Q2 2024 KKR & Co Inc Earnings Call
Ladies and gentlemen, thank you for standing by welcome to Kkr's second quarter 'twenty 'twenty four earnings conference call. During today's presentation, all parties will be in a listen only mode.
Speaker Change: Following management's prepared remarks, the conference will be opened for questions. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad.
Craig Larson: Mind you. This conference is being recorded I will now hand, the call over to Craig Larson partner and head of Investor Relations for KKR Craig. Please go ahead.
Craig Larson: Thank you operator and good.
Speaker Change: Good morning, everyone welcome to our second quarter 2024 earnings call. This morning, as usual I'm joined by Rob Lewin, Our Chief Financial Officer.
Speaker Change: And Scott Nuttall, our co Chief Executive Officer.
Speaker Change: We would like to remind everyone that we'll refer to non-GAAP measures on the call, which are reconciled to GAAP figures in our press release, which is available on the Investor Center section at KKR Dot com.
Speaker Change: And as a reminder, we report our segment numbers on an adjusted share basis.
Speaker Change: This call will contain forward looking statements, which do not guarantee future events or performance. Please.
Please refer to our earnings release as well as our SEC filings for cautionary factors about these statements.
Speaker Change: So first beginning with our results for the second quarter.
Speaker Change: We are pleased to be reporting fee related earnings of 84 cents per share the highest we reported in our history.
Speaker Change: And 25% above the cigarettes, we reported one year ago.
Speaker Change: And adjusted net income of $1.09 per share is up approximately 50% compared to one year ago.
Speaker Change: Going into a little more detail management fees in the quarter were $847 million.
Speaker Change: This is up 13% year over year, driven by the breadth of our fundraising activities alongside a pick up in deployment.
Speaker Change: Capital markets transaction fees were strong in the quarter at $192 million.
Speaker Change: Mainly from activity in new and existing portfolio companies within private equity and infrastructure as.
Speaker Change: As well as an overall improvement in both the debt and equity capital markets backdrops.
Fee related performance revenues in the quarter were $37 million.
Speaker Change: This was the first quarter, our offshore case series vehicles are in their annual incentive fee given their launches about a year ago.
Speaker Change: The fee related performance revenue figure includes our infrastructure vehicle well to be clear our performance allocation on a private equity vehicle is reflected in our realized performance income line item that is below fee related earnings.
Speaker Change: He related compensation was right at the midpoint of our guided range, which as a reminder is 17, 5%.
Speaker Change: Other operating expenses came in at 158 million. So in total FRE was $755 million and a referee margin came in at 68%.
Speaker Change: Insurance operating earnings were $253 million in Q2.
Speaker Change: And strategic Holdings operating earnings were 41 million in the second quarter as we continue to track towards our expected 300 plus million net dividends by 2026.
Speaker Change: Importantly, we're continuing to see consistent growth across the underlying businesses.
Speaker Change: Kicky our share of these businesses as of the first quarter. So on a one quarter lag basis LTM revenues were $3 6 billion and EBITDA was approximately $900 million or so.
Speaker Change: With 14% and 12% like for like growth in revenue and EBITDA year over year, respectively.
Speaker Change: Yeah.
Speaker Change: So altogether total operating earnings were $1 17 per share.
Speaker Change: As a reminder, total operating earnings equals our fee related earnings together with insurance and strategic holdings operating earnings.
Speaker Change: This quarter total operating earnings represents over 80% of pre tax adjusted net income so said differently over 80% of our pre tax earnings this quarter were driven by our more recurring revenue streams.
Speaker Change: Turning to investing earnings realized performance income was $482 million.
Speaker Change: And realized investment income was $139 million.
Speaker Change: This was driven by secondary and strategic sale activity across a number of asset classes, including private equity and infrastructure.
Speaker Change: As well as across multiple geographies pointing to the maturity and the diversity of our business.
Speaker Change: So in aggregate adjusted net income was $972 million or the $1 <unk> per share figure I mentioned a moment ago.
Speaker Change: Moving to investment performance and page 10 of our earnings release.
Speaker Change: The traditional private equity portfolio appreciated, 4% in the quarter and 18% in the last 12 months.
