Q2 2024 Power Corp of Canada Earnings Call

Operator: Good morning, ladies and gentlemen, and welcome to the Power Corporation second quarter 2024 earnings conference call. At this time, all lines are in listen-only mode.

Speaker Change: Good morning, ladies and gentlemen, and welcome to the Power Corporation Second Quarter 2024 Earnings Conference Call.

Operator: Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for you to queue up for a question. If anyone has any difficulties hearing the conference, please press star then zero for operator assistance at any time. I would like to remind everyone that this call is being recorded on Friday, August 9, 2024. I would now like to turn the conference over to Mr. Geoffrey Orr, President and Chief Executive Officer of Power Corporation. Please go ahead, sir.

Speaker Change: At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session.

Speaker Change: Instructions will be provided at that time for you to queue up for a question.

Speaker Change: If anyone has any difficulties hearing the conference, please press star then zero for operator assistance at any time.

Speaker Change: I would like to remind everyone that this call is being recorded on Friday, August 9, 2024. I would now like to turn the conference over to Mr. Geoffrey Orr, President and Chief Executive Officer of Power Corporation. Please go ahead, sir.

Geoffrey Orr: Thank you, operator. Welcome, everyone, to our call. Thanks for being with us this morning. I will dive right into the presentation to go through our perspectives on the second quarter and overall commentary on how we are thinking about the business. Before I do so, I'll remind you on pages two and three of the cautionary disclaimer statements regarding forward-looking information and non-IFRS measures. On page four, you have the happy mugshots of myself and Jake Lawrence, who is here with us today for your second call as CFO.

Geoffrey Orr: Thank you, operator. Welcome, everyone, to our call. Thanks for being with us this morning.

Geoffrey Orr: I will dive right into the presentation to go through our perspectives on the second quarter and overall commentary on how we are thinking about the business.

Geoffrey Orr: Before I do so, I'll remind you on pages 2 and 3 of the Cautionary Disclaimer Statements regarding forward-looking information and non-IFRS measures.

Geoffrey Orr: On page 4 you have the happy mugshots of myself and Jake Lawrence who is here with us today for your second call as CFO .

Geoffrey Orr: So we're happy to be with you, and we've got some other colleagues with us here as well in case we get some very technical questions. The Q2 results then, right after that, you've got the various public disclosures on page six from our different operating businesses, which I just make reference to if you're looking for additional information. And with that, I'll start my remarks on the quarter on page 7. It was really, from our perspective, a very strong quarter.

Geoffrey Orr: We're happy to be with you and we've got some other colleagues with us here as well in case we get some very technical questions.

Geoffrey Orr: The Q2 results, then, right after that, you've got the various public disclosures on page six from our different operating businesses, which I just make reference to if you're looking for additional information.

Geoffrey Orr: And with that, I'll start my remarks on the quarter on page 7.

Geoffrey Orr: It had really good financial results, broadly based, led by Great West Life, for sure, who had record earnings again this quarter, exceeding $1 billion for Great West Life Co. But really broadly based, all the businesses across Life Co., IGM, all reporting either good financial results or good momentum in their markets. So we're feeling very good about the businesses. And while market levels and stock market levels and interest rates at the short end have helped at the margin, overall, the macro conditions are not all positive. As you know, high inflation and higher mortgage rates are impacting a lot of our client bases.

Geoffrey Orr: It was really, from our perspective, a very strong quarter, had really good financial results.

Geoffrey Orr: broadly based, led by Great West Life for sure, who had record earnings, again, this quarter, exceeding a billion dollars.

Geoffrey Orr: for Great West Life Co., but really broadly based, all the businesses across Life Co., IGM, all reporting either good financial results or good momentum in their markets.

Geoffrey Orr: So we're feeling very good about the businesses and while market levels

Speaker Change: The stock market levels and interest rates at the short end have helped at the margin. You know, overall, the macro conditions are not all positive.

Geoffrey Orr: So from a flow point of view, there's a number of our businesses that the macro conditions are not helping. But aside from what's going on on the macro side, earnings are based upon momentum across each of the businesses. The businesses have got clear strategies, and they're executing on those strategies. They're building momentum from a revenue point of view, from a cost point of view, from a capital efficiency point of view, so it's great to see. And it is happening across IGM and Great West Life.

Speaker Change: As you know, high inflation, higher mortgage rates are impacting a lot of our client bases. So from a flow point of view, there's a number of our businesses that are macro conditions are not helping. But aside from what's going on in the macro basis, on the macro side, you know, the earnings are based upon.

Speaker Change: Brought momentum across each of the businesses the businesses have got

Speaker Change: the NAB basis.

Geoffrey Orr: But also, our NAV-based businesses are also showing good momentum and good progress. So overall, I am feeling great about the businesses. On the alternative side, we did continue to fundraise but also work with partnerships at both PowerStainable Capital and Cigar to continue to build out their scale and their profitability, and their revenue. And as well, in terms of our ability to generate cash and return capital to shareholders, which continues to be a high priority.

Speaker Change: are also showing good momentum and good progress. So overall feeling great about the businesses.

Speaker Change: On the Alt side, we did continue to fundraise but also work with partnerships at both the Power Sustainable Capital and Cigar to continue to build out their scale and their profitability and their revenue.

Speaker Change: page of

Geoffrey Orr: We had some good news at GBL, which we'll talk about, but they're going to make a meaningful increase in their dividend, which PowerCourt will enjoy when that is paid. And we made progress on the standalone businesses; Peak, which owns Bauer and Rawlings, disposed of Rawlings. And so, at the start of Q3 here, we received a check for $83 million Canadian from that disposal and also, I think, recorded a gain somewhere around $42 million on the investment in the quarter.

Speaker Change: Enjoy when that is paid and we made progress on the standalone businesses Peak which owns Bauer and Rawlings, disposed of Rawlings and so we in the just start of Q3 here we received a check of 83.

Speaker Change: million Canadian from that disposal and also I think recorded a gain somewhere around 42 million on on the investment in the quarter And we continue to be active on on buybacks through the quarter buying 189 million year-to-date so far

Geoffrey Orr: And we continue to be active on buybacks through the quarter, buying $189 million year-to-date so far. So with that, I'm going to pass it to Jake to walk through the financials, and the NAVs over the next few slides.

Jake Lawrence: So, with that, I'm going to pass it to Jake to walk through the financials, the NAVs over the next few slides. Jake? Great. Thanks, Geoff, and good morning, everyone. Picking up on slide 8 of the presentation, as Geoff noted, Power Corporation reported solid earnings off another strong quarter from our main operating entities. That's Great West and IGM Financial.

Jake Lawrence: Picking up on slide eight of the presentation, as Geoff noted, Power Corporation reported solid earnings off another strong quarter from our main operating entities, that is, Great West and IGM Financial. As we often point out, these two companies generally form all of Power's recurring earnings. For Q2-24, adjusted net earnings from continuing operations were $761 million. This compared to $842 million in the same quarter last year.

Speaker Change: As we often point out, V2 companies generally form all of Power's recurring earnings.

Speaker Change: For Q2, 24 adjusted net earnings from continuing operations were $761 million.

Jake Lawrence: I'll address the breakdown of these results on the next slide, but we'll just note here that Q2 of 2023 included a few positive one-time items. On a per share basis, adjusted net earnings in the quarter were $1.17 compared with $1.26 in the same quarter last year.

Jake Lawrence: This compared to $842 million in the same quarter last year. I'll address the breakdown of these results on the next slide, but we'll just note here that Q2 of 2023 included a few positive one-time items.

Jake Lawrence: On a per share basis, adjusted net earnings in the quarter were $1.17 compared with $1.26 in the same quarter last year. I'll also point out that the reduction in average share count from our ongoing and active NCIB program contributed approximately $0.03 to EPS.

Jake Lawrence: I'll also point out that the reduction in average share count from our ongoing and active NCIB program contributed approximately 3 cents to EPS. Adjusted NAV at the end of the quarter was $50.48 per share at June 30th compared to $53.10 per share at March 31st. The decrease in NAB quarter-over-quarter was primarily due to the share price decrease in Great West Life and GBL, which was partially offset by IGM's share price increase and fair value gains in some of our proprietary investments.

Jake Lawrence: Adjusted NAB at the end of the quarter with $50.48 per share at June 30th compared to $53.10 per share at March 31st.

Jake Lawrence: The decrease in NAB quarter over quarter was primarily due to the share price decrease in Great West Life and GBL, which was partially offset by IGM's share price increase and fair value gains in some of our proprietary investments.

Jake Lawrence: As of yesterday's market close, Power had an NAV of $50.24, reflecting a rebound in Great West shares offset by decreases in IGM and GVL. Finally, this quarter, Power Corporation's Board of Directors declared a quarterly dividend of $0.5625 per share in line with last quarter, and that's up 7.1% from Q2 2023. Now turning to slide nine, to break down the earth.

Jake Lawrence: As of yesterday's market close, Power is NAV with $50.24 reflecting a rebound in Great West shares offset by decreases in IGM and GVL.

Jake Lawrence: Finally, this quarter, Power Corporation's Board of Directors declared a quarterly dividend of $0.5625 per share, in line with last quarter, and that's up 7.1% from Q2 2023.

Jake Lawrence: Great West once again delivered strong earnings of over $1 billion, with contributions to growth from each of its four segments. And as Great West noted yesterday, its U.S. retirement and wealth business and power are on track to becoming the largest segment in its business by year end. And this is very much in line with the growth strategy that was embarked on several years ago but further fortified with acquisitions such as Personal Capital, Mass Mutual, and Prudential. IGM also reported strong earnings this quarter, with year-over-year earnings growth across its two segments, wealth management and asset management. Average assets continue to grow despite a challenging macroeconomic environment.

Jake Lawrence: Now turning to slide 9 to break down the earnings.

Jake Lawrence: Great West once again delivered strong earnings of over $1 billion with contributions to growth from each of its four segments.

Speaker Change: And as Great West noted yesterday,

Speaker Change: Its U.S. retirement and wealth business Empower is on track to becoming the largest segment in its business by year-end. And this is very much in line with the growth strategy that was embarked on several years ago, but further fortified with acquisitions such as Personal Capital, MassMutual, and Prudential.

