Mubadala, Ares create $1bn JV to invest in credit secondaries

Abu Dhabi’s Mubadala Investment Company (Mubadala) and Ares Management Corporation plan to deploy approximately $1bn in global credit secondaries opportunities through a joint venture.

The partnership is a natural extension of US-based Ares’ credit and secondaries platforms, which respectively had approximately $214bn and $22bn of assets under management as of December 31, 2022.

The joint venture, anchored by Mubadala, is expected to leverage the anticipated growth and substantial demand from general and limited partners for customised liquidity solutions for the credit secondaries asset class. It is anticipated to scale alongside the growing market opportunity.

The venture represents a key milestone for both organisations and will enhance Mubadala’s positioning within the secondaries credit market while enabling Ares to significantly scale its offering.

We are proud to announce the creation of a joint venture with @Ares_Management to invest in global credit secondaries opportunities. The JV will initially aim to deploy approximately $1 billion as it seeks to capitalize on the anticipated growth and substantial demand…

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— Mubadala (@Mubadala) March 22, 2023

“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,” Fabrizio Bocciardi, head of credit investments at Mubadala said adding that the state investor will work with the Ares team to realise the significant benefits of this joint venture.

Dave Schwartz has been appointed as partner and head of the credit secondaries strategy and a member of the Ares Secondaries Executive Committee.

“There has been a substantial increase in credit secondaries transaction volume resulting from the growth of the primary private credit market,” said Schwartz.

“Against this market backdrop, we see a meaningful supply-demand imbalance requiring dedicated capital to meet the liquidity needs of General and Limited Partners.

“We believe that our partnership with Mubadala combined with the scale, underwriting capabilities and experience of our private credit and secondaries businesses will allow us to take advantage of these attractive market dynamics as we seek to drive attractive risk-adjusted returns for our investors.”

Since 2017, Ares and Mubadala have established a long-standing strategic relationship investing across the full spectrum of the credit sector.

Mubadala’s recent acquisitions

Meanwhile, the Global Sovereign Wealth Funds 2023 annual report said that Abu Dhabi investors are covering all bases with the Abu Dhabi Investment Authority most active in North America, Mubadala investing more in Europe in 2022 and ADQ investing across emerging markets.

With more than $284bn in assets under management, Mubadala is central to the UAE’s economic diversification strategy. The state investor has stepped up its investment in health care, technology, mobility, clean energy and life sciences and has partnered with private equity firms and other investors to invest in alternative asset classes as it expands its portfolio.

Read: Mubadala Investment Capital invests in fintech Tabby’s Series C round

Mubadala said on Wednesday announced the closing of its co-led $300m Series B fundraising round for China’s industrial supply chain technology and service provider JD Industrials.

The wealth fund said the investment, which builds on the company’s existing strong partnership with the JD Group, was concluded through its China Investment Program. JD Industrial aims to drive industry transformation based on technology and to become one of the world’s largest industrial technology e-commerce platforms.

The wealth fund partnered with Oman and Etihad Rail Company to support the development of the 303km railway network, which connects the two GCC neighbors with an overall investment of $3bn.

Read: Oman and Etihad Rail Company, Mubadala partner to develop 303km rail network

Earlier in March, Mubadala said together with private equity firm Stone Point Capital and other investors said they were buying a 20 per cent stake in US insurance broker Truist Insurance Holdings for $1.95bn. The deal values the sixth-largest insurance broker in the US and a unit of Truist Financial Corporation at $14.75 billion.