How Ares Built an ABF Platform the Slow Way

Lessons from one of the leaders in alternative credit

In Moody’s Private Credit Outlook 2026 (Link), the firm forecasts private credit AUM to double from $2 trillion in 2026 to $4 trillion by 2030. On its own, this isn’t notable; its in line with predictions from other firms. What’s notable is what they expect to drive that growth: asset-based finance (“ABF”), not direct lending.

According to Moody’s:

Investing is shifting from a corporate lending focus to the ABF market…ABF will lead growth as partnerships, asset origination accelerates. Alternative asset managers are looking to fund newer, more diverse pools of assets—increasingly consumer loans and data infrastructure credit. New partnerships are spurring origination opportunities while alternative asset managers will continue stepping up as banks remain constrained in certain lending activities.

This framing reflects what fundraising has started to show. After a decade of steady allocations, many institutions are full up on corporate credit risk. Putting the marginal dollar into another sponsor-backed direct lending fund is getting more difficult to justify for pensions and sovereign wealth funds that have so much of it already.

For these institutions, ABF promises a cleaner next allocation. It targets comparable income to direct lending, but offers risk diversification. Instead of relying on corporate earnings to pay coupons, ABF depends on assets and structure.

For private credit firms, meanwhile, ABF promises to be the next fundraising bonanza. But to win mandates, firms must prove capability. And many don’t possess the requisite sourcing channels, talent and infrastructure in-house.

In 2024, three such firms came to the same conclusion: if ABF was going to drive the next leg of growth, the quickest path was to acquire a platform.

That year, Blue Owl Capital acquired Atalaya Capital Management, Brookfield Asset Management took a stake in Castlelake, and Janus Henderson Group bought Victory Park Capital.

One large private credit firm was notably absent from this buying spree: Ares Management.

The reason? Ares was already well established in ABF since it had started assembling its platform years before.

It saw the same trends a decade earlier and decided to build rather than buy. Today, it manages a $46.7 billion ABF platform—the largest non-rated ABF platform in institutional markets.

While the 2024 acquirers raise and invest their first vehicles under new ownership, Ares is on its third Pathfinder fund.

In this article, I want to examine how Ares got the jump on ABF early. And the lessons private credit firms and allocators can learn from their example.

Disclosure: This is not investment advice. See full disclaimer at the end.

Phase I (1997–2018): The direct-lending boom years — and the beginnings of ABF

Ares was founded in 1997 to invest in leveraged loans, high yield, private credit and private equity. While all remain important to the firm, private credit became the clear growth engine over time.

Ares launched their public BDC, Ares Capital Corporation (ticker: ARCC), in 2004 and grew it to become the largest in the world. The focus of the BDC was making direct loans to sponsor-backed companies. Post-GFC, the opportunity set expanded as banks retreated from certain kinds of risky lending due to regulation.

Ares grew their footprint by raising closed-end vehicles and separately managed accounts for large institutions looking for yield in the low rate environment post-crisis.

The 2010s rewarded private credit firms that could source sponsor relationships, efficiently underwrite middle-market companies, and avoid credit foot-faults. Ares became a core beneficiary of that regime.

But alongside their direct lending growth engine, Ares placed bets that would lay the foundation for their ABF platform.

The first bet was in 2011 when Ares acquired Indicus Advisors, a London-based structured credit shop. At the time, the rationale was to expand their structured credit and European leveraged finance capabilities. It wasn’t marketed as an expansion into “ABF,” since this wasn’t yet a known category.

But the Indicus acquisition gave Ares something that ABF ultimately requires: a structured-credit underwriting culture. It brought Ares the ability to analyze cash flows and structures with the rigor ABF demands.

The Indicus acquisition also brought in Keith Ashton, a seasoned structured credit practitioner, who would eventually become a foundational leader of the ABF franchise.

Ares began deploying its newly acquired expertise through institutional SMAs and liquid vehicles like Ares Dynamic Credit Allocation Fund (launched 2012) with Ashton as portfolio manager. Alongside corporate bonds and floating-rate loans, these funds invested in structured credit such as CLO tranches.

