ARES (ARES) Q2 2025: Perpetual Capital AUM Jumps $50B, Anchoring Durable Fee Visibility

August 1, 2025 | By EarningsIQ Research

ARES delivered a record-setting quarter with perpetual capital AUM swelling by $50 billion over the past year, now nearly half of all fee-paying assets. Platform breadth, fundraising velocity, and global product innovation supported robust management fee growth, while the GCP acquisition expands real assets scale but temporarily compresses margins. With $105 billion of dry powder and a strengthening deployment outlook, ARES enters the second half positioned for accelerating fee conversion and cross-cycle resilience.

Summary

• Perpetual Capital Surge: Sticky AUM sources now anchor nearly half of fee-paying assets, boosting forward fee visibility.
• Global Fundraising Engine: Diversified strategies and channels drove the second-highest quarterly raise on record, with notable strength in private wealth and secondaries.
• Deployment and Margin Watch: GCP integration and real asset expansion create near-term margin pressure, but set up for multi-year operating leverage.

Performance Analysis

ARES posted a quarter of broad-based growth, marked by a $26 billion fundraising haul across more than 20 strategies and 40 funds, bringing year-to-date gross commitments to $46 billion. Management fees climbed 24% year-over-year, powered by momentum in private credit, secondaries, and real assets. Fee-related earnings (FRE) grew 26%, even as the GCP acquisition compressed FRE margin by 90 basis points to 41.2%, a temporary effect as integration costs are expected to subside over the next four quarters.

Perpetual capital AUM reached $167 billion, representing nearly half of total fee-paying AUM, and was a key driver of the $50 billion increase in perpetual capital over the past 12 months. Deployment activity rebounded after an April pause, with $27 billion deployed in the quarter, slightly above the prior year despite market volatility. Secondaries, wealth, and insurance platforms each demonstrated accelerating growth, while the GCP deal added $103 million in revenue and expanded ARES’ vertically integrated real estate capabilities.

• Fee Visibility Shift: Perpetual capital AUM now anchors nearly half of fee-paying assets, supporting more stable management fees.
• Global Diversification: International flows comprised over one-third of year-to-date wealth channel capital, with new partnerships in Japan poised to drive incremental growth.
• Secondaries Acceleration: AUM in the segment rose 29% year-over-year, with infrastructure secondaries on pace to triple fund size versus prior vintage.

ARES’ performance this quarter reflects a business model built for scale, recurring fee generation, and cross-cycle resilience, even as near-term margin compression and deployment pacing remain key watchpoints for investors.

Executive Commentary

Strategic Positioning

1. Perpetual Capital as a Core Pillar

ARES’ pivot toward perpetual capital—AUM that does not contractually repay and can be continually reinvested— is reshaping the business. This base now stands at $167 billion, nearly half of fee-paying AUM, and supports higher fee stability and less sensitivity to fundraising cycles. The perpetual capital mix is increasingly diversified, spanning credit, private equity, real estate, infrastructure, and sports media, with seven of eight semi-liquid products now above $1 billion AUM.

2. Global Wealth Channel Expansion

The wealth platform delivered $7 billion in first-half equity commitments (up 54% YoY), with over 80 distribution partners and 1,300 new financial advisors onboarded in the quarter. International flows now represent over a third of wealth channel capital, and new Japanese partnerships are expected to unlock further inflows. The breadth of product and intentional design across asset classes are driving adoption and stickiness.

3. Secondaries and Infrastructure Growth Engines

Secondaries AUM rose 29% YoY to nearly $34 billion, with infrastructure secondaries on track to triple the previous fund’s size. The segment’s growth is fueled by GP-led private equity solutions and new credit secondaries products, highlighting ARES’ ability to innovate and capture secular tailwinds.

4. Real Assets Platform Scaling Post-GCP

The GCP acquisition positions ARES as a vertically integrated real estate and infrastructure manager, able to develop and operate assets and capture additional leasing and management fees. The first Japan data center fund closed at $2.4 billion, and a pipeline of new projects in London, Tokyo, and Osaka is expected to drive forward growth. While GCP temporarily compresses margins, synergy realization and new fee streams are expected to unlock operating leverage over time.

