Co-President Blair Jacobson Mainstage Discussion at SuperReturn International 2026

Thank you very much for having me. It's always fun to be here with you, Danny. It is always fun to be here bright and early and I love how many people show up for an early session because you have the star power.

So, I think it's a good place to start in macro, then we'll zoom in because private credit, real estate, digital, private equity, all these separate ecosystems are things that Ares are involved in. When you put it all together, that is absolutely moving forward, empowering so many parts of the economy. And there's been a lot of the news, we know, about our space. Um but underlying all of that, we think is still this disconnect where we read the media headlines, but then we look at our portfolios and companies are doing well. And they're powered by private capital in every underlying sector. They are growing. They're growing well in excess of GDP. You know, we talk a lot about the 3,000 companies that we monitor on a monthly, quarterly basis, growing 8 to 12%. And for all of the media discussion and anxiety about private credit, the credit statistics of our portfolios, actually this is public information in particular in the US. It's improving. We're not seeing distress in the loan and bond market. Even banks we say a lot. Look at bank earnings. Their charge-offs are going down in CNI loans, consumer credit, credit card portfolios. So, the good thing is there still these tailwinds. And when you look at public markets, companies frankly don't want to go. We have a lot of big mega IPOs to talk about. The broader long-term trend is that your average middle-size company is not in the public markets. Public markets are broadly shrinking. So, overall we think the trends are positive.

So, maybe I'll sort of start bottom-up on that because you brought up retail. Retail has a psychology issue, not a performance issue. Again, if you look at many of these wealth vehicles, they are performing exactly as intended. The returns, the monthly dividend yield. But, it'll take a few more quarters. And what's probably less reported, and we've said this publicly, our wealth business is growing. We think it will continue to grow this year. The private credit funds, there are two of them in the US. Those are under the microscope. We have a European private credit fund, growing. Non-traded REITs, sports media entertainment, infrastructure, secondaries, all getting significant inflows. And again, this is only 10 to 15% of the overall market. It's a little bit tail wagging the dog. Because the other thing is institutional support, which is the majority of the market, very strong. We've had two record fund-raising years. Actually, we have a lot of our institutional sales people here. They've done an awesome job. We raised 90 billion 2 years ago, 115 billion last year. Record first quarter. We're projecting another record year. This is a fundamental long-term core holding for them. And their performance has been good, and they're continuing to back it.

Yeah, I think we've spent a lot of time being more transparent, more talkative because your average institution, one reason why they are more comfortable, they're closer to the assets, the investments. They're getting the same questions from their boards, their CIOs. And that makes sense. But, if you're my dad, my dad watches CNBC all day. If you

I'll [laughter] convert him. You know, but if you watch, you know, Cramer, and he's like, these vehicles have an issue. Of course,

you're going to have questions. But, again, I think it just takes time for that. And we saw this in a little bit of the rotation in REITs on the semi-liquid side, 2022, 2023. Took a couple quarters to come back. So, overall, I think we're very, very comfortable with the trajectory.

Yeah. So, we take the complete opposite view, and I know this from my own lived experience because I've probably had 100 and 150 meetings standing up our European vehicle for this in particular. I would say that the number one question we've always gotten is 'I'm getting a 9% yield. How does that work?'

And again, we don't anchor it on this is liquid maybe. It's more these are the same institutional loans that we give to other clients. Great, but they are absolutely illiquid. But, we've structured them in vehicles that have 20% broadly syndicated loan allocations. They generate yield. The loans churn. So, we tell them is 5% maximum per quarter is enough to not disadvantage the investors who want to stay.

So, again, it's more like illiquid plus than liquid minus.

So, one thing that is absolutely driving our current fundraising success, and again, we had a special opportunities fund earlier in this year. We've had some positive messaging about our asset-backed fund, which again, you'll hear some interesting news about soon. We pulled forward our US direct lending fund raise why? We are seeing very good opportunities in the market. Some of our peers are more indexed to retail.

If that's pulled back, that means there's less capital, less competition. So, we've seen loan spreads widen, which is a good thing, documentation tighten. So, that's sort of the core direct lending focus, but more broadly, we've countercyclical strategies. Look at our secondaries business. That's doubled in size in the last 5 years, now almost 45 billion. Private equity, real estate, infrastructure, credits. A lot of the DPI issues that you hear about in private equity, a lot of the angst, is helping fuel that business. So, yes, we are seeing the current volatility create opportunity across many of our business lines.

