Ares Management Corporation ($ARES)

Good afternoon, everyone. The -- thank you, Mike. Thank you, everyone for joining us. Hopefully, everyone is wide awake after that light lunch.

I think it must be good. We're all eating steak for lunch.

I'm not sure how much we need an introduction for you, particularly in this room. So I'm going to keep this brief. Under Mike's leadership, Ares has become one of the defining platforms in the private market, spanning credit, private, private credit, real assets, infrastructure, secondaries, insurance capital, sports and increasingly, the individual investor channel. While the growth and scale of Ares is impressive, I think it's the intentionality and the architecture of what you've built that really makes Ares unique. It's not just a bigger version of the traditional asset manager model, it's essentially a different operating system. And for this discussion, that's what I want to focus on, more about the shape of Ares rather than the scale, and what enables it to operate differently from many of your peers. And on a personal note, Mike's been a close friend of mine for 40 years. We were high school classmates, Clarkstown High School North in New City, New York.

Go Rams.

Go Rams. So it's particularly nice to be up here, share the stage with you.

We were actually analysts together too at Kidder.

We were. We started our careers together at Kidder, Peabody. Actually, Mike graduated a year early, and helped me get my first job, I never forget.

Value of relationships.

True. So why don't we jump into it. I want to talk a little bit about the growth strategy. Acquisitions have played a role in the Ares growth story. You've acquired platforms like Landmark and secondaries, SSG in Asia, Black Creek, the most recently GCP in the real estate front. Instead of folding them into the Ares machine, you've allowed them to retain a higher degree of autonomy. Why? Was that a deliberate principle to the model? Or is it something that evolved as the scale started to sort of take hold?

It's very deliberate. It's consistent with the way that we run the business day to day, but maybe I'll just zoom out to contextualize how we think about growth and acquisitions. If you look at the history of the firm, about 25% of our historical growth has come through acquisition. So it has been a meaningful part, but it's never overwhelmed the organic trajectory. And for you and many of our partners here who have kind of watched the journey, we've always talked from the inception of the firm that the way that you drive value in private markets is to have origination edge, first and foremost, because at the end of the day, your clients, be they institutional investors or individuals, come to you to get differentiated exposure to drive outperformance. And so everything we've done, whether it was organic or inorganic was viewed first through the lens of, can we do something differentiated on the sourcing and investment management front? And then two, try to go where the puck is going, sketch where the puck is going, meaning what markets are opening up, where we have a right to win, but maybe you don't have the right talent or the right capability or the right capacity, and that's been the playbook, whether it's organic or inorganic. So as an example, we started off in the private credit business covering largely financial sponsors in the early 2000s. As that developed, we bled it out into adjacent markets, nonsponsored industry verticals. And then we saw an opportunity to take that organically to Europe, and built the largest private credit business in Europe and still the leader to this day. And so we've always wanted to build off of strength in places that we understand. But when we've made acquisitions, the reason why you're perceiving them as autonomous is, because we've largely made acquisitions in businesses that we're not in. But we actually understand or feel like we have a right to win or that we have something that we can actually add from a revenue synergy perspective. That makes it a lot easier. I'd look just at the people in this room. Financial services M&A is really, really difficult if you're trying to mush two businesses together, two operating systems together, different cultures, it's a really hard thing to do. And so we have had much more conviction buying businesses that slot in adjacent to something that we do. So you mentioned Landmark. As an example, Landmark was a pioneer in the secondary space, probably the first institutional secondaries manager that started about 40 years ago, and had a good run, but they weren't really scaling into what we perceived was going to be a transformational shift in secondaries. And the transformational shift that we were identifying and we're actually able to see it because of the depth of the network that we had on the investor and client side was, one, there's going to be a meaningful shift from GP-led -- LP-led to GP-led secondaries and that this was going to become a solutions business, not just buying LP stakes from pension funds. Two, the primary market for secondaries is the installed base of alts. And so if you're buying off on a secular growth trend in private markets, secondary market growth will follow primary market growth, which meant that it was going to move away from largely being private equity, dominated to being real assets, real estate infra and private credit. And then, there's this whole world forming around individual access to alternatives, and one of the best ways to deliver private equity exposure into that market is through highly diversified pools of secondary exposures because that's the only place you're going to be able to get the scale to kind of derisk the product for the investor. So we went ahead, and we bought that largely all stock at a meaningful discount to our trading value because, obviously, you need to be financially accretive, but in the course of 4 years, 4.5 years since we've owned it, we launched and scaled a nontraded product for the individual investor. We launched the market-leading credit secondaries platform and have raised significant dollars behind that. We've gone through a fundraising cycle in real estate and infra. We've gotten into the GP stakes business, so on and so forth. So we took that chassis, if you will, and we aresified it. I don't know if that's a word, but we brought relationships to it, we brought capital to it, we brought a new product set. And if you look at what we've done, we've effectively doubled the size of that business in 4 years of ownership and completely inflected the growth trajectory of that business. So it does stand alone because we were not in the secondaries business. So the people who are running that have real autonomy to grow it, but we've been guiding them along kind of a strategic repositioning of the business.

