Ares(US:ARES)2021-04-29 20:47Financial Data and Key Metrics Changes - Ares Management reported AUM exceeding $200 billion, marking a nearly 40% year-over-year growth compared to Q1 2020 [8][23] - Fee-related earnings (FRE) totaled $128.5 million, an increase of 38% year-over-year, with a record margin of 38.4%, reflecting a nearly 500 basis point improvement [21][8] - Management fees reached $327 million, up approximately 20% from Q1 2020 [21] Business Line Data and Key Metrics Changes - The company raised over $10 billion in capital during the quarter, including $3.7 billion for the Ares Pathfinder Fund and $1.7 billion for the Real Estate Opportunity Fund III, which exceeded its target by 13% [9][10] - Deployment for the quarter was strong, with over $10 billion of gross invested capital, including nearly $9 billion from drawdown funds, representing a 60% increase from Q1 2020 [13] Market Data and Key Metrics Changes - The European direct lending fund ACE V raised €11 billion, surpassing its €9 billion target and representing a 70% increase compared to the predecessor fund [11] - Ares Capital Corp. raised $1.6 billion in debt and equity, while Ares Commercial Real Estate raised $640 million, indicating strong growth prospects in the commercial mortgage sector [10] Company Strategy and Development Direction - Ares Management aims to maintain a growth rate of 15% or more in FRE for the foreseeable future, driven by strong fundraising, deployment, investment performance, and realizations [7][8] - The company is focused on expanding its product offerings and geographical reach to provide differentiated investment solutions, particularly in the alternative asset management landscape [27][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the constructive market backdrop and the company's ability to capitalize on strong fundraising and deployment opportunities as the economy recovers [7][8] - The company anticipates continued growth in its private market alternatives as investor appetite increases [12][27] Other Important Information - Ares Management declared a quarterly common dividend of $0.47 per share, a 17.5% increase from the previous year [5][6] - The company announced the acquisition of Landmark Partners, expected to close in the current quarter, which is seen as timely given the growth in the secondary market for alternatives [16][17] Q&A Session Summary Question: Initiatives in the high net worth channel - Management highlighted the established brand in the high net worth segment and the growth in AUM in this channel, which has seen a 42% CAGR over the last five years [31] Question: Update on M&A priorities - Management indicated that M&A would focus on acquiring capabilities or relationships that complement existing strengths, with a particular interest in infrastructure and real estate [34][36] Question: Pace of deployment related to incentive-eligible AUM - Management noted that the market is recovering post-pandemic, leading to healthy transaction activity, and expects continued deployment opportunities across the platform [38] Question: Competitive landscape in private credit in Europe - Management emphasized the origination advantages and scale of capital as key competitive moats, with no significant impact on spreads or credit quality despite increased competition [42][44] Question: Update on ACOF V performance - Management reported strong performance in ACOF V, particularly in healthcare and energy sectors, with expectations for continued increases in IRR [49] Question: Capital management and plans for retiring preferred equity - Management stated that the recent equity raise positions the company well for liquidity, allowing for the retirement of preferred equity and support for both organic and inorganic growth opportunities [54] Question: Contribution of Ares in seed or anchor capital - Management reiterated a balance sheet-light model, with individual commitments from team members increasing, reducing the need for balance sheet capital [73]