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Perspectives: The Ares story
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In this episode of HSBC's Perspectives series, Michael Arougheti, Co-Founder and CEO of Ares, joins Danielle Johnson, HSBC’s Global Head of Institutional Client Group, to discuss Ares’ origins, the drivers behind its continued expansion, and future opportunities.
Watch or listen to find out more.
This episode was recorded on the sidelines of the HSBC Global Investment Summit in Hong Kong in April 2026. Find out more here: https://www.business.hsbc.com/en-gb/campaigns/global-investment-summit
Disclaimer: Views of external guest speakers do not represent those of HSBC.
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Transcript
Introduction to HSBC Global Viewpoint
00:00:01
Speaker
Welcome to HSBC Global Viewpoint, the podcast series that brings together business leaders and industry experts to explore the latest global insights, trends, and opportunities.
00:00:13
Speaker
Make sure you're subscribed to stay up to date with new episodes. Thanks for listening, and now onto to today's show.
Meet Michael Arregetti, CEO of ARIES
00:00:21
Speaker
Welcome, thank you for tuning in to the Perspectives podcast series. I'm Danielle Johnson, I'm responsible for our institutional clients globally. I'm here with Michael Arregetti, the CEO of ARIES, so pleased to have you here in Hong Kong. I do want to to start with your origin story.
Michael's Journey into Finance
00:00:36
Speaker
Have your listeners learn a little bit about yourself, sure what motivates you, what drives you, um how you got into this business, and what inspired you to start ARIES. I kind of fell into finance. I found myself, and because I was graduating early, a lot of my friends were not in the look for job programs. So they were working and
00:00:56
Speaker
having fun and i was kind of, oh wait, I need to go figure out what I'm going to do. i applied to a couple of jobs in banking, didn't get any. So I found myself almost graduated without any gainful employment. And i actually got a call from a friend of mine who had graduated the year prior, who worked at Kidder Peabody and said, hey, we're hiring and I know you're looking, do you want to come and entry for interview for a job?
00:01:21
Speaker
And I actually got a job as an analyst in the M&A group at Kidder, not knowing anything about what that meant. yeah So I found my way to Wall Street. And i still get this this thrill around the business.
00:01:34
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I love the energy yeah about it, like just the the pace of it and the markets. um I love and this is why I kind of moved into private markets the way that I did.
Transition to Credit Agricole and Early Private Equity Days
00:01:45
Speaker
I love this idea of learning how the world works and I know this sounds crazy and I say this to my kids who are once a musician, one's an artist and they don't want to hear from me about finance, but at the end of the day, the markets and finance underpin everything, from politics to sports to you know, technology. And so when my mind opened to that and I realized that I was thrust into this world where I was meeting all of these entrepreneurs and business owners and yeah hearing their stories. And then how did you how did you found Ares? How did get involved? I got really lucky. This was i
00:02:20
Speaker
So I was an M&A analyst, which it back then, that was a tough job. I literally was working 120 hours a week. My apartment was across the street from the office. So for for two years, I basically lived in a 50-yard box. But that kind of training, and I still to this day think it's so valuable to to kind of work that hard and know what that feels like. Because after you do that, everything else just feels yeah simple. And then...
Founding of ARIES and the Rise of Private Credit
00:02:51
Speaker
Towards the end of my analyst career, the the guy that I was working for left to start a merchant bank that was backed by a French bank, which was called Indo Suez Capital, which now is Credit Agricole.
00:03:02
Speaker
And at the time, it was this really entrepreneurial group of people, it was probably 12 of us, that were investing the bank's balance sheet into the early days of private equity. So we were making middle market loans to private equity companies, we were doing equity co-investments, we had a CLO business, we had a fund of funds.
00:03:22
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It was quite kind of a ah mini version of the modern day multi-asset class asset manager. um And that's where I really saw private markets upfront and close and really built a lot of the relationships that form the basis of my career today.
00:03:41
Speaker
there's this view that private credit just kind of came out of nowhere. And I always try to explain to people, actually, we've been doing this for a long time almost 35 years, and we've been tracking the growth of the private equity markets and the development in the bank markets. but um It was a little bit different yeah then because it just wasn't as scaled. It wasn't as well understood. And it was still being done within a bank. yeah But it was so unique about the way that we were structured is the bank basically gave us an allocation of capital that we were investing on their behalf. So it felt more like what an institutional fund business feels like versus working for a bank.
00:04:20
Speaker
And then i actually got to move to Paris for about a year and a half because my mother so my mother was a French teacher. And I had studied French in college and so was fluent in French. Okay.
00:04:31
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That business ultimately grew to be quite substantial in its own right. And then we left Indos Suez with probably 40 some odd people and took the business to Royal Bank of Canada, where we were tasked with building up their principal investing business and their leveraged finance business and loan sales and trading and things like that.
