Ares Management: The Alternative Asset Empire

I. Introduction & The Ares Advantage

Picture this: It's 1997, and while the world obsesses over dot-com startups and irrational exuberance, five finance veterans quietly gather in Los Angeles with a radically different vision. They're not chasing the next hot IPO or building a trading algorithm. Instead, they're focused on the unglamorous, overlooked corners of finance—leveraged loans, distressed debt, the stuff that makes most investors' eyes glaze over. Their initial capital? A $1.2 billion collateralized debt obligation vehicle. Their advantage? They saw opportunity where others saw tedium.

Today, Ares Management Corporation (NYSE: ARES) commands $572 billion in assets under management, making it one of the world's leading alternative investment managers. The firm offers clients complementary primary and secondary investment solutions across credit, real estate, private equity, and infrastructure asset classes. But here's what's remarkable: unlike peers who built their empires through buyouts and headline-grabbing deals, Ares constructed its fortress by becoming the lender to its competitors—a strategy so counterintuitive it bordered on genius.

The Ares story isn't just about growth; it's about timing, patience, and the power of being first. When banks retreated after 2008, Ares was ready with capital. When private equity needed financing for middle-market deals, Ares was there with solutions. When investors sought yield in a zero-rate world, Ares had already built the infrastructure to deliver it. This is the story of how a credit-focused spinoff from Apollo became a global alternative asset powerhouse—not by competing in the buyout wars, but by financing them.

Three themes define the Ares journey: the first-mover advantage in private credit before it was fashionable, a collaborative investment model that turns potential competitors into partners, and the strategic use of patient, permanent capital vehicles that transformed the firm from asset manager to asset owner. What unfolds is a masterclass in building an alternative investment platform for the 21st century—one loan, one relationship, one strategic acquisition at a time.

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II. Origins: The Apollo Years & Wall Street Foundations

The Drexel Burnham Lambert alumni network reads like a Who's Who of modern finance, but the story of Ares Management begins with five men who understood something their peers didn't: the real money wasn't in competing for buyouts—it was in financing them. Antony Ressler co-founded Apollo Global Management in 1990 and Ares Management in 1997, while John H. Kissick was also a partner at Apollo before founding Ares with Ressler and Bennett Rosenthal, who joined from Merrill Lynch's global leveraged finance group.

Ressler's journey began at Drexel, where he eventually reached senior vice president in the high yield bond department, before co-founding Apollo with Leon Black and other Drexel veterans including Marc Rowan, Josh Harris, and Michael Gross. The Apollo years from 1990 to 1997 weren't just formative—they were a masterclass in distressed investing and contrarian thinking. While the world chased growth stories, Apollo and its West Coast affiliate focused on the wreckage of the savings and loan crisis, buying distressed debt at cents on the dollar.

But here's where the story gets interesting. Michael Arougheti, who would later become Ares CEO, was cutting his teeth at RBC Capital Partners from 2001 to 2004 as Managing Partner of the Principal Finance Group, overseeing middle-market leveraged loans and subordinated debt—having previously worked at Indosuez Capital where he was a Principal responsible for leveraged transactions. This wasn't glamorous work. Middle-market lending was the province of regional banks and specialty finance companies, not the domain of Wall Street stars.

The convergence of these backgrounds—Ressler's high-yield expertise from Drexel and Apollo, Rosenthal's leveraged finance experience from Merrill Lynch, and later Arougheti's middle-market lending focus—created a unique DNA. They weren't building another buyout shop; they were constructing something far more interesting: a lending platform that would serve the very firms they once competed against.

Although the founders had technically completed a spinout with Ares' formation in 1997, they maintained a close relationship with Apollo over the first five years and operated as the West Coast affiliate of Apollo. This arrangement was both blessing and constraint—providing deal flow and credibility while limiting independence. The early Ares team learned Apollo's playbook intimately: how to evaluate distressed situations, structure complex transactions, and most importantly, how to think about downside protection in every investment.

The intellectual foundation they built during these years would prove invaluable. They observed firsthand how private equity firms struggled to find reliable financing partners for their deals. Banks were fickle, pulling back at the first sign of trouble. The high-yield bond market was volatile and transaction-dependent. What the market needed was patient, flexible capital from partners who understood the private equity business from the inside. This insight—born from years of watching deals from both sides of the table—would become the cornerstone of the Ares strategy.

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III. The Spinoff: Breaking Free (1997–2002)

The year 1997 marked a pivotal moment in alternative asset management history, though few recognized it at the time. Ares Management was founded by Antony Ressler and John H. Kissick, both partners at Apollo, along with Bennett Rosenthal from Merrill Lynch's global leveraged finance group, to manage a $1.2 billion market value collateralized debt obligation vehicle. This wasn't a dramatic departure with press releases and fanfare—it was more like a carefully orchestrated dance where partners slowly drift apart while maintaining the rhythm.

The initial structure was deliberately modest. A CLO vehicle might seem unremarkable today, but in 1997, it represented something revolutionary: permanent capital dedicated to credit investing. Unlike traditional private equity funds with their ten-year lifecycles and J-curves, this vehicle could compound capital indefinitely. The early Ares funds, Ares I and II, were structured as market value CLOs, while Ares III through X evolved into cash flow CLOs. Each iteration refined the model, teaching the team how to manage credit risk across cycles while generating consistent returns.

