Key facts
- Most withdrawal requests for Ares' private credit fund came from outside the U.S., according to CEO Michael Arougheti.
- Ares capped payouts at 5% of the fund's net asset value, limiting withdrawals to approximately $524.5 million out of over $1.2 billion requested.
- The fund's net asset value was $10.7 billion as of February 28, with a total portfolio value of $22.7 billion.
- Despite redemption requests, the fund saw $708 million in inflows in the first quarter.
- Arougheti believes increased regulatory attention will ultimately help the private credit industry.
Most withdrawal requests from a private credit fund managed by Ares originated from outside the United States, primarily from smaller institutions and family offices, according to CEO Michael Arougheti. Speaking at the Morgan Stanley U.S. Financials conference, Arougheti stated that 11% of the fund's shares were requested for redemption. Ares capped payouts at 5% of the fund's net asset value, limiting withdrawals to approximately $524.5 million out of over $1.2 billion requested. The fund's net value stood at $10.7 billion as of February 28, with a total portfolio value of $22.7 billion. Despite the redemption requests, the Ares Strategic Income Fund experienced $708 million in inflows during the first quarter, resulting in a net gain of $184 million.
Arougheti expressed confidence that the markets would grow through the current period of jitters in the private credit asset class. He also noted that insurance companies rely on private credit to generate excess returns for their policyholders. U.S. life and annuity insurers' private credit holdings more than doubled over the last 10 years. U.S. Treasury Secretary Scott Bessent has consulted with state insurance commissioners to improve oversight amid concerns about transparency and lending discipline. Arougheti stated that increased regulatory attention and transparency are appropriate as the insurance industry leans into private markets investing.