Ares Management is launching its second Asia-focused private credit fund, aiming to exceed the $1.7 billion raised by its predecessor to capitalize on the region's expanding private lending market. The proposed Asia Direct Lending II Fund will finance leveraged buyouts across Asia-Pacific, although details remain subject to change, sources told Bloomberg. The initiative highlights a broader trend of global investment managers increasing their footprint in the region.

Competitive Landscape in APAC Fundraising

Approximately 60 Asia-Pacific-focused funds managing more than $1 billion each are currently fundraising, accounting for more than 10% of global fundraising targets. This figure is well above the region’s 5% share of recently closed funds, according to Bain & Company. The imbalance points to a potential fundraising rebound in 2026 but also intensifying competition for capital as limited partners remain selective.

Recent Fundraising Activities

Several major financial institutions have recently secured significant capital for Asia-focused funds:

Strategic Partnerships and New Ventures

KKR & Co. and Capital Group are collaborating on the launch of a public-private credit fund in Asia this year. Capital Group CEO Mike Gitlin told Bloomberg that the fund will target both public and private investments, positioning it as a “more liquid, cheaper, and more transparent” option. This strategic shift reflects the evolving demands of investors seeking diversification across both asset classes and regions.

Ares Management limited withdrawals to 5% from its Ares Strategic Income Fund after redemption requests climbed to 14.4% of the fund's assets, highlighting ongoing liquidity pressures in the private credit sector. This marks the second consecutive quarter the fund has faced elevated redemption requests, following an 11.6% outflow demand in the first quarter that also prompted a 5% cap. The firm targets affluent investors and manages over 20,000 shareholders.

Smaller institutions and family offices, primarily based outside the U.S., drove nearly half of the redemption requests despite representing less than 1% of the shareholder base. Approximately two-thirds of the requests originated from investors who had also sought redemptions in the prior quarter. In contrast, repurchase requests from the U.S. private wealth channel, the fund's largest investor segment, represented only 2.4% of common shares outstanding, reflecting a more than 35% decline in new requests compared to the first quarter.

Ares informed investors that it expects to process the bulk of pending second-quarter redemption requests by the end of the year, assuming future withdrawal demand remains consistent with current trends. The fund reported annualized total returns of 10.3% since inception, outperforming broadly syndicated bank loans by 1.87%.

The situation at Ares mirrors broader instability in open-ended private credit vehicles. Apollo Global Management limited withdrawals from its Apollo Debt Solutions fund after investors requested 16.8% of their shares. Similarly, Cliffwater LLC capped redemptions at 5% following requests for approximately 17% of shares, and Partners Group restricted withdrawals from its $8.6 billion Global Value SICAV fund after requests exceeded 5% of net asset value.

Industry Performance and Outlook

The trend of gating withdrawals has persisted across major firms, with BlackRock, Ares Management, JPMorgan, and Morgan Stanley all implementing caps in the first quarter. JPMorgan CEO Jamie Dimon recently cautioned that periods of calm in credit markets often obscure risk buildup, warning that performance could deteriorate more than expected once the credit cycle turns due to weakening underwriting standards and transparency.