Operating as Apollo's West Coast affiliate provided crucial advantages during these formative years. Deal flow came naturally—when Apollo looked at a buyout, Ares could evaluate the debt opportunity. When Apollo passed on a deal for equity returns, Ares might still find the credit attractive. This symbiotic relationship allowed Ares to build track record and relationships without the brutal competition faced by standalone startups.

But constraints chafed. Being an affiliate meant certain deals were off-limits, certain strategies couldn't be pursued. More fundamentally, Ressler and his team saw opportunities that didn't fit Apollo's distressed-to-control model. They wanted to be lenders, not owners. They wanted to finance deals, not fight for them. The philosophical divergence grew wider as the dot-com bubble inflated—while Apollo continued pursuing control investments, Ares saw opportunity in providing credit to cash-flowing businesses ignored by the equity markets' obsession with growth.

In 2002, Ares completed a corporate spin-off from Apollo management. The timing was no accident. Apollo faced its own challenges, including regulatory scrutiny from the Executive Life controversy that had dogged the firm since the early 1990s. The post-dot-com environment created unique opportunities for credit investors as equity valuations collapsed but many businesses still needed capital. The spinoff allowed both firms to pursue their distinct strategies without conflict or confusion.

What emerged from this five-year chrysalis period was a firm with a unique positioning: the operational knowledge of a private equity firm, the risk management discipline of a credit investor, and relationships across the entire alternative asset ecosystem. While others would spend years trying to break into the club, Ares had been born inside it, educated by it, and now stood ready to serve it in an entirely new way.

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IV. The Credit Revolution: Pioneering Private Credit (2000s)

The revolution began not with fanfare but with a simple observation: middle-market companies—those with $10 million to $100 million in EBITDA—were orphaned by the financial system. Too small for the syndicated loan market, too complex for traditional bank lending, these businesses formed the backbone of the American economy yet struggled to access capital. Arougheti had witnessed this firsthand at Indosuez Capital from 1994 to 2001, where he originated and structured leveraged transactions, before joining RBC where middle-market lending to private equity portfolio companies became an increasing priority despite never being a focus for big institutions.

Enter Ares Capital Corporation in 2004—a masterstroke of financial engineering that would reshape the entire industry. ARCC wasn't just another fund; it was a publicly-traded business development company (BDC), a permanent capital vehicle that could originate and hold loans without the redemption pressures faced by traditional funds. The structure was elegant: public shareholders provided permanent equity capital, leverage amplified returns, and the closed-end nature meant no forced selling during downturns.

The genius lay in the alignment. Unlike banks that originated loans to sell them, or CLOs that were constrained by ratings requirements, ARCC could hold loans to maturity, work with borrowers through difficulties, and capture the full economic value of the credit. This patient capital approach resonated with private equity sponsors who were tired of fair-weather banking relationships. When a portfolio company needed additional capital for an acquisition or to weather a downturn, Ares could provide it without committee delays or regulatory handwringing.

The numbers tell the story of explosive growth. From its IPO in 2004 at $15 per share with less than $500 million in assets, ARCC would grow to become one of the largest BDCs in existence. But size alone wasn't the achievement—it was the model's replication across the industry. Suddenly, every major alternative asset manager wanted a private credit platform. The "shadow banking" system that regulators would later fret about was being born, one bilateral loan at a time.

What made Ares different was its collaborative approach. Rather than competing with private equity firms for deals, Ares became their partner, financing buyouts and recapitalizations with flexible capital solutions. This strategy turned potential competitors into allies. When KKR or Blackstone won a buyout, Ares might provide the debt financing. When a smaller PE firm needed a reliable lending partner, Ares was there with a solution. The firm was building something unprecedented: a lending franchise with proprietary deal flow generated by relationships rather than cold-calling.

Elisabeth de Fontenay, a Duke Law professor studying private credit's rise, captured the phenomenon perfectly: "Financing for a lot of companies has become very incestuous." But this "incest" was actually a feature, not a bug. The tight relationships between private equity and private credit created information advantages, reduced transaction costs, and aligned incentives in ways the traditional banking system never could. By the mid-2000s, Ares had cracked the code on private credit before most firms even understood the game had changed.

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V. Navigating the Financial Crisis (2007–2009)

May 2007 should have been a moment of triumph. Abu Dhabi Investment Authority acquired a minority interest in Ares without any voting or governance rights—sovereign wealth fund validation at its finest. Instead, it marked the beginning of the most treacherous period in modern financial history. Within months, Bear Stearns' hedge funds would collapse, subprime mortgages would implode, and the entire global financial system would teeter on the brink. For a credit-focused firm like Ares, this wasn't just a crisis—it was an existential test.

The ADIA investment proved prescient in ways neither party could have anticipated. It provided Ares with patient capital and global credibility just as traditional funding sources evaporated. While competitors scrambled for liquidity, Ares had the backing of one of the world's largest sovereign wealth funds—a signal to markets that smart money still believed in the model. But capital alone doesn't navigate crisis; expertise does.

What set Ares apart during 2008-2009 wasn't just survival—it was the ability to play offense while others played defense. Banks, crippled by toxic mortgage assets and regulatory scrutiny, retreated from lending markets en masse. The syndicated loan market, which had financed the buyout boom, essentially froze. Private equity firms found themselves with portfolio companies desperate for capital but no traditional sources available. This was Ares' moment.

The firm's credit DNA proved invaluable. Unlike equity investors who watched valuations plummet helplessly, credit investors could work with borrowers, restructure debt, and often emerge with better economics than before. Ares didn't just weather the storm; it expanded into the vacuum left by retreating banks. Middle-market companies that previously wouldn't have considered non-bank financing suddenly had no choice. The "de-banking" trend that would define the next decade wasn't a gradual evolution—it was a violent dislocation that Ares was uniquely positioned to exploit.

