Q2 2021 Hamilton Lane Inc Earnings Call

Good morning, ladies and gentlemen, thank you for standing by and welcome to the Hamilton Lane incorporated second quarter fiscal years Twentytwenty, One earnings conference call.

This time all participants are in a lesson only mode. After the speakers instrumentation, there will be a question and answer session to ask a question. During the session you will need to press star one on your telephone. Please be advised that todays conference is being recorded if you require any further assistance. Please.

Sorry zero I will now like to turn the conference over to your Speaker today, John Oh, Vice President Investor Relations. Please go ahead.

Thank you Julie good morning, and welcome to the Hamilton Wayne Q2 fiscal 2021 earnings call today, I will be joined virtually bike Mario Genie CEO, Eric Kirsch, Vice Chairman and a toolbar my CFO before.

Before we discuss the quarter's results we want to remind you that we will be making forward looking statements based on our current expectations for the business.

These statements are subject to risks and uncertainties that may cause the actual results to differ materially.

For a discussion of these risks. Please review the risk factors included in the Hamilton Lane fiscal 2020, 10-K, and subsequent reports we file with the FTC.

We will also be referring to non-GAAP measures that we view as important in assessing the performance of our business reconciliations of those non-GAAP measures to GAAP can be found in the earnings presentation materials need available on the public Investor Relations section of the Hamilton Lane website.

Detailed financial results will be made available when our 10-Q as filed.

Please note that nothing on this call represents an offer to sell or a solicitation to purchase interest in any of Hamilton Lane products.

Beginning on slide three.

Year to date, our management and advisory fee revenue grew by nearly 12%, while our fee related earnings grew by over 40% versus the prior year period.

This translated into your year to date GAAP EPS of 79 cents based on $25.1 million of GAAP net income and non-GAAP EPS of 91 cents based on $48.8 million of adjusted net income.

We have also declared a dividend of 31 point 25 cents per share this quarter, which keeps us on track for the 13.6% increase over last fiscal year equating to the targeted $1.25 cents per share for fiscal year 2021.

With that I'll turn the call over to Mario.

Thanks, John and good morning, we had another strong quarter gross and I continue to be impressed by and proud of our team for their tremendous efforts in meeting and exceeding the needs of our clients all while juggling their own daily lives.

Well, we continue to operate virtually across many of our global locations, you're starting to see some return to normal in several of our offices outside the U.S. employees in the office and in person meetings with clients and prospects.

Across the firm productivity and output remained strong employee engagement is high and we continue to lean heavily on our strong technology backbone well to keep us connected and to service. Our clients. This has all resulted in continued growth with support from both new and existing clients.

I'll shift gears now and turn to an update on our new headquarters building highlight a new office was opened in Asia. A quick reminder, regarding our new headquarters, we assigned a 17 year lease to occupy approximately 130000 square feet in a newly constructed building located in suburban Philadelphia the square footage nearly doubles, our current footprint and while we have.

Isn't growing into the space over time in the near term the additional footprint allows us to provide a safe and socially distance work environment for our employees.

To the extent, we find ourselves with excess space, we will seek to sublet horse of the building consumer.

Construction continues to progress well and we anticipate relocating the new space in the first half of 2021 yeah.

In Asia, we have opened a new office in Singapore, which further expands our Asian presence and puts us closer to investors and investment opportunities in that region.

I'd also like to speak about a few recognitions affirm recently received for how long.

He's not only because it speaks to the first class organization, we build but also to demonstrate what is truly important to us and our culture I'm proud to say that for the ninth consecutive year Hemmingway has been selected as the best place to work in Pennsylvania by the Central Penn Business Journal, It's a state wide program dedicated to identifying and recognizing Pennsylvania's best employer.

In addition, the firm was recently designated by the private equity women Investor Network as the International International Limited partner of the year for 2020. This award is given annually to an outstanding institutional limited partner, who has demonstrated a commitment to encouraging and supporting female investors in the private equity industry.

A tremendous honor to be selected for this award and reflects the deep commitment that Hamilton Lane has for creating a diverse work environment.

Asked few months has caused us like many firms to again, we examine our principles and to ask whether we can do more for answer that question is yes. We are extremely proud of the caliber of the organization, we have built with women and minorities, representing 50% of our workforce globally and 46% of our senior leadership team.

