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Group 1: Market Overview - Amazon has announced a significant $38 billion computing deal with OpenAI, which will enhance OpenAI's access to computing power using Nvidia GPUs [5][1] - The Federal Reserve is currently evaluating its rate path, with a 69% chance of a rate cut in December being priced in by the markets, despite some Fed officials expressing doubts about further cuts this year [6][4] - The Dow is down approximately 213 points, while the S&P 500 shows a slight gain, indicating a mixed market performance [115][3] Group 2: Economic Indicators - A report highlights slowing income growth for young workers, with real wage gains for those aged 25 to 29 being around 2%, which is significantly impacted by higher inflation [100][102] - The job market is experiencing a low hiring and low firing environment, which is particularly affecting young workers who rely on job switching for career advancement [105][106] - Concerns are raised about the structural shifts in employment due to AI, particularly in the tech sector, which may not align with traditional business cycle dynamics [26][32] Group 3: Federal Reserve Insights - Chicago Fed President Austin Goulby expressed unease about front-loading rate cuts, citing inflation concerns and the need for careful observation of economic indicators [8][12] - Goulby noted that inflation has been above target for over four years, with recent core inflation running at an annualized rate of 3.6% [14][29] - The Fed is balancing its dual mandate of managing inflation while supporting employment, which is currently in tension due to the labor market dynamics [106][113] Group 4: Corporate Developments - Microsoft has signed a data center deal with Iron, a Neocloud provider, continuing the trend of significant investments in AI infrastructure [6][5] - Cisco has received an upgrade from UBS, driven by a multi-year growth cycle fueled by AI infrastructure demand [74] - Core Mining is acquiring New Gold for approximately $7 billion in an all-stock deal, reflecting ongoing consolidation in the mining sector [79]

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Financial Data and Key Metrics Changes - Ares Management reported a 28% year-over-year increase in management fees, totaling $971 million, and a 39% increase in fee-related earnings (FRE) [22][23] - Realized income for the quarter increased by 34% year-over-year, reaching $456 million [29] - Assets under management (AUM) grew to over $595 billion, with fee-paying AUM increasing to $368 billion, both up 28% year-over-year [8][22] Business Line Data and Key Metrics Changes - The firm raised over $30 billion in new capital during the quarter, marking the highest quarter on record, and has raised over $77 billion year-to-date [6][7] - Gross deployment reached over $41 billion, a 55% increase from the previous quarter and 30% above the previous high [8] - The infrastructure secondaries fund closed at $3.3 billion, exceeding its hard cap due to strong investor demand [10] Market Data and Key Metrics Changes - The company experienced strong demand for private credit strategies, with $19.3 billion raised in credit strategies during the quarter [11] - Approximately 40% of third-quarter inflows came from outside the U.S., indicating strong international demand [16] - The diversified non-traded REIT saw record fundraising, driven by a leading 1031 exchange program [17] Company Strategy and Development Direction - Ares Management aims to continue increasing its quarterly dividend, with a 20% increase announced for the current quarter [4][5] - The company is focused on expanding its wealth management platform and enhancing its distribution capabilities globally [18] - Ares is positioning itself to benefit from potential credit cycle opportunities, emphasizing its asset-light model and strong capital base [39][40] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the current market environment, noting a rebound in transaction activity and strong M&A volumes expected in the fourth quarter [19] - The firm anticipates continued strong demand for its institutional funds and expects to exceed last year's fundraising record of $93 billion [15][48] - Management highlighted the resilience of its credit portfolios and the low realized loss rates, indicating a healthy credit environment [33][39] Other Important Information - Ares launched the "Promote Giving" initiative, committing to donate a portion of fund performance fees to charitable organizations [20][21] - The company is actively investing in expanding its investment teams across various products and geographies [40] Q&A Session Summary Question: Real estate market outlook and Ares' position - Management highlighted Ares' position as the third-largest institutional real estate manager, benefiting from scale and a vertically integrated platform [43][44] Question: Fundraising outlook for next year - Management expressed confidence in surpassing previous fundraising records, driven by strong performance and diverse strategies [47][48] Question: Impact of lower yields in private credit - Management indicated that investor appetite for private credit remains strong, as private credit spreads continue to offer better relative returns compared to traded alternatives [53][54] Question: Update on GCP transaction integration - Management reported positive integration progress with GCP, enhancing Ares' real estate platform and expanding opportunities in data centers [62][63] Question: Asset-based finance market strategy - Management discussed the significant growth in asset-based finance deployment, with nearly double the deployment in Q3 compared to Q2 [80]

