The three of us are delighted to be here. It was fun hearing Tony and Mike's opening remarks, talking about anniversaries and investor days and all that. The three of us have been together for 25 years. We've had some interesting times, but it's always been a pleasure, guys. So listen, I feel we have a pretty easy remit this morning.
We're here just to provide a quick overview of where we stand in credit, which of course is our largest business. We're getting a little bit off the hook with only 10 minutes. because we really want to feature some of our strongest players. We have Court Schnabel, Blair Jacobson, Joel Holsinger, Aaron Rosen, and Edwin Wong all coming up to do distinct segments on some of the verticals that we're managing today. And a big part of our job as we think about it 20 years into coming to Aries, it's really about getting the right players in the right position on the field, and that's something that we spend a tremendous amount of time on.
invest in our people, invest in the types of people who work with and for us, empower them to run their businesses and achieve success. We can't do it by ourselves. We don't do it by ourselves. So I'm thrilled that you'll get deep sessions on really each of the five verticals, which you'll see here in the middle of this slide.
Direct lending in the U.S. with Court, alternative credit with Joel. We're not featuring liquid credit today. We want to put a little bit more focus on opportunistic credit with Aaron. and then have Edwin come up and talk about APAC.
But all in all, today we manage a little bit north of $300 billion in credit. We have 500 people. It's obviously a global business leading with North America, but Mike mentioned our expansion into Europe in 2006. That's become a very large business today, and we're very focused on growth in APAC credit.
Again, one of the few platforms that's truly global that I think has a 25-year investment track record. Mike and Tony stole some of our thunder. We say this over and over again, our business and credit leads by bringing origination and bringing unique, differentiated deal flow to our investors.
That's why they come to Aries. We've got a great liquid credit business that provides the foundation for deep credit research and industry analysis. But again, it's really all about deploying people into these local markets in geography, and you'll see how the growth in our investment professionals has grown.
I know Mike talks about this a fair amount. We have the highest investment professional count, I think, amongst any alternatives firm, particularly in credit. And I think we'll continue to. It's all about investing in those people. So over to Mitch here for a moment.
Thanks, Kip. You keep hearing us talk about the many advantages we go to market with in our direct lending group. You heard Tony talk about it.
You heard Mike talk about it. I'm going to focus on three. Scale, origination, and incumbency. And I promise I'll do it quickly. As you can see with scale, we go to market with among the largest balance sheets in the industry, $190 billion and growing.
So what does that mean? It means we can typically can commit and hold more than our competition. But what's wonderful about the fund platform that we've created at Ares, no individual fund ever takes undue risk. The average position size at ARCC is 0.2% and that is not uncommon across our funds.
Now, we have the luxury of running really diverse funds because of our origination. Our scale allows us to continually invest in origination. As Kip just mentioned, we go to market with the largest direct lending team in more offices around the globe.
Simply put, we out-originate our competition. And when you see more, you can be more selective. It is not uncommon in a given year for our direct lending teams to have gross originations north of $40 billion. And what's amazing, and you heard Mike talk about this, we say no 95% of the time. So when you reverse engineer that number, you can get a sense of how much information, how much flow, the volume that comes through this system year in and year out.
Most of our competition can't begin to process even a sliver of that deal flow. And finally, incumbency. Most years, 50% of our gross originations comes from our existing book of business. And so when you marry the largest origination team by far with the largest book of business, you get a sense of why our market share continues to grow year in and year out.
So what does this mean in practice? How do these advantages help our investors? Well, on the right side of this page, I want to focus your attention on that chart.
And what it simply shows you is that irrespective of what's going on in the liquid loan market, the new volume market, our teams continually find unique assets for our investors. And they do it in scale. There's that $40 billion number I referenced. And before I leave and turn it over to...
Smitty, Kip mentioned we are going to spend a lot of time on our liquid credit group, but a big part of our credit business is that liquid credit team. Our first fund at Aries in 1997 was a COO, and we've grown that business tremendously over the past 27 years. Today, it's 46 plus billion dollars, and our team's constantly ranked in the top quartile of performance.