The numbers tell a story of transformation, not just survival. While traditional banks wrote down hundreds of billions in losses, Ares' credit strategies generated positive returns through the crisis. The firm's AUM actually grew as institutional investors, desperate for yield in a zero-rate world, discovered that private credit offered returns traditional fixed income couldn't match. The financial crisis didn't break Ares—it made it indispensable.

Looking back, the strategy that paid off wasn't complex: maintain discipline, provide solutions when others couldn't, and view distress as opportunity rather than disaster. By 2010, as markets stabilized and competitors licked their wounds, Ares had established itself as a permanent fixture in the new financial architecture—not as a shadow bank operating in darkness, but as a legitimate alternative to traditional lending, operating in broad daylight with the backing of some of the world's most sophisticated investors.

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VI. Going Public & Platform Building (2010–2015)

April 1, 2010 marked a watershed moment. ARCC completed its merger with Allied Capital Corporation, becoming the largest business development company measured by market capitalization and total portfolio companies under management. This wasn't just an acquisition—it was a coronation. Allied Capital, once the crown jewel of the BDC sector with its storied history dating back to 1958, had been brought to its knees by the financial crisis and accounting scandals. Allied Capital shareholders agreed to a takeover that valued the BDC at $3.47 per share, a discount of nearly 90% from its peak valuation in 2007.

The Allied acquisition represented everything Ares had been building toward: scale, legitimacy, and the infrastructure to dominate middle-market lending. The combined entity managed approximately $12 billion in committed capital, operated with 61 dedicated investment professionals, and instantly became the undisputed leader in the BDC space. More importantly, it absorbed Allied's relationships, deal flow, and institutional knowledge—assets that money couldn't buy in normal times.

But the real transformation came in May 2014 when Ares Management completed its initial public offering and is currently listed on the New York Stock Exchange. The decision to go public wasn't about ego or exit strategies—it was about currency and credibility. Public markets provided access to permanent capital, a liquid currency for acquisitions, and most critically, the transparency and governance structure that institutional investors demanded.

The IPO timing was perfect. Traditional asset managers were struggling with fee compression and outflows to passive strategies. Meanwhile, alternative managers like Ares offered something different: uncorrelated returns, higher yields, and exposure to private markets that index funds couldn't replicate. The public markets rewarded this differentiation, providing Ares with a premium valuation that would fuel its next phase of growth.

During this period, Ares also executed strategic additions of two investment teams, Indicus Advisors and Wrightwood, enhance our experience in alternative credit and real estate debt investing. These weren't random acquisitions but targeted capability builds. Indicus brought expertise in structured credit and CLOs, while Wrightwood added real estate debt capabilities. Each addition expanded Ares' toolkit, allowing it to offer more solutions to more clients across more situations.

The platform expansion wasn't just horizontal—it was vertical too. Ares launched inaugural publicly traded funds for our Credit and Real Estate groups: Ares Dynamic Credit Allocation Fund (NYSE:ARDC) and Ares Commercial Real Estate Corporation (NYSE:ACRE). These vehicles democratized access to strategies previously available only to institutions, while providing Ares with additional permanent capital vehicles to deploy its expertise.

By 2015, the transformation was complete. Ares had evolved from a credit-focused spinoff to a diversified alternative asset platform with multiple business lines, public and private vehicles, and the scale to compete with anyone. The firm that had started with a single CLO now managed strategies across the capital structure, from senior secured loans to equity co-investments. This wasn't just growth—it was the methodical construction of an alternative investment ecosystem where every piece reinforced the others.

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VII. The Acquisition Machine: Scaling Through M&A (2016–Present)

The transformation from organic growth to acquisition-driven expansion began in earnest with a blockbuster deal. In May 2016, Ares Management announced a plan to buy asset management company American Capital; the US$3.4 billion deal closed in January 2017. This wasn't just another BDC acquisition—it was a statement of intent. American Capital, despite its troubles during the financial crisis, brought $12.3 billion in pro forma assets and relationships with 314 portfolio companies. The deal structure itself was complex: $14.41 per share from Ares Capital, $2.45 per share from American Capital's sale of its mortgage management business, and $1.20 per share in transaction support from Ares Management—a creative financing that minimized dilution while maximizing value.

The acquisition strategy accelerated dramatically. On January 30, 2020, Ares Management acquired a controlling stake in the Hong Kong–based alternative investment firm, SSG Capital Management. The deal was formally completed on July 2, 2020, and SSG Capital Management now operates under the name Ares SSG. This wasn't about planting a flag in Asia—it was about acquiring deep, local expertise in Asian credit markets at a time when Western capital was flooding into the region. SSG brought relationships, deal flow, and most importantly, the cultural understanding necessary to navigate complex Asian restructurings.

The pace of acquisitions intensified as Ares identified gaps in its platform. Ares executes strategic acquisitions of Landmark Partners and Black Creek Group, resulting in the launch of its Secondaries Group, the enhancement of its industrial real estate investment capabilities and the launch of Ares Wealth Management Solutions. Each acquisition followed a clear logic: Landmark brought secondaries expertise just as the secondary market was exploding; Black Creek added industrial real estate capabilities as e-commerce drove warehouse demand to record levels; the wealth management solutions platform positioned Ares to tap the massive retail market seeking alternative investments.