00:04:55
Speaker
our clients were coming to us and saying, can you lend me five times cash flow at X percent? And I would go into a risk committee to bank and say, we have this great private equity client that wants a loan, but it's going to be LIBOR 500. And the first thing that would say is, what's wrong with it? And
ARIES' Global Reach and Client Management
00:05:15
Speaker
you say, well, what do you mean what's wrong with that? i could price it at LIBOR 300 if that would make you happier, more comfortable. Right? So there was a lot of prescriptive um
00:05:27
Speaker
structuring views that exist in the banks for the right reasons because they're 10 times leveraged, they're highly regulated, there's an asset liability mismatch between deposits and and the balance sheet. And so having spent as much time within banks as we did, we got to a point in 2002, 2003, where the private equity business was now getting really scaled and demonstrating continued success.
00:05:53
Speaker
And the banks weren't really able to keep pace with their needs. And that's when we kind of had the epiphany that maybe there's a better way to do this.
00:06:04
Speaker
And so we actually went out on our own in 2003 with my partners who are now still my partners at ARIES to start a private credit business. For the first maybe 10 years of ARIES when we were really building these private markets businesses The institutional community didn't quite know where to put it. So similar to the banks. They used the boxes. Boxes, liquid traditional fixed income, 4%, public equities, 60, 40. And then there's alternatives, which is everything else.
00:06:33
Speaker
So when did it inflect? When did it get its own box? I think it got its own box post the GFC. So we had been meaningfully scaling private credit and other ancillary businesses leading up to the GFC, largely driven by client appetite, meaning people who wanted dollars from us to grow their businesses.
00:06:55
Speaker
And then post the GFC, i think people understood, given just how much available investment there was for folks like us, that we were able to translate what our clients were asking us for on the ground from a financing standpoint to an investment outcome that made sense for for clients.
00:07:13
Speaker
And while we were going through that transformation, And while the private equity firms were transforming, the institutional investors were also changing the way that they thought about the world. And I think that's why the GFC did it. Got it. Because they realized coming out of the GFC that a lot of the things that they thought were true about the performance of the liquid markets proved to be not true.
Investment Strategies and Performance at ARIES
00:07:35
Speaker
Right. They had all these liquid securities that proved to be illiquid. They found that a lot of the things that they thought were not correlated were correlated. And so they began to restructure their businesses away from a traditional public equity, public fixed income alts to thinking about the world in terms of equity risk and credit risk.
00:07:56
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And we began to see a lot of the large pension sovereigns insurance companies realigning their teams yeah to think about public and private in the same conversation. yeah And that's when you start to have conversations about illiquidity premium got it and non-correlation, all of those things. But it was all of these cross currents that seemed to have come together after that.
00:08:17
Speaker
So pensions, sovereigns, insurance companies, when you look at what does your investor base look like? How has it evolved? So Aries manages about $625 billion dollars of assets.
00:08:28
Speaker
We have over 3,000 institutional clients, and that is everyone that you would expect, large pension funds and all the major sovereigns and insurance companies and small endowments and foundations.
00:08:41
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But we also have a large and growing individual investor base too, going back to the early days of our traded BDC, now to our very broad wealth platform. So I don't know how many hundreds of thousands of individuals are now investors with us, but it is now this very broad global, institutional, and and individual investor base, which drives home the how profound the responsibility is for us to show up every day and generate return.
00:09:10
Speaker
And that was also, I think, for our business a real unlock too, because I think in the early days of private markets, Most people were, if you were an early private equity practitioner, my job is to show up and maximize return on this small fund. yeah And now, you know we're all fairly large global companies that have real reach and real opportunity for impact.
00:09:35
Speaker
and we serve retirees and savers all over the world, and that just changes the yeah the the perspective, which I'm thrilled
Sports Investment Expansion During COVID-19
00:09:43
Speaker
about. Yeah, no, fiduciary duty to all those investors. And yeah you know we had this institutional event here. It's pivoted to our wealth event here. How do you think about that that wealth channel? It's been a tremendous source of of growth I'm such a huge believer in the growth of the wealth business because it provides access to alternative product to the individual investor.
00:10:05
Speaker
And the reason I'm excited about that is for decades, institutions were getting all this excess return. And the only way the individual was really getting it is if they were a beneficiary in a plan. But it was impossible for them because there was no access point for them to actually own it directly.
00:10:23
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And now that the world is moving from defined benefit to defined contribution, and you've had all of these trillions of dollars of wealth accumulated in the markets, the idea that we can now package what we think is some pretty unique investment product for the individual, it's it's it's exciting and it's liberating and it's in the very early innings.
