Private Credit Resilience (with Danny Burger)

Ares CEO Mike Arougheti argues private credit redemption pressures are about investor psychology, not underlying stress. The illiquid fund segment is only 10-15% of private credit. He sees no private equity valuation problem - the system is 'unclogging' through secondary solutions and refinancing. AI data center debt is well-structured with equity from high-grade hyperscalers.

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Ares Management 7.8
Asset Manager $200.00B
Mike Arougheti 8.5

Private Credit Resilience (with Danny Burger)

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AI infrastructure investment is equity-driven by high-grade hyperscalers, leverage is well-structured at asset level. Capital constraints mean demand exceeds supply, supporting continued growth.

Mike Arougheti

The redemption pressure is not stress but an education process. The illiquid fund segment is only 10-15% of private credit. Underlying performance is delivering exactly the investment outcome investors signed for. It's about investor psychology and behavior within these structures, not an indictment on private credit.
Mike Arougheti

Private equity is not broken, it's going through a transition. You had a 10+ year run-up in private markets reflective of zero interest rates. 30,000 companies were bought at multiples reflecting lower rates with capital structures from when rates were lower. The system needs to unclog through secondary solutions, opportunistic credit, and refinancing.
Mike Arougheti

The AI CapEx cycle is largely driven by equity capital from large, high-grade hyperscale counterparties. Leverage is happening at the asset level in a very structured, well-understood way. It does not feel over-levered or out of balance. There's just not enough capital to keep pace with technological change.

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