Ares Management Corporation has acquired Riverside Credit Solutions (RCS), a key player in Boston's lower-middle market lending. This acquisition is part of Ares’ strategy to strengthen its position in the direct lending market by leveraging RCS's expertise and established track record.
RCS has made significant strides in the direct lending sector, deploying over $700 million across more than 60 investments. Ares plans to integrate RCS’s team—including new partner David Dobies and managing directors Tom Gillis and David Kilpatrick—into its U.S. direct lending operations. This integration aims to enhance Ares' capabilities in the lower-middle market.
Mitch Goldstein, partner and co-head of the Ares Credit Group, believes that RCS’s focus on this segment will help Ares fortify its market leadership, improve borrower relationships, and increase deal flow.
With Ares' considerable resources now supporting RCS’s operations, borrowers can expect more competitive loan terms and interest rates. This move is likely to intensify competition in the direct lending market and may lead to better financial products and services.
Our Opinion
While this acquisition strengthens Ares' position, it raises questions about market consolidation and its impact on borrowers. The integration of RCS into Ares' structure may lead to standardized processes, potentially affecting the personalized service that lower-middle market borrowers often seek from specialized lenders. Industry experts are closely watching to see if Ares can maintain RCS's focus and agility while leveraging its larger platform.
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