Ares targets equipment financing with launch of Ansley Park Capital

March 4, 2024 (Preqin News) – Funds managed by Ares Management’s Alternative Credit strategy are to target the equipment financing sector with the launch of Ansley Park Capital.

The new entity was formed following the acquisition of the management team and operating platform of BciCapital, the equipment finance business of regional bank City National Bank of Florida. It will offer ‘scaled, flexible equipment-based capital solutions’ for transactions ranging from $5mn to more than $200mn to firms in sectors including manufacturing, rail, construction, and infrastructure.

Ares’ Alternative Credit funds, which had $34bn in AUM as of the end of 2023, have committed about $400mn of initial equity capital to support originations, which Ansley Park says it expects will exceed $3bn. Former BciCapital Chief Executive Officer (CEO) Eric Miller will serve as the new entity’s President and CEO.

‘The equipment finance landscape is rapidly evolving, and the team’s deep industry expertise across a wide range of asset classes will enable Ansley Park to effectively deploy capital critical to supporting the financing needs of companies driving the US economy,’ said Joel Holsinger, Partner and Co-Head of Ares Alternative Credit in a statement announcing the launch.

In addition to direct financing, Ansley Park will also partner with banks in capital market transactions, acquire equipment finance portfolios, and ‘design balance sheet optimization and capital relief solutions’, Holsinger said.

The US equipment finance sector is a $1tn industry, according to the Equipment Leasing and Finance Association (ELFA). The three main sources of equipment finance funding are captives, independent lenders, and bank-affiliated lenders, it says.

In a survey of small- and medium-sized businesses, conducted in March 2023 and published in February by national bank Pathward, while 70% of firms said their company was in growth mode, 77% reported having just enough cash to remain operational, and 56% anticipated needing funding in the year ahead. The survey found that 37% of respondents may need to seek financing to purchase equipment.

According to ELFA, real private investment in equipment and software by US businesses is forecast to reach more than $2tn in 2024. It says that 54% of equipment acquisitions are forecast to be financed.

‘The resilient US economy and opportunities for growth and greater efficiencies underlie the trends this year as equipment acquisition continues to drive supply chains across all US manufacturing and service sectors,’ ELFA President and CEO Leigh Lytle said in January. ‘Nearly eight in 10 of US businesses use equipment leasing and financing to acquire the productive assets they need to operate and grow.’

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