Ares Management (ARES) 5 Aug 202020 Q2 Earnings call transcript

Welcome to the Ares Management Corporation Second Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded on Wednesday, August 5, 2020. I would now like to turn the conference over to Carl Drake, Head of Public Company Investor Relations for Ares Management. Please go ahead, sir.

Good afternoon, and thank you for joining us today for our second quarter 2020 conference call. Michael Chief Chief Financial Operating by Michael Officer; Officer. today our McFerran, Officer joined Arougheti, Executive our and I’m and Chief

Kipp question-and-answer of our In Private Equity Group, Credit Co-Chairman Kaplan, available Private and deVeer, for be Group; the Group; co-Head addition, our Head Cwiertnia, of Matt will of session. David Equity our

our subject made risk those contain forward-looking call Before I to want this SEC including our we in uncertainties, remind and factors during to are filings. begin, identified and in you that comments risks statements

Our to actual performance future results note statements. no could of differ materially, past and update Please we undertake is that forward-looking guarantee obligation not a any such results. also

to with During principles. substitute or measures, non-GAAP a financial not generally measures isolation this will which in prepared accepted from call, for refer accounting accordance certain be we should considered in

be This to of the third same interest any offer of morning, on for XX, dividend of addition, nothing record XXXX. representing ARCC last XX, include XX% declared Investor second earnings management call measures. paid presentation our on per please in September holders available an of to an that directly or Please of comparable the we quarter of Part constitutes GAAP we most this The share, quarter Ares I section website our note a the our In an that to Please refer $X.XX the Fund. announced XXXX, dividend sell measures offer will quarter dividend our September solicitation note fees on an purchase to on our common to increase for reconciliations that year. fee. of Resources

is preferred September our $X.XXXX dividend of payable holders on XXXX, September per declared to Series share, A also record of preferred on XX. quarterly XX, We which

to over who quarterly and some financial the start Arougheti, business Now I’ll highlights. will with call Michael turn

everyone. you good your and Carl, afternoon, I wish is I and safe, families and everyone and well. Thanks, hope Great. healthy

strong, couldn’t quarter challenges. of we’re our the COVID more results we and of pandemic full with now be current impact employees behind to the us, proud our be the that to pleased the So adapted of have how continue

consistent our global steady for resilient model and reflect in our AUM business market and growth earnings the clients alternative revenue Our management in and growth fee-centric investments.

was same consecutive million, of growth period quarter XXth second from quarter $XX XX% fee-related with the earnings year. Our increase our sequential last of of an FRE

In AUM management our reporting of to including quarter set FRE, metrics, other AUM. records addition record and second for fees, our also key fee-paying new most

high, expense efficiencies we Our experience of second slower gain and post-IPO as quarter continue a to FRE scale reached operating margins growth.

The second approximately $X continuing group, and quarter billion half raised, year. second into of was including than our best the $X ever, our quarters platform in our billion private more funds the the across of one from is equity fundraising momentum with

flexible capital as the public quarter, rebounded, poured historic monetary private markets solutions. a traded unprecedented as we toward pivoted during and rally companies has first first rescue In half traded the have Our and with AUM, for in seen set increase second in the the assisting which with scope. dramatic well fiscal capital in the aggressively sharp shadow the by very and earnings, Mike McFerran strong us invested followed and March, quarter more stimulus a up of will in could be a speed emphasis sell-off future with by little perspective, an available the capital fundraising From discuss equity growth volatile in bit. dislocation. with second And quick our and debt market year, and management as a markets fees been larger quarter, we markets in investing the in in on the into

the to Fed economy feeling policies have federal we the the interim and economy and of this do days effects the think the during actions the knock-on in we’re and government that early helped broadly still by markets broader While support from clearly period, crisis. provide this

two pandemic. we’ll talked as fundamentals, we’re technicals take continue we’ve believe positioned over on planning and and and dynamic. next And we’re to uneven We disconnected economic well available years we There our trends call of so will capital tradable have and for believe be with many believe that benefited those about have few of recovery opportunities accelerated differentiated our for with to from before, are outsized do that to the this a slow that the market investment strong years. patience, are We returns more long-term advantage us capabilities. business today, with only and

on investing flexible approach front, First, valuable have opportunities volatile and self-origination pivot of public our markets. our and markets, more scaled even private as capabilities the between become investment the in benefits

opportunities, Our coverage significant and enable larger to value network relative uncover and us source for of relationship inconsistent companies. market attractive competition, particularly advantage take

generally liquidity. many today activity environment with traded difficult assets or to not have North retrenched capital. as access America existing is new has are in to banks to and attractive. Ares, certain tending has companies their players, and not step like scaled attract Many available both transaction unable where This improved, Europe, significantly competitors opportunities or for and to for markets reducing in making resulted forms are the it in of workforces capital portfolios, the competitive while slower, attractive So

in of executing unitranche an the company many growth capable we a U.K. why brokerage were a relationships needs. example sponsors, we case, U.K. met As for two both the and private insurance billion with the company flexibility structure transaction this example, to the that we GBP bespoke private This clients led nearly what and quarter, is had In enhanced a great financing credit for purposes. and in we’re company’s leading them financing and of for relationship U.S. completed, second largest a capital ever of able solution private turn the to our

substantial a and to amount invest were both of As funds. able capital direct a our U.S. lending across result, we European

be to in funds our advantage is an structuring flexible possible greater as market even toward as today’s environment. bias Our

were publicly transaction to As preferred. which the a second investments enabled REIT. that $XXX in financing our warrants with loan on traded $XXX mortgage of acquisitions. solution to led opportunities quarter, and potential structure term included with of a a for go note, during offense investment the new an example, asset-oriented credit the advertising short able which respect We an a REIT team company, alternative to million solution, sourced outdoor Also and our for its the a another special convertible public sector operates form in team million

go and consolidate focused the a strategies. helping offense in quarter, market ago, financial are funds, in their teams them alternative Overall, we the $X.X during foundations and opportunity period year drawdown share. direct strengthen global on to companies Our billion to credit our same $X.X second from compared primarily lending, billion and deployed special enable on our

seen strong interest also in year-to-date our commit the The has sectors for near the be rates. continuing theme product relationships place traded X factors their major investors been These second investing volatility fundraising diligence all case wallet in are and with given difficult been that to sets. environment, is our more scale statistics more their and it’s In which in new to with can relationships. larger market is capital share consolidate The strong to strengthened with investors trusted at this broad for managers investors of known alternative heightened alternatives pipeline. leading managers,

LP year, half more impressive of is even of our half in we purchase one years For organically, AUM lending best we QX, XXX performance the puts in Private Year-to-date, to closing including and direct raised now XX for raised the and of corporate by large consistent since believe first from strong track them the investors the platform. year. billion held This an raised XX investors excluding ever. funds Denali the have capital relationships fundraising, fundraising many which we’ve approximately of that and of first for our our over of $X to $X.X the none second billion capital from our in commingled was we’ve funds built now on the raised, $XX.X the investors, billion directly in Specific with Group. institutional quarter is Equity accounted testament our time. a deep to XX% new our The Ares existing existing us which

on opportunities at the during in its our Our of $X.X $X excess fund $X.X billion fundraise billion, billion second quarter, concluding well closed special target.