The firm also started widening its aperture into specialty-finance, bringing in Jeff Kramer in 2013 to drive expansion into consumer and commercial lending activities.

Kramer arrived with a background that mapped to what ABF would later require: pool-based underwriting, structured lending, and familiarity with the ABS ecosystem.

Before Ares, he invested in consumer and commercial-related assets inside Goldman Sachs’ Special Situations Group, and earlier founded a specialty finance platform focused on acquiring and structuring pools of consumer loans.

During this period, Ares’ ABF efforts were real, but dispersed; more capability accumulation than a single flagship product. They rode direct lending while placing some feelers for a future beyond corporate loans.

They also started to refer to their efforts in ABF by a new name: Alternative Credit.

Phase II (2019–2020): Ares hires Holsinger and elevates Ashton

In 2019, Ares decided to make Alternative Credit a priority franchise by hiring one of ABF’s rising stars, Joel Holsinger.

Holsinger built his reputation inside one of the original and most highly-regarded opportunistic credit firms: Fortress Investment Group.

Over a decade at Fortress (starting in 2008), Holsinger rose to become Co-Head of Illiquid Credit and sat on senior committees, helping to oversee a mandate that spanned everything from CLOs and CDOs to Litigation Finance and Intellectual Property Investing.

Hiring a senior leader from Fortress was a savvy move for a firm like Ares that wanted to turn its Alternative Credit skills into a platform since Fortress had been an early proof point that alternative credit could be scaled into a product.

In many ways, Fortress drafted the blueprint for what Ares would later create with its Alternative Credit business. Fortress’s model was to build repeatable origination channels through partnerships, move capital through warehouses and takeouts, and widen the asset menu to build diversification without losing underwriting control. Holsinger had seen this model honed through a full cycle.

In announcing the hire, Ares CEO Michael Arougheti, framed their ambition clearly:

“We are very excited about our substantial and growing presence in the alternative credit sector, and we see similarities between today’s alternative credit market opportunity and the direct lending market opportunity of ten years ago.”

In other words, Ares was trying to do in ABF what it had already done in sponsor lending: take a fragmented market and institutionalize it with scale, repeatability, and brand.

But the strategy wasn’t just to import the Fortress playbook. It was to pair it with a leader who could institutionalize it inside Ares. That was Keith Ashton’s role. He had been inside the firm since 2011, arriving via Indicus with deep structured credit and securitized products expertise. Elevating him alongside Holsinger created a clean division of labor from day one: Holsinger would build the business, Ashton would integrate it within Ares.

Together, they turned Alternative Credit into a defined platform with a mandate and a plan. The move from capability to product came next, with the launch of Pathfinder.

Phase III (2021–2022): Ares productizes ABF with Pathfinder

By 2021, nearly a decade after beginning the expansion of its private credit remit beyond direct lending, Ares launched its first dedicated ABF product: Pathfinder.

Pathfinder was designed as a flagship “all-weather” alternative credit fund. Ares positioned Pathfinder as a vehicle for buying large, diversified portfolios of contractual cash flows—the kind of assets that require scale, structuring fluency, and patient capital to originate, finance, and hold.

Picture from 2021 Marketing Deck (Link)

In 2021, Pathfinder Fund I closed at $3.7 billion, about 85% above its $2.0 billion target, suggesting strong demand out of the gates for its inaugural ABF product.

Alongside the closed-end flagship, Ares rolled out Pathfinder Core, a perpetual-life vehicle intended to hold similar ABF exposures inside a more durable capital wrapper.

Ares complemented the closed-end flagship and evergreen product with separately managed accounts, particularly for insurance-oriented capital, and with permanent or semi-permanent vehicles (including public credit structures) that could hold exposures through volatility rather than forcing sales at the wrong moment.

Overnight (but not really), Ares had created a scaled ABF player.

Phase IV (2023–2025): Ares scales under pressure

Ares would get a chance to use that scale almost immediately when the regional banking crisis kicked off in 2023.

Banks needed liquidity and balance-sheet relief, from counterparties that could move quickly on complex pools.