Speaker Change: IGM also reported strong earnings this quarter, with year-over-year earnings growth across its two segments, wealth management and asset management.

Speaker Change: Average assets continue to grow despite a challenging macroeconomic environment. This past June , IGM saw heightened growth flow and redemption activity in advance of the Canadian federal tax change, which came into effect during the quarter on June 25th.

Jake Lawrence: This past June, IGM saw heightened gross flow and redemption activity in advance of the Canadian federal tax change, which came into effect during the quarter on June 25th. In Q2, IGM rolled up its investment in Wealthsimple by 15%. This reflects the strong business performance we saw in Wilson, including revised revenue expectations as well as an increase in public market peer valuation. This marks the third consecutive quarter in which Wealthsimple's value was written up.

Speaker Change: In Q2, IGM rolled up its investment in Wealthsimple by 15%.

Speaker Change: This reflects the strong business performance we saw in Wealthsimple, including revised revenue expectations, as well as an increase in public market peer valuations.

Speaker Change: This marks the third consecutive quarter in which Wealthsimple's value was written up.

Jake Lawrence: I'd like to remind everyone that Power Group's combined investment in Wealthsimple is now valued at $1.5 billion, up from $1.3 billion last quarter, of which Power's share is $563 million, and that's up from $490 million in Q1. Moving to GVL, whose comparative earnings contribution was impacted by a positive net recovery last year related to the decrease in WebHelp's NCI put-right liability. As a reminder, these put-right liabilities no longer exist as they were extinguished as part of the Concentrix merger.

Speaker Change: I'd like to remind everyone that Power Group's combined investment in Wealthsimple is now valued at $1.5 billion, up from $1.3 billion last quarter, of which Power's share is $563 million, and that's up from $490 million at Q1.

Speaker Change: Moving to GVL, whose comparative earnings contribution was impacted by a positive net recovery last year related to the decrease in WebHelp's NCI put-right liabilities.

Speaker Change: As a reminder, these put-right liabilities no longer exist as they were extinguished as part of the Concentrix merger.

Jake Lawrence: As well, GBL received lower dividend income this quarter following the sale of its investments in Olsum and GEA. This is part of GBL's broader strategy of rotating its portfolio in favor of private assets and returning capital through buybacks and dividends to shareholders. As mentioned earlier by Geoff, this strategy was on full display as GBL announced a proposed record-high extraordinary dividend of €5 per share, funded by gains from its partial sell-down of its investment in Adidas and strong cash earnings.

Speaker Change: As well, GBL received lower dividend income this quarter following the sale of its investments in Wholesome and GEA.

Speaker Change: This is part of GBL's broader strategy of rotating its portfolio in favor of private assets and returning capital through buybacks and dividends to shareholders.

Speaker Change: As mentioned earlier by Geoff, this strategy was on full display as GVL announced a proposed record-high extraordinary dividend of €5 per share, funded by gains from its partial sell-down of its investment in Adidas and strong cash earnings.

Jake Lawrence: This dividend will, of course, be subject to approval at its next shareholder meeting. Moving to our alternative investment platforms, CIGARD contributed positive earnings as, driven primarily by performance and power investment and to guard private equity. Power Sustainable continues to scale with two recently announced strategy lines.

Jeff: This dividend will, of course, be subject to approval at its next shareholder meeting.

Speaker Change: Moving to our alternative investment platforms, Cigar contributed positive earnings this quarter.

Speaker Change: driven primarily by performance and power as investment into GARD's private equity funds.

Speaker Change: Power Sustainable continues to scale with two recently announced strategy launches.

Speaker Change: This quarter's results also include fair value decreases in its energy infrastructure strategy.

Jake Lawrence: This quarter's results also include fair value decreases in its energy infrastructure strategy. Cigar and Power Sustainable continue to deliver strong fundraising despite headwinds in the fundraising for alternative assets, while continuing with the other investments in standalone business lines.

Speaker Change: Cigard and Power Sustainable continue to deliver strong fundraising despite headwinds in the fundraising for alternative assets.

Speaker Change: Continuing with the other investments and stand-alone business lines.

Geoffrey Orr: This quarter saw a modest contribution to earnings as the gain realized on the disposal of Peaks Minority Interest in Rawlings was offset by a non-cash impairment charge taken on Leon. On a comparative basis, Q2'23 included a $97 million gain on the sale of Powers Investment in Dallas. Turning to slide 10, where we break down the $50.48 net asset value per share as of June 30. As our publicly traded operating companies represent over 85% of our gross asset value, they generally account for the majority of the change in NAF.

Speaker Change: This quarter saw a modest contribution to earnings as the gain realized on the disposal of peaks minority interest in Rawlings was offset by a non-cash impairment charge taken on Leal.

Speaker Change: On a comparative basis, Q2'23 included a $97 million gain on the sale of Powers Investment in Dallas.

Speaker Change: Turning to slide 10, where we break down the $50.48 net asset value per share as of June 30th.

Speaker Change: As our publicly traded operating companies represent over 85% of our growth asset value, they generally account for the majority of the change in NAB. This quarter the share price trading of Great West and GVL accounted for the decrease in NAB per share.

Geoffrey Orr: This quarter, the share price trading of Great West and GVL accounted for the decrease in NAV for shares. However, as noted, this was partially offset by a share price increase at IGM, as well as fair value increases in some of our proprietary investments. I'll note that the NAB closed yesterday at $50.24, which does reflect that rebound in Great West shares, partially offset by declines in IGM and GBL. Looking at the balance sheet, Power's cash and cash equivalents stayed relatively stable at $1.5 billion on June 30th.

Speaker Change: As noted, this was partially offset by a share price increase at IGM, as well as fair value increases in some of our proprietary investments.

Speaker Change: I'll note that the NAB closed yesterday at 5024 which does reflect that rebound in Great West shares partially offset by declines in IGM and GDL.

Speaker Change: Looking at the balance sheet, Power's cash and cash equivalents stayed relatively stable at $1.5 billion on June 30th. We did remain active, as Geoff noted, in buying back shares and spent close to $100 million in the quarter under our NCIB program.

Geoffrey Orr: We did remain active, as Geoff noted, in buying back shares and spent close to $100 million in the quarter under our NCIB program. And this is reflected in the lower share count you see near the bottom of the page. With that, Geoff, I'll turn it back to you.

Speaker Change: And this is reflected in the lower share count you see near the bottom of the page.

Geoffrey Orr: Okay, thank you, Jake. Then I'll just make a few high-level comments on our various businesses. On page 11, we have the financial results for the last five quarters for Great West. Again, extremely strong earnings. We've mentioned a 13% growth year-over-year in base earnings, led by Empower for sure, but across all of the businesses, Empower, Canada, Europe, and the capital risk and risk solutions businesses, we had good growth. Capital risk solutions looks like it's down year-over-year.

Speaker Change: With that, Geoff, I'll turn it back to you. Okay, thank you, Jake.

Jeff: And I'll just make a few high-level comments on our various businesses. On page 11, we have the financial results for the last five quarters for Great West.

Speaker Change: Again, extremely strong earnings. We've mentioned a 13% growth year-over-year in base earnings.

Speaker Change: led by Empower, for sure, but across all of the businesses, Empower Canada, Europe , and the capital risk and risk solutions businesses, we had good growth. Capital and risk solutions looks like it's down year over year.

Geoffrey Orr: It had the implementation of the minimum tax, the global minimum tax, which primarily hit that business, so they absorbed that in the results. But on a pre-tax basis, the business continued to grow. So, strong, broadly-based earnings, which is great to see. It was a clean quarter as well. I mean, there was not a lot of noise.

Speaker Change: the implementation of the minimum tax, global minimum tax.

Speaker Change: which primarily hit that business so that they absorbed that.

Speaker Change: in the results, but on a pre-tax basis, the business continued to grow. So strong, broadly based earnings, which is great to see.

Geoffrey Orr: A few items that offset, for example, at Empower, there was a catch-up fee of approximately $40 billion related to the pre-transaction. I think that was the number, but I may not have that exactly.

Speaker Change: It was a clean quarter as well. I mean, there was not a lot of noise.

Speaker Change: A few items that offset, for example, at Empower, there was a catch-up fee of approximately $40 billion related to the Prue transaction, I think was the number, I may not have that exactly. There was an offsetting impairment related to credit in the commercial mortgage portfolio. So you've got those two, but the underlying number was basically a sustainable number, if you can put it, or a clean number is a better way to put it.

Geoffrey Orr: There was an offsetting impairment related to credit in the commercial mortgage portfolio. So, you got those two, but the underlying number was basically a sustainable number, if you can put it that way, or a clean number is a better way to put it. So, the quality of the earnings we thought was great. There's not a lot of noise through them.

Geoffrey Orr: Just generally, since we've moved to IFRS 17, you have a lot fewer one-time items coming in and out, which I think is a positive in terms of all of us and all of you getting comfort around sustainability of earnings levels. The pre-transaction was completed in the quarter. And so, that's behind us. That was successfully done. Jake mentioned the three deals. All three have been successfully integrated.

Speaker Change: So the quality of the earnings we thought was great, there's not a lot of noise through them, and just generally since we've moved to IFRS 17, you have a lot less

Speaker Change: one-time items coming in and out, which I think is a positive in terms of all of us and all of you getting comfort around sustainability of earnings levels.

Speaker Change: The pre-transaction was completed in the quarter, and so that's behind us, that was successfully done. Jake mentioned the three deals, all three have been successful.

Jake Lawrence: Successfully integrated great client retention synergies achieved and the group's long-standing

Geoffrey Orr: Great client retention synergies have been achieved, and the group's long-standing tradition of being all over the execution of M&A transactions continues. It's one thing to get deals done, but it's another thing to then successfully integrate them.

Speaker Change: tradition of being all over the execution of M&A transactions continues. It's one thing to get deals done, it's another thing to then successfully integrate them. So declaring victory on the pre- transaction and the team focused on execution here at this point.

Geoffrey Orr: So, declaring victory on the pre-transaction, and the team focused on execution here at this point. And then, I just want to point out that the ROE at Great West Life is up over 17%, and that is at the high end of where the company's target ranges are, but great to see the return on capital being produced by Great West. Turning then to 12.