And so I mean that's a great story because, I guess, I was going to ask it like does the autonomy ever start to conflict with the benefits of the scale, but actually, in that case, is a great example where you've used that autonomy to actually drive more scale.

So the hardest part about driving the growth of these businesses at scale is exactly what you talked about is territorialism within the businesses, competition for investor capital, demands on your sales force. So the way that we've architected the business is any part of this enterprise where we could drive economies of scale for the benefit of all, we centralize, and we scale, and we tech enable it, and we try to make it a center of excellence. So that's institutional sales, wealth sales, compliance, technology transformation, so on and so forth. So the center of the house, we've got kind of end-to-end centers of excellence that everybody benefits from, but the minute it bleeds into the specific specialization of that business, they have complete autonomy to drive the business forward, and that's created a really healthy feedback loop where we can kind of push initiatives and ideas from the top of the house, and they can bubble up ideas from the field, right? I was talking to a GP, and they told me that if we had this product, we could scale it. And so part of what we've done is we've created the culture of collaboration where those ideas are percolating, and then, we can support the scale of it?

The -- one thing that's always stood out knowing the firm as well as I have over the years is when you look across your leadership team, you've got folks that you've worked together with for 30 years. You've known them for 40 years in the case of like a guy, Dan Katz, and Kipp deVeer and Mitch and Smitty, and whatnot, is -- how important is trust capital to you as you sort of look across the organization and the leadership and the way you've organized the business?

Everything. It's funny. When we try to define our competitive advantages, we talk a lot about scale, and we talk about flexibility, but the core value driver for our company, as we talk about is just the power of our relationship, network. And the way that we invest in our clients and that they invest in us, which may sound warm and fuzzy, but you're talking about our lifelong friendship. And how we've kind of had our careers winding and intertwining, those are really hard to replicate. And many of you here in the client business, you -- when you build that kind of trust over decades, not years, very hard to displace. And you start to get really long-term greedy and less transactional, and that's self-reinforcing in terms of how people want to interact with us. The investment business is really, really hard, particularly in Alts. You kind of you set a business plan, you make an investment and you have to wait 5-, 6-, 7-plus years to know if you were right or not. And so when you talk about trust capital, the more trust that you build around those investment committee tables where everyone kind of has a view of shared success, people aren't pointing fingers on bad investments, people aren't taking disproportionate credit for good ones. It just creates a stability that is really value enhancing over time. And what it's allowed for us is, we've now raised and mentored 2 or 3 generations of leaders in the firm in that trust-based culture because we were role modeling what it looked like to partner with your friends around the building of these businesses. And so now we have people who are running very, very large businesses at Ares that started off kind of around that table and seeing what that looked like. It's important now, too, because you asked it in the last question that the excess value capture that's happening now is how do you get into the gaps between these product lines that used to be pretty rigid, private equity, infrastructure, credit. There are things like digital infrastructure that touches our real estate business, our asset-based finance business, our insurance business, our private credit business, our infra equity business. And if you have broad trust and collaboration, the way that you can resource growth around those intersections is fundamentally different than people who are going to be fighting over who gets credit for the growth or who gets the opportunity to actually build that business.

The -- as I think more about sort of the building out the platform, you've built this broad toolkit across the capital stack, right? Direct lending, secondaries, NAV lending, pref equity, was that part of the design? Was it to be a sort of a solutions provider? Or is it sort of just over time as you're making acquisitions as you're getting into new businesses, over time, it became less of being a product provider, and then, you started to sort of link them together to be the solutions provider?

