* Best-ever quarter for Ares on fundraising front

* Inflows, capital deployment stood at $36 billion in Q2

* Meaningful pickup in investment pipeline, CEO Arougheti

says

* Private credit giant's AUM hits $671 billion

* Uninvested capital grows to record $170 billion

July 31 (Reuters) - Ares Management ( ARES ), one of the

biggest names in private credit, reported a record fundraising

of $36 billion in the second quarter on Friday, as institutions

continued allocating to the asset class.

The results place Ares among the strongest fundraisers in

alternative assets, as institutional capital shifts to larger,

established managers.

Top asset managers have pointed to broad-based demand from

institutional investors despite negative headlines around

private credit in recent months, helping cushion a slowdown in

the wealth channel.

Institutional investors such as ⁠pension funds tend to

allocate capital with a long-term perspective and are more

patient through pockets of volatility.

Ares has broadened its investor base, with the number of

direct institutional investors more than tripling since 2019.

Bulk of its business is institutional-focused.

"Clients continue to reward us due to our strong and

consistent fund performance across our strategies," CEO Michael

Arougheti said.

Inflows were led by the credit segment, which drew $23.7

billion during the quarter. The real assets division raised $9.7

billion.

Major fundraising included Ares' flagship asset-based

finance fund, which raised $8.5 billion in the quarter.

Assets under management jumped 17% to $671.3 billion, while

fee-related earnings rose 20% to $491.1 million from a year ago.

Much of Ares' earnings comes from the fees it earns on

assets it manages, providing a more stable and predictable

stream of income.

DEPLOYMENTS TICK UP

Deal activity for private credit firms remained slightly

subdued during the quarter, as geopolitical uncertainty kept a

lid on sponsor-backed M&A activity.

Ares struck an optimistic tone about the road ahead as it

sits on a record investment pipeline.

"Our diverse global origination platform enabled us to remain

active investing in attractive opportunities across the platform

in a slower transaction environment and we are now seeing a

meaningful pickup in our firmwide investment pipeline,"

Arougheti said.

Ares deployed $35.9 billion of capital in the quarter,

driven by its U.S. and European direct lending, real estate and

alternative credit strategies.

Among the notable deals in the quarter, Ares led a more than

$1.7 billion debt financing supporting buyout firm KSL Capital

Partners' acquisition of private clubs operator Invited Clubs.

Fundraising, capital deployment and investment performance

are key metrics that Wall Street watches closely as it drives

future earnings.

Uninvested capital jumped 13% to record $170 billion in the

quarter. That positions Ares well to execute on its largest-ever

forward investment pipeline and support continued earnings

growth, finance chief Jarrod Phillips said.

Ares starts generating management fees as it deploys

uninvested capital, further boosting profit.

Alternative credit posted a gross return of 4.1%, while U.S.

senior direct lending returned 2.5%. Infrastructure equity

returned 9%.

After-tax realized income per share of Class A common stock

was $1.29 for the quarter ended June 30, compared with $1.03 a

year ago.

(Reporting by Arasu Kannagi Basil in Bengaluru; Editing by Arun

Koyyur)