Ares Management (ARES) 2 May 242024 Q1 Earnings call transcript

Welcome to the Ares Management Corporation's First Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded on Thursday, May 2, 2024. I would now like to turn the call over to Greg Mason, Co-Head of Public Markets Investor Relations for Ares Management. Please go ahead, sir.

Good morning, and thank you for joining us today for our first quarter conference call. I'm joined today by Michael Arougheti, our Chief Executive Officer; and Jarrod Phillips, our Chief Financial Officer.

number during with the a will today have available be Q&A also of us executives who We session.

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

results, results to that forward-looking future such also purchase note nothing update past Ares guarantee any could is and statements. sell materially, a fund. solicitation in of we and call offer differ actual an this any Our undertake offer obligation not performance constitutes to no on to interest a Please an of an or

earnings measures. Note holders our second file of common an to The this of XX-Q over quarter record dividend nonvoting and increase same first June June of per for on to from in certain GAAP our we accepted financial refer comparable ago. During XXXX, of on This representing Class common to this should quarter Investor will accordance refer accounting $X.XX XX% measures call, to company's substitute on A quarter a website principles. measures, will the share non-GAAP the we presentation Please for our dividend section measures declared we stock, Form reconciliations as Resources on with announced or that a that in generally year plan available prepared not we dividend to morning, directly the isolation later for XX, which be paid of our be most considered month. our XX. the the

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

strategies. our our a morning, fee-related everybody in first XX% financial gross raised, well. in everyone. XX% AUM, growth capital and in key good generated across investment metrics, from earnings, across double-digit with is strong drawdown investment and billion deployment over funds strong doing year-over-year XX% including in increase hope performance growth Greg, growth Thanks, quarter results our We We $XX

billion, the reached up year-end Our well goal transaction than both very and well that available paying to environment yet positioned of as fees, records is for XX% not growth our year-over-year. In billion of we our $XXX AUM AUM new the $XXX capital ahead XXXX our opinion, increased improves. and trajectory more strong which growth for outlined future we're

potential by balance increased had net XX% $XXX more fee-related and more year-over-year, comprised we performance first be quality, our million realizations light, our $XX XX higher past our entirely expected, AUM seasonally incentive-generating net leading months. earnings. As year-over-year stable quarter accrued the our realized build income income income realizing than our continues of performance as million in over to increased despite by performance income Yet, were future to

European our previously, higher most The and stated with we second quarterly of resilient face remarkably As from the quarter. realizations of be is the fourth funds companies we the quarters, fourth operating this and our our to whole, sound continuing U.S. fundamentals occur be With witnessing key number rates sectors in the European-style and of the efficiently amount significant year to adjacent borrowers. incumbency is borrowers retain strength expect credit remain indicators in economies enable to single-family global continue levels interest we're over flow real the fundamental existing are a invest benefits levels, below the of consistently markets us our across rental. to the to continue on that are, allocated in the and lending housing generating with showing and anticipated portfolio opportunities support multifamily the In portfolios earnings proving our companies. In sectors, capital experiencing cash growth. of economy largest in quarter more default the while growth. Aggregate and region The a portfolio, Asia QX, rebound credit upsizing in growth highest corporate historical our to in Pacific direct our like of student in industrial, strong first of are our healthy. XXX not be and seeing we estate, signs are continent the activity well the within moderate and exclusive to portfolios particularly into in

and credit, strategic have of insurance, billion top global have the the to Europe $XXX lending one growth in firm, estate credit, debt and European global of credit. U.S., that define are as private and which credit, these as we and now Asia continue we is debt alternatives. real secondaries, as credit, believe spans sectors direct and in we credit, initiatives asset-based opportunistic one that fastest-growing AUM, invest what the opportunistic debt. We and across real platforms over and asset-based We debt, built markets, particularly in we in of infrastructure well as within addressable we While our in the infrastructure such Asia large it believe transformation infrastructure private many private early credit, of fragmented in estate

in we've areas. growth leading in these investing years, have we the And in of platforms believe that many future these For today, been we segments.

and of now largest asset-based AUM credit. non-rated capital approximately one is pools which team, in what credit noninsurance alternative our believe billion on focused XX manages professionals has $XX.X example, we the of For investment

players modernize next the dollar providers, team primarily and transition As traditional investments the market several solutions to that making private clean ideal multitrillion financed by banks for an assets. Similarly, global flexible seeing partner of believe we're capital been from for growing a other the noncore example, capital is digital benefit that a has we energy. Infrastructure solutions. this to sources infrastructure away banking debt demand decades, the from necessary capital we've been historically where long-term need for transition infrastructure and over sector's makes significant an as private our

private providers infrastructure the credit, trends. is Our positioned team, leading is of one we well these for believe which of

as across capital new investors' to We as continue allocated a investors fundraising strategies we're across remain our high platform and investing continuing existing an increasing investors at retail percentage institutional under capture rate. believe meaningfully investments. re-upping We funds our are into to to our see of that strong alternative and both momentum

