Okay, thank you very much, and welcome everybody to the TD Cowen Inaugural Financial Services and Fintech Summit. I'm Bill Katz. I am responsible for covering the asset managers, the retail brokers, and the exchanges for TD Cowen. I'd be remiss if I didn't say that II season is open. If you're willing to vote for us, we would appreciate five stars in the category. Also, for those of you attending on the webcast, there is an opportunity to ask questions. I am trying to monitor that as well as to have a conversation with management. I am thrilled to have Ares Management Corporation participating in today's conference. With us today is Jarrod Phillips, who is the CFO of Ares. He has been with the firm for quite a bit of time. He's experienced all through the verticals of the platform, and I think he's a great, great partner of ours to talk about the storyline. On the way to driving towards $75 billion of assets under management, was laid out at the Investor Day. The company is currently sitting on about $430 billion as of the end of the first quarter. So, Jarrod, thank you for joining, and I see many of the IR teams here as well. So thank you all for coming today. Really appreciate you spending some time with us. Absolutely. Thanks, Bill. Thanks for having us. Excited to be here. All right, listen, it's been, it's been an interesting day for sure, but maybe we'll start with a couple of big picture questions and then maybe dive in a little bit deeper at some of the different segments, if you will. Just from a big picture down, and obviously, you had your Investor Day just a few weeks ago now. Are you seeing any material shifts in the investor allocations? And I was wondering if you could maybe think that through or answer that through the prism of what you're seeing in your your retail platform, which has been accelerating very nicely, your insurance platform of both your sort of Aspida as well as third party, and then maybe even on the institutional side, and how are these allocations migrating between US and what you're seeing offshore? Sure. Maybe I'll start with institutional, as that's the largest part of our business, and I'll work through retail and insurance. In terms of institutional, where private credit has benefited over this last cycle with rising interest rates, if we were having this meeting a couple of years ago, you might ask about allocations. Are people just allocating to private credit because it's a zero interest rate environment and they're searching for yield? And now people have continued to allocate to private credit, and it's largely a function of they can move senior in the capital structure, generate a return that's close to the equity returns and, you know, do very, very well being more senior. So there is always an advantage to being in the middle of the return spectrum, and we've seen it both now in that lower interest rate environment and now in the higher interest rate environment. At the same time, what we've seen is it matters to investors who can deploy their capital and who can deploy it with quality and the right timing. And so they've seen... They've consolidated their wallet share. We've seen the larger scale players benefit from that, and we've seen a greater allocation to those larger scale players as a result. It's very important that they, that they know that that capital will get deployed, as opposed to looking for a slightly cheaper management fee and then not seeing that capital ultimately be deployed. In the institutional front, I think that has been pretty broad geographically for the last several years or even more, where you are seeing, you know, whether it's Asian sovereigns, Asian investors, Middle Eastern, European, they're all invested in the products in both the U.S., Europe, and Asia direct lending products. They understand that product, and they've continued to deploy there. Moving maybe now to the insurance side, what we've tried to do and where we've tried to be differentiated, as you know, we're a balance sheet light manager, but we do have a minority interest in Aspida, which we've been growing nicely over the last several years. We actually started that product from scratch, pretty much. We acquired the platform that drives the insurance contract writing, and then we acquired a reinsurance platform along with that. So we really started with zero back book to work from and just started writing contracts. Now, the advantage to what we saw on that platform is we did a highly tech-enabled platform, and that's what we liked when we bought it, and we had the thesis that this was where the insurance environment would ultimately migrate to. And what we've seen with our tech enablement, where everything is now done online, it enables people to close quicker, it enables people to earn their commissions faster. So it's really a positive on all sides, and we've seen with that a high popularity in that product and really just been growing that organically. We have been raising third-party capital to support that, and in our recent Investor Day, Lou, the CEO of Aspida, talked about that we thought we'd be pretty, pretty close to done with raising third-party capital at this time with that, and that we'd have enough to hit that $50 billion target at 2028. So still continue to be excited about that product, and it, and it's been really nice to grow that kind of from 0 all the way to that $50 billion at the end of 2028. And then last, on the retail side, I like to think about retail a lot on the credit side, very