Co-Founder & Executive Chairman, Ares Management Corporation
Guiding Principles with Tony Ressler | Investor Day 2021
Tony Ressler, Co-Founder and Executive Chairman at Ares Management, sets the stage at Ares Investor Day 2021 by discussing Ares’ significant accomplishments over the last two decades and offers attributes that aided the firm in achieving success. He highlights Ares’ guiding principles: choosing investments based on performance, instituting transparency with investors, committing to hiring and retaining good people, leveraging the power of the Ares platform, advancing Ares’ direct origination and having the skills to invest well in all markets.
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About Antony Ressler
Antony Ressler, co-founder and executive chairman of Ares Management, has discussed the growth of private markets and the firm's performance. At Ares Investor Day 2024, he stated that the company's market value and fee-related earnings grew tenfold over the prior decade, and assets under management increased five- to sixfold. He attributed this to consistent performance, disciplined investing, and a collaborative culture, adding that he expects private markets to grow faster than traditional markets across corporate, asset-backed, real estate, and infrastructure classes globally. Ressler has also spoken about the sports industry as a growing asset class, describing it as a "two-and-a-half to three trillion dollar" market. As principal owner of the Atlanta Hawks, he has emphasized plans to redevelop downtown Atlanta around the team's arena, stating that creating a "live, work and play" environment is good for business and the metro region. He has also commented on the economy, noting that low interest rates for an extended period contributed to high asset prices, and that the U.S. economy was "going about as well as we could hope for" in 2018, while expressing caution about inflation and the accumulation of debt in less visible markets.
Transcript (17 segments)
A
Antony Ressler0:20
Thank you, Carl. I appreciate that introduction. We certainly appreciate everyone being here. I know I'm excited to be here. Actually, I'm excited to be anywhere right now after the last 18 months. Probably most of you as well.
Well, I think for the sake of argument, my job is to kind of set the stage, if you will. And I think the objective, if you will, is to lay the foundation for what we have done over the past 20 years, which obviously, at least from my perspective, is just not that easy. But we've had a group of principles, a group of guiding principles at our firm. And there's just no doubt that these principles—I can't say that we had all of them at the first day we started the firm, but I assure you we certainly, shall we say, adopted them very, very quickly. And you can appreciate why as we go through them.
But the first principle that we built this firm on was, and continues to be, that assets will always follow quality performance. We firmly believe that consistent and attractive performance through business and market cycles is what our clients are looking for. If we deliver growth, assets and growth will follow, no question, and has for the past 20 years.
But along with quality performance is undoubtedly transparency with our investors. It truly builds, if you will, a trust, and particularly when things are not going out perfectly, it creates a sense of partnership. And through cycles, truly, you appreciate that sense of partnership with your investor base.
I'd say thirdly, and we often say, many firms often say, culture is in fact critical. But for us, culture is just about everything. We're committed to hiring great people and, as importantly, trying to keep them. As a result, we do have amongst the highest retention rates in our industry, and it's something we're enormously proud of.
Well, fourth, again, this is a term that I've used over and over again, but we've always believed that pools of capital and investment professionals with focus have huge benefits from other pools of capital. Benefits, if you will, from relationships they might have, from access to diligence, from industry knowledge, from sharing investors, marketing, etc. We've always referred to this, shall we say, forced collaboration. In our early years, we called this the power of the platform—how each pool of capital can truly help the others to be the best they can be. It's fair to say, I've said this so often that those at the firm that have been here the past 20 years are all terribly sick of hearing me say it, but I keep saying it because it's something we've grown up with.
In addition, I would say the fifth principle at our firm is certainly our commitment to direct origination. It's core to our philosophy of boots on the ground in local markets, creating assets for clients that they simply cannot source or manufacture on their own. Whether it's in our credit groups, or corporate PE, or special opportunities, real estate equity, real estate debt, our new secondaries business—all of these products are, if you will, predominantly self-originated and somewhat unique to our investors' portfolio.
