10-K: Ares Management Reports Strong 2025 Growth, AUM Hits $622.5B

Ares Management Corporation achieved significant growth in 2025, with assets under management increasing to $622.5 billion and robust capital deployment, despite increased expenses from strategic acquisitions.

Summary

• Ares Management Corporation's Assets Under Management (AUM) grew by 29% to $622.5 billion as of December 31, 2025, up from $484.4 billion in 2024.
• The company raised $113.2 billion in gross new capital commitments in 2025, with 79% from existing institutional investors, demonstrating strong client satisfaction.
• Capital deployment reached $145.8 billion in 2025, a significant increase from $106.7 billion in 2024, indicating active investment strategies.
• Net income attributable to Ares Management Corporation increased by 14% to $527.4 million in 2025, compared to $463.7 million in 2024.
• Total revenues grew by 44% to $5.6 billion in 2025, primarily driven by increases in management fees and carried interest allocation.
• Management fees increased by 25% to $3.68 billion, with 93% derived from perpetual capital or long-dated funds, highlighting revenue stability.
• Carried interest allocation saw a substantial increase of 196% to $1.15 billion in 2025, compared to $390.2 million in 2024.
• The Real Assets Group experienced significant growth, with AUM increasing to $139.1 billion and management fees rising by 69%, largely due to the GCP Acquisition.
• The GCP Acquisition, completed on March 1, 2025, added complementary logistics and digital infrastructure capabilities, contributing $202.8 million in management fees and $143.1 million in other fees.
• The company declared increased quarterly dividends for Class A and non-voting common stockholders, from $3.72 annually in 2024 to $4.48 annually in 2025, and intends to pay $1.35 per share per quarter in 2026.
• Available capital (dry powder) stood at $156.0 billion as of December 31, 2025, up from $133.1 billion in 2024, indicating significant future deployment potential.
• AUM not yet paying fees totaled $78.8 billion, with an additional $4.3 billion in development assets not yet stabilized, collectively capable of generating approximately $730.4 million in potential incremental annual management fees.
• Full-time equivalent headcount increased by 34% to 3,967 professionals in 2025, with 805 professionals added from the GCP Acquisition.
• The company's debt assets within the Credit Group were approximately 86% floating rate instruments as of December 31, 2025, which helps mitigate interest rate volatility.
• The Tax Receivable Agreement (TRA) liability balance increased to $579.9 million as of December 31, 2025, from $402.4 million in 2024.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this filing as highly positive, reflecting strong financial performance, significant AUM growth, successful strategic acquisitions, and a commitment to shareholder returns through increased dividends, despite higher operational and acquisition-related expenses.

Positives

• Total Assets Under Management (AUM) increased significantly by 29% to $622.5 billion in 2025.
• Gross new capital commitments reached $113.2 billion in 2025, indicating strong investor confidence and fundraising capabilities.
• 79% of fundraising from direct institutional investors came from existing clients, highlighting strong client retention and satisfaction.
• Capital deployment surged to $145.8 billion in 2025, demonstrating effective utilization of raised capital and investment opportunities.
• Net income attributable to Ares Management Corporation grew by 14% to $527.4 million in 2025.
• Total revenues increased by 44% to $5.6 billion, driven by strong performance across business segments.
• Management fees increased by 25% to $3.68 billion, with a stable base from perpetual capital or long-dated funds (93% of management fees).
• Carried interest allocation saw a substantial 196% increase to $1.15 billion, reflecting strong fund performance.
• The GCP Acquisition significantly expanded the Real Assets Group's capabilities and geographic presence, contributing substantial new fees.
• The company increased its quarterly dividend for Class A and non-voting common stockholders from $0.93 to $1.12 per share in 2025, with a planned increase to $1.35 per share in 2026.
• Available capital (dry powder) of $156.0 billion and AUM not yet paying fees of $78.8 billion represent significant embedded growth potential for future management fees.
• The Credit Group's debt assets are largely floating rate (86%), providing a hedge against rising interest rates.