Ares stepped into that moment with a marquee proof point: the $3.5 billion purchase of a diversified asset-backed loan portfolio from PacWest Bancorp.

With this transaction, Ares showed it had the scale, expertise and financing relationships to close on a diverse lender-finance book on a compressed timeline.

The Pathfinder platform grew alongside the opportunity. In October 2023, Pathfinder Fund II closed at $6.6B (hard cap), giving Ares a larger pool of capital to pursue portfolio acquisitions and structured programs.

Ares also widened its edge by moving from being a scaled buyer of diversified portfolios to building more repeatable origination channels, a playbook that mirrored the structured partnership model Joel Holsinger had seen scaled at Fortress.

It formed a JV with Certified Automotive Lease Corp to access prime auto leases via forward flow; partnered with Investec Fund Solutions on a structured fund finance forward-flow/SPV; and backed the launch of Ansley Park Capital with ~$400M of equity to originate large-ticket equipment loans and leases.

By 2025, the org chart and the numbers reflected the scale-up: investment professionals grew from ~40 (December 2020) to ~90 (September 2025) and Alternative Credit AUM reached ~$46.7B by September 2025.

Today, Ares’ Alternative Credit business is a fully built out ABF platform. It has flagship scale capital (Pathfinder funds and Pathfinder Core), institutional SMA capacity and a repeatable tool kit that spans portfolio acquisitions, structured programs, and origination partnerships.

Lessons for anyone trying to build an ABF platform

Ares’ path to building their ABF franchise was intentional and deliberate. They didn’t wake up one morning and decide to enter ABF. They built the prerequisites, then turned them into a product, then used stress to harden the franchise.

Lessons from their approach:

1. Earn the right to play before you ask for capital.
   The Indicus move gave Ares the structured-credit reflexes (pool analysis, waterfall thinking, structural protection) that ABF later demanded. They incubated that skill set inside existing vehicles before they tried to sell it as a dedicated product.

2. Talent matters—but integration matters more.
   Star hires aren’t sufficient, they have to be woven into a team. Ares didn’t just recruit Holsinger; it paired him with Ashton and embedded the business inside Ares’ underwriting, portfolio construction, and capital base.

3. If you want ABF at scale, stop shopping for assets and start building pipes.
   The best ABF exposure is manufactured. JVs, forward flows, structured programs are key components of an origination network that must be developed. That’s the Fortress lesson Holsinger imported: predictable sourcing beats episodic opportunity.

The punchline may be uncomfortable for late entrants: you can buy a team in a quarter, but you can’t integrate a platform. An ABF franchise isn’t just people and capital. It’s a stack of small, compounding prerequisites that make the whole greater than the sum of its parts. Ares’ path suggests that the right way to get those parts to harmonize is the slow way.

Conclusion

Private credit’s next phase is going to look different from its last one. The 2010s were the direct lending era.

That model scaled because the inputs (bank retrenchment, low rates, and a steady pipeline of LBO-driven demand) were abundant and because the product was simple enough to replicate across managers.

The next leg of growth has different drivers. As more institutional portfolios max out on corporate credit exposure, the marginal dollar is going towards exposure that can provide diversification.

This is why ABF is moving from adjacent strategy to core strategy. And this is why we’re seeing a rush of M&A from firms desperate to buy their way into the game.

ABF demands a different skillset than direct lending, requiring forward flow arrangements and JV partnerships rather than sponsor relationships to drive dealflow.

Ares is a useful case study because it built that operating system in a measured manner. It accumulated capability before it tried to accumulate AUM.

Only then did it productize the strategy with Pathfinder, and only after that did it use stress windows to prove scale and expand supply through forward flows, warehouses, and selective platform builds.

Over the next few years, we should expect more managers to talk about ABF, some of them to buy their way into it, and a smaller set to take the more deliberate path chosen by Ares.

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This article is for informational purposes only and does not constitute investment advice, a recommendation, or an offer or solicitation to buy or sell any security or investment product. The views expressed are the author’s own and may change without notice. Information is believed to be reliable but is not guaranteed; readers should conduct their own independent analysis and consult their financial, legal, and tax advisers before making any investment decision. Past performance is not indicative of future results.