Ares Management (NYSE:ARES) Q3 2025 Earnings Call November 03, 2025 09:00 AM ET Company ParticipantsMike Arougheti - Co-Founder, CEO, and DirectorJarrod Phillips - CFOGreg Mason - Co-Head of Public Markets Investor RelationsConference Call ParticipantsCraig Siegenthaler - AnalystBill Katz - Senior Equity AnalystSteven Chubak - Managing Director and Equity Research AnalystKen Worthington - AnalystBrian Bedell - AnalystBrian McKenna - Equity Research AnalystMichael Cyprys - Equity AnalystBen Budish - Equity R ...

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]

BlackRock’s HPS Investment Partners has written off roughly $150 million after discovering allegedly falsified collateral behind loans to telecom entrepreneur Bankim Brahmbhatt.The financing, arranged with BNP Paribas, was backed by what turned out to be fabricated accounts receivable and forged customer emails, lawsuits show.Brahmbhatt’s companies - Broadband Telecom, Bridgevoice, and Carriox Capital - have filed for bankruptcy; lenders say total exposure exceeds $500 million.BNP Paribas took a €190 millio ...

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 ...

LIPSCHULTZ, CO-C. E. O.COMING UP NE ♪ DANI: BLUE OWL REPORTED RESULTS THIS WEEK AFTER JOINING FORCES WITH META ON A. I. DATA CENTERS.THE FIRM REPORTED A 21 FATHERS YEAR OVER --% YEAR OVER YEAR JUMP ON A. U. M.JOINING US IS THE CO-C. E. O.WONDERFUL TO HAVE YOU ON THIS MORNING. LOOK, I KNOW WHENEVER ANYONE ASKS ABOUT THE EQUITY PRICE, YOU VERY ASTUTELY ARE LIKE, WE DON'T CONCENTRATE ON THE SHORT-TERM BUT THERE WAS A DECLINE AFTER EARNINGS SO WE HAVE TO ADDRESS IT. WHY THE DISCONNECT BETWEEN THE TWO.YEAH. LOOK ...

More cracks may be emerging in the opaque private credit universe https://t.co/u5CpWmCFrX ...

Earnings Reports - Meta reported a 26% revenue growth, reaching $51.2 billion, but aggressive AI spending raised concerns, increasing to $70-72 billion from $66-72 billion [2] - Microsoft achieved $77.7 billion in revenue, an 18% increase, with Azure growth at 40%, but AI spending surged 74% during the quarter, causing investor unease [3] - Alphabet generated $102.3 billion in revenue, a 16% growth, with AI capex rising to $91-93 billion, but confidence remained due to strong cloud performance [4] - Overall, the earnings from these companies indicate aggressive AI investment and sustained earnings power, though investor anxiety about future payoffs persists [5] Trade Agreement - President Trump and President Xi agreed to a trade deal, reducing U.S. tariffs on Chinese goods from approximately 57% to 47% [5] - China committed to resuming large-scale purchases of U.S. soybeans and delaying rare-earth export restrictions for one year [5] - This agreement provides a degree of stability for investors, particularly those with exposure to China and U.S. agricultural exports [6][7] Nuclear Sector Developments - The U.S. government plans to invest at least $80 billion in nuclear reactors to meet the energy demands of AI technologies [11] - The announcement led to significant gains in the uranium sector, with companies like Energy Fuels, Uranium Energy, and Cameco seeing stock increases of 9%, 14%, and 23% respectively [12] - China's nuclear ambitions are projected to consume one-third of global uranium supply by 2030, indicating a structural shift in the market [10][14] Private Credit Market Concerns - The private credit market has grown from around $300 billion in 2010 to approximately $3 trillion last year, raising concerns about potential debt issues [21] - Recent bankruptcies in the sector have prompted caution among investors, with JPMorgan's CEO warning of possible underlying problems [23][24] - Investors are advised to review their portfolios for exposure to private credit and assess the extent of lending operations in affected companies [25][26]

Private credit firms are in the business of lending, not owning. But as more borrowers start to struggle with their liabilities, lenders are swapping their debt positions for equity stakes to try and stem losses https://t.co/aoXVgRga2O ...

