Private credit investing with Ares Management’s Mike Arougheti
1Digest
This podcast episode features an interview with Mike Erigetti, co-founder and CEO of Aries Management, a prominent alternative asset manager specializing in private credit. The episode delves into Erigetti's career journey, the genesis of Aries, and the firm's evolution in the private credit market. Erigetti emphasizes the importance of direct lending, highlighting the value creation through sourcing and originating deals. He discusses his leadership style, emphasizing servant leadership and empowering his team. Erigetti attributes Aries' success to foresight, planning, and a willingness to invest in growth, emphasizing the importance of a strong team culture built on trust and collaboration. He shares his optimistic outlook for direct lending, citing structural factors like an aging population and the growth of the private equity ecosystem. Erigetti outlines Aries' strategy for capitalizing on growth opportunities, including expanding its presence in Asia-Pacific and exploring partnerships in Latin America. He discusses the relationship between interest rates and direct lending returns, explaining how the asset class's floating rate nature and credit spread dynamics create a surprisingly stable total return for investors. Erigetti explores the growth potential of asset-based lending and alternative credit, highlighting the increasing demand for these products and the opportunities for innovation. He also mentions other growth areas for Aries, including real assets. Erigetti shares his constructive view on the economic outlook, citing positive signals from Aries' portfolio companies and the resilience of the consumer. He emphasizes the strength of the labor market and the system's ability to absorb rate shocks. Erigetti discusses the Pathfinder Funds, a family of funds that allocate a portion of their carried interest to charitable causes, highlighting the positive impact this initiative has had on Aries' culture and its commitment to social responsibility. He shares his experience as part of the ownership group for the Baltimore Orioles, discussing the opportunity to modernize the business and engage the community. The episode concludes with a lightning round of quick questions and answers, covering Erigetti's first investment, his greatest strength as an investor, his biggest mentor, and his current excitement about the world.
Outlines
Aries Management: Private Credit, Leadership, and the Future of Direct Lending
This episode features an interview with Mike Erigetti, co-founder and CEO of Aries Management, a prominent alternative asset manager specializing in private credit. The episode delves into Erigetti's career journey, the genesis of Aries, and the firm's evolution in the private credit market. Erigetti emphasizes the importance of direct lending, highlighting the value creation through sourcing and originating deals. He discusses his leadership style, emphasizing servant leadership and empowering his team.
Building a Culture of Trust and Collaboration
Erigetti attributes Aries' success to foresight, planning, and a willingness to invest in growth, emphasizing the importance of a strong team culture built on trust and collaboration. He shares his optimistic outlook for direct lending, citing structural factors like an aging population and the growth of the private equity ecosystem.
Growth Strategies and Market Outlook
Erigetti outlines Aries' strategy for capitalizing on growth opportunities, including expanding its presence in Asia-Pacific and exploring partnerships in Latin America. He discusses the relationship between interest rates and direct lending returns, explaining how the asset class's floating rate nature and credit spread dynamics create a surprisingly stable total return for investors.
Investing in the Future: Asset-Based Lending and Beyond
Erigetti explores the growth potential of asset-based lending and alternative credit, highlighting the increasing demand for these products and the opportunities for innovation. He also mentions other growth areas for Aries, including real assets. Erigetti shares his constructive view on the economic outlook, citing positive signals from Aries' portfolio companies and the resilience of the consumer. He emphasizes the strength of the labor market and the system's ability to absorb rate shocks.
Social Impact and Beyond: Pathfinder Funds and the Baltimore Orioles
Erigetti discusses the Pathfinder Funds, a family of funds that allocate a portion of their carried interest to charitable causes, highlighting the positive impact this initiative has had on Aries' culture and its commitment to social responsibility. He shares his experience as part of the ownership group for the Baltimore Orioles, discussing the opportunity to modernize the business and engage the community.
Keywords
Aries Management
Aries Management is a global alternative investment manager with a focus on private credit, real estate, private equity, and secondaries. It is known for its direct lending capabilities and its commitment to responsible investing.
Private Credit
Private credit refers to loans made directly to companies or assets by non-bank lenders. It offers investors the potential for higher returns than traditional debt investments, but also carries higher risk.
Direct Lending
Direct lending is a type of private credit where lenders make loans directly to companies or assets, bypassing traditional banks. It allows for greater flexibility in structuring loans and tailoring them to specific borrower needs.
Asset-Based Lending
Asset-based lending is a type of alternative credit where loans are secured by a specific pool of assets, such as receivables or inventory. It is often used by companies with limited credit history or those seeking short-term financing.
Servant Leadership
Servant leadership is a leadership style that emphasizes serving the needs of others, empowering team members, and fostering a culture of trust and collaboration.
Pathfinder Funds
The Pathfinder Funds are a family of funds managed by Aries Management that allocate a portion of their carried interest to charitable causes. They are designed to align investment returns with positive social impact.
Baltimore Orioles
The Baltimore Orioles are a Major League Baseball team based in Baltimore, Maryland. They are known for their rich history and their passionate fan base.
Q&A
What are the key factors that have contributed to Aries' success in private credit?
Aries' success in private credit can be attributed to a combination of factors, including foresight, planning, a willingness to invest in growth, a strong team culture built on trust and collaboration, and a commitment to responsible investing.
How does Aries maintain a tight-knit culture as it grows?
Aries maintains a tight-knit culture by defining its values, aligning employees to a higher purpose, and fostering a sense of community through initiatives like the Pathfinder Funds.
What is Mike Erigetti's outlook for direct lending in the current economic environment?
Mike Erigetti is optimistic about the future of direct lending, citing structural factors like an aging population and the growth of the private equity ecosystem. He believes that the asset class will continue to grow, particularly in emerging markets.
How does Aries position itself to capitalize on the growth opportunities in direct lending?
Aries is expanding its presence in Asia-Pacific, exploring partnerships in Latin America, and investing in areas like asset-based lending and real assets to capitalize on the growth opportunities in direct lending.
What is Mike Erigetti's leadership style?
Mike Erigetti describes his leadership style as servant leadership, emphasizing empowering his team, fostering a culture of risk-taking, and prioritizing the growth and success of his employees.
Show Notes
Ares Management’s Co-founder, CEO, and President Mike Arougheti shares his outlook for the economy and private markets, his evolution as a leader, and the firm’s path to building its prowess in private credit.
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