Ares Leads $2.2 Billion Arcmont Secondary Sale as Private Credit Secondaries Market Grows

Ares Management Corp. has taken the lead in purchasing a private credit portfolio from Arcmont Asset Management through a secondary market transaction according to Bloomberg. This move is part of a larger trend where private credit funds are seeking liquidity through secondhand stakes.

Arcmont is transferring loans from its third direct-lending fund, which was established in 2019 with €6 billion, into a new continuation vehicle. This structure allows the firm to extend its holding period for the assets.

Pantheon is also a significant participant in the continuation vehicle, which could raise up to $2.2 billion. PJT Park Hill, a unit of PJT Partners Inc., is advising on the secondary sale.

Private credit funds, which primarily lend to companies owned by private equity firms, have faced challenges in exiting loans due to a slow dealmaking environment. As a result, managers have turned to the secondaries market to raise liquidity.

The secondaries market saw a significant increase in volume last year, nearly doubling to $20 billion from approximately $11 billion in 2024. This growth is expected to continue as the private credit industry expands to $1.8 trillion.

Why Did This Happen?

The rise in private credit secondaries is driven by the need for liquidity among fund managers who are finding fewer opportunities to exit loans. With fewer exits, firms are turning to secondhand markets to access capital.

Ares and Pantheon are both raising new pools of capital for their secondaries strategies. Ares has already raised $7.1 billion for its first private credit secondaries strategy, while Pantheon is seeking at least $6 billion for its latest credit funds.

This trend is also being fueled by the overall expansion of the private credit market. As the industry has grown to $1.8 trillion, demand for liquidity options has increased, creating new opportunities for secondary buyers.

What Are Analysts Watching Next?

Analysts are closely watching the performance of the continuation vehicles and the impact on the private credit market. The success of this transaction could set a precedent for future secondary sales.

The secondaries market is expected to continue growing in line with the broader private credit industry. This could lead to more firms exploring continuation vehicles as a way to manage their portfolios and access liquidity.

The involvement of major players like Ares and Pantheon in this deal suggests that the secondary market is becoming a more attractive option for private credit managers. As more capital is raised for secondaries strategies, the trend is likely to accelerate.

The market is also watching for signs of continued volatility in the private credit sector, especially as investors become more cautious about exposure to certain industries. This could influence future secondaries transactions and the overall liquidity of the private credit market.

What This Means for Investors

For investors, the growth of the secondaries market offers new opportunities to diversify their portfolios and access liquidity in private credit. As the market expands, investors may see more options for investing in continuation vehicles and other secondary structures.

However, the increasing use of secondaries also means that private credit managers are facing more competition for deals. This could affect the pricing of loans and the overall returns for investors in the sector.

The continued expansion of the private credit market and the growth of secondaries are also being influenced by broader economic factors, including interest rates and market conditions. These factors will play a key role in shaping the future of the industry.

The current environment presents both opportunities and challenges for investors in the private credit space. As the market evolves, it will be important to monitor how these developments affect returns, liquidity, and risk profiles for private credit investments.