All those figures alone position us as a leader in our industry. We are focused on further improving and enhancing our efforts to build a truly diverse and inclusive organization.

There's not been a time in recent memory when people and organizations cared more about who they are partnering with and we are working hard to ensure we continue to be an organization brings pride to our clients partners and shareholders.

Finally, before I move to cover some of the quarters results in detail. Let me now take a minute to talk about what's going on in the private markets similar story to the public markets valuations fund raising in deal activity across all sectors have rebounded in some cases to levels higher than what we saw pre pandemic rebound has not been uniform with some industries and sectors.

Such as growth in technology doing very well, while other sectors such as energy in some parts of the leisure markets struggle how.

Limited partners and investors reacted at no point did we see any of the panic reaction. We saw in the global financial crisis by large investors has maintained and more often increase their allocations that have continued investing across all parts of the private markets. There's been a small shift favoring growth oriented investments in some areas of the credit markets.

We haven't seen any significant changes in how investors are approaching the private markets.

Let me now turn to some results for the quarter beginning on slide four here, we highlight our total asset footprint, which we define as the sum of our AG land assets under management and you weigh assets under advisement.

Total asset footprint for the quarter stood at approximately 547 billion us dollars and represents a 14% increase to our footprint year over year, continuing our long term growth trend consistent with prior quarters, you AUM growth year over year, which was approximately 7 billion usthree nearly 11% came from.

Both our specialized funds and customized separate accounts and continues to be diversified across client type size of client and geographic region. Our focus remains simply growing and winning across both lines of business and we are pleased with the continued success as.

As for our anyway, similar to what we're seeing with our UN growth year over year, which came in at over 58 billion Usfive approximately 14% was from across client types and geographic region.

As we have mentioned on prior earnings calls anyway can fluctuate quarter to quarter for a variety of reasons, but the revenue associated with the way does not necessarily move in lockstep with those changes and while this quarter saw an increase in anyway dollars relative to the previous quarter. We will continue to emphasize that no direct correlation exist between the scale of it.

Are you a dollars and revenue generation.

Now I'll turn it over to Eric.

Thank you Mario and good morning, moving on to slide five we highlight our fee, earning AUM as a reminder, fee, earning AUM as the combination of our customized separate accounts and our specialized funds with basis point driven management fees.

We will continue to emphasize that this is the most significant driver of our business as it makes up over 80% of our management and advisory fees.

Relative to the prior year period total fee, earning AUM grew $3.2 billion or nearly 9% stemming from positive fund flows from across both our specialized funds and our customized separate accounts.

Taken separately nearly $1.7 billion of net fee, earning AUM came from our customized separate accounts and over the same time period $1.5 billion came from our specialized funds growth in these two segments continues to be driven by four key components.

One re ups from our existing clients to winning and adding new clients three growing our existing fund platforms and for raising new specialized funds.

What you also see here is that our fee rates continue to remain steady.

Moving to slide six fee, earning AUM from our customized separate accounts stood at $24.6 billion growing approximately 7% over the past 12 months, we continue to see the growth coming across type size and geographic location of the clients. What you also see here is that over the last 12 months.

More than 80% of the gross inflows into customized separate accounts came from existing clients.

You've heard us say in the past that re ups from our existing client base remains a key component of the growth we've achieved in the segment of fee, earning AUM.

In addition to re ups, we continue to expand our client base by winning and adding brand new relationships, which in turn provide a growing base for future re up opportunities.

Moving to our specialized fund growth here continues to be strong we are executing well across our existing product suite and our tactically introducing new product lines overall demand remains robust and like the rest of our business comes from a diversified set of investors around the globe over.

Over the past 12 months, we've achieved positive inflows of nearly $1.5 billion, resulting in a nearly 11% increase in fee, earning AUM.

Turning to fund specific updates I'll start with our current secondary fund, which continues to be the primary driver of growth in specialized fund fee, earning AUM.

During this recent quarter, we closed on approximately $250 million of LP commitments and that brings the total dollars raised for this product to approximately $2.5 billion in prior calls we told you that we had until October of 2020, the finish raising this fund however, given strong demand.

And a strong pipeline of investment opportunities. Our current investors have graciously allowed us to extend the fundraising deadline to January 2021.

Lastly, similar to prior closes with this product this closing degenerate retro fees of $2.9 million in the quarter.

