Ares Management, one of the largest players in private credit, is signaling it may get bigger in private equity. CEO Michael Arougheti said the firm would consider a deal if it fits culturally and strategically, and the price is right. The comments follow a Financial Times report that Ares held talks to acquire buyout firm Leonard Green & Partners.
Ares has built its name lending to companies through private credit, a market that has exploded in recent years. But with $671 billion in assets under management, the firm is now looking at how to broaden its reach. Arougheti's remarks suggest that private equity is no longer just a side business for Ares, but a potential growth area.
Why private equity matters for Ares
Private credit and private equity are two sides of the same coin in the world of alternative assets. Private credit involves lending to companies, often those that are too small or risky for traditional bank loans. Private equity, on the other hand, involves buying stakes in companies, usually with the goal of improving them and selling later for a profit.
For years, Ares has been a leader in the former. But big institutional investors—like pension funds and retirement plans—are increasingly looking for fewer managers that can cover more of the so-called 'private markets' in one place. Instead of hiring one firm for loans, another for buyouts, and a third for real estate, these allocators want a single partner that can handle multiple strategies.
That shift turns private equity from a nice-to-have into a distribution tool. A larger buyout platform can help Ares raise money across its various strategies and deepen relationships with the same large allocators. In other words, offering private equity makes it easier to sell private credit, and vice versa.
What a deal could look like
The reported talks with Leonard Green & Partners, a Los Angeles-based buyout firm, would fit that pattern. Leonard Green has a long history in consumer and retail investing, areas where Ares already has some presence. But Arougheti was careful not to confirm any specific deal, saying only that Ares would consider an acquisition if it met certain criteria.
'Culturally and strategically' is a key phrase. In the asset management world, mergers often fail not because of the numbers, but because of clashing cultures. Ares has a reputation for a collaborative, credit-focused approach. Any target would need to mesh with that.
Price is another hurdle. Buyout firms have become more expensive as private markets have grown. Ares would need to pay a premium to acquire a firm like Leonard Green, and it would have to convince its own investors that the deal is worth it.
What it means for investors
For everyday investors, this is a story about the changing shape of the asset management industry. Ares is a publicly traded company, so its shares are available to anyone with a brokerage account. But the bigger takeaway is about how your retirement money is being managed.
Many pension funds and 401(k) plans are increasing their allocations to private markets, including private credit and private equity. That trend has been a tailwind for firms like Ares, which have seen their assets under management grow rapidly. Private credit fundraising has stayed strong even as defaults have hit record levels, showing that investors are still willing to put money to work in this area.
But there are risks. Private markets are less liquid than public stocks and bonds, meaning your money is locked up for years. And as more money flows into these strategies, competition for deals increases, which can push down returns.
For Ares specifically, a move into private equity could be a double-edged sword. On one hand, it could help the firm attract more capital and diversify its revenue. On the other, it would put Ares in direct competition with established buyout giants like Blackstone and KKR, which have deep pockets and long track records.
Investors will be watching to see if Ares actually makes a deal, and at what price. Arougheti's comments suggest the firm is open to the idea, but only on the right terms. As Blue Owl's recent experience shows, fundraising can slow when private-wealth investors pull back, so Ares will need to be careful about timing.
In the meantime, the broader trend is clear: the lines between private credit and private equity are blurring. Firms that once specialized in one area are now trying to do it all. For investors, that means more choice, but also more complexity. Understanding how these firms make money—and where the risks lie—is more important than ever.