Speaker Change: And then I just finally point out that the ROE at Great West Life is up over 17% and that is at the high end of where the company's target ranges are, but great to see the return on capital being produced by Great West. Turning then to 12 for IGM.

Geoffrey Orr: IGM produced really strong financial results, but also both IG Wealth and McKinsey produced strong earnings. Markets for sure have helped, but again, here the macro environment, on balance, is hurting. High inflation over the last several years, very high interest rates, and high mortgage rates are impacting both IG Wealth's business and McKinsey's business and the fund business in general in Canada, as many of you would be aware. A lot of clients, particularly in the mass market, the mass affluent, where a lot of the existing business of IG Wealth and McKinsey exists, are really feeling the pinch. They do not have the cash to invest, or, in fact, they're drawing on their investments.

Speaker Change: You know, IGM produced really strong financial results, but also both IG Wealth and McKinsey produced strong earnings. Markets for sure have helped.

Speaker Change: But again, here the macro environment on balance is hurting.

Speaker Change: high inflation over the last several years, very high interest rates, high mortgage rates.

Speaker Change: are impacting both IG Wealth's business and McKenzie's business and the fund business in general in Canada, as many of you would be aware. You know, a lot of clients, particularly in the mass market, mass affluent, where a lot of the existing business of IG Wealth and McKenzie

Speaker Change: exists.

Speaker Change: a lot of clients are really feeling the pinch. They do not have the cash to invest or in fact, they're drawing on their investments. So you've got the industry, basically, which typically is a net inflows of a couple of percent per year in those segments or been in outflows for a while here, and that's impacting the flows.

Geoffrey Orr: So, you've got the industry basically, which typically is in net inflows of a couple of percent per year, and those segments have been in outflows for a while here, and that's impacting the flows, but the markets themselves have helped the earnings levels. Businesses continue to invest heavily in positioning their businesses for long-term future growth. I think across the investments, as you know, we have in each of Wealth and Asset Management and IGM, we've got more mature businesses, IG Wealth and McKinsey producing the lion's share of the current income, but we've got investments that position the company well as we look forward 3, 5, 7 years and Rockefeller, Simple, doing extremely well. Jake mentioned Simple, so I won't repeat that. And then China AMC, really performing well, and Northleaf, really performing well.

Speaker Change: But the markets themselves have helped the earnings levels.

Speaker Change: The businesses continue to invest heavily in positioning their business for long-term future growth.

Speaker Change: I think across the...

Speaker Change: Thank you very much.

Speaker Change: more mature businesses, IG Weld, McKenzie.

Douglas Goldstein: Producing the lion's share of the current income, but we've got investments that position the company Well as we look forward three five seven years out and Rockefeller. Well simple doing extremely well. Jake mentioned Well simple I won't repeat that and then China AMC really performing well and Northleaf

Geoffrey Orr: Great fundraising at Northleaf in an extremely difficult environment, $1.8 billion in new commitments in the quarter alone. So, really great to see IGM's businesses all performing well. You were pretty thorough, Jake, in covering GBL. I won't add too much to the story.

Speaker Change: really performing well. Great fundraising at Northleaf in an extremely difficult environment of a billion eight new commitments in the quarter alone. So really great to see IGM's businesses all performing well.

Speaker Change: You were pretty thorough, Jake, in covering GBL. I won't add too much to the story.

Geoffrey Orr: Returning capital to shareholders has been something GBL has done for the last number of years. We have not participated in the buybacks, and neither has the Frayer family, but with them now using dividends as a tool to return capital to shareholders, we're going to enjoy the benefit of an 82% increase. I think we take in, at current exchange rates, about $90-92 million a year in dividends from GBL, so an 82% increase. You can do the math.

Speaker Change: Returning capital to shareholders has been something GBL has done for the last number of years. We have not participated in the buybacks.

Speaker Change: And neither has the Frayer family, but with them now using dividends as a tool to return capital to shareholders, we're going to enjoy the benefit of...

Speaker Change: Thank you very much.

Geoffrey Orr: It should be somewhere around an extra $70 million when we get the 2025 increase. We are starting to enjoy and participate in their strategy of returning more capital to shareholders, which will be able to flow through to Power Corp shareholders. They have continued to be active in their re-purchases. Okay, I'm going to spend a couple of minutes on alternative energy then.

Speaker Change: enjoy and participate in their strategy of returning more capital to shareholders, which will be able to flow through to the Power Corp shareholders. And they have continued to be active on their REIT purchases.

Geoffrey Orr: And, you know, our alternative strategy is not only a financial strategy; it's also a strategic strategy. There are a lot of things that we are able to do at PowerCorp that are synergistic with Great West Life and IGM and participation with GBL as well. Things that we can do. I'll give an example of the FinTech strategy we launched in 2015, which has morphed into part of Cigar's business, an important part of their business.

Speaker Change: Okay, I'm going to spend a couple of minutes on alts then.

Speaker Change: You know, our old strategy...

Speaker Change: is not only a financial strategy, it's also a strategic strategy. There's a lot of things that we are able to do at Power Corp that are synergistic with Great West Life and IGM and participation with GBL as well.

Speaker Change: where things that we can do. I'll give an example of the Fintech strategy we launched in 2015 which has morphed into part of Cigar's business.

Geoffrey Orr: But, you know, that is highly synergistic with what IGM and Great West Life are doing. We think that we were able to do that by attracting a lot of talent into that business that we wouldn't otherwise necessarily have been able to do through our more traditional platforms, Great West Life, and IGM. This is just one example, but I can go through all of the examples, a lot of strategies where there's a lot of cooperation, and we can do some things on these platforms that are perhaps more difficult for Great West Life to do.

Speaker Change: an important part of their business, but you know that is highly synergistic with

Speaker Change: what IGM and Great West Life are doing. We think that we were able to do that by attracting a lot of talent into that business that we wouldn't have otherwise necessarily been able to do through our more traditional platforms, Great West Life, IGM. There's an example, but I can go across all of the examples, a lot of the strategies where there's a lot of cooperation and we can do some things in these platforms that are perhaps more difficult for Great West Life to do. So there are strategic reasons, but from a financial point of view, we think it's also going to be attractive. And we make money through both the asset management activities and the investing activities. I'm going to talk a little bit about each of those on the asset management activities. We spent a lot of time focusing on the fee-related earnings, which...

Geoffrey Orr: So, there are strategic reasons, but from a financial point of view, we think it's also going to be attractive. And we make money through both the asset management activities and the investing activities. I'm going to talk a little bit about each of those.

Geoffrey Orr: On asset management activities, we spent a lot of time focusing on the fee-related earnings, and we haven't spent as much time talking about the carried interest or, in fact, the returns we've made on our proprietary capital. We're going to try and change the narrative a little bit on that as we move forward and get greater visibility into it. It's probably, I think, our error in focusing a lot on fee-related earnings when, in fact, they're not that meaningful at this point.

Speaker Change: And we haven't spent as much time talking about the carried interest or in fact the returns we've made on our proprietary capital. We're going to try and change the narrative a little bit on that as we move forward and get a greater visibility into it.

Speaker Change: Our error in focusing a lot on fee-related earnings, when in fact they're not that meaningful at this point. And, you know, we've got businesses that are trying to get to scale, are getting to scale, but where we have been making money is on the carried interest and on the proprietary capital. So if I flip you on the page to 15.

Geoffrey Orr: And, you know, we've got businesses that are trying to get to scale or getting to scale, but where we have been making money is on the carried interest and on the proprietary capital. So, if I flip you onto page 15, you've got basically from when we announced the strategy at the end of 2019, we had $3.7 billion on the left side of the page. In funded AUM, it's now up to $28.6 billion, of which $26 billion is fee-bearing. So, good growth, and you see the dark blue line.

Speaker Change: You've got the...

Speaker Change: Basically, from when we announced the strategy at the end of 2019, we had $3.7 billion on the left side of the page.

Speaker Change: in funded

Speaker Change: AUM, it's now up to $28.6 billion, of which $26 billion is fee-bearing.

Geoffrey Orr: Basically, as we said, PowerCorp has still got $2.2 billion of its own proprietary capital in there, which is just about the same amount we had five years ago. So, we have succeeded in using third-party capital, a portion of which is Canada Life and a little bit of which is some of the IGM strategies. On the right-hand side of the page, we do have $154 million in accrued carried interest in the platforms from the different strategies.

Speaker Change: So...

Speaker Change: Good growth, and you see the dark blue line, basically, as we said, Power Corp is still got...

Speaker Change: $2.2 billion of its own proprietary capital in there, which was just about the same amount we had five years ago. So we have succeeded in using third-party capital, a portion of which is Canada LIFE and a little bit of which is some of the IGM strategies.

Speaker Change: On the right-hand side of the page...

Speaker Change: We do have $154 million in accrued, carried interest in the...

Geoffrey Orr: We would have recognized probably about half of that in the P&L, and another half is to be recognized. There'll be a minority interest in that because the minority shareholders in Cigar and Parastainable Capital will get some of that, but we are making money on the carry. That'll go up and down.

Speaker Change: in the platforms.

Speaker Change: from the different strategies.

Speaker Change: We would have recognized.

Speaker Change: – probably about half of that into the P&L, and another half is to be recognized. There will be a minority interest in that because the minority shareholders in CIGAR and Paris Stainable Capital will get some of that. But we are making money on the carry. That will go up and down, there's some volatility to that. We get into a period where we get really weak markets that get into a drawdown, and you can see some of that going backward, but over time we expect that to contribute.

Geoffrey Orr: There's some volatility to that. We get into a period where we get really weak markets that get into a drawdown, and you can see some of that going backwards, but over time, we expect that to contribute. If we flip over to page 16, the $2.2 billion of crop capital that we do have is invested in different strategies. These are just the broad categories.

Speaker Change: if we flip over to page 16.