In all honesty, it's more the former than the latter. I think when we went into the business building phase, it was always with a customer-centric approach, which I talk a lot about is differentiated because if you look at a lot of the large Alt managers. They came at this opportunity largely from the private equity side, in terms of the roots in the DNA or the traded market side where they were the client. So in the early days, they would be waiting for the phone to ring and someone was calling them with an opportunity. Our DNA was middle market direct lending, get on an airplane, fly to a small city and go originate and service the client. And so the orientation of the firm has always been around meeting the needs of the client and the customer, similar to banking, which is where we grew up. And so by orienting our investment people to think that way, as the toolkit expanded, it was very easy for them to meet the client where they were. And it was also back to the feedback loop comment, easy for them to understand that maybe we could do more with that client, or maybe the traditional banks or insurance company lenders weren't meeting their needs. So if you look at the business today, it's not private credit, NAV loans, it's GP solutions. And if we're talking to a large private equity manager, we're talking to them about financing new deals, refinancing existing deals, helping them with a NAV loan or GP pref because they're having a liquidity issue, maybe it's a stake in their business, maybe -- so maybe it's an acquisition, we're approaching them holistically as a client, much the way that a lot of the larger financial services institutions do now, which is just fundamentally different than the business used to be. It used to be much more targeted and niche.

Let's talk about the -- everyone is looking for an information edge, right? You're investing across multiple geographies across the globe. You're investing in lots of different sectors, different strategies across the business, thousands of borrowers that you're lending to, what are you seeing from all that information that perhaps that the public markets isn't making clear?

I think there's two -- maybe two questions in there. One is about information edge that we have, and what do we see in the market. And then, two is, what is the public market not seeing missing maybe in terms of the business model? So, I'll hit them both. We have a huge information edge. That is one of the large benefits of being in the private markets is we have investments in thousands of middle market companies around the globe. We're the third largest developer owner operator of industrial warehouses in the world. Many people don't know that. We see the flow of goods happening all over the world. We're getting property-level data on lease rates and occupancy rates and where people are expanding, where they're not. That helps inform how we manage what we own, and it also helps us make investment decisions into the new market. And not surprisingly, when we speak about our views, they're coming from a real conviction in the value of that primary information edge. And so one of the things that we talk a lot with our people is trust your primary information advantage and try to not get sucked into this current world we're living in, which I think is actually making it very hard to be an active investor in the public markets. It's very momentum-driven. It's very dependent on positioning. The velocity of news and information is at an extraordinary level, and it's getting harder and harder for people to kind of find the signal through the noise. And so we always anchor on what we're seeing. And so not surprisingly, if you look over the last 3 or 4 years, we had many people calling for recession. And the tsunami and the tide is going to go out and you'll see who's not wearing a bathing. And we saw none of that because we had all of these data points that were showing us the fundamental strength in the economy was real. And as I sit here today, despite all of the noise and anxiety in the market about AI disruption, about private credit, whatever it's going to be, the fundamentals are still very, very strong. So we're seeing double-digit cash flow growth in our underlying credit and equity portfolios. We're seeing continued high occupancy rates and NOI growth in our real estate portfolios. We're seeing meaningful growth in demand for the products that we manage. So there's nothing that's flashing anything other than green right now. Markets have a way of talking themselves into things. So it's not to say that if the anxiety continues that you can find yourself in a traditional credit cycle, but that's not what the numbers tell us. Maybe to hit the second point, I also think that's part of what's happening in this all narrative. I don't think people understand how durable the secular trend is from public to private markets. They're not experiencing the conversations with the clients and the customers and the investors the way that we all are. So there's a huge disconnect, right? So if you look at our nontraded BDC, I think we have 900 borrowers in that fund, 0% nonaccrual, 0. EBITDA has grown 10% to 12% over the last year. 2.2, 2.3x interest coverage, 40% loan to value. For the 30-plus years I've been investing in credit, there's nothing in those numbers that screens credit crisis is coming. And so there are definitely narratives that are being put into the market that are just fundamentally not looking at the data. And I try to trust what we see, but then also look at bank portfolios, look at card portfolios. We're not seeing it, right? You could begin to see weakening in the lower part of the consumer economy, and we should all be a little bit mindful of that, but there's nothing that we're seeing in our primary data or the market data that would tell us that we're anywhere but still growing.

Just the echo chamber of the news real and just hard.

