Asset management and financial services executives are optimistic heading into 2025, forecasting improved dealmaking activity as well as a continued focus on private credit.
While there was a lull in deal-making heading into the U.S. presidential election, “you are seeing some release on that pent up demand, it is showing up in our pipeline,” said Michael J. Arougheti, CEO of $464 billion Ares Management Corporation, speaking at the Goldman Sachs Financial Services Conference on Dec. 11.
Arougheti said he expects deal activity to accelerate in 2025.
It was a sentiment echoed by many other executives.
Jonathan Gray, president and COO of $1 trillion Blackstone said, “economically, particularly here in the United States, we feel some very good momentum,” adding that moving into 2025 “the overall picture to us looks pretty good.”
Gray noted that he expects “we’ll move back to a more traditional approach on anti-trust. That should be helpful for M&A.”
Harvey M. Schwartz, CEO of $447 billion The Carlyle Group, said an election result in the U.S. took uncertainty off the table.
“I think this is one of the best business environments we’ve seen,” Schwartz said, adding “it’s super favorable.”
But there are plenty of policy questions to come in 2025.
Citigroup’s CFO Mark Mason summed up the U.S. as shifting from “political uncertainty to policy uncertainty” with outstanding questions on everything from taxes to regulation, tariffs and immigration ahead speaking at the conference.
Several executives pointed to geopolitical uncertainty outside of the U.S. with multiple wars raging as well as political leadership changes across France, South Korea and Syria this month alone.
Private credit, wealth, insurance
Private credit is forecast to continue growing hitting a $2.64 trillion market in 2029, according to the latest Preqin estimate.
Ares, which closed one the year’s largest private credit funds, sees consolidation ahead, especially in direct lending.
“It is not coincidental that the largest are getting larger,” Arougheti said, adding, “I would expect that to continue.”
This year, many mergers and acquisitions and strategic partnerships were announced in private credit, with BlackRock most recently acquiring credit manager HPS Investment Partners in a $12 billion deal.
Arougheti pointed to growth in alternative credit which includes asset-based lending. Asset-based lending, which is a wide-ranging space that includes aircraft leasing and royalties, is in its early days, Blackstone’s Gray said.
“The longer-term idea of private credit gaining more and more share, particularly in this asset-based area, has a lot of room to run,” he said.
Scott C. Nuttall, co-CEO of $624 billion KKR, noted that asset-based finance has grown 40% year-over-year for his firm. Nuttall said there is “a lot more opportunity there,” speaking at the conference.
Executives from several asset management firms all pointed to similar areas where they expect to see growth in coming years: retail and wealth channels as well as insurance company relationships. Wealthy individuals have similar long duration investment needs similar to institutional investors, Blackstone’s Gray said.
“I do think this will be one of the major changes in the alternatives space over time,” he said, adding that it is “early days in my mind.”
Asked about the possibility of changes that would make it easier to include private market offerings in 401k retirement plans, Blackstone’s Gray said, “My gut is that it will happen.”
