July 31 (Reuters) - Ares Management ( ARES ) said on

Wednesday it has closed its latest direct lending fund with a

capital base of $34 billion, making it the largest in the

investment manager's history.

Total equity commitments raised for the fund, which is

double the size of its predecessor, stand a little over $15

billion, more than its $10-billion target.

Credit markets have recovered after the U.S. Federal Reserve

paused interest rate hikes last year. Rising borrowing costs

derailed deal markets, particularly for transactions underpinned

by high levels of debt.

Goldman Sachs Asset Management's alternative investments

platform said in May its latest fund raised more than $20

billion for senior direct lending. Banks in the syndicated loan

market compete with direct lenders including private equity

firms and others.

According to bankers' estimates the direct lending market is

roughly half the size of the more than $1.5 trillion syndicated

loan market.

Ares' direct lending funds provide secured loans to

mid-sized companies in the United States.

"The middle market continues to experience significant

demand for reliable capital solutions as it remains underserved

by banks and other traditional lending sources," said Mark

Affolter, partner and co-head of U.S. direct lending at Ares.

The fund, known as Ares Senior Direct Lending Fund III, has

committed $9 billion in capital to more than 165 companies till

date.

Ares managed to rope in about $6.4 billion in debt and

equity for the fund in the second quarter of 2024. The company's

previous fund had $14.9 billion in equity and debt commitments.