Michael Arougheti, CEO of Ares Management, said his firm’s conversion to a C-corp last year from a public partnership has boosted liquidity in the stock.
Arougheti also said Blackstone’s announcement in April that it will become a C-corp will lure more investors to alternative asset managers. As a corporation, the firms can be included in indexes and their stock is available to a much wider pool of investors.
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The group of rapidly expanding firms includes mainstays like LPL Financial, but also smaller upstarts that are enlarging their footprints at a notable clip.
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“I think it’s great for Blackstone, I think it’s great for the alternative asset managers,” Arougheti said. “I’d like to think we provided some leadership in going first.”
Lifted by the conversions, alternative asset managers have outperformed the S&P 500 over the past 12 months with dividends reinvested: Ares returned 16%; KKR, which switched last year, gained 19%; and Blackstone is up 38%. The S&P gained 13% in the span.
Ares, which managed about $131 billion as of Dec. 31, has been a pioneer in private credit, a hot business that is now garnering more attention from Wall Street. The firm was the top U.S. collateralized loan obligation manager during the first quarter of 2019, according to data compiled by Bloomberg News.
Ares is pushing deeper into Europe and Asia and expanding strategies like investing in structured credit and asset-backed securities that it expects could be as big as direct lending. The firm has also started a strategy dubbed "climate infrastructure" that will make investments focused on combating climate change.