Next our annual credit fund focused series continues to attract capital to date. The current series has raised over $290 million of commitments and we have until the end of January 2021 to complete raising capital for the benefit of those less familiar with the series. It is a relatively unique structure.

Whereby we are continually raising and deploying dollars simultaneously there.

Therefore, it is less about targeting a set amount of dollars to raise as you traditionally would see across funds with a multiyear deployment period and more about ensuring that we size the product inline with the current opportunity set.

This inevitably will lead to some size variability from series. The series. We do however, typically see commitments to this product being more calendar back end weighted and would expect that to continue for this race.

Next up is our direct equity fund for those less familiar with this fund and its strategy here, we invest directly into companies alongside leading fund managers. We have successfully raised four prior funds in this vertical with our last fund having raised approximately $1.7 billion I.

I am pleased to announce that on October 9th we held the first close for our fifth fund at nearly $320 million. The fund has not yet been turned on as we are still finishing up investing our current fund and thus no fees for this period.

Based on pipeline and pacing, we would anticipate that this new fund goes live starting in January 2021.

For this new fund, we've made an alteration to the fee model, reflecting some changing investor preferences. Our prior four funds have had a traditional 1% management fee on committed capital, which then switch to a 1% on net invested capital post the investment period Ken.

Carried interest was charged at a 10% rate over an 8% hurdle following a European waterfall method.

For this new fund, we are providing investors a choice either the traditional 1% management fee on committed capital with a 10% Kerry just as we have in the past.

Or they can opt for a 1% management fee on net invested capital and that will come with a carry rate of 12.5%.

The hurdle rate remains at 8% as does the European waterfall methodology, we are seeing some investors more focused on early IR, our management and thus prefer invested capital models and are willing to pay more for performance on the backend part of being a good partner to your clients is listening and understanding preferences and being responsive for this firm.

Close 33% of the capital opted for the traditional model and 67% opted for the invested capital and higher carry option.

We are encouraged by the results from this first close which was started and completed all post pandemic and we look forward to providing updates as we continue to raise this fund.

Finally, we continue to see strength in our white label initiatives, where we partner with distribution houses and provide products into those channels outside of the United States. We continue to see positive net inflows into our semi liquid evergreen product and are encouraged with the success that we've achieved to date.

Before I end here I want to take this opportunity to discuss our latest technology investment.

On September 2nd Honcho, a SaaS oriented company focused on compliance related solutions announced the closing of a series a financing round, we're Hamilton Lane invested balance sheet capital alongside a blue Chip Investor Group that included Vin top capital and Peter deal are.

Our investment in Honcho was another example of US partnering with leading technology franchises to come together to solve a problem not all of these solutions are commercial opportunities for Hamilton Lane in this case it would be odd if we announce that Hamilton Lane is now selling compliance software.

They are however problems that we think need addressing because in doing so it makes our firm along with our industry better and stronger and we believe that leads to more growth.

So here with Concho as with other similar situations Hamilton Lane is proud to be a strategic partner and investor and with that I'll turn it over to a tool to discuss the financials.

Thank you, Eric and good morning, everyone.

Slide eight of the presentation shows the financial highlights for the first half fiscal 2021.

We continue to see solid growth in our business with management and advisory fee up nearly 12% versus the prior year period.

Our specialized funds revenue increased $10 million or 19% compared to the prior year period, driven by almost $1.4 billion in fee, earning a UN added from our latest secondary fund between periods.

We recognized $6.1 million and retrofit sales from the secondary fund in the current year period compared to $2.8 million from our latest co investment fund in the prior year period.

As many of you are likely aware investors that come into later closest to fundraise for many of her products paid retroactive fee dating back to the fund first close.

Therefore, you typically see a spike in management fee related to that fund for the quarter in which subsequent closings occurred.

Revenue from our customized separate accounts increased approximately $2.9 million compared to the prior year period due to re ups from existing clients and the addition of several new client.

Revenue from our advisory and reporting reporting offerings increased approximately $2.3 million compared to the prior year period.

The final component of our revenue is incentive fee instead.

Incentive fee for the year to date period were $20.5 million.

Fiscal year, the fiscal quarter saw strong strong realization activity from a second co investment fund that materially contributed to the quarter carry total.

