ARES · Q2 2025 Earnings

This was a more measured call than the typical mega-alts narrative. Management spent meaningful airtime debunking bull cases that competitors lean into — and the confidence in doing so is itself the signal.

On private credit market dynamics, management broke from industry talking points. The standard alts-CEO line is that private credit is the fastest-growing alternative asset class. Ares said the opposite: "if you look at the market broadly, private credit fundraising institutionally is actually down sequentially for the last three years...the private credit market is consolidated and probably consolidating further." This is a scale player arguing the moat is widening, not the TAM. The implication is that growth from here is share-take from sub-scale managers, not category lift — a more durable but slower thesis.

Fee pressure went from acknowledged risk to dismissed concern. On fee compression as private credit matures, management said: "we have not really seen [fee pressure], and when people ask for it, we push back pretty hard." The framing is that proprietary origination at scale is a pricing moat, not a commodity. For a business where ~$167B of perpetual capital compounds at management-fee rates, defending the fee structure is the entire earnings model.

Management characterized Europe as increasingly attractive. "We now have a different rate trajectory and different fiscal stance that is actually making Europe much more attractive. We're seeing increased investment and we're seeing increased investor appetite." This is the kind of regime call that drives multi-quarter deployment patterns — worth watching whether European AUM grows disproportionately over the next 2-3 quarters.

GCP integration economics got better, not worse. Management disclosed ~$10M of integration costs this quarter, of which $6-7M/quarter will eventually roll off, and added: "we're identifying more cost than we originally expected." The $200M first-year FRE contribution remains intact. The hidden positive here is that the operating run-rate post-integration is now likely higher than originally underwritten.

Dry-powder deployment is running faster than the historical baseline. Management used to guide 18-24 months on deployment of fundraised capital; this quarter they said "the deployment has been roughly a year on dry powder...that correlation has been pretty strong over the last five years." Faster deployment compresses the time-to-fee-activation on the $86.8B of deployable AUM not yet paying fees. This is mechanically positive for 2026 FRE.

Wealth distribution build-out is broadening, not concentrating. Ares is now partnering with 80+ firms globally, a 33% YoY increase, and engaged 1,300+ new financial advisors in the quarter — up over 200% YoY. Notably, the top-5 distribution partners now represent only ~half of YTD wealth capital raised, evidence that the platform's reach is diversifying rather than relying on a narrow concentration of large partners.