Ares executives attributed the increase in AUM to fundraising, reporting $13.7 billion of net inflows of capital in the quarter, and the acquisition of AMP Capital's infrastructure debt business in February, adding $8 billion in AUM.
Most of the gross capital raised in the third quarter was by its private credit business, with a total of $7.4 billion, including $2.7 billion by its U.S. direct lending vehicles, $1.8 billion by Ares' business development company Ares Capital Corp. and $400 million to a new collateralized loan obligation.
Real assets raised $2.6 billion in the third quarter, including $500 million each by two non-traded real estate investment trusts and $500 million for an infrastructure debt fund. Strategic initiatives raised $2.5 billion, including $1 billion in managed assets for its insurance business, and Ares secondaries business formerly known as Landmark raised $400 million in the third quarter.
Ares' secondary business, now called Ares Secondaries, was the only business line to lose AUM. Ares provides results for its secondaries business lagged by one quarter, reporting $22.8 billion as of June 30, down 4.6% from $23.9 billion in the prior quarter, but up 10% from $20.7 billion year-over-year.
Ares reported an $86.2 million non-cash impairment charge related to its decision to rebrand its secondaries group and discontinue using the Landmark trade name. Ares took another non-cash impairment charge of $95.4 million related to an acquired Landmark private equity secondaries fund that did not attain its fundraising targets as well as shorter expected fund lives of certain funds as a result of returning capital to fund investors sooner than planned.
Ares closed its acquisition of alternative secondary market firm Landmark on June 2, boosting AUM by $19.5 billion.
Ares' largest business by AUM was credit, with $204.5 billion at the end of the third quarter, up 1.3% from June 30 and up 13% from Sept. 30, 2021. Real assets was its second largest at $65 billion, increasing 3.8% from the end of the prior quarter and 62% from $40.2 billion at the end of the year-earlier quarter.
Private equity had $35.3 billion as of Sept. 30, up 5.7% from June 30 and a 22% increase from a year earlier. Strategic initiatives had $13.9 billion at the end of the third quarter, up 11% from June 30 and up 28% from the end of the third quarter 2021.
Jarrod Phillips, Ares' chief financial officer, acknowledged during the earnings call that periods of extreme volatility could impact its deployment pace. Ares invested $18.3 billion in the third quarter, down from $24.1 billion in the second quarter and $19.6 billion the third quarter of 2021.
Ares reported a GAAP net loss of $35.5 million.
