Mubadala and Ares form a joint venture to trade secondhand stakes of private debt funds, initially investing $1 billion in credit secondary assets, with a focus on direct lending funds. The market for secondhand private debt stakes has expanded rapidly in recent years, reaching $17 billion in transaction volume in 2022.
The foray into private debt secondaries is Mubadala’s latest effort to increase its exposure to the private debt market. Dave Schwartz, most recently the co-head of Ares’ US direct lending business, will lead the venture’s credit secondaries strategy and serve on the firm’s secondaries executive committee.
Mezzanine financing is making a comeback, situated in a company’s capital structure between senior debt and common equity, as interest rates have risen and lending conditions have tightened. Investors’ appetite for private market loans is growing, with two fund managers lining up a combined $10 billion in commitments to their flagship private debt funds.
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