success the decades, has different a apart ourselves cycles our as deployment in fundraising follow over which service. our market differentiated believe investor and come environments past as also that view assets insights supports we set Our economic rate and high-quality We well that performance. with capability

we quarter, sizes with exceeded in of were largest various private the and credit now our During vintages. previous funds our the each first market their have commingled X strategies active the

over an total the another in at $X.X approximately equity to equity the subsequent Our with investment in and quarter summer. quarter $XX fund leverage. billion billion anticipated first occur equity third commitments has commitments future vintages billion fund's now capacity. U.S. raised close capacity additional quarter this senior end, direct lending We potential and in million in raised in $XXX $X.X billion current The in the anticipate $XX and billion and fund This final compares end to $X investment previous sometime will commitments.

absence billion capital, equity EUR in quarter quarter, billion, with vintage year-end. equity investment billion of fund are a quarter Both these the Our each significant end. XX.X third-party fundraising close large capacity The raised and current and We're commitments rated to respective our investing anticipate potential XX raised at $X.X SMAs X quarter anticipated strategies, with fund added clients current X/X towards We $XXX total market. of commitments European over final has direct strong billion upsize for over an additional previous X of exceeding for of million funds we in EUR bringing which another the has commitments first the the end despite EUR raise fund. Alternative EUR insurance an already billion. lending X following one separate had leverage. of fund continuing future deployed XX of the campaign a in equity additional to credit in incremental already in

Our we more credit this open-end to than less in $XXX year, twice the during including nearly credit the ago, new CLOs. AUM. In quarter. in liquid X recovering, raised the $X.X CLO billion alternative up raised which first years its quarter, markets mandates, fund fund, a has billion Since $X than million with inception grown to X core accepts subscriptions

additional in of April of CLOs the and of all for have through amount the priced raised exceeded X months first already CLOs XXXX. X the year also capital in We that we

internationally. wealth solutions are inflection funds Our to is reach accelerating experiencing efforts and point, to an beginning our our of distribution, platform domestically where both perpetual from expand our inflows several

Europe the our we're first and material interest than this higher inflows were the outside inflows quarter totaled a in from increase of billion, XX% last our $X fact, fourth in quarter the wealth channel, quarter from seeing year. and more equity came Asia. XX% than In U.S., which

raised Our and quarter's $XXX fund driven quarter. its ASIF, by direct our million strong nearly nearly inaugural nontraded million raised inflows equity BDC, Europe, $XXX in our lending in were ASIF, which which

private flows. AUM secondaries Our billion AUM surpassed and is seeing our gaining fund, diversified and $X in ramp nearing billion is a new equity fund, $X significant APMF, in credit CABC, momentum in also international

leverage than This with our Ares raised amount $XX platform of nearly nearly management Wealth into X approximately credit in So the billion X our momentum our had $X.X the the we nontraded AUM, wealth products, in ago. including Solutions vehicles, following continued inflows. Across that the in in we years Xx another for equity million April in quarter. $XXX channel wealth reached less total we've AUM billion launch Management

distribution number excited management Looking our further as existing new enabling growing product channel us our of and penetrate the distribution ahead, broadening wealth further in attract partners. to a to we're is about growth within suite

experience increasing Finally, to additional with by Aspida in billion, under $XX $X.X total growth continues AUM. reaching billion an management strong assets quarterly

insurance third-party expect sheet sufficient the raise funding will for for seeing its months Aspida maintain with We believe first Aspida. quarter we provide are to us our We to interest in approach capital the in asset-light platform runway and the to foreseeable an trajectory future. growth to coming pursue the affiliated continue and increased raised strong third-party balance in

at had or quarter firms This on-balance insurance X.X% of held banks stark the the represents credit either country. total the $XXX end, and contrast vehicle. and directly less amount in across approximately affiliated assets invested our stands by AUM than to we million sheet On our balance insurance Ares of in in credit assets sheet

opportunities seventh funds name equity in several. value-add asset-light over approach including Our less we across X entire our we which X.X% than investment our and different credit estate our infrastructure climate second across year third European fund, businesses. Overall, our fund, to fund AUM, sixth secondaries XXth infrastructure market the our the expect funds our this commitment fund, fourth an special of funds infrastructure fund, investment to fund, discussed, credit, U.S. value-add XX highlights portfolio private our real debt in total our our and corporate our strategies, represents private

As markets Of the credit market the active, formation driving out across the and investment M&A. coming transaction increasing loan are related volumes. banks transaction more been is with date to syndicated become from note, activity less more markets. have drawing competitive activity robust traditional U.S. significant becoming increasingly of has a portion the refinancing CLO this in new is more

