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Ares Management (ARES) Aims $750 Billion in AUM by 2028
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On its 2024 investor day, Ares Management Corporation (ARES - Free Report) set out numerous targets for the next five years. ARES has been benefiting from high interest rates and robust demand for private credit. The company will focus on credit, wealth and insurance for its growth.
ARES expects to increase assets under management (AUM) to more than $750 billion by the end of 2028. This indicates an increase of more than 75% from the 2023-end reported figure of $419 billion. This will be driven by scaling existing funds, as well as launching and growing new strategies.
“We expect to grow faster than the projected industry average over the next five years,” per the presentation.
Particularly, in the wealth management solutions business, Ares Management aims to increase AUM to $100 billion in 2028, up from about $25 billion now. Moreover, management fees are expected to increase from $175 million to $600 million over the same time.
Private credit AUM is expected to increase from $1.7 trillion to more than $2.8 trillion by 2028.
Given that alternative credit is ARES’ fastest organically growing strategy, the company expects to increase AUM in alternative credit to $70 billion by 2028 from the $33.9 billion reported at 2023 end.
Aspida is the company’s insurance strategy, and offers retirement and reinsurance solutions to help clients. The strategy is expected to grow AUM to $50 billion by 2028 from $14 billion at the first-quarter 2024 end.
Fee-related earnings are expected to increase, seeing a compound annual growth rate (CAGR) of 16-20%, with a mid-point of $2.65 billion for 2028, suggesting a rise from the $1.16 billion reported at 2023 end.
Realized income is projected to increase, witnessing a CAGR of 20-25% through 2028 to $3.5 billion at the mid-point, indicating growth from the $1.22 billion reported at 2023 end. The company expects European-style waterfall realized income to drive realized income growth higher than fee-related earnings.
The increase in realized income and fee-related earnings are expected to drive dividends for the company. Ares projects annual dividend per share to increase, seeing a CAGR of 20% to more than $7.66 by the end of 2028, implying a rise from the $3.08 reported at 2023 end.
The company operates in expanding addressable, fragmented markets with significant tailwinds. This, along with its buyouts and strategic organic initiatives, will drive growth and help it achieve these targets.
ARES currently carries a Zacks Rank #3 (Hold). Over the past year, shares of the company have rallied 69.5%, outperforming the industry’s growth of 42%.
Estimates for CSWC’s current-year earnings have been revised marginally upward in the past week. The company’s shares have gained 37.7% over the past year.
Estimates for APAM’s current-year earnings have been revised marginally upward in the past 30 days. The company’s shares have risen 43.9% over the past year.
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Ares Management (ARES) Aims $750 Billion in AUM by 2028
On its 2024 investor day, Ares Management Corporation (ARES - Free Report) set out numerous targets for the next five years. ARES has been benefiting from high interest rates and robust demand for private credit. The company will focus on credit, wealth and insurance for its growth.
ARES expects to increase assets under management (AUM) to more than $750 billion by the end of 2028. This indicates an increase of more than 75% from the 2023-end reported figure of $419 billion. This will be driven by scaling existing funds, as well as launching and growing new strategies.
“We expect to grow faster than the projected industry average over the next five years,” per the presentation.
Particularly, in the wealth management solutions business, Ares Management aims to increase AUM to $100 billion in 2028, up from about $25 billion now. Moreover, management fees are expected to increase from $175 million to $600 million over the same time.
Private credit AUM is expected to increase from $1.7 trillion to more than $2.8 trillion by 2028.
Given that alternative credit is ARES’ fastest organically growing strategy, the company expects to increase AUM in alternative credit to $70 billion by 2028 from the $33.9 billion reported at 2023 end.
Aspida is the company’s insurance strategy, and offers retirement and reinsurance solutions to help clients. The strategy is expected to grow AUM to $50 billion by 2028 from $14 billion at the first-quarter 2024 end.
Fee-related earnings are expected to increase, seeing a compound annual growth rate (CAGR) of 16-20%, with a mid-point of $2.65 billion for 2028, suggesting a rise from the $1.16 billion reported at 2023 end.
Realized income is projected to increase, witnessing a CAGR of 20-25% through 2028 to $3.5 billion at the mid-point, indicating growth from the $1.22 billion reported at 2023 end. The company expects European-style waterfall realized income to drive realized income growth higher than fee-related earnings.
The increase in realized income and fee-related earnings are expected to drive dividends for the company. Ares projects annual dividend per share to increase, seeing a CAGR of 20% to more than $7.66 by the end of 2028, implying a rise from the $3.08 reported at 2023 end.
The company operates in expanding addressable, fragmented markets with significant tailwinds. This, along with its buyouts and strategic organic initiatives, will drive growth and help it achieve these targets.
ARES currently carries a Zacks Rank #3 (Hold). Over the past year, shares of the company have rallied 69.5%, outperforming the industry’s growth of 42%.
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Stocks Worth Considering
Some better-ranked stocks are Capital Southwest (CSWC - Free Report) and Artisan Partners Asset Management (APAM - Free Report) , currently carrying a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Estimates for CSWC’s current-year earnings have been revised marginally upward in the past week. The company’s shares have gained 37.7% over the past year.
Estimates for APAM’s current-year earnings have been revised marginally upward in the past 30 days. The company’s shares have risen 43.9% over the past year.