Speaker Change: The $2.2 billion of crop capital that we do have is invested in different strategies. These are just the broad categories, there's many, many more funds than that, and it's a mixed

Geoffrey Orr: There are many, many more funds than that. And it's a mix between fixed income type fee delivery, income credit, and real estate infrastructure, which either produces steady cash, not always earnings, but steady cash flow. And then there are more venture capital and private equities, for which returns come in the form of capital gains and realizations. And we have different targeted returns on each of those. But overall, we expect to return over 10% when you look at the current mix. So on $2 billion of strategy, we expect over time to make a couple hundred million dollars of value creation. And we have, in the past five years, realized distributions. We've sold secondary positions.

Speaker Change: between fixed income type fee delivery, income, you know, credit, real estate, infrastructure, which either produces steady cash, not always earnings, but steady cash flow. And then there are more venture capital and private equities, which the returns come in the form of capital gains and realizations.

Speaker Change: and we have different targeted returns.

Speaker Change: on each of those. But overall, we expect to return over 10% when you look at the current mix. So on $2 billion of strategy, we expect, over time, to make a couple hundred million dollars of value creation. And we have, in the past five years,

Geoffrey Orr: It's contributed to our earnings, contributed to our cash, and, even more importantly, contributed to our share buybacks. So we will try to continue to focus on this and give greater balance to all of the areas that we think we're benefiting from our old strategy. Speaking of returning capital to shareholders, on page 17, we've returned almost a billion dollars year-to-date. I mentioned the 4.9 million shares that we had purchased up to June 30th, and we have very strong cash balances at this point and are in a strong position to continue to do so, and we'll continue to look for additional sources of cash flow to do buybacks.

Speaker Change: realized distributions. We've sold secondary positions. It's contributed to our earnings, contributed to our cash, even more importantly, and contributed to our share buybacks.

Speaker Change: So we will try to continue to focus on this and give greater balance to all of the areas that we think we're benefiting from our alt strategy.

Speaker Change: Speaking of returning capital to shareholders on page 17...

Speaker Change: We've returned almost a billion dollars year-to-date. I mentioned the 4.9 million shares that we had purchased up to June 30th.

Speaker Change: And we have very strong cash balances at this point and we're in a strong position to continue to do so and we'll continue to look for additional sources of cash flow.

Geoffrey Orr: We think it's great value, it's NAV accretive, it shifts the balance of our portfolio over time to more earnings-based and less NAV-based, which we think is a positive, and as well, it lowers the share count, which means we have more dividends and more earnings for the remaining shareholders, so we'll continue on that as a priority. On Page 18, we pay close attention to our shareholder returns. We are ultimately in business here to provide strong, attractive risk-adjusted shareholder returns.

Speaker Change: to do buybacks. We think, you know, it's great value. It's NAV accretive. It shifts the balance of our portfolio over time to more earnings-based and less NAV-based, which we think is a positive.

Speaker Change: And as well, it lowers the share count, which means we have more dividends and more earnings for the remaining shareholders. So, we'll continue on that as a priority.

Speaker Change: Page 18, we pay obviously close attention to our shareholder returns, we are ultimately in business here to provide strong, attractive, risk-adjusted shareholder returns.

Geoffrey Orr: They bounce around; obviously, these are all end-date and start-date sensitive, but we continue to be highly focused on our primary goal, which is to provide attractive, long-term returns to our shareholders. And then, moving to 19 on the discount, it bounces around. We've been making really good progress over the past year on reducing the discount. It was down into the low 20s, and then it bounced back quite a bit in the last week or so in these choppy markets.

Speaker Change: They bounce around. Obviously, these are all end date and start date sensitive, but we continue to be highly focused on our primary goal, which is to provide attractive long-term returns to our shareholders.

Speaker Change: And then moving to 19 on the discount. It bounces around. We've been making really good progress over the past year on reducing the discount. It was down into the low 20s.

Speaker Change: And then it bounced back quite a bit in the last week or so through these choppy markets.

Geoffrey Orr: So, you know, a glass half full kind of attitude. If you loved it at 22%, we really love it at a 28% discount. So we're not happy with the discount gapping out, but we'll view that in the positive light as being an opportunity. And then I'm going to, you know, conclude again where I started on page 20, just talking about the business from a big picture point of view, and feel really good about the way the businesses are positioned across Great West Life and their various businesses, IGM and their various businesses, GBL, and the platforms.

Speaker Change: Thank you very much.

Speaker Change: And then I'm going to, you know, conclude again where I started on page 20, just talking about the business from a big picture point of view. Feel really good about the way the businesses are positioned across.

Speaker Change: Great West Life and their various businesses, IGM and their various businesses, GBL and the platforms.

Geoffrey Orr: We've got clear strategies in every area. We have management teams that are highly focused on executing those strategies. We're more in an execution mode than we were, say, going back a couple of years ago, which is not to say we always have our eyes open for the next acquisition, but the teams have got clear strategies, they're executing, and they're making progress. We have a mix of businesses, some of which are more mature, producing high income.

Speaker Change: We've got clear strategies in every area. We have got management teams.

Speaker Change: that are highly focused.

Speaker Change: on executing those strategies. We're more in an execution mode than we have been, say, going back a couple of years ago, which is not to say we always have our eyes open for the next acquisition, but the teams have got clear strategies, they're executing, and they're making progress.

Speaker Change: We have a mix of businesses, some of which are more mature, producing high income.

Speaker Change: And we have a number of businesses that are creating the growth, either today or into the future. So we've got a good portfolio mix of mature and income-producing businesses.

Speaker Change: The macro environment is going to be what the macro environment is going to be. We'll navigate through whatever comes our way. And there's providing some tailwinds right now, but also some headwinds.

Geoffrey Orr: And we have a number of businesses that are creating growth either today or into the future. So, we've got a good portfolio, a mix of mature and income-producing businesses. The macro environment is going to be what the macro environment is going to be, we'll navigate through whatever comes our way, and there are some tailwinds right now, but also some headwinds. With that, prior to opening it up for questions, I just want to do one last thing, which is to recognize Geoff Kwan, who I think is on the line. He's not on the line.

Speaker Change: With that...

Speaker Change: Prior to opening it up for questions, I just want to do...

Speaker Change: One last thing, which is, I just want to recognize Geoff Kwan, who I think is on the line. He's not on the line, okay. I will recognize Geoff Kwan in any event.

Geoffrey Orr: Okay. I will recognize Geoff Kwan, who has covered the group going back to 2014, in any event. And Geoff has done a great job appreciating that the role of an analyst is to inform the investor base about what's good, what's bad, what they don't like, and what the opportunities might be. And that is the role of all of the analysts. Nonetheless, Geoff has always been very thorough, very professional, very clear in his communication, and always curious to learn and understand what's really going on in the businesses.

Speaker Change: who has covered the group going back to 2014. And Geoff has done a great job appreciating the role of an analyst.

Speaker Change: is to inform the investor base.

Speaker Change: about what's good, what's bad, what they don't like, what the opportunities might be, and that is the role of all of these.

Speaker Change: the analysts. Nonetheless, Geoff has always been very thorough, very professional, very clear in his communication, and always curious to learn and understand what's really going on in the businesses. So we thank Geoff.

Geoffrey Orr: So we thank Geoff and congratulate him and wish him good luck in his new endeavors. And with that, I would like to, operator, if you could open up the lines for questions at this point. We will now begin the question.

Speaker Change: and congratulate him and wish him good luck in his new endeavors. And with that, I would like to, operator, if you could open up the lines for questions at this point.

Operator: We will now begin the question and answer session. To join the question queue, you may press star then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then 2. We will pause for a moment as other callers join the queue. The first question comes from Jaeme Gloyn with National Bank Financial. Please go ahead.

Speaker Change: We will now begin the question and answer session.

Speaker Change: To join the question queue, you may press star then 1 on your telephone keypad. You will hear a tone acknowledging your request.

Speaker Change: If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then 2.

Speaker Change: We will pause a moment as callers join the queue.

Speaker Change: www.globalonenessproject.org

Speaker Change: [inaudible]

Speaker Change: The first question.

Speaker Change: This question comes from Jaeme Gloyn with National Bank Financial. Please go ahead.

Jaeme Gloyn: Yeah, thanks. Good morning. First question on the buyback activity seems to have picked up a little bit of the pace post-quarter. With this recent sell off, you know, you have the excess cash tradition you have today.

Jamie Goyne: Yeah, thanks. Good morning. First question is on the...

Speaker Change: Good morning. On the buyback activity, it seems to have picked up a little bit of the pace post-quarter with this recent sell-off. You know, you have the excess cash tradition you have today, more cash coming in the pipe over the next couple of quarters, especially with the extra divvy from GPL.

Jaeme Gloyn: More cash coming in the pipe over the next couple quarters, especially with the extra divvy from GPL.

Jaeme Gloyn: You know, is that something you're looking to potentially accelerate in this environment?

Speaker Change: You know, is that something you're looking to potentially accelerate in this environment? And how are you thinking about that?

Geoffrey Orr: I'm not going to telegraph all of our purchase activities ahead of time. I would get scorned from all of the traders I used to know when I worked at BMO and Nesbitt Burns. If you like the stock at a 22% discount, you've got to love it at 28%. We've got some weakness here, so that's probably an opportunity.

Speaker Change: Yeah, so I'm not going to telegraph all of our you know purchase activities

Speaker Change: ahead of time, I would get scorned from all of the traders I used to know when I worked at BMO and Nesbitt Burns.

Speaker Change: But having said that, no, look, I said 20...

Speaker Change: If you like the stock at 22% discount, you've got to love it at 28%.

Geoffrey Orr: We try and be in the market throughout the year, but there's no question that when the stock is weak, there's more opportunity there, and we're buying at better prices. Jaeme, I'm not going to answer the question directly, but those are factors we look at when we decide the levels of buybacks that we're doing. On the carried interest disclosures, I appreciate the extra color around that and how you're thinking about the proprietary capital returns.

Speaker Change: We've got some weakness here, so that's probably an opportunity. We'll play that. We try and be in the market throughout.

Speaker Change: throughout the year, but there's...

Speaker Change: No question that when the stock is weak, there's more opportunity there and we're buying at better prices. So Jaeme, I'm not going to answer the question directly, but those are factors we look at when we decide the levels of buybacks that we're doing.

Jamie Goyne: Yeah, I understand.

Speaker Change: On the carried interest disclosures, I appreciate the extra colour around that and how you're thinking about the proprietary capital returns.

