Ares Management CEO Discusses M&A and Market Outlook
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 3 days ago
0mins
Source: seekingalpha
- M&A Performance Exceeds Expectations: Ares Management CEO Michael Arougheti stated that approximately 20% of the company's AUM growth has stemmed from transformational acquisitions, particularly the GCP acquisition, which added significant Japanese real estate and data center development businesses, showcasing the company's strategic success in M&A.
- Diversified Strategies Drive Profitability: Arougheti emphasized that while high rates pose challenges in certain areas, the company's diversified strategies enable profitable growth in any rate environment, demonstrating resilience and adaptability in its business model.
- Stability in Private Credit Market: Discussing private credit, Arougheti noted that the loan and high-yield markets are not showing significant stress, with Ares' software portfolio representing about 8% of its private credit book, reflecting effective risk management practices within the company.
- Recovery in Direct Lending Activity: Although direct lending activity in the U.S. was slow in Q1, Arougheti indicated that it is now picking up, signaling a recovery in market demand and the company's proactive positioning in the credit space.
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Analyst Views on ARES
Wall Street analysts forecast ARES stock price to rise
10 Analyst Rating
8 Buy
2 Hold
0 Sell
Strong Buy
Current: 126.000
Low
155.00
Averages
191.40
High
223.00
Current: 126.000
Low
155.00
Averages
191.40
High
223.00
About ARES
Ares Management Corporation is an alternative investment manager offering clients complementary primary and secondary investment solutions across various asset classes. Its segments include Credit Group, Private Equity Group, Real Assets Group, Secondaries Group, and Other. The Credit Group segment manages credit strategies across the liquid and illiquid spectrum, including liquid credit, alternative credit, direct lending and APAC credit. The Private Equity Group segment categorizes its investment strategies as corporate private equity, special opportunities and APAC private equity. The Real Assets Group segment manages comprehensive equity and debt strategies across real estate and infrastructure investments. The Secondaries Group segment invests in secondary markets across a range of alternative asset class strategies, including private equity, real estate, infrastructure and credit. It has operations across North America, South America, Europe, Asia Pacific and the Middle East.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Ares Management CEO Discusses M&A and Market Outlook
- M&A Performance Exceeds Expectations: Ares Management CEO Michael Arougheti stated that approximately 20% of the company's AUM growth has stemmed from transformational acquisitions, particularly the GCP acquisition, which added significant Japanese real estate and data center development businesses, showcasing the company's strategic success in M&A.
- Diversified Strategies Drive Profitability: Arougheti emphasized that while high rates pose challenges in certain areas, the company's diversified strategies enable profitable growth in any rate environment, demonstrating resilience and adaptability in its business model.
- Stability in Private Credit Market: Discussing private credit, Arougheti noted that the loan and high-yield markets are not showing significant stress, with Ares' software portfolio representing about 8% of its private credit book, reflecting effective risk management practices within the company.
- Recovery in Direct Lending Activity: Although direct lending activity in the U.S. was slow in Q1, Arougheti indicated that it is now picking up, signaling a recovery in market demand and the company's proactive positioning in the credit space.
See More
Ares Management Raises $850M for First Real Estate Debt Fund
- Fundraising Progress: Ares Management has raised approximately $850 million to date for its first closed-end real estate debt fund, aiming for a total of $1.5 billion, indicating strong market demand for real estate debt investments.
- Market Context: The fund focuses on property debt investments in the U.S. and Europe, reflecting a shift towards debt funds by real estate investors in response to banks retreating after the 2008 financial crisis.
- Return Potential: Rising interest rates have pressured property values, making debt strategies more attractive to investors, although concerns about private asset valuations and commercial real estate defaults persist in the market.
- Future Outlook: The fund's final close is expected in the first half of 2027, further solidifying Ares Management's position in the real estate debt market and signaling potential growth opportunities ahead.
See More
Ares Management Forms JV with Scion Group for Student Housing Investment
- Portfolio Acquisition: Ares Management's real estate fund has formed a joint venture with The Scion Group to invest in off-campus student housing, successfully acquiring a 12-property portfolio with 7,578 beds for approximately $910 million, highlighting the strong demand characteristics in this sector.
- Sustained Market Demand: Scion Group CEO Bronstein stated that the student housing market continues to demonstrate resilient demand, and the formation of the joint venture not only expands Ares's investment platform but also underscores its ability to execute on complex investment opportunities.