Asia net which gross over of deployment private fee-paying more $XX.X in nearly activity increased, we Although year, refinancing muted, in in our little growth comparatively in activity our in to pickup credit. was some XX% the levels $XX transactions first the a and our deployment activity increase including quarter billion AUM. increased last Pacific to also expect slower, a slowed markets our Since those regions. In billion, see are European quarter,

more environment. period, to were the in in environment Notable $X.X $XX various portfolio powder in deployed transactions invested and an digital double which robust have quarter, larger conducive deployment middle slower from the incumbent of team. a companies in demand year market transaction both and infrastructure that equity solution. Alternative opted include and an forming to infrastructure with capital relatively we this year. Across to newly as continue of deployment asset-based businesses European the LPs we lending platform, dry significant private we return to billion consumer companies, than demand submarkets. new for well improved Park, the Direct as However, U.S. equity a market investing acquiring than be amount traditional our the ago more in M&A, conviction is gained in as billion for significant will the loans with credit a more originated Lending, from share We active market nearly quarter leasing with Ansley and partnership direct that invest borrowers from experienced across finding a opportunities equipment pent-up upstart

venture to seeing low core continuing pipeline sectors debt, Additionally, remained particularly $X.X transactions values. team transaction a LP-led new substantial expanding and opportunities within to solutions. the double-digit by opportunities. student in and return is opportunities growing, activity our as the We capital within volumes primarily supporting senior driven needs and market we compelling multifamily over GP-led further improving momentum And billion lending return is joint real more Subsequent estate, structures gain announced funding in anticipate GP active secondaries, increase. and and LP-led transaction and economic mid-teens equity originations. In powder, with finance, housing. intriguing opportunities and gaps our non-QM our in the of reprice outpace structured quarter certainty space. in in fund dry within end, NAV portfolios to residential are opportunities, industrial, liquidity We're

to like now, April, for the quarterly financial Jarrod? over turn LP-led in largest secondaries completed detailed highlights our call more we and on comments I'd As history. And in equity private Jarrod the an transaction firm's our to outlook. example,

you Hello, Thank today. Thanks, for joining us Mike. everyone.

to high-teens AUM, AUM with fees, as our realized future along earnings continue leading the yet fee-related we paying results with not which XX% mid- in a deliver income and fees, of growth. strong of growth indicator for We capacity quarter first in in our view stronger management growth to

current FRE-based the on dependent because of geopolitical inflationary visibility sustained risks, less uncertainty from data timing high stream activity. arising strong high-quality interest provides our and the With rates, realization it's the earnings

taking revenues. high, over As our of we're return first levels future fundraising, a for with in Mike the activity. Starting solid to billion to positioning M&A start and us growth capital a stated, of and in advantage has off reached a well higher raising new available quarter, $XX

increase our the available Our totaled by over last quarter, an management million period primarily deployment the capital. the to compared fees $XXX same in of driven XX% of year,

should spreads expected, $XXX fourth majority also the improvement as XX% XXXX, vast of margin changes of quarter to of environment, from in to fee-related longer or XXX asset As first FRPR interest totaled from segment, revenues for credit assuming valuations. fees management performance FRPR FRE quarter the higher modest a our our by no is significant the were higher million, benefit roughly XX.X%. up crystallized the in driven points basis quarter. In and the credit rate

growth activity during FRE continued of expect deployment year. rest throughout We momentum the as gains the XXXX

the As Mike first rate differentials continued on constrained bid-ask seasonality, activity uncertainty quarter. values spread and mentioned, realization our in

a quarter, in million net ago. from of up performance a we result, $XX As generated realized income the first million $X year

quarters. The on mentioned make several the realizations waterfall income are funds realizations their that that credit fund compared earnings start larger stage smaller life European-style will at their distributions more seasonality and of calls, This our funds to payments cycles. European European-style currently larger tax of previous our are until lives. the cover to persist end eligible in older, to the of of early waterfall we've due nature our concentrated end performance realizing seasonality European investors regularly funds is seasonal As meaningfully to in current fourth the and primarily our of second toward

XX% spread the For it's and to second other quarters. best across the the in quarter, fourth XX% quarter assume in XXXX, XXXX XX% and

year. years full increase funds XXXX XXXX the continue to quarter believe with and $XXX over XX% of from first in income previous will million, the net income the European-style that we realized in X/X the $XXX For in XXXX, a that million over was performance XXXX. Realized realized amount waterfall generate and XXXX

quarter performance the Class stock was entirely After-tax due $X.XX, for common income fee-related from limited realized of share XXXX. quarter. first our our income Importantly, to income was up comprised earnings our per A realized of XX% realized the of

year, up the XX, March billion billion, stood previous $XXX from XX% at a representing of increase. in our AUM As $XXX

the reached and across at XX% pay quarter, billion our in previous deployment fee-paying the U.S. from direct primarily management opportunistic which the our capital, invested year. Strong end of up of credit drove fee-paying and growth European alternative all Our lending, on credit $XXX AUM AUM. strategies, year-over-year fees

management deployment fee fundraising for our and building higher shadow future sustained Following momentum, AUM, stage setting the growth. we're

