the Ares secondaries executive committee. He most recently was co-head of Ares' U.S. direct lending strategy. Sebastien Burdel and Luca Salvato, partners in the Ares secondaries group, and Nate Walton, partner and head of the private equity secondaries strategy and a member of the Ares secondaries executive committee, were also appointed to the senior leadership team of the new venture. An Ares spokesman said three co-heads of U.S. direct lending remain: Jim Miller, Kort Schnabel and Mark Affolter.
"Private credit has become a relevant and important part of institutional portfolios which has led to the growth and development of the private credit secondaries industry," said Fabrizio Bocciardi, head of credit investments at Mubadala, in the release. "We believe that Ares is particularly well-positioned as a global leader to capitalize on the growing demand for diversified credit secondaries opportunities."
Mr. Schwartz added that there has been "a substantial increase in credit secondaries transaction volume resulting from the growth of the primary private credit market. Against this market backdrop, we see a meaningful supply-demand imbalance requiring dedicated capital to meet the liquidity needs of general and limited partners."
Ares and Mubadala established a strategic relationship to invest across the credit sector in 2017.
Mubadala has $284 billion in assets. Ares has $352 billion in assets under management. Spokesmen at Mubadala could not immediately be reached for comment.