That is a 2008 vintage fund that has performed well with a two and a half multiple laundry life deals contributing over $80 million and realized carry since 2018 and over $20 million in unrealized carry remaining.

We remain a very diversified carry story.

Good now over 60 vehicles in a carry position that are ultimately backed by thousands of underlying companies.

Moving to slide nine we provide some additional detail on our unrealized carry balance we saw strong rebound of the marks this quarter in line with market performance for the balance up 7% from the prior year, even as we recognized $40 million of incentive fee during that period.

And just to remind everyone. We don't control these positions and thus don't control the timing of the exit.

Turning to slide 10, which profiles for earnings our fee related earnings were up 14% versus the prior year period as a result of revenue growth we discussed earlier.

In regard to our expenses total expenses increased $12 million compared with the prior year period.

G and a decrease of $5.6 million due primarily to decreases in travel expenses consulting and professional fee and commissions.

Total compensation and benefits increased by $17.6 million due to strong operating performance and an increase in headcount so.

$5.1 million of this increase however.

Is attributable to incentive fees related compensation.

For the compensation growth in our fee related earnings our goal has been to maintain a steady to slightly increasing fee related earnings margin, which we are on pace for this year.

Let me take a moment here to remind everyone about the rent expense associated with the headquarters move that Mario spoke about earlier in the call.

While the building is likely to be fully completed sometime next year as we mentioned in a prior call. We will begin expensing the rent starting in the third fiscal quarter.

We expect the impact to our GSK expense will be a run rate increase of $4 million to $5 million annually stemming from the new leaf.

Moving to our balance sheet on slide 11, our.

Our largest asset on the balance sheet as investment alongside our client in our customized separate account and specialized fund.

Similar to our unrealized carry balance this quarter saw an increase in value.

Relative to the prior quarter to the previous quarter, primarily due to increased valuation changes.

In regard to our liabilities, we continue to be modestly levered and with that we thank you for joining the call and are happy to take it up open it up for questions.

Thank you at this time, if you'd like to ask the question Press Star one on your telephone to which I have question. The fancy again, just a question press star one on your thoughts.

And your first question comes from the line that can bring thanks.

Okay. Morgan. Please go ahead.

Hi, Good morning, Thank you for taking my questions.

If we look at net sales commitments less distributions September was a slower quarter.

Commitments looked like they were in the range of historical levels, but distributions looked elevated so what is the outlook for distributions and maybe could you walk us through how you're thinking about the different drivers realizations versus step downs versus others and in the fund and separate account businesses and.

Then if distributions are going to remain at this level can you talk about the opportunity to drive better contributions and maybe like an outlook or a pipeline, particularly in separate accounts on the contribution side. Thank you.

Ken Thanks, It's Eric I'll take that as.

As we said in prior calls some of this is really just type related particularly around the separate account side. So on the separate account side as you know we're in at Tranching mode, and so we had seen some tranches that expire.

And we don't always have exactly perfect matches for the neutrons to come online.

What are the other driver on the distributions in this time period is that we have had and secondary would be an example, some of those funds that are now at that kind of 12 year time period, or basically rolling off to be non fee, earning.

And so it is a combination as you noted really three things aging of the asset.

To what's happening with actual distributions.

And three the timing mismatches between re ups and tranches expiring.

So we would continue to point to growth continues to look strong from our end and we think some of this just becomes timing noise.

So.

Okay is there any any outlook. So on the charters expiring you guys have good visibility into that if we look out over the next couple of quarters are there enough traunches expiring, where we're likely to remain in this billion dollar plus distribution quarters or is that sort of got a burn itself.

Out in and look to to moderate.

Where are Youre just unclear.

It's a little unclear again, partly because the liquidity is obviously not under our control.

So you can look at the aging of the ASP, but what we're seeing in terms, we would expect to see from a pure liquidity point is a bit outside of our control.

Okay, and then maybe a little one on the new fee structure in the co invest funds do you think that allows you to make that fund bigger than would otherwise be the case and attract more investors or was this sort of something that you needed to do to just sort of.

Reach your kind of pre existing targets.

I think it's too early to tell so I think the reason for the change was as we said when they really just being responsive to what investors want I think what we're finding is that people like choice and I think what we provided them here was a good creative solution depending on what you are more focused on are you more focused on kind of upfront fees or more back ended fees and so I.

