Ares Management Corp Q1 FY2025 earnings call

• Market Dynamics: Despite increased market volatility and uncertainty, Ares delivered strong financial results. They raised over $20 billion in gross new capital commitments and deployed over $31 billion. AUM reached $546 billion. • Fundraising and Deployment: Raised over $20 billion in gross new capital commitments, with broad contributions across strategies. Deployed over $31 billion, and had an improving gross - to - net deployment ratio in private credit strategies. • Business Attributes: Operates an asset - light business model with low balance sheet leverage, primarily using long - dated third - party capital. Over 72% of total AUM is in credit - related products, and over 92% of these credit assets are senior loans. • GCP Integration: The integration with GCP International is going well, with early fundraising momentum encouraging. • Wealth Channel: Experienced strong momentum in the wealth channel, raising a record $3.7 billion in quarterly equity commitments and $5 billion in total commitments across eight perpetual semi - liquid products. • Investment Pipeline: The firm - wide investment pipeline remains relatively unchanged, with some strategies expecting acceleration in deal flow, such as opportunistic credit, secondaries, etc.

In the first quarter, Ares achieved notable financial results. Management fees saw a year - over - year growth of 18%, reaching a record $818 million. FRE (fee - related earnings) grew by 22%, with fee - related performance revenues totaling $28 million in the first quarter compared to $4 million in the first quarter of 2024. After - tax realized income per share of Class A common stock grew by 36%. Fundraising was robust, with over $20 billion in gross new capital commitments, the highest first - quarter fundraising on record. Deployment was over $31 billion, and AUM reached $546 billion, with AUM and fee - paying AUM growing by 27% and 25% respectively year - over - year. Credit strategies had strong performance, with various credit composites generating positive returns, and credit quality in US and European direct lending portfolios remaining strong and stable. Real estate also saw improvements in property values.

• Net realized performance income from European - style funds is expected to be in the range of $225 million to $275 million for 2025. • Ares expects to remain active and opportunistic during the current volatile period. • FRE margin outlook is still within the zero to 150 basis points range, with expectations of progress through integration and synergy realization. • For GCP, expect about $7 billion in fundraising over the next few quarters, which will contribute to growth in fee - paying AUM.

• Economic and market volatility pose risks to growth. • Uncertainty regarding tariff policies and their impact on portfolios. • There is a potential for delays in the timing of performance income due to a prolonged pause in the credit markets. • Retail investor behavior could be pro - cyclical, which might affect the wealth business if retail flows slow down.

Q: What can be expected for the remainder of 2025 in terms of defaults and non - accruals in private credit?

A: In the global credit business, about 96% of exposure is in senior loans. LTVs are low, non - accruals are at 1.5% (below historical average), and equity owners are likely to protect portfolios, so a spike in defaults and non - accruals is not expected.

Q: Talk about incremental growth in wealth management, including product perspective and distribution during April turbulence?

A: Wealth management has shown strong momentum with record capital gathering. In April, equity inflows were $1.2 billion, which was in line with recent pace, and no meaningful change in behavior was seen, and redemptions did not show an increase