Ares Management is a leading global alternative asset manager with approximately $197 billion of assets under management as of March 31, 2021. The firm is known for its expertise and performance across a diversified range of investment strategies, including credit, private equity, real estate and strategic initiatives.
Credit
Ares Management has a strong reputation in credit investing, managing investment vehicles across the liquid and illiquid spectrum. This includes publicly traded vehicles like business development companies as well as private funds focused on leveraged loans, direct lending, structured credit and opportunistic credit strategies. Some key facts about Ares Management’s credit platform:
- Over $76 billion in credit assets under management as of March 31, 2021
- One of the largest managers of collateralized loan obligations (CLOs)
- A leading direct lender to middle market companies in the U.S. and Europe
- Deep experience in stressed and distressed credit investing
Ares has demonstrated an ability to generate attractive risk-adjusted returns across market cycles within credit through its disciplined approach and rigorous credit analysis. The firm aims to capitalize on market inefficiencies and relative value opportunities while managing risk.
Private Equity
In private equity, Ares Management pursues majority or shared-control investments, principally in under-capitalized middle market companies that have significant growth potential. Key facts:
- Over $28 billion in private equity assets under management
- Targets investments typically between $100 million and $500 million
- Focuses on traditional buyouts, recapitalizations, family-owned businesses and corporate partnerships
- Industry expertise in areas like healthcare, financial services, software and business services
The firm has developed a reputation for helping to drive operational improvements at portfolio companies to accelerate growth. Since inception in 2003, Ares’ U.S. private equity funds have generated an aggregate gross IRR of 31% as of September 30, 2020.
Real Estate
The Ares real estate group targets investments across various property types and strategies, including multifamily, office, logistics, retail, hotel and land. Key facts about the real estate platform:
- Over $23 billion in real estate assets under management
- Invests across the capital structure from mezzanine debt to preferred and common equity
- Targets repositioning and development opportunities
- Vertically integrated manager with in-house capabilities for sourcing, underwriting, closing, developing and managing
Ares leverages its experience and hands-on approach to create value throughout all phases of the investment process within real estate. The group has consistently executed on compelling investment opportunities through changing economic environments.
Strategic Initiatives
The firm’s Strategic Initiatives group focuses on differentiated investment opportunities that fall outside the scope of traditional credit, private equity and real estate strategies. Key facts include:
- Over $7 billion in strategic initiatives assets under management
- Areas of focus include aviation leasing, energy infrastructure, royalties, specialty finance and transportation
- Flexible, opportunity-driven approach allows pursuing investments based on market dislocations
- Invests across the capital structure in both public and private markets globally
This flexible mandate allows Ares to capitalize on its vantage point across markets to source and execute on compelling investments that others may overlook. The Strategic Initiatives portfolio has provided diversification and contributed incremental returns for the firm.
Integrated Investment Approach
Ares operates with a differentiated, integrated investment approach that looks for risk-adjusted returns across market cycles. Some key aspects include:
- Credit-oriented philosophy – Emphasis on preserving capital with comprehensive credit analysis across all strategies
- Consistent value creation – Focused on driving operational improvements and strategic initiatives at portfolio companies and assets
- Aligned incentives – Investment professionals have a significant amount of personal capital invested in Ares funds
- Local presence – Extensive network of over 20 offices providing insights and access to deals globally
This philosophy has been ingrained across Ares’ investment teams and strategies over time, enabling the firm to navigate different market environments successfully.
Strong Track Record
Ares has an established track record of deploying capital opportunistically across market cycles and generating strong, risk-adjusted returns for investors. Some key figures demonstrating Ares’ performance include:
- 13% net return on AUM since inception through December 31, 2020
- Approximately $124 billion in gross realizations in credit strategies since 2004
- 31% gross IRR generated by U.S. private equity funds since inception in 2003 through September 30, 2020
- 11% average net return generated across U.S. real estate funds since 2009
This performance has enabled Ares to continue fundraising and expanding its assets under management significantly over time. The firm’s long-term track record through varying macroeconomic conditions reinforces its reputation as an astute investment manager.
Experienced Management Team
Ares benefits from an experienced, cohesive leadership team that sets the firm’s strategic vision and reinforces its collaborative culture. Some key figures include:
- Co-founders Tony Ressler and John Kissick have led the firm since inception in 1997
- Michael Arougheti and David Kaplan are Co-CEOs, with decades of combined industry experience
- The senior management team averages over 20 years of investment industry experience per person
This management continuity, partnered with deep resources across the organization, has enabled Ares to continue expanding strategically while maintaining its alternative investment management roots. There is strong alignment between management, investment professionals and investors.
Commitment to ESG
Ares has incorporated a comprehensive environmental, social and governance (ESG) approach into its investment process and portfolio management. Some ESG-related initiatives include:
- Becoming a UN PRI signatory in 2017
- Founding the ESG & Business Strategy group in 2020
- Integrating ESG factors into investment decisions across strategies
- Publishing annual ESG reports for stakeholders
- Pursuing impact-oriented investments focused on areas like renewable energy, affordable housing and financial inclusion
Ares views effective ESG practices as both a risk mitigation strategy and value creation opportunity. Its commitment to responsible investment reflects the changing landscape and investor focus on sustainability.
Growth Prospects
As one of the largest alts managers globally, Ares continues to be well-positioned for growth in assets under management and earnings. Some positive factors include:
- Increasing investor allocations to alternatives driven by lower expected returns for traditional asset classes
- Ability to raise follow-on funds across strategies with long-term track record
- Expanding product set and geographic reach over time
- Shifting to a corporate structure provides more permanent capital and flexibility
- Strong credit performance through economic cycles enables consistent fundraising
Management aims to drive growth both organically and through acquisitions in an effort to expand Ares’ capabilities and strategies. The firm’s strong performance, experienced team, integrated approach and competitive position as one of the largest alts managers globally reinforce its growth trajectory.
Conclusion
In summary, Ares Management has established itself as a leading global alternative investment manager by executing on compelling opportunities across market cycles. The firm is known for its integrated investment philosophy, value creation focus, deep credit expertise, strong track record of risk-adjusted returns and experienced management team. Ares’ platform provides significant scope to continue growing assets under management across its diversified set of credit, private equity, real estate and strategic investment strategies. The firm’s reputation, competitive positioning and performance make Ares Management well-placed to remain a top alts manager going forward.