Executives at Ares Management Corp. have intensified their stock sales as the private credit giant's shares surge amid rising interest rates and a retreat by traditional lenders.
Co-founders Tony Ressler, Bennett Rosenthal, David Kaplan, and Michael Arougheti, among others, have collectively sold approximately 2.7 million shares of Ares, amounting to nearly $250 million in value so far this year. This figure is roughly equivalent to the total number of shares the firm's executives divested in the entire year of 2022, based on data compiled from regulatory filings.
Arougheti, aged 50 and also serving as the CEO, accounted for nearly half of the open-market sales this year, with the most recent transactions reported last month.
In a statement, a spokesperson for the Los Angeles-based firm, which manages approximately $378 billion, noted that "The four co-founders continue to hold nearly 90% of all 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 has emerged as one of Wall Street's hottest asset classes amid recent macroeconomic volatility. The trend is driven by interest rate hikes, which are keeping borrowing costs elevated for longer periods, and a pullback by traditional lenders following the collapse of three regional banks earlier this year, prompting increased demand for financing in the private credit sector.
This increased demand is helping to fuel Ares's ambitious fundraising efforts, which are expected to surpass the $57 billion the firm raised last year. The company reported a 25% increase in second-quarter after-tax realized income compared to the previous year and expressed its intention to acquire loan portfolios from regional banks. Arougheti has indicated that the turmoil in the sector earlier this year may extend beyond 2023.
Ares's shares have gained 51% in value this year in New York trading through Tuesday, outperforming the 17% increase in the Russell 1000 Index.
Like many other leaders of publicly traded companies, Ares's executives have established prearranged trading plans to govern the bulk of their stock sales, with the proceeds likely to be allocated to various areas, including philanthropy, real estate, the art market, and other favored niches among the world's affluent.
Ressler, aged 62, who is also a co-founder of Apollo Global Management Inc., is the majority owner of the National Basketball Association's Atlanta Hawks. He donated $36 million worth of Ares stock to an unnamed charitable foundation he helps oversee this year, in addition to selling around $60 million worth of the firm's shares in February through a trading plan. His stake in Ares is now valued at approximately $6 billion, constituting the majority of his wealth, and he is the only Ares executive among the world's top 500 fortunes, according to the Bloomberg Billionaires Index.
The other co-founders, Arougheti, Kaplan, and Rosenthal, who are still actively involved with the firm, each have stakes in Ares worth roughly $1 billion even after their recent sales. All three established trading plans this year, and Arougheti has also received additional stock through incentive plans. Together with Ressler, they accounted for nearly all of the stock sales by Ares executives this year.
Outside of their roles at Ares, Rosenthal is a co-managing owner of Major League Soccer's Los Angeles Football Club, while Arougheti was appointed as a senior adviser to private equity firm Volery Capital in 2021. Kaplan, on the other hand, serves as the CEO of two Ares-backed blank-check companies, with the most recent one launched this year despite a lull in the sector.
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