Ares Management Corporation · NYSE:ARES
Ares Management — Ares Capital — Debt Investor Presentation (February 2025)
49 slides from Ares Management's debt investor presentation, February 2025
Slide 1: Investor Presentation Year Ended December 31, 2024
Investor Presentation Year Ended December 31, 2024 Contact: John Stilmar, Investor Relations jstilmar@aresmgmt.com (678) 538 - 1983 Confidential – Not for Publication or Distribution
Slide 2: Disclaimer
Disclaimer IMPORTANT NOTICE: Statements included herein may constitute “forward-looking statements,” which may relate to future events or the future performance or financial condition of Ares Capital Corporation (“ARCC”), its investment adviser Ares Capital Management LLC (“ACM”), a subsidiary of Ar
Slide 3: Risk Factors
Risk Factors An investment in a fund managed by Ares Management, strategy, account or vehicle entails a significant degree of risk and, therefore, should be undertaken only by investors capable of evaluating the risks of that investment and bearing the risks it represents. General risks about making
Slide 4: Market Leading Company in Direct Lending
Market Leading Company in Direct Lending Market Leading Business Significant Development Company Competitive Strengths Attractive Portfolio and Compelling Track Record Diverse Sources of Funding Key Differentiators $16.47 Largest publicly traded Incumbency from Large BDC1 with Significant Discipline
Slide 5: ARCC's Positioning and Team Differentiators
ARCC’s Positioning and Team Differentiators Confidential – Not for Publication or Distribution
Slide 6: ARCC is Well Positioned in a Growing Market
ARCC is Well Positioned in a Growing Market ARCC has a leading market position with many distinct competitive strengths developed over 20 years Largest Investment A Leading Credit Expanding Market Sourcing Team and Market Manager Opportunity Differentiators Coverage4 ARCC’s manager The addressable A
Slide 7: Ares Management
Ares Management With approximately $484 billion in assets under management, Ares Management Corporation is a global alternative investment manager operating an integrated platform across five business groups Global Footprint2 Profile Founded 1997 AUM $484bn Employees 3,200+ Investment Professionals
Slide 8: Ares Credit Group
Ares Credit Group Integrated scaled global platform combines direct origination, deep fundamental credit research and broad perspective of relative value Differentiators $348.8 Billion AUM1 Access to 85+ Partners averaging 25+ years of Deep Investment Differentiated Broad Expression of experience Op
Slide 9: Market Opportunity
Market Opportunity We believe that addressable market continues to expand which provides additional opportunities for ARCC Bank Consolidation Has Meaningfully Reduced the Number of Banks1 Growing Demand for Direct Lending2,3,4 ~70% Reduction in Number of U.S. Banks Over the Last 40 Years 225%+ Growt
Slide 10: Leading Investment Team
Leading Investment Team We believe ARCC benefits from a large, long tenured and experienced team with significant experience in direct lending and extensive middle market knowledge ARCC’s Team Brings Members of the Investment Committee Invested $160 billion in direct lending across 30+ years average
Slide 11: ARCC's Sourcing Differentiators
ARCC’s Sourcing Differentiators ARCC’s scale and flexibility lead to sourcing differentiators and significant deal flow Origination Scale & Relationships Incumbency Flexible Solutions Selectivity • Wide funnel with $650+ • 20-year history in the • Incumbency allows us to • Multi-asset class Billion
Slide 12: ARCC's Investment Approach and Portfolio
ARCC’s Investment Approach and Portfolio Confidential – Not for Publication or Distribution
Slide 13: Key Elements to Our Investment Approach
Key Elements to Our Investment Approach We believe a credit-focused investment approach supports our 20 years of leading performance • Leading market share positions Fundamentally Strong • Long-term staying power Companies • Experienced management teams Highly Diversified • Across asset classes, bor
Slide 14: Flexible Capital Across Diversified Product Lines
Flexible Capital Across Diversified Product Lines ARCC has demonstrated its ability to be a total solutions provider, which we believe enhances our origination and our relationships with clients ARCC’s Asset Allocation Merits of a Flexible Approach 9% Target best relative value opportunities across
Slide 15: Highly Diversified Attractive Portfolio
Highly Diversified Attractive Portfolio Attractively positioned $26.7 billion1 highly diverse portfolio with a level of downside protection Moderate portfolio company 550 Portfolio Companies3 Average Position Size 0.2%4 Largest investment is ~2%5 leverage with LTV of ~44%2 ARCC Portfolio by Industry
Slide 16: ARCC's Significant Portfolio Diversity vs. BDC Peer Averages