Geoffrey Orr: That proprietary capital has been about $2.2 billion. You're highlighting carried interest as a more meaningful component today. It can obviously fluctuate, but is there a view to potentially dedicate more proprietary capital as you're continuing to build those strategies to drive some more of that carried interest upside? Or should we still take the view that that prop capital is fairly stable and really focused on bringing in third parties?

Speaker Change: That proprietary capital has been about $2.2 billion. You're highlighting carried interest as a more meaningful component today.

Speaker Change: They can obviously fluctuate, but is there is there a view to potentially dedicate more proprietary capital as you're continuing to build those strategies to drive some more of that carried interest upside or

Speaker Change: Should we still take the view that Prop Capital is fairly stable and really focused on bringing in a third party?

Geoffrey Orr: Okay, so just a clarification, and then I'll address your question on the seed capital. So the carried interest actually comes through the GP, not our LP investments. It comes through the general partner.

Speaker Change: Okay so just a clarification and then I'll address your question on the seed capital. So the carried interest actually comes through the GP, not our LP investments, comes through the general partner. So the general, as you know on let's say a private equity fund, there'll be a 2% fee and a 20% carry beyond a target.

Geoffrey Orr: So the general, as you know, on, let's say, a private equity fund, there'll be a 2% fee and a 20% carry beyond a target return. In some of our infrastructure funds, that carry kicks in at a 15% return. And on some of the credit funds, it's at a lower target level, but there's carry typically on all the funds. And that carry gets paid to the general partner, Power Sustainable Capital, or CIGAR, of which we own an equity interest. We're controlling shareholders in both. Some of the carry gets paid to the portfolio managers, some of it gets paid to the management of the GP, and then the GP shareholders get the balance.

Speaker Change: Target returned.

Speaker Change: in some of our infrastructure funds that carry kicks in at a 15% return and on some of the credit funds at a lower target level, but there's carry typically on all the funds, and that carry gets paid to the general partner, Power Sustainable Capital, or CIGAR.

Speaker Change: of which we own an equity interest in the GP, we're controlling shareholders in both. Some of the carry gets paid to the portfolio managers, some of them gets paid to the management of the GP, and then the GP shareholders get the balance.

Geoffrey Orr: So the 154 is the carried interest that we've accumulated to date as a GP and CIGAR and in our old businesses, not as an LP seed investor. So just to make that distinction. To your question on seed capital 2.2 and whether we would increase it, that's not what we've been doing to date. As you know, we've told each of CIGAR and Power Sustainable Capital that we will keep the overall capital level the same, and they need to build their businesses based on third-party capital, including Canada Life, which is a better way to say it is non-Power capital.

Speaker Change: So the 154 is the carried interest that we've accumulated to date.

Speaker Change: that has, as a GP in cigar and in our old businesses, not as an LP seed investor. So just to make that distinction.

Speaker Change: to your question on the seed capital 2.2 and whether we would increase it. That's not what we've been doing to date. As you know, we've...

Speaker Change: We've told each of...

Speaker Change: Cigar and Power Sustainable Capital that we will keep the overall capital level the same and they need to build their businesses based on third-party capital including Canada Life, which a better way to say it is non-

Geoffrey Orr: And that is our current view. Would we ever change that to facilitate faster growth? Yeah, I wouldn't say we never would have done that. That's not our current stance, Jamie, but I hate to say we'd never do that under the circumstances. Circumstances, either because we thought there was an opportunity to get great returns or we thought it would really make a difference in moving them forward. We'd be, you know; we never say never to a strategy. You're always open to changing what you do.

Speaker Change: Power Capital.

Speaker Change: and that that is our current view. Would we ever change that?

Speaker Change: to facilitate faster growth. Yeah, I wouldn't say we never, like, that's not our current stance, Jaeme, but I hate to say we'd never do that. Circumstances, either because we thought there was...

Jaeme: Thank you very much.

Geoffrey Orr: But at this point, the 2.2, and I don't want to put too much of a point on it, that level of capital is what we expect to have invested in the businesses. It will also jump up and down a little bit with market values. Or all of a sudden, you know, we just got a big realization, and we just got a big funding and a drawdown where we've been asked to put up funds. It'll bounce around, but managing it to that level is our current strategy. I hope that answers your question.

Speaker Change: The 2.2, and I don't want to put too fine a point on it, that level of capital is

Speaker Change: what we expect.

Speaker Change: to have invested in the businesses. It will also jump up and down a little bit with market values, or all of a sudden, we just got a big realization and we just got a big funding and a drawdown where we've been asked to put up funds. It'll bounce around, but managing it to that level is our current strategy. I hope that answers your question.

Operator: Thank you. The next question comes from John Aiken with Jefferies. Please go ahead.

Speaker Change: Yeah, perfect. Thanks guys.

Speaker Change: Okay, thank you. The next question comes from John Aiken with Jefferies. Please go ahead.

John Aiken: Good morning. As Jaeme noted, you've got a very strong cash balance, more coming in from peak in the Q3 and then, obviously, in 2025 coming in from GBL. Geoff or Jake, you know, this is a

John Aiken: Morning. As Jaeme noted, you've got a very strong cash balance, more coming in from peak in the Q3 and then in 2025 obviously coming in from from GBL. Geoff,

John Aiken: This is a big cash balance. Should we be expecting...

Speaker Change: or Jake, you know, this is a big cash balance. Should we be expecting deployment at some point over the medium term, probably the next three years for something large, or are we just holding cash balance because of the unpredictable nature of the market these days?

John Aiken: deployment at some point over the median term call of the next three years for something large, or are we just holding cash balances because of the unpredictable nature of the market? That's a good question. Let me go to prioritization of capital. And Jake, you're welcome to jump in in any way that you would like after I make the comment.

Speaker Change: That's a good question. Let me go to prioritization of a capital and Jake you're welcome to jump in in any way that you would like after I make the comment.

Geoffrey Orr: So, you know, we're trying to keep a minimum balance of cash, and then we have inflows and outflows that occur, and they're not always predictable. We have realizations because, all of a sudden, Peak sells Rawlings, we sell Bellis, we get distributions from our investments in the private equity or in the VC world out of our proprietary capital. So you get cash that's coming in, and you don't always see it coming two years in advance, and it's market-dependent in some ways as well. And then we get drawdowns.

Jake Lawrence: You know, we try and keep a minimum balance of cash and then we have inflows and outflows.

Jake Lawrence: that occur, and they're not always predictable. We have realizations because all of a sudden, you know, Peak sells Rawlings, we sell Bellis. We get distributions from our investments in the private equity or in the VC world out of our proprietary capital. So you get

Jake Lawrence: cash that's coming in and you don't always

Jake Lawrence: See it coming two years in advance and it's market dependent.

Geoffrey Orr: We've got commitments. The $2.2 billion is the funding, but we've made additional commitments to different funds. And as those funds deploy, we'll get drawn down. So the nature of our future cash generation is difficult to put a precise focus on it.

Jake Lawrence: in some ways as well. And then we get drawdowns. We've got commitments. The $2.2 billion is the funded, but we've made additional commitments to different funds, and as those funds deploy, we'll get drawn down. So the nature of our future cash generation is difficult to put a precise...

Geoffrey Orr: So that was really how we generated cash, but we expected that it would continue to generate cash through those various sources going forward and add to the balances. Now, on the capital allocation question, you know, the number one priority absent our, you know, different businesses requiring and wanting to look for and needing capital to do something that's attractive to them. And I'll give some examples of that.

Jake Lawrence: focus on it. So that's that's like that was really how to how do we generate cash? But we expected that that will continue to generate cash through those various sources going forward and add to the balances. Now on the capital allocation question

Jake Lawrence: You know, the number one priority, absent our

Jake Lawrence: different businesses requiring and wanting to look and needing capital to do something that's

Geoffrey Orr: The number one priority will be to return capital to shareholders by way of a buyback. And that relates to Jaeme's question about trading at a 22% discount, trading at a 28% discount. You know, it's hard not to look at that as a pretty attractive place to put capital.

Speaker Change: that's attractive to them, and I'll give some examples of that. The number one priority will be to return capital to shareholders by way of a buyback. And that relates to Jaeme's question, is trading at 22% discount, trading at 28% discount.

Geoffrey Orr: But we've always said, and if you go back over the past 20, 25 years, if Great West Life or IGM have an opportunity to make some acquisition, and there's equity required, we have always jumped in and supported those issues. I go back to many of the equity issues they've done. It hasn't happened for a while.

Jamie Goyne: It's hard not to look at that as a pretty attractive place to put the capital, but we've always said, and if you go back over the past 20, 25 years.

Jamie Goyne: If Great West Life or IGM have an opportunity to make some acquisition and there's equity required, we have always jumped in and supported those issues. I could go back to many of the equity issues they've done. It hasn't happened for a while. They haven't required equity, but we've always kind of underwritten those with a lead order. That'll be a priority. Supporting our...

Geoffrey Orr: They haven't required equity, but we've always kind of underwritten those with a lead order. That'll be a priority. Supporting our companies will be a priority. The lead priority would trump, in those circumstances, buybacks. But we're not kind of saving it up. If your indirect question is whether we're trying to build the cash up because we've got something that the curtain is going to open on, and we're not building it up. The fact that it's grown to this extent is that we had some big realizations, particularly with the China strategy, as you know.

Jamie Goyne: Our companies will be a lead priority. Would Trump, in those circumstances, buybacks?

Jamie Goyne: and

Speaker Change: but you know we don't have we're not kind of saving it up if your indirect question is we're trying to build the cash up because

Speaker Change: We've got something that, you know, the curtain is going to open and we're going to, we're not building it up. The fact that it's...

Speaker Change: have grown to this extent.

Speaker Change: Robert Vasseur, Jake Lawrence, Gregory Tretiak, Robert Orr

Geoffrey Orr: And so, to my point, the cash comes in on a lumpy basis sometimes, and it happens to be at a higher level than it's been for a few years right now. That's as much color as I can give on you.