Negatives

• Net income attributable to Class A and non-voting common stockholders decreased by 3% to $426.1 million in 2025, primarily due to increased Series B mandatory convertible preferred stock dividends.
• Total expenses increased by 60% to $4.71 billion in 2025, largely due to acquisition-related compensation and integration costs from the GCP Acquisition.
• Other income (expense), net, showed a significant non-cash expense of $319.7 million in 2025, primarily from the revaluation of contingent consideration related to the GCP Acquisition.
• Realized net investment loss for the Real Assets Group increased by 222% to $(54.5) million in 2025, mainly due to higher interest expense from acquisition financing.
• Realized net investment loss for the Private Equity Group increased by 94% to $(29.2) million in 2025, also impacted by interest expense allocation.
• The Operations Management Group (OMG) reported a 30% increase in negative Fee Related Earnings, reaching $(808.2) million, due to increased headcount and operational expansion costs.
• A one-time supplemental distribution fee expense of $30.7 million was incurred in 2025 due to the termination of a distribution agreement with a strategic partner.
• The company recorded a non-cash impairment charge of $2.3 million to the fair value of management contracts of certain CLOs within the Credit Group due to lower than expected future fee revenue and earlier than expected end to useful lives.

Risks

• Difficult, volatile market and political conditions may adversely affect businesses by reducing investment value, hampering fund performance, or reducing capital raising/deployment ability.
• Operating in a complex regulatory and tax environment (domestic and foreign) increases compliance costs and administrative burdens, and may restrict operations.
• Inability to raise or deploy capital, or waivers/reductions in management fees, or failure to generate carried interest/incentive fees, would materially reduce revenues and cash flows.
• Dependence on executive officers, senior professionals, and key personnel, with risks of departure, competition, and enforceability of non-compete agreements.
• Reputational harm from conflicts of interest, non-compliance with regulations, or negative publicity.
• Intense competition in the investment management business for fund investors and investment opportunities, potentially leading to lower fees or reduced profitability.
• Growth strategy involving acquisitions and new lines of business carries risks of integration difficulties, assumption of liabilities, diversion of management attention, and regulatory exposure.
• Significant portion of management fees derived from ARCC, making the company vulnerable to ARCC's performance or termination of the advisory agreement.
• Economic U.S. and foreign sanction laws may prohibit transactions with certain countries, individuals, and companies, leading to penalties and reputational damage.
• International operations expose the company to numerous regulatory, operational, and reputational risks and expenses, including differing legal/tax regimes and currency fluctuations.
• Financial support of particular investment products or inability to provide support may cause AUM, revenue, and earnings to decline.
• Operational risks from errors, system failures, reliance on third-party service providers, and natural disasters/cyber-attacks.
• Increasing demands from fund investors, including potential for fee compression and changes to other terms, could adversely affect profit margins.
• Security incidents or cyber-attacks could disrupt operations, compromise confidential information, and damage business relationships or reputation.
• Technological developments in artificial intelligence could disrupt markets, increase competition, and introduce legal/regulatory risks and compliance costs.
• Numerous privacy laws (e.g., GDPR, U.K. GDPR, CCPA) expose the company to significant fines, penalties, litigation, or reputational damage for violations.
• Litigation and regulatory matters, including those related to employee misconduct, fraud, and deceptive practices, could lead to liabilities and reputational harm.
• Changes in interest rates could negatively impact asset values, investment opportunities, and financing costs for funds and portfolio companies.
• Inflation has impacted and may continue to adversely affect business, results of operations, and financial condition of funds and portfolio companies.
• Use of leverage by the company and its funds exposes them to substantial risks, including volatility and contractions in debt financing markets.
• Asset valuation methodologies can be highly subjective, and realized values may differ materially from estimated fair values.
• Poor fund performance due to market conditions, political actions, or monetary/fiscal policy could reduce revenues and ability to raise future funds.
• Third-party investors may not satisfy capital calls or may exercise redemption/termination rights, adversely affecting fund operations and performance.
• Contractual rights and obligations under fund governing documents and investment management agreements, including termination rights, pose risks to revenue streams.
• Downturns in global credit markets could adversely affect credit-oriented investments.
• Investments in specific market sectors (private credit, power, infrastructure, energy, real estate, insurance, secondaries, private equity) are subject to industry-specific risks and regulations.
• Risk of being deemed an investment company under the Investment Company Act, which would impose impractical restrictions on business operations.
• Disparity in voting power among common stock classes means Class A common stockholders have limited influence over corporate matters.
• Status as a controlled company under NYSE listing standards means fewer corporate governance protections for Class A stockholders.
• Potential conflicts of interest between Class B/C stockholders (controlled by Holdco Members) and Class A/Series B preferred stockholders.
• Holding company structure, Delaware law, and contractual restrictions may limit ability to pay dividends.
• Anti-takeover provisions in charter documents could delay or prevent a change in control.
• Obligations under the Tax Receivable Agreement (TRA) may be substantial, potentially exceeding actual tax benefits, and payments may be accelerated upon change of control or early termination.