It's hard. I mean, I guess that's what creates opportunity, too, right? And so part of what you have to train yourself on is like what's the information that actually matters to me, not just what's the information that's being fed to me, and I think that successful investors today are very good at focusing on pertinent information and not kind of media.

So the -- away from private credit, one of the other topics that I've heard a lot about over the last two days, not surprising, you mentioned AI disruption. I think everybody in the room, there's an agreement that everyone sees AI as being very disruptive. There's not consensus on quite how the extent of what that disruption is going to be. How are you thinking about AI as being a driver of sustainable growth over the entirety?

Yes, we could spend our whole time talking about this. So again, back to public versus private, right? There's -- it's as if people woke up one day and realized that AI was going to have a transformational impact on the way that we work, live and invest. From the private market practitioner perspective, I can't get my head around it because if you've been investing for the last 5 to 10 years, and you have not been thinking relentlessly about the risks and opportunities that are going to get created from this tech transformation, what were you thinking about, right? So the public market woke up and said, "Oh, there's disruption here who's going to get disrupted." And then, assume that people who were in the markets hadn't thought of that, which to me is kind of an insane thing. So we have been investing with a view towards AI disruption potential, but also AI opportunity. And the AI opportunity for us is taking the form of meaningful growth in our digital infra and renewable energy franchise. We're seeing significant scaling in our data center development business. We're seeing significant scaling in our digital infrastructure lending strategies. We're seeing meaningful transformational change in our renewable energy businesses as we try to relieve the power constraint. So one of the things that I think the market doesn't appreciate about the Alt manager space generally is how hedged they are to these different outcomes, right? So if we believe that AI will be disruptive at the pace of change that people are reflecting in the market, that means that the CapEx cycle is going to remain elevated, and that's a huge opportunity on the other side of the ledger. So you can't just talk about the risk, you have to talk about the risk and the opportunity.

To your point, it seems like the market is just focused on what's the impact on software and how much software do you have in the portfolio?

Yes. And I think that's a very narrow view. Obviously, we've spent a lot of time underwriting and reunderwriting our software positioning, but I think even that narrative came from a position of lack of understanding. And now 3 weeks, it seems like 3 years, but 3 or 4 weeks since that start to snowball, you're now seeing people who are actual experts come out and say, okay, this is actually the limits of the technology. This is how the implementation cycle will occur. These are the opportunity -- and it's getting more rational, but the initial reaction time is quite extraordinary. In terms of what we're doing, we said on our last earnings call, we have 25 in-flight projects where we're using AI tools to do something that's margin accretive or transformational for our business, places where we're using sales force or automation tools to improve our lead gen and penetration in our wealth sales, AML KYC procedures in our compliance business, preparation of financial models and investment memos to create efficiency in our analysts and associate pool. So it's a combination of front office and middle office transformation, and they're all in flight, and I think they'll all have real impact. I don't know that we're yet at the place where it's transformational impact, but the sum total of all of those projects that are being piloted and implemented will create some pretty meaningful efficiencies.

And it seems like the market is looking also to make sure it's measurable.

Yes, I think it has to show up in margin expansion or productivity gains in some part of your business. And I think any company, whether you're an Alt manager or another, if you're going to talk about it, you're going to have to come demonstrate ultimately what the results are going to be.

Let's shift gears a little bit. You've always been a passionate lover of sports. The -- so not surprising to see Ares emerge as not just an early mover, but also an active mover in the space. What is it about the economics of sports that gets you excited, and you see this long-term investment -- positive investment theme?

Yes. This is a good example of organic business build. We started our -- meaningfully are reorienting our sports investment franchise in March of 2020. Prior to that point, we had distributed investments in our traded credit business. We had some in our private equity business and our private credit business, but it was always distributed. And then if we were making investments in sports, media and entertainment, we'd kind of go find the experts around the platform. The unlock for us was just based on individual investments in sports. When COVID hit, and we saw that there was going to be a meaningful disruption in the live entertainment market, sports, concerts, arena based events, we saw an opportunity to become that solutions provider because there were a lot of people who owned assets or venues or touring companies that were not going to have any revenue and they were asset rich and potentially cash poor. And that's kind of where I think we thrive is going into the market as a real creative liquidity solution provider. We already had good relationships with a lot of the players in that ecosystem. We knew a lot of the folks at the league level, and we very quickly reoriented the business to be a sports, media and entertainment dedicated coverage and investment model, organized teams around all of the major leagues around the globe did a lot of missionary work with league commissioners and owners around the value of institutional capital in the sports business, and then started to go to our investors and talk to them about the opportunity. We spun up a very large fund in a matter of months, and then started investing into the distress, which then became nondistressed and accelerated, and now we have a leadership position there. The other thing that we did well, which is highly differentiated, we didn't just say, "Hey, we want to come in and buy a minority stake in your team." We said, how can we help? Can we unlock value in your real estate? Can we talk to you about media rights securitizations? Can we monetize a piece of tech IP that you have? So we were doing investing up and down the capital stack as a solution provider, which then engendered trust, which now that the market is fully open is -- has us in a position where we're in almost every dialogue that's happening around the sports ecosystem.