much like we were maybe 10 years ago, in terms of there weren't a lot of commingled credit, direct lending products that were out there. Well, the RIA channel hasn't really had access. There was always the BDCs, but they were viewed by the RIA channel as that, hey, that's more of an equity even though we know the underlying is all direct lending, and it's ultimately a direct lending product, they wanted something that was more pegged to NAV and had a return that was relatively predictable. So now they have access to a fixed income product within their portfolios that is a floating rate product, that generates a spread to liquid credit and a spread to the high-yield markets. So they can now be diversified in terms of what they're doing from that standpoint. So we've seen an increase in the allocations from that, but there's still a tremendous amount of growth that can happen on that retail side for these credit products. And to your question on geography, we've also seen now. We launched ASIF, that's our European direct lending product. That's only with one distribution partner right now, and it's really only raising from Europeans, but that's been a meaningful increase to where we've raised funds on the retail side. Opening up our U.S. products for European investors is very important, and you'll see us continue to hire and build that out. And we've begun to bring in money from the Asian and Australian markets into our ASIF product, the non-traded BDC here in the United States. So we've seen that there's a worldwide appetite to be invested in these products and really crossing geographies. So Europeans investing in U.S. domiciled product and, you know, all of those different permutations that you'd end up with in that. Great, thanks. So as I think about your story, and we actually laid out a note the other day saying that the alternative managers are sort of migrating or evolving to what we call the generation four, which is to try and manage these platforms, your platform in particular. Many of your peers have the same thing, like multi-vectored growth, by distribution channel, by geography, by product at Quantum, right? So as you think about your KPIs that you laid out at the Investor Day, including the goal of getting $750 billion of assets, which is 75% higher than what you said today, and much of that coming across these multi-vectored opportunity sets, how are you and the team and Mike team sort of charting a course to sort of drive that growth, but also retain that performance-led culture that you've been spending a lot of time, you know, educating folks like myself on? Yeah. Culture is at the heart of what we do, really. And if you look at the team, you mentioned early in my introduction that I've been here at Ares for a long time now, and I actually still feel like one of the younger members of the team. We have a lot of people that have been together 20, 25 years. And if you look at how we've been bringing people up through the chain, you have folks like Kort and Jim running ARCC, that they're homegrown, and they've been part of that team for a long time and learned from Mike and Kipp and Mitch, Smithy, those folks, how to run the business in the manner that we want, how to be collaborative across our culture. Our investment committees reflect that, our compensation reflects that, and just what we look for in the people that are at our organization reflect that. We want people who are collaborative, who are looking to assist across the entire platform, who are looking to help others be successful. We don't want fiefdoms or a star culture, and generally when that starts to happen, we move on from that relatively quickly. So as we're looking to grow, whenever we're doing inorganic acquisitions, culture is it's paramount to what we're looking at doing. So if something's not culturally accretive as well as strategic and financially accretive, that's not something that we're going to pursue. That is the reason that we will walk away from a deal. Once something is acquired, we bring them into the culture immediately. Often, we, we've known those teams from the past, and we've worked with those teams in the past, so we have that strong belief that they're going to fit in and be part of our culture, which is, you know, very, very collaborative and very cross-platform. If you look at how we invest, a lot of our, a lot of our strategies will invest cross-platform where it makes the most sense. We'll, we'll have things like our alt credit business that will participate with Secondaries or real estate, and then you'll have, you'll have other businesses, like credit opportunities, that are able to collaborate up and down the credit stack. There, there's incentives for our people to be collaborative. There's incentives for them to look for opportunities to grow, and new ideas can spring from that. And if, if you look at how we acquired our Secondaries business, and we said, "Hey, one of the things that you don't have is Credit Secondaries. One of the things that we're known for is credit." And we used some of our credit professionals who went over there and now have built that business from a zero into something that we believe will be very meaningful by the end of that, that 2028 guidance. And that's what you're always looking for, is what are those growth opportunities within your culture, where you can go from zero or a very small number and go to a much larger number? So you'll have 50%, 60%, 70% growth within that type of business, as well as continued