Future Outlook

Ares Management Corporation anticipates continued growth in 2026 through a combination of existing and new strategies across the Americas, Europe, and APAC. The company expects its significant AUM not yet paying fees and development assets to generate substantial incremental annual management fees. Management intends to maintain a fixed quarterly dividend for Class A and non-voting common stock, reassessed annually based on fee-related earnings after taxes, and plans to retain realized net performance income to fund future growth and potential stock repurchases. The company also expects compensation and benefits to increase as it transfers investment professionals to build its Capital Solutions Group within the Operations Management Group. Operating expenses are expected to fluctuate during the integration period of the GCP Acquisition as the company seeks cost savings and synergy opportunities. The company is also monitoring evolving regulatory landscapes, particularly concerning artificial intelligence and ESG, which may impact future operations and compliance costs.

Management Comments

• Our disciplined investment philosophy across our distinct but complementary investment groups contributes to the stability of our performance throughout market cycles.
• We believe we create value for our stakeholders not only through our investment performance, but also by expanding our product offerings, enhancing our distribution channels, increasing our global presence, investing in our non-investment functions, securing strategic partnerships and completing strategic acquisitions and portfolio purchases.
• We believe our consistent and strong performance in a broad range of alternative investments has been shaped by several distinguishing features of our platform: Comprehensive Multi-Asset Class Expertise and Flexible Capital, Differentiated Market Intelligence, Consistent Investment Approach, Robust Sourcing Model, Talented and Committed Professionals, and Collaborative Culture.
• We believe that our people and our culture are the most critical strategic drivers of our success as a firm.
• We believe the consideration and integration of ESG factors into the investment and portfolio management processes helps enable us to generate attractive investment returns to our investors.
• We believe our portfolios across all strategies remain well positioned for a fluctuating interest rate environment.
• We believe that stabilized market conditions, with a renewed focus on value creation strategies that emphasize operational improvements, selective deployment, talent optimization and digital transformation are essential to support long-term momentum.
• Management believes that we are well-positioned and our liquidity will continue to be sufficient for our foreseeable working capital needs, contractual obligations, dividend payments and strategic initiatives.
• Management believes the possibility of all of the investments becoming worthless is remote.

Industry Context

StockSavvy.ai notes that Ares Management Corporation's strong AUM growth and capital deployment in 2025 outpaced many peers in the alternative asset management industry, which generally experienced mixed performance. The company's strategic focus on expanding its Real Assets Group through acquisitions like GCP International aligns with broader industry trends of diversification into high-growth sectors like digital infrastructure and logistics. The emphasis on perpetual capital and long-dated funds provides a stable revenue base, a key differentiator in an environment where fee compression is a persistent industry pressure. The increased scrutiny on ESG factors and the rapid evolution of AI technologies are industry-wide challenges that Ares is actively addressing, positioning itself to adapt to these transformative trends. The company's ability to attract and retain talent in a highly competitive market, as evidenced by its headcount growth, is crucial for sustained success in the alternative investment sector.

Comparison to Industry Standards

• Ares's AUM growth of 29% to $622.5 billion in 2025 demonstrates strong performance compared to the broader alternative asset management industry, which has seen varied growth rates, with some larger players experiencing slower expansion.
• The 79% fundraising from existing institutional investors indicates a higher-than-average client loyalty and satisfaction, often exceeding benchmarks for new fund commitments in the private markets sector.
• The increase in Class A and non-voting common stock dividends from $3.72 to $4.48 annually, with a projected $1.35 quarterly in 2026, positions Ares favorably against many publicly traded asset managers, which may offer less predictable or lower dividend growth.
• The acquisition of GCP International, adding logistics and digital infrastructure capabilities, is a strategic move mirroring industry leaders like Blackstone and KKR who are also expanding into these high-demand real asset sectors.
• The Credit Group's 86% floating rate debt assets align with best practices for managing interest rate risk in credit-focused strategies, comparable to other large direct lending platforms.
• The company's focus on integrating ESG factors into its investment process and publishing sustainability reports is in line with evolving global benchmarks and investor expectations, particularly from European institutional investors, and positions it competitively against firms that may lag in ESG integration.

