Ares Management Q2 FY25 earnings call ARES

The GCP acquisition, now fully integrated, contributed $103 million in revenue and $34 million in FRE in Q2 FY25. The first Japan data center development fund closed at $2.4 billion, expected to generate an additional $40 million in fees through Q1 FY26. The Real Assets Group, with nearly $130 billion in AUM and over 880 professionals, is poised for significant growth, leveraging a large pipeline of data center projects globally.

Ares maintains a top-5 leadership position in the wealth channel, with H1 FY25 fundraising up 54% to $7 billion. AUM across eight semi-liquid products exceeded $50 billion, with seven products over $1 billion. The firm expanded its global wealth distribution network to over 80 firms, a 33% YoY increase, and engaged with over 1,300 new financial advisors in the quarter, up 200% YoY. International demand is robust, with over one-third of year-to-date flows from Europe and Asia, and meaningful flows expected from Japan partnerships.

The secondaries segment is a strong growth driver, with FRE nearly doubling since the Landmark acquisition in June 2021. Secondaries AUM increased 29% YoY to $34 billion. The inaugural credit secondaries fund raised $1.2 billion in the quarter, bringing total commitments to over $3.5 billion. A new private equity secondaries fund focused on GP-led transactions launched, closing $800 million to date, and the third infrastructure secondaries fund is expected to hit its $3 billion hard cap, more than triple the prior vintage.

Perpetual capital AUM increased by $50 billion over the past 12 months to $167 billion, now representing nearly half of total fee-paying AUM. This growth is driven by wealth and insurance businesses, GCP, and other open-end institutional funds, providing a stickier AUM base with consistent management fees and enhanced revenue visibility.

U.S. direct lending portfolios show 13% YoY comparable EBITDA growth and 43% average loan-to-value, with nonaccrual rates well below historical averages. European private credit exhibits similar strong performance with low LTVs and interest coverage. The global investment pipeline is at its highest level in over a year, and with record dry powder of $151 billion, the firm is well-positioned for accelerated transaction activity in H2 FY25, driven by potential lower U.S. rates and existing lower European rates.

Aspida, an affiliated insurance portfolio company, generated over $1.9 billion in new premiums in Q2 FY25, driven by strong demand in retail annuities and flow reinsurance. Aspida's balance sheet assets reached $23 billion, with $15 billion sub-advised by Ares. The company executed two new reinsurance transactions, expanding its relationships, and remains on track to meet its FY25 target of approximately $7 billion in new premiums.