building of your growth in something like direct lending, where despite its large size, still has a very large addressable market and still has the ability to grow and take share. You want to continue to build and use the strength that you have there, continue to grow it, though, and then look for those multi-percentage opportunities in places like Credit Secondaries. Great. If we could dive in now to some of the different businesses, so many different ways to take the conversation. Unfortunately, we only have about 30 minutes. So again, just sort of referencing back to the Investor Day, one of the more powerful sets of slides that I looked through was just the ability to sort of sustain strong deployment and maintain relatively wide spreads across your direct lending platform, and really, regardless of the bank competition being in and out, or where M&A activity or just sort of capital market activity was from any one year. So maybe a bit of a two-part question. I'm gonna add a second part, just given everything going on in the last week or so. The first part is, if you could just sort of talk about why you're able to sustain such superior metrics, if you will? And then secondary, there's been an intense focus over the last week or so around the health of the direct lending backdrop, and whether or not there is all of a sudden acute credit cycle building. Mm-hmm. I was wondering if you might be able to address maybe the big picture, as well as what should we be thinking about tactically around just sort of the health of the direct lending market? Sure. So starting with the first part there, what's key to how we've built up our business is we believe strongly that incumbency matters. And when you believe that incumbency matters, if you're only active in one segment of the middle market, then you're at the risk of losing incumbency at a certain point. And so we've made it part of our core that we're investing in lower middle market, core middle market, and upper middle market. We want to take our borrowers through that entire life cycle and grow them through that life cycle. So we've been able to originate across all of those. If you look, our average deal size has increased over the years as we've gotten larger, as we've raised more funds, and we've been able to deploy more, but our median deal size stays relatively consistent, meaning that we're continuing to work on that lower middle market. So we're identifying those companies that will grow in the future to core middle market or upper middle market companies. And doing that enables us to deploy across a number of different market cycles. We actually look at... A lot of people say, "Well, oh, the banks are back. Does that mean that there will be less deployment?" In general, when the banks have been active, that's when we've been most active, because we're able to go through all of those different areas of the middle market. Generally, the banks being active gives private equity sponsors, gives others, a little bit more surety of execution in those markets. So you'll see them become more active. As they're more active, we can then be a part of that, and then we can be more active. So a lot of that is a net positive, seeing the banks come back into the market and seeing their activity increase. In terms of what's been in the news cycle over the last week or so here, you know, I think it started with maybe an article that was a little bit sensational, a little bit incorrect in terms of how the actual deal was structured. It made it seem as though the assets were structured away from the lending group, where the lending group wouldn't have access to them. In this case, it wasn't actually structured in that manner. It was still—it's still part of what the lending group has collateral on. Being able to move it out of that is something that would be extremely unusual in direct lending. It can happen more in the bank-syndicated loan front, but it was corrected, I think, in the article that came out then on Monday about it. It is a very small portion of the portfolio, and I think it is much more idiosyncratic and related to the performance of that particular company. But really, the way they did that structure was actually to generate cash to pay the senior loans. And that is a pretty large group of some of the largest lenders, so it's in the sponsor's best interest to be collaborative, such that they have the ability to work with those lenders in the future. So, we're still in the middle of that story, and I don't wanna dig too deep into it or comment too much on it, but I expect that you'll see it's... It will work itself out through the normal course. And it was maybe made for better headlines than anything else. And ultimately, we would expect, you know, an outcome in line with what we've seen in places in the past. But I don't think it's indicative of a larger health issue in the overall direct lending market. In fact, if you look at just the economic fundamentals of our portfolio, our EBITDA continues to increase year-over-year. Our interest coverage has actually improved over the last quarter, as we've seen interest rates stabilize along with that EBITDA growth. So you're seeing still strong fundamentals in your portfolio. We've certainly expected that a higher-for-longer would tick up your delinquencies, that's only natural. But overall, in this cycle, we also have LTVs that are stronger than they've ever been. You have a lot more fundamental strength than has, I think, been typical in the market