And what's wonderful for the firm is not only is this a very large growing business, but as Kip talked about, Our traders and our research analysts in this group constantly provide information and new deal idea generation across our platform, and not just to our direct lending businesses, but to our private equity groups, our alt groups, and our opportunistic credit groups. So with that, I'll turn it over to Scott. Thanks, Mitch. Brevity was never your strength, and I'm pretty good for you.
I like it. It's great. I think as we think about the credit group, I think one thing we wanted to highlight was kind of the growth in the platform. and the different asset classes, but also the size and scale.
Mitch mentioned about how direct lending was the first business kind of that we started and how we really focused on size and scale of the assets and the team. And what this chart is trying to depict here is if you go back five years, we basically had five funds or series of funds, a public company series of funds that had a billion dollars of aggregated assets. Fast forward today, and there are 15 family of funds.
that have over a billion dollars of capital. And that's what's great about it is the diversity of it. So you have alternative credit, a new silo within credit, you have special opportunities, a new silo, but then you have tangential silos within the direct lending business, sports media and entertainment, and then globally a business in Australia, which is now doing direct lending.
So you can see the halo effect of having these large pools of capital. in order to invest in different asset classes in different parts of the world. And I would say that the three of us are incredibly focused on two things here.
One is continuing to add to the resources. So we want these funds to continue to grow, continue to prosper, continue to keep those competitive advantages. And we're dedicated to hiring more people, opening new offices and expanding the footprint. And then second of all, we cross-pollinate on different investment committees throughout the firm.
So if I think about Patrick Triers and our infra-debt business, helping him solidify his sponsor relationships, working with Brian Donahoe and the debt team on the real estate size to build size and scale, learn from the blueprint that we've created. And then I look at what Dave Schwartz is building, a partner who helped us build the direct lending business and what he's doing on the credit secondary business. We can help with that infrastructure. We can help with that blueprint and help them guide the way.
A couple examples here. I look on the upper left-hand part of this, the European business. I look what Blair and Mike Dennis have built, and I wonder, they must think how easy it was.
They just copied everything that we did in the US. But I joke, they've built a phenomenal business. They had a first mover advantage, but they didn't rest on their laurels.
They opened offices across Europe. They built size and scale in their capital base, and now they have a dominant market share in Europe and have built a phenomenal business. We want to do that across alternative credit. It was a business that was kind of focused on separate asset classes with Joel and Keith. Now building that business to really take advantage of what is probably, as you'll see on the next slide, one of the largest addressable markets.
And if you look at Europe going from $10 billion to $50 billion and really kind of dominating the market, alternative credit is on the way there. And then opportunistic credit. As we think about evolving, we've now repositioned that business within the credit group, more closely aligned with the private equity and sponsors and direct lending business to take advantage of a changing market environment and a great opportunity for that asset class. And then finally, I'll just kind of hammer home the point. This is a Carl Drake slide, so it's complicated.
It used to have five accesses. It only has two here. But I think what it does show...
is obviously a very, very large addressable market, a $40 trillion market. Or as Mike mentioned earlier, we have about a 1% market share. So lots of opportunity for these funds to grow and to expand.
Yeah. We had a slide that was significantly less complicated at the investor day in 2021 that we premiered there. But the question that I'll leave you with that we get asked a lot just in closing is, you guys have built this great...
market-leading credit business. It's so big. Aren't I just buying the index?
And the simple answer, and Mike put the easier-to-read slide up, is no. We're playing in a huge addressable market across corporate credit, asset-based finance, opportunistic credit in multiple geographies. And while we've shown tremendous growth in this business, we think the best is yet to come, and there's a lot of great stuff ahead. So with that, I think we'll exit stage left and ask court to come up. Thank you.
Thank you. All right. Hello, everyone.
I'm Court Schnabel. Excited to talk about our U.S. direct lending business today. As I think everyone knows, we have been in the direct lending business of the United States here at Aries for a very long time. Longer than almost all of our competitors and peers in the marketplace that we see every day.