The crown jewel of recent acquisitions came in October 2024. Ares Management acquired the international business of GLP Capital Partners (GCP), excluding its Greater China business, for approximately $3.7 billion in cash and $1.9 billion in Ares Class A common stock. This deal instantly transformed Ares into a global logistics and real estate powerhouse, adding expertise in the fastest-growing segment of real estate at precisely the moment when supply chain reconfiguration and nearshoring were reshaping global trade patterns.

But perhaps the most intriguing move was cultural rather than financial. In December 2024, Ares acquired 10% of the Miami Dolphins of the National Football League. It was one of the first deals allowing outside investors to buy into an NFL franchise after league owners voted to allow new investors in August. This wasn't vanity—it was strategic positioning. Sports franchises offer uncorrelated returns, cultural cachet that opens doors, and most importantly, a platform for building relationships with ultra-high-net-worth individuals who are increasingly important to alternative asset managers.

The acquisition strategy wasn't about buying assets under management for the sake of scale. Each deal brought capabilities, relationships, or market access that would take years to build organically. The pattern was clear: identify secular trends (Asian growth, logistics boom, wealth management democratization), acquire best-in-class operators in those spaces, and integrate them into the Ares ecosystem where cross-selling and operational synergies could multiply value. This wasn't empire building—it was platform construction, methodically assembling the pieces needed to compete in every corner of the alternative investment universe.

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VIII. Modern Era: Multi-Strategy Dominance

Today's Ares Management bears little resemblance to the focused credit shop that spun out of Apollo nearly three decades ago. The transformation is staggering: As of June 30, 2025, Ares Capital Corporation's portfolio had a fair value of approximately $27.9 billion, and consisted of 566 portfolio companies backed by 247 different private equity sponsors. But ARCC is just one piece of a much larger mosaic.

The Credit Group has evolved into a behemoth, managing approximately $377.1 billion of assets as of June 30, 2025. This isn't just direct lending anymore—it's a full-spectrum credit platform spanning liquid credit, structured products, alternative credit, and specialty finance. The group operates like a multi-strategy hedge fund crossed with a commercial bank, deploying capital across every corner of the credit markets from investment-grade corporates to distressed debt in emerging markets.

Real Estate, once an afterthought, now commands $108.7 billion in AUM as of June 30, 2025. The platform spans public and private equity and debt strategies across the U.S., Europe, and Japan. The GLP acquisition transformed this division from opportunistic investor to strategic operator, controlling vast logistics networks that serve as the backbone of global commerce. This isn't just owning buildings—it's owning the infrastructure of the modern economy.

The Private Equity Group, with approximately $23.8 billion of assets under management as of June 30, 2025, might seem small by comparison, but it's strategically vital. Unlike the mega-buyout funds at Blackstone or KKR, Ares focuses on the middle market and special situations where its credit expertise provides an edge. The group doesn't compete for trophy assets; it finds value in complexity, distress, and situations where patient capital and operational expertise can unlock value.

Infrastructure, the newest major vertical with approximately $21.1 billion in AUM as of June 30, 2025, represents Ares' bet on the energy transition and digitalization megatrends. The strategy seeks to originate and manage diverse, high-quality debt and equity investments in private infrastructure assets—from renewable energy projects to data centers to transportation networks. This isn't following the crowd into infrastructure; it's building proprietary deal flow through the firm's existing relationships and expertise.

The Secondaries Group, born from the Landmark acquisition, manages approximately $33.9 billion as of June 30, 2025, investing in the secondary markets across private equity, credit, real estate, and infrastructure. This platform provides liquidity to an inherently illiquid market, buying stakes from investors who need early exits while providing new investors access to mature portfolios. It's a strategy that turns the J-curve problem of private markets into an opportunity.

What makes this multi-strategy approach powerful isn't just diversification—it's the synergies from this multi-asset strategy that provide professionals with insights into industry trends, access to significant deal flow, and the ability to assess relative value. When Ares evaluates a company, it can provide equity, senior debt, mezzanine financing, or any combination thereof. When it enters a new market, it can deploy capital across the entire capital structure. This isn't just cross-selling—it's creating bespoke solutions that no single-strategy firm could match.

The collaborative model extends beyond investment strategies to fundraising and client service. A pension fund that invests in Ares credit funds might also allocate to real estate or infrastructure. A wealth management platform distributing Ares interval funds might expand to private credit or secondaries. Each client relationship becomes a gateway to multiple products, reducing customer acquisition costs while deepening wallet share.

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IX. Playbook: The Ares Investment Philosophy

Since our inception in 1997, we have adhered to a disciplined investment philosophy that focuses on delivering compelling risk-adjusted investment returns throughout market cycles. This isn't corporate boilerplate—it's the DNA that differentiates Ares from its peers. While others chase returns, Ares obsesses over risk. While competitors celebrate home runs, Ares focuses on batting average. This credit-first mentality, inherited from the firm's origins in distressed debt and leveraged finance, permeates every investment decision across every strategy.

The philosophy begins with downside protection. Every investment starts with a simple question: "How do we not lose money?" This might seem obvious, but in practice, it leads to fundamentally different behavior. Ares structures deals with multiple ways to win but, more importantly, limited ways to lose. In private credit, this means robust covenants, conservative leverage, and deep collateral coverage. In private equity, it means buying at reasonable multiples with clear paths to value creation beyond multiple expansion. In real estate, it means focusing on cash-flowing assets with defensive characteristics rather than speculative development.