Speaker Change: Opportunistic real estate was up one in the quarter and up three in the LTE M <unk>.
Speaker Change: Infrastructure continues to perform well up 3% in Q2 and up 17% LTM.
Speaker Change: And then credit the leveraged credit composite was up two in the alternative credit composite was up three in Q2.
Speaker Change: And over the past 12 months performance here was 12% for both strategies.
Speaker Change: And given this investment performance our gross unrealized carried interest balance increased to $7 1 billion.
Speaker Change: That is up over 40% from Q2 of 2023.
Speaker Change: And finally before turning over to Rob we wanted to reflect for a moment on an exciting milestone as Kicky are entered the S&P 500 index in June.
Speaker Change: We believe this is a strong reflection an endorsement of the firm's performance our people and our culture and.
Speaker Change: And we want to thank and recognize everyone at KKR for the creativity innovation and focus that got us to where we are today and.
Speaker Change: And we will continue to propel us going forward.
Speaker Change: And with that I'll hand, the call over to Rob.
Robert H. Lewin: Thanks, a lot Craig.
Robert H. Lewin: Given the recent S&P 500 inclusion.
Robert H. Lewin: We expect that there are many on the call listening for the first time.
Robert H. Lewin: Welcome.
Robert H. Lewin: We would encourage you to also take a look at our April Investor Day replay and presentation that is found on our website.
Robert H. Lewin: We feel as good as ever to hit our 2026 guidance figures that we introduced in April.
Robert H. Lewin: As a reminder, those include.
Robert H. Lewin: 300 billion plus of new capital raised over the course of 2024 through 2026.
Robert H. Lewin: And in terms of our financial metrics by 2026.
Robert H. Lewin: $4 50, plus cents per share of FRE.
Robert H. Lewin: $7 plus per share of total operating earnings and.
Robert H. Lewin: And between seven and $8 of adjusted net income per share which is after tax.
Speaker Change: So looking at the LTM figures that we reported this morning.
Speaker Change: Our 2026 guidance implies a 20% annual growth rate plus or minus across all three of these key financial metrics.
Speaker Change: Overall, our activity levels and the momentum across the firm feel very strong.
Speaker Change: We are continuing to see our management fee scale meaningfully.
Speaker Change: With 13% year over year growth.
Speaker Change: And this is before our in market flagship funds have turned out.
Speaker Change: We are also seeing continued real signs of the monetization backdrop improving.
Speaker Change: As evidenced by our Q2 realized performance fees and investment income.
Speaker Change: Last quarter I mentioned that we had very healthy pipelines on the back of the improved environment as well as our diversified and performing portfolio.
Speaker Change: I will echo the same comments again this quarter.
Speaker Change: So far in Q3, we have already completed a secondary sale of our shares in Coca side.
Speaker Change: Check our portfolio company one stream public.
Speaker Change: And advised lineage logistics of third party capital markets client on their IPO as well.
Speaker Change: As a result of the current activity levels, our capital markets business saw its second highest revenue quarter in the past couple of years and Q2.
Speaker Change: Looking forward and.
Speaker Change: If something changes in the market or deal pipeline gets pushed Q.
Speaker Change: Q3 capital markets fees are shaping up to be one of the highest in our history.
Speaker Change: Turning to strategic holdings.
Speaker Change: We've only reported this segment on a standalone basis for two quarters.
Speaker Change: We remain confident in our ability to take the business to over 1 billion of operating earnings by 2030.
Speaker Change: Stepping back.
Speaker Change: I don't think there are a lot of corporates, giving seven year guidance.
Speaker Change: So I think this really does speak to our confidence in both the durability and growth orientation of these cashless.
Speaker Change: Now turning to insurance.
Speaker Change: There are a lot of really positive developments this quarter. So I wanted to spend a bit of extra time, taking you through a number of business building initiatives.
Speaker Change: In Q2, we saw a record volume of inflows from global Atlantic across annuity sales and flow reinsurance.
Speaker Change: Totaling over 8 billion in the quarter.
Speaker Change: Compared to less than 3 billion, just a year ago.
Speaker Change: And looking at the last four quarters in aggregate total inflows, including block activity a bit over $50 billion.