Our way our well this investing our having equity stressed transactions. least between the as on toward at sixth the means during by held closing at its equity billion with which first of environment we’re flagship investments in investors quarter, $X.X funds to capital $XX corporate as private PE and from distressed our target coming This $X group for second of existing two goal traditional closed attractive for that approximately private fund, XX% raised billion well billion

new also across accounts credit credit commitments public We to commitments fund. raised managed alternative on billion which commingled closings and and $X.X additional funds strategies, to our our included flagship vehicles,

Our now meet toward alternative year. expect exceed continue at to or and billion to billion we fund credit of target the $X $X its the billion our $X.X stand end by target,

additional performance about strong. has real where of saw been million also funds, We $XXX our to commitments consistently estate

our launched direct year, billion direct into May, lending lending the fund. is colleagues showcase and continuing, commingled fund, capital our interest XXXX. largest fundraising senior weeks. in successor U.S. our the so the European this from lending our through of months, SSG funds. the equity third new highly the currently or two secured fund either equity of commitments They at our year launched private together, XXXX. We’ve nine Asian the at strong include a alternative PE in which end seen is lending nine commitments infrastructure lending fundraises, climate fund, in our focused offering first next credit client close we’ve far, U.S. history. second private sixth fund, European direct this direct including six fund, our fifth in done and on Our the in our breadth real capital represent junior largest at our fund, corporate our and least We surpassing billion estate be in capital We be funds, four only least nine fifth These coming momentum and significant fund funds before targeted it’s fund to our to expect once and, be have our firm’s targeted we Ares market second to incremental of of $XX raised early $XX to and entire least organization commingled

partnerships, fundraising will managed certainly capital In of of funds, raised. strategic which of account a close-end other accounts and our all traditionally continue commingled for addition, annual highlighted with outside our efforts vehicles, these our and public funds, our sizable amount funds

wallet pension our the into clients highly believe that opportunities the periods long recognize with arise and to clients, they and our manager wealth companies, happy significant funds and processes, volatility. investment as banks insurance sovereign By others, ironed further engaged. and see expanding during private attractive work-from-home runway alternatives, investors opportunity have we are for expand have funds, can a leading we their our share They’ve We’re investment we gain consolidation. to out that our include which share from that growth of

equity new be institutional strengthened with to In leading to our franchises and approximately Capital addition, with which the of new of a this onboarded of stream investors, XX private over and attract transaction, are XXX continue being real only we steady investors believe the estate Ares. closing SSG credit, will

rate to to new commit strategies a an capital attractive of into also desire larger continue and see reups other strategies. Ares into existing We

to snapback the in respective our QX. in which quarter. benchmarks loan liquid more, and funds Turning both We was basis. saw our year-to-date or highlights X% to performance and led most nice by across outperform performance our high-yield a in rebounded most strategies, credit a about The other their continue of a on strategies few

fund, around which returned direct liquid for the lending Our European X%, X% quarter. our lending less direct significant Ares volatile first compared U.S. respectively, quarter and composite both the were second to and in Capital, funds,

to X% returns Our the European than limited for and which hospitality their gross of U.S. resilient retail composites, with fund quarter. second real and continued equity have estate more performance exposure properties,

in helped the performance first public us corporate our decline nearly from fund driven quarter. recapture rebounded composite most the Our positions, X% strong private of equity which by

Our performance composite excluding been have private than energy. XX% for the up equity would more quarter,

and will These equity Given sixth completed certain volatility, fund for in most forward. going energy the From continue investor other private activities our sentiment, like energy in managers, are buyout our corporate industry expected the investing, likely challenges a slow to from we, outside be term. to perspective, monetization fund. and remain the latest of excluding dedicated our in way funds slow near realizations are be energy markets regular and

stages potential early access of is On capital the which transaction in The recovery, public creating positive markets bodes non-COVID-impacted or rebounded sectors. perhaps for equity sharply, monetization opportunities activity for certain XXXX have side, late and the well XXXX.

second of from market position the the & of ACOF income quarter, sale of our realized advantage During the Floor Decor and III. we uptick took generated in a portion

recently energy infrastructure completed the single-phased, includes in the in single-site of In addition, two an our demand with billion through Co., and in project sale a companies first power power America. XX the of of AZEK Wind, corporate gain purchasing companies generated approximately investment renewable we private U.S., equity, largest the in This sector. agreements largest quarter, additional industrial within public U.S. in the the By the highlights $X for of portfolio in project, of second went Also our highly ACOF team’s power unrealized growing quarter. one had relative IV, successful the wind end AZEK to IPO the the Aviator which the

And to capabilities enhances call the and over transaction, across closed and region. our to update want brief further ability our the in transaction July. leadership our global our we private expand provide I credit to SSG in a which said before investment expands lastly, before believe Capital position I strategic a on Mike, turn so We high-growth

region the SSG decade, experience, are $X.X SSG to by successfully its platform, the past and expand Like corporate recent particularly track lending special the opportunities one of target. The secured with they across tenure on itself the leading and communities For the closing lending million fund, institutional has record AUM other XX $XXX team’s Pan-Asian the of as long the as parts established and current approximately to investors of investors recognized widely and capital base billion. that its is market its of continues latest bringing valuable environment. in June secured

diversifying footprint will seek America business Europe. SSG using replicate Ares on to expect and success achieved and we our growth forward, Pan-Asian that across the we’ve North its the opportunity Going capitalize broad scaling and

will new our region, Mike to our further addition, his I’ll the over business the for SMBC McFerran in strategic bolster remarks the opportunities. call on expands our quarter’s positioning Mike? only partnership our expect and we with In connectivity financial now, and relationships And turn which results.

