Ares Management Corp at Goldman Sachs U.S. Financial Services Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Alexander Blostein - Goldman Sachs & Co. LLC - Analyst : So I wanted to start with a little bit of a 2025 priorities question for you guys. You held an Investor Day early this year. You set out new five-year targets, including 60% to 20% FRE CAGR, over 20% total earnings growth, which obviously is important. As you execute against this plan, why don't

Question: Alexander Blostein - Goldman Sachs & Co. LLC - Analyst : I got you. Well, lots to cover. We'll get to all of these topics. I did want to stick with a bit of a macro question first. And this has been really consistent throughout this day and yesterday. The excitement around the pace of capital markets has been robust, I guess to say the least, and mostly excitement so far. But it does feel like the conversations post the US elections have turned a little bit more constructive. Curious what you guys are seeing in your pipelines when it comes to direct lending deployment in particular. It's been a tougher environment to deploy capital over the last year, so how are you thinking about that into '25?

Question: Alexander Blostein - Goldman Sachs & Co. LLC - Analyst : Yes. Let's turn a little bit to some of the more specifics. Let's start with fundraising. As we talked about, Ares is on track for a record year in fundraising. We talked about $80 billion. It's kind of what you're hoping to get to in 2024. You're well on your way there across a pretty wide range of products. What are your expectations for 2025? I know you said you're going to be in the market with, I think, 15 institutional products, but if you kind of wrap it up for us and think about next year versus that $80 billion?

Question: Alexander Blostein - Goldman Sachs & Co. LLC - Analyst : Great. Okay, perfect. Well, let's spend a couple of minutes on private credit. I have a bunch of questions on this. Nobody better to talk to than you guys about this, given your deep expertise in this part of the market. Why don't we start with direct lending? It is very clear that market share in direct lending is consolidating pretty rapidly. You guys have been a big beneficiary of that. At the same time, the growth in some of the semi-liquid products and then the instant demand that that creates in the marketplace is putting some pressure maybe on spreads. maybe for now until deal activity picks up. But how are you thinking about balancing kind of relatively tight spreads in the market today versus the need to put capital to work? And what do you think ultimately that means for pricing within direct lending over time?

Question: Alexander Blostein - Goldman Sachs & Co. LLC - Analyst : Great. Well, speaking of consolidation, let's touch on that as well. We've seen a number of deals in the private credit landscape for many obvious reasons. It's an area of a lot of growth. We've seen traditional managers coming in. Obviously, the headline-grabbing announcement was from BlackRock and HPS about, I guess, a week, a week and a half ago. I'm curious to get your perspective on how a deal of that size could impact competitive dynamics in this space, and how do you think about consolidation in private credit broadly?

Question: Alexander Blostein - Goldman Sachs & Co. LLC - Analyst : Right, which speaks again to the competitive moat. It's very hard [to get through]. Let's talk about another leg of the stool within your private credit business, which is alt credit. There's a lot of names for it, and I feel like whether it's Private Credit 2.0, investment-grade private, et cetera, et cetera -- so it's a big growth lane for the industry. So I guess a couple of questions here, but I was hoping you could start with your origination capabilities in bank partnerships in this part of the market. How differentiated you guys are versus competitors? And as a follow-up question to that, We've obviously seen some discussion about potential bank deregulation. So I'm curious just to kind of get your thoughts to what extent that could suppress some of the supply opportunities you see in the market if banks become more active again.

Question: Alexander Blostein - Goldman Sachs & Co. LLC - Analyst : Okay, great. All right, let's touch on some of the other products and asset classes. I was hoping to go to real assets next. On the last call, you talked about expectations for improving growth. In your real asset strategy, real estate obviously being a big part of that, it's been a fairly challenged market for some period of time. What's driving, I guess, the improved outlook, and what are some of the key sources of that improvement that you're seeing? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 11, 2024 / 2:20PM, ARES.N - Ares Management Corp at Goldman Sachs U.S. Financial Services Conference

Question: Alexander Blostein - Goldman Sachs & Co. LLC - Analyst : Great. Okay, let's talk about some of the inorganic things you guys have done recently. You mentioned the GCP acquisition. It's a pretty meaningful deal for you guys. It gives you a significant -- or enhances really your footprint in real asset space, especially outside the US. Maybe talk to us about the expectations, how the deal is going to get integrated, what are the key milestones you're trying to achieve over the next one to two years, and what are some of the areas of revenue synergies that you think the two of you could address?

Question: Alexander Blostein - Goldman Sachs & Co. LLC - Analyst : You talked about how this deal checks a number of really important growth areas for you guys. But at the same time, the balance sheet is a really good place. The multiple in the stock is very strong. How are you thinking about additional acquisitions? You guys have been obviously inquisitive in the past. Where's that on your priority list for the next couple of years?

Question: Alexander Blostein - Goldman Sachs & Co. LLC - Analyst : I got you. Okay, let's talk about some of the other important growth channels. You mentioned wealth in your earlier remarks, so let's spend a couple minutes on that. $7 billion of equity raised for the first three quarters. Really off to a nice start just nearly over the last year or so with some of the newer products. What's [going to] come? How are you thinking about expanding, whether it's new product, additional distribution? It's probably some combination of both, but help us think through what that looks like for the next couple of years.

Question: Alexander Blostein - Goldman Sachs & Co. LLC - Analyst : Somewhat related to that, and maybe a little bit more thematic, but curious to get your thoughts on this as well. 401(k), it's got a lot more air in the last month or so. There's a view that perhaps the Trump administration will make it easier to get some litigation relief, and therefore more private market vehicles could make its way into retirement accounts. How are you thinking about that as an opportunity for Ares? Also, how do you think about potential partnerships for you guys with some of the traditional players in the 401(k) channel?

Question: Alexander Blostein - Goldman Sachs & Co. LLC - Analyst : You've got to produce returns.

Question: Alexander Blostein - Goldman Sachs & Co. LLC - Analyst : And I guess, how are you thinking about partnering with people? Because it's a way to propel you into the 401(k) challenge. It's got a lot of operational complexities, lots of barriers to entry, right? There's a few players, obviously, that are very large in the 401k space. Is that an avenue of ultimately getting in there, or are you guys thinking --

Question: Alexander Blostein - Goldman Sachs & Co. LLC - Analyst : Got it. Okay. Well, we can keep chatting, but unfortunately, we're out of time. Thank you for doing this, Michael. It was great to see you.