(Bloomberg) -- Ares Management Corp. sees credit quality holding up even as the Federal Reserve is poised to cut interest rates as soon as next month.
“Credit performance is getting better going into the cut cycle, which is pretty rare,” Chief Executive Officer Mike Arougheti said in an interview Friday after the firm reported its second-quarter results. “As rates come down and you start to see the transaction activity pick up, I don’t think that’s a signal that you’re going to see corollary deterioration in credit quality.”
Ares invested $26 billion during the quarter ended June 30, led by $12 billion for US direct lending, the firm said in an earnings statement.
It raised $26 billion, driven by $8.9 billion for US direct lending. The firm recently raised its biggest direct lending fund.
“We have a higher level of confidence that we have a shot to meet or exceed the number from last year,” Arougheti said. Ares gathered $74 billion in 2023, its second-highest fundraising year.
Ares expects dealmaking to continue picking up as private equity firms contend with record levels of dry powder and a need to return capital to their investors, Arougheti said on an earnings call with analysts.
Ares reported after-tax realized income of $332 million, or 99 cents per share, above the average analyst expectation of 98 cents per share, as fee-related earnings and realized income gained. Assets under management rose 18% to $447 billion. Ares reported available capital to invest of $122 billion at quarter-end.
Expectations for the Federal Reserve to begin cutting interest rates increased after data Friday showed the US unemployment rate rose again in July.
Ares shares fell 5.1% to $141.56 at 11:43 a.m. in New York as broader markets declined amid concerns about the economic outlook.
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