before large credit issues. So I do think that this is maybe a little bit more idiosyncratic as well. Great. For what it's worth, two of your other peers have sort of suggested exactly the same thing, so, it does seem like that, you know, inappropriate article at the end of the day. All right, one more question on credit, because I wanna cover a couple other topics as well. So again, I hate, hate to keep coming back to what you just said, but what you just said, you're very bullish on the opportunity in alternative credit, right? Yeah. It does seem like a huge opportunity. It's much larger than a direct lending, right? I think you laid out a $40 trillion credit opportunity, direct lending being the largest of that, I think, at $18 trillion, something of that ilk, much larger than direct lending. Why is Ares so well-positioned, and where do you sort of see the best opportunities, whether it be in the U.S. or beyond, just given your, your scope, particularly Europe and, and maybe even Asia, where I think you have a bit of an advanced position? Sure. So when you look at our, our alt credit business, what you see is it's about 45% of the investment grade or more the insurance-related partnerships and the insurance-related type assets that they're looking for on their balance sheets, and about 55% illiquid, and that's mainly in the form of commingled funds. We have the Pathfinder series, Pathfinder I and II, and then their open-ended institutional class, that 55% really is attractive to any number of LPs. It's not really specific to insurance companies and the assets they're looking for. So you see a lot of the LPs that are on other places in our platform coming into there as they're getting a non-correlated return that has good DPI, that has a, a predictable cash flow to it. So there is a, a great fundraising opportunity that's happened there. You know, if you just see how Pathfinder One went to Pathfinder Two, and then you've seen that we've continued to raise in the core product, it has been very attractive on that fundraising side. On the more investment-grade side, that's about having that platform, having the ability to service insurance companies, working with them. We don't have a large insurance company on our balance sheet. We do have $50 billion of AUM with other insurance companies, so they are looking for that type of product, and we wanna make sure that we're well-positioned to deliver that, as well as deliver it to Aspida, our own captive insurance company that we have an investment in. But really, that 55% is, I think, a lot of where that focus is that you've heard us talk about and that you've just mentioned. There's a lot of opportunity in the banking space. We recently brought 75 different regional banks into an off-site. We talked to them about all the different ways we could partner with them to create better ROE for them, to do things like SRTs, to have a lot of different places where it is truly a partnership that benefits them, it benefits our investors. It allows them to continue to originate assets, but offload some of that risk. It gives them better capital treatment in many ways. And we think that this is just the beginning of a long-term migration. As they can better capital plan, they can better capital structure, and they can generate more ROE, and we can be a perfect partner for that and have the right products. By having a large illiquid side, that enables us to be much more creative in our structuring, enables us to do much larger deals, and enables us to be able to partner well, too, across our platform, you know, whether it's in the Secondaries business, the real estate business, or otherwise, if we find the right assets there. So a lot of different opportunity. Great, look forward to hearing more about that as we go forward. Let's shift gears a little bit. I'm not managing time well, so I apologize. I have a gazillion questions for you. On retail democratization, that seems to be a big area of focus. You shared a statistic at your Investor Day that 52% of semi-liquid vehicle flows went to the numbers two through six. There are inferences for both the first position as well as position seven through infinity. And I think that's up from, like, 17% just a couple of years ago, right? So you've seen that consolidation. So maybe a two-part question: How do you sort of see the evolution of the industry from here, and is it getting a little too late for some also-rans? And then how should we toggle to your long-term growth of $100 billion by 2028, which would be, like, a fourfold increase in where you sit today? Sure. Our belief is that there's, there's gonna be only a few winners ultimately in this space, because the, the main distribution partners, the wirehouses and private banks, they're only gonna bring in a limited number. It's not gonna be unlimited. They probably are gonna be somewhere in that 5 to south of 10 range. They're, they're not gonna have a lot of different managers. They don't have the capacity to diligence them. They don't want to have all of those different people out marketing separate types of products. So there is an advantage to having multiple types of products. In fact, we, we think we're the only one that has a number of different billion dollar products that are now in the marketplace on that side. So getting shelf space, I think, is gonna become harder and harder. If you, if you haven't started, then it's going to be extremely difficult. Using an example from us is, obviously, ASIF is something that