We've invested through all different market environments over that 20-year period and generated industry-leading results for our investors, which has allowed us to amass more and more capital and allows us to stand here today and present the largest direct lending platform in the United States. You can see in the pie chart there on the right, we manage $129 billion of AUM today. It's relatively diversified in terms of the types of funds that we manage. We manage over 50 different funds now in our U.S. direct lending business. The largest is $43.9 billion.
You see there is ARCC. We have a whole afternoon dedicated to ARCC, our publicly traded business development company, but relatively diversified by fund after that. We've invested $142 billion.
since our inception 20 years ago, and we have a two basis point annualized loss ratio. There's so many things that go into that. Don't have time to get into it here in this five minutes.
Obviously starts with the broad origination, the saying no 95% of the time, and then so importantly, our portfolio management team, the actions that we take when a portfolio company's performance is not going according to plan, our ability to work through that, get our money back. sometimes even get gains to offset our losses, all goes into that two basis point annualized loss ratio. We've transacted with 450 different financial sponsors. I think most people know the source of our deal flow is primarily financial sponsors, but we are not dependent on any one sponsor for our deal flow.
That diversification is very important for so many different reasons. We've invested in the largest team now, we believe, in the industry. 200 investment professionals just in the United States, just focused on U.S. direct lending.
We have so much more room to grow. This has already been hit on earlier a few different times, but in our U.S. direct lending business, we've sized the market about $5.4 trillion, $3 trillion, the traditional middle market where banks have largely kind of been pushed out, mainly served by private credit providers. A whole nother $2.4 trillion market that the banks are still very active in syndicating leveraged loans and high yield bonds. We're obviously just starting to chip away at that market. We have what we estimate is a 2.4% market share position today.
So still a huge amount of runway going forward. This slide outlines our depiction of the market where we sit relative to our competitors. You can see, as I already said, we are the largest.
The Y-axis, by the way, is size of manager. So we sit there at the top. But maybe even more importantly, we are the only direct lender in the U.S. that competes across all three size ranges of companies, lower middle market, middle market, and upper middle market. Some of our competitors straddle a few of those, but no one goes across all three.
This is really, really important. Gives us the ability to get in early with our portfolio companies when they're small. gain incumbency, grow with them as they grow.
As you can see, lots of different competitors, but we stand at the top. A little bit of backup data on the point I just made. You can see on the left-hand side, this is our origination over the last five years, the distribution of different company sizes.
About 50% of what we are originating is less than $50 million of EBITDA. allows us to move up and down depending on what the market is giving us, right? Last 18 months, the banks were kind of on the sidelines. You can see we skewed a little bit more toward larger companies.
Obviously, now as banks are coming back, that origination in the lower and middle market is going to help us continue to find the best companies. And the beautiful thing is on the right-hand side, you can see there is a premium for being able to invest in some of these smaller and mid-sized companies. Spreads are higher, leverage levels are lower. Talked about the sponsor relationships there on the left-hand side. It's grown nicely over our history.
But maybe even more importantly, a new area that we are focused on is non-sponsored. We are trying to really make sure that we're penetrating more and more non-sponsored companies, staying a step ahead of our competition. We've put in place several different industry verticals with people that are just focused on those industries, which allows us to go out into the market and build relationships directly with management teams. You can see the increase over the last six or seven years now in our non-sponsored deal flow.
It's grown from 11% of what we see to now 25% of what we see. A lot of stuff going on in this slide. We'll spend a lot more time on this this afternoon. But you can see the broad funnel that we've talked about.
In 2023, we saw about a half a trillion dollars of deal flow come into our platform. That allows us to be super selective, as we've already talked about several times. You can see the bottom left, 4% to 5% selectivity rate remaining very, very consistent over time. And then my last slide hits on our yields, our overall performance. going back to 20 to 2004. Everybody always asks us what's happening with private credit yields.
Are they up? Are they going down? The answer is yes, all of the above.
They go up, they go down, they change a lot based on what's going on in the market. But what's more important than absolute yields is relative yield. The yield that we're generating relative to the broadly syndicated market. Left-hand side is first lien yields, right-hand side is junior debt yields relative to the leverage loan index and the high yield index. We generate a 200 to 300 basis point premium over a 20-year period to the first lien index and a 400 to 500 basis point premium to the high yield index.