John Aiken: Prioritization is buybacks, absent, or companies needing us to support them on an attractive acquisition. Thanks, Geoff. You did answer what I wanted. And then just as a quick follow-on, as we've seen GBL kind of shift its strategy and, you know, kind of a bit surprised with the special dividend, is that something that Power would ever consider, given your cash balance? Thank you.

Speaker Change: That's as much color as I can give on you. So prioritization is buybacks absent are companies needing us to support them on an attractive acquisition.

Speaker Change: Thanks, Geoff. You did answer what I wanted. And then just as a quick follow-on, as we've seen GVL kind of shift its strategy and kind of a bit surprised with the special dividend, is that something that Power would ever consider, given your cash balance?

Geoffrey Orr: I think our priority is buying shares back versus special dividends. That would be the view of the company right now. I think we get better value for the long term. Again, we're doing a bunch of things. We're buying the stock at a discount. We're shifting the mix to more earnings-based. While we really like our NAV-based businesses, our shareholders have told us that they struggle to value our NAV businesses. It's a lot easier for them to value the earnings-based businesses in those streams.

Speaker Change: You know, I think our priority is buying shares back versus special dividends. That would be the view of the company right now. I think we get better value for that long term. I think it's, again, we're buying, we're doing a bunch of things. We're buying the stock at a discount.

Speaker Change: We're shifting the mix.

Speaker Change: to more.

Speaker Change: Earnings-based, and while we really like our NAV-based businesses.

Speaker Change: You know, our shareholders communicate to us that...

Speaker Change: They struggle to value our NAV businesses, and it's a lot easier for them to value the earnings-based businesses in those streams. So, you know, we're going to keep having the NAV businesses. They do lots of things for us. But by buying shares back, if you do the math on it, we're actually shifting our mix over time.

Geoffrey Orr: We're going to keep having the NAV businesses. They do lots of things for us, but by buying shares back, if you do the math on it, we're actually shifting our mix over time. It also produces more longer-term benefits. If you take $1Bn and buy $1Bn of stock back, and you eliminate 25M shares, that's another $50M-$60M of cash flow that we have available to increase the dividend over time. Whereas if you do it one time, it's just one time.

Speaker Change: And then it also produces, I think, more longer-term benefits. If you take a billion dollars and buy a billion dollars of stock back, you know, and you eliminate 25 million shares, well, that's another 50, 60 million dollars.

Geoffrey Orr: It felt great. Everybody goes off and enjoys the quarter. Our bias is heavily towards doing buybacks versus doing special dividends, but I won't speak for the JBL board. That's a whole other dynamic, and they have their own rationale for doing it.

Speaker Change: Casflow, that we have available to increase the dividend over time, whereas if you do a one time, it's one time, it felt great. Everybody goes off and enjoys the quarter and then you're so our bias is heavily towards.

Jaeme Gloyn: and I really think it was...

Speaker Change: towards doing buybacks versus doing special dividends. But I won't speak for the GBL board. I mean, that's a whole other dynamic, and they have their own rationale for doing it.

John Aiken: Thanks, Geoff. I'm glad that we're philosophically aligned. I'll retreat.

Speaker Change: Thanks, Geoff. I'm glad that we're philosophically aligned. I'll recue.

Operator: The next question comes from Doug Young with Desjardins Capital Markets. Please go ahead.

Speaker Change: Okay, thank you.

Speaker Change: The next question comes from Doug Young with Desjardins Capital Markets. Please go ahead.

Doug Young: Hi, good morning. Just back to the SAGIR discussion, just kind of three areas I want to dig into. The carried interest, so... It sounds like 77 million are not realized.

Doug Young: Alright, good morning. Just back to the SAGIR discussion, just kind of three areas I want to dig into. The carried interest, so...

Doug Young: I'll call it $75 million, not realized; that's net of comp.

Speaker Change: Sounds like $77 million not realized, so call it $75 million not realized. That's net of comp.

Doug Young: How much of this could be attributed to power?

Doug Young: Is it 50 million? And assuming no change, and I fully understand this can bounce around, but how long does it take?

Speaker Change: How much of this would be attributed to power? Is it $50 million? And assuming no change, and I fully get this can bounce around, but how long does it take for this to kind of flow through into earnings?

Doug Young: Like, how long does it take for this to kind of flow through into earnings?

Geoffrey Orr: So that would be after, that would be the share of the shareholders after employees in that case, net of that. But it is for all the GP owners, and I think Cigar is really the biggest contributor to that.

Speaker Change: So...

Speaker Change: That would be...

Speaker Change: That would be the share of the shareholders after employees recalled and casement.

Speaker Change: Yes, that instead of that, but it is for all the GP owners and I think cigar is really the very contributor to that and on an undiluted basis we would own

Geoffrey Orr: And on an undiluted basis, we would own, you know, 60 odd percent. I think it's somewhere around there; fully diluted, we're at 52, 53. So the realizations of it, I can't answer that question. There's going to be some of that, which is venture capital, and private equity. And that's the question of when is it, when is it realized, and when does it get paid? It'll be in future years. I hope the balance is a lot bigger, by the way. Is that gross?

Speaker Change: you know, 60-odd percent, I think, is somewhere around there. Fully diluted, we're at 52, 53. So, the realizations of it, I can't answer that question. There's going to be...

Speaker Change: Some of that, which is venture capital, private equity, and that's a question of when is it realized and when does it get paid? It'll be in future years. I hope the balance is a lot bigger, by the way, is that gross? But I don't have a good visibility, and probably Cigar themselves doesn't have good visibility on the realizations.

Geoffrey Orr: But I don't have good visibility, and probably Cigar themselves don't have good visibility on the realizations, but we would share in that pro rata to our equity ownership, and that is the way to think about it. So it's not like there would be a minority interest that would participate in that. And so the point of illustrating it wasn't to say, you know, and half of it's flown through the P&L, approximately always. So there's 75 million with the minority interest in there. Wow.

Speaker Change: But we would share in that pro-rata to our equity ownership in CIGAR, is the way to think about it. So there would be a minority interest that would participate in that.

Speaker Change: Thank you.

Speaker Change: Point of illustrating, it wasn't to say.

Speaker Change: you know and half of it's flown through the P&L approximately always so there's 75 million with the minority interest in there Wow there's

Geoffrey Orr: There's 40 million bucks there that you should all be getting excited about. But the point was to illustrate that the economics that are being driven out of the GP are not just from the fee-related income because, you know, we've we have. As I said earlier, we're probably guilty in our communication of having put a lot of emphasis on the fee-related income. And the reality is building up these businesses to get them to scale where they're going to make a meaningful contribution to power corp is a long road. But you step back and say, well, yeah, but we've got other drivers aside from the strategic reasons we're doing it. We've got other drivers or drivers of economics. It's carry on.

Speaker Change: There's 40 million bucks there that you should all be getting excited about. The point was to illustrate that the economics that are being driven out of the GP are not just...

Speaker Change: from the fee-related income.

Speaker Change: Because, you know, we have, as I said earlier, we're probably guilty in our communication of having put a lot of emphasis on the fee-related income, and the reality is building up these businesses to get them to scale where they're going to make a meaningful contribution to Power Corp is a long road.

Speaker Change: But you step back and say, well...

Speaker Change: Yeah, but we've got other drivers of, aside from the strategic reasons we're doing it, we've got other drivers, or drivers of economics. It's Cary, we hope to make a lot more money on Cary going forward.

Geoffrey Orr: We hope to make a lot more money on carry going forward. And again, the two point two billion, we've kind of not really focused on in the short and the medium, short to medium term. That's going to be the prime driver of the earnings coming out of these strategies, and we've kind of neglected that in our communication. So as we've discussed that, we're realizing we probably put the emphasis on the wrong syllable here for a while.

Speaker Change: And again, the $2.2 billion we've kind of...

Speaker Change: We're not really focused on, in the short to medium term, that's going to be the prime driver of the earnings coming out of these strategies. And we've kind of neglected that in our communication. So as we've discussed that, we're realizing we probably put the emphasis on the wrong syllable here for a while. And we're going to try and...

Doug Young: And we're going to try and be more complete in our disclosure. And you went to where I was going next, and that $2.2 billion, I think, and I know this isn't going to be consistent, but you're aiming for a 10% plus return on that. That's $220 million. Let's say you don't increase that $2.2 billion; it stays constant. $220 million of cash coming in; there's really no offset or use. So, I mean, that's really what you could think of in terms of funding buybacks, at the minimum. Is that the right way to kind of think of it?

Speaker Change: to try and be more complete in our disclosure.

Speaker Change: And you went to where I was going next, and that $2.2 billion, and I know this isn't going to be consistent, but you're aiming for a 10% plus return on that. That's $220 million.

Speaker Change: Let's say you don't increase that $2.2 billion, it stays constant, $220 million of cash coming in, there's really no offset or use, so that's really what you could think of in terms of funding buybacks at the minimum. Is that the right way to kind of think of it?

Geoffrey Orr: Yes, but what I would say is that the realizations of that cash are and are different. But that's why I pointed out that half of it is in equity infrastructure, private credit, royalties, those kinds of strategies which are designed for income investors to produce steady income, not always net income or equity infrastructure. The infrastructure funds, for example, have actual P&L losses to them, but they produce a lot of cash. That's why I won't get into the details, but we're looking at this on a cash basis.

Speaker Change: Yes, but what I would say is that the

Speaker Change: are

Speaker Change: different

Speaker Change: But that's why I pointed out that half of it is in...

Speaker Change: Equity infrastructure, private credit, royalties, those kinds of strategies which are designed for income investors to produce steady income, not always net income, or equity infrastructure. The infrastructure funds, for example, have actual P&L losses to them, but they produce a lot of cash.

Speaker Change: So I won't get into the detail, but so we're looking at this on a cash basis. They produce, that part of the portfolio produces steady cash returns. The private equity and the VC is through realizations.

Speaker Change: And if you just follow the private equity market or the VC market, you go through, like the last two years have been, they've been very difficult to do realizations, right? That's why the whole private equity and the alts market is backed up. It's not just...

Speaker Change: It's not just there's difficulty in funding, the reason there's difficulty in funding is that there's difficulty in realizations.

