8-K: Ares Management Corporation Reports Strong Second Quarter 2024 Results, Driven by Record Fundraising and Deployment

Ares Management Corporation announced impressive second quarter 2024 results, highlighted by record gross fundraising of $26 billion and the second-highest level of capital deployment in the firm's history.

Summary

• Ares Management Corporation reported a GAAP net income of $94.9 million for the second quarter of 2024.
• The company's after-tax realized income was $332.0 million, or $0.99 per share.
• Fee related earnings reached $324.5 million for the quarter.
• Ares achieved record gross fundraising of $26 billion and deployed $26.4 billion in capital.
• The company's available capital stands at more than $120 billion.
• Assets under management (AUM) totaled $447.2 billion, a 18% increase year-over-year.
• Fee-paying AUM (FPAUM) reached $275.8 billion, a 14% increase year-over-year.
• A quarterly dividend of $0.93 per share was declared, payable on September 30, 2024.

Sentiment

Score: 8

Explanation: The document conveys a positive sentiment due to record fundraising, strong capital deployment, and double-digit growth in key metrics. While there are some negative points, the overall tone is optimistic and forward-looking.

Positives

• The company experienced double-digit growth across many key financial metrics.
• Ares has a record amount of available capital, exceeding $120 billion.
• The company is well-positioned to capitalize on the improving transaction environment.
• The dividend reinvestment program is effective for the September 30, 2024 dividend.
• The company's global platform has over $447 billion of assets under management with more than 2,950 employees.

Negatives

• GAAP net income attributable to Ares Management Corporation was $94.9 million, which is lower than the $144.5 million reported in the same quarter last year.
• Realized net investment income decreased by 86% for Q2-24 compared to Q2-23, primarily due to realized gains from the sale of an investment in Q2-23 that did not recur in Q2-24.
• Realized Income decreased by 21% for the Real Assets Group in Q2-24 compared to Q2-23, primarily due to a realized loss associated with a guarantee of a credit facility.

Risks

• The document contains forward-looking statements that are subject to various risks and uncertainties.
• Actual results may vary materially from those indicated in the forward-looking statements.
• The company's performance is subject to market cycles and economic conditions.
• The company's ability to deploy capital and generate additional earnings growth is dependent on the transaction environment.

Future Outlook

Ares believes it is well-positioned to capitalize on the improving transaction environment and generate additional earnings growth, with a record amount of available capital.

Management Comments

• Michael Arougheti, Chief Executive Officer and President of Ares, stated that they generated impressive results in the second quarter, including their highest level of gross fundraising and second highest level of deployment.
• Jarrod Phillips, Chief Financial Officer of Ares, noted the continued strength in the fundamental performance of their portfolios and double-digit growth across many key financial metrics.

Industry Context

Ares' strong performance reflects the continued investor interest in private market investment solutions, as institutional and high net worth investors seek diversification and yield in a low-interest rate environment. The company's diversified platform across credit, real estate, private equity, and infrastructure positions it well to capture opportunities across various asset classes.

Comparison to Industry Standards

• Ares' 18% year-over-year growth in AUM is strong compared to industry averages, which typically range from 10-15% for large alternative asset managers.
• The $26 billion in gross fundraising is a significant achievement, placing Ares among the top firms in terms of capital raising for the quarter.
• The 14% growth in FPAUM is also above average, indicating strong demand for Ares' fee-generating products.
• Comparable companies such as Blackstone, Apollo, and KKR have also reported strong fundraising and deployment numbers, but Ares' growth rate is competitive.
• Ares' focus on direct lending and alternative credit strategies aligns with current market trends, where investors are seeking higher yields and less correlation with public markets.

Stakeholder Impact

• Shareholders will benefit from the declared dividend and the company's strong financial performance.
• Employees will benefit from the company's growth and success.
• Customers will benefit from the company's ability to provide flexible capital and create value.
• Suppliers and creditors will benefit from the company's financial stability and growth.

Next Steps

• Ares will host a conference call on August 2, 2024, to discuss the second quarter results.
• The company will continue to deploy its available capital and capitalize on the improving transaction environment.
• Ares will pay a quarterly dividend on September 30, 2024.

Key Dates

Keywords

Ares Management Corporation, alternative investment, assets under management, fundraising, capital deployment, private equity, credit, real estate, infrastructure, dividend, financial results, fee related earnings, realized income