Ares co-president sees exponential growth in AI data centre builds

• Long-term fixed income investors are focused on rising bond yields (US 5%, UK 6%), influenced by central bank actions, politics, and kinetic wars.
• Ares focuses on long-term secular trends like aging populations, AI, digital infrastructure, supply chain, and energy transition, underwriting resilient individual companies.
• A 'generational AI CapEx supercycle' is underway, driven by exponential compute demand, with significant financing from hyperscalers and private capital providers.
• The private credit market is seen as 'quite positive,' with underlying portfolio companies showing 8-10% earnings growth, 45-50% loan-to-value, and accruals within historical tolerances, despite slowed inflows.

Blair Jacobson, Co-President of Ares, discusses the current financial market environment, highlighting rising bond yields and geopolitical concerns. He emphasizes Ares's focus on long-term secular trends, particularly the generational AI CapEx supercycle, and expresses confidence in the resilience of their private credit portfolio. Despite short-term volatility, he sees strong demand-driven growth in AI infrastructure and positive underlying performance in private credit.