Ares Earnings Results Show AUM Surpassing $0.5 Trillion as Diversified Model Proves Resilient Amid Market Volatility

What's Happening

Ares Management Corporation (NYSE: ARES) reported strong first quarter 2025 results with management fees up 18% year-over-year, fee-related earnings (FRE) up 22%, and after-tax realized income per share up 36% to $1.09 (beating estimates by $0.15). The company reached a significant milestone by surpassing $0.5 trillion in assets under management, reaching $546 billion (including $45 billion from the recent GCP International acquisition).

Why It Matters

• Despite recent market volatility following April tariff announcements and geopolitical events, Ares' business model demonstrated resilience with record Q1 fundraising and strong deployment

• The company's focus on private credit (72% of AUM, with 92% in senior loans) positions it advantageously during economic uncertainty as public markets become less reliable

• The completed GCP acquisition significantly bolsters Ares' Real Assets business, especially in data centers and logistics

• Ares maintains record dry powder ($142 billion) with $99 billion of AUM not yet paying fees, providing significant future fee growth potential

Big Picture Drivers

• Rising investor interest in private credit as traditional capital providers retreat during market volatility

• Growing demand for institutional-quality alternative products in global wealth management channels

• Increasing importance of data center capacity and power generation infrastructure investments

• Expanding opportunities in secondaries as traditional exit channels become less available

• Global geographic diversification in fundraising, with 30%+ of wealth demand coming from Europe and Asia

The Key Moves

• Raised over $20 billion in gross new capital commitments across strategies in Q1, with 45% coming from outside credit and growing momentum in real estate, infrastructure, secondaries, and private equity

• Deployed over $31 billion in Q1, with improving gross-to-net deployment ratio of 49% in private credit strategies, showing Ares' ability to capitalize on less competition

• Expanded wealth management channels globally with record $3.7 billion in quarterly equity commitments and $5 billion total commitments across perpetual semi-liquid products

• Launched two new wealth products: an infrastructure fund and a sports, media and entertainment product

By The Numbers

• AUM: $545.9 billion, up 27% YoY

• Fee Related Earnings: $367.3 million, up 22% YoY

• After-tax Realized Income Per Share: $1.09, up 36% YoY

• Available Capital (Dry Powder): $142 billion

• Quarterly Dividend: $1.12 per share, up 20% YoY

Key Trends to Watch

• Performance of Ares' credit portfolio as companies navigate potential tariff impacts

• Timing of European-style waterfall performance income as market volatility could extend asset durations

• Evolution of M&A activity following current slowdown and its impact on deployment opportunities

• Growth trajectory in wealth management channel despite broader economic concerns

• Integration progress and margin improvement from the GCP acquisition

Analyst Sentiment

• Positive: Strong fundraising momentum across strategies despite market volatility (Craig Siegenthaler - Bank of America)

• Supportive: Asset-light business model with match-funded capital provides stability during market uncertainty (Alex Blostein - Goldman Sachs)

• Optimistic: Significant dry powder positions Ares to capitalize on investment opportunities during volatile markets (Steven Chubak - Wolfe Research)

• Constructive: Growing wealth management channel diversifies fundraising sources (Kyle Voigt - KBW)

• Watching: Potential impacts of tariffs and economic uncertainty on deployment and portfolio companies (Ken Worthington - JPMorgan)

• Neutral: Integration progress and fee margin impact of GCP acquisition (Benjamin Budish - Barclays)

Key Questions

• How will prolonged market volatility affect Ares' European-style waterfall performance income timing and amount?

• What specific areas will benefit most from market dislocation based on prior crisis performance?

• How sustainable is the current growth in private wealth capital raising, particularly if economic conditions worsen?

• Will the data center and logistics real estate segments maintain momentum despite broader economic concerns?

• Can Ares maintain deployment pace if M&A activity remains subdued through 2025?

Key Quotes

• "We believe a significant advantage for Ares is that we operate very broad and diversified investment strategies with wide ranging mandates across large global investable markets." - Michael Arougheti

• "When traditional capital providers and public markets retrench, the stability and certainty of the private markets becomes even more valuable." - Michael Arougheti

• "Despite the economic uncertainty, we remain optimistic about 2025 and beyond. In the past, our business has proven to be very resilient in more challenging markets and we have no reason to believe that this time will be any different." - Michael Arougheti

The Wrap

Ares Management delivered robust Q1 2025 results and demonstrated that its diversified business model is well-positioned to navigate market volatility. With record available capital, defensive positioning in its credit portfolios, and strong fundraising across channels, the company appears prepared to capitalize on investment opportunities arising from market disruption. Management remains confident in the firm's ability to generate consistent deployment and growth throughout market cycles, as it has historically performed well during periods of dislocation.