The flexible capital approach transforms Ares from vendor to partner. When a private equity firm approaches Ares, the conversation isn't "Do you want debt or equity?" but rather "What solution best achieves your objectives?" This might mean unitranche debt that simplifies the capital structure, preferred equity that provides flexibility, or a complex package that evolves as the company grows. This solutions-oriented mindset creates stickier relationships and better economics—borrowers pay a premium for certainty and flexibility.

Long-term thinking manifests most clearly in Ares' use of permanent capital vehicles. The firm operates multiple BDCs (business development companies), REITs, and interval funds that provide permanent or long-duration capital. These structures allow Ares to hold investments through cycles, work with management teams through challenges, and capture the full value creation rather than being forced to sell at arbitrary fund life endpoints. ARCC, for instance, can hold a loan for seven years, restructure it twice, and ultimately convert to equity if that maximizes value—flexibility that traditional funds simply don't have.

The synergies from this multi-asset strategy provide professionals with insights into industry trends, access to significant deal flow, and the ability to assess relative value. This isn't just information sharing—it's pattern recognition at scale. When the real estate team sees distress in retail properties, the credit team knows to scrutinize retail borrowers more carefully. When the private equity team identifies a trend toward industry consolidation, the credit team can position to finance the roll-ups. This informational advantage compounds over time, creating a moat that scale alone cannot replicate.

The power of this philosophy becomes most apparent during market dislocations. In March 2020, when COVID-19 froze markets, Ares didn't panic or retreat. The firm deployed capital aggressively, providing rescue financing to quality companies facing temporary liquidity crunches. The credit-first mentality meant Ares could quickly assess which companies would survive versus which faced existential threats. The flexible capital approach allowed it to structure creative solutions. The permanent capital vehicles provided dry powder without redemption pressures. The result: some of the best vintage years in the firm's history.

This disciplined approach to investment has created a virtuous cycle. Conservative underwriting leads to consistent returns. Consistent returns attract stable capital. Stable capital enables patient investing. Patient investing generates superior risk-adjusted returns. And superior returns attract more capital, starting the cycle anew. It's not flashy, it's not exciting, but it works—compounding wealth quietly while others blow up spectacularly.

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X. Growth Strategy & Future Vision

The ambition is breathtaking in its scope: ARES expects to increase assets under management (AUM) to more than $750 billion by the end of 2028. This indicates an increase of more than 75% from the 2023-end reported figure of $419 billion. For context, this growth target would add more AUM in five years than most alternative managers accumulate in their entire history. But this isn't wishful thinking—it's a carefully orchestrated strategy built on three pillars: credit expansion, wealth management democratization, and insurance platform development.

The company will focus on credit, wealth and insurance for its growth. The credit opportunity is straightforward—private credit has roughly doubled since 2020 and is expected to grow to more than $2.5 trillion by 2029. As a first mover in this meteoric space, Ares is near the top of the pack, with nearly $360 billion of assets in private credit alone as of March. The secular tailwinds are powerful: continued bank retrenchment, growing comfort with private credit among institutional investors, and the structural need for flexible capital solutions in an increasingly complex world.

The wealth management push represents a fundamental reimagining of alternative investments. In the wealth business, Ares aims to increase assets under management to about $100 billion in 2028, up from about $25 billion now. This isn't just creating interval funds for retail investors—it's building an entirely new distribution ecosystem. Ares Wealth Management Solutions, born from strategic acquisitions, provides the infrastructure to deliver institutional-quality alternatives to individual investors through financial advisors. The democratization of alternatives isn't just a growth strategy; it's a generational wealth transfer opportunity as $84 trillion moves from baby boomers to millennials over the next two decades.

The insurance platform, Aspida, represents perhaps the most intriguing growth vector. The strategy is expected to grow AUM to $50 billion by 2028 from $14 billion at the first-quarter 2024 end. Insurance companies need yield to meet their long-term liabilities, and traditional fixed income no longer provides sufficient returns. Ares offers a solution: originate and manage private credit assets specifically tailored to insurance company needs, with the duration, credit quality, and regulatory treatment they require. It's a symbiotic relationship—insurers get yield, Ares gets permanent capital.

Geographic expansion underpins everything. The firm operates with 3,000 employees in 40 offices across 20 countries, but the real growth is in Asia-Pacific and Europe. The SSG acquisition provided the platform for Asian expansion, while organic growth in Europe has accelerated as banks there face even more stringent regulations than their U.S. counterparts. Each new geography isn't just about gathering assets—it's about building local relationships that generate proprietary deal flow.

The financial targets reflect this confidence: Realized income is projected to increase, witnessing a CAGR of 20-25% through 2028 to $3.5 billion at the mid-point, indicating growth from the $1.22 billion reported at 2023 end. Ares projects annual dividend per share to increase, seeing a CAGR of 20% to more than $7.66 by the end of 2028, implying a rise from the $3.08 reported at 2023 end. These aren't just growth targets—they're a promise to shareholders that scale will translate into cash returns.

The strategy acknowledges risks too. Competition is intensifying as every major bank and asset manager launches private credit funds. Regulatory scrutiny is increasing as regulators worry about systemic risk in non-bank lending. Credit cycles haven't disappeared—the next downturn will test whether private credit's growth has come at the expense of underwriting standards. But Ares' response is to get bigger, more diversified, and more institutionalized—to become too important to fail in the best sense of the term.

