Ares cuts €1bn private-credit vehicle to €400m after valuation pushback

Ares Management has reportedly cut the planned size of a European private-credit continuation vehicle from around €1bn to approximately €400m after prospective investors pushed for deeper discounts on the loans being transferred.

The Financial Times reported that the assets came from a European direct-lending fund roughly a decade old. Ares had sought to move the loans into a new vehicle that it would continue to manage, allowing existing investors to receive liquidity while new investors acquired exposure to the portfolio.

The reduction is significant because it exposes one of the central challenges facing the developing private-credit secondaries market: buyers and existing managers do not necessarily agree on the value at which loans should change hands.

According to the FT, prospective investors wanted larger valuation discounts than Ares was prepared to accept. The disagreement resulted in the planned transaction being cut by about 60%. Ares declined to comment on the reported process.

Continuation vehicles are well established in private equity but have become increasingly prominent in credit as fund managers look for ways to provide investors with liquidity while retaining assets that have not yet matured or refinanced.

Ares itself says continuation vehicles represented approximately 60% of reported credit-secondaries volume during 2025. In the structure, a manager transfers assets from an existing fund into a newly established vehicle, enabling existing limited partners to sell or roll their exposure while extending the investment period.

That makes the reported pricing dispute commercially important. Private credit is frequently presented as being less volatile than traded fixed income because loans are valued periodically rather than continuously. Secondary transactions create moments when outside investors have to put a clearing price on those assets.

If prospective buyers demand a deeper discount than the existing manager is willing to accept, the gap can limit liquidity even when the underlying loans are still performing.

The FT also reported that Ares is pursuing a separate continuation vehicle of about €2.5bn for loans held by a 2018 fund, underscoring the scale at which managers are exploring secondary structures.

For institutional investors, the episode is therefore less about one reduced fundraise than about price discovery. As private-credit portfolios age, continuation vehicles can provide liquidity, but only where buyers and sellers can agree what the loans are actually worth.