we're very happy about and has been doing very, very well on its retail fundraising. Well, when we acquired Black Creek and that distribution channel in 2021 now, we looked at that and said, "Okay, well, we should be working on a non-traded BDC." We were probably talking about it before the acquisition closed. So we started at day one of that acquisition. We actually didn't start raising retail dollars in ASIF until June of last year. So it took us almost two years of working on that product constantly, and so there's a lot of expense that goes into that. And then there's distribution fees that layer on top of that, and sales, your sales force that you have to pay, that layer on top of that. So if you don't have scale, it's very difficult to break in. And if you haven't broken in, and if you don't have products through that channel right now, it's very hard to build those relationships. So ultimately, I do think that there will be a limited number of winners in that space, and it is getting harder and harder to get on shelves. In terms of how we've looked at it, though, we have a product with every major partner. We don't have any product that's with every partner, though. So we have a lot of growth that's left within the products that we have. And as Raj laid out, there's probably a few more products that make sense here domestically, and really building out that platform in Europe and in Asia, is going to be very, very instrumental in achieving that $100 billion AUM mark that he laid out. At the same time, when you just look at the pace of growth that we've had in retail, and if you look at Q1 being our best quarter ever, and then we followed that up with an April that was our best month ever, and that's all with a relatively muted REIT environment. So that's without the REITs kind of raising what we know that they're capable of in a more macro environment that's favorable to real estate. It shows you that we're on the right, right position of up and to the right on the graph, and that we're rapidly working towards getting to that $100 billion. Great. Okay, so it's a good question just came in over the transmit here, let me ask it. So how do you sort of see the traditional asset managers coming into the space, given that they have the pre-existing relationships with the RIAs? And maybe I'll back up the question even a bit more. Obviously, you've had a major announcement between one of your peers, KKR and Capital Group, as they sort of think through the co-branded and the hybrid opportunity set. So maybe how do you sort of see that race for shelf space from here and all the traditionals on the outside looking in? Or is there other things they can do to sort of try and, you know, compete up against a platform like Ares? Yeah, it's really interesting. I mean, the KKR transaction that you referenced, it remains to be seen, you know, what the economics of that are. Seems like that's probably more of a midterm, then there's maybe something that'll happen in 2025. So we'll be watching that. But we're certainly always talking to potential partners and thinking about how we may be able to penetrate a little bit more in that market. At the same time, I talked about it in our Investor Day, and I talk about it a lot publicly, that for us, it's really important to maintain quality in the AUM that we're raising, and not just chase quantity. Because you don't want to do that at the expense of returns and the expense of being able to deliver something that is differentiated. So I think that's gonna be the one of the toughest parts between the traditional and the alternative marriages, is those are very different cultures, there's very different fee scales, there's very different expectations of how you build out teams and you manage teams. So I don't think anyone's perfectly solved that yet. Generally, when a traditional and an alternative got together, the ability for that alternative to maintain its own ecosystem and separation has been key to them, and I think that'll continue to happen. I think we're getting closer and closer to alternatives being available for retirement products. However, I still don't think we're extremely close to that. I think the 401(k) opportunity is very compelling. It's something that we talk about internally, but is still probably a number of years out. But it'll be interesting to see what opportunities there are in the broader retail space, because I think there's a lot of value to getting retail investors into a lot of alt products. Right. Makes sense. Okay, we only have a few more minutes, so I want to cover just maybe a couple of the topics real fast before we let you go. Maybe talk a little bit about on margins. Let's just switch around a little bit. I think we've covered a little bit insurance through the conversation. How should we think about the incremental margins for growth here? Mm-hmm. You've laid out a nice pathway for margin expansion. You talked about ceasing of some of the initiatives, if you will. I think you showed a slide that said you can get to 50% plus margins, but how do we think about maybe the intermediate stop Mm-hmm along the way? Then when you look at the industry, there are some scaled players that have margins that are starting to approach 60% and even 70% in FRE. How should we think about that trajectory for Ares, as, particularly as you climb toward that $750 billion of AUM? Sure. I would start by saying that growth is our primary focus, and we won't sacrifice growth for margin expansion. There will be