Ares CEO Warns of Tightening Access, Rising Risks in Private Markets Amid Strategic Shifts

Ares Management Corp.'s CEO has raised concerns about diminishing access to high-conviction private market opportunities, citing increased competition and stricter due diligence standards across infrastructure and industrial sectors. The firm, which manages over $230 billion in assets, reported that private equity deal flow declined by 14% in the fourth quarter of 2025 compared to the prior year, with energy and defense-related transactions down 22% and 18%, respectively. The executive emphasized that risk premiums have widened significantly, with implied default rates in private credit portfolios rising to 4.7%—up from 2.3% in early 2024. These developments are particularly pronounced in energy, where exposure to legacy oil and gas assets has become more volatile amid shifting climate policies and geopolitical disruptions. The CEO pointed to CL=F (crude oil futures) volatility as a key indicator, noting a 38% spike in 30-day implied volatility since late 2024. Market participants are also reacting to the broader macro environment: the VIX index has averaged 21.4 in 2026, the highest level since 2022, signaling elevated uncertainty. This environment is pressuring private market valuations, with some portfolio companies experiencing up to a 12% mark-to-market reduction in the first quarter. Public equities tied to private market exposure, such as AAPL, have seen correlated repricing, with investor sentiment shifting toward liquidity and resilience over long-term growth bets. The announcement is prompting asset allocators to reassess private market allocations, particularly in sectors with high capital intensity and regulatory exposure. Institutional investors, including pension funds and sovereign wealth entities, are now demanding greater transparency and stress-testing protocols before committing capital to private vehicles.