Putting that choice I think to us innovative strong and forward thinking.

In terms of timing.

Remember, we've got 18 months from the date of the first close to complete the fundraising. So we would say coming out of the gate with what felt like a very strong first close, particularly as noted since this was all kind of done post pandemic.

And we've got a long runway in front of us here from a time perspective so.

I think we'll continue to provide up to but but early innings here.

Okay, great. Thank you very much.

And your next question comes from the line of Michael Cyprys Morgan Stanley. Please go ahead.

Hey, good morning, Thanks for taking the question. If we look at the fee related revenues are up around 12% year on year, just for the quarter versus a year ago, while the fee related expenses up around 8% or so year on year. So it looks like you guys have about 400 basis points positive operating leverage there I'm just curious how you guys would characterize the soreness.

Spread there arguably you're getting a lift from the travel side I'm just trying to think through maybe you can provide some color on where do you think see that gap normalizing between the revenue growth versus the expense growth on the fee related side in any any sort of quantification around the benefit or uplift you guys are seeing on the expense side from the environment that we're in today.

Yeah, Mike its Eric So I think as we noted in all the things you pointed to on the DNA side have been I've been true.

I think it's really hard to forecast out so while we're seeing return to normal or at least more normal in some parts outside the U.S.. We have offices that are open businesses again, returning to a little bit more of a normal state.

We're also not seeing big event, so take part of our DNA aside from the travel conferences hosting events.

Et cetera, I think it's just too early to tell whether that truly returns to what it was or whether those numbers stay low.

Lower the rent thing, we've obviously covered so we think this is.

Gene is going to be rising as that trend continues to come online. So theres no surprise, there I think we've been telegraphing that very clearly.

But I think on the the variability on DNA, that's that's really coded related.

I think too early to tell what a new return to normal looks like.

Okay, and just maybe a follow up question you guys recently raised an impact phonetic, maybe as last quarter or the prior quarter. So maybe just on the commingled specialized funds side I'm, just curious what sort of new funds or strategies could be making sense to bring to market. As you look out over the next couple of years as you think.

About the white space that's out there just in terms of other sectors or sub asset classes within the private markets. How are you approaching that how do you think through prioritizing that versus other initiatives.

Yes. It certainly is a priority for us I mean, I think we said in the past that we view ourselves as a relatively young and small player in the commingled products side, and we have aspirations to get that gets to be much bigger you can see that's a big chunk of the current growth is being driven by us just improving and expanding the size of the current platforms that we've had.

But as you know theres a lot of white space out there and the product market. I think we've also been careful as you've seen us to not sort of telegraph, where we're going to.

To make sure that we're kind of maintaining competitive advantages. So I think on the new funds.

Just like on impact you all are going to hear about them. Once we've actually had a closing under our belt and that the product is already launched as opposed to us pro.

Proactively telling the market what were about to go think about raising but we think a lot of white space a lot of room to grow there.

Okay. Thank you.

And your next question comes from the line Alexander Blostein with Goldman Sachs. Please go ahead.

Hey, good morning, everybody. Thanks for the question I wanted to follow up on the pricing structure change that you discuss a little bit earlier, so I guess I guess the question is why now.

J curve mitigation efforts kind of well understood and I feel like that or what was always part of the picture. So curious to see sort of why is this happening now or you see more explicit explicit pressure from Lps on making those kind of changes to how to mitigate J curve dynamics.

Do you see that more as a Hamilton lane dynamic or is that more of an industry phenomenon. It's starting to unfold and I guess lastly, do you think we could see a similar structure spillover into other vehicles outside of the tone that some could we see you know kind of direct private equity or something like that or some of the other funds followed a similar pattern from here.

Thanks.

Alex its Mario.

The it's not I wouldn't call. It so much pressure question as it is a question that you have investors that have different goals in the market and so you try to reach as many investors as you can as Eric mentioned you have a number of investors that and as you mentioned are very Jake are sensitive and so.

I would much prefer the lower upfront fee butterfly and paying the same relative fees. If you will over the life of that just more back ended and you have others that are in different to that and just want to look at what works for them. So I think for US is it's less a question of feeling pressure and say we have to do this as it.

Just a question of saying what what is the market asking for what is it one.

