Ares Management (ARES) 1 Nov 24 2024 Q3 Earnings call transcript

Ares Management Corporation, a leading global investment manager with a diverse range of investment strategies, reported a strong third quarter performance, showcasing robust fundraising and deployment activities. The company's executives, Michael Arougheti and Jarrod Phillips, presented an optimistic outlook for the company, highlighting growth opportunities and strategic acquisitions.

Key Themes and Trends

The macroeconomic environment remains favorable for Ares Management, with fundraising momentum, improving transaction activity, and solid fundamental performance in the underlying investment portfolios. The company has seen a significant increase in global deployment, setting the stage for a record year in 2024. The successful launch of several funds, including the European Direct Lending Fund and the Special Opportunities Fund, underscores the company's market-leading position and ability to attract capital.

Michael Arougheti emphasized the positive impact of lower short-term rates, which are driving higher valuations for rate-sensitive assets and increasing real estate transaction activity. This trend is expected to continue as the market anticipates a rate-cutting cycle, which could broaden out and strengthen deployment across more strategies.

Financial Highlights

Ares Management reported impressive financial results for the third quarter, with growth in management fees, fee-related earnings, and realized income. The company generated strong year-over-year growth across its financial metrics, including 18% growth in management fees, 24% growth in fee-related earnings, and 28% growth in realized income. These figures reflect the company's ability to effectively manage its assets and capitalize on market opportunities.

Fundraising and Deployment

The company raised nearly $21 billion in gross capital during the third quarter, bringing the year-to-date total to over $64 billion. This is a testament to the strong demand for Ares' investment strategies and the company's ability to attract capital from a diverse range of investors. With a record level of available capital and an expectation of an improving market, Ares is well-positioned for strong future deployment.

Key Strategies and Initiatives

Ares Management is capitalizing on the growing trend towards digital healthcare solutions by expanding its presence in the healthcare sector, particularly in telemedicine services. This strategic move reflects the company's ability to identify and capitalize on emerging opportunities in the market. Additionally, the company is focusing on expanding its real estate capabilities globally, with significant investments in industrial, digital infrastructure, and clean energy sectors.

Challenges and Opportunities

Despite the strong performance, Ares Management faces challenges, particularly in the form of evolving market conditions and increased competition. The company is addressing these challenges through strategic acquisitions, such as the recent acquisition of GCP International, which will expand its real assets presence in the strategically important APAC region. This acquisition also aligns with the company's long-term growth objectives and reflects its commitment to delivering value to its investors.

Conclusion

Ares Management Corporation's strong third-quarter performance and strategic initiatives underscore its position as a leading player in the global investment management industry. The company's ability to effectively manage its assets, capitalize on market opportunities, and navigate challenges is a testament to its robust business model and strong leadership. As Ares looks ahead, it is well-positioned to capitalize on growth opportunities and deliver value to its investors.