Financial Data and Key Metrics Changes - Ares Management reported a 28% year-over-year increase in management fees, totaling $971 million, and a 39% increase in fee-related earnings (FRE) [6][22] - Realized income increased by 34% year-over-year, reaching $456 million, with after-tax realized income per share of Class A stock growing by 25% [22][29] - Assets under management (AUM) rose to over $595 billion, with fee-paying AUM increasing to $368 billion, both up 28% year-over-year [8][22] Business Line Data and Key Metrics Changes - The firm raised over $30 billion in new capital during the quarter, the highest on record, contributing to a year-to-date total of over $77 billion [7][8] - Gross deployment reached over $41 billion, a 55% increase from the previous quarter and 30% above the previous high [8] - The infrastructure secondaries fund closed at $3.3 billion, exceeding its hard cap due to strong investor demand, making it one of the largest in the market [10] Market Data and Key Metrics Changes - The firm experienced strong demand for private credit strategies, with $19.3 billion raised in credit strategies during the quarter [11][12] - The wealth management segment saw a record $5.4 billion in equity inflows, with significant contributions from international markets, particularly Japan [16][18] - The diversified non-traded REIT achieved the highest quarterly common stock raise in over two years, maintaining a 20% market share in the 1031 exchange space [17] Company Strategy and Development Direction - Ares Management aims to continue increasing its quarterly dividend, with a 20% increase announced for the current quarter [4][5] - The company is focused on expanding its investment strategies, including launching new funds in various sectors such as digital infrastructure and special situations [15][40] - Ares is positioning itself to benefit from potential credit cycle changes, emphasizing its asset-light model and strong fundraising capabilities [39][40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the current credit market conditions, indicating that recent bankruptcies are isolated incidents and not indicative of a broader credit cycle downturn [32][33] - The firm anticipates strong M&A activity and deployment opportunities in the upcoming quarters, supported by improving financing conditions [19][20] - Management highlighted the ongoing demand for durable income and differentiated private market solutions, which positions Ares favorably for future growth [8][19] Other Important Information - Ares has committed to donating a portion of fund performance fees to charitable organizations through the Promote Giving initiative, reflecting the firm's core values [20][21] - The company is actively investing in expanding its investment teams and capabilities across various products and geographies [40] Q&A Session Summary Question: Real estate market outlook and Ares' position - Management highlighted Ares' strong position as the third-largest institutional real estate manager, benefiting from scale and a vertically integrated platform [43][44] Question: Fundraising outlook for next year - Management expressed confidence in surpassing the previous record of $93 billion in fundraising, driven by strong performance and diverse strategies [47][48] Question: Impact of lower yields in private credit - Management indicated that investor appetite for private credit remains strong, as it offers relative returns compared to traded alternatives, and lower rates could lead to increased transaction activity [53][54] Question: Update on GCP transaction integration - Management reported positive integration progress with GCP, enhancing Ares' real estate platform and expanding opportunities in data centers [61][63] Question: Wealth fundraising acceleration - Management noted strong momentum in wealth fundraising, particularly from new product launches and international markets, with expectations for continued growth [70][71] Question: Acquisition of BlueCove and Liquid Credit - Management discussed the strategic fit of BlueCove within Ares' insurance capabilities, anticipating significant growth and synergies from the acquisition [73][74] Question: Asset-based finance market strategy - Management outlined a balanced approach to sourcing opportunities in both rated and non-rated markets, with significant deployment growth expected [78][80]