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XI. Leadership & Culture

The leadership structure at Ares defies conventional corporate hierarchy. In February 2025, the firm appointed Kipp deVeer and Blair Jacobson to the newly created positions of Co-Presidents, effective immediately. This triumvirate structure—CEO Michael Arougheti flanked by two co-presidents—isn't corporate bureaucracy; it's strategic redundancy. Each leader brings complementary expertise: Arougheti with his credit markets mastery and strategic vision, deVeer with his U.S. direct lending dominance, and Jacobson with his European platform expertise.

The story of these three men working together spans three decades. Arougheti noted: "I have had the pleasure of working closely with Kipp and Blair over the past 30 years, witnessing firsthand their ability to innovate and build highly successful businesses at the firm." This isn't just longevity—it's the kind of partnership that allows for brutal honesty, implicit trust, and the ability to disagree violently in private while presenting a unified front in public.

Bennett Rosenthal, Co-Founder and Co-Chairman, remains involved in strategic direction and investment oversight, providing institutional memory and relationships that date back to the firm's founding. His presence ensures continuity—a living link to the Apollo days and the early vision that created Ares. Meanwhile, Mitchell Goldstein and Michael Smith continue to serve as Co-Heads of Ares' Credit Group, which they have co-led since 2017. This deep bench isn't accidental—it's carefully cultivated succession planning that ensures no single departure can destabilize the firm.

Michael Arougheti's evolution from credit specialist to CEO exemplifies the Ares trajectory. Starting at Kidder Peabody's M&A group, moving through Indosuez Capital and RBC's Principal Finance Group, he joined Ares in 2004 with deep middle-market lending expertise. His rise wasn't meteoric—it was methodical, mastering each business before moving up. This patient development creates leaders who understand the business from the ground up, not MBA-wielding generalists parachuted in from consulting firms.

Ares Management fosters a culture of respect, collegiality and collaboration, and we encourage our employees' individual professional growth. This sounds like corporate speak, but the evidence suggests otherwise. The firm's 3,000 employees across 40 offices maintain remarkably low turnover for the industry. The collaborative model isn't just about investment strategies—it's about compensation structures that reward teamwork over individual glory, promotion paths that value institutional knowledge over external hires, and a culture that celebrates the deal that didn't get done because the risk was too high.

The sports investments reveal another dimension of leadership style. In December 2024, Ares acquired 10% of the Miami Dolphins of the National Football League. Earlier in 2024, Arougheti, Goldstein, and Smith became part of the Baltimore Orioles ownership group. These aren't vanity purchases—they're relationship platforms. Sports ownership provides access to ultra-high-net-worth individuals, creates cultural cachet that opens doors, and offers a non-threatening environment to build relationships that eventually become business partnerships.

Building bench strength through strategic hires and acquisitions has created a leadership pipeline that extends deep into the organization. Each major acquisition brings not just assets but talent—leaders who've built businesses and understand entrepreneurship. The firm doesn't just acquire companies; it acquires entrepreneurs and gives them platforms to continue building. This approach creates a culture of builders rather than managers, owners rather than employees.

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XII. Competition & Market Position

The alternative asset management industry has become a three-horse race at the top—Blackstone with over $1 trillion in AUM, Apollo approaching $700 billion, and KKR at roughly $600 billion. Ares, with $572 billion, sits just outside this triumvirate, but its positioning is deliberately different. While the giants compete for mega-buyouts and trophy assets, Ares has carved out a distinct niche: the firm is among the largest players in the private debt market.

The differentiation strategy is subtle but powerful. Ares, initially created within the private equity behemoth Apollo by its cofounder, Tony Ressler, to focus on distressed credit. As Ares moved into private equity in the 2000s, Ressler wanted to build a credit unit that could help finance deals. He ended up hiring Arougheti, deVeer, Smith, and Goldstein, along with 8 other RBC employees, and a management contract from RBC allowed them to take their book of business. Knocking around the world of high finance, Ares' new hotshots had picked up all the tools. But it was spotting and seizing a massive new market that would vault them into the big leagues.

The collaborative model creates a moat that's difficult to replicate. Ares became a leader of the burgeoning practice, providing loans to the private equity portfolio companies of counterparts like Apollo and KKR rather than competing against them for buyouts. This positioning transforms potential competitors into partners. When Blackstone wins a $10 billion buyout, Ares might provide $2 billion in financing. When Apollo needs to refinance a portfolio company, Ares is there with a solution. This symbiotic relationship creates steady deal flow without the winner-take-all dynamics of buyout competition.

The race for scale in alternatives has accelerated dramatically. Every major bank—Goldman Sachs, Morgan Stanley, JPMorgan—has launched or acquired alternative asset management platforms. Traditional asset managers like BlackRock and State Street are building private market capabilities. Insurance companies are either building or partnering with alternative managers. Yet despite this proliferation of competition, "For all the talk of people getting into it and raising funds," he boasts, "No one is really making any traction or inroads into taking share from the incumbents."

The competitive advantages compound over time. Scale provides lower cost of capital, allowing Ares to win deals on price. Reputation attracts the best talent, enabling superior execution. Permanent capital vehicles provide flexibility that traditional funds lack. The multi-strategy platform creates information advantages that single-strategy competitors can't match. Each advantage reinforces the others, creating a virtuous cycle that's increasingly difficult for new entrants to break.

But challenges from banks re-entering markets represent a real threat. As interest rates normalize and bank balance sheets strengthen, traditional lenders are becoming more aggressive. Regional banks that retreated after 2008 are returning to middle-market lending. European banks, having cleaned up their balance sheets, are competing more aggressively for leveraged finance business. The syndicated loan market, moribund for years, is showing signs of life. For the first time in over a decade, private credit faces real competition from traditional lenders.