00:10:44
Speaker
I think the challenge is Similar to the transition I talked about with the institution going from 60-40 to credit and equity and bre the and the individual investor and their advisor is going through a similar evolution and education process. And we're in a moment now where For example, in the private credit part of the wealth space, there's a lot of noise and misunderstanding.
00:11:09
Speaker
So flows are probably slowing there. But then in infrastructure and real estate and what about private equity. What about data centers? Data centers, people understand. it It's funny because that's something that is also prevalent, also very misunderstood.
00:11:26
Speaker
I think we're in the very early days of the evolution of this market. Like any market as it develops, you're going to have fits and starts and bumps. yeah When you just think about the amount of wealth in the hands of the individual investor today and the shift away from defined benefit, it has to accelerate.
00:11:46
Speaker
And when I think about folks such as yourself who are really putting the appropriate amount of time, energy, resources behind education and access, it it is it is accelerating and should continue
ARIES' Expansion Plans in Asia
00:11:59
Speaker
to accelerate. Yeah.
00:12:00
Speaker
I know we jumped around a lot. um We talked a little bit about a bit about the evolution of the business, the then, the now, scale. What do you think you need for scale? What does scale mean in ah in a credit multi-asset platform? Yeah, scale. So it's one of the things that we had to convince ourselves, but also our investors, was that scale benefited performance.
00:12:23
Speaker
We understood early origination drove the business because ultimately what people pay us for in private market investing is access to companies and assets that they can't find anywhere else.
00:12:39
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And the only way that you could do that is if you put real resources in local markets against that opportunity. yeah And so i think our clients came to understand because we were able to originate these really unique investments for them that what scale gave us was the ability to build these networks in a way that very few people could.
00:13:02
Speaker
And because we did it early, we had this this incumbency benefit from those relationship networks that just kept you know amplifying the the competitive advantage. so So that is the moat. That is the moat.
00:13:14
Speaker
And it's very hard for people to understand because this business at the end of the day and your side of the business and ours is still a relationship business. Absolutely. and relationship businesses are predicated on building deep trust through experience with people.
00:13:29
Speaker
And so we had been doing this for 15 years before people realized that this was a thing. And then by the time they did, we had so many transactions and positive and difficult experiences under our belt with a lot of these clients that we were able to lean into it, I think, in a way that other people didn't. Yeah. Well, you got you were the early mover. Yeah. And now a lot of folks have joined the party.
00:13:52
Speaker
Where do you see is the the future of the business in terms of new products? I know you've gotten into sports investing. Yeah. um Maybe tell us a little bit about that, what opportunities you see. um i don't know if we mentioned it on this pod, but you do own a baseball team in Baltimore. I do.
00:14:06
Speaker
Yeah. So it's nice. I get it's one of these nice intersections of my personal life and passions and what we do professionally. We had personal investments in sports and we had areas had been investing in and around sports and entertainment for 15 years before we launched our sports investment business.
00:14:24
Speaker
And this happened so quickly, but in March of 2020, COVID hit and covid hit and For those of us who had investments in sports, it was a kind of a moment, which is no one's gonna show up. No one's gonna show up. No games, no concerts, no, you know.
00:14:44
Speaker
And we very quickly said, okay, well, what what does that mean? And what it meant was you have you were gonna have a lot of people who owned assets, sports teams or, stadiums and arenas or ticketing platforms or yeah stadium hospit... that were part of this huge global ecosystem that were literally going to be frozen.
00:15:05
Speaker
yeah We called a lot of our strategic limited partners and said, hey, we have an idea. Why don't we come into this market with a creative solution for people who are asset rich and cash poor or who need a liquidity bridge that can't be met?
00:15:23
Speaker
in the markets. And it started off almost as this kind of solutions business. But what was so special about the time was at that moment, institutional capital wasn't allowed to invest in sports leagues. i didn't appreciate that.
00:15:40
Speaker
So before 2020, for most of the sports leagues, it was banks that were kind of lending against league-wide facilities. And rich people and their friends because we we had relationships with teams and leagues, spent the better part of the you know the first half of that year effectively proselytizing getting institutional capital to come into sports.
00:16:05
Speaker
And we got approved by the major leagues to bring capital in. We raised a $4 billion dollars plus pool of capital to do it. And we very quickly got into the business of investing in some of these assets.
00:16:18
Speaker
But back to my comment about origination, in order to do it well, we started to go across the platform. So we created teams from private credit, private equity, real estate, asset-based finance, and married them to different leagues and different geographies because there's meteorite securitizations that would be ah an ABF deal.
Leadership and Philanthropy at ARIES
00:16:40
Speaker
There's a stadium.
00:16:42
Speaker
renovation or stadium adjacent redevelopment, there'd be a real estate deal. So we kind of aligned the entire capability set of the platform against the various leagues and went out again and built this kind of origination moat early.
