Ares Management raised $20.7 billion in the third quarter to a record $51.6 billion, far outpacing the record $41 billion raised in all of 2020.
In its third-quarter earnings report, the credit giant said both its assets under management and its management fees jumped more than 50 percent from the previous year on strong investor demand for private market solutions.
The Los Angeles-based manager also said it deployed a record of nearly $20 billion during the period. Fee-related earnings surged more than 70 percent from the previous year to $183.2 million. Net accrued performance income surged 127 percent, also to a new record.
The majority of the $20.7 billion in fundraising in the quarter came from Ares’ credit group, with $14.9 billion raised from funds across direct lending, alternative credit, CLOs and its publicly traded business development company, Ares Capital, among others. The remainder was raised in Ares’ private equity, real estate and secondary situations group. Ares saw strong demand for its perpetual capital strategies, which increased more than 70 percent year on year, and now account for $71 billion of Ares’ AUM.
The latest results fully incorporated Ares’ acquisitions several months ago of Black Creek Group, which has one of the largest retail alternative investment platforms in the US, and Landmark Partners, which gave it a significant presence in the growing secondary market for private alternatives.
Black Creek Group grew its assets under management to $15 billion since its acquisition closed 1 July, with Ares’ overall retail channel now representing nearly $50 billion in AUM. Landmark raised more than $1 billion in the quarter, Ares said. As of 30 September, Ares had approximately $282 billion of AUM.
One of Ares’ key goals is to expand its retail distribution onto new broker-dealer platforms. The firm’s co-founder and chief executive officer, Michael Arougheti, said during a Wednesday call with analysts that the company intends to “meaningfully accelerate” the pace of its retail and high-net-worth fundraising in the years ahead. As part of that effort, the manager recently formed Ares Wealth Management Solutions, which combines its high-net-worth fundraising capabilities with Black Creek’s extensive retail distribution under one umbrella.
Arougheti said Ares expects its retail channel to be among its fastest growth areas in the next five years, a trend that hasn’t been lost on other managers. Indeed, T Rowe Price, a major US money manager with an extensive retail distribution network, announced Thursday that it was entering the private debt business with its purchase of Oak Hill Advisors, a private credit firm that manages $53 billion in assets, for as much as $4.2 billion.
Earlier this week, Ares Capital reported strong third-quarter earnings that drove its net asset value to a record $18.52 per share, some $1.20 higher than its pre-pandemic NAV.
Ares Capital’s third-quarter core earnings jumped 21 percent, to 47 cents a share, from the year earlier period, well ahead of the dividend of 41 cents a share. It said that its GAAP earnings per share of 73 cents included $150 million of net realised and unrealised gains. During a call with analysts, Ares Capital’s CEO Robert Kipp DeVeer said the company has generated more than $1 billion in net realised gains since it went public in 2004.