The response has been to move further into complexity and specialization. While banks can compete on vanilla senior loans, they struggle with unitranche structures, covenant-lite documentation, and speed of execution that private credit provides. Ares' ability to provide $500 million in 48 hours for a take-private transaction is something no bank committee structure can match. The firm's willingness to hold loans for seven years through multiple restructurings provides value that banks, constrained by regulatory capital requirements, simply cannot offer.

Market share data tells the story. In U.S. middle-market direct lending, Ares consistently ranks in the top three by volume. In European direct lending, the firm has built one of the largest platforms from scratch in just over a decade. In Asia, the SSG acquisition instantly created a top-tier platform. But market share in private markets isn't like consumer goods—it's about quality, not just quantity. Ares' portfolio quality, as measured by default rates and recovery values, consistently outperforms industry averages.

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XIII. Bear & Bull Case

Bear Case: The Gathering Storm Clouds

Interest rate sensitivity poses the most immediate threat to Ares' business model. The firm has thrived in a declining and low-rate environment where investors desperate for yield flocked to private credit. As rates normalize above 5%, the relative attractiveness of private credit diminishes. Why accept illiquidity risk for 8-10% returns when investment-grade bonds yield 6%? The math that drove $2 trillion into private credit could reverse just as quickly.

Credit cycle concerns loom larger as we move further from the last recession. Private credit has never been tested at scale through a genuine credit crisis. The 2020 COVID disruption was brief and met with unprecedented fiscal and monetary support. The next recession won't see $5 trillion in stimulus. When defaults spike and recovery values plummet, will private credit's vaunted flexibility translate into superior outcomes, or will the lack of trading markets and price discovery create a doom loop of mark-to-market losses?

Competition from syndicated loan markets represents a structural threat, not a cyclical one. Banks have spent fifteen years rebuilding capital and refining risk management. Regulatory relief under changing political winds could unleash traditional lenders' competitive advantages: cheaper funding costs, established relationships, and the ability to provide full banking services. If banks return to aggressive middle-market lending, private credit's growth could stall abruptly.

Integration risks from rapid M&A multiply with each acquisition. The GCP deal adds $100 billion in real estate AUM, but real estate requires different expertise than credit. Cultural integration, system harmonization, and retention of key talent become exponentially harder with scale. One bad acquisition, one culture clash, one mass exodus of talent could unravel years of careful building.

Regulatory changes affecting private markets represent a slow-moving but potentially devastating risk. Regulators increasingly worry about systemic risk in non-bank lending. Enhanced reporting requirements, leverage limitations, or investor protection rules could fundamentally alter the economics of private credit. The industry has thrived in regulatory shadows—harsh light might not be kind.

Fee compression in mature strategies is already visible. As every asset manager launches private credit funds, fees are falling. The 2-and-20 model has given way to 1.5-and-15, and management fee-only structures are proliferating. Ares' premium pricing depends on performance differentiation that becomes harder to maintain as the industry matures and strategies commoditize.

Bull Case: The Secular Tailwinds

The "de-banking" trend is secular, not cyclical. Basel III and its successors make traditional bank lending structurally less profitable. Banks face leverage ratios, stress tests, and living wills that don't apply to private credit. This regulatory arbitrage isn't a loophole—it's intentional policy designed to move risk from systemically important banks to diversified institutional investors. Ares benefits from regulatory architecture that isn't changing regardless of political winds.

First-mover advantage in the growing private credit market compounds daily. 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. Relationships built over decades, expertise developed through cycles, and infrastructure investments create barriers that new entrants cannot quickly overcome. Being first matters more in relationship businesses than commodity ones.

The diversified platform reduces concentration risk in ways that aren't immediately apparent. When credit markets freeze, real estate might thrive. When private equity struggles, infrastructure could boom. This isn't just diversification—it's optionality. The ability to shift capital and resources to the most attractive opportunities creates value that single-strategy firms cannot match.

Strong fundraising momentum reflects institutional investors' structural needs, not temporary preferences. Pension funds need 7-8% returns to meet obligations. Insurance companies require yield to match long-term liabilities. Sovereign wealth funds seek alternatives to negative-yielding government bonds. These aren't trades to be unwound—they're strategic allocations that will only grow as traditional fixed income fails to meet return requirements.

Secular growth in alternatives allocation is perhaps the most powerful tailwind. Institutional investors currently allocate 10-15% to alternatives versus target allocations of 20-30%. Retail investors have virtually no alternative exposure despite representing $100 trillion in global wealth. The democratization of alternatives through technology platforms and regulatory evolution could unlock decades of growth. Ares isn't fighting for share of a fixed pie—the pie is growing exponentially.

The dry powder argument deserves special attention. Ares sits on billions in uninvested capital, often criticized as "dead money." But dry powder in distressed environments becomes golden ammunition. The ability to deploy capital when others cannot, to provide rescue financing when banks retreat, to buy assets when forced sellers emerge—this optionality has enormous value that traditional metrics don't capture.

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XIV. Recent News & Developments

The Q2 2025 earnings announcement validated the growth strategy with remarkable precision. These initiatives contributed to a 19% increase in total assets under management (AUM), reaching $572 billion. The firm raised $26 billion across 20 strategies, demonstrating the breadth and depth of investor demand for Ares products. Management fees increased by 24% year-over-year to $900.3 million, proving that scale translates directly into revenue growth.

