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January 25, 2017

2016 was the year that alternative asset manager Ares Management passed the $100 billion threshold in assets under management. Through a combination of fundraising and acquisitions, the firm has seen its AUM grow from $12 billion in 2006 to $97 billion by the end of the third quarter of 2016.

CC Michael Cornelius flic.kr/p/9JKNxD
CC Michael Cornelius flic.kr/p/9JKNxD

But have Ares’ limited partners benefited from this explosive growth in AUM? A new report by UNITE HERE reveals:

  • None of Ares’ private equity or real estate funds performed in the top quartile of peer funds, according to most recent information from Preqin. Most fell in the third or fourth quartile.
  • Only one of Ares’ twelve real estate funds outperformed its benchmark.
  • While Ares’ revenues from management fees have risen 143% from 2012 to 2015, the portion of those fees linked to fund performance have remained flat (from 15% to 21% of revenues – less than some publicly-traded peers).
  • Ares’s publicly traded business development corporation generated a larger share of Ares’ management fees (39%) than any of Ares’ private fund suites.

Have Ares’ limited partners benefited from Ares’ explosive AUM and management fee growth? Or are limited partners in private funds getting left behind as Ares seeks fee growth elsewhere?

The full report is available here.

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