Corporate Governance

Legal Proceedings

• The company, its executive officers, directors, funds, and their investment advisers are subject to legal proceedings from time to time, including those arising from fund management.
• The company and its funds are subject to extensive regulation, which can lead to requests for information, regulatory proceedings, or investigations.
• Management believes there is no potential liability related to any current legal proceeding or claim that would individually or in the aggregate materially affect its results of operations, financial condition, or cash flows.

Related Party Transactions

• Substantially all of the company's revenue is earned from its affiliated funds.
• Accrued carried interest, predominantly due from affiliated funds, is presented within investments.
• The company is reimbursed by Ares Funds for certain operating costs and expenses initially paid by the company.
• Employees and other related parties may participate in co-investment vehicles that invest alongside Ares Funds, generally without paying management fees, carried interest, or incentive fees.
• Carried interest and incentive fees from funds can be distributed to professionals or their related entities, subject to repayment obligations guaranteed by professionals.
• The Tax Receivable Agreement (TRA) involves payments to certain direct and indirect holders of AOG Units (TRA Recipients), including Holdco Members and other executive officers, for 85% of cash tax savings from tax basis increases.

Stakeholder Impact

• Shareholders (Class A and non-voting common): Benefit from increased dividends and AUM growth, but face limited voting influence due to the multi-class stock structure and potential dilution from equity awards and AOG Unit exchanges. Preferred stockholders receive cumulative dividends and have conversion rights.
• Employees: Benefit from increased headcount, competitive compensation, equity-based awards, and philanthropic initiatives. The GCP Acquisition added significant headcount and associated compensation. However, employee misconduct or departures pose risks.
• Investors (Fund LPs): Benefit from strong fund performance, as reflected in increased carried interest and incentive fees. Existing investors show high satisfaction, contributing to fundraising. However, they are exposed to market volatility, illiquidity risks, and potential conflicts of interest in investment allocations.
• Customers (Portfolio Companies): Benefit from Ares's capital deployment and operational expertise, but are exposed to market risks, leverage risks, and potential regulatory scrutiny.
• Regulatory Bodies: The company is subject to extensive and evolving regulation across multiple jurisdictions, leading to increased compliance costs and scrutiny, particularly in areas like cybersecurity, ESG, and AI.
• Creditors: Benefit from the company's strong financial position and ability to service debt, but are exposed to leverage risks and market conditions affecting the company's ability to refinance debt.

Next Steps

• Continue to expand fundraising efforts in existing and new strategies across the Americas, Europe, and APAC in 2026.
• Deploy available capital (dry powder) of $156.0 billion into new investment opportunities.
• Integrate GCP International's operations and seek cost savings and synergy opportunities during the integration period.
• Monitor and adapt to evolving regulatory landscapes, particularly concerning artificial intelligence and ESG.
• Reassess the fixed quarterly dividend for Class A and non-voting common stock annually based on fee-related earnings after taxes.
• Utilize retained realized net performance income to fund future growth and potential stock repurchases.
• Continue to build the Capital Solutions Group within the Operations Management Group, potentially transferring investment professionals from other segments.

Key Dates

Recommendation

Ares Management Corporation demonstrates robust growth across key financial metrics, including a substantial increase in AUM, revenues, and net income. The significant rise in carried interest allocation signals strong underlying fund performance. Strategic acquisitions like GCP International are expanding the company's market reach and capabilities in high-growth sectors. The consistent increase in common stock dividends, coupled with a large pool of dry powder and AUM not yet paying fees, indicates strong future earnings potential and a commitment to shareholder returns. While expenses have increased due to acquisitions and operational expansion, these are largely investments in future growth. The company's diversified, credit-oriented investment approach and strong client retention further underpin its stability and competitive advantage in the alternative asset management industry.

Keywords

Alternative Investment Management, Assets Under Management, Private Equity, Credit Strategies, Real Assets, Secondaries, SEC Filing, 10-K, Financial Performance, Capital Deployment, Fundraising, Dividends, GCP Acquisition, Tax Receivable Agreement, Corporate Governance, Risk Management, Artificial Intelligence, Cybersecurity, ESG