You can find original article here WealthManagement. Subscribe to our free daily WealthManagement newsletters. Bringing Alternatives to DC Plan Participants Tops 2026 Regulatory Priorities “While much of year one of Trump 2.0 was spent getting key officials in place and navigating the longest government shutdown in U.S. history, experts expect year two to be busy at regulators like the Securities and Exchange Commission and Department of Labor, with the administration’s push to broaden access to private ma ...

Financial Data and Key Metrics Changes - Ares Management reported a quarterly dividend of $1.12 per share, representing a 20% increase compared to the same quarter last year [4] - The company achieved a record management fee of $900 million, reflecting a 24% year-over-year increase [33] - Fee-related earnings (FRE) for the quarter were $409 million, marking a 26% year-over-year growth, with FRE margins at 41.2% [35] Business Line Data and Key Metrics Changes - The total assets under management (AUM) increased to $572 billion, showing a quarter-over-quarter organic growth of 19% on an annualized basis [8] - Fee-paying AUM (FPAUM) rose to $350 billion, representing a quarter-over-quarter organic growth of 17% on an annualized basis [9] - The secondaries business saw a 29% increase in AUM to nearly $34 billion, with $2.5 billion raised during the quarter [16] Market Data and Key Metrics Changes - In the U.S. direct lending market, the company experienced a year-over-year comparable EBITDA growth of 13% with a low loan-to-value ratio of 43% [25] - European direct lending showed strong performance with a loan-to-value ratio of 49% and interest coverage of 2.3x, indicating healthy credit quality [70] - The company raised over $1.3 billion in infrastructure, including $850 million for its first Japan data center development fund [15] Company Strategy and Development Direction - Ares Management is focused on expanding its wealth distribution network, now partnering with over 80 firms globally, a 33% increase year-over-year [19] - The company is optimistic about the growth potential in the data center and digital infrastructure sectors, leveraging its recent GCP acquisition [30] - Ares aims to capitalize on the increasing demand for private credit and alternative investments, particularly in the wealth channel [41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the business amid market volatility, with strong fundraising and investment performance [7] - The company anticipates a strengthening transaction market environment in the third quarter, supported by lower short-term rates and significant private equity dry powder [28] - Management highlighted the importance of maintaining a balance between capital growth and quality deployment to mitigate risks [60] Other Important Information - The integration of GCP is progressing well, with expected synergies contributing positively to the financial outlook [32] - The company reported a net accrued performance income balance of $1.1 billion, an 8.5% increase from the previous quarter [10] - Ares Management's insurance platform, Aspida, generated over $1.9 billion in new premiums during the quarter, indicating strong demand [22] Q&A Session Summary Question: Discussion on private credit and institutional demands - Management noted that while private credit fundraising has been down sequentially, Ares continues to see institutional appetite for private credit, maintaining fee structures despite market pressures [47][49] Question: Opportunities in alternative investments - Management emphasized their commitment to democratizing access to alternative investments and readiness to offer products as the market opens [56][58] Question: Update on deployment pipelines - Management expressed confidence in the growing pipelines across various business segments, including direct lending and real estate, despite market fluctuations [64] Question: Comparison of European and U.S. direct lending markets - Management indicated that European markets are becoming more attractive due to different rate trajectories, with credit quality remaining stable across both regions [70] Question: Investment in distribution and partnerships - Management confirmed ongoing investments in product development and distribution efforts, particularly in international markets, to drive growth [76][78]

Financial Data and Key Metrics Changes - The company reported fee-related earnings (FRE) of $0.23 per share and distributable earnings (DE) of $0.21 per share for the second quarter [4] - FRE revenues grew by 29%, FRE increased by 23%, and DE rose by 20% year over year on a last twelve months basis [7] - The company raised $14 billion of new capital during the quarter, totaling a record $55 billion over the last twelve months, representing 28% of assets under management a year ago [6][7] Business Line Data and Key Metrics Changes - In alternative credit, the company closed a private offering of $850 million for a new interval fund, reflecting strong investor confidence [8] - The digital infrastructure strategy saw a final close of its third flagship fund at a $7 billion hard cap, with over half the capital already soft circled for investment [9] - The real estate credit strategy deployed over $3 billion year to date, with significant activity in the insurance channel [9] Market Data and Key Metrics Changes - Capital raised from EMEA and APAC investors increased to 23% from 14% two years ago, indicating ongoing globalization of the business [12] - The company raised $5.8 billion of equity in credit during the second quarter, marking a record quarter for the credit platform [24] - The direct lending portfolio gross returns were 3% in the second quarter and 13.5% over the last twelve months, with strong credit quality maintained [26] Company Strategy and Development Direction - The company is focused on expanding its product offerings to meet varying investor needs across the risk-return spectrum, leveraging its scale and incumbency [7] - A new strategic partnership with Voya aims to deliver private market strategies tailored for defined contribution retirement plans, broadening access to alternative investments [20] - The company plans to grow FRE management fees to over $5 billion and FRE to over $3 billion, indicating a strong long-term growth trajectory [34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of their investor base despite market disruptions, highlighting the secular demand for their strategies [12] - The company noted that the investments made over the past year are beginning to bear fruit, with a steady and predictable financial profile [33] - Management emphasized the importance of the current macro environment for direct lending, indicating optimism for future transaction volumes [84] Other Important Information - The company completed the listing of its technology-focused BDC, OTF, which is now the second largest publicly traded BDC by net assets [22] - The company has raised $3.5 billion of capital across strategies that did not exist two years ago, reflecting strong reception for new offerings [10] - The net lease pipeline continues to grow, with nearly $41 billion of transaction volume under letter of intent [28] Q&A Session Summary Question: Can you discuss the asset origination channel and the scaling opportunity in asset-backed finance? - Management highlighted the significant opportunity in asset-backed finance and the integration of their asset-backed business with direct lending, emphasizing their strong origination capabilities [36][40] Question: What are the thoughts on the build-out of a target date fund with Voya? - Management discussed the importance of democratizing access to alternative investments for 401(k) participants and the potential for innovation in this area [50][54] Question: What should be expected regarding the integration and scaling of recently acquired businesses? - Management indicated that integration benefits are already being realized, with strong fundraising numbers and a diversified business model [60][66] Question: Can you comment on the competitive environment in the triple net lease market? - Management stated that their leadership in the net lease market has accelerated, with a growing pipeline and strong trust built with partners [75] Question: How is the direct lending business performing, and what are the expectations for the third quarter? - Management noted strong credit quality and a positive macro environment for direct lending, with signs of increased activity in the market [84]