Our quarter billion million $XX over available deployment at management AUM for paying end, fees $XXX representing in not future nearly potential future totaled yet fees.

from XXXX billion. by the AUM to accrued we this quarter, potential. billion interest income out compound our accrued rates first $XXX eligible net $XXX income is of over the reinvestment strategies. net earning as significant of incentive amount, performance first period. of million above In $XXX XX% million Of Our performance representing performance in the uninvested, in at their quarter to funds, $XXX the continued increased funds are credit hurdle was fee quarter European-style to $XXX end, or in XX% just Of coming increased million income with waterfall $XX that million our

success performance, is market we consistent fund our by performance believe investment of terms driven throughout fundraising cycles. in Finally, our

XX performance group, to the for gross excellent quarter real composite reinforce that the for quarter's quarter last we over approximately equity, primary to to and positive. X% returns returns XX credit across quarter, nearly from infrastructure composite X% returns with months had quarter composite for ranging ranging assets, last we credit first U.S. our continues X% approximately generated and X% our view. in gross the real at Our gross the And debt months. Across turned and strategies. Across XX% the from XX% estate returns another X

positive As of in to portfolios, recovery. Mike a and see market we real fundamentals signs we're continue see estate beginning our stated, to

X% in composite private Our equity the quarter last approximately was over XX has months. flat but the returned

send XX. I'll it Mike earnings year, common closing long-term for latest XX% look on we for portfolio equity Investor the new providing EBITDA to share gross per private Our year-over-year growth. objectives back ACOF at a track on and sound since comments. has IRR growth guidance remain corporate fund, inception. are dividends VI and May teens for forward for Overall, And we fundamentals XX% with our Day generated fee-related low our our to

also our but our future momentum, highlights not believe growth quarter potential only We lines. business Jarrod. Thanks, significant across our the first Great.

significant these capitalize management Over coming growth more debt, estate are us profile. the and secondaries, which out continued years investment markets years, credit, We now to platforms wealth competitive. our get in and alternative These when we've segments past positions several also credit, on building our real in segments online heavily to investing APAC outperform infrastructure, strategies, new distribution that growth made scaled in more to investments areas hope new in and insurance. invest the to drivers secular include ahead. We've contributing

into work style promising our years quarter's to growth deep believe our our now can substantial record earnings a financial As you first powder yet appreciate fees. consistent waterfall and our of our to long-term XX% that, European a support AUM of we positioned streams in I funds results, limiting always, in I'm weeks. the as and And with dedication, I and fundraising We business not markets. And operator, up we have for company. And and in forward dive amount hard you asset-light earnings outlook paying dry business while come. with model at remains from and the our our Investor we're provides discussing open few stated, think grateful look to our as growth, robust, can with see the questions. the Jarrod momentum investors' providing our and Day our for into We growth volatility great line team's ongoing visibility exposure our a from our for the future of

America. from of first The Bank [Operator Craig comes question Instructions] Siegenthaler,

lending how So are supply demand and perspective on deployment in the we wanted evolving. your dynamics backdrop direct current the

asset translating So from is first demand other syndications? this bank on are what And spread? how you the into side, seeing managers,

Sure.

quarter-over-quarter given which market think ARCC think to market issue in deployment. activity. We've do in syndicated and I has right incumbency. private and see the is I that you share, at performance defend but if second. could I skewing and very and our see elsewhere what doing come that the look not to that we're going portfolio is obviously, hold new So grow, size and the think year-over-year continue activity just differentiated gain our share, just and now, been portfolio it you're to transaction I'll in we from transaction activity you a gross refis back high too, to look high-yield given that businesses, muted, credit And that been loan more than towards able the at

a new outperforming. tighten And wealth tightened from credit flows But the last so capital in I like more peer us. One the would could the we activity for they supply are expect on the gross particularly think set, been that's, the of pipeline feel They've much on a this. indicate of weeks, private you get growth a basis, think, part I good the differentiator, here. may is, in particularly the other think, say relying equation their here. accelerate, about have little really and the deployment market we're over overly net couple versus too, and harder would bit they demand, of capital. terms do I the the stabilized that I when of and up for deployment, some hold fundraising to And just manage versus spreads into of frankly, get that both until you back see I channel

one gives bit in I of us cycles. is we do context ways been and able that the a a drawdown capital So to of of the in nontraded just little terms that this funds of outperform through have we've advantage diversity the feel

is follow-up which from side, a business. private on equity private of also the is what companies, the know just the I Mike, outlook sponsors and independent issue new part

pickup equity private a of for peers your in are Some looking transactions.