And maybe even most importantly, at the bottom, much, much lower loss rates at the same time. I'll end it there. And now I'm going to have Blair come up to the stage. Great. Thanks, Court.
Hello everyone, I'm Blair Jacobson. I'm responsible for a European credit business at Aries. So I'd like to rewind to the mid-2000s when our U.S. direct lending team asked a very simple question, which was, where else can this strategy, this blueprint that they've developed, work in other markets across the globe? Well, at the time, Europe was an obvious answer.
A lot of great middle market companies, a lot of private equity firms that are consumers of leveraged finance. However, what was not obvious was frankly, there was nobody doing it. At that point in time, pre-GFC, banks had 100% market share for European direct lending of senior secured assets. But Aries said we can do this, so we entered the market. We lifted a team out of Barclays Bank, and as you can see here, the rest is history.
And I'm really excited to share with you the business that we've built in Europe. We strongly believe that we are the number one ranked manager. by many different metrics.
You'll see here we manage about 70 billion of assets. That's grown almost 25% per year over the last five, six years. We've invested more than 60 billion euros in more than 350 different companies. That's supported by what we think is the largest investment team in the market.
Again, nearly 90 dedicated investment professionals across six offices. We came to London in 2007. In 2009, we opened up Paris, Frankfurt, and Stockholm. And five years ago, we opened up Amsterdam and Madrid.
And all of that has been backed by very strong investment performance in true Aries style, backed by a very, very low loss rate. Now, why are we so excited about the European market? And I'll contrast it a little bit in a few moments to the US.
But suffice it to say it is a very large market, about a trillion and a half, with upside from there based on liquid loans and issuers that we think we're relevant to. And contrast that to our 70 billion of assets under management. We strongly believe there is a lot left for us to go for.
Now contrast it a little bit to what we see in the U.S. The European market structure, quite simplistic. At this point, it's really just banks.
and alternative managers with banks steadily losing market share and groups like Aries gaining market share. We do not have a BDC market in Europe. The retail high net worth market is nascent as you heard Raj say earlier. We have some really exciting developments on the Aries side there.
There's no middle market CLO business. So from that perspective again it's quite simplistic but in that way it's very attractive because I'll get to in a few minutes it's very inefficient. So the risk-adjusted returns we can generate in Europe and have done are very exciting on an absolute and relative basis. But we don't think it ends here. There's a lot left to go for.
European direct lending market really started in the UK, which was the hardest hit in the financial crisis. It's now spread to continental Europe. We're spending time now on southern Europe and eastern Europe. As our fund sizes grow, and there's a nice slide that was put up earlier showing that we're more relevant to bigger companies.
So again, larger funds were more relevant to bigger issuers. And further, regulation has actually been a positive for us. The implementation of the Basel regime in Europe and Basel IV on the horizon means it's less efficient for banks to hold these loans on our balance sheet. So more of that is coming to groups like Aries. And also things like the non-sponsored opportunity.
25% you heard Quartz say in the US. Europe probably 5-10% and growing rapidly. So let me put some of this into some data and numbers for all of you.
Starting on the left, again, when we started in 2007, bank market share, 100%. That has steadily been decreasing 10 years ago, about 85%. Now it's below 50%.
And again, that's all been for the benefit of alternative direct lenders like Aries. Now that might be a little bit higher in the continent, a little bit lower bank market share in the UK, but the trend line we think is very, very clear. And that's also demonstrated by what you see in the middle, which is the number of deals done every year by alternative fund-based lenders like Aries.
And that's grown six times in the last 10 years. Again, run rate 6, 7, 800 deals done each and every year by fund-based lenders. Now, similar to what you heard Court say, a lot of our companies are owned by private equity firms. The private equity business in Europe is highly developed.
over 250 billion of dry powder left to invest. That will need something like 250 billion of credit. Well, look at where European direct lending dry powder is under 70 billion.
