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. Current conditions (3Q 2023) indicate

...Ares Management Corp. continues to exhibit strong AUM growth given robust investor demand for private capital offerings. Ares' AUM reached $360 billion at the end of the first quarter of 2023, compared with $325 billion a year before, primarily driven by strong fundraising and capital appreciation, partly offset by capital reductions, redemptions, and distributions. Since 2008, the company has generated a compound annual growth rate of 19% in AUM. Fee-paying AUM (FPAUM) increased to $234 billion from $199 billion over the same time horizon. Credit makes up approximately 65% of AUM. Locked-up AUM provides significant visibility into future cash flow generation. As of March 31, 2023, 89% of AUM and 95% of management fees are from long-dated funds or permanent capital vehicles. A good portion (27%) of AUM is permanent and nearly 44% of management fees are derived from permanent capital. Increased volatility could result in lower performance fees. A meaningful portion of Ares' earnings comes...

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