YouSaid · the spoken record

Mike Arougheti

lines on the record: 59
first: 2024-07-23
most recent: 2024-07-23
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“I try, this is not going to be a short answer, but I just forgive me for this one. You know, I struggle today just given the pace of information and all of the Headlines and speed of news that we're losing the narrative. And so what I'm actually most excited about is when you just zoom out and you try not to get caught up in the muck, the arc of human progress is actually quite remarkable, right? I mean, we're making huge strides in global poverty reduction and medical advancements and life expectancy. And I always try whenever I'm getting sucked into the headlines and all the partisan divisiveness just to take a breath and kind of get some historical perspective because there's a lot to be excited about just in terms of where we are and all of the great things that happen day to day that I think people take for granted.”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“Their Yankee fans, so we're having a real. I like your sons, and I don't have any real problem in the Arrogatti household right now.”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“Gosh, golfing, fishing, playing the guitar, Camden Yards, skiing, and obviously I have two teenage boys, so I try to spend as much time with them as I can as well”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“Been fortunate to have so many, both peer mentors and senior mentors. This someone we talked about earlier, I would say John Kissick.”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“First investment was charms blow pops that I would buy for a nickel in large bags, chop them up and sell them for 25 cents on the bus. Made a killing.”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“Behind some dark window never to be seen. And it was always, there was this separation. And the same way I think that the younger generation of workers in our business want mission and they want to be part of something bigger and they want relatable leaders. I think the same is true for sports. So when you walk around the stadium as a fan, it's amazing how engaged the fans feel with you and the team. So that was a big lesson there of just kind of leaning in on that because not necessarily what's been done before, but it's still early. But if the results are any indication, it's working.”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“We're having a lot of fun. Don't get me wrong, but we're doing it in a way that I think is somewhat unique in sports ownership in terms of just the way that we're approaching community engagement, the way that we're even engaging with the fans in the stadium. To your point's different. In the old days, owners of sports teams would sit up in some”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“A great question. We have a large sports and investing business. The Earls included, for better or for worse, or family owned. They've been family owned for decades, if not generations. And so the ability to come in with a partner like David and bring best practices in business to what was effectively a family-run business is pretty exciting. So there's just a lot to do there. But maybe back to sense of purpose, both Dave and I believe that the Baltimore Orioles, while we own them, is a community asset, right? done well and the community is appropriately engaged you can have a real impact on the city of Baltimore right and so we've tried to take that same sense of responsibility and come in with all humility and just say if we could do better here meaning if we can run a better business if we can continue to sustain great performance and ignite the fans if we can bring the community around this thing game changer for the city and so”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“That are doing the same thing. They said, I love what they did. I want to do it too. And they're raising their hand and doing it. So back to the culture conversation, that's something that just happened organically, right? We had to make the first step. We had to be pushed to do it and recognize it. But then once we did it, it just took off.”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“And we very then quickly pivoted to stand up the Ares Charitable Foundation, which was we were going to take a percentage of our promote and contribute it into the Charitable Foundation and align our performance to impact work. And what's so exciting and cool about it is the work that we're doing is in areas where we actually can make a difference. Financial literacy, entrepreneurship, social equity. And so we're going into the communities where we live and work and invest, and we're actually able to take our profit and put it back in. And it's been really empowering for our teams and our investors. Because, again, I think they see our teams approaching their business with a deeper sense of responsibility than they were before. And it's so funny how when you do something like that and people see it, now I think we have 10 teams around the firm.”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, this is one of the things I'm most proud of. And we had a portfolio manager that joined us, gosh, five or six years ago named Joel Holsinger to start to guide us through the next evolution of the growth of our alternative credit business. And he had an idea, which we took to, that we wanted to have 10% of the carrot interest in those funds go to charitable causes that were near and dear to his and his team's heart. And we had a very long conversation back to the sense of purpose in investing, of aligning the profit that we generated to doing good in the world, right? Do good, do well. And so that was an eye-opening moment for us because what we saw was it changed the conversation internally back to culture. And these are large funds, right? This is a $40 billion business at this point.”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“Labor markets tight, the system's working, so we've absorbed a pretty significant rate shock, and nothing has in fact broken, and we're running in a good place here. Yeah, I remain constructive.”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“It's hard to have a single answer for a global picture, but we do touch a lot of small companies and assets and asset owners. And I would say generally the tone's still very constructive. We have been consistent in that view for at least two plus years, so we were never on the recession train. One of the benefits of having the business we have is we're getting real-time information from our portfolios and it's been constructive. Our corporate portfolios are still growing in the low double digit EBITDA range. Our real estate portfolios are growing NOI. So it's clear that growth will slow. It is slowing. The consumer is quite resilient now. And we're not alone in this view. I think you're probably seeing it in your client base. I think the commercial banks are seeing it in their client base. And most of our private credit appears while we've seen some cracks form in certain portfolio areas, I think, are generally running at default rates significantly lower than historical average. So I'm still pretty constructive.”