Ares Management Q3 2025: Contradictions Unveiled in Fundraising Momentum, Real Estate Supply Constraints, and Private Credit Spreads

Business Commentary:

• Strong Financial Performance:
• Ares Management Corporation reported record management fees of $971 million for Q3 2025, marking a 28% year-over-year increase.

• The strong growth in management fees was driven by significant net deployments, leading to a 21% annualized increase in FPAUM.

• Fundraising and New Capital:

• The company raised more than $30 billion in new capital in Q3, exceeding their previous record of $19.3 billion in Q2.

• This was primarily due to high demand for their private credit strategies and infrastructure funds.

• ** Fee-Paying AUM and Asset Growth:**

• Fee-paying AUM increased to $368 billion, representing a 28% year-over-year growth.

• This increase was due to significant net deployments and strong performance across nearly every major investment strategy.

• Infrastructure and Real Estate Momentum:

• Ares raised over $10 billion across various infrastructure products in the past 12 months, with a notable $5.3 billion pool of capital through their infrastructure debt fund.
• The growth in infrastructure and real estate was driven by strong demand from both institutional and individual investors for differentiated private market solutions.

Contradiction Point 1

Investor Demand and Fundraising Momentum

It involves differing perspectives on investor demand and fundraising momentum, which are crucial for understanding the company's growth and financial health.

What is your outlook for fundraising in 2026 considering campaign fundraising? - Steven Chubak (Wolfe Research)

2025Q3: We anticipate continued strong fundraising performance, supported by our diverse product lineup and expanded distribution efforts. - Michael Arougheti(CEO)

How is the compression of U.S. direct lending spreads affecting institutional demand and fee rates? - Alexander Blostein (Goldman Sachs Group, Inc., Research Division)

2025Q2: Despite recent fundraising being down sequentially in private credit for 3 years, institutional demand remains strong. - Michael J. Arougheti(CEO)

Contradiction Point 2

Real Estate Supply Constraints and Transaction Volumes

It involves expectations regarding real estate supply constraints and transaction volumes, which can impact investment strategies and deployment opportunities.

How do you envision your franchise position in real estate as LP appetite normalizes across institutional and wealth clients? - Alexander Blostein(Goldman Sachs)

2025Q3: Real estate supply constraints are subsiding, supporting rent growth and transaction volumes. Our real estate deployment increased 51% quarter-over-quarter and 78% year-over-year. Given our position, we expect to benefit from increased transaction volumes. - Michael Arougheti(CEO)

Where are the most likely areas for capital deployment if M&A remains low? What is the current dry powder situation? - Alex Blostein(Goldman Sachs)

2025Q1: We have significant dry powder for both real estate and credit. We think that the supply constraints that have been a real headwind over the last couple of years in both real estate and credit are slowly starting to abate and we're starting to see more opportunities. - Michael Arougheti(CEO)

Contradiction Point 3

Fundraising Growth and Strategy

It pertains to the company's strategy and expectations regarding fundraising growth, which is a critical aspect for investors and influences the company's expansion and financial health.

What is your outlook for fundraising in 2026, given the strong momentum and campaign contributions? - Steven Chubak (Wolfe Research)

2025Q3: We anticipate continued strong fundraising performance, supported by our diverse product lineup and expanded distribution efforts. Our fundraising has achieved a higher base number year-over-year, reducing volatility. - Michael Arougheti(CEO)

What drives non-flagship fundraising in 2025, and how will it impact overall fundraising results? - Steven Chubak (Wolfe Research)

2024Q4: We expect a very strong year in 2025 as well, notwithstanding a large campaign fund being under way. We understand the big campaign can obviously help, but the floor for the year is already set and remains above 10 billion. - Michael Arougheti(CEO)

Contradiction Point 4

Private Credit Spreads and Investor Demand

It involves the company's perspective on the impact of lower yields in private credit due to lower base rates on investor demand, which is crucial for understanding the company's growth prospects and market conditions.

How could lower base rates reducing private credit yields impact investor demand and fundraising? - Craig Siegenthaler (BofA Securities)

2025Q3: Investor demand is linked to relative returns compared to traded alternatives, and currently, private credit spreads still offer excess returns. Lower rates typically lead to wider credit spreads and increased transaction activity, which benefits our business. - Michael Arougheti(CEO)

How is the European credit market performing, and what impact is the Trump administration having on growth potential? - Michael Brown (Wells Fargo)

2024Q4: Credit spreads were certainly a little bit tighter in the quarter, but we continue to see good asset growth in a variety of different sectors and in a variety of different strategies. - Blair Jacobson(Executive)