Overview of Financial Performance

Ares Management Corporation reported strong financial results for the first quarter of 2025, with total revenues increasing 54% year-over-year to $1.09 billion. This growth was driven by higher management fees, carried interest allocation, and incentive fees across the firm’s diversified investment strategies.

The company’s Credit Group segment was a standout performer, with management fees rising 15% due to growth in perpetual capital vehicles and increased capital deployment in private funds. The Real Assets Group also saw a 39% jump in management fees, boosted by the acquisition of GCP Capital Partners and the WSM Acquisition. Meanwhile, the Private Equity and Secondaries groups delivered steady fee-related earnings.

Despite the strong top-line growth, expenses also increased significantly, up 88% year-over-year. This was largely attributable to higher compensation and benefits, including $151 million in incremental costs related to the GCP Acquisition. The company also incurred $50 million in general and administrative expenses tied to the GCP deal. Excluding these acquisition-related impacts, expenses grew at a more moderate pace of 33%.

Segment Performance Highlights

Credit Group

• Management fees increased 15% to $585 million, driven by growth in perpetual capital vehicles like ARCC, CADC and ASIF, as well as capital deployment in private funds like SDL III and ACE VI.
• Fee-related performance revenues jumped to $18 million, up from just $0.8 million a year earlier, due to higher incentive fees from a European direct lending fund.
• Realized net performance income more than doubled to $19.9 million, reflecting increased carried interest and incentive fees.

Real Assets Group

• Management fees rose 39% to $130 million, boosted by $24 million in fees from the GCP Acquisition and an additional $5 million from the WSM Acquisition.
• Other fees surged to $21 million, up from $5 million, as the GCP platform enabled Ares to generate more property-related fees like leasing, development and management fees.
• Realized net performance income increased significantly to $18.5 million, compared to just $1.4 million a year ago, driven by carried interest distributions.

Private Equity Group

• Fee-related earnings declined 7% to $14 million, as higher compensation costs offset stable management fee revenue.
• Realized income fell 12% to $10 million, reflecting lower realized net performance income.

Secondaries Group

• Fee-related earnings jumped 59% to $41 million, driven by higher management fees.
• Realized income more than doubled to $40 million, boosted by realized net performance income.

Assets Under Management (AUM) and Fee-Paying AUM (FPAUM)

Ares ended the quarter with $545.9 billion in AUM, up 28% from a year earlier. This included $81.5 billion of AUM not yet paying fees, which represents a 29% embedded growth opportunity in potential management fees upon deployment.

FPAUM, which directly generates management fees, grew 25% to $335.1 billion. The increase was driven by $30.5 billion in AUM from the GCP Acquisition, as well as net new commitments and deployments across the firm’s strategies.

Perpetual capital AUM, which provides stable, long-duration fee streams, comprised 52% of total AUM as of March 31, 2025. Management fees from perpetual capital and long-dated funds accounted for 92% of the firm’s total management fees during the quarter.

Outlook and Strategic Priorities

Looking ahead, Ares remains well-positioned to navigate the current market environment. The company’s diversified investment strategies, focus on value creation, and growing perpetual capital base provide resilience and flexibility.

The GCP Acquisition has significantly expanded Ares’ real estate and digital infrastructure capabilities, enhancing the firm’s vertically integrated operating platform. Management expects this to drive incremental fee generation, particularly in property-related revenues.

Integration of the GCP business is underway, and Ares anticipates realizing cost savings as it executes on synergy opportunities. The company also continues to invest in talent and technology to support its growth initiatives.

Overall, Ares’ strong fundraising, deployment, and investment performance position the firm for continued success. The company’s emphasis on value creation, operational improvements, and digital transformation should enable it to capitalize on evolving market dynamics and deliver long-term value for shareholders.

Conclusion

Ares Management delivered an impressive quarter, demonstrating the strength and diversification of its alternative investment platform. The firm’s ability to grow management fees, generate realized performance income, and expand its perpetual capital base underscores the durability of its business model.

While the GCP Acquisition resulted in elevated expenses in the near-term, the strategic benefits of enhanced real estate and digital infrastructure capabilities are expected to drive sustainable growth in the years ahead. Ares’ focus on value creation, talent optimization, and digital transformation positions the company well to navigate the current market environment and capitalize on future opportunities.