more Hello, review Mike. and you I I and families and well. some you, the quarter begin our and current then Thank of will on provide safe hope your with are a everyone. highlights position. in-depth results financial

our growth which is was of income sequential quarter. steady quarter management our business XX% by second The consecutive The FRE in quarter driven the fee-centric realized XXth drove growth. model, second of our

at our The respectively, which stands this assets to drove of over to gross margin helped fundraising XX XX%, FRE Our fee-paying management and margins. last XX.X% AUM as new XX%, we and increased and improve and $XX.X fundraising scale billion under highs, reach shadow months, $X AUM continue billion. the over over

our significant a saw real we performance quarter, credit, and of equity private the estate. the recovery During funds fairly broad-based in across

Decor, the held income position our highly in portion a quarter, a realization realized muted our successful realized Floor supported environment. Equity this Group, in which Private & our despite position also We overall of publicly

the continued Fee-related in quarter volatility. a administrative significant times the year restrictions. due and even from well which part let quarter earnings growth our Now as driven second XX% trajectory, same an detail. $XX the of results XXXX. decrease last quarter fee-related highlights XX% Year-to-date, million in by million prior continued declined through up growth you year travel further XX% through of Fee-related from fee $X totaled in management the as our growth me the to XXXX the million, over from from and second earnings earnings increase period was $XXX expenses, general of was of take for of period

As preferred totaled for deployment share common income AUM and strategies, of After-tax or realized second A quarter for $X.XX $XXX.X the first our were first compared to AUM fundraising for quarter, quarter the second from quarter to fee-paying of FRE quarter increase and XX% margin per compared margins as distributions, new several the of FRE through net we our of an grow of continued $XX.X million, of increase XXXX. Realized an represents stock across expand. million was XX% for of Class stock, and has of the second XXXX half XXXX. the to XX% the XX.X% income half the in which XXXX.

spend Next our some on to time I’d like metrics. and AUM related

with additional we depreciation market Our AUM XX.X% June to strategies, of QX. gross our in which an fund billion last inflows near as XX as $XXX.X compared received record well was as driven totaled across significant $XXX.X some by year, of in of billion the saw the appreciation, quarter, AUM year-over-year. increase commitments

gross billion for of the fundraising private quarter, as first Our equity the new accounted corporate sixth of special fund, including close the final half opportunities the for close which well the flagship totaled quarter. than our as more $X.X commitments our capital in fund for

Our deployment fee-paying funds. the commitments direct liquid real which strategy opportunities of ended estate special our AUM, well by lending and meaningful credit and private is additional by credit quarter represented strategies, approximately driven within strategy. as funds billion AUM increased XX% as European in credit and U.S. equity $XXX.X XX% alternative year-over-year our X% fee-paying XX% funds, with We

strategies. record our by new fund Our billion. from private approximately if billion deployed, $XX.X amount, totaling of available to uninvested billion $XX.X for is million. $X $XX fees $XXX which, end. was to management at deployment, incentive-eligible this increased Last, over Of which corresponds equity, driven billion increased families, our including quarter annual future quarter AUM AUM by and with $XX.X not $XX.X yet of to fees, flagship of corporate additional We available opportunities special capital billion ended commitments alternative high credit paying the billion a

IPO decline levels and our performance drive about net of less-cyclical the majority to believe first quarter, cycles, areas fund net generate feel strategies, strong a the the through and at advantage like the future we and financial helped accrued significant From we capital fees. in are building our position top the have March AZEK of are underweighted perspective, along the strong caused carry rebound businesses we blocks Co. income, the With combined of history long-term services We successful a navigate general the believe and in the our income of software structure market recognize shadow in net competitive wide decline health investments with in million, AUM, place additional meaningful, Firmwide, flexible like overweighted across increase moment Although current accrued our performance generally debt long-term to through and with investing market portfolio performance portfolio accrued to address of strong as good our $XXX vast the represents in various our a as the market of the a environment. of our array resilient, a issuance. XX. XX% we value we from market to a take in and and businesses. sectors. more I’d COVID-impacted healthcare, recent performance balance

recently no in with with the to our balance credit $X.XXX company. our provides and markets and in million debt nearly an X.XX%, sheet ability billion environment our the As existing of cash corporate position substantially puts issuing by rebounding than the us in returns drawn interest offering at notes $XXX balance amounts on a a We on second sheet public rate we This capital quarter in low accretive in Mike rate liquidity, excellent billion successful entered advantage for lower generate with notes. stated, $X facility. took and revolving on the our $XXX XX-year management million the

and our all maturities of until from over. nearly debt have when our million cash, We we cash left have subtracting no XXXX, $XXX of

of callable of perpetual a our As stock is $XXX million X% outstanding preferred June reminder, XXXX. as

great near-term during and We we liquidity we half as no closer, and this with the calling environment we equity, meaningfully conclusion, we significant what enter of positioned capitalized, As lies XXXX well strong we our do evaluate elect no and get flexibility expected to volatile mark-to-market very debt, debt current opportunistic be If our is optionality to to is comparatively In back so, well it net believe sheet be no sheet gives and it extremely earnings. that and retiring maturities would will this our for We accretive expensive. period. believe patient leverage. in ahead. us business balance balance the and expect

rooted be an credit evolves. in flexible Our our and model drive excellent as in balance to growth and market opportunistic sheet-light liquidity, strong this puts management coupled fee-centric strategies, profitability and with business continued position us to and

momentum volatile funds, fundraising of large investors ability well markets. perform significant our and flagship recognize down a to have and We with during pipeline our

or ways investment the Our and are compelling investments, platform been stronger collaboration the opportunity, our make to landscape professionals never has finding competitive creative as across valuable. provides more

shadow portfolio about teams generate and position growth excellent practices attractive puts us overall our global health our maximizing we revenues We and synergies and Our AUM across in and management invest good of have feel earnings. portfolios. in the an to excellent portfolio, best generating well sharing value,