- Enhanced Execution Capability: Andrew Holm, head of U.S. diversified equity for Ares Real Estate, emphasized that this transaction showcases Ares's capability to execute large, complex opportunities, leveraging its scale, sector experience, and operational relationships to strengthen its market position.
- Optimistic Industry Outlook: With the growing demand for off-campus student housing, the collaboration between Ares and Scion is expected to yield long-term revenue growth opportunities for both parties, reflecting confidence in this niche market.
See More
Scion and Ares Form Joint Venture for Student Housing
- Significant Investment: Scion and Ares have formed a joint venture focusing on high-quality off-campus student housing in the U.S., acquiring a 12-property portfolio valued at approximately $910 million, which provides 7,578 beds, demonstrating strong confidence in the student housing market.
- Market Leadership: Scion's portfolio now exceeds 105,000 beds, making it the world's largest owner of off-campus student housing, reflecting the company's dominant position and ongoing expansion capabilities in the rapidly growing student housing sector.
- Capital Deployment Success: Since 2016, Scion has deployed over $10.2 billion in capital, including $3.4 billion in the past 24 months, indicating its active role and significant market influence in the sector.
- Industry Consolidation Trend: This transaction not only marks the first collaboration between Scion and Ares but also reflects broader structural changes in the student housing market, attracting more institutional capital into this demand-driven real estate sector.
See More
Ares Management Discloses New Investment Stakes
- Portfolio Expansion: Ares Management disclosed new investments in its quarterly 13-F filing, including a $53.3 million stake in medical device manufacturer Integer Holdings, indicating a strategic move into the healthcare sector.
- First-Time Investments: The firm also made initial investments in business development companies like BlackRock TCP Capital and Carlyle Secured Lending, further diversifying its portfolio and strengthening its influence in the small and mid-sized lending market.
- Increased Holdings: Ares boosted its stakes in 17 other holdings, including Golub Capital BDC and Blue Owl Technology Finance, demonstrating ongoing confidence in the BDC sector despite pressures on lending standards.
- Asset Liquidation: The only sale recorded by Ares was the liquidation of its stake in New Mountain Finance, which sold a $477 million asset portfolio in February, reflecting Ares's strategy to adjust its investment portfolio in response to market changes.
See More
Wealthy Investors Cut Private Equity Investments Amid Concerns
- Investment Reduction Trend: In the first quarter, wealthy individuals significantly reduced their investments in private equity funds, indicating growing concerns about valuations and credit quality across the private capital sector, with KKR and Ares attracting less capital to their evergreen vehicles compared to last year, reflecting a lack of market confidence.
- Private Credit Decline: Private credit experienced the steepest fundraising decline, dropping 30% from both the previous quarter and the same period last year, closely tied to Blue Owl's decision to halt redemptions at its inaugural retail fund, leading to an overall decline in alternative investment fundraising to $180 billion for 2026.
- Increased Redemption Requests: Fears about AI's impact on software companies have driven mounting investor redemption requests from private credit vehicles, with EQT executives stating that without the private credit issues, the firm would have raised over €1 billion more in the quarter, highlighting the sector's vulnerabilities.
- Infrastructure and Real Estate Growth: Despite the overall downward trend, quarterly inflows to evergreen property funds rose over 25% year-on-year, indicating that certain asset classes remain favored by investors in uncertain market conditions, potentially providing support for future investment opportunities.
See More
Ares Management CEO Discusses M&A and Market Outlook
- M&A Performance Exceeds Expectations: Ares Management CEO Michael Arougheti stated that approximately 20% of the company's AUM growth has stemmed from transformational acquisitions, particularly the GCP acquisition, which added significant Japanese real estate and data center development businesses, showcasing the company's strategic success in M&A.
- Diversified Strategies Drive Profitability: Arougheti emphasized that while high rates pose challenges in certain areas, the company's diversified strategies enable profitable growth in any rate environment, demonstrating resilience and adaptability in its business model.
- Stability in Private Credit Market: Discussing private credit, Arougheti noted that the loan and high-yield markets are not showing significant stress, with Ares' software portfolio representing about 8% of its private credit book, reflecting effective risk management practices within the company.
- Recovery in Direct Lending Activity: Although direct lending activity in the U.S. was slow in Q1, Arougheti indicated that it is now picking up, signaling a recovery in market demand and the company's proactive positioning in the credit space.
See More
Ares Management Raises $850M for First Real Estate Debt Fund
- Fundraising Progress: Ares Management has raised approximately $850 million to date for its first closed-end real estate debt fund, aiming for a total of $1.5 billion, indicating strong market demand for real estate debt investments.
