Ares Management Corporation · NYSE:ARES
Ares Management — Investor Day (2021)
38 slides from Ares Management's investor day presentation, 2021
Slide 1: Private Equity Overview & Outlook
Private Equity Overview & Outlook Matt Cwiertnia Co-Head of Private Equity Group Scott Graves Co-Head of Private Equity Group and Head of Special Opportunities Ares Management Corporation Investor Day 2021 - Not for Publication or Distribution
Slide 2: Important Notice
Important Notice This presentation is prepared for Ares Management Corporation (NYSE: ARES) for the benefit of its public stockholders. This presentation is solely for information purposes in connection with evaluating the business, operations and financial results of Ares Management Corporation (“A
Slide 3: Important Notice
Important Notice Dated information: This video may contain dated information. Viewers are cautioned that this video and the associated presentation is maintained here solely for the purposes of providing historical background about Ares Management Corporation. As the video may contain dated informat
Slide 4: Ares Private Equity Group Overview
Ares Private Equity Group Overview Our focus is to consistently generate attractive net returns, which we believe will enable us to grow AUM $30.7B Key Attributes of the Private Equity Group In Private Equity AUM Across 3 Complimentary Strategies1 Corporate Leveraging The Power of The Ares Platform
Slide 5: Private Equity is a Large and Growing Market
Private Equity is a Large and Growing Market $5 Trillion Market1 Private Markets Growth Has Outpaced Public Markets2 Private Equity is Poised for Significant Future Growth, Other with Nearly 80% of LPs Planning to Increase their Allocations3 13% 14 Net Asset Value and Market Cap Indexed to 2000 Spec
Slide 6: Partnership Approach Across Asset Classes
Partnership Approach Across Asset Classes Structured Stressed / Growth Recap Distressed Equity Solutions Rescue Structured Buyouts Financing Equity Credit Equity We Have Received Numerous Accolades1 Corporate Private Equity Ares Private Equity Infrastructure & Power Infrastructure & Power Top 20 Pri
Slide 7: Key Enablers Lead to Our Sustainable Competitive Advantages
Key Enablers Lead to Our Sustainable Competitive Advantages Sustainable Competitive Advantages • 105+ PEG & 695+ Ares Investment Professionals1 Hybrid Traditional & Distressed Experience People • Deep Industry & Asset Class Experience • Trusted & Creative Solutions Providers Robust Sourcing • Consis
Slide 8: We Are Built to Scale and Our Growth Has Outpaced the Market
We Are Built to Scale and Our Growth Has Outpaced the Market ASOF I $3.5B AEVF 22% vs. 14% ACOF V AEOF $1.1B $1.2B PEG AUM CAGR1 Market CAGR1 $7.8B $30.7 Since 2003 Since 2003 EIF V $800M $27.4 ACOF IV $25.0 $25.2 $4.7B $24.5 $23.5 $21.1 ACOF III $3.5B $14.1 ACOF II $2.1B ACOF I $10.1 $9.9 $751M $7.
Slide 9: We Have Invested in Our Team and Processes to Scale Deployment
We Have Invested in Our Team and Processes to Scale Deployment Private Equity Deployment Annual Deployment Targets ($ in millions) $6,000 $5,157 $1.5-$2.5B+ $5,000 ~3x Annualized Growth Over $4,625 Deployment ACOF Past 5 Years $4,000 $3,407 Seek to Deploy Approx. $3,000 $2,528 $2,792 $1.5-$2.5B+ ASO
Slide 10: Corporate Opportunities: ACOF Overview and Performance
Corporate Opportunities ACOF Overview and Performance Middle-and-Upper Blend of Traditional Typically Control or Middle Market Focus and Distressed Strategies Shared Control Ownership Rigorous and Systematic Focus on Great, Growing Companies Value Creation Framework Aggregate Performance1 Core Indus
Slide 11: Systematically Growing Companies is A Key to Our Success
Corporate Opportunities Systematically Growing Companies is A Key to Our Success We Identify Systems for Growth… Our Ability to Grow EBITDA …Where We Can Primarily Drive Top Line Growth… Investments1 Historical Salesforce Strategic, Multi-Unit Growth & New Services Integrated M&A Expansion Effective
Slide 12: ACOF's Competitive Differentiation
Corporate Opportunities ACOF’s Competitive Differentiation Differentiated Creative Value Creation Solutions Advantaged Provider Combine Proprietary Traditional & “Playbook” and Deal Flow Positioned as a Robust Portfolio Distressed “Partner of Choice” Management Expertise Enabled by Go-to- Focus on C
