As institutions continued to allocate to the asset class, Ares Management, one of the biggest names in private credit, reported a record fundraising of $36 billion in the second quarter on Friday.
As institutional investors strengthen their ties with bigger, more seasoned managers, the record fundraising puts Ares among the leading companies drawing funds in alternative assets.
Ares’ fundraising pipeline is still strong, and the company continues to see “very strong” institutional demand for its credit strategies, CEO Michael Arougheti told analysts.
Since there is less competition due to reduced flows from the wealth channel, these investors now see a chance to receive excess returns from private loans, according to Arougheti.
Because they are less exposed to private credit, institutional investors—like pension funds—tend to allocate capital with a long-term outlook and are more patient in volatile markets.
Since 2019, the number of direct institutional investors in Ares has more than tripled, demonstrating the company’s expansion. Because the majority of its business is institutional in nature, experts believe Ares is well-positioned to increase its market share.
Ares’ stock increased by almost 2%. As of the most recent close, the stock has dropped 23% this year, in line with peers.
The credit segment brought in $23.7 billion during the quarter, which was the largest inflow. $9.7 billion was raised by the real assets section.
Ares’ flagship asset-based finance fund, which raised $8.5 billion in the quarter, was a significant source of funding.
During the quarter, Ares’ wealth platform raised over $3.9 billion, a 15% increase over the same period last year. According to Arougheti, flows in July were almost $1.5 billion.
The fees Ares receives from the assets it manages account for a large portion of its revenue, giving it a steadier and more reliable source of income.
Fee-related earnings increased 20% to $491.1 million from the previous year, while assets under administration increased 17% to $671.3 billion.
TICK UP DEPLOYMENTS
Due to sponsor-backed M&A activity being restrained by geopolitical concerns, deal activity for private credit firms remained somewhat muted during the quarter.
As it stands on a record investment pipeline, Ares expressed optimism over the second half of 2026.
According to Arougheti, as sponsor communication improves and more businesses enter the market after postponing transactions earlier in the year, current deal talks indicate a better second-half outlook for capital deployment.
Ares used $35.9 billion in capital during the quarter, mostly through real estate, alternative credit, and direct lending in the United States and Europe.
Ares oversaw more than $1.7 billion in debt financing to finance buyout firm KSL Capital Partners’ acquisition of private club operator Invited Clubs, one of the quarter’s noteworthy transactions.
Because of our solid and reliable fund performance across all of our strategies, clients continue to reward us,” Arougheti stated.
While U.S. senior direct lending returned 2.5% during the quarter, alternative credit had a total return of 4.1%. 2.4% was recovered via opportunistic credit.
Chris Kotowski, an analyst at Oppenheimer, described Ares’ fundraising and investing record as “very solid.”
Wall Street keeps a careful eye on fundraising, capital deployment, and investment success since they are important indicators of future earnings.
During the quarter, uninvested capital increased by 13% to a record $170 billion.
According to finance head Jarrod Phillips, this puts Ares in a good position to deliver on its largest-ever forward investment pipeline and support ongoing earnings growth.
As Ares deploys uninvested funds, it begins to generate management fees, increasing profit even further.
For the quarter that concluded on June 30, after-tax realized income per share of Class A common stock was $1.29, up from $1.03 in the same period last year.