And that's why we've done it and why now I think because as the asset class has matured investors that said I have choices, both in how I invest and I want to have choices in the price on paying for those investments. So I think it's just a question of the maturity of the asset class.

As to other products or other services that they have that kind of choice I don't know that you can say that this one is fairly clear because people look at the co investment.

Yeah.

So I think it is a pressure.

The issue for investors around that but I I don't know that I'd look at it and say Oh. This means that all these other products are now going to go to that I wouldn't draw that conclusion.

Got it great. Thanks, and a quick modeling follow up it looks like the insight.

Incentive comp rate in the quarter or the comp related to increased incentive fees around there.

That came in a little bit better than expected. So I'm just curious to get an update on how you guys are thinking about compensation on carry related from here. If we were to see maybe a big of a pickup on realization from thanks.

Yeah, Hey, Alex so to allow I'll take that so as you saw in the quarter the.

The carry came in pretty strong and that drove the compensation for the quarter.

So as you if you think about.

There's.

You know from quarter to quarter, it may bounce around a little bit based on business performance.

Yeah, Eric mentioned.

Earlier in the in the.

Call that would continue to hire we're still in growth mode.

So I think I think quarter to quarter may bounce around a little bit, but when we get to the D. ended the year and you look back I think it will look like you will see the store you is going to be very consistent with.

Which is that our margins are stable and moving up into the right over a period of time.

Okay. Thanks.

And your next question comes from the line of Robert Lee with KBW. Please go ahead.

Thanks. Good morning, most of my questions were asked but just maybe real quick one.

I apologize if you mentioned it but what really.

The retro fees in the quarter I think I heard 2.9 billion, but if I don't know that I referred to.

Yes, the secondaries fund or.

Maybe other bankruptcies.

Okay.

Yeah. The 2.9 million Roberts, Eric was result of the secondary fund and that was really the primary driver of any retrofits.

Okay, and all right. Thanks, and then on the maybe back to the direct equity and just want to make sure.

I've got the details. So I mean, you had the first close and basically have 18 months.

On the first closed end fund raising.

Current expectation is that smell them turn on wherever that.

I'm in the first calendar quarter.

Now seems like another year on raising after that is going to make sure I'm thinking is that correct.

Sure Rob It's Erik again, I'll take that so what we said here is we had the first close on over $300 million.

We don't turn it live until we actually finish investing the prior which is the current fund based.

Based on pipeline opportunities our expectation is that the new fund will go live in January of 2021.

Looming that again the pipeline everything else holds.

The fund raising is 18 months from the date of the first close in the first close took place in October of this year.

Right.

Okay, great and.

Maybe just one kind of bigger picture environment, if you kind of touched on this front.

It seemed.

During earnings you know some some of the.

Yes, yes primary firms.

When I kind of got the sense that maybe that realization outlook was already target the bid.

Ill give you some more M&A or whatnot.

I mean as you are you seeing that same thing more broad based.

Across the west or your Lps or.

You kind of touched on maybe a little haphazard.

Your general sense on.

On that.

Yes, Rob it's Mario.

I think part of your question and now, but I think what you're asking is whether emirates.

We're seeing M&A, increasing whether we're seeing deal activity increasing is that is that what you're asking.

It was mainly on the realization side it seemed like some of the primary firms.

One more optimistic.

Perhaps that they're seeing more potential for selling.

Selling assets, you know IPO as well as kind of the point.

Yeah, I would say there are there are two.

I think.

As of last week.

Well expected realization activity because of a belief that taxes in the United States would increase and so people wanting to get deals done before year end.

With with the election results unclear, whether there will be as big a push for higher taxes, so depending on how that shakes out we'll see whether activity increases solely for that reason I suspect yields that are in process will continue that may have been caused by that but I think just in general I think what you're hearing from them.

And from US is markets are strong and exit activity is good and so certainly relative to earlier in the year.

The deal activity, increasing across all geographies and across most sectors. So.

I don't.

Unless you tell me that markets are going to.

Significantly I would expect that you'd like to do.

Great. Thanks for taking my questions.

And your next question comes from the line of Chris Shutler with William Blair. Please go ahead.

Hi, everyone. Good morning.

How much of Hamilton Wanes see paying are you when would you classify today as direct investing or co investments and.

You expect that percentage to to grow overtime as a percentage of the total mix and does that have any impact on how we should think about comp expense trending over time.