Speaker Change: And so, and the money's not getting deployed, so the whole system's backed up, starting to loosen up now, if you have been following that. So the realizations on that portion of it are dependent on you creating capital gains, and then there actually being sales of the portfolio, which can sometimes drag out, and you get two years where you get a lot, and it rains.

Speaker Change: and then you get a couple of years where it all dries up and so they are not steady, they're episodic.

Speaker Change: So you, so the 220.

Speaker Change: or 250 depending we said we think we're gonna get we're hoping to get a little more than 10% on the mix But it's around there Will not be 250 every year It's going to be a portion of it's going to come in steady income and a portion of it will come episodically Now there is one other way we can realize Cash on that which we've also utilized as a tool. You'll remember a couple years ago. We sold For I think about 300 million. I'm not too far off

Speaker Change: a secondary position in CIGAR.

Speaker Change: Three, I think it was.

Speaker Change: And there's a big secondary market, as you know, in the alts. I could go on a lot about that for you, but there's buyers of secondary positions, and sometimes we get a bid for a position we have for a fund position, and we just kind of liquidate it. That's a third source of cash, which can create, again, kind of episodic, if I can use that word, realizations. So it's not just straightforward. We're not buying a bond here and collecting it every quarter. That money will come in in different ways.

Speaker Change: And back to my comment about, you know, predicting the cash flow here. We're confident we're going to get a lot of cash out of it, but it's hard to exactly put a timetable on when it comes in. Doug, Jake, the account...

Geoffrey Orr: The accounting geography will also be complicated just a little bit. The energy infrastructure will have some amortization of the assets flowing through it, and so that will offset some of the earnings you see, just given consolidation. But to Geoff's point, they are economically profitable, and they will be producing cash flow. The top part, the income strategies, will have more of a consistent flow to them, with the bottom portion around capital appreciation really being dependent on those episodic activities Geoff noted. And then can you remind me, I don't think you do, but do you, do you actually hold Sager at the business?

Speaker Change: The accounting geography will also be complicated just a little bit. The energy infrastructure will have some amortization of the assets flowing through, and so that will offset some of the earnings you see, just given consolidation. But to Geoff's point, they are economically profitable, they will be producing cash flow. The top part, the income strategies, will have more of a consistent flow to them, with the bottom portion around capital appreciation really being dependent on those episodic activities

Speaker Change: No, that makes sense. And then can you remind me, I don't think you do, but do you do you actually hold SAGIR, the business, not like the actual business itself, not the funds, do you hold that, is there a value of that in the NAV?

Doug Young: Just like the actual business itself, not the funds. Do you hold that? Is there value in that?

Doug Young: The value of that in the now.

Geoffrey Orr: Yeah, there sure is, and we have been writing it up with the ADQ, now Lunate BMO, transaction last year. That was done at a value, I think it valued Cigar overall at $500 million for the entire GP. I'm looking at my colleagues here. US, 500 US. And our share in that is on the books for 200 and something over a quarter of 290, 290 US or Canadian, 290 Canadian is what we have in our nav for our GP position in the cigar.

Speaker Change: Yeah, there sure is. And we have been...

Speaker Change: It's been written up with the ADQ, now Lunate BMO, transaction last year that was done at a value, I think it valued Cigar overall, I'm going to say $500 million for the entire GP. I'm looking at my colleagues here.

Speaker Change: Thank you very much.

Speaker Change: Canadian. 290 Canadian is what we have in our nav for our GP position in CIGAR.

Geoffrey Orr: Okay, so that would, and we have not, that's like, that's a nice capital gain on that. Yeah, okay. And then, just lastly, Geoff, maybe you could put your investment banker hat back on here. But, you know, it's like, you get the feel that the market has.

Speaker Change: Okay, so that would and we have not that's like that's a that's a nice capital gain on that

Speaker Change: [inaudible]

Speaker Change: And then just lastly, Geoff, maybe you could put your investment banker hat back on here.

Doug Young: It's more conducive to getting the rest of the non-core businesses off your books. Like you've done some on, you know, within Peak. There's still some.

Speaker Change: You get the feel that the market's more conducive to getting the rest of the non-core businesses off your books. You've done some within Peak, there's still some left in Peak, you've got Leon, what's your feel in getting some of those non-core businesses off the books?

Doug Young: and Lesson Peak. Now, you've got Leon, Roman Paul Stink, and the rest of them still in there. But,

Geoffrey Orr: What's your feeling about getting some of those non-core businesses off the books?

Geoffrey Orr: Yeah, your crystal balling on this thing is difficult because, you know, if you're asking me whether the Fed is going to be able to land the economy, work interest rates down quickly enough and avoid a hard landing versus a soft landing. I'm not going to answer that question, but that has a bearing on the market. But yeah, so obviously, you know, if we go into a recession, it's going to be tough to do things.

Jeff Kwan: Yeah, your crystal balling on this thing is difficult because...

Speaker Change: Thank you.

Speaker Change: You know, so if you're asking me whether

Speaker Change: whether the Fed is going to be able to land the economy.

Gregory Tretiak: and Gregory Tretiak.

Geoffrey Orr: I think the business of Peak, maybe looking at it another way, I think the business of Peak is doing well across the board. They were doing well in their sports businesses, doing well in their hockey businesses. I think that Lumen Pulse's business has gone through fits and starts, but they've got a growing backlog and growing momentum in their business. So rather than talk about the market environment, which I cannot predict, I think the business of Lumen Pulse is picking up momentum, which is a good thing.

Speaker Change: Maybe looking at it another way, I think the business of Peak is doing well across the board. They were doing well in their sports businesses, doing well in their hockey businesses. I think that

Speaker Change: Lumen Pulse's business.

Speaker Change: has gone through fits and starts, but they've got a growing backlog and growing momentum on their business.

Speaker Change: So, I think rather than talk about the market environment, which I cannot predict, I think the business of LumenPulse, we think, is picking up momentum, which is a good thing. And Lyon is facing challenges, as you would have seen, with a big reduction in their workforce a couple of weeks ago.

Geoffrey Orr: And Lyon is facing challenges, as you would have seen a big reduction in their workforce a couple of weeks ago of 30%. But they've got a nice position in the electric bus market. A big, big issue for them is that the subsidy programs for the various municipalities that were announced across Canada have not been put in place in a way that the different municipalities can access them. So they built out a lot of capacity in buses with a lot of demand for their product that is backlogged because they can't get the federal funding that was expected.

Speaker Change: Thank you very much.

Speaker Change: have not been put in place in a way that the different municipalities can access them. So they built out a lot of capacity in buses with a lot of demand for their product that is backlogged because they can't get the federal funding that was expected. And like you've seen in...

Geoffrey Orr: And like you've seen in the electric car business, where you've had subsidies to buy Teslas and whatnot, the economics of the business are dependent on public policy helping the sale of buses, and that's backlogged at this point. So they have got challenges with cash flow. So does that get resolved? How does that get resolved? I think that's a difficult one to see us trying to make any moves there with Lyon given the current state of their business.

Speaker Change: The electric car business where you've had subsidies to buy Teslas and whatnot, the economics of the business are dependent on public policy helping the sale of buses, and that's backlogged at this point. So they have got challenges in cash flow. So does that get resolved? How does that get resolved? I think that's a difficult one to see us...

Geoffrey Orr: Doug, what I would point out is when the pivot was made back at the end of 2019 towards financial services, as you correctly note, these were identified as essentially non-core standalone businesses. The following four years, I'd say were extremely challenging, right? We had a pandemic, and we had a massive spike in rates, which obviously hurt financing and valuation activities. Assuming the next four years aren't as challenging, I would expect further progress would be made than what we would have had in the last four years. There's no question. I mean, this is a...

Geoffrey Orr: I've said this before, had you told me or us back in December 19 when we announced the strategy that we would still own these businesses, I would have said, no, come on. So, you know, that's another way of saying what Jake said. We went through a few challenges here in terms of market ups and downs. But, you know, it doesn't matter. We're in the grand scheme of things, we continue to execute on the strategy, and the opportunity to realize those funds will present itself, and we'll take advantage of it when it's there. So we're very committed to getting it done. I appreciate all the color, thank you.

Operator: Once again, if you have a question, please press star then 1. The next question comes from Graham Ryding with TD Securities. Please go ahead.

In the Grand scheme of things, we continue to execute on the strategy and the opportunity to realize those funds will present itself and we will take advantage of it when it's there. So we're very committed to getting it done.

Speaker Change: I appreciate all the color. Thank you.

Doug Young: Thank you thanks, Doug.

Speaker Change: Once again, if you have a question. Please press Star then one.

Speaker Change: The next question comes from Graham Ryding with TD Securities. Please go ahead.

Graham Ryding: Hi, good morning. Just wanted to maybe talk about the alts platform that you have and the idea of penetrating the retail channel. It seems to be an opportunity or a focus for a lot of alternative asset managers in the market. So how much of a priority is that for Cigar at our power sustainable? And if so, how are you going about that great potential opportunity?

Graham Ryding: Hi, good morning.

Graham Ryding: Just wanted to maybe talk about.

Speaker Change #101: The ox.

Graham Ryding: Platform that you have in the idea of penetrating the retail channel it seems to be an opportunity or a focus for a lot of.

Speaker Change #102: Alternative asset managers in the market. So how much of that how much of a priority is that for cigar airpower sustainable and if so how are you how are you going about.

Speaker Change #102: Great initial opportunity.

Graham Ryding: Yeah, great question. And we do view the buzzword as the democratization of alternative media.

Speaker Change #103: Yeah, Great Great question, and we do view the.

Speaker Change #102: <unk>.

Speaker Change #104: The buzzword is the democratization of vaults.

Speaker Change #102: So.

Speaker Change #102: That is no.

Speaker Change #105: No question.

Speaker Change #105: A priority not just for cigar Paris stand with capital, but also for north leaf for.

Mackenzie: Mackenzie for IAG wealth.

Speaker Change #107: Our empower.

Speaker Change #107: Both at distributors.

Speaker Change #108: And as manufacturers, we view that as a big opportunity.

Speaker Change #108: The more you go into it.

Speaker Change #108: To do so requires different structures.