Particularly when more capital now, institutional capital is chasing it.

Yes, which is great for the asset class. So the reason to love sports aside from the fact that everybody kind of understands it is the value of unscripted live content continues to go up. And in this -- not to go back to my media ran, but we're also in a content deluge, right? Like we're producing so much content that we're never like in our lifetimes are we ever going to be able to consume all of this, but unscripted live sports is the most premium content that we have, and people are placing extraordinary value on that. And so you could see the value of sports teams tracking the value of content. And as that ecosystem grows, everything around the sports team from youth sports development, stadium management, sports tech, all grow in value as well. It's uncorrelated to anything else in your portfolio, and we've run this 6 ways to Sunday, if you were to look at a diversified portfolio of sports investments against traded equities, private investments, you're not going to find correlation. It tends to be inflation protected and it's a store of value just because there's a finite number of assets at a time when money is finally able to flow into the asset class. Prior to 2020, institutional money wasn't allowed in sports. So if you're an owner of a sports asset, now all of a sudden that incremental liquidity is just going to continue to drive values up. So I think there's a store value and supply demand of liquidity that's going to continue to see those assets escalate.

It seems like a good time to become an owner of a baseball team.

We'll see. Everyone catch on, like room fully Yankee fans, that it was like a lead balloon.

I figure, they're sleeping from the steak that was served for lunch. The -- so private capital has evolved from going from an opportunistic part of portfolios more to a sort of an institutionalized part of the allocation. And you're seeing that on the institutional side, you're increasingly seeing that on the retail for the individual, the democratization of capital and private capital, and whatnot. What do you think still needs to develop from like market structure and governance to transparency is one that a lot of folks are talking about, particularly in this climate right now. And then I'll just add one extra thing. It's -- what do you think needs to develop, and who's responsible for doing that? Is that the individual firms? Is it the entire industry? How do you sort of see that?

It's a good question. There's a lot to unpack there. I think everyone is responsible, right? If you want to promote stability and growth, the asset managers are responsible to deliver performance, transparency and a good client experience, but clients are also responsible for kind of articulating structural need and promoting good governance. And in the institutional market, that's there, right? So there's not a lot that needs to happen, if anything, to see continued growth in institutional demand for Alts. I think we're all getting better at delivering product into the institutional market. And again, it used to be private equity, private credit, and now we're able to actually offer multi-asset class, multi-geography product and deliver solutions to the investor. I think all of the things you asked about are largely going to be this discussion around individual investor access to private markets investing, and that's going to take time, and it's going to take time for structures to get challenged and tested. Technology needs to keep pace with the needs for pricing transparency and all of those things. I think the industry is a lot farther along than maybe the current headlines would have you believe, but whenever you're going into a market that touches an individual investor, by definition, the governance and transparency standards from a regulatory standpoint are going to be higher. I do want to hit on one thing about transparency because as long as we've been in private markets, we've heard this. I think it's important that we say transparency to who. So if you're an institutional investor of Ares Management, you have line-item access and monthly performance data on everything that we manage on your behalf, right? So if you were to call a large pension fund and say, do you feel like you have transparency into your private markets exposures, they would say 1,000%. That is not a nontransparent market. It's not transparent to certain people who don't have access to that information. So when we talk about a lack of transparency, I think, it's important that we talk about -- what we're really saying is if we're going to move into parts of the market that get us into a different regulatory framework or touch a different client and there's a requirement for more transparency to the regulator or to the investor, that's a conversation. But I do think it's important to kind of dispel this idea that private markets are not transparent, because they're incredibly transparent relative to what you could get if you were to look at, let's say, a bank balance sheet. They're incredibly transparent in terms of the level of access you get to information relative to public markets. I see folks here from CNB who lend to us, line item access to information, so it's a little bit of a false narrative.

