Summary
Ares Management Corporation's 2014 10-K filing highlights its performance as a diversified alternative asset manager across four key segments: Tradable Credit, Direct Lending, Private Equity, and Real Estate. The company experienced significant revenue growth, driven by increases in management fees, particularly from its Direct Lending and Real Estate groups, bolstered by capital raises and acquisitions. While performance fees saw fluctuations, the overall revenue trajectory was positive. Expenses, particularly compensation and benefits, also increased due to business expansion and strategic acquisitions. The filing details the company's management structure as a limited partnership and notes its election to utilize reduced disclosure requirements available to emerging growth companies under the JOBS Act. It also addresses various risks, including the potential for market volatility affecting unit prices, the complexities of its tax structure, and governance provisions that may differ from traditional corporations. The company's financial condition remains solid, with substantial assets under management and a clear distribution policy, though subject to various factors including the discretion of its general partner. Investors should note the company's reliance on management and performance fees, the significant impact of its Consolidated Funds on its financial statements (though not on net income attributable to the Company), and the potential risks associated with its tax receivable agreement. The IPO in May 2014 marked a significant transition, establishing a public market for its common units.
Financial Highlights
24 data points| Revenue | $603.89M |
| Operating Expenses | $860.04M |
| Net Income | $34.99M |
| Shares Outstanding (Basic) | 80.36M |
Key Highlights
- 1Ares Management reported strong revenue growth in 2014, with total revenues of $603.9 million, up from $478.7 million in 2013, driven by increased management fees across its Direct Lending and Real Estate segments.
- 2The company's Assets Under Management (AUM) grew to $81.8 billion as of December 31, 2014, from $74.0 billion in the prior year, reflecting successful fundraising and strategic acquisitions.
- 3Significant compensation expenses were incurred, including a one-time recognition of $56.2 million in equity compensation expense related to the Reorganization and IPO, alongside increased headcount and merit-based increases.
- 4The company completed the acquisition of EIF Management, LLC in January 2015 for $149.2 million, expanding its Private Equity Group into the power and energy sector.
- 5Ares Management qualifies as an 'emerging growth company' under the JOBS Act, electing to use reduced disclosure requirements, which may make its common units less attractive to some investors.
- 6The company's structure as a limited partnership and its reliance on a holding partnership structure mean that distributions to common unitholders are dependent on cash flows from its subsidiaries.
- 7The Tax Receivable Agreement (TRA) presents a significant potential future obligation, where Ares Management pays 85% of realized tax savings stemming from tax basis increases due to unit exchanges, with estimated termination payments of $536 million as of December 31, 2014.