And we simply think banks cannot fill the difference, again, creating a very nice supply-demand imbalance for us. Now, spending another moment on our business, we talked to something like 1,300 European companies. each and every year.
And that's grown significantly over the last few years, but we're still selective. Again, you'll hear this a lot today. We only complete with three, four or 5% of the companies that we see and choose the very best.
Now, another difference between the US market and Europe, Europe tends to be more of a sole lender market. We don't have many club deals. And what this helps us do is control the return, the terms, the documentation on the way in. And if the companies have any issues, We're in control of the outcome there. But again, the indicators are flashing green.
We're seeing a 14% yearly growth in our number of introductions. And just last year, 25 billion of early read volume. So how is that translated into returns? Well, we've been able to convince investors around the globe that the relative value available in Europe is very, very attractive, as illustrated here.
Most recently, again, our upfront fees in our deals, we charge it on every single one, has never been below 3%. Currently, it's a little bit higher. Compare that to other markets.
It can be 50, 75 basis points more. Our loans also float. So again, Euroboard just over 4% and the UK Sonia just over 5%.
That implies with an 11% yield, we're making LIBOR plus six or seven. Add the fees to that, three-year expected underwritten returns. around 12%.
Now, the risk we are taking to achieve those returns actually has been going down. That's why spread of unit leverage has been going up. But again, over time, when rates go up, that means companies can absorb less leverage. The leverage in our new deals peaked in 2020, has been coming down ever since, currently below five times. And further, when you look at loan to value, again, that risk has actually shifted towards the equity.
As our loan to value for the past two years has been below. 40%. So to wrap things up on the direct lending side, on behalf of myself and Court, we're really excited about the market opportunity ahead. After these sessions in the break, you'll have a panel on the next front deal.
Well, actually, we think we still have a lot left to go for as well in a $7 trillion market, where we believe we are the best resourced manager with nearly 300 dedicated investment professionals and over 700... underlying businesses through incumbency that we continue to lend to. We'll continue to raise funds to address these markets in the future and believe that we have a really, really nice road ahead of us. So with that, I'll hand it over to my partner, Joel. Thank you.
We'll begin on a little overview of alternative credit. ARIE's alternative credit. It's called many things by others. It's called asset-based finance or ABF. It's called asset-based credit or ABC.
We look at it as every investment we make is a credit-related investment. We're not doing just financing assets. We're making credit-related underlying assets.
Everything's a portfolio. It's a portfolio of loans, leases, and receivables. It's also a portfolio of contractual cash flows.
We are investing with a particular view in mind. We are generally looking across those from a relative value lens as we continue to invest. At its simplest basis, we lend, we own, we invest in liquids. And as we'll go through this and we talk through our different pools of capital, we've built our capital to be balanced. We built our capital to grow with balance, both across the liquid or the rated part of our markets, both public and private rated.
as well as across the illiquid or direct originated, similar to what you see across other parts of direct lending and opportunistic credit. And so as you look at our team, we have a large established team, one of the largest teams in the space, over 70 investment professionals. But just as importantly, we have a very senior team.
We've been doing this for average of over 20 years for half of us. My partner, Keith Ashton and myself have been doing this for over 25 years. We have a long track record in this space.
This is not an area that's newly discovered for us. This is an area where we have this established track record at Aries alone since 2011. And the thing we're most proud of, as you can see on stage, over $45 billion of invested capital, just barely a hair over one basis point of annualized loss rate. That is what attracts capital. That is what attracts scale. That is what continues to grow the flywheel that Mike talked about earlier.
So as we grow, it's... as we've grown from 2018 to 2024, we've remained balanced and will remain balanced from here. You touch our markets every day. We talk about these portfolios. We talk about loans, leases, and receivables.
When you leave your house, drive your car, stop at Starbucks, go to work, you're creating contractual cash flows with a residential mortgage. You're driving your car with an auto lease or an auto loan. You're using unsecured consumer loans.
You're using credit cards. You're streaming Netflix. You're streaming.
Spotify, and others. All of those create those contractual cash flows. All of those create those portfolios of assets.