Speaker Change: That's the highest point in any 12 month period energy as history.
Speaker Change: On the earnings front, we continue to feel good about our ability to generate 14% to 15% pretax ROE is the right long term target.
Speaker Change: The ROE for Q2 came in below this range as.
Speaker Change: As a result of a couple of factors, but mostly a function of us leaning into the long term opportunity at G. I.
Speaker Change: The drivers for the quarter include elevated levels of liquidity from a big block reinsurance transactions as well as the significant ramp up in quarterly volumes.
Speaker Change: And some of the investments we are choosing to make that favorite longer term ROE is really at the expense of near term rovs.
Speaker Change: Overall, we continue to feel great about the long term trajectory of G I and the opportunity for us to create significant value together.
Speaker Change: In particular, given that we are now six plus months into owning 100%. We thought we thought we'd bring you throw some tangible examples of how our closer collaboration across investments as well as capital markets are driving real business performance.
Speaker Change: First in real estate we.
Speaker Change: We recently closed on a 2 billion Unlevered acquisition of a 5000 plus unit multifamily portfolio.
Speaker Change: Given the dearth of real estate or excuse me of core real estate capital globally.
Speaker Change: We are seeing excellent risk return for the few very well capitalized buyers in the market.
Speaker Change: Of which we are one.
Speaker Change: We have conservatively priced this deal to an 8% Unlevered return.
Speaker Change: With significant upside potential.
Speaker Change: Which we think is a really compelling risk adjusted return, but it's the type of deal that is going to put some pressure on our near term roe's for the benefit of longer term profitability.
Speaker Change: As an example, we expect the year one yield on this portfolio to be in the low 4% range.
Speaker Change: Obviously less than where we are originating our liabilities today.
Speaker Change: But the combination of yields increasing overtime.
Speaker Change: And the expected appreciation of the asset make this a really interesting deal and one we're excited to pursue for the long term.
Speaker Change: Now there will naturally be a limit to how much of this type of investment that we want to make but I think it's a really great example of our increased coordination between our real estate equity team N G I.
Speaker Change: We also have had a very positive development this quarter on the infrastructure side of our business we.
Speaker Change: We announced an investment in Labrador Island link, which is a transmission line that brings renewable energy to eastern Canada.
Speaker Change: This is the first collaboration between global Atlantic and take care of his infrastructure teams, who worked together just structure of the equity interest with significant downside protection.
Speaker Change: And finally, we wanted to take you through a briefcase case study from early Q3 that combines global Atlantic our credit teams as well as our capital markets franchise.
Speaker Change: Cyrusone data center portfolio company of ours has been growing rapidly with demand for hyperscale facilities, continuing to increase driven by cloud and AI deployment.
Speaker Change: To support this growth our capital markets team helped arrange an 8 billion dollar facility of which we saw that the 3 billion institutional tranche that was anchored by global Atlantic.
Speaker Change: Strategically this represents a really exciting evolution of our playbook.
Speaker Change: Where we generated a great outcome for our portfolio company.
Speaker Change: Made a compelling credit investment.
Speaker Change: And we're able to simultaneously drive capital market space.
Speaker Change: All of these examples would not have been possible without the interconnectivity across the firm.
Speaker Change: Our model.
Speaker Change: We expect many more examples like this to come.
Speaker Change: Now before handing it off to Scott I wanted to briefly touch on some of our operating metrics across the firm where there continues to be very significant momentum.
Scott C. Nuttall: In the quarter, we raised $32 billion of capital. This is the second most active fundraising quarter in our history.
Scott C. Nuttall: A particular note we're very pleased with the initial reception of our global energy infrastructure five fund.
Scott C. Nuttall: Through July approximately $10 billion of capital has been raised.
Scott C. Nuttall: And in June we launched our Americas private equity flagship fund race, so our fundraising super cycle.
Scott C. Nuttall: Now well underway.
Scott C. Nuttall: Also within private equity our middle market strategy called ascend it has already achieved its fund raising goal of 4 billion.
Scott C. Nuttall: And we have not yet held its final close.
Speaker Change: It's a great outcome for a first time fund.
Scott C. Nuttall: Obviously, something that is adjacent and benefiting from our existing private equity team.