ARCC’s Significant Portfolio Diversity vs. BDC Peer Averages ARCC’s portfolio is designed to mitigate risk from any one issuer or industry Average Hold1 Number of Industries identified by S&P1,3 34 0.6% 28 0.2% ARCC BDC Peer ARCC Q4-24 BDC Peer Q4-24 Average Average Largest Exposure at Fair Value1,2
Slide 17: ARCC's Financial Results
ARCC’s Financial Results Confidential – Not for Publication or Distribution
Slide 18: ARCC Has Delivered Compelling Long Term Performance
ARCC Has Delivered Compelling Long Term Performance We believe ARCC has a high quality portfolio and leading track record 20 YEARS • 20 year track record with over $160 billion of capital invested across Ares in U.S. direct lending, Length of Track Record resulting in attractive returns for ARCC inv
Slide 19: ARCC Has a Compelling Track Record of Credit Performance
ARCC Has a Compelling Track Record of Credit Performance ARCC’s annual loss rate has been significantly better than the industry averages ARCC Credit Experience Since Inception1 First Lien Second Lien & Subordinated Period Measured1 2004 – Q3-24 2004 – Q3-24 Significant Capital Deployed1 $77 billion
Slide 20: Strong Credit and Investment Performance
Strong Credit and Investment Performance ARCC has generated cumulative net realized gains where others have generated losses ARCC generated ~200 bps of average annual incremental Since IPO in October 2004 through December 31, 2024: gain differential vs. Peers3 since 20044 Approximately 1.4% $900 mil
Slide 21: Differentiated Portfolio Management Capabilities & Focus
Differentiated Portfolio Management Capabilities & Focus We believe we have the largest and most experienced portfolio management team amongst any other U.S. direct lending manager1 Portfolio Management Capabilities Experienced and Growing & Focus Areas Portfolio Management Team 550 Robust coverage
Slide 22: Consistent Track Record of Generating Meaningful Shareholder Value
Consistent Track Record of Generating Meaningful Shareholder Value ARCC has delivered the highest regular/base dividend growth, NAV per share growth, NAV-based total returns and stock-based total returns when compared with every other externally managed BDC with a market cap of over $700 million tha
Slide 23: ARCC's Stock Total Returns Since Inception
ARCC’s Stock Total Returns Since Inception Annualized Shareholder Total Return Since Inception 10/8/04 - 12/31/241,2 1400% 1200% ARCC 1000% American Capital Acquisition provided additional scale January 3, 2017 800% Allied Capital Acquisition S&P 500 Index 600% provided scale April 1, 2010 400% S&P
Slide 24: Capital & Liquidity
Capital & Liquidity Confidential – Not for Publication or Distribution
Slide 25: Deep and Diverse Access to Debt Financing
Deep and Diverse Access to Debt Financing Our deep bank and capital market relationships enhance our access to capital supported by investment grade ratings Aggregate Principal Debt Summary* Amount of Principal Weighted Average ARCC Has Long Standing Investment Grade Ratings** Stated Interest ($ in
Slide 26: ARCC Has Stable and Broad Sources of Financing
ARCC Has Stable and Broad Sources of Financing Conservative balance sheet with a longstanding track record of accessing diverse sources of financing Simple Balance Sheet with Significant Liquidity Strong Liability and Funding Construction $534 Available Cash $6.7b Total Excess Available $6,142 Borro
Slide 27: Deep Sources of Liquidity and Well Laddered Maturities
Deep Sources of Liquidity and Well Laddered Maturities Investment portfolio provides ample cash flows to support debt maturities Sales & Repayments Sources of Liquidity* ~$6.7 billion of 70% as a % of Portfolio at available borrowing $20,482 Amortized Cost capacity3* 60% 50% $13,806 $8,728 $ Million
Slide 28: Strong Coverage Ratios
Strong Coverage Ratios ARCC noteholders may benefit from conservative liability structure and significant unencumbered assets Strong Asset Coverage for Unsecured Notes1* Significant Fixed Charge Coverage from Earnings2* 4.5x 4.5x 4.1x 4.0x 4.0x 3.8x 3.7x 3.5x 3.4x 3.5x 3.3x 3.4x 3.5x 3.5x 3.2x 3.2x3
Slide 29: Conclusion
Conclusion Confidential – Not for Publication or Distribution
Slide 30: Conclusion
Conclusion We believe ARCC is well positioned to deliver differentiated results Strong and growing position in an expanding market Meaningful competitive strengths driven by our scale and tenure in the market Healthy, attractively positioned and diversified senior oriented portfolio Large and experi
Slide 31: Appendix
Appendix Additional Investment and Financial Considerations Confidential – Not for Publication or Distribution
Slide 32: Risk Position: Asset Mix Changes with Views on Risk and Return
Risk Position: Asset Mix Changes with Views on Risk and Return Our portfolio composition will change based on our view of market conditions and the returns available 100% 3% 6% 4% 4% 4% 4% 4% 5% 5% 5% 7% 7% 7% 7% 8% 9% 9% 9% 12% 11% 12% 4% 3% 3% 3% 3% 4% 4% 4% 12% 4% 2% 5% 5% 3% 2% 4% 3% 4% 90% 5% 1
Slide 33: Ivy Hill Asset Management Overview