00:16:57
Speaker
But what what is amazing about the world today versus what it was 20 years ago, people catch on a lot faster and they can catch up a lot quicker. So there's there's a sense of urgency. when you're building these businesses to accumulate those competitive advantages quicker because I think people can be fast followers. how do you do that?
00:17:16
Speaker
You move quickly. um You think about how to organize to protect what you have, move move the right people into the right seats, get the right type of capital. So one of the things I think that we did well was rather than just go in with equity, we went in with debt, structured equity, equity, real estate,
00:17:36
Speaker
you know, all of the above. And so we were giving people a much differentiated view on on liquidity solutions that I think we're were available in the market. But I mention that because that's a huge business for us today. It didn't exist five years ago. So when people ask me, like, what's next? Well, that's what I was to ask. You've ignited the credit market, the private credit market. You've ignited the sports market, it sounds like. What's next? I think what's next, and I'm not just saying that because we're here in Asia. We are spending a lot of time thinking about methodically bringing the business here.
00:18:07
Speaker
Because if you think about the history of Aries, we started off in the US market and a lot of the patterns we saw there in terms of just what was happening in the banking system, the growth of private equity, the growth of the loan and bond market, it all kind of started to happen in Europe right before the GFC as well and then accelerated. And luckily, we were there early and kind of caught the wave.
00:18:31
Speaker
And ah that's starting to happen here, right? You're beginning to see private equity make meaningful investments in growth, particularly in developed parts of this market. You're beginning to see the liquid fixed income markets, you know, mature and and evolve. so We've been pushing very aggressively to to create capabilities. I don't know if that's like what's next, but this is a place where it's music to my ears and being at HSBC.
00:18:57
Speaker
I'd love to end focusing a little bit on leadership, culture and
Impact of Philanthropy on Culture and Norms
00:19:01
Speaker
values. um Our listeners has got a little bit of a sense of what makes you tick and of your North Star. But they probably don't know is that your firm has a charitable foundation. Tell us a little bit about that. Yeah, thank you for asking about it because I don't get the chance to talk about it as much as I'd like.
00:19:15
Speaker
I got a call from a friend of mine who I had known for years. This was probably seven or eight years ago, he was a portfolio manager at one of our competitor firms. And he's like, I want to do something different.
00:19:31
Speaker
um And I think I want to do it at Aries, but I have one request, which is i want to take 5% of the promote. So five of 20 and put it towards philanthropic causes because I want to align our performance with the impact that we can have. But I want Aries to match me.
00:19:53
Speaker
So we said yes, and that was kind of the first thing that we did. And we immediately saw how energizing it was for his team because they all said, I'm not like, it gave them purpose. It goes back to the conversation we were having earlier just about the beneficiaries of the plans that we managed money for. This took purpose to a whole new to a whole new level So we stood up the Aries Charitable Foundation and we committed that we were going to take 1% to 5%, depending on the fund, and put it into the foundation and align the foundation's work to the types of things that we really think that we can make a difference on.
00:20:33
Speaker
Financial literacy and financial empowerment entrepreneurship, um economic opportunity. And we started to do these big tentpole grants to try to really impact the communities that we live and work in.
00:20:48
Speaker
And it's grown to be quite substantial, obviously, given the the fortunately the good performance that we've had. And it's electrified the workforce. So people are contributing promote and they're contributing equity and time and now they're sitting on boards of these grantee companies and learning the business of philanthropy. It has a multiplier effect.
00:21:08
Speaker
it's It's incredible. And then, and this is the kicker, the same gentleman created an umbrella organization called Promote Giving. So anyone who's listening to this, I would encourage you to learn more.
00:21:20
Speaker
And he went out to our friends in the asset management community and said, look at look at this model that we're executing on where we're aligning our performance to our philanthropy. And a real focus on education and health care. Yeah.
00:21:32
Speaker
And we want you to take the pledge. Just pick one fund and say that you'll allocate promote to philanthropy. We don't want to. run it for you, but we want you to experience what we're experiencing and for you to get back the way that we are. And I think he's now signed up a dozen yeah asset managers who have taken the pledge and now they're out proselytizing. So the goal back to amplification is that what started with one fund and then became our foundation, which is now hundreds of millions of dollars of
00:22:04
Speaker
of capacity is now expanding broadly into the asset management world and it's incredibly gratifying. It's reflective of the culture, but it's also reinforcing and and building the culture too. So it's it's probably one of the things I'm most proud of. That's terrific. That's terrific. Thanks for asking about it. Absolutely. And I think we should end on that note because it's it's so impressive. Thank you all for tuning in. Thank you, Michael, your and joining Thanks your time. Really Always good to be with you.
00:22:28
Speaker
Thank you for joining us at HSBC Global Viewpoint. We hope you enjoyed the discussion. Make sure you're subscribed to stay up to date with new episodes.