Scott C. Nuttall: It really speaks to the rest of activity of our investors to the quality of our team and our track record as we look to fund raise for our next flagship.
Scott C. Nuttall: Focusing for a moment specifically on private wealth.
Scott C. Nuttall: Our case series vehicles in the quarter raised $2 $8 billion of capital, 60% of which was driven by our private equity strategy.
Speaker Change: The K series suite has gaining real momentum, but we are still in the earliest days of what we view to be a really long term strategic focus.
Speaker Change: As a reminder, we now have vehicles across our 40 investing verticals, that's private equity infrastructure real estate as well as credit representing over $11 billion of AUM.
Speaker Change: And that's up from approximately $3 billion, just a year ago.
Speaker Change: And looking beyond K series, we recently announced our exclusive strategic partnership with capital group, one of the largest global active asset managers.
Speaker Change: With $2 six trillion of AUM, and serving 67 million individual investors cap.
Capital Group: <unk> group has built a leading client franchise with world class wealth distribution capabilities.
Capital Group: By combining capa groups club public market investing as well as distribution expertise with KKR is nearly 50 year track record and alternatives investing.
Capital Group: We plan to introduce a series of hybrid public private investment solutions that make the KKR platform available to a broader universe of investors.
Capital Group: Importantly, the hybrid products are a step beyond what we're already doing with the case series and the accredited Investor Universe.
Capital Group: As they expand our reach to include the mass market.
Capital Group: We're excited about the future of this collaboration and we will share much more as we approach the products expected launch in 2025.
Speaker Change: Turning to capital invested we deployed 23 billion of capital in Q2.
Speaker Change: For the first half of 2024, we have now deployed 37 billion, which is almost double the first half of 2023.
Capital Group: Real estate in particular had a strong deployment quarter across equity.
Capital Group: Credit.
Capital Group: On the credit and liquid strategy side direct lending continued to put capital to work.
Capital Group: As well as opportunities to high grade ABS.
Capital Group: Importantly, there remains a very healthy pipeline for deployment in the second half of 2024 as well.
Capital Group: Overall, we remain very excited around the business momentum that we are seeing across the firm and how that can really translate into further P&L outcomes of the second half of the year.
Capital Group: And with that let me turn it over to Scott.
Scott C. Nuttall: Thank you Rob.
Scott C. Nuttall: And thank you everybody for joining our call today.
Scott C. Nuttall: Last month, we held our annual meeting for our fund investors followed by KKR as partners meeting.
Scott C. Nuttall: I thought while we're together today I would share some of the messages we shared in those sessions.
Scott C. Nuttall: And some reflections from Joe and me on the first half of the year.
Joe: And our expectations for the second half.
Joe: The main message we shared with our investors is that we are seeing significantly greater market activity since the beginning of the year.
Joe: The macro inflation and rates backdrop has improved.
Joe: Markets are open.
Joe: In the deal market is back.
Joe: To give you a sense globally year to date.
Joe: Leverage credit issuance is up over 100%.
Joe: Ipos are up nearly 50%.
Joe: And announced M&A is up approximately 25%.
Joe: And given that typically it takes a couple of quarters for the market to turn back on.
Joe: These numbers understate the run rate activity, we are feeling today.
Joe: If this momentum continues we believe you will see even more activity in announced deals and exits in the second half of the year.
Joe: We are seeing this dynamic across our businesses.
Joe: Deployment is up.
Scott C. Nuttall: Monetization are up.
Scott C. Nuttall: Capital markets revenues are up.
Speaker Change: Your pipelines are up.
Scott C. Nuttall: And visibility is high.
Scott C. Nuttall: Unless something happens to disrupt this momentum.
Scott C. Nuttall: We expect to see increased activity in the second half of this year relative to the first.
Scott C. Nuttall: What's also encouraging is that we believe this is a very attractive investment environment.
Scott C. Nuttall: Volatility and uncertainty are still with us.
Scott C. Nuttall: So far 2024, it feels like it could be a sweet spot year, where values are attractive and activity levels are high.
Scott C. Nuttall: This is in contrast to last year when.
Scott C. Nuttall: When values are attractive, but transaction volumes were more muted as owners of mature assets didn't want to sell or finance them in a closed market.
