Ares Management Corp.

The stable outlook reflects S&P Global Ratings' expectation that Ares will maintain good investment performance, despite increased market volatility; solid growth in FPAUM; and leverage of 1.5x-2.0x in the next 18 to 24 months. We could downgrade Ares if leverage increases above 2.0x on a sustained basis. We could also downgrade the company if we observe material deterioration in the company's investment performance such that we think its ability to raise funds and maintain its earnings power has diminished. We could upgrade Ares if we expect the company to maintain leverage comfortably below 1.5x. An upgrade based solely on improvement in the company's scale and diversification is unlikely over the next 18 to 24 months. We expect FPAUM to grow

...Ares Management Corp. continues to exhibit good AUM growth. Ares' AUM reached $325 billion at the end of the first quarter of 2022, compared with $207 billion a year before, boosted primarily by a combination of strong fundraising, acquisitions, and market appreciation. Since 2008, the company has generated a compound annual growth rate of 21% in AUM. Fee-paying AUM (FPAUM) increased to $199 billion from $128 billion over the same time horizon. Credit makes up approximately 60% of AUM. Locked-up AUM provides significant visibility into future cash flow generation. As of March 31, 2021, 88% of AUM and 94% of management fees are from long-dated funds or permanent capital vehicles. We estimate that 25% of AUM is permanent while nearly 41% of management fees are derived from permanent capital. Increased volatility could result in lower performance fees. A meaningful portion of Ares' earnings comes from performance fees. Recent market drawdowns across asset classes and challenging macroeconomic...

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