Ares explores €3bn secondaries sale tied to flagship European direct lending fund

Ares Management is exploring the sale of approximately €3bn of limited partner interests in one of its flagship European direct lending funds, in a transaction that would rank among the largest private credit secondaries deals completed to date, according to a report by Bloomberg.

The report cites unnamed people familiar with the matter as revealing that the private markets manager is in discussions with specialist credit secondaries investors over a potential sale of bundled LP stakes in the fourth vintage of its Ares Capital Europe direct lending strategy, although the talks remain ongoing and may not result in a transaction.

The proposed deal highlights the rapid expansion of the private credit secondaries market as investors seek liquidity from funds whose holding periods have been extended by slower M&A activity and subdued exit markets. With fewer portfolio companies being sold or refinanced, many limited partners have been waiting longer than expected for capital to be returned.

The growing demand for liquidity has fuelled strong growth in credit secondaries. Industry estimates indicate the market almost doubled in size last year, reaching approximately $20bn, up from around $11bn in 2024.

Ares has been an active participant in the sector from both the buyer and seller perspectives. Earlier this year, the firm completed fundraising for its inaugural private credit secondaries strategy, securing $7.1bn of commitments to capitalise on increasing demand for liquidity solutions in private credit.

The potential transaction also reflects the broader evolution of the secondaries market beyond traditional private equity buyout funds. As private credit has grown into a major asset class, dedicated secondaries transactions have become an increasingly important tool for investors seeking portfolio management flexibility and earlier liquidity.

Several sizeable GP-led credit secondaries transactions have already been completed this year, including a $3.2bn portfolio sold by Crescent Capital to Pantheon Ventures and a $2.3bn continuation fund transaction led by Coller Capital for Benefit Street Partners.