Scott C. Nuttall: This year, we not only have an open market, we have pent up supply of deals that didn't get done in the last couple of years coming to market.
Scott C. Nuttall: So we're optimistic.
Scott C. Nuttall: A couple of other things we shared in our June sessions.
Scott C. Nuttall: In private equity, while many in our industry over deployed in and around 2021.
Speaker Change: We did not.
Scott C. Nuttall: We have been applying the lessons, we learned before and during the financial crisis.
Scott C. Nuttall: And have been deploying in a linear fashion the last many years.
Scott C. Nuttall: As a result, we have strong returns.
Scott C. Nuttall: <unk> powder and a healthy portfolio.
Scott C. Nuttall: In credit we're seeing the benefits of a scaled at 230 plus billion dollar platform with significant opportunity across now a 40 trillion dollar global credit space.
Scott C. Nuttall: Our private credit business is now over $100 billion.
Scott C. Nuttall: And we continue to see attractive investing opportunities in asset based finance Asia credit opportunistic investing in junior debt amongst other areas.
Scott C. Nuttall: In infrastructure the global opportunity is immense.
Scott C. Nuttall: Across our efforts in core value add and climate.
Scott C. Nuttall: The capital need massively outstripped supply and we feel very well positioned.
Scott C. Nuttall: In real estate.
Scott C. Nuttall: Credit opportunity remains compelling with banks on the sidelines and the equity investment opportunity is very attractive.
Scott C. Nuttall: As a reminder, we started our real estate business in 2011.
Scott C. Nuttall: We don't have office and retail exposure of any consequence.
Scott C. Nuttall: So we have the ability to play offense in this environment.
Scott C. Nuttall: And we believe we will take share over the next several years and will benefit from the current and coming dislocation.
Scott C. Nuttall: The real estate investment opportunity is highly compelling.
Scott C. Nuttall: We have closed or under exclusive contract over $10 billion of real estate equity deals since the April 1st.
Scott C. Nuttall: And have a full pipeline as some owners of real estate and seek liquidity and so their best assets.
Scott C. Nuttall: And in this environment scale is trading at a discount.
Scott C. Nuttall: And we also introduced a fifth asset class to our investors in June.
Scott C. Nuttall: Insurance.
Scott C. Nuttall: This is the IV start sidecar a franchise that invests alongside the global Atlantic balance sheet and block and flow deals.
Scott C. Nuttall: This area has amongst the most compelling capital supply demand imbalances, we see across the firm.
Scott C. Nuttall: And speaking of G. E. We're now roughly seven months since we became 100% owners.
Scott C. Nuttall: We've been focused on mining the untapped opportunities we shared with you last November when we announced the deal.
Scott C. Nuttall: Yeah.
Scott C. Nuttall: As you heard Jay is growing rapidly.
Scott C. Nuttall: And as we transition the business to 100% ownership, we're seeing the combined impact of simultaneous fast growth and investing in the business for the long term.
Speaker Change: As we sit here today, we feel very optimistic about the opportunities to create value with G. A at a 100%.
Speaker Change: Investing across more KKR asset classes.
Speaker Change: Scaling KKR capital markets and structured assets going global and particular in Japan, and finding more ways to work together more broadly.
Speaker Change: Overall.
Speaker Change: The opportunity with G. A is greater in our minds today.
Scott C. Nuttall: It was at the beginning of the year.
Scott C. Nuttall: So to keep it simple.
Scott C. Nuttall: The market is open.
Scott C. Nuttall: The firm is very active.
Scott C. Nuttall: Our investment performance is particularly strong.
Scott C. Nuttall: Never felt better about our team.
Scott C. Nuttall: And we are well positioned to execute the plan we shared with you at our April Investor Day.
Speaker Change: With that we're happy to take your questions.
Speaker Change: Thank you we will now be conducting a question and answer session.
Speaker Change: If he would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: Confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue. We ask that you limit your questions to one you may get back in queue for a follow up as time allows you may reenter the queue by pressing star one for participants using speaker equipment. It may be necessary to pick up your handset before.
Speaker Change: Pressing the star keys.