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“I know it's pathetic. That's what makes a market, right? Exactly. But it is amazing because that is why it's getting so much attention because I think people are understanding As the comfort level with these structures is improving and the flexibility of the capital that's available to the aggregators of these assets is also improving in terms of the ability to innovate and customize. It's a pretty big world. And so rightfully so, I think it's getting a lot of attention. Other places we're spending a lot of time are in and around real assets. So real estate lending, infrastructure lending, some of that is around opportunistic where we think that we're just going to see the install base of credit need some form of refinancing to the new rate environment. And some of it is just secular opportunities like the next wave of data center rollouts that's going to require trillions and trillions of both debt and equity to come into the market that doesn't currently exist.”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“Assets so long as those assets generate cash flow. And so that's everything from auto receivables, credit card receivables, shipping container leases, music royalties, healthcare royalties, net lease, residential solar securitizations. You know, there's 20 plus end markets that we participate in. And what's so exciting about that, what I've always loved about the private markets business is everywhere you look is a private company whoever makes the components on the microphones that we're speaking into is a family-owned company somewhere. And when you get into the deep world of alternative credit, things you do in your daily life creates an asset with cash flow attached to it. So when you start to really walk down the street, and in fact I pointed back, once you see it, you can unsee it. I look around and all I see are securitizable assets.”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“So alternative credit and asset based finance is probably one of the hotter corners of the, as you described, it hot private credit market. And I think that's a function of a couple of things. One, it is squarely in the middle of this bank balance sheet conversation that has been happening over the last two years. Two, with the continued growth in alternative asset manager-affiliated insurance platforms, you're beginning to see more linkage between those insurance companies and the growth in the rated side of the asset-based finance market. And three, as we are getting larger and folks like us are getting larger, we're able to aggregate capital in teams against this market opportunity in a way that we couldn't 10 years ago. At its simplest form, the way that we think about it, if direct lending is lending directly to a company or to an asset, alternative credit is lending to a pool of”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“When Rage starts to recede, because when they do, you're either restructuring some parts of your book and getting incremental compensation, and then the new loans that you make are coming at significantly wider credit spread that tend to overcompensate for whatever the reduction in the base rate is. So it presents a surprisingly stable total return to the investor. And I think that's one of the reasons why it's getting so much uptake in the investor community, because when you go back and you actually underwrite the history of returns, durable, you know, and we're making money when rates are going up, we're making money when rates are going down. We're making money in volatile markets and good markets, but it's the components of return change.”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“It's always one of those things to your point when things get quote unquote hot, people always worry that there's risk there that they don't understand. And I get that because sometimes it's true. And sometimes when something is too good to be true, it could just be that good, right? So the reason that private credit is so attractive is it's a floating rate asset, short duration, self-structured, self-negotiated, actively managed in partnership, usually with some sophisticated owner of a company or an asset. And the components of return are upfront fee, base rate, credit spread, and some form of call protection, and so the way the asset class functions is when rates go up, credit spreads moderate. If rates are going down in response to weakening economic fundamentals, credit spreads gap out. So if you look at the history, at least through the Aries lens, while you make more money in markets like this, you don't give it back.”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“So you got to do that. And then in certain parts of the world, for example, we have a partnership with Vinci Partners, which is a Latin American-based alternative asset manager. We have a long-term view that the Latin American markets will evolve and open up over time. It's a little bit too far afield for us to take on right now. So we're doing it through partnership. But again, we're keeping those options open. We want a front row seat to the development of these markets. And so if we can't do it directly, we're going to do it through partners who can help educate us so that when those markets turn, we want to be there.”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“Yet we're making investments and we're executing on the same playbook. We have a fully developed origination and investment footprint across the Asia-Pacific region. We're putting people in offices with a really diverse set of products to go find deals. It's like the old days here, you know, and so maybe you asked the question earlier about what it was like back then. When you go into these markets, you do get a feel, you get a little taste of the good old days because they're running around these markets in a way that we were here 25, 30 years ago”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“Private credit themes are in place in those markets, but the markets aren't nearly as evolved, even if you allow for some maturation of the U.S. market, it will still be a very large capital market. It may not be growing 15%, it may be growing 8% or 10%, but there are markets that haven't even opened up yet, you know, that if you're early and you're willing to take risk and make investments in those markets, I think there's huge growth.”