Private Credit Valuation Dispute Shrinks Ares Vehicle From €1bn to €400mn
Investors demanded steeper discounts on loans moved from an older fund, forcing Ares to scale back a planned European continuation vehicle.
Ares has reduced a planned European private credit continuation fund to roughly €400 million from an initial target of about €1 billion after prospective investors pushed for larger discounts on the underlying loans, according to the Financial Times.
The vehicle was designed to buy assets from a direct-lending fund raised about a decade ago. Continuation funds give existing investors liquidity while allowing a manager to keep selected assets for longer, but they also require the same manager to set a transfer price between related pools of capital.
That conflict is particularly sensitive in private credit, where loans do not have continuous public prices. Ares is separately seeking about €2.5 billion for another continuation vehicle tied to a 2018 European fund, with Coller Capital reportedly exploring an anchor commitment. Ares and Coller declined to comment to the FT.
Why it matters
The smaller vehicle is a market test of private credit valuations. Investors are signaling that reported net asset values are not automatically acceptable exit prices, especially for older loans. As continuation funds spread from buyouts into credit, independent valuation and conflict management will become more important to market confidence.
Source: Financial Times