Slide 13: Special Opportunities: ASOF Overview and Performance
Special Opportunities ASOF Overview and Performance “All-Weather” Special Situations and Focus on Middle Market Companies Targets Debt and Non-Control Equity Distressed Strategy Undergoing Transformational Change Offers Leadership, Capital Flexibility Assists Non-Distressed Helps Distressed Business
Slide 14: Investing In and Catalyzing Transformational Change Across Market Environments
Special Opportunities Investing In and Catalyzing Transformational Change Across Market Environments ASOF I Gross Deployment Since Inception1 ($ in millions) $4,500 $4,104 Private Investments $4,000 $291 $48 $3,500 $693 2 $3,000 $176 $307 $2,568 $2,500 EETC Portfolio $311 $319 $2,000 Public Investme
Slide 15: ASOF's Competitive Differentiation
Special Opportunities ASOF’s Competitive Differentiation Private & “All Advantaged Middle Capital Public Experienced Weather” Private Market Partner of Relative Team Deployment Deal Flow Focus Choice Value Lens Invest in Non- Target What We Leverage One of the Lends to and Leverages Seek to Catalyze
Slide 16: Infrastructure & Power: AIP Overview and Performance
Infrastructure & Power AIP Overview and Performance Value-Add and Flexible Strategy Cycle-tested Across Subsectors and Structuring Supports Late-Stage Targets Climate Infra Assets the Asset Life Cycle Development and Asset Optimization ESG Plays an Integral Role at Every Benefits from the Scale and
Slide 17: Climate Infrastructure is the Largest and Fastest Growing Infra Sector
Infrastructure & Power Climate Infrastructure is the Largest and Fastest Growing Infra Sector U.S. climate infrastructure has outpaced all other infrastructure sectors in total value and number of transactions1 Historical Climate Infrastructure Investment in the U.S. Estimated Global Energy Investme
Slide 18: AIP's Competitive Differentiation
Infrastructure & Power AIP’s Competitive Differentiation Deep Demonstrated Experience Deep and Value-Add Dedicated History of Advantaged Across Local and Asset Structuring by Ares Sectors and Sourcing Flexible Management & Managing Platform Through Capabilities Capital Team Complex Cycles Strategy A
Slide 19: Private Equity FRE Has Grown as the Business Has Scaled
Private Equity FRE Has Grown as the Business Has Scaled Private Equity Assets Under Management1 Private Equity Business Line Fee ($ in billions) Related Earnings (FRE) ($ in millions) $31 $99 $23 $84 18% 34% 2015 Q2-21 2015 LTM Q2-21 Corporate Opportunities Special Opportunities Infrastructure & Pow
Slide 20: Looking Ahead: We Believe We Have Several Avenues for Growth
Looking Ahead: We Believe We Have Several Avenues for Growth Our growth will be driven by our focus on industry-leading investment performance through both organic and M&A opportunities New Product Development Scale Flagship Funds Sector-focused Geographical-focused $31B Corporate Opportunities Grow
Slide 21: Appendix
Appendix Ares Management Corporation Investor Day 2021 - Not for Publication or Distribution
Slide 22: GAAP Statement Of Operations
GAAP Statement Of Operations Year Ended December 31, $ in thousands, except share data Q2-21 LTM 2020 2019 2018 2017 2016 2015 2014 Revenues Management fees $1,307,451 $1,150,608 $979,417 $802,502 $722,419 $642,068 $634,399 $486,477 Carried interest allocation 1,583,262 505,608 621,872 42,410 620,45
Slide 23: RI and Other Measures Financial Summary
RI and Other Measures Financial Summary Year Ended December 31, $ in thousands, except share data (and as otherwise noted) Q2-21 LTM 2020 2019 2018 2017 2016 2015 2014 Management fees(1) $1,335,413 $1,186,565 $1,012,530 $836,744 $744,825 $659,451 $650,918 $598,046 Other fees 25,993 19,948 18,078 24,
Slide 24: GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis
GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis Year Ended December 31, $ in thousands Q2-21 LTM 2020 2019 2018 2017 2016 2015 2014 Realized Income and Fee Related Earnings: Income before taxes $944,635 $379,478 $425,180 $184,341 $149,859 $297,920 $81,484 $556,915 Adjustments: Amort
Slide 25: GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis (cont'd)