Ivy Hill Asset Management Overview Ivy Hill was established in 2007 and has become a leading middle market loan manager Ivy Hill Portfolio and Team Characteristics Diversity in Fund Structure & Investments5 15+ ~$13bn Year Track Record AUM3 30% 35% 20 234 35% Managed Vehicles Borrowers CLOs Loan Fun
Slide 34: ARCC's Portfolio Has Generated Higher Returns with Less Risk
ARCC’s Portfolio Has Generated Higher Returns with Less Risk Our investment strategy and competitive strengths have led to attractive returns with lower volatility Annualized Returns (Dividends & Change in NAV)1,2 3 Years 5 Years Since IPO (2004) 12.1% 13.2% 12.1% 9.0% 8.8% 6.2% 6.6% 5.9% 5.4% 4.9%
Slide 35: Cycle Tested with Differentiated Approach
Cycle Tested with Differentiated Approach ARCC’s team has deep experience and a leading track record in managing underperforming companies ARCC’s Historical Core Non–Accruals1,2 12% Percentage of Total Core Investment Portfolio Differentiated Approach 10% Pro-active portfolio management approach all
Slide 36: Rigorous Underwriting and Credit Management
Rigorous Underwriting and Credit Management Our in-depth process typically spans several months, allowing for thoughtful decision making Typical Average Timeframe Key Attributes of ARCC Borrowers1 Investment Opportunity (Primary and Secondary) Up to 1 week 100% Preliminary Evaluation by senior manag
Slide 37: Benefits of BDC Structure
Benefits of BDC Structure We believe creditors benefit from the leverage restrictions and diversification requirements of the BDC/RIC structure BDCs are closed-end investment companies The BDC/RIC structure provides limitation on regulated by the SEC leverage and requires portfolio diversification •
Slide 38: Reconciliations of GAAP Net Income to Core Earnings
Reconciliations of GAAP Net Income to Core Earnings Reconciliations of GAAP Net Income to Core Earnings For the years ended (in millions) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 GAAP Net Income $591 $379 $474 $667 $858 $793 $484 $1,567 $600 $1,522 $1,522 Adjustments: Net realized and
Slide 39: Index & ETF Definitions
Index & ETF Definitions Confidential – Not for Publication or Distribution
Slide 40: Index Definitions
Index Definitions Indices are provided for illustrative purposes only and not indicative of any investment. They have not been selected to represent appropriate benchmarks or targets for ARCC. Rather, the indices shown are provided solely to illustrate the performance of well known and widely recogn
Slide 41: Endnotes
Endnotes Endnotes Confidential – Not for Publication or Distribution
Slide 42: Endnotes
Endnotes Slide 4: Market Leading Company in Direct Lending 1. By market capitalization as of December 31, 2024. 2. As of December 31, 2024. Includes capital deployed by ARCC, the Senior Direct Lending Program (“SDLP”), funds and SMAs. For investments made through the SDLP, invested capital represent
Slide 43: Endnotes
Endnotes Slide 8: Ares Credit Group • ARCC received the 2021 All-America Executive Team Most Honored designation alongside 136 other companies. Various Ares personnel received first place awards as part of the “Brokers, Asset Managers & Exchanges” category for: Investor Relations, CEO, CFO, Investor
Slide 44: Endnotes
Endnotes Slide 13: Key Elements to Our Investment Approach 1. The portfolio median EBITDA includes information solely in respect of corporate investments in Ares Capital's portfolio. Excluded from the data is information in respect of the following: (i) the SDLP (and the underlying borrowers in the
Slide 45: Endnotes
Endnotes Slide 18: ARCC Has Delivered Compelling Long Term Performance 1. As of December 31, 2024. Includes capital deployed by ARCC, the Senior Direct Lending Program (“SDLP”), funds and SMAs. For investments made through the SDLP, invested capital represents the total facility amount funded by the
Slide 46: Endnotes
Endnotes Slide 20: Strong Credit and Investment Performance 1. Calculated as the net realized gains/losses from Ares Capital IPO in October 2004 to December 31, 2024. Excludes $196 million one‐time gain on the acquisition of Allied Capital Corporation in Q2‐10 and gains/losses from extinguishment of
Slide 47: Endnotes
Endnotes Slide 25: Deep and Diverse Access to Debt Financing 1. Subject to borrowing base and other restrictions. Represents total aggregate amount committed or outstanding, as applicable, under such instrument. 2. Effective stated rate as of December 31, 2024. In connection with the issuances of th
Slide 48: Endnotes
Endnotes Slide 33: Ivy Hill Asset Management Overview 1. Including IHAM investment committee members. 2. Refer to “Consolidated IHAM Vehicles” column within the “Selected Balance Sheet Information” table in Note 4 to Ares Capital’s consolidated financials statements included of the Form 10-K for the
Slide 49: Confidential – Not for Publication or Distribution
Confidential – Not for Publication or Distribution
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