(Bloomberg) -- Ares Management Corp. anticipates a pickup in deals later this year after the alternative-asset manager reported a muted quarter for lending to new mergers and acquisitions activity.

“The pent-up demand for M&A, the significant amount of private equity dry powder, and the demand from LPs to return capital will be conducive to an improved transaction environment this year,” Chief Executive Officer Mike Arougheti said Thursday on call with analysts.

Ares’s gross deployment increased 52% to $18.6 billion in the first quarter, although a “significant portion” of the transaction activity was related to refinancing existing debt, he said.

Ares reported after-tax realized income of $265.1 million, or 80 cents per share, below the average analyst expectation of 92 cents per share, as realizations and net deployment were dampened.

Assets under management rose 19% to $428.3 billion. The firm raised $17.4 billion during the quarter, led by $14.2 billion in credit. Ares reported record-high dry powder of $115 billion.

Private credit is starting to see a widening of performance between stronger and weaker managers due to the current interest-rate environment, Arougheti said.

“There could be a little bit of a cautionary moment here,” he said.

Shares of Ares rose 2.2% to $134.65 at 12:17 p.m. in New York.

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