certainly could side. on that So sponsor the help

I for pickup Yes, a we're -- think would we well. looking as

the benefits that year-end before private being in of in the become developing numbers you pipeline M&A the talked call. public. We our market about One is this of see

of capital, transaction right to accelerate activity and the will in definition, definition see pickup by Obviously, whether aside market side world. down rates, a loan spur from nonsponsored rates and combination stabilized technicals by go of is and market. rates, as return of be an activity. high-yield a well. One both that M&A I demand it, the pretty activity that now a think community stabilized We the part transaction are within And would as would significant the of also That's ingredients turns equity the transaction and part activity, the that sponsored to the machine there a should that, seeing for is LP accelerant. flip the on, should in to putting private spurs

So indicate everything shadow the you seeing Obviously, seeing pick side, is beginning flow picking also the optimistic would side well. advisory and year. real that we're pipeline move you they'll sell up the deal transaction as you think as as that we're activity estate will well. And in the and we to tell up there that to look talk the too I at of if the through business, we're is this community unfreeze

next comes Blostein question from Goldman with Our Sachs. Alex

I with or wanted you business. maybe frame today AUM and And the momentum little sort in you either bit third-party help respect what the opportunities of about through Ares of fee structures kind Can with and insurance however talked a fee-paying of us you've like maybe for rates to building that some looks frame maybe start in to want seen there. terms space up talk business that the to fee that? about you

does granularity little Just just was management up that? fee? straight more fee-related that get there. include to attached revenue a performance it is Or to So hoping

Sure.

out, zooming important insurance obviously, position us, private just So credit. maybe someone market-leading like obviously, one opportunity with for is an in a the

to our to to to $XX business, insurance $XXX as out expectation insurance here affiliated by insurance that, end you large our regard growing. With as of practice XXXX laid and solutions of significant Aspida, a million fast be insurance affiliated own we the platform, pretty go of well would the on our clients Day our build billion both that to an which support Investor chosen of summer amount business continue have third-party back if of approach in XXXX, guidance. We AUM

the not track of see in could ahead for that. you And on numbers. that, are We if that pacing

our and relationships affiliated raise now. or continue combination the the capital about ample grow the annuities to healthy we of nicely growth reinsurance quite business. up billion to second right very organic that quarter in of our we would company is the through And and exceed have as strong for that raise is is We distribution fundraising the be us to there way expectation objectives as prepared there. AUM we'll equity talked a meet $XX that very would The that third-party remarks, to momentum business. insurance make growing

there, the actuarial, the is terms of affiliated investment used entirety the balance In get that We on capital advisory, probably what do provide of an administrative sheet seeing. you're to for P&L. fee strategies structure sub-advised markets, fees lines, the the cetera, fees on the presentation in Solutions as arm's Those fees we on then and showing -- length up the et terms business fees the the Insurance are well. in sub-advise services financial our not in of underlying

to nurture billion over continue that we our secondaries alternative to business. of to and to up lot the benefit XXX opportunity which our credit relationships. this is our will goal to insurance an is clients, now showing we been close separate have of represent with pretty go a But our insurance continue in financial to that and you that approach pursue when reporting, $XX the So segment asset-light grow vocal business third-party

third-party And so I see grow you'll growth of think continue to business alongside the affiliate. the rapid the

you. Got

there. you demonstrated Okay. can outside of and maybe guys amount secondaries, continues sources tremendous sort is growth the in the of biggest success years be spend private what on the in obviously the spend outlook of other And the of question pretty estate, you over parts around strong kind then real there. on maybe to expect a just you of growth are outlook, second couple business? But have my and credit, minute fee management of a things it's of equity So minutes whether credit

I think come our in Sure. the the good of position that is, underappreciate in market, has to out stake we've business. leadership think, this we position staked the other and that they Look, credit, out before, I parts appreciate news we've leadership said may while the

grow to growth that continued real and and our And to were our look Europe. management both expect would you If real fee diversify, the assets I platform. in platform, continues across business in U.S. at estate

business, and look transition you climate obviously, that's practice infrastructure meaningful our infrastructure If at growing. energy have transaction a -- we

into pretty insurance, the meaningful undercapitalized, continue on is fundraise management the global that of that infrastructure market addressable that's talked We for that one are We a there. We as our us. is to lean will sixth able and debt drive infrastructure be going be the expect, about growth to engine fund leaders to we significant believe debt meaningfully space. market a we'd fee that, growth for meaningful