That is why our world is so big. $28 trillion, and we're just starting to scratch the surface. This is a market that was consolidated in the pre-GFC days with your GEs, CITs, capital sources, and some of the banks.
It became more fragmented. We've been since 2011, the largest consolidator in this market. And we continue to press our advantage with regards to that scale.
Our biggest advantage we have is sitting on this platform. If you think of our platform we sit on today, we have partnered with everybody you'll see on stage today. We have partnered with them. And it's this collaboration that really drives not just our business, but drives all of Aries.
Because when you think of our partnership with real estate against diversified portfolios of net lease or single family rental. When you think of our partnership with InfraDebt and InfraEquity across digital fiber, or digital assets such as fiber and cell towers and data centers, that ability to bring flexible capital and scale, whether it be in the rated part of our markets, whether it be in the unrated part of our markets directly sourced, that is what allows us to stand on the shoulders of giants and do what we do. And so what we've done is we've raised capital that meets the opportunity set.
When you think of the opportunity set, that 28... trillion dollars that sits out there. The key is having balanced capital. The key is not being overweighted to just insurance solutions. The key is sitting there and being able to drive something where you have returns across the return spectrum.
As you can see on screen, we have capital that's raised in scale across insurance solutions. About half of that is in partnership with Aspita, and we will continue to grow with Aspita. but we will also continue to grow with our third-party insurance clients.
We have capital on the other end of the spectrum with Pathfinder. And as we sit there with Pathfinder, we have the ability of relative value to rotate across these asset classes of lending, owning, and also playing in liquids, but with that relative value lens. And in the middle, maybe one of the biggest opportunities is the core strategy. Because if you look at the core strategy with similar return spectrums of what you see across the direct lending or other assets, it's a massive world. That ability to bring that capital and bring capital that's also unique from the standpoint of being open-ended versus Pathfinder being close-ended, that entire thing, the opportunity set meets the capital that we've raised and continue to grow.
Why? Why do we raise that type of capital? Why have we raised the capital we have?
We've talked about quality AUM. At its simplest, Keith Ashton, who you'll hear from later on the panel. Always says I can never finish an example or a speech without talking about food in some form or fashion.
So the recipe, as you've heard here today, for alpha is simple. Origination plus relative value. That's alpha.
And so the more we originate, the more that we. bring relative value to the table with a little bit of sprinkle of information edge, that flywheel, as we've talked about earlier, that alpha creates that growth. That alpha brings quality AUM.
So as much as we will scale our insurance solutions, and that's a massive opportunity, as much as we will scale core, we will also scale Pathfinder. So that ability to bring that capital is the key to our thing, is the key to our business. If you look at relative value, It's interesting because a lot of people will look at this slide and they'll say, look at all of the different categories of assets from real assets to transportation to consumer and other.
It actually is even larger than that. Because if you look at any individual asset on here, if you think of residential mortgage, we do residential transition lending. We do whole loans in the non-QM space. We invest in mortgage REITs with regards to preferred equity and convertibles.
We have the ability to acquire assets. We have the ability to invest in assets. We have the ability to lend against those assets.
So that ability to rotate in net lease where we're doing lending as well as ARB strategies, as well as the deal we did two years ago with Capital Automotive for $3 billion, that brings that scale. And so we continue to press our advantage. We continue to have that competitive advantage as we grow.
And it's showing in the numbers. As you can see, the growth we've already had to this period and the six point. three times growth we've had to 2023, we expect to grow from here.
We'll put 70 billion on the page, but we also do it with purpose. Six years ago, I went to Mike Garagetti back in the hair gel days with an ask, which was, we want to be able to tie what we do in with purpose. And when you think of that purpose, we've also been pathfinders with regards to combining not just... Alpha, combining not just relative value, combining not just great results for our investors, but doing it with a charitable tie-in, where at least 10% of our flagship fund with Pathfinder and Pathfinder 2 we just raised, as well as our core strategy with a 5%, having that go to global health and global education charities and inspiring the broader Aries Foundation that we have today.
