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Ares Management is on course to raise more than $80bn from investors this year, a record sum for the credit-focused investment group, its chief executive predicted on Friday.
Michael Arougheti, the head of the $464bn asset manager, said the investment group was benefiting from “heightened demand” for its funds from both institutional and retail investors, who have been drawn to the high yields on offer in private credit.
That has manifested in the fastest fundraising pace Ares has ever logged, including $20.9bn of investor commitments won in the three months to the end of September.
Arougheti has sought to push the Los Angeles-based asset manager beyond credit, which includes its core franchise that lends directly to companies, a division that has boomed as banks have retrenched from the business.
He recently clinched a deal to buy the international arm of real estate investment manager GLP Capital Partners for up to $5.2bn. The takeover will add $44bn to Ares’s assets when it is finalised and take it towards Arougheti’s goal of reaching $750bn by 2028, which would make it one of the largest publicly traded investment managers in private markets.
The race in the private investment world has manifested in a spate of dealmaking by firms looking to bulk up in private credit, insurance and infrastructure, and in turn, credit-focused shops looking to broaden their businesses.
Investment manager Blue Owl in the third quarter bought insurer Kuvare and asset-backed lender Atalaya. BlackRock closed its $12.5bn takeover of infrastructure investment firm Global Infrastructure Partners last month and is now in talks to buy private credit manager HPS Investment Partners for more than $10bn.
Credit has been viewed as one space where these asset managers can grow without the same limitations they are finding in the traditional leveraged buyout business.
The managers have been able to lend and deploy hundreds of billions of dollars, regardless of the broader market backdrop. Ares said it had deployed just under $30bn in the third quarter, the vast majority through its credit arm. That was the second-best showing in the group’s history and put year-to-date investment activity at nearly $75bn — also on pace for a record.
Kipp deVeer, who runs Ares’s credit business, said on Wednesday that the firm had seen “an acceleration” in buyout activity, and as a result, it was benefiting from a spate of new financings it could underwrite.
Ares generated $339mn of fee-based earnings in the quarter, up 24 per cent from a year earlier, in line with analysts’ expectations. The company also disclosed that the management fees it earns — a closely scrutinised metric — rose 18 per cent from a year prior to $757mn.