So most, businesses not trend. are if at the the across platform all, of growing

Some will grow around the But and assets strategies in credit we've faster scale are cetera. are the created information now competitive show and lot secular secondaries real I the the that et starting origination in you'll to up a and and of and mature backdrop. think of see to continuing diversity PE, advantages given

to -- growth business So going with every into see from business, But you expect every going to I you're line I some almost trend that of it come without should you think here. smooth growth. episodic if

question comes Steven with Research. next from Chubak Our Wolfe

how levered But and that hire with out growing especially with burden, X% a it's for backdrop? unfolding, just ride deteriorating credit see only start aggregate nearly longer corporates do AUM. opportunistic high about to on question given opportunity positions, in you a flow a credit wanted number just cash of So interest prolonged credit. of opportunistic grappling the Recognized

asked noncredit for asking Sure. growth areas. because that Thank question you Alex for

most need on own for price the while you think, would that's that I thesis, debt a create in plan, way obviously, which areas runway and longer I and to performing the environment. credit, you a on NOI a is where to if of alternative owners higher to of to is broadly service of nature up, and rate with a turning hit we realize call disproportionate what on conversations nail discount business credit, I not for so is it the amount of I paid In opportunistic my and here I well. come values within are longer And is flow EBITDA credit and that businesses as cash have where of exciting the And a debt teed just which head. real we difficult most the largely on are are having and becomes to institutional high-performing transact tight. The a and same, going to interest on. asset asset and down I'm investment rate my different environment order have companies assets my rate a service full execute one need

in a credit is going big price equity into which run-up equity higher And is solutions, assets singular equity to complement private asset of sheets" I that full and so terms balance average real a from deleverage to on institutional structured solutions. of an solution high-quality and debt on owners private in them you at if leading equity reduce that liquidity up today on burden. credit cycle. NAV going particularly calling plain them the of beneficiary refis. hiking origination finance think multiple two vanilla close calling trained is company on private resolution. be opportunistic were most to price equity opportunistic with issue "bad be We're could standard portfolio calling environment purchase we sponsors is purchase with rates, some of secondary on because fund deviations the acute We're the on and and we're look need And loans ranging calling that. The historical rate But with them to with issue, We're that the cash here in with than private solutions at form of level. the

back And to cycles, about ground a the And is PE DPI that experiencing structure And versus to that quality so very, prior it's capital solution. I dollars mentioned there's get sitting market, standpoint a the powder. uninvested. private PE the business, in market XX% you that capital for you probably go with now, are difficulty particular, the from of in of ground to that's dry in and the been filled if in today $X equilibrium highest typically needs LPs in amount the X.Xx had equity some need in there the you is gap at the kind there's than very where interesting, to argue even $X back could acute. undeployed get the

be there into to these structures reinvestment $X.X is new invested a use these for how the trillion to owners in decisions trillion sitting either world very capital portfolio some is of as to $X available needs or deals, made powder. So in and precise where existing by dry to being companies the do that

so and company not the runway. but exist that's gives credit whatever addresses may is capital opportunistic equity, challenge And a to very way and logical the to liquidity dilutive bring

that the that for optimistic fundraising to the market is as well. this of vintage fund this year we're next to and of So bring part market strategy strategy very part year for our in

areas anchor outperformance gross for origination gross on for And given markets some quarters, sources see any trajecting the versus we discussing was you period next that ratio you the syndicated of historical sponsor can versus the how the M&A sort net that gross certainly Ares. whether expectations for also relative building follow-up, active origination do the appreciate to origination few of cited just were strong there's earlier, of my or could But over of differentiation, you in wide were just paradigm the continued open? activity, where dynamic a

strong high its gross our in a credit, and XX% the credit deployment. all are net I in or European net were that really deployment it than positions the look in deployment the billion over businesses. the QX. to to where out and to $XX.X in look refinanced our look to U.S., if is is strong then way billion deployment, roughly and get quarter to exact back deployment you typically credit $X.X of private mean gross got private the think at credit a that good generally book, European had then in And credit. probably little put very To Interestingly tighter of we were gross two billion. on strong came That I this one in in book large and of deployment into we of basically, about billion, if historically. had that. a which into we episodic, private gross go of about with be finds gross meaning think to say able historically, if $XX.X we've gross would XX% has of an can and it our experienced of perspective, so net, had follow multiple history in gross the And a you decades we for we very adjustment. I net it in you'll anomalous cycles, at was gross net Yes. I gross the been up typically $XX deployment deployment And obviously is credit,

And talk the so what I the gross April. transaction continue but you on to And net see see to April, in quarter. there improve backlog even saw already think pick as we would see though we from hope earnings you through pipeline early, building we in and and only will up, did and It's through it month, begin call, it's still net that improving the to QX. is to about start gross pipeline one the backlog the activity to expect ARCC we would

Ben from Budish, comes question next Our Barclays.

secondaries, I business, wanted management trends there equity, I real to credit we some apologize movement it ask had the from the the saw, some I looks private especially was mute about outside QX. assets, of fee hit.

anything highlight mind? in anything there there's curious keeping to if or should Just we be

mean think ahead, I I go No, so. don't Jarrod. --

Mike, that different in Yes, and quarter. fourth fees was in real it million That there's have those about the We $XX.X either two in catch-up did that segments. nothing about got way. really You both assets. we secondaries some talked

a what bit you catch-up the fees some your now have it's the those little then and when and way of occasionally, in just effect you And annual our being is rate. regular just there. there's funds there part downs pay So fees run equity, in private of of aged saw portfolio within go down

really still -- saw for kind you still of We noteworthy. nothing quarter-over-quarter. fees, management saw you those grow adjust there's fees if catch-up So

