Ares' Jacobson Sees Big Opportunity in European Direct Lending

The video discusses the experience of raising capital for Europe's largest direct lending fund during the COVID-19 pandemic. It highlights the defensive investment strategy focusing on telecommunications, healthcare, and software sectors. The discussion covers market dynamics, the role of the ECB, and the shift away from traditional banking. A comparison with the US market is made, emphasizing the growth potential in Europe. The importance of ESG in investment decisions is also highlighted, noting its increased relevance post-pandemic.

What was a significant challenge faced when raising capital for Europe's largest direct lending fund?

• High interest rates

• COVID-19 pandemic and lockdowns

• Lack of investor interest

• Regulatory hurdles

Which type of companies does the fund prefer to invest in?

• Automotive and energy

• High fashion

• Telecommunications and healthcare

• Cyclical industries

What has been a major factor in the shift from traditional banking to direct lending in Europe?

• Decreased demand for loans

• Significant regulations and challenges faced by banks

• Relaxed regulations

• Increased bank profitability

How does the ECB influence the lending market in Europe?

• By increasing interest rates

• By restricting direct lending

• By funneling capital through the banking sector

• By reducing loan sizes

How does the European direct lending market compare to the US market?

• It is more mature

• It is less regulated

• It has a larger market size

• It is smaller and less mature

What is a key focus for lenders in terms of ESG criteria?

• Reducing operational costs

• Ensuring companies have positive ESG practices

• Maximizing short-term profits

• Avoiding regulatory compliance

Why has ESG become more important in lending decisions recently?

• Increased competition among lenders

• Pandemic highlighting societal inequalities

• Decreased investor interest in ESG

• Regulatory requirements