I would say our sixth and final principle really was, always since our inception, was to raise, if you will, flexible capital which permits us to invest well in all types of markets and, as importantly, to be able to pivot when appropriate to the best relative value. This has enabled us to deploy capital successfully in truly all types of market cycles. I'd say this principle of really committing yourself to flexible capital is what helped us enormously as we, shall we say, traversed the 2008-2009 period, being able to go very, very senior at certain types in certain times of the market, and frankly, to go very junior in the 2010-11-12 range. So again, that flexibility of capital is something our firm has actually, I think, built somewhat of a high-quality reputation about.
So when you take, if you will, our six guiding or core principles that we feel we've grown up with, I would say the next slide is really just highlighting some of the milestones over the past 20 years, which I guess my job is to try to make them sound even more exciting than they might initially, but we'll try our best.
Ares clearly started as a credit manager in 1997. We are proud of that, and again, built on, if you will, that ability to play anywhere in a company's capital structure. From 2002 to 2004, we truly leveraged this ability, this expertise, and flexible capital to form our private equity group and then launched our direct lending platform with the addition of really four superb investment professionals and leaders: Mike, Kip, Smitty, and Mitch. I think you'll hear from all of the above quite shortly, but four senior professionals who built our U.S. direct lending business over the past 20 years—I guess 17 years since they joined us in 2004.
After a decade of growth in both credit and private equity, we added our real estate group in 2013 and then shortly thereafter completed our public offering in May of 2014. Public company now seven years—wow, that's time flies. I'd say in 2017, we promoted Mike Arougheti as our CEO and elevated Kip, Smitty, and Mitch as our co-heads of what is, and was, a truly rapidly growing credit business, which has been made a whole lot better over the past four years. I would suggest these were some of the best management changes and promotions a company can make.
Another important step when Ares became a C Corp, which many of you I think are quite familiar with, this really not just led to improved valuations for Ares but for the entire alternative asset management sector. It really created an ability for more and more investors to participate as public shareholders. These changes helped our business grow more dramatically, as evidenced from the fact that our assets under management grew from something around $106 billion at the end of 2017 to something close or just over $260 billion as of July 1st of 2021. And I guess as importantly, helped the stock price, which has delivered a total return of over 250 percent during this period.
I must say, for a long while I've argued that that extraordinary growth and the really improved operational performance across the firm are in fact a truly incredible coincidence, rather than, some would say, the result of Mike Arougheti replacing me as our CEO. I would say even my wife doesn't accept that story any longer, and nor should any of you.
While we are proud, of course, of what we have accomplished in the past 20 years, we believe we are just getting started. We have never been better positioned for growth than we are today. In the last two years, we've acquired four exciting growth engines for our firm that complement our existing businesses beautifully: in Asia with SSG, growing in the direct lending and special situations and private equity arenas with Invesco and Daspit, with our secondaries business with the incredible acquisition of Landmark, as we'll hear about shortly, and lastly, our growing retail distribution and core-plus real estate activities with the recently closed acquisition of Black Creek. All of which we believe positions us beautifully for the next several years.
I think this is one of those global map slides. Maybe not for you, but for me, it makes me take a moment, take a long pause, and just be somewhat amazed at what we have become. The fact that we have 31 offices across the globe, 2,000 employees, all built over the past 20 years, truly positions us as a global, international asset management firm, which one needs to be to compete in today's world. We truly have that global footprint, and we think positions us, as I say, for the next 10 or 20 years as beautifully as one can be.
Again, in terms of a global footprint, you also have to have high-quality people. And as I said, you have to keep the obsession of keeping your best people, which we have been successful in doing over the past 20 years and fully expect to for the next 20 years. Our organization today, as I said earlier, has over 2,000 people. We have five great investment groups, if you will, all of which are growing and positioned to be successful for a long time to come.
In closing, I couldn't be more proud of the company we have built. I couldn't be more excited about the growth ahead. Over the past 10 years, we believe, at least, we have come from being a really good asset manager to becoming a really great company. And now, to tell you a little bit more about our company, I would suggest, is the most talented CEO in the business. And I promise you, I would say that even if Mike wasn't my friend. Mike Arougheti, come on up.