So, what's really interesting is, for all the focus on SaaS-pocalypse, the dialogue is now shifted meaningfully in software in particular. Hey, there going to be some winners and losers. But, I want to focus on the winners' side, because that's a little bit what's less reported more broadly, and there's so many ways to play this. So, you can see it impact how we operate ourselves as a company to make ourselves more streamlined, also make ourselves better investors. You also see it in how we invest. We're still investing in software, by the way. Your publication reported a loan we made in Europe, and something we would have always done, which is an ERP rock-solid business. But, on the digital side, I've been spending a lot of time on this. This is the supercycle megatrend of our lifetimes. And the data is incredibly compelling, whether it's usage statistics, whether it's the CapEx forecast from the hyperscalers, which seem to go up every week. This 2026 was going to be 500 billion, now 6 700 billion. And when you look at a two trillion opportunity in five years just to build data centers, and then a trillion and a half in terms of how you power them, we like that a lot. But I think one thing we want to caution people on is you can't just invest in a trend. You have to invest in underlying assets. And we have a very, very focused view on what we like and what we don't like. So, if you look at our digital business where we're actually the developer, we're developing about two gigawatts of IT load right now in major markets around the world, but in core cities. This is important. You're not seeing us do things in the desert, for example. Major metropolitan areas where the bet is a little bit more on cloud than AI. We have single hyperscaler clients. These are all pre-leased, which is important to de-risk those deals. So, again, I think there are lots of ways to play the trend, but we have to remember we are making individual investments in individual assets.

I think it almost has to. Again, we're still at the relatively early phases. And again, like anything else, there will be some winners and losers. That's why from our perspective, we think about diligence, we think about site selection. We want things that are pre-permitted. They have water, they have power, we have line of sight. So, for example, we bought a site a little while ago in northern Virginia, which by the way, fun fact, the single biggest data center market in the world. Before we even closed the deal, we had three hyperscalers wanting to lease it from us. If you look at the data now, the supply demand is completely imbalanced. You see rental rates going up, you see vacancies going down, and actually it's not just us. The pre-lease rates are going up significantly as well. Is that the same 5 10 years from now? We have to see.

It is really important because not only we're in the digital business, but we're in the community relations business.

If we look at some of our more mature data centers, for example, in Japan, we've created recreational facilities at the data centers. We have, I'm English now, so football pitches, we have pools. Again, you really have to partner with the communities to make sure everyone's comfortable. By the way, it creates a lot of local jobs, local income. So, we think it needs to be framed win-win.

Ah.

Yeah, I'm glad you asked that. We now have over a hundred billion dollars in real estate assets. We're the third largest owner-operator in the world, but we're very focused on what we do. We are under indexed office, retail, hospitality. We're over indexed digital, logistics. Logistics, by the way, think Amazon warehouses, other things we like, multi-family, student housing, self-storage. And again, if you look at the data, really interesting time to consider real estate. When I say real estate, it's very mature asset class and rate sensitive, but we're at an interesting point because valuations have come down off peak levels 20%. We're a couple quarters into that recovery. Historic recoveries 50 to 60 quarters. We're also seeing supply demand start to get really imbalanced because all the new supply again if things we like multifamily logistics supply is coming down 65 70% and put that against a transaction market with rates lower than peak levels improving 15% per year. So we think it's a great time to be buyer and a seller. But overall for real estate a bit cyclical sometimes this is the time though when great vintages are created.

Yeah maybe again there's sort of flows around the world. Some things get bigger some things get smaller. Yeah when again we talked of sort of two trillion of data centers to be built in five years. That's a lot. 900 billion of that is meant to be third party not built by the hyperscalers themselves. Match that against 15 to 20 billion being raised per year. There is a I agree there's a huge imbalance. That will create capital flows. Maybe that makes things more interesting in another part of the economy. We just have to see.

I think it helps a little bit. It's a bit more focused. But again, the number of companies in the public domain has been cut in half in the past couple of decades. Companies have access to more private capital from groups like Ares, so they can fulfill their growth ambitions without having to report every quarter on a short-term basis. So, yeah, maybe gives a little bit of an opportunity. Actually, one thing we're excited about is that these IPOs will create significant wealth that will ultimately need to be invested, which again can be a great channel for our wealth business.

Invest with Ares, right?

Could be. That's what we think.

Maybe a topic for next year. Put it that way.

Yeah, a little bit feels like waiting for Godot, a little start and stop. You know, last year we came up animal spirits, then we had tariffs, things started to recover Q3, Q4 coming into this year. Then we had the war break out in the Middle East, so things are a little bit slower. It's a little bit up and down, but again, our volume's actually been okay. We've said publicly that our global pipeline is at record levels. And again, that's across all of our asset classes. And I think the reason for that for deployment for us is not only we global and broad-based, we have so much incumbency in our portfolio. So many companies that we own that are growing one additional capital. In credit that can be up to half of our deployments. We still see increased private equity activity. Maybe not as much as we had thought, but again the pressure of these 32,000 companies that need some kind of liquidation over time I think is really important. Again, I'll go to some of the other trends. We talked about secondaries. If secondaries are such an incredible tool today to help unlock DPI that limited partners want. We're finding a lot of different ways to play that trend.

