Ares Management AUM sees double-digit gains in quarter, year

Ares Management Corp. reported $179.2 billion in assets under management as of Sept. 30, a 13.1% increase from $158.4 billion as of June 30 and up 24.2% from $144.3 billion at the end of the year-earlier quarter, the alternative investment firm said Wednesday.

Michael Arougheti, Ares president and CEO, attributed the increase in AUM largely to record fundraising in the third quarter as well as nearly 50% growth in realized income.

Ares had $52.5 billion in available capital as of Sept. 30, an increase of 55.3% from the end of the third quarter of 2019.

In response to an analyst's question during Wednesday's investor call, Mr. Arougheti said that he expects consolidation in the alternative investment management industry to increase.

"Anytime we go through a crisis of the depth and magnitude like the one that we're going through now, we always see market share consolidation," he said. "There is an overarching secular trend in alternatives for the larger platforms getting larger."

Unlike in traditional money management where size can sometimes hurt performance, "in alternatives, at least based on the way that we go about the business, we have found that the larger we get, the more we can invest in competitive advantages and the better our performance is," Mr. Arougheti said.

Ares credit business, its largest, had assets under management of $131.2 billion as of Sept. 30, up 11.8% from $117.4 billion as of June 30 and up 23.4% from $106.3 billion at the end of the third quarter of 2019.

Private equity AUM was $26.7 billion as of Sept. 30, flat from $26.6 billion at the end of the prior quarter and a 4.7% increase from $25.5 billion as of Sept. 30, 2019.

In response to a question during the call about a 2016 private equity fund, the $7.85 billion Ares Corporate Opportunities Fund V Matt Cwiertnia, a partner and co-head of Ares' private equity group, said 40% of the fund's invested assets are in energy, made up primarily of midstream companies. By comparison, Ares' energy portfolio is about 19% of the remaining combined value of its Ares Corporate Opportunities funds.

He said that in 2020, Ares executives have worked to restructure a lot of the balance sheets of its energy companies to give them time and operating room "to make their way into a hopeful recovery of the energy markets over time."

The goal and hope for that energy portfolio is "toward making back our money in that portfolio and beyond," Mr. Cwiertnia said.

Real estate assets were $14.4 billion as of Sept. 30, unchanged from the end of the second quarter and up 15.2% from $12.5 billion year-over-year.

Ares' new strategic initiatives business, created with the July acquisition of a majority interest in Asian alternative money manager SSG Capital Holdings, had $6.9 billion in assets under management as of Sept. 30.

GAAP net income attributable to Ares Management Corp. was $47.5 million for the quarter ended Sept. 30.