Capital Allocators – Inside the Institutional Investment Industry
Episode: [REPLAY] Kipp deVere – The World of Private Credit at Ares (EP.329)
Host: Ted Seides
Release Date: June 2, 2025

Introduction

In Episode 329 of Capital Allocators, host Ted Seides sits down with Kipp deVere, a Director and Partner at Ares Management. With a career spanning over two decades in the institutional investment sector, Kipp offers invaluable insights into the evolution of private credit, the growth trajectory of Ares, and his perspectives on the current financial landscape.

Kipp deVere’s Background and Path to Ares

Kipp deVere’s journey into the world of finance began in his early years in New Jersey, where he was immersed in a finance-centric environment, influenced by his banker father. A history major from Yale ('94), Kipp’s academic path was not directly aligned with his eventual career in finance. However, a pivotal moment during his senior year—his mother’s battle with cancer—redirected his focus towards securing a career in banking.

Kipp deVere [05:32]: "I had to figure out how to get a job. And I was fortunate and I sort of networked enough that I got into the JP Morgan Analyst program through a little bit of luck and a little bit of hustle."

Upon graduating, Kipp joined JP Morgan’s Analyst program, where he spent three and a half years before transitioning to J.P. Morgan Asset Management. Seeking a more entrepreneurial role, he pursued an MBA at Stanford but did not latch onto the burgeoning Silicon Valley trend, choosing instead to focus on finance outside the tech-centric hub.

Evolution and Growth of Ares Management

Kipp joined Ares Management in May 2004, during the nascent stages of private credit as an asset class. At the time, Ares was a smaller firm with around 65 employees managing a $3 billion CLO (Collateralized Loan Obligation) portfolio. Over the past two decades, Ares has expanded exponentially, now boasting approximately 2,600 employees across 30 offices worldwide, and managing $250 billion in credit assets.

Kipp deVere [14:48]: "Ares today is about 2,600 people. We have 30 offices. The rough breakdown today is about 700 in New York, 700 in LA and about 400 in London."

This growth was achieved both organically and through strategic acquisitions, enabling Ares to diversify into areas like real estate, infrastructure, and secondaries. Notable acquisitions include Apollo’s real estate business and Landmark Partners, which bolstered Ares’ presence in the secondaries market.

Ares’ Credit Strategy

Ares Management is renowned for its private credit expertise, having been a pioneer in this space. The firm emphasizes flexible, customized lending solutions tailored to the specific needs of borrowers, particularly in the middle market. Ares employs a unitranche approach, which blends senior and junior debt into a single security, enhancing downside protection without significantly compromising returns.

Kipp deVere [41:14]: "We've been able to generate more gains in that business than losses. So of course we have a cumulative default charge off ratio which is very, very low, like under 5 and 10 basis points for both senior and junior assets."

Ares' underwriting process is thorough and collaborative, involving extensive vetting and investment committee reviews where associates and VPs play a crucial role in shaping investment decisions. This rigorous approach ensures a high-quality portfolio with a focus on defensive industries such as healthcare, business services, and software, which exhibit lower default rates.

Market Insights and Growth Inflection Points

Kipp highlights that economic downturns have historically served as inflection points for growth in private credit. The Global Financial Crisis (GFC) was a significant catalyst, demonstrating the resilience and lower volatility of private credit compared to public markets. Similarly, the COVID-19 pandemic underscored the need for flexible lending solutions, further accelerating Ares' expansion.

Kipp deVere [19:53]: "The GFC I think really taught public market investors that they didn't have the liquidity that they thought they had in liquid markets."

Currently, Ares is navigating a landscape of rising interest rates and inflation risks, drawing parallels to the mid-90s credit market conditions when Kipp first entered the industry. Ares remains confident in its ability to manage leveraged assets through robust liquidity management and diversified capital sources.

Managing a Global Team and Organizational Culture

Ares Management’s success is deeply rooted in its collaborative culture and decentralized management structure. The firm operates with a 17-person executive committee that meets weekly to oversee global operations, ensuring that each business unit operates autonomously while aligning with the overall strategic vision.

Kipp deVere [24:56]: "We want to be viewed as great partners. That's the most important thing because all we have at our firm is people and money."

This culture fosters information sharing and best practice dissemination across all departments, enabling seamless integration of newly acquired businesses and maintaining operational excellence despite the firm's substantial scale.

Future Outlook and Growth Plans

Looking ahead, Ares aims to double its assets under management to $500 billion, leveraging its established infrastructure and market position. The firm plans to deepen its presence in existing markets and explore new opportunities in regions like Asia, despite current challenges and market noise in places like Hong Kong and India.

Additionally, Ares is expanding its alternative credit business, encompassing non-corporate lending assets such as single-family rentals, cell towers, and medical receivables. This diversification is part of Ares’ strategy to tap into the $3-4 trillion addressable market for alternative lending solutions.

Kipp deVere [55:28]: "We think the European market is a great market actually for what we do because it's just less Institutionalized."

Personal Insights from Kipp deVere

Outside of his professional endeavors, Kipp is an avid skier, with a deep fondness for Vail, where his father owned a house. He values organization, thoughtfulness, and collaboration, and emphasizes the importance of patience and listening to others—lessons he has cultivated throughout his career.

Kipp deVere [64:15]: "I'm a very organized, thoughtful person. I don't like people who are quick to rush decisions."

Kipp credits his father and his long-term partners at Ares for significantly shaping his professional philosophy and approach to leadership.

Conclusion

Kipp deVere’s extensive experience and strategic vision have been instrumental in shaping Ares Management into a leading player in the private credit space. His insights into market dynamics, coupled with Ares’ robust credit strategy and collaborative culture, position the firm for continued growth and resilience in the ever-evolving financial landscape.

For more detailed discussions and expert insights, visit capitalallocators.com and explore past episodes and premium content.