Even in a challenging environment, Ares continues to show “strong growth across key financial metrics,” Arougheti said.
Ares earned $477.3 million in management fees in the first quarter, up 49% from the year-ago quarter. But its carried interest allocation fell 40.1% to $178.3 million in the first quarter, from $297.5 million in the first quarter of 2021, while incentive fees rose 486% to 16, $4 million in the first quarter compared to the prior year period.
Assets under management across Ares’ five business lines increased in the 12 months ended March 31.
The credit business had $196.9 billion in assets under management as of March 31, up 2.2% from December 31 and 30.3% from $151.1 billion in one year to the next.
Actual assets were $58.5 billion in assets under management at the end of the first quarter, an increase of 27.2% from December 31 and 181% from $20.8 billion. dollars as of March 31, 2021. Private equity was $33.6 billion at the end of the quarter, nearly 1% higher than December 31 and up 32.3% from March 31, 2021.
In response to an analyst’s question on the earnings call, Arougheti acknowledged that limited partners are being asked to commit more capital to the funds of alternative investment managers, even if those managers are not had not yet exited investments and made distributions from their previous funds.
Ares executives are “experimenting extensively” with the phenomenon in its private equity business, he said. Due to the active pace of investing, private equity managers are coming to market earlier than expected with new funds.
Investors spend more time due diligence on new funds from existing managers than new ones, which has a positive impact on Ares, he said.
Ares’ new business, secondary solutions, totaled $23.5 billion at the end of the first quarter, up 6.3% from the end of the prior quarter, which was the first time Ares included activity in its quarterly reports. Strategic initiatives totaled $12.5 billion as of March 31, up 8% from December 31 and 26.3% from the end of the year-ago quarter.
GAAP net income was $45.9 million for the three months ended March 31, compared to $58.4 million for the three months ended March 31, 2021.