Financial Data and Key Metrics Changes - Ares Management reported a 28% year-over-year increase in management fees, totaling $971 million, and a 39% increase in fee-related earnings (FRE) [5][20] - Realized income increased by 34% year-over-year, reaching $456 million, with after-tax realized income per share of Class A stock growing by 25% [19][27] - Assets under management (AUM) rose to over $595 billion, with fee-paying AUM increasing to $368 billion, both up 28% year-over-year [6][20] Business Line Data and Key Metrics Changes - The firm raised over $30 billion in new capital during the quarter, marking the highest quarter on record, and has raised over $77 billion year-to-date [5][6] - The infrastructure secondaries fund closed at $3.3 billion, exceeding its initial hard cap due to strong investor demand, making it one of the largest in the market [9] - In alternative credit, the open-ended core alternative credit fund raised over $1 billion, bringing total AUM to over $7.4 billion, positioning it as the largest non-rated asset-based finance fund [11] Market Data and Key Metrics Changes - The company noted strong demand for private credit strategies from both institutional and individual investors, with a significant increase in fundraising across various sectors [8][14] - The third quarter saw record fundraising for diversified non-traded REITs, driven by a leading 1031 exchange program [15] - Approximately 40% of third-quarter inflows came from outside the U.S., indicating strong international demand [14] Company Strategy and Development Direction - Ares Management aims to continue increasing its quarterly dividend, with a 20% increase announced for the current quarter [3][4] - The firm is focused on expanding its wealth management platform and enhancing its distribution capabilities globally, particularly in the semi-liquid product space [16][65] - The company is well-positioned to benefit from a potential credit cycle, leveraging its asset-light model and significant dry powder for deployment [36][37] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the current market environment, anticipating strong M&A activity and improved financing conditions [17][18] - The firm expects to exceed last year's fundraising record of $93 billion, driven by strong performance and investor demand [5][46] - Management highlighted the importance of maintaining a diversified product lineup to meet evolving investor needs [16][46] Other Important Information - Ares Management is leading an industry initiative called Promote Giving, committing to donate a portion of fund performance fees to charitable organizations [19] - The company has raised its AUM target for semi-liquid wealth products from $100 billion to $125 billion, reflecting strong advisor demand [15] Q&A Session Summary Question: Insights on real estate market positioning - Management highlighted their global real estate business as the third-largest institutional manager, benefiting from scale and a vertically integrated platform, with significant deployment increases noted [40][41][42] Question: Fundraising outlook for next year - Management expressed confidence in surpassing previous fundraising records, attributing this to strong underlying performance and a diverse strategy mix [44][46] Question: Impact of lower yields in private credit - Management indicated that investor appetite for private credit remains strong, as relative returns compared to traded alternatives are still favorable, despite potential lower yields [49][50] Question: Update on GCP transaction integration - Management reported positive integration progress with GCP, highlighting growth opportunities in real estate and data centers as key areas of focus [57][58][60] Question: Asset-based finance market strategy - Management discussed their balanced approach to sourcing opportunities in both rated and non-rated markets, with significant deployment growth observed [73][75]

Core Viewpoint - The private-credit sector, particularly involving BlackRock and HPS Investment Partners, is facing significant challenges due to a large-scale fraud involving fabricated collateral, highlighting vulnerabilities in the private credit market [1][3][10]. Group 1: Fraud Details - BlackRock's HPS Investment Partners and other lenders are attempting to recover over $500 million in loans linked to businessman Bankim Brahmbhatt, who allegedly created fake invoices and accounts receivable as collateral [3][7]. - Brahmbhatt's companies, including Broadband Telecom and Bridgevoice, have filed for bankruptcy, and the lenders' total exposure exceeds $500 million [7][15]. - The fraudulent activities included the use of forged customer emails and fabricated accounts receivable, leading to a significant write-off by HPS of approximately $150 million [7][8][14]. Group 2: Market Context - The private credit market has grown to over $1.7 trillion globally, driven by nonbank lenders filling gaps left by traditional banks [4]. - Recent high-profile bankruptcies, such as First Brands and Tricolor Auto Group, have raised concerns about the due diligence standards of private lenders [5][6]. - Industry leaders, including JPMorgan's Jamie Dimon, have warned that the current situation may indicate broader issues within the private credit sector [6]. Group 3: Investigation and Consequences - An investigation revealed that all customer emails provided by Brahmbhatt's companies were fake, with one supposed customer confirming the fraudulent nature of the invoices [11][14]. - Brahmbhatt's companies transferred millions in pledged assets to offshore accounts before filing for bankruptcy, raising further concerns about asset recovery [15][16]. - While the financial impact on BlackRock and HPS appears limited relative to their total assets under management, the reputational damage to the private credit industry could be significant [10][16].

there's almost this kind of this mass hysteria taking hold about about credit in general, private credit in particular, and it's just not anchored in any facts. It's anchored by repeating a few anecdotes uh and then kind of just creating the well, hey, you never know. Um and and some of that is, you know, intentional.Some of it, I'm sure, is quite sincere by people that just don't just aren't sure. But the truth is that our system, the private credits, not just blew out, our our peers are very good at what ...

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