Adds executive commentary from conference call throughout

By Arasu Kannagi Basil and Pritam Biswas

May 1 (Reuters) - Ares Management ARES.N, one of the biggest names in private credit, reported record first-quarter fundraising of about $30 billion on Friday, a sign that investor appetite for the asset class remains strong.

The multi-trillion-dollar private credit sector has found itself in the middle of a barrage of negative headlines in recent months, drawing intense scrutiny to the industry.

While fundraising in the private wealth channel has slowed across the industry, analysts expect overall fundraising to be strong for Ares given its institutional strength.

CEO Michael Arougheti told analysts Ares was on track for another record year of fundraising and seeing broad-based institutional investor demand despite recent market noise.

"Institutional investor is not anxious. They're not allocating away from private credit. They're looking at this as a huge opportunity to take advantage of a bizarre dislocation," Arougheti said.

Over the years, Ares has broadened its investor base, with the number of direct institutional clients surging about 50% from 2022 to 2025.

Institutional investors such as pension funds typically commit money for longer periods and tend to be more patient and predictable compared to retail investors during periods of volatility.

"Ares results highlight the strength of its franchise which should drive a positive reaction in the shares given resilient results despite continued negative sentiment around private credit," RBC analyst Bart Dziarski said.

Ares shares rose as much as 6.2% and were last up 2.3%. The stock has plunged 27.4% so far this year, as of the last close.

Arougheti also played down concerns around lending standards in the industry.

"The broader market will see defaults, which will inevitably garner attention, but we are not seeing signs of an impending default cycle. We believe that private credit players are getting well compensated for the risks with enhanced economics," Arougheti said.

FUNDRAISING MOMENTUM

While Ares invests across asset classes such as real estate, private equity, and infrastructure, the alternative asset manager is best known for its strong presence in the credit landscape.

Its credit segment drew $20.4 billion in capital in the quarter, while the real assets division raised $6.2 billion.

Arougheti said the pipeline of new institutional funds remains robust, with three of Ares' largest institutional private credit funds raising capital in the market over the next 12 months.

"In U.S. direct lending, we're accelerating the launch of our fourth senior direct lending fund due to improving market conditions," Arougheti said.

"It's noteworthy that we continue to exceed our fundraising targets in most of our flagship fundraisers."

Assets under management jumped 18% to $644.3 billion from a year earlier. Ares had set a target of surpassing $750 billion by 2028.

Ares completed the acquisition of London-based systematic fixed-income manager BlueCove in February, boosting its assets under management by $5.5 billion.

RECORD INVESTMENT PIPELINE

Ares has a record investment pipeline, finance chief Jarrod Phillips said, adding that it was well-positioned to invest capital opportunistically and meet its financial targets for 2026.

The firm ended the quarter with $158.1 billion in uninvested capital, up 11% from a year ago.

Ares deployed $32.3 billion of capital in the quarter, most of it dedicated to U.S. and European direct lending, real estate and alternative credit strategies.

Over the past several weeks, Ares has seen a pickup in new U.S. direct lending deal activity, as market participants adjust to changing conditions, Arougheti said.

"Given the ongoing impacts from geopolitical issues and certain redemptions in retail-focused funds, the current environment is offering wider spreads, higher fees and better terms," Arougheti said.

As it invests available capital, Ares starts earning fees on the AUM, further boosting profit.

A huge chunk of Ares' earnings comes from the fees it earns on assets it manages, providing a more stable and predictable stream of income even when markets are turbulent.

Fee-related earnings jumped 26% to $464.4 million in the quarter from a year ago.

"We also continue to see strong fundamental performance across our investment portfolios despite the volatile market environment," Arougheti said in a statement.

After-tax realized income was $1.24 per share in the three months ended March 31, compared with $1.09 per share, a year earlier.