Why is it -- why is that getting lost?

I think it -- and I think part of it is, if you're -- if you spend your whole life, either in a regulated market or a traded market, and all of a sudden you see over 30 years, the evolution of a large growing private market that kind of operates in a different regulatory structure, a different cadence of information flow, a different underwriting standards. Like it's just -- it's completely foreign to the entrenched way that people used to access investments. And I think that just promotes -- I don't even know if it's misunderstanding, but it promotes bad nomenclature, right? Lack of transparency is probably not the right word. It is, to your point, if you want to see it scale, who else needs access to this information in order for it to scale the way that we all want to see it scale, right? So it maybe isn't lack of transparency, but it's more how do we expand transparency to people who we feel should have access to it. So I think some of it is just definitional, but I think a lot of it is, it's fairly new to a lot of people who are used to buying loans and bonds and equities or -- and they just don't really understand that the long-term relationship of a client and a private investor and the investor who gives that private asset manager money, that's a closed loop 7- to 10-year system where there's perfect transparency and perfect clarity on what everybody is kind of managing to, and even that's misunderstood, right? Because people are choosing to borrow in the private markets or raise equity in the private markets because they want a long-term stable partner. They don't want syndicate. They don't want distributed partnership. They want to know who their partners are. They want to know that their partners actually have the flexibility, scale, access to drive their business plan, and they want to do that over long, long periods of time. So you're going into these markets for that illiquidity. You're going into these markets for the lack of NAV volatility. So again, if you're wired to the traded markets that may not -- it may not make sense, but the entirety of the business is starting from the client appetite for deep partnership. So that -- it will just take time. But again, I think as more people see it as we go through more cycles as the asset classes get tested, and you can see how they perform, that will promote continued growth.

The -- so some folks out there have been pretty vocal about how the complexity, the uncertainty, the volatility is likely to drive a shakeout, not surprising, right? The -- as you look at the industry, what do you think is going to determine who are going to be the winners and who are going to be the losers? Is it risk management? Is it platform construction? How do you think about that?

It's all of the above. If you think about the playbook in Alts to perform through cycles, diversification top of the list. So you have to be diversified in your product set. You have to be diversified in your distribution channels. You have to be diversified in your geographies. So back to my earlier comment, if M&A slows down, and your regular way private equity business isn't deploying, your secondaries business should be growing. If there's a narrative of outflows in wealth, which by the way, on an aggregated basis, we're not seeing, but if there's a narrative of that, that means your institutional business should kick in. So the value of diversification on all of those fronts is key. And the value of the institutional franchise is also a key. So we are coming into this year with about $160 billion of our $625 billion uninvested, dry powder. If you were over-indexed to wealth or annuity sales, and there was a slowdown in that market, which tends to be more procyclical, you can't actually either defend your existing positions with your dry powder or take advantage of this vintage of what should be higher return because you don't have the dry powder. So I think those that have real durable institutional franchises in a market where there's a little volatility happening in the liquid and nontraded markets, that will be a big driver. And then portfolio management is table stakes. And the ability to protect value and grow value in volatile times, ultimately is what will differentiate you and drive outperformance. And those that out will get funded and grow. And the last thing I'll say, I think what will -- the result will be continued consolidation of more dollars in the hands of the fewer scaled players, because they have diversification. They have scale. They have depth of relationship with the Street and the investors. They have the ability to invest in portfolio management and people. They have the ability to invest in systems. And so our experience has been, over the last 30 years, with every cycle, there's a reconsolidation of market share, and I think this one will be no different.

So I want to end. I'm looking at our clock here. I want to end on some stuff around culture and leadership. I know those are two things that you are very passionate about. You and Nelly are very involved in giving back to the community. You've all got various causes and organizations, operation hope, New York Presbyterian, all the work that Nelly is doing around Center for Discovery. When I was doing some work to prepare for this discussion, I had not been aware of your efforts to also tie carried interest to charitable giving. It's -- you got some of your peers here. It seems like a pretty novel positive.