Financial Data and Key Metrics Changes - The company reported fee-related earnings (FRE) of $0.24 per share and distributable earnings (DE) of $0.22 per share for Q3 2025, with a dividend declared at $0.225 per share [4][21] - Management fees increased by 29% over the last 12 months, with 86% coming from permanent capital vehicles [22] - FRE was up 19%, and DE was up 15% year-over-year [22] Business Line Data and Key Metrics Changes - In direct lending, gross origination in Q3 was approximately $11 billion, with net deployment increasing to $3 billion, bringing last 12-month gross and net originations to $47 billion and $12 billion, respectively [10][25] - The alternative credit strategy demonstrated scale benefits, deploying approximately $5 billion over the last 12 months, primarily focused on small business equipment leasing, aviation, and consumer transactions [10][11] - The company raised over $14 billion in new capital commitments during the quarter, achieving a record $57 billion in capital raised over the last 12 months [9][22] Market Data and Key Metrics Changes - The company noted a shift in investor focus towards credit and digital infrastructure, which are gaining market share from legacy categories [6] - The health of the private credit markets remains strong, with an average annual realized loss of just 13 basis points and no signs of meaningful stress in direct lending [7][8] Company Strategy and Development Direction - The company is strategically positioned to benefit from ongoing investments in institutional and private wealth distribution channels and new product expansion [5][6] - A substantial strategic partnership was announced with Qatar Investment Authority to scale and expand the digital infrastructure business [17] - The company aims for continued growth in management fees and earnings, with expectations of 20% growth in FRE per share by 2026 and 2027 [36][40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of their credit portfolios and the ongoing health of underlying borrowers [8][32] - The company anticipates continued growth in Part 1 fees in 2026, despite recent rate cuts [26] - Management emphasized the importance of performance and duration of capital in achieving positive investment outcomes over time [19][20] Other Important Information - The company has an installed base of over 160,000 individual investors and is adding new products in digital infrastructure and alternative credit [18] - The company completed its largest strip sale to date, selling about 18% of the assets in Fund 4 for proceeds of over $2.5 billion, delivering a 3.2x gross return [18] Q&A Session Summary Question: Summary of growth investments and future metrics - Management expects margin expansion and meaningful acceleration in FRE and DE per share growth as they move into 2026 and 2027 [34][35] Question: Impact of credit volatility on retail flows - Management reported strong flows and continued momentum in wealth-focused products, indicating resilience in the channel [46][47] Question: Understanding stock price perceptions - Management is focused on execution and communication to address market misunderstandings and believes the current valuations do not reflect the underlying business strength [52][55] Question: Digital infrastructure business and lease structures - Management clarified that leases are designed for long durations with built-in flexibility, ensuring strong returns even in case of early termination [61][62] Question: Absorption of recent fundraising and fund performance - Management noted that while there was short-term noise in fund performance, the underlying projects are strong, and they expect to absorb new capital quickly [68][70]

Financial Data and Key Metrics Changes - The company reported Fee-Related Earnings (FRE) of $0.24 per share and Distributable Earnings (DE) of $0.22 per share for Q3 2025, with a declared dividend of $0.225 per share [4][22] - Management fees increased by 29% over the last 12 months, with 86% coming from permanent capital vehicles [21][22] - FRE was up 19% and DE was up 15% year-over-year [22] Business Line Data and Key Metrics Changes - In direct lending, gross origination was approximately $11 billion in Q3, with net deployment increasing to $3 billion [10][25] - The alternative credit strategy demonstrated scale benefits, deploying approximately $5 billion over the last 12 months [10][25] - The company raised $5.6 billion in credit during Q3, with $3 billion from direct lending [22][24] Market Data and Key Metrics Changes - The company raised over $1 billion in the Digital Infrastructure Fund, reflecting strong investor interest [16][17] - The installed base of individual investors in Blue Owl products exceeded 160,000, with significant growth in private wealth fundraising [17][18] Company Strategy and Development Direction - The company is strategically positioned to benefit from the shift towards credit and digital infrastructure, capitalizing on ongoing investments across institutional and private wealth distribution channels [5][6] - Blue Owl aims to continue expanding its digital infrastructure business, highlighted by a substantial partnership with QIA [17][19] - The focus remains on delivering exceptional returns per unit of risk while maintaining a vigilant approach to market changes [20][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the health of the credit portfolios, with an average annual realized loss of just 13 basis points [7][8] - The company anticipates continued growth in FRE and DE per share, aiming for 20% growth in management fees and revenues by 2026 [36][37] - Management emphasized the importance of execution and communication to address market perceptions and enhance stock performance [55][56] Other Important Information - The company has a growing base of AUM Not Yet Paying Fees, amounting to $28 billion, which is expected to drive over $360 million in management fees upon deployment [9] - The company has closed on two investments in GP stakes during Q3, with a significant focus on delivering liquidity to investors [18][19] Q&A Session Summary Question: Summary of growth investments and future metrics - Management expects margin expansion and meaningful acceleration in FRE and DE per share growth from 2026 onwards, aligning with their long-term goals [34][35] Question: Impact of credit volatility on retail flows - Management reported strong flows and continued momentum in wealth-focused products, indicating resilience despite market volatility [46][47] Question: Understanding stock performance relative to fundamentals - Management acknowledged the disconnect between strong fundamentals and stock performance, emphasizing execution and communication as key strategies to address this [52][55] Question: Digital infrastructure business and lease structures - Management clarified that leases are designed for long durations with built-in flexibility, ensuring strong returns regardless of early termination scenarios [61][62] Question: Fund performance and absorption of recent fundraising - Management noted that recent performance fluctuations are short-term noise, with strong underlying performance expected to continue [68][69]