Partner & Co-President, Ares Management Corporation
Ares' Jacobson on Dry Powder, Default Risks
Blair Jacobson, Ares co-head of European credit at Ares Management, discusses record levels of dry powder, default risks and environmental, social, and corporate governance. He speaks with Bloomberg's Dani Burger on "Bloomberg Daybreak: Europe."
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About Blair Jacobson
Blair Jacobson, co-president of Ares Management, discussed private markets in two media appearances in June 2026. At SuperReturn International, he described a "disconnect between market anxiety and the fundamental performance" he is seeing, stating that portfolio companies are growing 8 to 12% per year and that non-accrual rates are lower than historical averages. He called AI-driven infrastructure investment a "supercycle megatrend of our lifetimes," citing a projected $2 trillion opportunity over five years to build data centers and $1.5 trillion to power them. Jacobson also noted that Ares is increasing its market share as fundraising concentrates among larger managers. In a Bloomberg interview, Jacobson said that most companies prefer to remain private due to the availability of capital from private equity, credit, and infrastructure sources. He pointed to a trend of declining public company listings and stated that institutions continue to back private funds because they need asset returns to meet growing liabilities. Jacobson reported that Ares had record fundraising for two consecutive years and expected another record in 2026.
Transcript (14 segments)
I
Interviewer0:02
Private capital is a fascinating time. $378 billion, a lot of money is chasing fewer assets. Where do you find value in all that competition, Blair?
B
Blair Jacobson0:18
I think the good news is, now that vaccines have rolled out, economies have reopened, the markets are open. We have looked at about 1,300 deals in the last 12 months. We are seeing record deal flow levels. A lot of what we do is sitting on record levels of dry powder. For every year they invest, they require one year. There is a lot for us to do. We tend to be local. We have 75 investment professionals all over Europe, six local offices. We are turning over rocks and stones in all the countries.
D
Dani0:59
What are the sectors you are most interested in right now?
B
Blair Jacobson1:06
Our fundamental goal, it has served us well, is to back the best businesses and the best sectors we can find. That tends to take us to telecommunications and software, health. Things like insurance brokerage, wealth management, have all been very stable. Good credits.
D
Dani1:31
It does seem that the majority has been stable. The default rate never surpassed 2% in 2020. Did we skip that part of the cycle or is it still coming?
B
Blair Jacobson1:39
We think a lot of challenges are left. Hopefully COVID is in the rearview mirror. There are a lot of factors in our mind. Four that we are focused on. The first is rise in fuel and energy costs. The second is supply chain issues. The third is the rising raw material costs. The last is tight labor. The Bank of England is forecasting 4% inflation. In terms of supply chain, gasoline lines and shortages like the 1970s, we are wondering if there are going to be holiday presents on the shelves. The bigger question is, how does it impact rates? The Bank of England signaled a rate rise. Think it will happen in the near future. Luckily, we invest in floating-rate assets. We think they will have real implications once rates start to rise.
D
Dani2:42
Perhaps they have to act more aggressively once they finally do move at the BOE. This is a global phenomenon as well. What does it do to the world of private debt if we all of a sudden have that tightening?
B
Blair Jacobson2:55
I think it depends on how much and how quickly. The market hates surprises. When we run the math on our businesses, we provide credit at a level where if rates were to go up 100 basis points to 200, we would be okay. Anything more than that, we would be at the table talking to the company.
D
Dani3:13
Have you had that conversation at all or is there a concern?
B
Blair Jacobson3:19
Not yet. This is one of the nice things about our class. COVID was one of the first tests of our asset class. It is probably less than 10 years old. It has performed well, because we backed a lot of the stable businesses that remained open and profitable during COVID.
D
Dani3:42
Let's talk about fund size a little bit. Ares had the wonderful superlative of having that. How big are they getting at Ares? One of the interesting trends we had, the deployment has gone well.
B
Blair Jacobson4:05
One thing that is interesting, the markets are moving to scale. They are focusing on larger businesses. We have done a couple transactions of over a billion in size. The capital markets themselves, 40% of the market in the U.S. 15 years ago focused on companies at 300 million or less, that number today is 2%. We are becoming more relevant as our capital base grows. We are quick, confidential, public to private, we can also provide growth capital that the bond and equity markets cannot.
D
Dani4:46
I know that you have been a very vocal proponent of ESG. When we think about ESG, it is around public companies, data, and the world of direct lending and private credit, it is more opaque. Does that make it a more difficult prospect to invest with an ESG lens?
B
Blair Jacobson5:03
We think it is the other way around. Ares is a group, it is important to us and to our investors who trust us with their capital. We are at a point where it has moved on to being passive, check the box, to think about how we can actively drive positive ESG outcomes. A lot of the times we are the sole lender to these companies and have influence. We are doing three things. First, we can promote sustainable business. We can invest in recycling businesses. We just did a one billion pound loan to a consulting business to help them reach more clients and their goals. We had some financial incentives for them to do more on the ESG side. The other thing, our average company is not that big. We have a lot of internal ESG...