Speaker Change: Your first question comes from Craig Siegenthaler with Bank of America. Please go ahead.
Craig William Siegenthaler: Good morning, everyone My.
Craig William Siegenthaler: My question is on G. As net investment income and your comments on long term versus near term roe's, So given G as investment portfolio yield.
Craig William Siegenthaler: That is currently depressed because you have excess levels of liquidity that have yet to be deployed how do you expect yields to improve.
Speaker Change: As you fully deployed the excess liquidity and over what timeline.
Speaker Change: Hey, Greg it's Rob Thanks for the question why don't I start out.
Speaker Change: And there's a couple of things going on in maybe the shorter part of your answer.
Greg: It is going to ultimately depend on what the growth is from here, but maybe let's talk a little bit about what we're seeing in the business.
Speaker Change: References to a lot of growth and just to put some numbers around that if you look at the past nine months, we've taken on $50 billion of additional capital.
Speaker Change: That compares to $20 billion in the preceding nine months and we're trying to be very thoughtful as you can imagine.
Speaker Change: Around deployment as we're digesting that growth. We're also using new muscles inside of our firm as it relates to linking up our real estate equity team our infrastructure team our capital markets team and so there's a lot of really good work going on and as a result, we've been operating at elevated levels of liquidity and so just again to put some <unk>.
Speaker Change: Behind that.
Speaker Change: If you look at the end of the quarter, we had roughly $8 billion of cash. If you look a year ago that number was closer to 4 billion and that doesn't even take into account a lot of the high grade corporates that we have that are being weighted to be rotated into higher yielding assets.
Speaker Change: The other point that I think it's worth talking about as we think about what the medium term net investment income can look like an ROE could look like is really this point I was trying to get out in the prepared remarks around us actively making investments today that we believe will generate meaningful long tomorrow, but thats coming at the expense of shorter term, Iowa, it's that core.
Speaker Change: Real estate example, that I mentioned, we are day, one we expect running yields to be roughly 4% think about where we're originating liabilities today, that's north of 5% and.
Speaker Change: And so not only are those investments not accretive to our near term P&L there actually dilutive.
Speaker Change: But for those who have followed us awhile shape and shareholders with us for a long time I don't know that we're always going to make the decision.
Speaker Change: To take some pain in short term P&L for long term earnings power.
Speaker Change: And so it's tough to say then extrapolate from there exactly what that's going to mean to near term ROE and returns. There's a lot of that is a function of the growth that we expect but as we look forward. We look at Q3 and Q4. Our expectation is we'll have operating earnings that are in and around where we are in Q2.
Speaker Change: And as we think about how we ramp up into 2025, Yeah. My expectation is we're probably based on the growth we see in front of US we're probably operating at a level, that's a little bit below our 14% to 15% long tomorrow range, but again all in service for that long term growth that we feel across the KKR platform and that we build.
Speaker Change: Leave pretty strongly will benefit GH long term P&L.
Speaker Change: Yeah.
Speaker Change: Thank you Rob.
Robert H. Lewin: Great. Thanks, Greg.
Speaker Change: Next question Bill Katz with TD Cowen. Please go ahead.
William Raymond Katz: Okay. Thank you very much so many questions, but in so little time, just in terms of volume sort of reiterated the 300 billion Sydney well on your way to that you launched a you've got the first closing on global five emphasize grade and then you mentioned that you saw now in the market for the North America Fund I was wondering if you could just comment about what you're hearing from the.
Speaker Change: L PS on demand across the asset classes, and then maybe tie that into Asia, when that might start to come into the market as well. Thank you.
Speaker Change: Yes.
Speaker Change: Hey, Bill it's Scott Thanks for the question.
Scott C. Nuttall: There's a couple of things one just broader context for you I know there's tends to be a lot of focus on the flagship funds.
Speaker Change: But if you go back and think about what's been going on with the firm.
Speaker Change: You can go back to the beginning of 2022, so call. It the last two and a half years, we raised $214 billion only.
Scott C. Nuttall: Only 14 billion of the 214 was in flagships, so happy to chat about the flagships, but we should also keep in mind the vast majority of the activity.
Scott C. Nuttall: That we've been generating has been outside of that and to your point, we now have the flagships coming back as well.