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“Taking, and so I think direct lending and private credit still have a long, long way to go. There are structural things at play just in terms of the aging of the population and people's desire for dependable yield that's creating demand for private credit, the private equity ecosystem continues to grow and expand. That's creating demand for private credit. The loan and high yield markets continue to move to scale, and they're servicing ever larger borrowers. That's creating demand. Commercial banks around the globe are dealing with new regulatory capital frameworks, and particularly in this rate environment, that's seeing transition of assets. So there's a lot of just secular tailwinds for direct lending, putting aside the globalization, which is one of the things that excites me the most, because when I look at what we've been able to do in Europe in the last 15 years, what we're building in the Asia-Pacific markets,”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“You can't stop looking at it. That's what's happening in direct lending right now. This is a market that has been here for 30 years. And it's been just chugging away. And interestingly, when you look at the growth of private credits grown a little less than 15% compound for the last 10 years, guess what? So is private equity grown 15%. The loan and high yield market have grown in the low double digits. The reason I think private credit is being perceived as growing faster is it's just a straight line compounder, right? So there's no ups or downs. You don't have an up 30, a down 20. There's no drawdowns. And so it just keeps clipping away at 10 to 15 percent. And then all of a sudden the numbers get pretty large, but there's nothing to evidence that it's grown disproportionate to other parts of the capital markets, which is how we get recentered on are people taking inappropriate risk, or what's the right pricing for the risk that we're taking.”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“There's a scientific term, I'm not going to remember the name for it, but I will ping you after this conversation, which is the term to describe when you see something that you have seen before that's been there all along, you can't stop seeing it. It's like ocular something. And I only mention that because in every other part of your life, it happens to you every day. Like you see something on the street that's been there for 20 years and you never notice it before you walk by it and all of a sudden”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, and I think people pay us to generate investment returns. So that is what we do for a living. But what we try to talk about, which makes it very powerful, is you think about who benefits more investment returns. We manage money for state pension plans and insurance companies and retirement portfolios. Like when you really drill down the tens of millions of lives that are dependent on our returns, that changes the game, right? Now you're not just showing up and saying, how do I generate return and promote? You're saying, how do I actually not mess this up because I've got 20 million people who are relying on me doing my job? And so we have created a real sense of responsibility at the company that I think is pretty unique in our business.”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“And you have to be willing to adjust it to. I think we have found what worked 10 years ago doesn't work now, and I'm pretty sure 10 years from now we're going to have to do different things to make sure that the culture stays intact. But it's been a blessing so far.”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“We talk about culture, and the reason for that is great culture can drive outperformance. It can drive out performance around the investment committee table. It can drive out performance at the company level, provide stability, and frankly, it's just a better work environment. You retain talent, people feel more fulfilled. So we talk about cultural a lot, and it's so interesting now because we've gotten so global and so diverse, but the culture's gotten stronger because we're just finding interesting people from all walks of life and all over the globe that are aligning to our values. And so the conversation for us always comes back.”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“It changes over time, and this has been part of my own evolution as a leader when you're smaller and younger, you don't really talk about culture, you just model it. Like this is what good culture looks and feels like because you can have a personal relationship with most of the people in your company. And then as you grow, you begin to understand that you have to define who you are and what you stand for as a company. And we've done that where we've basically articulated who we are, who we want to be, what our mission and values are, and we've tried to align people to that. And that's been incredibly energizing, productive, and a big leap forward for us because you move away from this idea of culture as what happens in the office every day to this sense of higher purpose and calling, which again, done at scale, is really powerful.”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“Kissick and others to that list, deep sense of trust emerged, and so the people who were partners at Ares now were analysts here twenty years ago, and so they saw that, and they've role modeled it and repeated it and replicated it. So I do think the culture here is a really big driver of our success. And unlike others in our business, this is a team sport. I think most people who thrive at Aries want to be part of a team. Like they want to be part of a team that's winning, but doing it together. Whereas I think certain investment houses are more about who's the star athlete on that team and how do they win. And we've tried because of this DNA and this friendship to not let the ego seep into the business. And I think that's been a big benefit to us. Don't know if it works for everybody, but it's definitely worked for us.”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“I think it's the biggest driver of our success. And it goes back to my comments about Tony, investing is all about trust because you're not right all the time and you have to defend an idea and take real risk behind it. And if you're doing it with partners, you have to trust one another. Trust is hard generally as a human. It's hard at scale, right? Back to what kind of leader am I or what's the culture? We're fortunate that we all grew up in the business together, right? And so when your best friends in the world or your business partners and you go through cycles together, it just becomes easier to do things, right? There's no second guessing. There's nobody who's not holding up their end of the bargain. Everybody's just running at speed together. And so if I go back to those early days of the smaller partnership, and I would add Tony and Bennett and John.”