Ares' $410 Billion Bet: Why AI, Private Credit and Secondaries Matter Now

Ares is redirecting growth toward credit, secondaries and AI

Ares' roughly $410 billion fee-paying asset base is not just getting bigger; it is shifting toward strategies that may matter more if markets grow harder to navigate.

The firm recently reported a record $36 billion fundraising, pushed AUM to approximately $671 billion, and grew roughly $410 billion of fee-paying assets 17% from a year earlier. Management said deployment opportunities are improving across credit, infrastructure and secondaries, while AI is helping improve investment decisions and operating efficiency. That mix matters because slower public-market exits are increasing the appeal of private solutions. With IPO and M&A activity slowing, companies are staying private longer, which strengthens the case for private credit and secondaries as ways to keep capital moving.

The main debate still centers on private credit. Bulls see wider spreads, less crowding and signs that lending activity is rebuilding. Bears see a tougher credit cycle, higher stress and the risk that easier inventory comes with worse losses. Ares' near-term case works only if better pricing and stronger execution compensate for a harder backdrop.

Private credit remains the core engine

Credit still offers the steadier fee base

Private credit is still Ares' core cash engine. The market sits at $1.7 trillion in AUM and is expected to exceed $3 trillion by 2028. For a scaled manager, that matters because the model is relatively straightforward: originate debt, collect the spread, and reinvest cash flow as borrowers stay funded. That can be a steadier fee compounder than waiting for clean IPOs or premium merger exits.

The current setup is what makes the asset class interesting. Ares said investors see wider spreads and less competition, and management also said direct lending activity is beginning to recover. In practical terms, lenders may have more room than they did a year ago to price risk more precisely and avoid the hottest deals.

Secondaries add liquidity and portfolio flexibility

Secondaries have moved beyond the "exit valve" role

Secondaries address a similar capital-allocation need, but on a faster timeline. As secondary transactions in 2025 surged 41% to about $226 billion, the market has started to look less like an emergency exit and more like a routine operating channel. Investors can address liquidity needs, trim overallocations and rebalance without waiting for a slow primary close or a clean asset sale.

That changes what a competitive edge looks like. The next winners may not be the firms that only originate at the primary stage; they may be the firms that can buy, sell, bundle and reprice assets more intelligently. A private credit market of $1.7 trillion in AUM creates enough inventory for a real secondary marketplace to function. If a manager can move that inventory better than peers, it can help protect returns when the cycle gets sticky.

Why the pair matters in this cycle

Together, the two strategies cover different parts of the cycle. Credit provides long-tail spreads; secondaries provide optionality when markets become uneven or illiquid. That helps explain why Ares says investors still see opportunity despite years of growth in private markets.

The main risk is still credit quality. Private credit is entering 2026 in a most challenging environment since 2008, and more than $100 billion has been raised into distressed and opportunistic credit funds. If stress broadens, inventory should become more available, but realized losses could rise too.

AI matters only if it improves underwriting, sourcing and margins

Ares is positioning AI as a tool that can make the platform sharper just as markets get tougher. In private credit and secondaries, the advantage is not just capital; it is processing more signals, faster and with better discipline. Ares says it is using AI to improve investment decisions and operating efficiency, which matters most when markets near their peaks and valuation discipline becomes more important.

What AI would need to deliver

The business case is straightforward. If AI helps across sourcing, underwriting and portfolio monitoring, it should show up in execution rather than in marketing language. The clearest proof points would be:

• better deal sourcing and screening in secondary inventory
• more consistent underwriting and fewer post-close surprises
• earlier detection of borrower stress
• higher team capacity and cleaner operating margins as the firm stays large

The verdict

Ares does not need AI to remain investable; its record fundraising already shows demand for the platform. But in a market where secondary transactions in 2025 surged 41% to about $226 billion and more than $100 billion has flowed into distressed and opportunistic credit strategies, technology could help leaders pull away from smaller peers.

The thesis weakens if fundraising cools, secondaries fail to sustain their recent momentum, or credit quality deteriorates faster than pricing improves. Those are the signals that matter most from here.