Capital Allocators – Inside the Institutional Investment Industry Episode: Kipp deVeer – Scaling for Private Wealth Globally in Credit (Private Wealth 5, EP.449)
Host: Ted Seides
Guest: Raj Dhanda, Co-President of Ares Management
Release Date: June 2, 2025

Introduction

In the fifth episode of the "Private Wealth" mini-series, Ted Seides engages in an insightful conversation with Raj Dhanda, Co-President of Ares Management. This episode delves into Ares Management's strategic approach to scaling its credit-focused offerings within the private wealth sector globally. The discussion touches upon capital formation, distribution strategies, global expansion, and the nuanced challenges of building brand recognition in a competitive landscape.

Ares Management: An Overview

Timestamp: [08:46]

Raj Dhanda begins by providing an update on Ares Management's growth trajectory:

"Firm continues to grow. We're about 500 billion of AUM today, still dominated by the credit business, but we're focused on growth in a lot of the other areas." ([08:08])

Ares Management maintains a diversified portfolio spanning credit, private equity, real assets, and infrastructure, with recent acquisitions bolstering their global presence, particularly in Japan.

Scaling in the Private Wealth Channel

Timestamp: [08:46] – [17:38]

Raj elaborates on Ares' strategic move into the private wealth channel:

"We've started focusing six or seven years ago and frankly did a couple of things early. Some good, some not so good..." ([08:57])

The acquisition of Black Creek during the COVID-19 pandemic was pivotal, doubling the salesforce and providing immediate access to a robust retail and wholesaling team. This move was instrumental in challenging market leaders like Blackstone by enhancing Ares' market share from initial dominance by single players to a diversified leadership:

"Now there are four or five firms, including Blackstone and Ares, that have probably 30 or 40% market share at the top of the stack." ([12:33])

Distribution Strategies and Team Structure

Timestamp: [12:33] – [22:13]

Ares Management employs a diverse and expansive distribution team, encompassing both internal and external wholesalers. This team is crucial in managing smaller check sizes typical of the wealth channel, ensuring efficient client servicing and capital deployment.

Raj emphasizes the importance of metrics in measuring the salesforce's effectiveness:

"We're going to the right people with the right things. Because the death of a salesforce is that you're deploying your sales force with clients in regards to products they're not interested in." ([14:19])

Investment Themes and Product Offerings

Timestamp: [20:52] – [25:19]

Ares Management structures its offerings around three primary investment themes:

1. Durable Income: Focused on private credit believed to be less volatile than public market credit, delivering premium yields.
2. Diversified Private Equity: Providing access to private equity strategies, including secondaries and primary investments.
3. Tax-Advantaged Real Assets: Encompassing REITs and infrastructure funds.

Raj discusses how these themes cater specifically to the wealth channel's needs, emphasizing diversification and risk management:

"The stock goes down by more and the stock goes up. They love the semi-liquid product that has very little correlation and not a lot of volatility..." ([15:37])

Global Expansion: Europe and Asia

Timestamp: [32:43] – [34:13]

Ares Management has made significant strides in European markets through the acquisition of GCP, enhancing their presence in Japanese real estate. The firm anticipates substantial growth in Asia, attributing it to the increasing awareness and demand for alternative investments akin to those available in North America.

"Launching some of these income products in Europe was pretty eye-opening for us because we attracted a lot more capital than we expected." ([32:53])

Managing Capital Flows and Underwriting Discipline

Timestamp: [34:28] – [36:55]

Raj addresses the challenges of handling large, pro-cyclical capital inflows:

"The money has to get to work immediately, particularly in the income strategies. It's inherently pro-cyclical money." ([34:28])

To maintain underwriting discipline amidst rapid growth, Ares ensures a balanced deployment of capital across various structures, avoiding over-reliance on any single pro-cyclical investment vehicle.

"We have a balanced roster of stuff to deploy, we're not under so much pressure to deploy because of the balance of capital that I feel comfortable with how we're set up." ([36:01])

Building and Maintaining Brand Recognition

Timestamp: [27:45] – [29:54]

Given the crowded market with established players like Blackstone and KKR, Ares Management prioritizes building a strong brand presence. This involves consistent messaging across all levels of the organization and leveraging senior leadership to forge meaningful relationships with financial advisors and institutions.

"We're trying to make sure at the top of AWMS areas, wealth management solutions, there's the consistent view of what we stand for, what differentiates us..." ([29:26])

Future Outlook and Strategic Focus

Timestamp: [41:35] – [42:19]

Looking ahead, Ares Management aims to continue its growth by enhancing its existing asset classes and exploring new opportunities in real assets and private equity, particularly in Asia. The firm remains committed to maintaining high performance standards and retaining top talent to sustain its competitive edge.

"At Ares, the platform is, for the time being, fully built. We feel like we're in all the asset classes on the alternative side that we need to be to be of the most value to clients..." ([41:35])

Personal Insights from Raj Dhanda

Timestamp: [39:27] – [40:40]

Beyond professional endeavors, Raj shares personal reflections:

• First Paid Job: "I was a golf caddy... I learned how to talk to some of these old rich guys who liked to play golf." ([39:27])
• Life Achievements: Expresses gratitude for personal and professional accomplishments, highlighting a fulfilling family life and career.
• Future Aspirations: Focused on balancing continued professional engagement with personal passions post the next five years.

Conclusion

Raj Dhanda's conversation with Ted Seides offers a comprehensive look into Ares Management's strategic initiatives within the private wealth channel. From scaling operations and expanding globally to maintaining underwriting discipline and building a robust brand, Ares Management exemplifies a thoughtful approach to capturing and sustaining growth in the competitive landscape of alternative investments.

Notable Quotes:

• "We've started focusing six or seven years ago and frankly did a couple of things early. Some good, some not so good..." — Raj Dhanda ([08:57])
• "The death of a salesforce is that you're deploying your sales force with clients in regards to products they're not interested in." — Raj Dhanda ([14:19])
• "We're trying to make sure... there's the consistent view of what we stand for, what differentiates us..." — Raj Dhanda ([29:26])
• "At Ares, the platform is, for the time being, fully built. We feel like we're in all the asset classes..." — Raj Dhanda ([41:35])

For more insights and detailed discussions from industry leaders, visit capitalallocators.com.