We challenges. open of you you the thank grateful are deliver all we continuing for another so support could for line all for We impressed the our today. company, demonstrated, to teams resilience questions? are grit up and their incredible results, of quarter and of Operator, time record our please of your the work yet by appreciate despite all the have for that and current

with our go [Operator Robert question ahead. first KBW. Lee will from And Please Instructions] come

that. Does with I is of least you’ve think maybe you’re of a thinking Mike, starting PE, mean, objective Great. specifically environment? I the it close. like mean still you that the still kind including I I’m fixed? previously, that and forget just outlook, But seem this reasonable within about good feel, curious, at guess of XX% good you still I with a it maybe about fundraising quarter positive suggested, given ACOF, the kind what the had pretty number, do for first upsizing is

Yes.

historically of thing in investing opportunities/special group capability the to special of our to distressed it’s I just public objective. private the in reasons articulated lot One leverage private to situations. and sits things need buying of is we of remarks, unique to clarify that our think in for the portfolio terms too, distressed able terms our improve that management equity us reasonable sits to origination in I a be approach would one be in the securities a market not makes markets, those prepared but

about the equity, deployment I complex, and think look that market well and in capital think raising you the that private of for SOF that think if I capital plans as And as us, when opportunity positioning So the when closed should fund SOF, of to of ahead had the capital whole we the ACOF, exceed on ACOF. not at success raising group that momentum aggregate continue that first in given I we meet, targets. plus our

LP? as And of board Okay. talked become them more kind of, of couple the bringing of But maybe on optimistic, the ability on kind quarters though terms do that, incremental the that new the LPs Great. has maybe in but in-process getting LPs bringing kind processes know down the get mean, from next over I with of of of mean, any incremental looked maybe last kind on not, you’re sense of kind hit the and about everything maybe LP? isn’t hit, assume or I was had some prospectively, new starting but dependent of fundraising. further of quarters that since, of new to slow existing success down you here, change you’ve and that guess, even some with this quarter couple kind Is I you’ve of before I path everything saw you’ve you those kind versus I what to

the uncertainty no. of answer still lot Yes, there’s obviously, it does. simple The But world. a in is

remarks, we in I with larger when to are went actually remote As had distress. we it fund and relationships offerings who work the advantage all think, embedded large the that market of benefited who managers actually talked take environment, a already in prepared about actually managers deep

raising that more a a have positioning amount been and and So reasons in XXXX, we’re the lot when the to year, toward we’re record potentially we institutional of processes I at their platform adapt LPs lot seeing think of as of well. the had premarketing concern into continued healthy of one little the marketing a would we’ve I you work, for had why the we’re new earlier fundraising a funds actively actually bit now, seeing look investor that’s and but our seen coming come remote on year. another already momentum platforms

So at today, I’m now any able actually optimistic seeing offerings change benefit diligence behavior. Rob, are products not least, in year. what that later some that folks we’re new become should in the seeing new the of I’d strategies more and to

think a how know I if we one a about modest, us onboard. mentioned kind one of I it’s P&L.? And may I Great. with completed you potentially Okay. impact, just But the but little about the that think is should a with you could and the Any talked I we should financial it you about update how maybe mean, through that more quick flow on on new maybe But can bit think one SSG. how fundraising. one fairly first being since

to. happy Yes,

I as about has of just billion mentioned, under SSG, management. assets folks, remind So $X to

And two but of offerings. As lending, the would as the and fund to you the prepared as And we the that’s what secured fourth to July two on quarter one we live I impact, to prior what at see lending. referred remarks announcement, nature special SSG the pre-closing it latest structured accretive which financial situations had along imagine The lending special management close meaningful as likely we in sits see strategic that investment refer that impact. their to closed as announcement in fund second reported in. has we the refer segment, a the quarter financial it to direct their of in given had which company so the is core deal very be we’ve akin will is that what would to initiatives the tenured today, momentum of our company, is which begin with way that The now is fifth given deal start launched we you’ll you’ll other think is undertaking a significant its then year more of the situations, world regular or post getting momentum, One the we’re last that the founding the has. to of back next all fund. separate group the kind AM. to and that with and then strategy secured reporting

to credit and to is but ambition real long-term its capabilities here, into the etc. we business, equity, infrastructure, see the expand Our private reach in its grow other SSG not have i.e., just product to estate, be that set

So big pretty think that America that the we and on a a And we have had success blueprint that scaling ambitions, given of businesses North same folks and our Europe. on the strategy have actually pretty we as playbook lot teams places historical I are in in plans other that SSG working are have executed well. the the business with expansion that and plan good

O’Hara question go will with The Jefferies. ahead. from Please next come Gerry

the vintage remarks equity before regular-weight deals online. I now capital what record opportunity you trying to to seeing private still as one, available And context guess, of sir, deployment. Perhaps to a sense equity if return. just some be and could with as Great. starts your relates fund around environment your private of And in get set the just come some levels the latest for runway could mentioned we to prepared start add you around respect what maybe it

billion some deployment, let and Sure. commentary mentioned, my quarter or give But we like give deployed I’ll you funds. $X.X in contextualize second about view, if in just of you our Matt XXXX, feel as to our then it. drawdown the they PE-specific I’ll I David

at about $X.X that about funds, million. $X.X Interestingly, If number number if that include in the was deployed in which you you the about in non-drawdown at $X.X drawdown we come look million QX, billion, would funds. look you I’ll the billion when $X.X to. to to grow QX back were And

in so March and is, in you there remember of April, Phase spike to two bit So first of there, deployment has into deployment. what a simplified or the were of last which QX through that markets we call, that much been way why about very a volatility how dislocation we’re kind going we’ve we little consistent. active in earnings liquid And was X, crisis kind the the the saw week talked was invest framework the the you the on for that’s and of if

new in now so market. to We’re build of on a on you begin portfolio, Phase to get is of the paid kind can incumbent the relationships, to capital provide liquidity extent X, go that to the in do and which bridges issue focus offense and then terms existing

rates when some of opportunities things ops then And pretty credit, talked but good very, leverage are getting the of more alternative still of stability, way. which environment. the rates prepared our indicators I of market direct regular in is the of the the about the earnings we very And remarks in multiple lending business, in because, a types higher significantly think, the in are risk Phase to for of we paid see return that in weight given a attractive the coming get deployment, our parts when you’re visibility and special little that and normalcy little bit X, change return more bit lower significantly more typically, you that’s market,

the would growth, be reality meaningful built fiscal recovery they’ve beginning snap have to a I a or into that phase, long built crisis enough. based are getting and still companies with squarely but in the in we’re support that and grapple actually on we think may liquidity stimulus have economic the of as health the March lot So June a bridges I back second we’re that this liquidity to that not would a economic V-shaped bridges view or deeper that think,

for is that And we a to the access to of starting have are. solutions that way are some being reaccelerate so companies provider the franchise around pipeline capital aren’t just or the assets that companies that high-quality those no

Okay. That’s helpful.

to any do on color you Matt, have you’d commentary like add PE?