Makes enough sense.

or just if line one you're management I I may if was to add because going didn't the I item asking thing, about rates. fee Ben, know fee

important. it's think I

look If fee we've XXX maintaining basis you between historically, points rate XXX a consistently. pretty and been

you'll If you quarter-over-quarter see rate strategies is that flat strategy has management slightly by strategy, been the up. were to actually go and in certain fee

think that narrative quarter-over-quarter you the bit a little are but mix in aside Jarrod fee, may see headline a highlighted, of the it's holding. will that rates I management variability in given slight putting So fee the a important shift quarter, show

sounds Mike. of versus good an of parity, wires growth the penetrating asking seeing And you're some us the the that? more it. terms expansion that, rate, partners more my appreciate terms fee like Can deeply, of your about Got just comes update give was maybe you just in so for I like much existing of I that's how distribution it follow-up, kind side, momentum. helpful. on future in things product wealth from

servicing a we looks to on have linear distributing XXX to drivers where sense management give professionals our focused Yes, growth really going about business wealth singularly give maybe today, -- I can't that on like what we and you the our a just for are wealth And family come view wealth from. are product. of people of

are partners and we a products fund, have X in credit of QX existing nontraded in the we as REITs, $XXX interval Today, market a number of the into funds we as billion well. The as $X.X platform non-traded credit raised distribution fund, fund, first a billion to well quarter. year family, build continue the we remarks, number process up on our as new of the the was in a introducing about a that That out $X about talked in European million BDC, from equity fund ago. prepared We have. and private the

growth million. raised X.X XX% plus April, we on quarter-over-quarter. growth And side and $XXX roughly equity the year-over-year times So alone,

be same the leverage, assume a if roughly So roughly you amount. levered that would X:X

to we're highlighted European credit is our a lot been has and And think very we're which it's a a growth demand seeing combination So rapid the AESIF, as had fund the fund, and platform. spot increasing in strong We of real lot that results inaugural of partnerships, we they a and see that there's I us out well. for international that of for our a distribution. quarter, continue building very distribution experiencing, international bright

add distribution and products. to to obviously, continue partners have we map, new road a So

will think grow. diversify And and both these so I numbers

comes question next JPMorgan. Worthington, Our from Ken

LPs is reflecting fundraising strong how the And XQ at enthusiasm? came out and which hit more data is, highlighted at And slowdown. the is that industry be levels, private of in all fundraising all? sort fundraising changing indicated of having ever way this you the quarter, yours recently falling sort backdrop peak last XXXX. lowest You dialogue credit with been highlighted 'XX particularly modest with Preqin XQ you're and changing with contributing any year your credit private private the market a this has what since fundraise again, of in may since for And to if strength credit. so, of sort in

has been experience. our That not

base managers some time about that with We and more opportunity of all that the And needs. talked our is of have markets scale. the fewer about for talked one consolidate, doing that can leadership we have business these as see LPs need quite broad we the you a position are scale just given that things with larger of

in credit, the some show the managers of the private and fundraising with hands concentration putting top just largest private And the data publications the debt of near or that frequent list. good pretty at of there's so and the from report us other and aside deployment

senior X vintage. loan European momentum not fund. So exceeded I fund, very that We the estate exceeded We're we've prior talked real seen seeing experience. thankfully, about third already think, prior in which good we're vintage, has experience fund, which our already our having the the has in positive our credit

we credit we indication, wealth brand our As there. continues interval have if private I I obviously, in our working the the through think mentioned, or to resonate and infrastructure And BDC sixth any channel are funds fund. that

experience, So as not that watching but industry the data well. we're our been has

certain work is. see a of there think managers. I are And who here being direct to where one think there we credit to a you than be do to it beginning managers I beginning it moment rate certain could want But and think the see this, to portfolios demand, and bit of continued with performance that performance. that and seeing expect no, you little many easier are people thing could is you're cautionary through great attribute would of the their hint given continue. to people maybe dispersion see lending that environment, If underperforming, we're frequent in And really

Our comes Morgan from with next question Michael Stanley. Cyprys

debt on maybe for to that, I centers drill and the that bit was data down demand It on a hoping you was estate driving the in seems with a you've and infrastructure opportunity remarks. elaborate to you alluded could like for real side. significant I that just hoping as prepared particularly curious how power generation to taking and I'm you to curious how finance. there to that meaningfully I'm AI that you looking you're the build as you're well need Ares funnel. enhance see steps that will just origination see -- sourcing how evolving participate opportunity out? for the

Thanks, Mike. Sure.

