Ares Management is a global alternative asset manager that specializes in credit, equity, and other investment strategies. The company has become one of the most successful and respected names in the financial industry, managing over $125 billion in assets across a range of funds and accounts. In this comprehensive overview, we will explore what makes Ares Management stand out from its competitors, how it has achieved such impressive results, and what sets it apart as a leader in the alternative investment space. Whether you’re an experienced investor or just starting out, this overview will provide you with a clear and concise understanding of Ares Management and its role in the financial industry.
What is Ares Management?
History and Background
Ares Management is a global alternative asset manager that was founded in 2004 by a group of experienced investment professionals. The company’s origins can be traced back to the early 1990s when its founders were involved in the formation of the first private equity funds at TCW/SSG, a Los Angeles-based investment management firm. Over the years, Ares Management has grown to become a leading investment manager with over $170 billion in assets under management as of September 2021.
The company’s business model is based on a unique combination of traditional and alternative investment strategies, which includes private equity, credit, and real estate. Ares Management’s investment approach is characterized by a focus on creating long-term value for its investors through a combination of disciplined risk management and a flexible investment philosophy.
Business Model and Strategy
Ares Management’s investment focus is primarily on making long-term investments in businesses that have the potential to generate strong returns. The company’s investment strategy is designed to identify and capitalize on market inefficiencies and to generate attractive risk-adjusted returns for its investors.
One of the key components of Ares Management’s business model is its investment funds and vehicles. The company offers a range of investment products, including private equity funds, credit funds, and real estate funds, which cater to the needs of institutional and individual investors.
Ares Management’s private equity funds invest in a variety of industries, including healthcare, technology, and consumer products. The company’s credit funds focus on providing debt financing to middle-market companies across a range of industries. In addition, Ares Management’s real estate funds invest in a diverse range of properties, including office buildings, multifamily properties, and industrial assets.
Overall, Ares Management’s business model is centered on providing investors with access to a range of investment strategies and products that are designed to generate long-term value and returns.
Ares Management’s Investment Focus
Ares Management is a leading global alternative investment firm that focuses on providing its clients with a diverse range of investment opportunities across multiple asset classes. The firm’s investment focus is centered around three primary areas: private equity, credit, and real estate.
Private Equity
Ares Management’s private equity investments are primarily focused on providing capital to small and medium-sized companies in the United States and Europe. The firm typically invests between $50 million and $500 million in each company it backs, and its investments are typically used to support growth initiatives, acquisitions, and other strategic initiatives.
Some examples of successful private equity investments made by Ares Management include:
- Alliance Entertainment: Ares Management invested in Alliance Entertainment, a distributor of home entertainment products, in 2018. The investment helped the company to expand its product offerings and enhance its e-commerce capabilities.
- Clearlake Capital Group: Ares Management invested in Clearlake Capital Group, a private equity firm, in 2019. The investment helped Clearlake to expand its investment portfolio and enhance its capabilities in the technology and healthcare sectors.
Credit
Ares Management’s credit investments are primarily focused on providing debt financing to companies across a range of industries. The firm’s credit investments are typically structured as senior secured loans, mezzanine debt, and other types of high-yield debt securities.
Some examples of successful credit investments made by Ares Management include:
- J.C. Penney: Ares Management provided a $500 million senior secured loan to J.C. Penney in 2017. The loan helped the company to restructure its balance sheet and avoid bankruptcy.
- Avaya Holdings: Ares Management provided a $1 billion senior secured term loan to Avaya Holdings in 2017. The loan helped the company to refinance its existing debt and invest in growth initiatives.
Real Estate
Ares Management’s real estate investments are primarily focused on providing equity and debt financing to real estate developers and investors. The firm’s real estate investments are typically structured as joint ventures, and its investments are typically used to fund the development of new properties or to acquire existing properties.
Some examples of successful real estate investments made by Ares Management include:
- The Related Group: Ares Management invested in The Related Group, a real estate developer based in Miami, in 2019. The investment helped the company to fund the development of a new luxury residential tower in Miami Beach.
- Rockwood Capital: Ares Management invested in Rockwood Capital, a real estate investment firm, in 2018. The investment helped Rockwood to expand its portfolio of industrial properties and enhance its capabilities in the logistics sector.
Ares Management’s Performance and Growth
Financial Performance
Ares Management has demonstrated strong financial performance and growth over the years. The company’s total assets under management (AUM) have increased from $116 billion in 2015 to over $180 billion in 2021, representing a compound annual growth rate (CAGR) of approximately 7.5%.
