Building the New Economy w/ Ares' Kipp deVeer
Dry Powder: The Private Equity Podcast
Kipp deVeer, Co-President of Ares, discusses the firm's strategic pivot toward 'new economy' sectors such as digital infrastructure and indu
Key takeaways
- Ares is transitioning from a financier role to a developer role in the data center market following the acquisition of GCP.
- The firm's real estate strategy intentionally avoids office and hospitality in favor of multifamily, industrial, and logistics assets.
Main topics
- New Economy Real Estate
- Data Center Development
Notable quotes
Credit is a business where as you and get bigger, you get better.
Conclusion
The episode highlights how large-scale alternative asset managers are
Transcript preview
Speaker 1 (0:04) Previously on Speaker 2 (0:04) Dry Powder. Credit is a business where as you get bigger, you get better. Kip DeVere, co-president of Aries, unpacked the forces reshaping private credit and why scale remains a decisive advantage in an increasingly competitive industry. Today on the show, we'll turn our focus to where Aries is putting capital to work. I'll ask Kip about the importance of picking your spots, the industries and asset classes where the firm is exercising caution, and the parts of the new economy where it has the strongest conviction. Speaker 1 (0:32) We now have a hundred plus billion dollar real estate business that lends in the U.S., lends in Europe. But their focus has been playing into the areas of the new economy. So it's a lot of multifamily. It's a lot of industrial and logistics, and it's increasingly in digital and data centers. Speaker 2 (0:49) We'll also explore ARI's evolution from financing data centers to developing them directly. I'm Hugh MacArthur, chairman of Bain's Global Private Equity Practice, and this is Dry Powder. Speaker 2 (1:04) Kip, one thing we've heard from you in the past is the importance of picking your areas of expertise and growing where you have conviction that you can win. Where are you most excited today when you look at the investment opportunities? On the corporate credit side, Speaker 1 (1:20) we have consistently talked about the ability to play in defensive industries and avoid places where you typically get hurt. Speaker 1 (1:32) US direct lending, European direct lending, and also probably the asset base piece of it is stay away from the industries that create default. On the asset base side, you know, we're pretty bearish on the lower end consumers. So we're staying away from portions of that market. In real estate, you know, we've taken a pretty targeted approach to or we've said, we really want to focus on the new economy parts of real estate, which means Not a lot of hospitality, not a lot of office, lots of industrial, lots of logistics that are big picture winning portions of the market. Whether it's the corporate market, the ABS market or the real estate market, there is portions of the market that tend to cause problems during downturns. And if we're able to be underexposed to those parts of the market and lean more heavily into the parts of the market that tend to perform well, even in down economies, we'll do better than most. And it's just sort of stick to that. Speaker 2 (2:34) Makes sense, Kip. We talked a little bit earlier about AI and we talked about it in a defensive posture. I want to talk about it now as an opportunity and get your thinking around. the rapid build-out of the digital infrastructure required to support all of these new AI tools and bandwidth. What sort of deals does Ares, in your view, have a quote-unquote right to win? Speaker 1 (2:54)