It's one of the best things that I've ever been involved with. It's the reason, as I've held Mike all the time, I will never retire. It also drives the culture of what we have, and it continues to make us a preferred counterparty. So in closing, a long track record, a one basis point annualized loss rate, scaled capital across the opportunity set, a balanced approach with our partners and with our capital, a huge tailwinds across what we have in asset based credit from banks and insurance, as will be covered later today, all while investing with purpose.
The future is bright. Good morning, everyone. I'm Aaron Rosen.
I am the co-head of Opportunistic Credit with my partner, Craig Snyder. Really excited to be with you here today. This is a very exciting time for the opportunistic credit business.
I'll spend a few minutes talking about where we are today, the market environment, why we think it sets up so well for the product and the platform that we've created, and then where we're headed. The origins of our business really started back in 2018. It was a special situations business, and I'll talk in a moment about how the markets have evolved as you think about stress and distress product and market dislocations. When we first started, we effectively inherited a public market trading business that sought to capitalize on market dislocations by buying distress securities.
And what we've done over the last six years is really evolved. that product to one that has become a true all-weather strategy capable of deployment in both good times and in times of dislocation. Today we manage $14.6 billion across the opportunistic credit funds. We've deployed $12 billion in funds one and two. We have 30 investment professionals in New York, London, and Los Angeles.
And our returns here, 22% gross and 17% net, we believe are amongst the best out there in our industry. We also have a quite low loss ratio of 0.1%. I was quite proud of that until I heard some of my partners speak before me, but 0.1% we'll take with the relative risk return that we think we're delivering. So what we've done here over the last six years is really create, again, a scaled platform capable of deploying in both dislocated and healthy markets. We perform deep private equity due diligence, we identify themes in the marketplace, we go and attack those themes, and we deploy effectively through the very strong sourcing engine that Aries has.
Here I'll talk a little bit about what the legacy stress, distress, special situations funds look like versus the Ares opportunistic credit business that we've created. Again, legacy public market deployment focus can find yourself adversarial to a sponsor and to companies. Difficult to execute at scale.
The illiquidity in the public markets has gotten a lot of attention. Dealer desks are not carrying a lot of inventory. The street research coverage isn't there.
And that lack of liquidity. has further exacerbated the volatility in those markets. And finally, you hear a lot about creditor dynamics in the current market, negotiations where liability management and debt discount is around the corner, and putting creditors in tough positions. The product we've created, we believe, is simply a better way of pursuing the stressed and distressed markets and also lending into over-levered, healthy companies. that just need more time to execute in a higher for longer interest rate environment.
We can deploy consistently across market cycles. We're in control of our destiny, and we have a partnership orientation with the firm's sponsor clients. So this is what it means by the numbers.
The top part shows our deployment across the last six years. So importantly, again, consistency. This enables us to achieve what we call vintage diversification.
You've heard these themes about Sourcing funnel, relative value. What we try and do is simply identify the best relative value in any of these market periods. Healthy, prior to the pandemic, the dislocation during the pandemic. Obviously, we were healthy again, then we have the bout of inflation and the interest rate hikes, and now we're healthy again. The healthy market we're in today, I would argue, is a lot easier for us than it was the healthy environment back in 2019. The economy's strong, but obviously the higher base rate.
is a big tailwind for our business. The profits that we've generated you'll also see are evenly distributed between dislocated and healthy environments. So again, this is a strategy that's generating the types of returns that our LPs expect of us and not relying on a market dislocation to do so. So what is our adjustable market? It's quite large.
I would actually argue that this page doesn't even do it justice because some of the opportunities we're actually financing today are for companies that are just looking for growth capital. When you think about the problems many companies in the middle market face, it's the ones we've been speaking about. Too much debt, higher interest rates cause problems with interest coverage, sponsors are having trouble returning capital to their LPs, and growth is more expensive to fund, again, because cost of capital is higher.
So when you put all that together, the opportunity for us with a scaled platform to provide credit instruments with equity upside into those companies today is very, very large and we are scaling rapidly. So in terms of where we go from here, again, the opportunity ahead is very significant in this particular current market. We see very distinct competitive advantages as a function of being on this platform.