Sure, it's Eric I'll take that we actually havent broken out the.

The the portion of that to that but in the total a U M.

It's a relatively small amount I mean, you sort of saw what the prior fund was for our last a co investment fund, which was up $2 billion.

And so while we include separate accounts with that activity.

Again in context, it totally U M. It makes up a smaller portion that said, it's also a very fast growing portion of the market as more investors want access to that kind of direct equity opportunities and.

And so.

To the extent that that will certainly bring in more carry components and then with that the incentive compensation will rise alongside of that.

Got it okay [laughter].

And if some of your competitors.

Newly publicly traded competitors have had disclosed a.

Committed not yet fee paying AUM number is that something that you can provide or plan to provide going forward.

Yeah. Good question, it's Erik again at this point, we really don't plan on providing that I think for a few I think a few perspectives there I.

I think while we have seen those numbers put out.

As the notion of a growth already built in.

The reality is is that that's just normal in our industry. So we all have that to some extent.

I think the reason for us of not wanting to sort of overly focused on that again, it's not new it's not novel to the industry. It's just part of the way that a number of contracts are structured is because I think from the clients perspective, it sort of sounds more like hey, we cant wait to spend this and we'll spend this as fast as possible. So we start getting paid on that.

That's just never been our mindset, it's not our orientation and so I think from our perspective, we have it we have a lot of it but it's not something we plan on breaking out at this point.

Got it Okay, and then lastly, just geographically can you remind us how much of your.

Your assets today are you guys versus non us clients and any updates on where kind of slows or.

From there or any trend that you see.

Sure, it's Eric I'll stick with that I mean, we said in the past that the business is essentially kind of a 60 40 business 60, North America, 40% not it certainly moves around but in general that's a pretty good kind of guesstimation of where things stand at any point in time.

And that ratio has been steady since we went public so despite I think a lot of talk about the emerging markets being growth areas and they certainly are what this also tells you is that we're still seeing an awful lot of growth coming out of the United States as well as coming out of Europe. So our ratio has been fairly static.

And we've been so we've we've been experiencing growth across both developed and non developed markets.

Okay. Thanks very much.

And your next question comes online of Michael Cyprys Morgan Stanley. Please go ahead.

Hi, Thanks for taking the follow up question I just wanted to circle back on the credit fund strategy that you have I was hoping you could talk a little bit about your approach to investing that capital. How you approach building a diversified portfolio. There maybe you can give us a flavor.

Types of investments that you're making.

Sure Mike its Eric I'll stick with that so the nice thing about that product is that it's it's opportunistic credit we've raised that as an opportunistic vehicle, which allows us to be tactical and to toggle depending on market conditions. So today, we're focusing on performing credit because the markets are very healthy to the extent.

That you saw dislocation in the market.

The advantage of that vehicle is that we could immediately move.

Move the strategy to focus on nonperforming credit so investors there have really entrusted us with getting them. What we think I think are the best credit opportunities in the market.

Whatever that is kinda presently serving up.

Great and maybe just last question for me you mentioned at the start of the call that you guys had often opened an office in Singapore I was just hoping you could talk through your thought process around why opening an office there why now any thoughts on staffing how many folks you have over there or expect to have over time and what other geographic regions could make sense.

How do you approach that.

Sure Mike I'm sorry.

Then in terms of of Singapore again, it's it's recognition.

Expanding Asian presence as you look at the offices, we've opened its where we have clients where there are investments as you probably know Singapore certainly on the Asian venture capital side is a is one of those locations are a lot of channel partners are there and on the fundraising side.

We see a robust private markets environment. So that that's really the core reason in terms of the number of people there it'll start fairly small.

Both investment and client oriented people turn.

In terms of all their locations again, it really depends on where the client and the investment activity.

Takes us and where we think it makes sense to people there as you can imagine opening an office both from a people perspective, and just logistics is something you want to be careful doing so.

Savings plan today that we know we're going to open an office next location and it's again as I said more a question of where the client and investment opportunities.

We had a critical mass to have one.

Great. Thank you.

And there are no further question at this time I will turn the call back over to the presenters for closing remarks.

Thank you very much just want to again, thank everyone for taking the time to join us and hope everyone stays well take care.

This concludes today's conference call you may now disconnect.

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