Sure. This is Matt Cwiertnia.

just market struggling right out led believe distressed point you side mandate be than probably traditional side. We now the private medium or balanced and the NASDAQ. if the So as and relevant flexible from is the to think see XXX perspective, more we I the middle or you I’d follow equity thing really capital is our on businesses both on the would are the S&P small on and side things really ever. distressed as a One think

are side, in that to offense. capital the we can of have a just the industries And side doesn’t really some access do. companies growth that of so have because that to, number them private distressed market alluded some are opportunities opportunities rescue traditional go programs and government OK the doing there front the and play seeing middle on the on some And are as and large of the caps Mike

the I certainly think backlog throughout So it is and ourselves, industry the traditional growing. for for

if think, I in this private before more the way and year see you bigger this regular here half the probably saw I in than year, the stays the first equity the half trend, of think in end on half. you’ll second second of

And follow-up. just one comments. Helpful Okay. perhaps

perhaps obviously appetite what the Mike, at as and But and active could a as You’ve additional perhaps partnerships with for give the you capacity for activity M&A-type in cycle? point even SSG been well firm is this strategic SMBC. sense

can Sure. as for as build finding significant, builds, to team we’re capital higher we’ve our that is get growth. or bar to drive we use about them that The but doing fund talked we growth inorganic team on businesses scale just historically, continues scale appetite meaningful by with us the and

to creation are builds. were value pretty fundraising engage able credit seeing in through So our special meaningful the successful the in our those group, team come you’re where we And opportunities, order. short groups alternative in

economics a three make always see it add sense. that, bringing business, the information financially So we’re path to as we by or We check. be distribution aren’t simple has but It that need also value to to that easy to capability. platform add check have differentiated to need we do accretive, or is about value the talked our to to going to to to business has M&A, need and to boxes going historically, when that and did a those just tenured it scaled always good did SSG the a gave value fit, on. proposition to great it’s right? now a cultural we economic adding us for the not manager region be to and a presence, a all hardest have things probably be us, with check beachhead the should They got then meaningful of And fit, things where cultural the fairly cultural box to fit straightforward. in piece is

to companies One fill So downturns, dislocation. everybody, through I gaps, will companies we’ve ARCC, gaps company. about we to arise the tend high. And distribution we’re to is management through of going at opportunities bar portfolio prior think subsidiary I or within both think acquisitive, in this continue acquisition pretty very when look like remind the type deployment, we gaps, you thing been geography acquisition, product when but into see to get

our opportunistic So working like the obviously would companies present assets back develop to to with begin year. identify while and teams think the markets platform, proactively we’re I tend And this strategy that the well. additions of as that be see corporate we’ll opportunities half to to into good

of go America. And come ahead. will Instructions] from question next Please [Operator Bank with Carrier our Mike

margin two current fundraising of say, margin, backdrop, given outlook, outlook the just next the then you’re the the some for McFerran, over, one how just the the to years your about and comments? Mike versus current thinking change deals in any the

No, no change at all.

is a with which least call, said we thought XX% year, margin what run margin a XX%, is think quarter and we expected we this consistent would to this year. the XX% we’ve our deliver I hit that since of at rate fourth or

expansion, over we continue. look at to continue itself going leads that that all referenced, is margin which we we operating the you and we’ve past Mike, the you as to calls feel, leverage capture identify as think grow, efficiencies it’s talked just XX%. and we continue in those, about scale We that for to quarter, of benefits If and to margin

don’t that ahead. I in any obstacles to see the years So

just then And Okay. a follow-up. as

Given that, versus companies, get some they out some just you the we of divergence in start of of see comments maybe what opportunities seeing areas terms attractive. relative that multiple where makes some points of you’re public that there portfolio backdrop, terms between portfolio of seeing, and sense the your holding of this it and are But the once are realize current markets, how in guys’ to of in the investment. up of like challenges are the private strength, some could kind maybe we you’re in

Yes.

funds that with breadth So just on a platform it’s question of touch. a of given not and the we the assets breadth answer straightforward simple the

the benefit. benefit. and real the would is heavily portfolio, that piece we talked we in sound is extraordinarily for you’ll the the that we and say, to expected a downturn Id’ most with as that, estate challenges The while underweight, on was are equity, beginning some if Kipp fact are I’ll the that into So see portfolios, But the and huge And answer to the simplify debt ARCC underwriting be underweight, can. our bear the you on hospitality generally, want impacted any industries drill example, portfolio. call dealing retail fact in entire deeper fruit shall about going across we’re both

this liquidity of with within value. play the offense came and now us, into funds, industry going the of lot to downturn, a think I each combined to that So which to down our we positioning cyclical have avoidance good conservative and positions drive continue

most as XX% probably the the have where you about in surprising. seen at the quarter script, regular if energy talked performance, not we’ve if has we been composite, the portfolios, As return PE portfolio. in returns the talked you our It’s look at place And in return. about we one you the roughly negative type this nonenergy and the way seen look would

of business So geography. And actually out us. the well that’s consumer, across or for pretty platform, the think consistent I that’s regardless playing focus on the differentiated healthcare, entire the technology,

Adam Our question with Beatty go come ahead. from next UBS. will Please

both Ares the concern spiking feared. outcome, at pandemic the environment. before been that the and than managed ask concern pandemic some far, book I least, as milder There was CLOs, to a some though the so as hit, wanted and seems of had and broadly kind then the about in more has then it across

concern. whether So I the get wanted of the terms to agency observations just and rating a fundamentals of that’s your trajectory activity in also and

Yes. Sure.