5. Insurance and Alternative Credit as Diversifiers

Insurance AUM reached $79 billion, with affiliated insurer Aspida generating $1.9 billion in new premiums and executing new reinsurance deals in the US and Japan. Alternative credit/asset-backed finance (ABF) continues to expand, with roughly half of the book in non-rated and half in investment-grade tranches, supporting both higher returns and recurring fee growth.

Key Considerations

This quarter’s results reinforce ARES’ transformation into a global, multi-strategy alternative asset manager with durable, recurring fee streams and a diversified growth engine.

Key Considerations:

• Fee Durability Through Perpetual Capital: The shift to perpetual AUM creates stickier, less cyclical fee streams, reducing reliance on episodic fundraising.
• Product Innovation Powers Distribution: New strategies in sports media, infrastructure, and credit secondaries expand addressable markets and deepen client relationships.
• Margin Compression Is Temporary: GCP integration costs and lower initial margins are expected to subside, with synergy capture and new fee streams to drive future margin expansion.
• Deployment and Fee Conversion Remain Key: With $105 billion of AUM not yet paying fees, the pace and breadth of deployment will dictate the timing of future fee growth.
• Globalization and Wealth Channel Penetration: International flows and new partnerships, especially in Asia, are set to further diversify and grow the capital base.

Risks

ARES faces risks from integration execution (notably with GCP), potential fee pressure in private credit, and the timing of deployment and fee conversion on large amounts of dry powder. Market dislocations, regulatory shifts, or sustained margin compression could weigh on earnings, while rapid product innovation and global expansion bring operational complexity. Management’s all-weather guidance helps, but macro volatility and competition remain persistent factors to monitor.

Forward Outlook

For Q3 2025, ARES guided to:

• Record capital raising across semi-liquid funds, with July and August already tracking above prior highs.
• Continued integration progress and incremental fee contribution from new data center and industrial funds.

For full-year 2025, management maintained guidance for:

• FRE margins consistent with the prior year, with temporary GCP drag offset by synergy capture and fundraising strength.

Management highlighted several factors that support the outlook:

• Accelerating global deployment pipelines, especially as rate environments stabilize and transaction markets rebound.
• Robust international demand and new product launches in the wealth and secondaries channels.

Takeaways

ARES’ Q2 results underscore a business model pivoting to durable, recurring fee growth and global scale, with perpetual capital and product innovation at the core. The GCP acquisition expands platform capabilities, though margin normalization will be gradual. Investors should watch for the pace of deployment, fee conversion on dry powder, and the evolution of margin structure as integration synergies materialize.

• Perpetual Capital Anchors Fee Growth: Nearly half of fee-paying AUM is now perpetual, providing a stable base for future management fees and less cyclical risk.
• Global and Product Breadth Drives Resilience: Diversified fundraising across strategies and geographies supports growth even in volatile markets.
• Margin and Deployment Are Key Watchpoints: GCP integration and dry powder fee conversion will determine the slope of earnings growth in coming quarters.

Conclusion

ARES’ Q2 performance reflects a business model built for scale, recurring fee generation, and resilience across market cycles. The shift toward perpetual capital, product innovation, and global reach positions the firm for durable, long-term growth, even as near-term margin and deployment pacing remain critical levers for investor scrutiny.

Industry Read-Through

ARES’ results highlight a broader industry trend: Alternative managers are moving aggressively toward perpetual capital sources to anchor fee durability and reduce reliance on episodic fundraising. Product innovation and wealth channel penetration are increasingly critical competitive differentiators, as retail and international flows become a larger share of growth. The GCP integration underscores the growing importance of vertically integrated real asset platforms, while the surge in secondaries AUM signals secular demand for liquidity solutions. Peers with concentrated, cyclical fundraising or limited product breadth may face greater volatility and fee pressure, especially as investors seek stability in uncertain markets.

ARES Financials Asset management Perpetual capital Wealth channel Secondaries Real assets Fee revenue