I appreciate bringing it up. It is passionate of mine. I go back to -- when we were in the key club together in middle school, true. I think you were the President, right? But in all seriousness, this is something for me as a leader that I'm probably most proud of. We talk about culture as a driver of performance incessantly because back to your point about trust capital and how we do the business, that is probably one of our biggest competitive advantages is this culture of collaboration that we've created. We've always been philanthropic in the ways that a lot of companies are volunteerism, the community engagement stuff like that, but about 6, 7 years ago, we had a portfolio manager come to us and say, "Hey, I want to take 5% of my promote and start to put it towards philanthropic causes that I'm passionate about, will you match me?" And we said, yes, and that was three fund series ago. And then what that led to was actually the standing up of the Ares Charitable Foundation on the heels of that, where we now take a meaningful percentage of our performance income and put it into our charitable foundation around places that we think will be force multipliers for the communities that we live and work in, job reskilling, financial literacy, entrepreneurialism, places where we think as business people and business builders, we can make a difference. The combined total of those commitments already in the last 5 years is hundreds of millions of dollars and scaling as the firm scales, and our people are attaching to that work in the field in a way that's really inspiring sitting on boards, interacting with the grantees in the field. And then the last piece, which is the next evolution, and this is my pitch to all of you, we've created an entity called Promote giving where we've actually invited other people in the asset management business to take the pledge with us. So donate 1% of your promote in a fund, start small if you're not ready to go big in a fund and come along for the journey with us. You don't have to invest it through our foundation, but join us in that journey, and we've already signed up in other asset managers to us to come along with us on that. And so I think it has changed what was already a strong culture because if you think about who invests with us, it's all people who are focused on their retirement, both stability and growth. And so what it's really done is oriented our people from coming in every day and not just thinking about how do I make great returns and how do I get paid to now saying, who am I actually generating returns for? And so there's a big mindset shift that happens when you're not only generating returns for the retirees that you're managing money for. But now if you do well, you then get to reinvest in some pretty needle moving things. So that's been a big passion project that's taken us 5 years, but it's now at a scale and inflection point that's pretty exciting. So I appreciate you bringing that.

No, we're going to put a sign-up sheet outside the...

I would love that. So we hope you could find it on our website.

It would be like the BDC panel we had yesterday, there will be so many people around round lining up for that. Congratulations. That's fantastic. I've watched the culture. We talk a lot about culture. It's sort of -- it touched quite a few of our questions today. The -- you have a differentiated culture. I've seen it upfront, up close, I would say, in experience, strong culture comes from strong leadership. You've led through lots of different periods of volatility and uncertainty and disruption, any wisdom to share with this group as we finish up here?

Well, I think the first thing, as I said earlier, is train yourself to slow down and find the signal through the noise. I think that people can get really sped up in moments like this. And it's kind of a sports analogy too, where people talk about slowing the game down. I think you have to really slow the game down. I think you have to trust your training, and then at least, as a leader, like we did a town hall with all of our employees yesterday. And one of the reasons for that was just to remind everybody, about how well positioned the company is and how big of an opportunity volatility presents because oftentimes, we take it for granted when you've been through multiple cycles that there's a playbook, and this is how you execute, but there are a lot of people who haven't been through volatility before. So I think as a leader, and I would say this to anyone, don't assume that the younger folks in your organization are actually experiencing volatility the same way you are with the same enthusiasm. They may be having a completely different experience. And I think that's just a good reminder as people develop as leaders to kind of put yourself in the shoes of the people that you're leading and not just lead from the front all the time. And -- so that was a really empowering hour with our troops yesterday, because I think you got everybody reoriented to the opportunity. And I'm going to leave you with one last thing because I know that we're out of time. It was an hour of open Q&A, and one question that got asked was, how do you execute on the playbook while maintaining humility and grace in the face of other people, like not doing well. And I raised it not as a question, but as just a conclusion to the conversation because I thought it was so emblematic of the way that people at Ares think, right, which is we're going to go out and we're going to take advantage of whatever volatility is there, but we're going to do it.

With grace.

With grace in the right way and not take advantage of people's distress, which, to me, brought the whole thing full circle.

As I said, culture is driven by leadership. And some folks asked me, what was Mike like? You've known him for 40 years, and I said, hand on heart. This guy is the same guy. He was when we were hanging out in your backyard, sitting around the Keg when your parents were away from home. Truly, the absolute same guy, and congratulations on all the success. Thanks for joining us today.

Thank you.

I'm proud of you, Mike.