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“Sensible. So I mentioned Aries' incredible growth and much of the actual core team has stayed together for twenty five years. So how did you keep the band, so to speak, together for so long, and how much do you think keeping that core DNA of that team, yourself, Kip DeVere, Mitch Goldstein, Michael Smith was a driver of Airy's success?”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“So there are a lot of people that were early to this, but to your point about foresight but seeing the evolution, just kind of missed it. And so that goes back to that self-awareness point of challenge things like could this be more, where could we grow? Or is the growth inappropriate and don't chase it? There have been a number of opportunities that we've looked at where we haven't pursued it because we just didn't trust it and didn't feel like we could bring the competitive advantage or insight to a market where we would actually win. So part of it is just you hone that filter over time with your partners and hopefully it gets better the more you do.”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“Look, you have to trust your own instincts and filter too. So going back to even private credit, private credit has evolved. You know, it was fairly cottage. It served a purpose in the market supporting private equity firms, but it was not very innovative, right? It was high-rate coupon mezzanine with warrants. And as the market started to evolve, if you were not willing to evolve with it, and many weren't, you got left behind.”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“I would say the same about the private equity business for those of us who were involved in the 80s and 90s. I don't think any of us ever could have imagined that it would be such an important part of the global economy today. Yeah.”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“Five or six years. And it's hard, especially when you're in a small partnership and you're making investments with a long payoff to really sustain those. And so I think we've always had good vision of where we wanted to go in and an openness to what the possibilities were, but I don't think anybody in our business, private markets generally could ever have really appreciated how large the private market opportunity would be with private credit, obviously, at the top of the list.”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“That we knew that direct lending would grow to be what it is today, but we knew what it took to be successful. We had identified how big we thought these addressable markets were. We made the investments. If I think about our European direct lending business, for example, which is a large market player now, we started building teams across the continent in 2006. We didn't make money in that business for”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“I think it's both. I think it's both in each of our businesses. We were religious planners, right? So we are annual strategic plans and budgets and three and five year growth plans and then what we would call moonshot scenarios where if X, Y, or Z happens, what does it mean for us? And so we go into each of our business builds with a really good roadmap for what we think success looks like. And that's important whether you're doing something organically or you're doing something inorganically, because again, everyone needs to know what success looks like in order to celebrate it, know when you got there. And the planning is a big part of it. And then I guess that's the foresight and being open to things happening. But when you see things opening, you have to have a willingness to invest behind growth. And that goes back to this risk taking because you never really know. I can't say.”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“People outside of their comfort zone and doing it in a way where they feel supported to go out and take those types of risks. And I think that mindset around risk-taking and growth has been a big part of our success.”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“I'd like to think of myself a little bit as a servant leader. I tend to lead from within as opposed to from without in the trenches with people. I am pretty hands-on, but not micromanager in the sense that I'm engaged and there to help. I'd like to think that I'm approaching my leadership with a sense of humility, which is empowering to the people that work for me because I don't think that they perceive me as having interest in anything other than supporting their growth and success. Our values as a company, it's interesting. One of them is self-awareness, which I always struggled with because sometimes it can sound pretty arrogant to say we're self-aware, but what we tried to capture with that was an idea that we have a willingness to fail and not dwell on it, right? And that we've built trust with each other that we can actually make mistakes so that we can move forward. And I think I'm a compassionate leader in that sense where I think I'm trying to push people.”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“I think it's a really good example of what good succession looks like. And I'm hoping that that now is a pretty good cultural lightning rod for the rest of the firm to understand how we do it in the future.”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“Strategic Private equity folks, and I say this lovingly and with a lot of self awareness we're great at telling other people how to do succession, but we're usually pretty bad at it ourselves, right? I mean, we're kind of experts in organizational design, but we're usually pretty bad at shining the light on ourselves. And I think as we and others in our industry have matured, we've gotten much more professionalized and institutionalized in the way that we think about things. But the one thing we knew was that any good succession requires forethought and planning and a lot of trust, but it also requires the person who is vacating the sea to actually make room. And Tony, I think better than anybody understood that. really allow for decisions to be getting made and to trust those. But he did what he was supposed to do and gave me a lot of runway and a lot of leeway and a lot of support.”