There's a huge disconnect between the public market narrative and private credit reality. The narrative on AI disruption is wrong. These are largely senior secured loans with 30% loan-to-value in mature software businesses.
Mike Arougheti
In the Ares portfolio, software exposure is only about 6% of AUM. EBITDA margins are >40%, cash flow growing double digits, weighted avg maturity 3-4 years. Even with AI disruption, these are high-free-cash-flow companies.
Mike Arougheti
AI disruption isn't binary. If AI implementation accelerates, it's a huge catalyst for growth in our digital infrastructure and renewable energy practice. Our portfolios are well-hedged.
Spreads between broadly syndicated loans and private credit are tightening. Is 600 over the right price?
Matt Miller
Mike Arougheti
We still generate 150-200 bps of excess return. Spreads are tight everywhere—high yield, loans, high-grade. Sophisticated global institutional investors see that and are flowing into our product.
With rates coming down, does outperformance narrow? Is the industry just about scale now?
Dani Burger
Mike Arougheti
Size drives performance in private markets due to sourcing, structuring, and managing esoteric investments. We're not experiencing fee compression on senior, excess-return products.