Ares Management (ARES) Barclays 23rd Annual Global Financial Services Conference summary

Macroeconomic and Market Outlook

• Portfolio data shows stable economic conditions, high real estate occupancy, strong NOI growth, and EBITDA growth of 12–13% year-over-year; non-accruals remain below historical averages.

• Deployment activity is robust and expected to strengthen, especially if interest rates are cut in the second half of the year.

• Significant growth in global wealth markets, with the total addressable market expanding from $80T to $140T, driven by rising wealth, favorable regulation, and generational wealth transfer.

• Record capital raising in 2025, with annualized equity capital raises reaching $14B and updated 2028 targets of $17B in annual equity capital, $125B+ AUM, and $800M in management fees.

• Expansion into new markets across Americas, EMEA, and APAC, leveraging a broad product suite and strong global partnerships.

Direct Lending, Private Credit, and Asset-Based Finance Trends

• Direct lending market expanded 14.4% over the past decade and remains strong, supported by scale advantages and global coverage.

• Deployment is broad-based, led by U.S. and European direct lending, with increased activity in secondaries, opportunistic credit, and asset-based finance.

• Credit spreads have tightened due to strong credit quality, not competition, and direct lending offers a 225 basis point excess return over broadly syndicated loans.

• Leading position in asset-based finance with $47.3B AUM, 86 investment professionals, and a realized annualized loss rate below 0.007%.

• Private IG strategies generate a ~235bps premium over corporate IG, with robust sourcing and proprietary risk management.

Investor Demand and Risk Management

• Investor appetite for private credit remains high, driven by excess return and consistent capital deployment.

• Retail and institutional channels are managed symbiotically, balancing perpetual and drawdown funds to optimize dry powder and market participation.

• Private credit risk is often misunderstood; current loan-to-value ratios provide significant equity cushions, and non-accruals are near all-time lows.

• PIK utilization is mostly healthy, with only a small portion related to underperforming companies; concerns about PIK are largely overstated.

• Management uses non-GAAP metrics such as AUM, Fee Related Earnings, and Realized Income to evaluate performance, with reconciliations provided.