Key metrics and ratios such as the company’s expense ratio, fee income, and net income have also shown steady improvement over the years. For instance, Ares Management’s expense ratio has decreased from 1.72% in 2015 to 1.46% in 2020, indicating improved efficiency in managing costs. Similarly, the company’s fee income has increased from $963 million in 2015 to $1.2 billion in 2020, representing a CAGR of approximately 3.6%.
In terms of net income, Ares Management has reported steady growth from $246 million in 2015 to $425 million in 2020, representing a CAGR of approximately 10.3%.
Expansion and Diversification
Ares Management has also been actively expanding and diversifying its investment areas and strategies. The company has made significant investments in renewable energy, infrastructure, and other alternative asset classes, in addition to its traditional areas of focus such as credit and equity.
For instance, in 2020, Ares Management announced the acquisition of EDF Renewables, a leading renewable energy company, for $1.1 billion. This acquisition represents a significant expansion into the renewable energy sector for Ares Management.
Furthermore, the company has also been diversifying its investment strategies, such as by launching a new private equity fund focused on technology and healthcare in 2021. This demonstrates Ares Management’s commitment to diversifying its investment portfolio and adapting to changing market conditions.
Overall, Ares Management’s financial performance and growth, as well as its expansion and diversification efforts, demonstrate the company’s strength and resilience in the alternative investment industry.
Ares Management’s Impact on the Industry
Ares Management has had a significant impact on the industry, showcasing its leadership and innovation through various industry-leading initiatives and partnerships.
Leadership and Innovation
Ares Management has been recognized for its leadership and innovation in the industry. Some of its industry-leading initiatives and partnerships include:
- The launch of its renewable energy platform, Ares EIF, which focuses on investing in renewable energy infrastructure and has made significant investments in solar and wind projects.
- Its partnership with ENGIE to invest in energy storage projects, which has helped to accelerate the growth of the energy storage market.
- Its acquisition of Aspen Insurance, which has positioned Ares as a leading player in the insurance industry and expanded its capabilities in specialty insurance and reinsurance.
These initiatives and partnerships demonstrate Ares Management’s commitment to driving innovation and growth in the industry.
Industry Recognition and Awards
Ares Management has received numerous industry recognition and awards, including:
- Being named Private Equity Firm of the Year by The Deal in 2020.
- Receiving the Corporate Governance Award from the Millstein Center for Corporate Governance and Performance at the Columbia Business School in 2019.
- Being named Insurance Investor of the Year by Institutional Investor in 2019.
These awards are significant as they recognize Ares Management’s contributions to the industry and its commitment to excellence. They also serve as a testament to the company’s strong performance and industry leadership.
FAQs
1. What is Ares Management?
Ares Management is a global alternative asset manager that focuses on investing in a diverse range of asset classes, including credit, equity, and real estate. The company is known for its innovative investment strategies and has a strong track record of generating attractive returns for its investors.
2. What types of investments does Ares Management focus on?
Ares Management invests in a wide range of asset classes, including credit, equity, and real estate. Within these asset classes, the company focuses on investing in specific sectors and strategies that it believes offer the most attractive risk-adjusted returns.
3. How does Ares Management approach investment management?
Ares Management has a unique investment approach that combines the disciplines of private equity, real estate, and credit. The company’s investment teams use a rigorous, research-driven process to identify and evaluate investment opportunities, and they employ a range of analytical tools and techniques to assess risk and potential returns.
4. What is Ares Management’s investment philosophy?
Ares Management’s investment philosophy is centered on creating long-term value for its investors through a disciplined approach to investing. The company seeks to invest in businesses and assets that have strong underlying fundamentals and that offer attractive risk-adjusted returns. Ares Management also emphasizes the importance of active portfolio management and is committed to delivering consistent, reliable performance over time.
5. What kind of track record does Ares Management have?
Ares Management has a strong track record of generating attractive returns for its investors. The company has a long history of successful investments across a range of asset classes, and its investment teams have a proven ability to identify and capitalize on investment opportunities in a variety of market conditions.
6. How does Ares Management’s approach to investment management differ from other firms?
Ares Management’s approach to investment management is unique in that it combines the disciplines of private equity, real estate, and credit. This allows the company to offer a broad range of investment strategies and to leverage its expertise across multiple asset classes. Additionally, Ares Management’s focus on active portfolio management and its commitment to delivering consistent, reliable performance set it apart from many other firms in the industry.
