Ares Management Corporation (NYSE: NYSE:ARES) announced robust third-quarter results for 2023, with strong growth in management fees, fee-related earnings, and assets under management (AUM). The company has raised $21.9 billion in new commitments during the quarter, bringing the total raised for the year to $53.4 billion. Ares Management also announced a fourth-quarter common dividend of $0.77 per share, marking a 26% increase from the previous year.
Key takeaways from the earnings call include:
- Ares Management's private credit funds, including US senior direct lending, European direct lending, and alternative credit funds, have all seen strong growth, exceeding previous fund sizes.
- The company is expanding its presence in Asia credit, real assets, and wealth management and recently closed acquisitions of Crescent Point and Vinci Partners to expand its business in Asia and Latin America.
- The company expects total fundraising for the year to exceed $65 billion and is on track to meet its target of $500 billion or more in AUM.
- The company invested $16.7 billion in the third quarter, up from $15.2 billion in the second quarter, but down from $18.3 billion in the third quarter of 2022.
- Ares expects to see less dispersion in outcomes due to increased flagship vehicles and momentum in the wealth and insurance channels.
Ares Management is actively exploring inorganic growth opportunities, recently acquiring Crescent Point, a leading Asia-focused private equity firm with $3.7 billion in AUM, and Vinci Partners, a leading alternative asset manager in Latin America. These acquisitions are part of Ares Management's strategy to expand its business in Asia and Latin America.
The company also provided updates on its subsidiary, Aspida, which has raised close to $1 billion in capital and has a total AUM of around $10.6 billion. Ares expects Aspida to grow by approximately $5 billion per year, aiming for $25 billion AUM by the end of 2025.
In terms of investment activity, Ares Management invested $16.7 billion in the third quarter, marking an increase from $15.2 billion in the second quarter. Despite this, the investment amount was lower than the $18.3 billion invested in the third quarter of 2022. The company sees signs of large deal activity returning and is encouraged by its investment activity and pipeline for the fourth quarter.
Ares Management's CEO, Michael Arougheti, expressed confidence in the company's positioning in the market, noting a focus on bank asset portfolios and lender finance. Arougheti highlighted a potential $100 billion market opportunity in NAV lending and anticipated opportunities in the consumer loan sector.
Overall, Ares Management remains positive about its long-term growth prospects and continues to invest for future growth. The company is forming partnerships with banks for asset acquisitions and is optimistic about the opportunities in that area. Ares Management has a record amount of dry powder and expects to generate growing performance income from its European-style waterfall funds. The company expects to meet or exceed its target of $500 billion AUM by the end of 2025.
InvestingPro Insights
Based on the latest real-time data from InvestingPro, Ares Management Corporation has a market capitalization of $30.02 billion and a P/E ratio of 58.08. The company's revenue in the last twelve months as of Q2 2023 was $3645.66 million, with a growth of 1.97%. Furthermore, Ares Management's adjusted P/E ratio as of Q2 2023 stood at 54.14, reflecting its high earnings multiple.
From the InvestingPro Tips, it's noted that Ares has raised its dividend for four consecutive years, which aligns with the company's announcement of a fourth-quarter common dividend increase. Also, the company is expected to remain profitable this year, a prediction backed by its strong Q3 2023 results.
InvestingPro includes over 15 additional tips and metrics for Ares Management Corporation, offering a comprehensive analysis of the company's financial health and investment potential. For more in-depth insights, consider exploring the InvestingPro platform.
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