Ares Management has closed its fifth European direct lending fund at EUR 3.2 billion, exceeding its EUR 2.5 billion target by 28 percent.

Fund Details

The fund attracted commitments from a diverse LP base including:

• Dutch Pension Fund APG - Anchor investor with EUR 400M commitment
• Abu Dhabi Investment Authority - Returning investor from Fund IV
• British Columbia Investment Management - First-time commitment to Ares Europe

The fund will focus on sponsor-backed middle-market companies across Western Europe, with particular emphasis on the DACH region, Benelux, and France.

Investment Strategy

Fund V will target unitranche financings in the EUR 50-200 million range, supporting leveraged buyouts and growth capital transactions. The strategy maintains Ares' traditional focus on:

• Senior secured lending with first-lien positions
• EBITDA multiples of 4.5-6.5x
• Sponsor-backed transactions with established PE firms
• Defensive sectors including healthcare, business services, and software

Market Context

The close comes amid strong LP appetite for European private credit strategies, driven by attractive risk-adjusted returns and a pullback by traditional bank lenders from leveraged finance markets.

European direct lending AUM has grown to EUR 180 billion in 2025, according to Preqin data, with fundraising activity remaining robust despite higher base rates.

Michael Arougheti, CEO of Ares Management, commented: "European private credit continues to benefit from structural tailwinds as companies seek flexible financing solutions and banks reduce their exposure to leveraged lending."