Ares(US:ARES)2025-12-10 14:42Ares Management Conference Call Summary Company Overview - Company: Ares Management (NYSE: ARES) - Assets Under Management: Approximately $600 billion - Core Expertise: Credit, real assets, secondaries, and private equity - 2025 Performance: Sustained industry-leading growth momentum with record fundraising, strong deployment, and investment performance [1][5][12] Key Industry Insights Private Credit Market - Market Sentiment: Investors are moving away from anxiety regarding private credit, supported by strong fundamentals [5][6] - Portfolio Performance: Ares credit portfolios are large, diversified, with non-accrual rates near historic lows; company-level cash flow growing at 10%-12% annually [7] - Market Strength: Deployment in Q4 is strong, with pipelines at or near record levels [7][12] Fundraising Dynamics - 2025 Fundraising: On track for a record year, exceeding $90 billion, with strong demand from institutional and wealth channels [12][13] - 2026 Outlook: Anticipated strong demand for private credit, with larger flagship funds expected to enter the market [14] Alternative Credit Opportunities - ABF Strategies: Ares focuses on both investment-grade (IG) and non-rated asset-backed finance (ABF), with non-rated strategies being more profitable [15][17] - Market Position: Ares has raised three of the four largest ABF funds, indicating strong market presence [16] Deployment and Market Activity - Deployment Overview: Q3 saw over $40 billion deployed; Q4 is expected to continue this momentum across various segments, including infrastructure and real estate credit [21][22] - Market Segmentation: Deployment is broad-based, indicating overall market health, with strong opportunities in asset-backed finance and opportunistic credit [22] Wealth Channel Growth - Wealth AUM Target: Increased target to $125 billion by 2028, with consistent quarterly inflows of about $4 billion [23][24] - Product Evolution: Introduction of new funds in core infrastructure and sports/media, with ongoing demand for geography-specific funds [25] Direct Lending Insights - Advisor Demand: Financial advisors are focusing on durable yield from various asset classes, not solely private credit [26][28] - Market Dynamics: Demand for private credit remains stable despite changing interest rates, driven by excess return generation [29] International Market Dynamics - Distribution Landscape: About 40% of wealth products come from outside the U.S., with a more fragmented and less concentrated market in Europe and Asia-Pacific [30][33] Strategic Partnerships and Growth - Partnership Approach: Ares is cautious about partnerships with traditional managers, focusing on delivering differentiated outcomes for clients [38][39] - 401(k) Market Potential: Ares supports the inclusion of alternative assets in defined contribution plans but emphasizes the need for investor suitability and fiduciary duty considerations [40][42] Acquisition and Integration - GCP Acquisition: Integration is progressing well, with expectations for margin expansion as duplicative infrastructure costs decrease [47][48] - Secondaries Market Growth: Ares is expanding into infra secondaries, with significant growth expected in the coming years [49][51] Financial Outlook - FRE Margin Guidance: Expected margin expansion in 2026 due to successful fundraising and deployment [54][56] - Capital Management Strategy: Ares is considering various options for redeploying free cash flow, including dividends, buybacks, and investments in growth [59][61] Conclusion - Ares Management is positioned for continued growth in the alternative asset management space, with strong fundamentals in private credit, a robust fundraising outlook, and strategic expansion into new markets and product offerings.