a time when margin maybe assists us with growing FRE, but we really want to grow FRE with quality, which means growing it through an increase in revenues. And when we can do that by maintaining a very high fee rate, we think it's better to have, you know, 100 basis point fee with a 40% margin than a 50 basis point fee with a 50% margin, as you'll ultimately be able to generate more, and we'll be able to continue to grow. So we're always gonna be focused, at least, for the next however many years, on how are we growing and how are we able to grow with quality. So that's really what we look at first. What we've seen historically is, that has led to margin expansion. Because we're more credit-based, that also means that we're more deployment-based. As we deploy, that generates revenue, as opposed to an equity-style fund, that the minute it's raised, it's generating the full revenue that it will generate. And so ultimately, that is a higher initial margin. But that's one of the reasons we showed the slide that we did. If everything in our credit business was just invested day one, and we were earning a management fee on it, day one, then your margin would look more like that 52% that we'd laid out. If we just focus on deploying and don't focus on investing for growth, that's where it would naturally get to. But what I talked about then in the actual meeting was that we expect, in any given year, that it should expand between 0 and 150 basis points on average. There might be years where deployment kicks up, and we've seen that in the past, and that really kicks up your margin expansion. And there may be years where we look at what the opportunities are. Maybe there's a great opportunity set in alt credit or in our Secondaries business, and we say, "Hey, it's better for us to continue to invest and launch a strategy there, because it's gonna generate more FRE growth as we go forward." We want people to understand that we're going to look for the growth first and then expand margin there. But that doesn't mean that we don't expect to see margin expand. That's been the... That's been our natural occurrence, and we expect to see that happen. But really, it's, it's not gonna come with a pre-prescribed, "Look, we're gonna do this much margin expansion every year," because we wanna do it with growth first. Okay, and maybe one final question, because I think we're bucking up right against time, and I have a lot more questions and not enough time to get it all done, so I apologize for making you talk longer than I should have allowed. And I appreciate the fulsome answers. I think one of the key themes that came off your own Investor Day was just the opportunity set in terms of M&A. And you've done a very good job, both you mentioned Black Creek Group, and also you were very forward-thinking with the Landmark transaction. As you look ahead, where do you sort of see the greatest opportunity? And then how should we be thinking about the bid-ask spread? It does seem like a few of your peers who have been participating in our conference so far want to do more things, but also the bid-ask seems to be relatively wide. So how should we be thinking about both what's out there, and then the financial constraints around that? Sure, and we've talked about it publicly before, and maybe I'll give you an example of kind of each. Global infrastructure is something that's fairly interesting to us, but it's also something that's transacted a few times in recent past, and that's come on at a very high price. And I understand why the folks that bought it may have paid that price, but that gives you an example of, like, yeah, we'd be very interested in that, and it's something that we look at and we talk about. However, there's a higher bar as we believe we can organically grow things. And when you're paying that type of price, it seems like there is a wide bid-ask there for a lot of folks. Now, when you just take a look at what we're doing in North America, that informs what we're interested in doing in other regions. So if you look at, for example, private equity in Europe is somewhere where we don't have a tremendous amount of exposure. We have a small team there that's growing and building, but is it better to buy there or to build? So what opportunities may you have? If you look at real estate in Asia, we just are starting in Japan. We don't really have a real estate presence there. We just added, with Crescent Point, a private equity presence there, and obviously SSG a few years ago gave us the direct lending presence there. So how do we take what we have in the U.S.? how do we marry that to our other regions? And a lot of times when you're buying someone who's a, maybe a smaller single strategy manager within a geography, then that's a better type acquisition for you to bring into your platform, allow them access to the platform so they can expand their operations, they can expand their LP opportunities, and it becomes meaningfully accretive to both sides. So that's really how we think about it. Well, great. I've run over by a minute or so, but it's also toward the end of the day, so I thought it'd be okay. Thank you very much, Jarrod, and the IR team I see is joined as well. Just wanna thank you all for just participating in the conference, your patience with our questions, and the tremendous dialogue and conversation. Look forward to continuing that with you as we look ahead. So thank you again for joining, and that's end of the session. Thank you all. Okay. Thanks for having us.