Ares ASOF
Does anyone have any idea as to how good ASOF is considered (comp/returns/exits if its possible). People from my school have gone to the DL team as analysts and I know both teams take summer interns. How does ASOF compare in terms of learning experience and prestige? Also, how hard is it to get a return offer? Any insight is appreciated.
Based on the most helpful WSO content, Ares is highly regarded in the direct lending (DL) and alternative credit space. While specific details about ASOF (Ares Special Opportunities Fund) aren't explicitly mentioned in the context, here are some insights about Ares' broader reputation and structure that might help:
Prestige and Learning Experience: Ares is considered a top-tier player in the direct lending space, often compared to firms like Golub and Antares. Ares stands out as the largest and most sophisticated, with a strong track record of generating impressive returns (e.g., 14% annual returns since inception for their DL group). The learning experience at Ares is robust, with due diligence processes that are close to private equity standards, albeit slightly lighter.
Compensation and Returns: Ares' compensation is competitive, often in line with or above most middle-market private equity shops but below mega-fund private equity. Their funds, including private and BDC mandates, have raised tens of billions, showcasing their strong performance and market presence.
Return Offers: Ares is known to provide analysts with offers to become associates once the traditional recruiting season begins, offering 2-4 years of job security. However, the culture at Ares can be demanding, with a focus on process, memo creation, and a narrow investment committee strike zone, which might influence the return offer process.
Comparison to Other Teams: Ares' DL team is often highlighted as a powerhouse, with Golub being a slightly "watered-down" version in terms of pay and prestige. While ASOF isn't directly compared in the context, it's reasonable to assume that Ares' reputation for rigorous analysis and strong deal flow extends across its teams.
If you're considering ASOF, it would likely offer a strong learning experience and solid prestige, especially if you're interested in alternative credit or distressed opportunities. However, the return offer process and cultural fit might require careful consideration.
Sources: Lending/LevFin vs. MM IBD vs PE summer internships, —, Ares Capital Management - Culture, Status, Word on the Street
bump
It's called opp. credit now and recently moved to credit. IMO comp/exits similar to Bain Credit + SS, where comp is 220ish an1 and being in either credit or ss will give you good looks at a variety of exits across cap structure.
Ares is pretty new on the SS side so materialized exits will be a bit harder to find, Fund III just raised at almost 10b so great trajectory there
what about associate comp?
Any DL comp data points?
What’s the split of DL vs SS deals there? Are the DL deals they do vanilla deals?
ASOF has strong returns (unlevered btw) as well as fundraising
Return requirement is typically 15%+ IRR. Majority of portfolio is privates (pref equity, junior debt, debt+equity, etc) and ~30% is in publics (stressed/distressed debt with several years hold period).
There‘s around 35 investment professionals across LA, New York and London. The team is generalist so you work across all sectors and see a big variety of transactions.
Super helpful - are those gross or net irr figures? Realized or unrealized? Thanks!
Gross IRR. The DPI for ASOF I gives you an idea of realised/unrealised. ASOF II is mostly unrealised at this point which makes sense given vintage/investment period.
You can find these in the 10k btw (figures are as of Dec-25)
Thank you. ASOF 1 returns are very strong. Do you know how they achieved it? Even if you do a lot of pref/ equity, pe returns themselves are barely clearing 15%. Is it a bump from good entry levels during covid in 2020?
Many private deals have equity components, for example pref equity might be convertible, there might be warrants or some minority equity.
Then on the public side a lot of the deals are high IRR (sometimes with shorter hold period) and in several cases ASOF has meaningful post-restructuring equity positions (e.g Swissport).
And some Pref / PIK debt that has no equity upside can still be very lucrative (imagine 15% PIK, 3% OID, 1.75x Min MOIC and maybe an exit fee).
Overall, performance is good because of strong due diligence (very few losers in portfolio). You might have a small IRR boost from some good public deals in 2019 (Covid), but equally a lot of good publics in 2022 and the way the world is moving there may be some good opportunities on the horizon again.
Comparing ASOF with recent PE returns, the strategy benefits from being more senior in the capital structure and often not being exposed to the “hottest“ sectors where (in my view) there‘s a tendency to overpay (e.g. Software in 2021). There are also a lot of opportunities to provide capital to sponsors that cannot exit portcos. Equally though, would be very hard to achieve 30%+ IRR, which PE funds can in theory deliver.
They had monster P&L from Savers at one point in Fund 1. Ultimately ipoed.
Congrats on being one of the few to break out from WLU. You earned it
All that said it’s a great place to work and learn. But wouldn’t pump up the place as aggressively as people here have. If it were so good I wouldn’t see so many resumes from there, and I also would t find so many of their current employees to be duds (though to be fair they have some rockstars).
Finally on the cap solutions in privates they do, there are a number that have done well and they do have very good sourcing.
But the big issue is that the highest return pref / holdco deals are still horrible relative value to just buying public equities. Create on deals is about where public comps trade and you’re giving up a lot of upside, for not much downside protection. And needless to say, levered sponsor companies are almost always underinvested vs public peers. Financing those long held portcos w subordinated capital is basically the private markets equivalent of a Eminence Capital catch falling knife approach. Always have to ask — if the asset is as good as sponsor claims, why can’t they just sell or IPO (latter to delver + retain upside post offering). The answer is often not good.
Thank you so much for the reply, this is a helpful perspective
1. What makes you more pessimistic now? Is it more of, did well because of a few good plays (eg. Savers) and a select set of good opportunities, that are unlikely to repeat/scale with the larger fund size?
2. Is this generally true about credit vs equity? Debt trading at a discount is, more often than not, a short term play?
4. How would you think about working there from an analyst perspective instead of ib vs aso/post-banking? Is the main downside the smaller opportunity set for exits?
And as a response to the last point about privates. I definitely see the argument about creation multiple and public comps. But specifically the point about "why can't they sell, " is the counter argument not simply that there exist maybe low quality businesses (maybe its simply bad bs) but some offer good relative value with more unique/creative structuring? Of course, the counter argument to that is that these opportunities are few and far between, and thus, larger funds will have greater difficulties in exploiting them
Again, I appreciate the insight, would love to hear your thoughts on any of the above
Given you‘re quite critical of the longer hold periods, what strategies in credit / special situations do you find better placed? And are there any funds you see executing those well?
Not critical all the time, but credit is naturally mean reverting. You either refi and get par, or you default/restructure. That happens usually in a short period of time in leveraged credit as tenors are generally short 5-7 years and the hair doesn’t occur in years 1-3 post issuance, usually.
The whole premise of special situations investing is that there will be an event or events that create massive upside. There is are discrete problem(s) in business and they resolve and you trade to index spreads +/- once such problems have resolved.
Even in a equitization scenario, sitting on your hands not seeing the price move is a bad sign. You should only hold the post reorg stock if you see material upside that, at very least, would outperform spx. This can be catalyzed via M&A, asset sales, capital markets activities, fundamental improvement that is concrete and substantial. These things usually don’t take many years in a special situations context where owners have taken the keys.
A bit of off-topic here, but what did you mean by "Arini type book"; was that supposed to be a compliment to Arini?
Yes, complement. Because they bet big, get some things very right and get others wrong. So when they are right enough of the time, the winners can offset the losers.
This doesn’t work when a lot of the book is par high carry loans.
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