GAAP to Non-GAAP Reconciliation – Unconsolidated Reporting Basis (cont'd) Year Ended December 31, $ in thousands Q2-21 LTM 2020 2019 2018 2017 2016 2015 2014 Performance income and net investment income reconciliation: Carried interest allocation $1,583,262 $505,608 $621,872 $42,410 $620,454 $494,58
Slide 26: Glossary
Glossary Ares Management Corporation Investor Day 2021 - Not for Publication or Distribution
Slide 27: Glossary
Glossary ARCC Part II Fees ARCC Part II Fees refers to fees that are paid in arrears as of the end of each calendar year when the cumulative aggregate realized capital gains exceed the cumulative aggregate realized capital losses and aggregate unrealized capital depreciation, less the aggregate amou
Slide 28: Glossary
Glossary Fee Related Earnings Fee Related Earnings or “FRE”, a non-GAAP measure, is used to assess core operating performance by determining whether recurring revenue, primarily consisting of management fees, is sufficient to cover operating expenses and to generate profits. FRE differs from income
Slide 29: Glossary
Glossary Our Funds Our Funds refers to the funds, alternative asset companies, co-investment vehicles and other entities and accounts that are managed or co-managed by the Ares Operating Group, and which are structured to pay fees. It also includes funds managed by Ivy Hill Asset Management, L.P., a
Slide 30: Endnotes – Private Equity Overview & Outlook
Endnotes – Private Equity Overview & Outlook Ares Management Corporation Investor Day 2021 - Not for Publication or Distribution
Slide 31: Private Equity Overview & Outlook Endnotes & Performance Notes
Private Equity Overview & Outlook Endnotes & Performance Notes Private Equity is a Large and Growing Market 1. Source Preqin. Reflects private equity assets under management as of December 31, 2020. Includes Private Equity (excluding Venture Capital), Distressed Debt, and Special Situations funds. 2
Slide 32: Private Equity Overview & Outlook Endnotes & Performance Notes
Private Equity Overview & Outlook Endnotes & Performance Notes Partnership Approach Across Asset Classes (cont’d) • Private Equity International (PEI) selected Ares Private Equity Group as the second Distressed Debt Investor of the Year in North America – 2020. In its 2020 annual awards, Private Equ
Slide 33: Private Equity Overview & Outlook Performance Notes
Private Equity Overview & Outlook Performance Notes Corporate Opportunities: ACOF Overview and Performance • Except as otherwise explicitly noted, all performance information herein is unaudited, is on a “gross” basis, and takes into account the cumulative invested capital, cumulative cash distribut
Slide 34: Private Equity Overview & Outlook Performance Notes
Private Equity Overview & Outlook Performance Notes Corporate Opportunities: ACOF Overview and Performance – Pro Forma Performance Notes • The pro forma performance results shown have been compiled by Ares from realized and unrealized investments that were not collectively part of an actual portfoli
Slide 35: Private Equity Overview & Outlook Endnotes
Private Equity Overview & Outlook Endnotes Corporate Opportunities: ACOF Overview and Performance 1. The aggregate IRR and MIC shown does not reflect actual returns to any investor in any of the prior funds. Pro Forma Fund Performance (Ex-Energy) excludes the impact of investments in the energy equi
Slide 36: Private Equity Overview & Outlook Endnotes and Performance Notes
Private Equity Overview & Outlook Endnotes and Performance Notes Special Opportunities: ASOF Overview and Performance Note: Fund-level IRRs take into effect the performance benefit of the Savers warehouse facility and the subscription line, which should decrease over time. Since inception fund-level
Slide 37: Private Equity Overview & Outlook Endnotes
Private Equity Overview & Outlook Endnotes Infrastructure & Power: AIP Overview and Performance 1. Invested capital includes relevant investments made by Ares Infrastructure and Power and Ares Direct Lending, including Ares Capital Corporation, that are consistent with AIP’s investment mandate. 2. A
Slide 38: Ares Management Corporation Investor Day 2021 - Not for Publication or Distribution
Ares Management Corporation Investor Day 2021 - Not for Publication or Distribution