Ares Management boss Mike Arougheti sees the $1.5 trillion private credit market doubling to $3 trillion within five years, with a great deal of that coming from banks’ balance sheets.
(Bloomberg) — Ares Management boss Mike Arougheti sees the $1.5 trillion private credit market doubling to $3 trillion within five years, with a great deal of that coming from banks’ balance sheets.
“We’re still massively overbanked,” the CEO, co-founder and president of one of the world’s largest private credit firms said at the Global Credit Forum held at Bloomberg’s London Office.
Arougheti estimated that, given the capacity in the private credit market today, the industry could finance an $8 to $10 billion club deal.
His remarks come as an influx of major players rush to the private credit market, which has already swollen dramatically in size, as higher base rates and widened spreads yield larger returns than ever before for credit funds.
“It’s not a zero-sum, we win, banks lose thing,” Arougheti said. “When banks are in transition, it’s a good time to be in private credit.”
NYSE-listed Ares Management Corporation has $378 billion in assets under management and a market capitalization of $24.5 billion. Arougheti himself received $20.9 million in carried interest cash distributions and management fees in 2022, according to data compiled by Bloomberg.
The CEO reiterated his belief that the US economy can avoid a recession, “The consumer is fundamentally strong,” he said.
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