CLOs tranches regard with media the a that had significant resilient. if never to within is CLO market it’s back particularly crisis, indicator appreciated through So look structures you self-healing concerns and and pretty market. on the financial the the pretty at I the the that we performance, go CLO maybe And rated fully good the

so see out surprised to now. And not we’re resilience that playing

that’s The the structure the market market, loan through probably at the you which the it market loan higher XX%-plus don’t so represent the the today and of not just loan have the of in obviously pressure structure the price created pricing which market. other around. some loan the and downward And stability of is of maybe interesting go on look was when the frantic is stability price overall creating selling, of obvious, is you actually CLOs significantly amount currently last in thing than versus buy muting GFC, because a significant

kind tests the at relative to look is managers CLO actually to you structured the the loan market, buyer, to CLO that the exposure the themselves, loans imposed the XX% both non-CLO but has baskets places implications which that underweight structures. the cases pretty some if of they’re also indication weakest credit So discipline the talked discipline actually in CCC good a of triggered, on But continued those and triggered and this, with able and in that about themselves. There are where downgrades even that they’ll buyers. for happens, that risk OC again, be a to are we’ve is always, heal

a slowed. people quite still both of universe CLOs. resilient of But for non-rated new we issue other and the on buyer very them durable. we’re CLO CLOs, and see constructive as a as manager as very has of and market CLOs, still embedded the Obviously, rated So tranches

in about or do transaction that kind the what and do what level of you. a of demand I delays just any of with from kind you’re you you’re Pavonia then that the of have apart And of ask terms activity kind separate able pre-build to kind and channel, wanted have of on to and and to just insurance what seeing pre-closing Excellent.

Sure. Thanks, Adam.

of to The future. that ready in structure call, the able yes, transaction, optimistic the your good we’re last that but the because the engine been it construction, distribution closing Pavonia, on pre-work So of with all to point, our we about transaction. when getting to will turn regard news talked on is to near close we’ve on happen delayed, we the been of that as do, new product has still

are just folks also that and of Aspida, the the through front when talk not origination organic to M&A build opportunity the we have that aware think we distribution platform. to Insurance also I view there’s on acquisition Solutions grow alongside it’s and annuities but business, Ares reinsurance an a about the a platform

the of a though and Pavonia quite the smoothly going been has lot has around all actually and work even So it pipeline, the delayed acquisition building reinsurance of M&A momentum. has

So certain talked and the credit Pavonia well. our strategic we’re happy distribute insurance with an are we’ve continuing strategy private clients, insurance where that to companies continuing is a building as like long here complex, parts things scaling is. our insurance partnerships about with while IDF insurance before, piece to And at of the then product Ares, to important secondly, those is time our and of as drive strategy multipronged around includes business, all up

say the would opportunity, I well. about we’re as I and insurance think ever bullish executing we’ve So we’re as been

progress from business. us get preventing We’re closed, deal it’s making other to our in anxious not Pavonia but

question come go And RBC next Kenneth Markets. Capital Lee the will with from Please ahead.

of talk just key the hoping Just how just could be just about despite remarks markets. prepared that could the keeping one following slow, to current up comments on your you in slow, perhaps your the portfolio that upon equity regards expand utilization be could realizations further factors some and

their Sure. And you then my view. should be give give to or David able again, I’ll view. Matt

the which are is And figure in to people is and two, XXXX to equities to as We’re assets kind putting trying It’s you liquidity were us a of that be going activity second look just see like. regular private certain side, on of bid-ask out you of debt for right? clear XXXX, constrained valuation. the think, that XXXX, flow transaction dealing are benefiting challenges challenges with liquidity in a availability aside markets credit what public earnings capital and The I direct challenge, The up. way on lending either visibility. certain to pick then can earnings pretty wide spread is or companies or uncertainty lack hard when seeing equity,

do visibility So for think public a to an flow. being perfect and the opportunity, particularly we and for that really bit that’s non-COVID-type need them is just think liquidity give investor why demand, I I valuation the to But to we that, companies and post-IPO. type of company earnings a we’ll one more there a to around have IPO toward making side, a don’t impression get that positioning want to cadence path as we products, that of is huge building start that AZEK saw think transaction the around the certain you of mentioned, to AZEK acceleration then companies, and realization. regular attractive I little X example an back valuation

do So I Matt, to will be constructive markets I know, on think to of that for public continue add you the realizations. want don’t any color top that?

private From equity is you narrowing the I a Day, trying saw in warming a on. then, could private of bit week people everything more on see and has get I by a perspective, you say, in saying continue, Sure, a optimistic change realization. that market, sure. do spread, transactions week July, bid-ask Mike in that side, such think meaning of we market, been to where post-Labor bit the would if to pickup in out deal. us, people potentially can now, Yes. there’s and right even think that becoming do that rate for a are the especially is a of spot And I figure

that it on think as the I July, traditional But optimism, the are I buyers some would has think, get if bit might continues So there portfolio that and more stayed together the been be would to same true. if sellers think I true. be half little environment is statement to and that often, year And include companies this side of some back a improve. ready the for our of that come going that realization

the term latest there’s the Great. a could given FRE lot near I wonder fundraising as as on Very helpful. growth between one that just in thoughts of get deployments. if play if And your well at factors I the just here follow-up, ongoing I capital may.

about putting the capital it’s not quarter the year-over-year, we’ve yet what believe I highlighted growth our XX%, look just of earning do first ahead to growth combined, fees, where combined the just remarks that built natural of able into point significant would and capital at like round we half reiterate, I will we or But But reiterating we’re we last our of numbers lend as to prepared number. margin you to amount itself we QX better between conviction, capital have feel meaningful have our growth. growth with a Kenneth, continued the revenue you the AUM at that second when we’ve Mike. year-over-year, because expansion and we’re behind the the expectation high that there’s all I raising today year-over-year, call kind and to quarters, FRE it’s in just be Mike we’re of having, of running expressing That, we of deployment. think although we’ll that we’ll growth obviously year in I’d detail expect the from the know will I’m continue continue this obviously amount seeing, XX% year-over-year magic a of talked are then already you grow raised, again, just to not looked so. the couple

Please Chris Fargo. Our go Harris ahead. Wells next come with will question from

McFerran light restrictions. for mentioned Mike, second little Yes. A G&A in Mike quarter travel-related expenses. follow-up you on the was a due to

Or up? remain some half in potentially second this decent is run that’s restrictions year, which in G&A a number the up pick for there the those drive is spend? Assuming of place, would going to the spending rate

to as because around, spend what million of is fraction bit going be little was. money Mike at be Yes, things, has some million, my obviously guess run a we G&A else obviously we best there’s all I movement a that. travel, SG&A do going do obviously, $XX pace to expenses capital it’s all it on, Look, incur would would bit have raising $XX other we expect and of little we with to the seeing probably to mentioned, we’re being a of a The had saving with can million which It bit. $XX equal. between it’s

kind this, $XX $XX other While But our in million, other on do aspects of we’re services. like a I supporting employees with realistic. a $XX of of technology travel, lot expectation, saving we million lean is in think and million

tend obviously, And on a it’s Mike, I’ll when I is, conferences, against think just oversimplification, all or add, entertainment things like fundraising to just of incremental we’re come things deployment. quick maybe travel and or but important incremental spending those

So I would of and revenue to that Mike’s corollary come to FRE above even anything target with increase the in be say would still would development probably accretive and margin. FRE continue

that. Yes. I with agree

Okay. higher $XX to million million. $XX If number back, travel comes a than

be going to Yes, still the back to Yes. kind able to when run I expect G&A be to business. still of low-XXs rate the think we’re travels in run I quarterly.

