Goldman Sachs U.S. Financial Services Conference 2014 December 9, 2014
Table of Contents I. Overview II. Market Opportunity III. Investment & Growth Strategy IV. Financial Performance & PosiEon V. Conclusion VI. Appendix Segment Review Financial Informa4on Addi4onal Corporate…
Overview
Ares Management Overview Ares Management, L.P. (NYSE: ARES) is a leading global alternaEve asset manager with approximately 80 billion of assets under management(1) Since our incepLon in 1997, we have adhered to a disciplined…
Differentiated Business Model We believe Ares has a differentiated business model benefitting from high growth and consistent historical performance TRADITIONAL ASSET ALTERNATIVE ASSET MANAGERS MANAGERS BROAD ARRAY OF LONG-LIVED,…
The Power of our Platform Distinguishing features that together propel our investment performance and growth CollaboraEve Culture Cross group daily interacLon Deep team of talented professionals sharing ideas and best…
Track Record of Performance The power of our platform has led to attractive risk-adjusted returns across asset classes Tradable Credit Direct Lending Private Equity Real Estate Gross Annualized Returns Since Incep4on and Asset Level…
Consistent Growth Across Market Cycles(1) Our attractive investment performance has contributed to robust AUM growth over the past ten years Assets Under Management 90 800 Tradable Credit 80 Direct Lending 700 Private Equity…
Market Opportunity 10
De-leveraging of the Global Banking System(1) The banks now hold 40-50% more capital than pre- Bank Regulations recession Top 5 Banks: Average Tier 1 11% Common Capital RaLo(2) 10% 1. Increasing 9% Basel III Bank Capital…
Increasing Benefits of Scale in the Asset Management Space We believe fund investors are allocating a greater share of their assets to established and diversified platforms CapabiliEes of a Scaled Manager Advantages Provided to…
Accelerated Growth of Alternative Asset Allocations (1) Growth in alternaLve investments has more than doubled 2005 2013 AUM CAGR the growth rate of non-alternaLves over the past ve years By 2020, McKinsey & Company projects that…
Investment & Growth Strategy
Targeted Returns of Investment Strategies Ares has experience in the following asset classes Ares Risk / Reward Spectrum Ares Risk / Reward Spectrum Targeted Net Returns at November 2014(1) 0% 5% 10% 15% 20% 25% TRADABLE CREDIT…
Flexible Strategies Provide Investment Opportunities Across Market Cycles Investors invest with us across market cycles given our adaptable strategies and our history of capitalizing on market volatility Tradable Credit Group Direct…
Focus on Long-Lived, Locked-Up Capital 62% of Ares capital base has a tenor of 7 years or more Managed Permanent Accounts Capital 62% Long-Lived Capital 16% 17% Fewer than Management Fee Visibility 3 years 3%…
Diversified & Growing Investor Base Our deep and expanding investor relationships are founded on our demonstrated performance Number of InsEtuEonal Direct Investors Increasing Pension SWF 555 54% InsFtuFonal Direct Bank/Private…
Multiple Avenues for Growth Larger subsequent funds Cross-market our strategies to exisEng clients Growth of business development group Organic 1 Enter adjacent asset classes ConEnue to develop dierenEated New Products…
Financial Performance & Position
Well-Capitalized Balance Sheet We have a strong capital base for growth Combined Balance Sheet (1) September 30, 2014 - mm Cash 75 Low Debt Cash of 75mm vs. debt of 164mm(2) Performance Fees Receivable 527 Due from Aliates…
High Quality & Diverse Revenues Stable and diversified management fee driven business model Total Fee Revenue ComposiEon(1) 363mm 572mm 619mm 658mm 6% 7% 10% Net Performance Fees: Other(2) 4% 16% Net Performance Fees:…
Growth of Key Financial Metrics 2003-2014(1) Management Fees 2011-2014 Key Financial Metrics in millions 2011 2012 2013 2014(1) CAGR 577 80 74 503 Total AUM 60 bn 49 20% 415 619 658 Total Fee 572 Revenue 24% 324…