So sitting here in Berlin obviously on Thursday, everyone's waiting to see what the ECB does. Everyone generally views the consensus as being 25 basis points. You know, I think our view is that rates are still way down from peak levels. 150 to 100 basis points. That dramatically changes the math of leverage buyouts and other types of investments. So even if rates go up a little bit in reaction to inflation, that's fine. I think the bigger question in Europe is what does that do to growth? Growth is positive which is a good thing, but it's a bit anemic. Does it have a negative implication? The last thing we always point out is we invest largely in floating rate assets. So when rates go up, our investors make a higher return.

Well, what we saw and you know, it's a good point when rates were 5, 6% there was a lot of time spent on can this be digested and we made it through that just fine.

So, I think again, right now we're sort of still in this point where with the war started in February, there are questions about how that will filter through the economy, takes a few quarters. You know, but overall again, we're seeing the pipeline grow and we think that that gumming up will stop very quickly.

So, consolidation is a trend that's been around for decades. And I always say like when I was a little kid, I was taught that size is the enemy of performance. But I think what we've seen is being larger actually helps performance. You have scale, you have scale origination, portfolio management. You know, we have more capital and resources to devote to the AI transition for our own company, legal compliance, all these things. So again, a lot of the consolidation we're seeing is coming from a good place. We're seeing really, really strong monoline managers wanting to be part of a bigger platform rather than doing it from stress. Since Ares went public 12 years ago, we've made 15 different acquisitions. So, we sort of like filling in areas where we want to grow quicker, maybe it's a geography or a skill set where buying is better and quicker than building. So will we see more consolidation in the industry? Absolutely.

Yeah, put it this way. There is a limited number of scaled publicly traded managers that are obvious potential partners. And the other trend, if we go back to fundraising for a moment, we are increasing our market share. It is demonstrable that fundraising is concentrating. So again, we are out-raising our share at the expense of middle-size managers. So if you're sitting there looking up, you might say, 'Do I want to be a part of that, a broader platform, broader clients, more distribution?' The answer is yes.

I think they're all clever. They're all thinking about options. They're also thinking about things like succession and other challenges that they might face. Will they survive? Yes, but a lot of the really good ones are thinking about how they can be more broad.

Yeah, so I think we've said publicly that we love where we are. We've most of the boxes ticked, but there are two areas where we'd like to do a bit more. We are more subscale. One would be infrastructure, and the second would be private equity. Now, it's interesting being here at a private equity conference where people, you know, writing down notes.

Exactly. And private equity has well-known demonstrable challenges at the moment that again are well documented. But what's interesting is in an environment like this that is tough, you can see who the good managers are. There are managers that have excelled on DPI. There are managers that have fundraised incredibly, incredibly well. We are long-term believers in the private equity asset class. Again, Ares, we've dealt with private equity firms our whole careers and we have views on them. And again, there was this group who after the GFC did really well on a beta play with low rates and multiple expansion, but the groups that have always focused on making businesses fundamentally better, generating alpha, those are the groups that we're interested in.

Sports, Danny.

It's more confirmed it. Again, if you look at long-term trends, what do consumers pay for as it relates to TV and media and broadcast? Live sports. And that is absolutely confirmed our thesis over time. Just to give everyone a little bit of a flavor, we got into this business. We've been adjacent for like 20 years, really in it for about 10. We have a 10 billion business. We've made 50, 60, 70 investments, everything from teams and leagues. And by the way, leagues aren't just the ones you might read about every day. We have investments in the sailing league in Europe. We did a pickleball event in Florida a couple weeks ago. We have an investment with Shaun White in snow league. So, again, it's really broad. And also, sports isn't just teams and leagues. It's adjacencies. It's data, analytics, ticketing. We think that again, this is a long-term franchise store value. It's inflation protected and has an incredibly bright future. And you've seen that also with the increasing valuations of these teams and leagues for some of the reasons that you mentioned before.

I'm not sure that they have to. In other words, great. We say it's a store of value, inflation protected, but also these assets can also use some improvement, professionalization. Remember, historically, this has been sort of the domain of wealthy individuals. I think with institutionalization, similar I said before about private equity industry, a lot of the improvement from performance will not only be just rising valuations themselves, but really improving them as businesses.

Thanks, guys.