Ares Management Corp or Ares, the leading global private equity, private credit and real estate asset management firm has invested much of its newly raised assets in recent years in artificial intelligence, AI technology companies leveraged buyouts, private lending to AI technology companies and in AI data center related real estate.
Ares and other leading private equity firms tend to finance 30 % of the private equity buyout of AI technology firms with paid up-front equity and the rest is borrowed in debt in the form of bank lending and high yield bonds. Also in many cases the private equity buyout of AI technology firms is financed with Ares' private credit assets under management at interest rates of 7 % to 15 %. Ares real estate financing of AI data centers is done to a large extent also with borrowed money. This approach makes Ares' investments in AI technology companies leveraged.
Add to that the operational leverage inherent in technology companies, be they also AI companies. Here it must be noted that AI data center investment is becoming a high capital expenditure business for the companies involved in it.
Ares' investments in AI due to their leverage stand to be magnified in their outcome, both in terms of wins and losses.
If the AI boom transforms our world as to the forecasts of leading investors, analysts and technologists, Ares' market capitalization could rise to 120 billion USDs. If the AI boom turns into bust and the Nasdaq Composite falls 62 % from its peak, however, Ares' market capitalization could fall to 19 billion USDs from Ares' current market capitalization of 50.96 billion USDs, according to Wolfteam Ltd.'s projections and estimates.
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