Geoffrey Orr: So, that is no question a priority, not just for Cigar, Power, Sustainable Capital but also for Northleaf, McKenzie, IG Wealth, Empower. You know, both as distributors and as manufacturers, we view that as a big opportunity. The more you go into, to do so requires different structures. So in a traditional alternative business, you go out to an institutional buyer or a very large family office and you say, we're going to launch a fund, and it's going to dry up over the next four years, and we're going to call on you every time we need money. So going out to thousands of investors and millions of investors, you need to have different structures to manage that. And as well, you end up with different products.

Speaker Change #108: In the traditional <unk> business, you go out to an institutional buyer or a very large family office and you say, we're going to launch a fund and its going to drawdown over the next four years and we're going to call on you every time, we need money. So.

Speaker Change #108: So going out too.

Speaker Change #108:

Speaker Change #108: Thousands of investors and millions of investors.

Speaker Change #108: Need to have different structures to manage that.

Speaker Change #108: And the as well you end up with different products hence.

Geoffrey Orr: Hence, secondaries, which don't have long drawdown periods. Secondary funds tend to deploy their capital very quickly and also have the benefit of diversification, can be highly attractive as you move into smaller markets. And by the way, Northleaf has got that, and that's what the premier performer was that Cigar purchased, PEM, sorry. So, I got the name wrong there, excuse me, but that's why Cigar has gone into

Speaker Change #108: Dairies.

Speaker Change #108: Which don't have long drawdown period secondary funds tend to deploy their capital very quickly and have also the benefit of diversification can be highly attractive as you move into smaller markets.

North leaf: And by the way North leaf has got that and that's what.

Speaker Change #108: Premier.

Speaker Change #108: Performance was that the cigar purchased.

Speaker Change #110: I'm, sorry, I forget so.

Speaker Change #110: I got the name wrong, there excuse me, but thats why cigars gone into secondaries North leaf is already in the secondaries business that has that has a lot of appeal. Secondly, when you then look at it from a retail kind of smaller investor.

Geoffrey Orr: Northleaf is already in the secondaries business, that has a lot of appeal. Secondly, when you then look at it from a retail kind of smaller investor, their multi-asset programs and multi-asset strategies are probably the easiest way to think about it. So, rather than them going out and buying a fund itself, if they're in a fund to fund structure or they've got a portfolio approach where they've turned over the management of their overall portfolio to the house like IG Wealth has, as you may know, IG Wealth has got 82% of its flows coming into managed assets where the investor has simply said to IG, you manage the portfolio or in many of power systems, excuse me, empower strategies, where the money is in multi-asset, you can allocate 5% of the multi-asset or 10% of the multi-asset to alts, because it's not a single fund where you're going to get liquidity concerns that there's a run, you're in a multi-asset strategy that's got a long duration to it.

Speaker Change #111: They're multi asset programs and multi asset strategies are probably the easiest way to think about it so rather than them going out and buying a fund itself if they're in a fund of funds structure or they've got a portfolio approach, where they've turned over the management of their overall portfolio too.

Speaker Change #112: <unk> like <unk> wealth has as you can as you may know <unk> wealth has got 82% of its flows coming into managed assets were.

Investors simply said do you manage the portfolio or in many of our Paris arrows.

Speaker Change #112: Excuse me empower strategies, where the money is in multi asset you can allocate 5% of the multi asset or 10% of the multi asset to <unk>.

Speaker Change #112: Because it's not a single fund, where you're going to get liquidity concerns that there was a run here in our multi asset strategy.

Speaker Change #112: Strategy, that's got a long duration to it and so theres lots, there's lots of work that needs to be done.

Geoffrey Orr: So there's lots of work that needs to be done to think about that. And the final thing I'll say, I may be going on too long here for your answer, but McKinsey has launched a bunch of alternative funds. And in order to deal with the liquidity issue, they've got basically windows where you've got liquidity, you can take 5% out every quarter, you got to give notice, etc. So there are different structures, but this is a huge focus across our group.

Speaker Change #112: To think about that and the final thing I'll say, maybe going on too long here for your answer, but Mackenzie has launched a bunch of Alt funds and in order to deal with the liquidity issue they've got.

Speaker Change #112: Basically windows, where you've got liquidity you can take 5% out every quarter, you're going to give notice et cetera. So there's different structures, but this is a huge focus across our group and our Canadian firms cigar personable capital normally are also touching base with our U S distribution platforms.

Geoffrey Orr: And our Canadian firms, Cigar, PowerStandard Capital, and Northleaf, are also touching base with our U.S. distribution platforms, including Empower and Rockefeller, and looking for distribution into different markets. So we are leveraging that across the group. Hopefully, that answers your question, Graham.

Speaker Change #112: Including empower including Rockefeller.

Speaker Change #112: And looking for distribution into different markets. So we are leveraging that across the group.

Speaker Change #112: That answers the question Graham.

Graham Ryding: Yeah, yeah, that's helpful. And then probably just a quick one, but you touched on the targeted returns, slide 16, just for your $2.2 billion capital, which is proprietary roughly 10% plus. What has your track record been over the last five years, and have you been able to hit those targeted thresholds?

Graham Ryding: Yes, yes, that's helpful.

Speaker Change #113: And then.

Speaker Change #114: Probably just a quick one but you touched on the targeted returns.

Speaker Change #114: Slide 16, just three year to $2 2 billion of capital that's.

Terry: Prior Terry.

Speaker Change #116: Roughly 10% plus what is your what is your track record been over the last five years have you been able to hit those targeted thresholds.

Geoffrey Orr: Yeah, I think if we went through all of these existing strategies, they've all got track records. I want to be careful to make a blanket statement; that is too strong.

Speaker Change #117: Yes, I think if we went through all of these existing strategies they've all got.

Speaker Change #118: Track Records I want to be careful to make a blanket statement all is too strong.

Geoffrey Orr: I think the reason we feel good about our ability to grow these businesses is that they've got track records in these various areas that have demonstrated these returns. We've got some new strategies where there are fund managers that have joined our group. So, in particular, I'll point out Tom Murray of Power Sustainable Capital, who's got an infrastructure debt fund, but he's got a record with I Squared and with Apollo. It's not our record, it's his record, but he has a very, very long-term track record and credibility with investors.

Speaker Change #118: I think the.

Speaker Change #118: The reason, we feel good about our ability to grow these businesses is that they've got track records.

Speaker Change #118: In these various areas that have demonstrated these returns we've got some new strategies, where their fund managers that have joined our group. So in particular I'll point out Tom Murry in Paris tangible capital Who's got a an infrastructure debt fund.

Speaker Change #118: But he's got a record for with ice squared and with Apollo is not it's not our record as his record, but he's got a very very long term track record and credibility with investors. So we.

Geoffrey Orr: So, the reason we think we'll be able to go out and continue to raise money is these existing strategies have produced attractive returns. And the ones that, you know, we've had some other strategies that haven't done as well that have been closed that we're not in anymore. Great, that's it for me. Thank you.

Speaker Change #118: The reason, we think we'll be able to go out and continue to raise money as these these existing strategies have produced attractive returns so.

Speaker Change #118: And the ones that we had some other strategies that havent done as well that have been that have been closed that were not in anymore.

Speaker Change #119: Great that's it from that.

Speaker Change #118: Okay.

Speaker Change #120: Thank you.

Geoffrey Orr: There are no further questions. I would like to turn the conference back over to Mr. Geoffrey Orr for any closing remarks.

Mr. Jeffrey: There are no further questions I would like to turn the conference back over to Mr. Jeffrey or for any closing remarks.

Geoffrey Orr: Okay, thank you, operator. Thank you again for being with us. Thank you for your interest and your coverage and we look we wish you all hopefully you get a little bit of time to enjoy what's left of the summer and we'll look forward to talking to everybody in the very near future. Thanks everyone. Have a good day. Operator, back to you. Thank you, sir.

Mr. Jeffrey: Okay. Thank you operator, thank you again for being with US. Thank you for your interest and your coverage and we look are we wish you all a fleet you get a little bit of time to enjoy what's left of the summer and we'll look forward to talking to everybody in the very near future. Thanks, everyone have a good day.

Speaker Change #122: Back to you.

Speaker Change #123: Thank you, Sir ladies and gentlemen. This concludes your conference call for today. Thank you for participating and you may now disconnect your line.

Operator: to you, www.powercorporation.ca

Operator: [music]

Speaker Change #123: Yeah.

Speaker Change #123: Hum.

Speaker Change #123:

Speaker Change #123: [music].

Unnamed Speaker: John Aiken, John Aiken, Robert Orr, Gregory Tretiak, John Aiken [inaudible]

Geoffrey Orr: That part of the portfolio produces steady cash returns. The private equity and the DC are through realizations. If you just follow the private equity market or the VC market, you go through like the last two years have been very difficult to make realizations. That's why the whole private equity in the ultimate market is backed up. It's not just that there's difficulty in funding. The reason there's difficulty in funding is that there's difficulty in realization. And the money's not getting deployed, so the whole system's backed up. Starting to loosen up now if you've been following that.

Geoffrey Orr: So the realizations on that portion of it are dependent on you creating capital gains. And then they're actually being sales of the portfolio, which can sometimes drag out, and you get two years where you make a lot, and it rains. And then you get a couple of years where it all dries up. And so they are not steady.

Geoffrey Orr: They're episodic. So the 220 or 250, depending. We think we're going to get a little more than 10% on the mix, but it's around there will not be 250 every year. It's going to be a portion of it that is going to come in steady income, and a portion of it will come episodically. Now there is one other way we can make cash on that, which we've also utilized as a tool. You'll remember a couple of years ago we sold for, I think about, 300 million. I'm not too far off a secondary position on the cigar tree. I think it was so.

Geoffrey Orr: And there was a big secondary market, as you know in the old days, so I could go on a lot about that for you. But there are buyers of secondary positions, and sometimes we get a bid for a position we have for a fund position, and we just kind of liquidate. That's a third source of cash which can create again kind of episodic, if I can use the word realizations, realizations, so it's not just straightforward as we're not buying a bond here and collecting it every quarter; the money will come in in different ways.

Geoffrey Orr: And back to my comment about predicting the cash flow here. We're confident we're going to get a lot of cash out of it, but it's hard to exactly put a timetable on when it comes in. Doug and Jake, the account...