NEW YORK, July 31 (Reuters) - Ares CEO Michael

Arougheti said on Friday it should probably be bigger in private

equity, after a report that the group, a leader in private

credit, had held talks to buy a smaller firm.

Arougheti told the Financial Times in December that Ares

could look to acquire a large private equity group, in part

because the buyout business would be one beneficiary of a drive

to include more private assets in mainstream retirement plans.

The FT reported this week that Ares, which manages $671

billion, had held talks to acquire Leonard Green & Partners,

which manages $85 billion. Ares declined to comment on the

report at the time.

Asked about the FT report on an analyst call, Arougheti said

any deal would need to have cultural and strategic benefits, and

make the business better in areas including revenue.

"The question that we have posed ... is as Ares continues to

scale the way that it is, should we be bigger in private equity?

And I think the answer is probably, if we check all those three

boxes," Arougheti added.

"There's a lot to argue in favor of it, but ... the price

has to be right," said Arougheti. "I think the industrial logic

would make a lot of sense for the right ... situation," he

said.