and infrastructure I they're are we'll maybe highlight. would things handle first. because different covering separately different both from So trends two There opportunities them benefiting debt maybe

pointed to opportunity is transition $X to undercapitalized is take significant which capital woefully rollout. you by infrastructure That support data hyperscale to capital hasten market in it. the them needed of of trillion of our digital is estimation, center and just the One that a advantage is to, roughly the the amount

leading that add and in and the people debt capital opportunity. of one that continue market are We providers to against

the of the have the The raised capital there as on digital the side the been second debt. I forming dollars would highlight, which a markets transformation, disproportionate is versus to are support number of equity ledger

has and why managers pace. if went growth largest time. And in of the business, the out equity you This by support at evolution participant and that AMP market leading our acquired opportunities I think under which debt has watch. the infrastructure we for been their main accelerating ownership our some powder the infra is market, that so to not debt the dry equity markets one And the the kept raised have of been that private look reasons

debt is the think estate, equity So that developing think there environment, be the undersupplied institutional relative debt the have going to way credit which the was big realize is. opportunistic in what articulated are real this real opportunistic market. In very form upside on I owned need you holdings. that secular their by it are service ultimately on estate solution high-quality around of is I rate that credit, to is private I to And their opportunity some owners, high-quality issue down assets market that intentional value the and seeing

of what happen, a things through. some given both real think from off going I issue begin then exist lenders as on. you much sitting regional be heal. And if balance larger expect And estate debt nonbank in can so Europe significant are portfolio we're some given capital can and I X challenges to And of not banks, two, markets concessions sheets volumes support in on be of I opportunistic ourselves. balance that and we you'll investment sheets, loans, they're a to be the size on the that amount also market those to bank opportunistic well that sheets as new to capitalize would the bank particularly the there banks share would participant and call X installed challenges regulatory some base U.S. U.S. then to acquisitions of like And will that see of deals that that the expect coming we seeing opportunities balance both, primary bank that going the given thesis. And think of

with Hawken UBS. comes question next from Our Brennan

And a not be fundraising. you far Is wealth too the the that. because see have reliant fundraising couple a balance the as bit about management a that channels? wanted be Mike, channel good that what to of you for indicated on between channel do just desire as I as to follow-ups pro-cyclical? can

of right. as to I is drive to wanting value when opinion, markets those you're sometimes think think, be procyclical. is we investment It ARCC, XXXX is I countercyclical. earlier that in We opportunity way best. are ways that the management, easiest have our the having the since run the learned most Yes, not one to alternative than And an grow

is investor sometimes. to And so know challenging retail allocate on to the relying time when the

point that's one. So number

investor investor is and you So actually that turning with the consistent on when that way a the us we retail to next in for drawdown you're deploying to learned luxury generate oftentimes, out. markets the you is the the off, or early there the in of more to allows way investing gives running dollar much in just because cycles, institutional commingled the dividend, certain market a capacity be vehicle, funds well in served outperformance. The to market it turn challenge you through ARCC will over support the to is and in market decade when And traded the sitting windows procyclical market in order are non-traded needs in capital get $X market. of a growth that put just avoidance continued raising be retail where into

by of market so are the putting capital view. into you regardless definition, market the overarching And

so love the And we channel.

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different the you And balance view do a good channels? between have a on

it you because look you invest of to have the where to X too capacity would and evolution you through to a go weeds vintage lot fund, we the well X at as that of strategy, the in a we expectation and dollar has we gives No. we give over of in terms to and what into I here, have capacity get drawdown ultimately how deployment do to when that that there's drawdown a diversification of be can't but for and of here somebody a that would It's because number much an it what then pacing capacity then a are not then years. is the just evaluation in constant you -- want fund think with you that deployment given any your

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up whether Okay. from lot been taking or given LPs hold. heard whether seems hurdle are Follow-up. Expectations have you would point? a curious that a to not but longer risk-free higher rates to or for on not have at higher changing expect around take or here rates you this be desire rates, And

It's a X very good it to went and never that as rates say question, the in I return and want a ever, not don't infrequently generate comes come rate doesn't up. sound when idea it interesting change because expected up significant has for to hurdle were but we environment. come may asked interest an excess up of it in we

ask downside reality the there's the And someone as within operate the it, academically is to We time From to question do market floating hurdles structure the it. that structure is to way well. rate market. is of so time, the all the but would of the whether

for that for the And have worked agreed to continue so and XX-plus the I years think construct work. has current most people part, we'll

feeling of market seeing meaningful kind the pressure move hurdles. not rate not we're any to in floating or So that

would the closing this turn for at I questions over like time. back further no to any Michael remarks. have call We to now Arougheti

participation than have hope next everybody to we thank look speaking all and a to We their again quarter, you today, other and Thank any have forward don't for quarter. you I to wonderful you.

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

Thank will the callers archived great on any of a section dialing will the to have XXXX, be the you, on be missed Investor by our also a by X-XXX-XXX-XXXX part XXXX, call replay an June June Resources and archived link through homepage located An available of to through of day. today's international If webcast available call, X, X-XXX-XXX-XXXX. you X, website. callers dialing and domestic replay of