The GCP International acquisition is already bearing fruit. The Real Assets Group saw the most dramatic growth, expanding 92% year-over-year to $129.8 billion, primarily driven by the acquisition. This isn't just adding AUM—it's transforming Ares into a global real estate and infrastructure powerhouse at precisely the moment when these assets are most in demand.

New fund launches continue to expand the platform. Ares launched its second sports media and entertainment fund, capitalizing on the convergence of private capital and sports. The firm continues to see strong growth in alternative credit strategies, with the CEO noting it as "one of our fastest growing businesses." Each new strategy isn't just another product—it's another avenue for cross-selling, another source of information advantage, and another reason for investors to consolidate relationships with Ares.

Strategic partnerships are accelerating distribution. The wealth management channel shows particular promise, with redemptions in Q2 less than 1% of total AUM despite market volatility. The resilience of these flows demonstrates that retail investors view private credit as a portfolio staple, not a tactical trade. The firm is "effectively on one product on every one of the major platforms but not on every platform with every product," suggesting substantial room for growth.

The insurance platform continues its rapid expansion. Aspida has continued on a solid growth trajectory, ending the quarter with total balance sheet assets of $23 billion, $15 billion of which is sub-advised by Ares. In June, Aspida executed two new reinsurance transactions, further expanding its relationships. Aspida remains on track to meet its 2025 target for new premiums of approximately $7 billion—a testament to the strategy's execution.

Perpetual capital has become the cornerstone of the business model. Our perpetual capital AUM now stands at $167 billion and represents nearly half of our total fee-paying AUM. This shift from traditional closed-end funds to permanent capital vehicles provides revenue visibility, reduces fundraising pressure, and allows for patient investing through cycles. It's a fundamental transformation of the business model that few competitors have successfully executed.

Portfolio performance remains robust despite economic uncertainties. In U.S. direct lending, the firm experienced year-over-year comparable EBITDA growth of 13% with an average loan-to-value of 43%. Non-accrual rates remain well below historical industry averages. This isn't luck—it's the result of conservative underwriting, careful sector selection, and the ability to work with borrowers through challenges rather than forcing liquidations.

The deployment pipeline suggests continued momentum. The firm has $150.8 billion in available capital and $104.8 billion in AUM not yet paying fees, of which $86.8 billion is available for future deployment that could generate approximately $822.7 million in potential incremental annual management fees. This dry powder isn't idle capital—it's optionality for whatever opportunities emerge in the coming quarters.

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XV. Conclusion: The Alternative Future

Ares Management's journey from a $1.2 billion CLO vehicle to a $572 billion alternative asset powerhouse represents more than corporate growth—it exemplifies the fundamental restructuring of global finance. The firm hasn't just ridden the wave of private market growth; it has helped create it, shape it, and now stands positioned to dominate it for decades to come.

The strategic positioning is remarkably prescient. While competitors fought over buyout targets, Ares built the infrastructure to finance them. While others chased headline deals, Ares quietly assembled the capabilities to serve every corner of the alternative investment universe. The result is a platform that generates returns not from betting on individual companies or assets, but from the secular shift of capital from public to private markets, from banks to non-bank lenders, from institutions to individuals.

The moats are widening, not narrowing. Each new fund raised, each relationship deepened, each acquisition integrated adds another layer of competitive advantage. The information asymmetries from operating across credit, real estate, private equity, and infrastructure create insights that single-strategy firms cannot replicate. The permanent capital vehicles provide flexibility that traditional fund structures cannot match. The global footprint generates deal flow that regional players cannot access.

But perhaps most importantly, Ares has positioned itself as indispensable infrastructure for 21st-century capitalism. In a world where banks can't or won't lend, where public markets offer neither growth nor yield, where traditional bonds barely keep pace with inflation, Ares provides the solutions institutional investors need. The firm isn't just an asset manager—it's becoming the circulatory system through which capital flows from those who have it to those who need it.

The risks are real and mounting. Credit cycles haven't disappeared. Competition is intensifying. Regulation looms. But Ares' response—to get bigger, more diversified, more institutionalized—suggests management understands that in alternative investments, scale isn't just an advantage, it's survival. The winners in this industry won't be the most aggressive or the most innovative, but those who can weather storms, capitalize on disruption, and compound returns over decades.

Looking forward, the $750 billion AUM target by 2028 seems almost conservative given the tailwinds. Private credit alone could double again. Insurance companies' insatiable need for yield could drive Aspida to $100 billion. The democratization of alternatives could unlock trillions in retail wealth. Geographic expansion into Asia and emerging markets offers decades of growth. The energy transition and infrastructure modernization represent multi-trillion-dollar opportunities.

For long-term investors, Ares represents a bet on the continued institutionalization of alternative investments. It's a wager that the trends driving capital from public to private markets, from banks to non-bank lenders, from do-it-yourself to professionally managed, will continue and likely accelerate. It's an investment in the picks and shovels of 21st-century finance—not betting on gold strikes but selling tools to miners.

The story that began with five finance veterans seeing opportunity in the unglamorous corners of credit markets has evolved into something far grander: the construction of one of the world's preeminent alternative investment platforms. As traditional finance continues its slow-motion disruption, as technology democratizes access to private markets, as global capital seeks returns in an increasingly complex world, Ares stands ready to intermediate, facilitate, and profit from these massive shifts.

The alternative future isn't alternative anymore—it's simply the future. And Ares Management, through patience, discipline, and strategic vision, has positioned itself at the very center of this new financial architecture. The empire built on credit has become something far more powerful: an essential utility for global capitalism in the 21st century.