ART OF WAR. Ares Management (ARES.N) is upping the ante in the booming market for private credit. The asset manager that oversees $197 billion has just raised 11 billion euros for a fund that will lend directly to European medium-sized companies. It’s the largest of its kind, with total firepower reaching 15 billion euros including leverage. That’s over half the total Ares has lent in the region since it arrived in 2007. So-called direct lenders are shrugging off the pandemic. They lend to companies which are too small to access debt markets, while offering larger ones more flexible funding packages and greater certainty. Ares reckons capital rules and losses from Covid-19 will prompt banks to keep shunning medium-sized borrowers. The direct lending sector is growing quickly: private debt managers oversaw $975 billion in September 2020, over twice the level in 2014, Preqin says. And funds are now competing directly with bond markets, where terms are loose. Picking the right borrowers will be more important – and harder – than ever. (By Neil Unmack) On Twitter http://twitter.com/breakingviews Earlier in Capital Calls: U.S. GDP goes big read more Unilever planned profitability gain is optimistic read more Standard Chartered’s optimism offers relief read more Aussie sovereign fund waves its safe hands read more Samsung showcases power of sprawl read more