Ares Fund Prepares for Tough Conversations With Software Firms

Ares Management Corp. is preparing for tough conversations with software companies, some of which may need to restructure, after a review of its largest publicly traded private credit fund found about $1 billion of investments facing at least “medium” risk of disruption by AI.

Ares hired an outside consultancy to examine “software-oriented investments” in Ares Capital Corp.’s (ticker ARCC) $29.5 billion portfolio of holdings, the business development company said alongside quarterly results published Tuesday. The vast majority of those software investments, about 85%, are at low risk. But 14% of them are at medium risk and 1% are at high risk — together amounting to about 3.3% of ARCC’s total investment portfolio at fair value, it said.