Ares Management Targets $750B AUM by 2028 as Private Credit Grows in Low-Rate, Regulatory-Driven Market

Ares Management Corp. is positioning itself at the forefront of a seismic shift in global finance, spearheading the private credit sector’s rapid expansion as it targets $750 billion in assets under management by 2028 [1]. The firm, which spun off from Apollo Global Management in the 1990s, has carved a niche by providing non-traditional lending solutions to alternative asset managers like KKR and Apollo, funding buyouts of middle-market companies while taking occasional equity stakes. This strategy has aligned with broader structural trends reshaping the capital markets landscape, including declining public market listings, regulatory pressures on traditional banks, and a surge in demand for alternative yield sources amid historically low interest rates.

The private credit market’s growth reflects a strategic reallocation of capital by institutional investors. Pension funds, endowments, and high-net-worth individuals are increasingly channeling funds into direct lending, mezzanine financing, and distressed debt, seeking returns unattainable in traditional fixed-income markets. Ares’ expertise in middle-market lending—where it leverages sector-specific knowledge and data analytics—has allowed it to outcompete traditional banks in niche markets. However, the sector’s rapid expansion has introduced risks. As non-bank lenders like Ares and Apollo scale, competition has compressed spreads, squeezing profit margins. Analysts highlight that while the diversification of funding sources benefits borrowers, an overreliance on private credit could amplify systemic vulnerabilities if defaults rise during economic downturns [1].

Regulatory scrutiny is another looming challenge. Unlike banks, private credit firms operate in a lightly regulated environment, but policymakers are beginning to question the concentration of risk in non-bank lenders. Ares’ aggressive growth strategy, which involves deploying capital from long-term institutional investors, hinges on the stability of these capital sources. Rising interest rates, in particular, could strain the sector’s long-term viability, as investors reassess risk-return profiles.

The rise of firms like Ares underscores a broader transformation in finance. Alternative asset managers are redefining credit markets through specialized expertise and flexible deal structures, displacing traditional banks in many middle-market transactions. Yet the sector’s sustainability depends on balancing innovation with risk management. Ares’ leadership, including its CEO and two co-presidents, is navigating this dynamic by emphasizing scalability and operational discipline. Meanwhile, the term “masters of the universe”—coined by Tom Wolfe in 1987 to describe Wall Street’s elite—now applies to private credit executives shaping capital flows behind the scenes [1].

The private credit boom also raises questions about accessibility and transparency. While firms like Apollo have begun offering tokenized funds and ETFs to democratize access, critics argue that opacity in private markets creates information asymmetry, limiting retail investors’ ability to participate. For now, the sector’s advantages—such as tailored financing and higher yields—continue to attract capital. But as the market matures, its long-term success will depend on managing systemic risks and adapting to evolving regulatory frameworks.

Ares’ ambitions highlight the duality of private credit as both an opportunity and a potential risk. Its growth trajectory mirrors the sector’s broader ascent, illustrating how alternative finance is redefining traditional boundaries. Yet the path forward remains uncertain, with challenges like liquidity crunches and overleveraging posing significant hurdles. For institutions and policymakers, the task is to harness the sector’s innovation while mitigating its vulnerabilities, ensuring that the “masters of the universe” operate within a resilient and transparent financial ecosystem [1].

Source:

[1] [Fortune - Ares Management private equity credit] (https://fortune.com/2025/07/28/ares-management-private-equity-credit-michael-arougheti-kkr-apollo/)