We have the sponsor relationships, we have the team, we have the track record. We're focusing on attractive risk return in any market environment and deploying consistently, again, giving investors that vintage diversification and the stability of the higher return product without relying on a market cycle. And again, we're participating in a very large and growing opportunity set. And with the current market environment of where rates are, with maturities, and the need for capital to be returned, we're incredibly well positioned going forward.
So you'll hear from my partner, Craig, on a panel going forward, but we're very excited here for our opportunistic credit business, and I will turn it over to my partner, Edwin. Hi, good morning. I'm Edwin Wong. I joined the firm in 2020 as part of the acquisition of SSG, a firm I co-founded over 15 years ago. Today I have the honor of sharing with you the size of the opportunity set in Asia, how we position around it, and the outlook going forward.
As all of you would know, Asia represents a large part of the global economy. If you just look at the top five countries in the world by the size of the GDP, three of them actually resides in Asia. Equally important is the growth that lies ahead.
In fact, just this year alone, The estimate for 2024 is that Asia-Pacific region will contribute to over 60% of the global growth. And by definition, growth is going to be largely funded by debt. So what we're seeing is significant tailwind supporting the asset class in our region. If history is any guidance to us, what I've shown here is obviously the significant growth that we've seen in the development of the private credit market. Starting with the U.S., significant CAGR over the last 20 years.
A lot of people said Eurobets, roughly 10 years behind, you know, fantastic growth. If Asia is to follow that pattern... The outlook is somewhere in the next five to 10 years, we will get to the scale of the European private credit business.
So how are we positioned around it? We believe today we have established a leading credit platform in the Asia Pacific region. We currently manage close to $12 billion.
Hopefully the map will give you a good sense of the scale. breadth and depth of the platform that we have created already today. Close to 230 employees across the region, over 12 offices.
What that represents is having senior people on the ground to originate, structure, and manage risk on behalf of our clients. Significant track record, histories, relationships. Take India for example, a country that Many people are excited about, and we are as well, about the outlook.
We've been in that country, you know, for close to 20 years, where most of our peers, you know, it's really two to five years max. On the right, the strategy that we focus on, special sits, our version of the opportunistic credit, something that is cycle tested, dating back to the Asian financial crisis in the 90s. Senior lending flagship, what we call ACAP or Aries Credit Asia Pacific, focuses on direct lending and asset-backed opportunities in the region. And we also have a direct lending strategy that is focused on Australia and New Zealand. Direct lending is something that is a core product of the firm.
Happy to inform that the sponsors are very, very active in Asia Pacific. Over 600 active sponsors to date. We've covered a top tier of that market, 125 of them.
You know, many of them in partnership with our colleagues in Europe and US, so it's really a collaborative effort. We believe we have a market leading position in the market already, having done close to $2 billion of transaction just in the last 18 months alone. Similarly, asset-backed, you just heard Joe talk about the opportunity set.
We are very focused on developing that market in the Asia-Pacific region as well. For anchoring that off by a team sitting in Sydney, Australia, we expect the market to grow to other countries in the region. So what's the outlook?
Number one, continue scaling the existing strategies that we have. We think there's a lot of growth left. Again, we talk about the tailwind. We talk about the...
sharp CAGR. In fact, as a market leader in the region right now, we expect the CAGR to be much better than the market average. Permanent capital, you've seen the development of BDCs, both in the US and Europe.
I think it's a matter of time that we will create our Asia version of that in the region. Local currency. So far today, it's what we have been investing is really taking U.S. dollars from our LPs and investing in our region, there is actually a very significant opportunity to manage local currency for many of our investors in the region. Take insurance company, for example.
They earn significant premiums in local currency. So the opportunity set to create a private credit solution For that client set to invest that local currency back into those countries, it's a very, very significant opportunity that we're looking to capitalize on. And again, if you look at the map that we've shown before, we're one of really the only house that have capabilities in all those different countries.
So I hope you are as excited as we are about the outlook going forward. And with that, I think we'll do for a 10-minute break. Thank you.