Ares Management's Q2 2025: Unraveling Contradictions in Private Credit Demand, FRE Margins, and Fundraising Strategies

Private credit supply and demand dynamics, FRE margin expectations, fundraising and deployment dynamics, private credit demand and spreads, and FRE margins and fundraising are the key contradictions discussed in Ares Management Corporation's latest 2025Q2 earnings call.



Strong Financial Performance:
- Ares Management reported strong second quarter results, with AUM increasing to $572 billion, representing a 19% quarter-over-quarter organic growth.
- Fee-paying AUM increased to $350 billion, growing at 17% quarter-over-quarter.
- Growth was driven by successful fundraising, deployment, and market appreciation.

Growth in Private Credit Strategies:
- The company raised over $26 billion in gross commitments, with more than 20 strategies and 40 funds in market.
- Fundraising in private credit strategies helped drive the growth in AUM.
- The growth was supported by strong investment performance and market appreciation.

Integration of GCP Acquisition:
- GCP contributed $103 million in revenues and $34 million in FRE for a 33% FRE margin.
- Although there was a temporary margin compression, GCP's acquisition is expected to contribute significantly to future growth.
- The integration is expected to generate additional leasing, development, and property management fees.

International Demand and Wealth Expansion:
- International demand accounted for more than one-third of the year-to-date flows, with significant contributions from Europe and Asia.
- The company continues to expand its global wealth distribution network, partnering with over 80 firms globally.
- Growth in wealth channels is supported by the intentional design of products across various asset classes, enhancing adoption.