Ares Strategic Income Fund NAV Slips for Second Straight Month as Capital Raise Cools

Ares Strategic Income Fund’s net asset value slipped for a second consecutive month, falling to $26.67 per share as of July 31 from a $27.00 peak in May. The nontraded business development company, sponsored by Ares Management, reported the figure across its Class I, Class S, and Class D shares.

NAV per share fell to $26.71 in June before slipping further to $26.67 in July. The fund’s aggregate NAV stood at approximately $10.3 billion as of July 31, up slightly from $10.2 billion in June but below the $10.8 billion reported at the end of May.

The fund’s debt-to-equity ratio was 1.16x as of July 31, or 1.13x net of available cash of approximately $381 million, and it had approximately $4.1 billion available for additional borrowings under its existing credit facilities. Portfolio investments had a fair value of approximately $21.9 billion against $11.9 billion of debt outstanding.

Separately, the fund sold 627,661 Class I common shares through a private placement in August for total consideration of $16.7 million, continuing a slowdown in that funding channel. The fund raised $190.4 million through the same channel in March, $51.9 million in April, $9.2 million in June, and $32.2 million in July.

The fund declared monthly gross distributions of $0.2143 per share for August, payable Sept. 24 to shareholders of record as of Aug. 31, and reaffirmed previously disclosed distributions at the same rate through December.

The update follows a stretch of elevated redemption pressure for the fund. Ares Strategic Income Fund capped its second-quarter tender at 5% of outstanding shares after redemption requests reached 14.4% – nearly three times the quarterly limit – and accepted 34.7% of tendered shares on a pro rata basis. Last month, the fund’s board rejected an unsolicited mini-tender offer from Cox Capital Partners, which had offered to buy shares at a roughly 14% to 15% discount to NAV.

Ares Strategic Income Fund is advised by Ares Capital Management LLC, a subsidiary of Ares Management, and primarily invests in directly originated, senior secured, floating-rate loans to U.S. companies.

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