Ares: Private credit market will double within five years

The value of the private credit market is likely to double within the next five years, according to the chief executive of Ares Management.

Speaking at the SALT iConnections Conference in New York on 20 May, Ares’ co-founder, chief executive and president Michael Arougheti said that he expects to see private credit market growth double over the next five years.

Arougheti added that about 75 per cent of Ares’ investments are currently in some form of credit instruments.

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“I would say that it’s likely to double again, and again, every time we say that, the headline pops up when we say that it’s going to double,” said Arougheti.

“But that’s just basic math, right?”

Speaking on a panel focused on credit opportunities, Arougheti said that there is a 10-year compound annual growth rate for the private credit markets of about 15 per cent.

“I think you’ve got real, real strong sector tailwinds in these markets,” he added.

“You’ve got real cyclical tailwinds and the ecosystem around private markets, generally, as more companies stay in the private market longer.”

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Arougheti noted there is already a lot of balance sheet clean-up happening and he sees more opportunities ahead as interest rates stay higher for longer.

“There are liquidity induced cracks that have already emerged as rates stay higher for longer,” he added.

“That will continue. I don’t want to give anybody the impression that there’s not opportunities to invest because of rates.”

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