- Market Context: The fund focuses on property debt investments in the U.S. and Europe, reflecting a shift towards debt funds by real estate investors in response to banks retreating after the 2008 financial crisis.
- Return Potential: Rising interest rates have pressured property values, making debt strategies more attractive to investors, although concerns about private asset valuations and commercial real estate defaults persist in the market.
- Future Outlook: The fund's final close is expected in the first half of 2027, further solidifying Ares Management's position in the real estate debt market and signaling potential growth opportunities ahead.
See More
Ares Management Forms JV with Scion Group for Student Housing Investment
- Portfolio Acquisition: Ares Management's real estate fund has formed a joint venture with The Scion Group to invest in off-campus student housing, successfully acquiring a 12-property portfolio with 7,578 beds for approximately $910 million, highlighting the strong demand characteristics in this sector.
- Sustained Market Demand: Scion Group CEO Bronstein stated that the student housing market continues to demonstrate resilient demand, and the formation of the joint venture not only expands Ares's investment platform but also underscores its ability to execute on complex investment opportunities.
- Enhanced Execution Capability: Andrew Holm, head of U.S. diversified equity for Ares Real Estate, emphasized that this transaction showcases Ares's capability to execute large, complex opportunities, leveraging its scale, sector experience, and operational relationships to strengthen its market position.
- Optimistic Industry Outlook: With the growing demand for off-campus student housing, the collaboration between Ares and Scion is expected to yield long-term revenue growth opportunities for both parties, reflecting confidence in this niche market.
See More
Scion and Ares Form Joint Venture for Student Housing
- Significant Investment: Scion and Ares have formed a joint venture focusing on high-quality off-campus student housing in the U.S., acquiring a 12-property portfolio valued at approximately $910 million, which provides 7,578 beds, demonstrating strong confidence in the student housing market.
- Market Leadership: Scion's portfolio now exceeds 105,000 beds, making it the world's largest owner of off-campus student housing, reflecting the company's dominant position and ongoing expansion capabilities in the rapidly growing student housing sector.
- Capital Deployment Success: Since 2016, Scion has deployed over $10.2 billion in capital, including $3.4 billion in the past 24 months, indicating its active role and significant market influence in the sector.
- Industry Consolidation Trend: This transaction not only marks the first collaboration between Scion and Ares but also reflects broader structural changes in the student housing market, attracting more institutional capital into this demand-driven real estate sector.
See More
Ares Management Discloses New Investment Stakes
- Portfolio Expansion: Ares Management disclosed new investments in its quarterly 13-F filing, including a $53.3 million stake in medical device manufacturer Integer Holdings, indicating a strategic move into the healthcare sector.
- First-Time Investments: The firm also made initial investments in business development companies like BlackRock TCP Capital and Carlyle Secured Lending, further diversifying its portfolio and strengthening its influence in the small and mid-sized lending market.
- Increased Holdings: Ares boosted its stakes in 17 other holdings, including Golub Capital BDC and Blue Owl Technology Finance, demonstrating ongoing confidence in the BDC sector despite pressures on lending standards.
- Asset Liquidation: The only sale recorded by Ares was the liquidation of its stake in New Mountain Finance, which sold a $477 million asset portfolio in February, reflecting Ares's strategy to adjust its investment portfolio in response to market changes.
See More
Wealthy Investors Cut Private Equity Investments Amid Concerns
- Investment Reduction Trend: In the first quarter, wealthy individuals significantly reduced their investments in private equity funds, indicating growing concerns about valuations and credit quality across the private capital sector, with KKR and Ares attracting less capital to their evergreen vehicles compared to last year, reflecting a lack of market confidence.
- Private Credit Decline: Private credit experienced the steepest fundraising decline, dropping 30% from both the previous quarter and the same period last year, closely tied to Blue Owl's decision to halt redemptions at its inaugural retail fund, leading to an overall decline in alternative investment fundraising to $180 billion for 2026.
- Increased Redemption Requests: Fears about AI's impact on software companies have driven mounting investor redemption requests from private credit vehicles, with EQT executives stating that without the private credit issues, the firm would have raised over €1 billion more in the quarter, highlighting the sector's vulnerabilities.
- Infrastructure and Real Estate Growth: Despite the overall downward trend, quarterly inflows to evergreen property funds rose over 25% year-on-year, indicating that certain asset classes remain favored by investors in uncertain market conditions, potentially providing support for future investment opportunities.
See More
