Ares Management CEO Sees Strong 2026 Deal Pipeline, Details AI Strategy at BofA Conference

Ares Management (NYSE:ARES) CEO and co-founder Michael Arougheti struck an optimistic tone on transaction activity and outlined several strategic priorities during a fireside chat at Bank of America’s 34th Annual Financial Services Conference. Arougheti pointed to record deployment and pipeline metrics, discussed how the firm is thinking about AI-related disruption, and reiterated the company’s growth targets and dividend policy.

Constructive outlook for 2026 deal activity

Arougheti said Ares is “very constructive on the deal environment for 2026,” adding that the firm saw pipelines begin to accelerate into year-end and that the pipelines were diversified across its businesses. He said Ares finished the year with continued acceleration and noted that the firm deployed a record roughly $46 billion of capital in the fourth quarter.

He also said that, as of the end of January, Ares’ pipeline tracked across all businesses was at a record high, which he described as a “good predictor for transaction volumes” in the following six months. While acknowledging “AI jitters” in markets, he cited a number of factors he believes could catalyze deal flow, including a “constructive rate backdrop,” a “pro-business administration and a deregulatory stance,” banks de-risking, improving real estate volume after valuations troughed, and aging private equity portfolios and dry powder. Barring an unforeseen macro event, he said he expects transaction volumes to be “pretty healthy.”

AI disruption: risks and opportunities across portfolios

On recent headlines around AI disruption, Arougheti said private market investors try not to get “whipsawed” by daily headlines and argued it is “quite odd” that public markets have “woken up” to AI disruption as a theme. He emphasized that AI can create opportunities as well as risks, noting that while some companies may be disrupted, others may see improved productivity and margin expansion.

He added that the AI revolution could drive “meaningful opportunities” in areas such as digital infrastructure, renewable energy, and transmission. From Ares’ perspective, he said the firm is “balance sheet light” and feels “pretty good, if not great” about its positioning given its dry powder and the expectation that AI will create opportunities to “go on offense” as well as portfolio risks.

Arougheti also cautioned against framing AI disruption as only a software issue, saying it should be thought of more broadly as technology transformation affecting many sectors. He said software represents about 6% of Ares’ exposures “across the waterfront,” and described those exposures as tending toward enterprise software with two-sided networks, proprietary data moats, and mission-critical systems. He said Ares has been asking across the portfolio for more than five years about AI-related opportunity and risk and that re-underwriting has left the firm feeling “very well mitigated.”

Strategic priorities: digital infrastructure, Japan, real estate integration, and margins

Asked about strategic priorities, Arougheti said expanding private equity does not rank in the firm’s “top five.” He instead highlighted several areas of focus, starting with continued expansion in digital infrastructure. He discussed Ares’ acquisition of GCP last year, describing three elements of the investment thesis:

• Growing larger in Japan, where he said Ares acquired the “preeminent real estate manager” in that market.
• Diversifying Ares’ global industrial real estate business, noting Ares is now the third-largest developer, owner, and operator of warehouses in the world.
• Adding a data center development capability under Ada Infrastructure and a pipeline of large build-to-suit hyperscaler projects in markets including Tokyo, Osaka, London, São Paulo, and Northern Virginia.

Arougheti said the data center buildout has been a “big success” and noted that in the first year Ares closed a $2.4 billion Japanese data center fund. He added that the pipeline Ares has discussed publicly requires another $6 billion of equity to complete what is currently in front of the firm.

He listed Japan as another priority, saying Ares’ goal is to build on its market-leading real estate foothold by diversifying into product areas such as private credit and infrastructure. A third priority he outlined was advancing Ares’ “vertically integrated real estate approach,” with the intent to develop, own, and manage assets through the lifecycle rather than relying on operating partners or buying stabilized properties. He said Ares is far along in that effort in industrial and multifamily, which he said represent close to 90% of the exposures it manages.

Finally, he said Ares is focused on capturing margin opportunity across the business by consolidating middle-office functions and investing in technology and organizational redesign, describing a push to drive efficiencies that could accelerate margin improvement.

Private equity: open-minded, but no urgency

While private equity was not among the top priorities he listed, Arougheti said Ares has been “open minded” about being bigger in private equity, noting the firm historically began with a more even mix across private equity, private credit, and liquid credit but that private equity has not kept pace with growth elsewhere.

He cited three potential benefits of expanding private equity: alignment with institutional clients consolidating manager relationships, a value-creation skill set that can be leveraged across the platform, and the ability—at sufficient scale—to offer diversified equity exposure in wealth and retirement products beyond secondaries.

However, he said Ares does not feel urgency because private equity is “not a growth business” in the same way as other parts of the firm, and he emphasized Ares’ focus on “consistent, predictable growth” in fee-related earnings (FRE) and realized income (RI). He said any move would need to reflect private equity’s slower compounding profile and be supported by confidence in revenue synergies.

Guidance reaffirmed, dividend policy reiterated; private credit positioning

Arougheti said Ares reaffirmed its targets on its most recent call. He reiterated the company’s objective, excluding acquisitions, to grow FRE organically by 16% to 20%+ per year and RI by 20%+ per year. He said the firm raised its wealth targets based on current run-rate experience and noted Ares announced a first-quarter dividend that was up 20%. He added that Ares seeks to peg dividend growth to expected FRE growth.

In discussing private credit, Arougheti emphasized an origination-led approach and selectivity, saying Ares invests in only 3% to 5% of transactions it reviews. He also argued that scale can drive performance by enabling deeper origination networks, broader borrower relevance, and “incumbency,” noting about 50% of Ares’ private credit deployments in a given year are to existing borrowers. He said the firm’s portfolios generally compound at 10% EBITDA growth or more and described a long-term public track record proxy as having compounded annual returns in excess of 12% for over 20 years with close to 0% losses.

He pushed back on narratives about bank competition, describing banks and private credit managers as “symbiotic” and highlighting partnerships in areas such as CLOs, sales and trading, wholesale lending, and portfolio transactions. He also said the private credit market is concentrated, with about 65% of capital among the top 10 managers, and suggested dispersion of returns should be expected across managers rather than viewed as an “industry index.”

On wealth distribution, Arougheti said Ares has taken a deliberate approach, noting the firm has eight products in the wealth channel, about 185 people supporting the effort, and that around 30% of flows come from non-U.S. markets. He said Ares has roughly 80 distribution relationships, with about half carrying only one Ares fund, and described a strategy focused on deepening penetration within existing partnerships while adding product selectively.

Finally, he described Ares’ internal AI efforts, noting the firm acquired BootstrapLabs about three years ago and has been evaluating AI use cases across front-, middle-, and back-office functions. He said Ares reviewed about 160 viable use cases last year and selected about 25 to deploy, spanning areas including NDA review and negotiation, AML and KYC processes, Salesforce optimization for wealth sales, and investment team support for memos and modeling. He also noted that 2025 was the slowest year of organic headcount growth in more than a decade, which he said could indicate productivity initiatives are taking hold.

About Ares Management (NYSE:ARES)

Ares Management Corporation (NYSE: ARES) is a global alternative asset manager that provides investment solutions across credit, private equity and real estate. The firm originates and manages capital across a range of strategies including direct lending, syndicated and special situations credit, private equity buyouts and growth investments, and real estate equity and debt. Ares serves institutional investors, insurance companies, pension funds, sovereign wealth funds, and high‑net‑worth clients through both commingled funds and bespoke managed account structures.

Within credit, Ares offers strategies spanning leveraged loans, structured credit, opportunistic and distressed debt, and specialty finance, with an emphasis on underwriting, portfolio construction and active asset management.