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“And we all get hooked on it. And when you stop doing that, you have to find the way to scratch that itch. So I'd like to think one of the reasons why we're so growthy in the way that we approach our business is because I've effectively looked at Aries management as my deal, right? I want to invest in it the same way I used to invest in businesses, but do it all in one place. So I've been able to find whether it's through M&A or new product development to go back to my roots on the investing side, because why I got into the business in the first place, but it's a tough transition. And the cadence of business is different too. You don't get the immediate gratification.”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“Things matter more. They have consequences. And so I did experience the transition from CO own president to CEO as a deeper sense of responsibility and a more profound sense of service to the teams and the company. And that was pretty energizing. It is a tough transition because if you grow up your whole life in the deal business, you get into a rhythm of just transacting and it's really energizing closing deals is incredible.”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“It's a great question. So, I was fortunate when I took the job in 2018. I had been the president and COO of Aries for six years prior. So I had already gotten a lot of reps in running the company. And a lot of the growth that we enjoyed and the diversification globally came through the credit side of the business. So I felt connected to a lot of the parts of the business when I took that role. That said, it's almost like when you get married, things change. I was with my wife for 10 years and you say to yourself, we're going to get married and it's going to be the same. But when you do, it's serious.”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“Now, when we talk about relationship blending, it's really through the lens of people have choices, they choose to do business with the people that they trust and that are aligned to whatever their vision is, and that's not easy to build. And then I think you really have to think about these markets as evolving, right? You have to be constantly innovating around the service and the product that you deliver to your client. There were a lot of folks that started in the business when we did who were very anchored in mezzanine because that's what was available. And when the market started to innovate around things like Unitronches, right, or even Covenant Light, you could get anchored on the old way of doing things. But today, private credit is not just lending money to middle market companies. It's lending money to infrastructure projects and real estate assets and structured credit and partnering with banks on balance sheet solutions. So it's become this whole new pillar in the capital markets. It's actually a pretty”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“And pivoting to the point where we can actually be a real valued partner to our clients but not get to yes all the time, takes some getting used to and you have to build trust over decades, not years, decades where you're supporting people and helping them make money and going through bad situations, et cetera. So origination is important. Relationship is key. I think that's key in all of our businesses. But when people used to say relationship lending, we would cringe because that just means you're mispricing risk, right?”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“It's a great question because it's a very simple business as you articulate it that way, but it's complicated because in order to do it. While continuing to capture excess return. And so the way that you have to think about building value is you have to create broad origination networks in local markets so that you can get to deals before other people see them. And you have to surround those deals with flexible capital, scaled capital, and real client service, right? Because ultimately the reason that people are borrowing in the private market, they're getting some creativity and structure or terms or some innovation around your ability to grow with them and support their business plan that they're not getting somewhere else. And so I think we learned early that the tip of the spear for value creation is origination. And that sounds so simple, but it's really hard to do. And the reason it's hard to do is we say no to our clients 95% of the time. And when you're trained in banking, you try to say yes to your clients 95% of the time.”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“Early vehicles on these mezzanine investments. So there was an understanding of that business, but I think even in the early days, and this is where some of the early mover advantage came in, most people were still wired to the capital markets, right? They were coming at the illiquid credit market from the perspective of the loan and bond market or the private equity market, where you were the client, right? So you would sit around, you wait for the phone to ring. Someone would show you the deal, you'd evaluate it. And we were trained through our banking background to go out and really source and originate. So, yeah, Aries has always been buying private credit, but I think the big pivot for us is when we decided to really invest, grow the BDC, was that early emphasis on going out and sourcing and really creating our own flow.”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“So, the answer is yes. The firm actually got a start managing market value CLOs, which, again, people don't talk a lot about, but probably the worst investment vehicle ever invented, just in the sense of the mark-to-market and the asset liability mismatch. But what was great about it was it gave you the flexibility to invest in liquid credit, illiquid credit, equities, et cetera. So I think one of the reasons that we are as well positioned as we are today is our first funds were go anywhere investment vehicles. And the earliest parts and teams were investing in equities, bonds and loans, CLO securities, and mezzanine, which in the early days of private credit was how a non-bank would participate in the mezzanine business. And the way that we came together with Bennett at the time was we were sourcing a ton of private credit at the time and were effectively partnering with those.”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT
“But careers are all about the people that you encounter and those relationships. And Bennett obviously had good vision to understand the opportunity, but obviously we trusted each other. And so it was a big move for him. And it was a big move for us too.”
2024-07-23 · Goldman Sachs Exchanges · Private credit investing with Ares Management’s Mike Arougheti · IDENTIFIED FROM THE TRANSCRIPT