Ares Management Corp (ARES)

A. Company Overview

Ares Management Corporation stands as a prominent global alternative investment manager, recognized for its disciplined investment approach and comprehensive range of services. Established in 1997, the firm has witnessed remarkable growth, boasting assets under management (AUM) of approximately $418.8 billion as of December 31, 2023. The company has expanded its footprint to include over 35 offices across more than 15 countries, directly employing over 2,850 professionals.

Ares Management caters primarily to a diverse investor base, which includes over 2,300 direct institutional relationships alongside a significant retail investor contingent through publicly traded funds, sub-advised accounts, and non-traded vehicles. The firm has demonstrated a commitment to delivering attractive risk-adjusted returns and has maintained a strong track record of performance throughout various market cycles.

Business Structure and Strategy

Ares Management is organized into distinct yet complementary investment groups, each focused on specific strategies including Credit, Private Equity, Real Assets, and Secondaries. This diversified business structure allows the firm to strategically capitalize on various market opportunities and generative investments while maintaining a solid foundation for stakeholder value creation.

Investment Strategy

Ares Management employs a multi-faceted investment strategy that prioritizes risk-adjusted returns across multiple asset classes. The firm’s understanding and expertise extend through various investment structures, from senior debt to common equity, which enables comprehensive assessments of relative value in markets characterized by fluctuating conditions.

The firm’s widespread utilization of proprietary research across more than 55 industries aids in effectively assessing market conditions and enhancing due diligence processes, thereby informing investment strategies that align with core performance objectives. This disciplined approach, enhanced by robust sourcing models and collaborative culture, manifests considerable advantages in identifying and structuring investments.

Integrated Investment Platform

Ares operates as an integrated investment platform that fosters a culture of collaboration among its investment professionals. This network facilitates knowledge sharing and resource optimization, thereby enhancing investment analysis, deployment of capital, and overall fund performance.

The firm’s investment process leverages insights from active investments across multiple sectors including over 1,800 portfolio companies, 1,400 alternative credit investments, 505 real estate properties, and numerous limited partnership interests. Each investment group's committees are comprised of members from various investment teams, promoting consistent evaluation processes through qualitative and quantitative risk assessments.

Investment Groups

• Credit Group: This division represents one of the largest managers of credit strategies in the non-investment grade sector, managing $284.8 billion in AUM across 270 funds as of December 31, 2023. The Credit Group employs a value-oriented lens across multiple debt strategies, targeting opportunities that often involve direct lending, liquid credit, and alternative credit solutions.
• Private Equity Group: Managing $39.1 billion in AUM across 65 funds, the Private Equity division capitalizes on investments in both healthy and distressed market conditions. Its focus emphasizes growth buyouts and structured equity solutions which position investments for long-term success.
• Real Assets Group: Controlling $65.4 billion in AUM dynamics, this group encompasses real estate and infrastructure investments, deploying equity and debt strategies with a strong focus on sustaining value throughout various market cycles.
• Secondaries Group: This group delves into secondary markets and holds $24.7 billion in AUM. The investment team is adept in recapitalizing and restructuring fund interests, providing customized solutions to meet the diverse needs of limited partners.

Product Offering

Ares Management’s extensive product offering caters to the increasing demand for alternative investments. The firm manages a growing array of funds that span multiple asset classes and strategies. This diversification not only enables effective risk management but also facilitates appealing returns across market environments.

The institutional investor base comprises corporate and public pension funds, insurance companies, sovereign wealth funds, and endowments, among others. A notable component includes separately managed accounts (SMAs), amounting to $91.1 billion of direct institutional AUM, which provide enhanced transparency and control for investors.

Growth and Development

Ares has demonstrated consistent growth over the years, achieving a compound annual growth rate (CAGR) of 26% in AUM over the past decade. The firm continuously seeks to expand its geographic presence, diversify its product offerings, and enhance its distribution channels. Recent initiatives have included strategic acquisitions, such as the integration of Crescent Point Capital, enhancing capabilities within the APAC private equity space.

Key Highlights for 2023

In 2023, Ares Management marked significant milestones, raising $74.5 billion in gross new capital commitments across more than 125 investment vehicles. The firm invested a total of $68.1 billion, reflecting its continued strong performance and investor enthusiasm for alternative investment strategies.

Competitive Landscape

The investment management industry is characterized by intense competition, where Ares competes not only for investor capital but also for high-quality investment opportunities. The firm distinguishes itself through a strong focus on investor relationships, a diverse product range, and strategic advantages drawn from its integrated platform, robust sourcing models, and reputation for delivering consistent performance.