Ares Invested Heavily in BDG and Infrastructure to Support Future AUM Growth(1) Past growth expenditures/investments on new BDG personnel, geographic expansion and technology have reduced earnings growth; however, we believe we are…
Significant Remaining Capacity for Investment 18.5 15.3 3.1 13.0 1.9 As of September 30, 2014, our 3.6 0.3 Available Capital was primarily 4.5 Available Capital(1) 5.5 aributed to ACOF IV, ARCC & bn 6.1 5.9 Related…
Conclusion
Conclusion 1. 1 Demonstrated investment approach with favorable track records across strategies 2. 2 Stable earnings due to long-lived, locked up capital, diversied & growing investor base and high c omponent of fee…
Appendix Segment Review 28
Tradable Credit Group is a Leading Manager Across Long-Only and Alternative Credit Strategies Business Overview and Returns Assets Under Management (bn) Ares has been managing below investment grade credit 32.6 instruments since its…
Direct Lending Group is Among the Largest Self Originating Middle Market Lenders Business Overview and Returns Assets Under Management (bn) Launched in 2004, Ares Direct Lending Group principally 28.0 originates private debt…
Private Equity Group Demonstrates a Differentiated Investing Approach and Top Tier Performance Business Overview and Returns Fund Sizes & Signicant TransacEons (bn) 4.7 Raised rst private equity fund in 2003, and currently manages…
Real Estate Group has a Demonstrated Track Record of Investing Across the Capital Structure(1) Business Overview and Returns Assets Under Management Ares Real Estate Group manages comprehensive public and private equity and debt…
Appendix Financial Information 33
Financial Highlights in millions Year ended December 31 Three months ended September 30, 2013 2012 2011 2014 2013 Direct Lending Group 238 190 155 69 66 Tradable Credit Group 146 145 99 37 47 Private Equity Group 93 69 68 22 24 Real…
GAAP to Non-GAAP Reconciliation Stand Alone Reporting Basis Three months ended in millions Year ended December 31, September 30, 2013 2012 2011 2014 2013 Economic net income and fee related earnings: Income before taxes 873 1,262…
Glossary ARCC Part I Fees ARCC Part I Fees refers to fees based on ARCCs net investment income (before ARCC Part I Fees and fees based on ARCCs net capital gains, which are paid annually (ARCC Part II Fees)), which are paid…
Glossary (continued) Fee Related Earnings Fee related earnings (or FRE) is a component of ENI and is used to assess the ability of our business to cover direct base compensaLon and operaLng expenses from management fees. FRE diers from…
Appendix Additional Corporate Information 38
Organizational Structure Management Commiqee Our 5 Co-Founders and 8 other senior professionals across the rm Board Directors / Co-Founders Other Management Commiqee Members Tony Ressler Chairman/CEO Bill Benjamin European Real…
Ares Management's Publicly Traded Entities Ares Commercial Real Ares Dynamic Credit Ares MulE-Strategy Credit Ares Capital CorporaEon Estate CorporaEon AllocaEon Fund Fund Business Development Real Estate Closed End Funds…
Investment Leadership Each group is led by its own deep leadership team of highly accomplished investors who average 22+ years of experience Tradable Credit Direct Lending Private Equity Real Estate Greg Margolies Keith Ashton…
Appendix Performance Appendix 42
Performance Notes to Slide 8, 16 and Slides 29-32 Tradable Credit Lipper Rankings reported in Lipper Marketplace Best Money Managers, September 30, 2014. Lipper Marketplace is the source of the long-only and mulL-strategy credit…
Performance Notes to Slide 8, 16 and Slides 29-32 Direct Lending Performance footnote for Ares Capital CorporaLon (ARCC): As of September 30, 2014. ARCCs performance staLsLcs are shown as representaLve of the Ares U.S. Direct Lending…
Performance Notes to Slide 8, 16 and Slides 29-32 Real Estate Performance returns for U.S. Value Add and Euro OpportunisLc reect realized and unrealized amounts as of June 30, 2014 and are shown for illustraLve purposes. Realized and…
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