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Ares Management CEO & Co-Founder Mike Arougheti Talks Record Earnings
Brief
Ares Management CEO and co‑founder Mike Arougheti framed the firm’s record quarter around three linked themes: technology-driven efficiency, diversified positioning across the private markets, and disciplined exposure to digital infrastructure. He said Ares raised more than $36 billion and deployed roughly the same amount in the quarter, and that internal AI and systems work produced about a 100 basis‑point year‑over‑year margin uplift (guidance 0–150 bps per year). Arougheti stressed portfolio resilience — aggregate cash‑flow growth is around plus/minus 10% and direct‑lending non‑accruals are under 2% — and argued fundamentals (low LTVs, healthy interest coverage) match original underwriting. On digital infrastructure, Ares is focused on 150–300 MW, hyperscaler‑adjacent builds in tier‑one markets (Tokyo, London, São Paulo) with 12–15 year pre‑leases and escalators, while maintaining presence across debt and equity in transmission, fiber, storage and asset‑based finance. He cautioned that hyperscalers’ capex (over $750 billion) is straining supply and widening spreads, but said Ares’ $170 billion of dry powder is roughly in line with accelerated deployment. The conversation closed on diversification and experience through cycles as the key risk mitigant amid heightened investor interest in private credit and infrastructure.
Why it matters
Speaker 2 (host): Ares reported a record quarter with over $36 billion of fundraising inflows; Speaker 4 (Mike Arougheti) said Ares also deployed roughly $36 billion in the same quarter.
Key details
- Speaker 4 (Mike Arougheti): Deploying AI and tech internally drove about a 100 basis point year‑over‑year margin increase in the quarter; Ares guided the Street to expect 0–150 basis points of margin improvement per annum.
- Speaker 4 (Mike Arougheti): Portfolio fundamentals remain strong — aggregate cash‑flow growth across private equity and private credit is around ±10%, and direct lending non‑accruals are inside 2% with low loan‑to‑value and healthy interest coverage.
- Speaker 4 (Mike Arougheti): Ares’ digital infrastructure strategy targets 150–300 MW data center deals (hyperscaler‑adjacent) in tier‑one markets such as Tokyo, London and São Paulo, typically pre‑leased 12–15 years with escalators; the firm avoids secondary/tertiary/frontier markets.
- Speaker 4 (Mike Arougheti): Ares has roughly $170 billion of dry powder (approximately in line with annual deployment as fundraising/deployment accelerated), the last two credit funds hit hard caps and closed faster than prior vintages, while hyperscalers’ capex demand exceeds $750 billion, putting pressure on supply and spreads.