Is Ares PE a UMM/MF Anymore?
Saw that they vastly missed the fundraising target for their flagship strategy raising only $5.7Bn of a $9.5Bn target.
What does this say about their analyst/associate program and their prospects for the future?
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Wow, I wasn't aware of this. Heard they have a special opps vehicle doing well. That makes more sense that a special sits vehicle does well at credit-focused Ares. I wouldn't join their Analyst program if gotten the chance however, it seems to be that traditional PE is careening downwards at Ares not reaching your target in today's climate is telling.
Interesting, when I look on LinkedIn it seems that they are seeing a lot of turnover maybe people on the inside see this as well
Where did you see that?
Saw it on their Q3 investor presentation while doing some research for a class.
Obviously anecdotal, but Ares recruited at my undergrad for their analyst program, and pretty much everyone preferred the MF (KKR, BX, WP, SLP) programs over Ares, and many preferred top banking groups (PJT RSSG, GS TMT, etc.). Seems like not many of the analysts choose to go A2A, with some going to other PE firms and others to HFs. I'm sure it's a great experience, but I don't think it's seen in the same light as MF PE analyst programs. They're traditionally known for credit, which they're amazing at, but not as many people strive for that from undergrad. However, my undergrad was in the east coast and Ares' PE team is in LA, so that was definitely a factor in people's decisions since most finance people want to be in NYC
I thought their PE was growing and becoming more of their primary investing strategy, which would improve the desirability of their analyst program, but if what you're saying is true, then I guess not.
Don't know the whole dynamics behind but I'd assume a $6bn fund is large enough to be considered UMM
Current Ares employee here. I think two things that haven’t been discussed on the fundraising side are 1) that ACOF is no longer investing in energy, and 2) the rise of alternative strategies in the private equity group such as ASOF. I believe the original target for ACOF VI was $9.25bn, which was subsequently downsized due to the firm’s decision to no longer invest in energy (the firm’s energy investments in fund V have struggled and LPs didn’t want continued exposure). Fund V was invested ~35-45% in energy, so from an equity dollars at work perspective in Fund VI, it is actually larger than the predecessor in terms of money going towards their core industries of HC, services / tech, industrials, and consumer. Additionally, the rise of the special opps business has been a boon for the group with amazing performance (over 65% gross since inception) which I assume has shifted the focus of the team (currently in the market raising ASOF II with amazing traction). I think the combination of those two factors contributed significantly to the ultimate sizing of fund VI, with the caveat being the firm has been on a tear in terms of deployment this year and it looks like they’ll start raising VII approximately a year from now.
On the analyst program point, in my biased opinion, it remains maybe the best experience of all the programs I have seen. As referenced, turnover and ultimate prioritization of those recruiting out of undergrad seems to be heavily skewed / driven by the fact that Ares PE team all sits in LA. Many people with East Coast roots are not interested, or after doing their two years decide to head to another shop (or usually HFs) for geographical reasons. As has been chronicled on this forum, the analyst program exits are phenomenal. Elliot, Farallon, Silver Lake, etc. - you can go wherever you want to go. Hope this context is helpful.
For the SAs, is Ares usually overhiring and giving the best performers returns or are they giving every SA a spot to return provided they do good work? Only asking bc programs like Vista and BX are usually overhiring.
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I thought the same thing, LPs thought your core strategy was ass and that is a benefit?!?!?
If that was really the case regarding Energy investments and subsequent downsizing, then ACOF VI shouldn't have gone out with a $9.25B target. Its not like energy investments just started to perform poorly.
A better story would have been to go out at the ~$6B target and say we're not doing energy anymore, and then hit your target. Vastly missing your target is atrocious optics.
I believe this is what the team did - not sure about the target, but my understanding was that it was right sized after the energy decision. The initial target ($9.25bn) was set in 2019, then the energy portfolio started to struggle in early 2020 which changed the outlook.
There’s a ton of large PE firms that also do energy and didn’t downsize their fund. You’re listening to too much of the internal marketing talking points.
When does Ares typically recruit for SA programs?
Early sophomore year of undergrad
no, winter sophomore year
they are still recruiting
Clearlake is clearly the place to be in LA now
I love it, everyone pretending that they would turn down area in favor of Warburg pincus, like many people have that option lol.
Still a MF.
Was never an MF from what I understand
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