Our Please question Stanley. Cyprys Michael from Morgan with come ahead. next will go

do to and of And overall little you just meaningful next approach contribution, ones, scaling? years? in I the your probably come about years about profitability, the special helping year. be about product will you a you more think strategies make think will be for Imagine strategy Which over of do improve you that? to which to the strategies next mind? How sits very the talk couple level year Which wait hoping other level as and a think more this would your into the was view, have profitability. profitability product approach couple fund Just bit and biggest

question, of of number and not simple but breadth Sure. funds a Again, the answer on strategies the simple a given platform. just

AUM, terms it probably of filter. and, we plan prior pretty operational the of assessing learn and the around any of exhaustive value rigorous big the good launching products means that And company. to the the a raise and, to of go about ultimately, for product, product cost AUM the that’s and that thinking the FRE expect evolution idea would of AUM. you that business complexity the and profitable mature of management product, scale all think development process, you have part very where not shareholder investor new what strategic And as of on to the I the and focus it, the to every review gets then obviously, cost actually demand, in operational the industry As is you a that’s not long-term a of run through you through

credit, places the a of to the special opportunities XX high gone that we’ve in with you seeing like expense a hired where that And are business out and people business very conviction period, against level so plan, around incurred alternative over plan. XX multiyear

you dramatic process we’ve on you in the invested. two place, the see hire capital, should expect So recent that highlight margin pay team, already because put pretty scaling did to initiatives raise the incurred but expense to the those some funds

mature estate, though think European upcoming the there actually margin scale is expansion running even line other it’s you should well. margin, Real just parts margin lending healthy expect, quicker direct than some we business talked business. I given as fundraise margin, pretty as but growing the at business in our see business, the of already that about a given but our you’ll remarks, FRE runs its that in of about fund, FRE the as that historically, talked at we’ve prepared lowest

So to fund see we most we’re U.S. beginning as with cycle through are our through value-add fundraise funds. roll getting benefits the this our op and scale of recent

in margin scaling businesses. have do PE the scaling enjoy see that we to types to of mature credit continue still you’ll some we and get think but mature to margins I to the So there,

as well. its size more relative was the base So business run mature margin capital given SSG to as just will of a hopefully, that, I at expectations that saying, also

in about scaling just you on imagine partnerships you you. you the that if line given have customized scaling doing these it? Great. quick those I is What of interrupted it’s And maybe just firm. initiatives storms. on could I the just not think update The quality sound great strategic growing you that part another question, a mentioned But you had some follow-up on those just the us I place? are capital over the what strategic how some And partnerships, do that? time? you think think about my is have had strategic how partnerships, apologies of of initiatives do are about offerings. trending, Maybe highly there. in you How Maybe

clarify, take forms. capital And that So the say, I we a strategic just strategic many partnerships around partnerships or have strategic want partnerships, provider LP. of business, I’d to more certain are whether part a they’re specific

relationships business, venture and big So been has SDLP bespoke example have some that would the of that joint which portions that partnerships, of are strategic our the unitranche larger around a within for area us. We ARCC. of have then a LPs and institutional be customized good we with growth

much much the our news more the be is geared clients. to we slower trying healthy look see to we your that as sales the where And of Those the of collaborative. our much have develop needs you whole good in launch accounts data a clients. a consultative. process to market you’ll as up for managed you when meet AUM, provider is, to solutions continue It’s it’s robust more product room, pretty are set, a transactional offering the set number. a it’s broaden fund and commingled of more toward cycle terms not larger because a The So do percentage out like product, at It’s a a close.

an so our have And with acceleration conversations LPs. in number of we that we seeing are the

that’s the do, what to Another like. relationships experience And analytics staffed those back. where to had help built around thing risk we’ve a the all working and we to as that up around and drive could of front opportunity, collaboration client strategy modeling team solutions there we’re look of on that is portfolio the entirety focused on out we’ve the client it’s

see it of they they’re the "I global that take specific intersection that’s a driving and to capital advantage you And of invest So these about but our I be a in to and the coming need says, it to a hope too opportunity. that someone see where offering specific, And they runs It clients business. part be that can’t ideas us we’re kind of value direct level, industries," and could someone that of high where opportunities need. you that gives we how in have you an us have value, where where a see could gamut. we, lending tactically think there’s want mandate. distressed at And we be to really

question Please ahead. Our Goldman come next Blostein will Alex Sachs. from go with

for Alex. This filling is Daniel Jacoby in

quickly think fees generated of a came management to outlook us ARCC I hood fees as you looks on about ARCC there the down what’s the quarter-over-quarter. bit going kind and the and from underneath little credit Just on a just Can management little look base bit we of fees like how get going fees, Part forward? help should for a

Sure. Mike, do to want you handle that?

