Ares Management Corp. executives are ramping up stock sales as the private credit giant’s shares boom amid rising interest rates and a pullback by traditional lenders.
(Bloomberg) — Ares Management Corp. executives are ramping up stock sales as the private credit giant’s shares boom amid rising interest rates and a pullback by traditional lenders.
Co-founders Tony Ressler, Bennett Rosenthal, David Kaplan and Michael Arougheti are among those who have sold about 2.7 million shares of Ares worth almost $250 million this year, according to data compiled by Bloomberg from regulatory filings. That’s roughly the same total number of shares the firm’s executives offloaded in all of 2022.
Arougheti, 50, who’s also chief executive officer, made up almost half of the open market sales this year, with the group’s most recent transactions filed last month, the filings show.
A spokesperson for the Los Angeles-based firm, which manages about $378 billion, said in a statement: “The four co-founders continue to hold nearly 90% of all of shares that they held at the time of the company’s IPO in 2014, inclusive of any shares that have been subsequently granted. They continue to be very excited about the opportunities for Ares in the next decade.”
Ares’s stock is trading near record highs as private credit becomes Wall Street’s hottest asset class amid recent macroeconomic volatility.
Interest rate hikes mean borrowing costs are now staying higher for longer, while the collapse of three regional banks earlier this year led many lenders to retrench. That sparked demand for financing in the private credit sector, which typically offers floating-rate loans.
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Overall, that’s helping to fuel Ares’s ambitious fundraising, which is poised to surpass the $57 billion the firm collected last year. The company reported a 25% jump in second-quarter after-tax realized income from a year earlier and said it expects to pick up loan portfolios from regional banks. Arougheti has said that the crisis in that sector earlier this year could play out beyond 2023.
Ares’s shares climbed 51% this year in New York trading through Tuesday, outpacing the 17% gain of the Russell 1000 Index.
Like other bosses at listed businesses, Ares’s executives established prearranged trading plans to manage the bulk of their stock sales, with the proceeds likely to ripple through philanthropy, real estate, the art market and other niches favored by the world’s rich.
Ressler, 62, who also co-founded Apollo Global Management Inc., is majority owner of the National Basketball Association’s Atlanta Hawks and this year donated $36 million of Ares’s stock to an unnamed charitable foundation he helps oversee, filings show.
He also offloaded about $60 million of the firm’s shares during February through a trading plan and now has a stake worth about $6 billion, making up the bulk of his fortune. He’s the only Ares executive among the world’s 500 biggest fortunes, according to the Bloomberg Billionaires Index.
Ressler’s fellow co-founders still active at the firm — Arougheti, Kaplan and Rosenthal – each still have stakes in Ares worth about $1 billion even after their recent sales. The trio all set up trading plans this year, while Arougheti has also received additional stock through incentive plans, filings show. Together with Ressler, they made up virtually all the stock sales from Ares executives this year.
Outside Ares, Rosenthal is a managing owner of Major League Soccer’s Los Angeles Football Club, while Arougheti was appointed in 2021 as a senior adviser to private equity firm Volery Capital. Kaplan, meantime, is CEO for two Ares-backed blank-check firms, with the latest launched this year despite a lull in the sector.
–With assistance from Allison McNeely.
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