Ares Management Q2 Earnings Call Highlights

Key Points

• Record fundraising and AUM growth: Ares raised approximately $36 billion in the second quarter, bringing first-half fundraising to $66 billion. Total AUM and fee-paying AUM each increased 17% year over year to about $671 billion and $410 billion, respectively.
• Strong financial performance and dividend increase: Fee-related earnings rose 20% to approximately $491 million, while after-tax realized income increased 27% to $468 million. Ares raised its quarterly dividend by more than 20% to $1.35 per share and expects to approach the upper end of its margin-expansion outlook.
• Broad investment activity with manageable redemptions: Firmwide investment activity rose to $36 billion, supported by private-credit, infrastructure and real-estate deployments, while direct-lending non-accruals remained below 2%. Redemptions in the non-traded BDC declined, with core U.S. individual-investor requests representing only about 2.5% of NAV.

Ares Management NYSE: ARES reported second-quarter results marked by record fundraising, higher fee-paying assets under management and double-digit growth in fee-related earnings and realized income, as the alternative investment manager expanded activity across credit, real assets, secondaries and wealth products.

Chief Executive Officer Michael Arougheti said the company raised approximately $36 billion of gross capital during the quarter, its highest quarterly fundraising total, bringing first-half fundraising to about $66 billion. Total AUM rose 17% year over year to approximately $671 billion, while fee-paying AUM increased 17% to about $410 billion.

The company ended the quarter with $170 billion of dry powder and $114 billion of AUM that was not yet paying fees. Arougheti said the fundraising performance reflected increasing diversification, with approximately 70% of capital raised so far in 2026 coming from outside Ares’ four largest credit fund families. Investors committed capital across roughly 90 funds and vehicles during the first half.

Financial Results and Dividend

Management fees exceeded $1 billion in the second quarter, up 14% from a year earlier, while total revenue including fee-related performance revenues and other fees increased 17%, Chief Financial Officer Jarrod Phillips said.

Fee-related earnings were approximately $491 million, an increase of 20% year over year. Realized income totaled approximately $522 million, up 31%, and after-tax realized income was approximately $468 million, up 27%. After-tax realized income per Class A and non-voting common share rose 25% to $1.29.

Realized net performance income reached approximately $51 million, more than triple the prior-year amount. Phillips said Ares expects approximately $10 million of realized net performance income in the third quarter, while maintaining its previous full-year outlook.

Ares’ year-to-date fee-related earnings margin was 42.3%, about 100 basis points above the prior-year period. Phillips said the company expects to approach the upper end of its full-year margin-expansion guidance of zero to 150 basis points, helped by revenue growth, deployment and the absence of about $9 million in second-quarter expenses tied to its biennial institutional limited-partner meeting.

The company declared a quarterly dividend of $1.35 per Class A and non-voting common share, an increase of more than 20% from the dividend for the same quarter a year ago. The dividend is payable Sept. 30 to shareholders of record on Sept. 16.

Fundraising Across Credit and Real Assets

Ares highlighted demand for its private-credit strategies. During the quarter, its Ares Pathfinder Fund III, an asset-based finance strategy, completed fundraising with approximately $8.5 billion of equity commitments, surpassing its $6.5 billion target and hard cap. The company also raised more than $12 billion of debt and equity capital across U.S. and European direct-lending vehicles.

Arougheti said Ares expects first closes for its next U.S. senior direct-lending commingled fund and a new evergreen core product in the fall. The company expects to launch its seventh European direct-lending fund early next year.

Within infrastructure, Ares’ open-ended core infrastructure fund raised approximately $1.9 billion of equity in the quarter. Its sixth infrastructure debt fund raised about $500 million and had raised approximately $3.7 billion to date. Ares expects its final close later this year at a level above the $5 billion raised by the prior vintage, including leverage and related vehicles.

Real estate fundraising included approximately $1.8 billion for the company’s fifth Japan industrial development fund, bringing total commitments to $3.4 billion. Ares expects the fund to reach its hard cap in the third quarter. The company also raised approximately $2.8 billion in its real estate debt strategy through a new global commingled fund and separately managed accounts.

In its wealth-management platform, Ares raised about $3.9 billion in gross equity commitments, up approximately 15% from a year earlier. Wealth-product AUM exceeded $76 billion at quarter-end. Arougheti said the company raised approximately $1.5 billion in July and expects a similar level of gross fundraising in the second half as in the first half.

Investment Activity and Portfolio Performance

Firmwide investment activity increased to approximately $36 billion from approximately $27 billion a year earlier. The company’s forward investment pipeline rose nearly 20% from the first quarter to a record level, according to Arougheti.

U.S. direct lending deployed approximately $12.4 billion of gross commitments during the quarter. About 75% of the activity involved existing borrowers, amid a slower merger-and-acquisition environment. Arougheti said the number of nondisclosure agreements signed by the U.S. direct-lending business rose about 35% quarter over quarter, while the number of newly logged deals rose about 30%, signaling improved sponsor activity heading into the second half.

Real estate deployed more than $4 billion, with activity rebounding in North America and Japan. Ares said it continues to see opportunities in logistics assets and is selectively broadening investments into hospitality and retail properties.

Phillips said credit and real-asset strategies delivered strong 12-month results. Alternative credit generated a gross return of 16.4%, U.S. senior direct lending returned 11.2% and APAC credit returned 19%. U.S. direct-lending non-accruals were below 2% and flat sequentially, while portfolio companies recorded 9% year-over-year organic EBITDA growth.

Ares also cited demand for digital infrastructure and related power development. Its Ada Infrastructure platform was executing seven large data-center campuses, representing 22 individual investments and approximately one gigawatt of compute capacity. Co-President Blair Jacobson said the digital infrastructure business remains on track to contribute an estimated $50 million to $100 million of fee-related earnings in 2027 and beyond.

Wealth Redemptions and Strategic Growth

Arougheti addressed redemption requests in Ares’ non-traded business development company, saying roughly 95% of investor accounts elected to remain in the fund. Requests from the company’s core U.S. individual investor base totaled approximately 2.5% of net asset value and declined about 35% from the prior quarter.

He said requests were concentrated among a relatively small number of non-U.S. family offices and smaller institutions, particularly in Asia. Ares intends to adjust new share classes offered to those investors, including potential features related to lockups, redemption penalties and regional redemption queues. Arougheti said the remaining regional redemption queue had declined from about $1.2 billion to a little over $600 million and could return to normal levels within two to three quarters if current trends persist.

On acquisitions, Arougheti said Ares evaluates opportunities based on cultural, strategic and financial fit. He said private equity could offer industrial benefits if the company can find the right opportunity, including deeper relationships with institutional limited partners, broader company financing capabilities and more direct private-equity exposure for wealth products.

Management reiterated its long-term compound annual growth targets of 16% to 20% for fee-related earnings and more than 20% for realized income and dividend growth.

About Ares Management (NYSE:ARES)

Ares Management Corporation NYSE: ARES is a global alternative asset manager that provides investment solutions across credit, private equity and real estate. The firm originates and manages capital across a range of strategies including direct lending, syndicated and special situations credit, private equity buyouts and growth investments, and real estate equity and debt. Ares serves institutional investors, insurance companies, pension funds, sovereign wealth funds, and high‑net‑worth clients through both commingled funds and bespoke managed account structures.

Within credit, Ares offers strategies spanning leveraged loans, structured credit, opportunistic and distressed debt, and specialty finance, with an emphasis on underwriting, portfolio construction and active asset management.

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