Yes, Part million. I Yes, $X base and between the combined the the think decline was sure. about I fee management quarter-over-quarter fee,

you know, as it’s think, management I fees to assets going be ARCC. the of function gross a at are

the I, historically so refer activity, in business so business also I big, touched to million that think would is would before, it see transactional look, that don’t to supports there’s from smaller about would we’ve you Part to because again, I as highlight, So volatility lot fee, look there’s I $X and then I an quarter-over-quarter. a paid there’s if XX% as the the is continues you benefit. grow, this of as at to offsetting as which be, that implied that about the saying I steadiness far impact and Part so Kipp, FRE but out of the albeit impact on comp, think a is compensation come an because

don’t job X:X management BDCs leverage. was to also fee we from if articulating we do off-line the above But leverage get work when X:X don’t lower nuance, a a it Yes. we Daniel, and a accepted agreement, can to we I X:X, good available know I the it. the restruck if there cover to

think leverage. interest write in to the drive because original X:X the intent and X.X% in because so perversion assets, What of was of the And book potentially of actually growth lower opposed align think assets incremental shareholders it’s I in assets of steps NAV as in to look the dividend. write of all debt. of through levered the for up contract we intent, through don’t as on sheet fee the to with back the this the So to go average bit that happened the leveraging that QX and on assets and it’s balance above down, an a I you down the X% ROE little assets down QX, believe, ironically, from QX, saw a I original ROA leverage

then had X:X hit for as X:X And quarter, the prior operating leverage below assets you modest a X% had were you the lower assets a so NAV. triggered little because the you actually result, because of a above to because the the Mike’s were a gross bit of point, that, and the in hit

as improves, ARCC, this to, we’d as quarter, it fee NAV that expect at to have as continues, of billion continue on which and liquidity see we $X available yesterday, and we Kipp So call deployment about talked expect about did it was. and as it will continue the

then Got to partnership of helpful benefit just us walk think and AUM can management about from how prepaying partnership? of That’s we is it. through just color. this the secondly, fees kind very you should economic kind the maybe this from And anticipate AUM, to the what you contribution on Sumitomo,

execute, to But I is. the the we’ll as not I’m on and think you what with and business to them, can able executed go going impact we’ll can’t see guys on I back initiatives the into articulate we’ve come be plan we specifics that yet.

of and to in that. announced businesses, pipeline strategic their businesses still as We’re talked through sheet, days. working well opportunities But in the about both been the executing partnership, new existing against we early we leverage a when balance we and we’re have

because because where various a situations funds So at our the we’ve and our had into accretive, creative into contributions capital they’re providing of we already large that, launching and portfolios made launches or we’re they’ve some company financing some solutions think, of will of businesses efficient subsidiaries. number management business and either be

to we some you. good have as to continue But that. for with think pretty going all of tuned to examples share stay execute, So we’re I

Japan. term The a take more was strategically second piece, which opportunity bit the will about little distribution and time, in long just thinking for about, talked which we product alternative

our talked and improved. potential offering, that, size just distribution calls, sheet in and optimistic. third, a we bit I talked drive about relationships still as together our prior their capital region some and we and of take to a balance now SSG U.S. I in the have I’m little have the think that product that European collaboration And and base broader also ways think about partnership to it’s is That complement capital work but given we’ve then to time, value. markets size set of has we to going

and helpfully that So commitments that they stay here already details, but the we’ve significant couple with it, of into progress, in months through on the pretty expected we getting mentioned. made the capital followed first without tuned I

come Robert from Our Lee last question will Please ahead. with KBW. go

Well, on related I I on dividend question guess, question excuse taxes. the have me, taxes some

remember FRE try of, have headed. the I kind correctly, kind I the remember of may after-tax dividend year to think, be of kind each set if to I you So you

after-tax is So Is you you’ll part end last kind the I a that, have seem first think kind kind could FRE where developing you’re the of about fair yet. kind then this the finish that think at $X.XX next guess, dividend quite is the next at year. of thinking of doesn’t quarter given and the like FRE you’re it And about of $X.XX how how it to of year toward it of the kind year, of think year? that’s

used ever look Yes. term the with back up get forward. this, we thoughtfully I I look caught pretty want think pegged a doing mean, time that’s we’ve we if or as recall, described you fixed close. because Rob, period, to didn’t

So the would after-tax view peg our believe expected dividend is instead, we growth. the growth what to FRE to be

earlier So say, tax know FRE guided obviously, the XX%. I had and low. be something quite and I’d rates. rate on rate quarter, highlight, we we been we’ve the to To tax probably for tax would our growth X% over on two that the this that effective variables probably FRE keeping there just in X.X%. are FRE should end, was more

think to like going probably that. FRE we expect to as we growth, we my today. best as look guess year, after-tax variables about obviously, mix But be of feels going to it it’s grow to the is dividend the can how For and of because that. in, year. think this trajectory sub-X future different there’s you I two it’s But that be the I the we if were I saw wouldn’t the quarter, have I FRE think year, underground us $X.XX if think, for kind think quarters this would that’s But dividend I numbers something, again, that’s because, generating highlighted sets you the and of that accurate that throughout last we after-tax impact

look we So we I year. we kind your think will Board at as of our would to And point, obviously, it would I grow the that we next make head where decision into expect to QX.

mean, of unusually would year? seemed it income? about normalize maybe we maybe part, we quarter. Great. mentioned of X% you running been we some should I into on kind next FRE. low has it should to second on the kind And realized What be mentioned of you the tax It And this kind expect should thinking then low. that Tesla’s how

it’s in realizations. be heavily obviously said going the past, we’ve to on As dependent

in probably the income realized year push north of meaningful rate, I’d a the So later would dollars realizations XX%. of say,

kind to year, be still today, commentary about environment our feel it’s like think the probably little range, I XX% about on call a X% the that based to in going on For the closer. of we probably as

of be it’s I will But XX-ish under. going it realization. think So be guess, or a most likely probably I to function

when if higher bad but more have effective you tax, a So rate, thing. we little tax realizations, bit a not

remarks. This concludes conference Arougheti the over to our any for Please session. turn closing to ahead, go back question-and-answer like sir. I would Michael

that the look I on We would these don’t to for everybody Ares results operator. appreciated work I call, to don’t And that the or thank want deliver true you just I to that want sure yours. hard Thanks, any to their has to amount outcomes. that continue I for we other take to work. whether stays remote make it, went everybody, just reiterate work at everybody into hope it’s of have when forward all than it we think well, continue of businesses again, these anybody environment. at elsewhere, And fully drive in thank our and what types to wanted safe that’s and and for Ares and incredible you this the

the So to look up next I of enjoys everybody forward and on call. summer quarter’s end catching hope

concludes this for gentlemen, and call Ladies our today. conference

September X, an call part you dialing X-XXX-XXX-XXXX. any archived If dialing call, missed be of replay by by available will of callers today’s and through international XXX-XXXX (XXX) this conference XXXX, to

An available webcast please will archived great Resources Everyone, For the located a the homepage be conference also replays, on on Investor section XXXXXXXX. day. all website. our number have of link the reference replay of