Scott C. Nuttall: The overall tone in the fundraising market.
Scott C. Nuttall: It continues to improve I think it kind of depends on where you are and what you're talking about.
Speaker Change: So, let's just talk about asset classes infrastructure.
Speaker Change: Infrastructure and private credit we continue to see investors very interested I'm trying to catch up to the allocations that they have made so it continues to be quite a bit of activity in those asset classes. I would also include real estate credit in that area.
Speaker Change: It's a similar theme to private corporate credit.
Speaker Change: And then you kind of move on into our real estate equity.
Speaker Change: There I think the sentiment is shifting a bit right now.
Speaker Change: There has been more caution no doubt our perspective is that the sentiment has bottomed.
Speaker Change: And the last year valuations have bottomed in the first half of this year and as you heard in the prepared remarks, we've been quite active deploying into real estate equity I'd say the fund raising is going to lag that reality, a little bit, but we're starting to have more conversations with investors that understand although it may be perceived as a big contrarian. This is a really good.
Speaker Change: Time to invest in real estate equity.
Speaker Change: And then in private equity.
Speaker Change: Activity is picking up as you heard monetization or up and deployment is up.
Speaker Change: People are starting to get more money back so those with more mature programs are starting to see some of that I think you'll see more of that as we get into the latter half of the year. We have just launched our.
Speaker Change: Our flagship U S. Private equity funds are not a lot to report as of yet.
Speaker Change: I'll, let Craig give an update on our ascend and strategy, which is a recent data point in a minute.
Speaker Change: It feels to us like there's a decent chance that private equity fund raising environment has bottomed as well and you'll start to see sentiment shift the positive.
Speaker Change: More broadly as you know private wealth big opportunity for us all upside.
Speaker Change: Insurance companies, we thought might pull back from also a little bit.
Speaker Change: Rates went up have not seen that actually.
Speaker Change: Actually you are seeing as much activity and momentum is insurance as we've seen in a while.
Speaker Change: And so we do think there is quite a bit of activity sorry for long answer, but hopefully it gives you a sense that there's a variety of different things happening underneath the surface and on private equity Craig why don't you just give us the latest data point, we have it's not a big one but it's at least indicative.
Speaker Change: Sure.
Craig: Hey, Bill Thanks for the question. So as you heard from Robin our prepared remarks, we've made what we feel is some great progress on ascendant, that's our middle market.
Craig: Private equity strategy first time vehicle for us.
Craig: As of June 30, we're at $4 1 billion and we have a $4 6 billion hard cap there and we're in a pretty advantageous spot at the moment, we're oversubscribed at hard cap.
Craig: And so to be clear, we are turning away clients that want to begin final diligence there and for some of those clients through final diligence, we're cutting back on allocations.
Speaker Change: The backdrop is one that that feels constructive there again far too early to try to lead through those dynamics as it relates to North America 14, but against that that would also be helpful data point.
Speaker Change: And Bill just one other thing for me and maybe two quick.
William Raymond Katz: Because I know, there's a lot of interest in the fundraising environment. We are continuing to see a couple of other themes. One is a concentration of relationships.
William Raymond Katz: So we're finding more investors wants to do more with fewer partners.
Speaker Change: And so we're continuing to see that.
Speaker Change: Trend accelerate.
Speaker Change: Also I think Theres increased recognition of what we've been talking about for the last decade, plus the power portfolio construction deployment pacing and tools to add value.
Speaker Change: I see much higher dispersion of results I think and we'll figure out who did a good job the last five years, and we feel really well positioned in that context.
Speaker Change: Yeah.
Speaker Change: Thank you.
Speaker Change: Yes.
Speaker Change: Next question, Alex <unk> with Goldman Sachs. Please go ahead.
Speaker Change: Okay.
Alex: Hey, good morning, everybody. Thank you for the question. So wanted to start with a question around the outlook for deployment you mentioned that a number of times that the pipelines look pretty robust and you announced a handful of deals as well.
Alex: So when we think about private equity in particular as you deploy this capital how are you thinking about utilization of direct lending markets versus syndicated markets over the coming several several quarters and on the flip side I guess, what does that mean for your own direct lending business as you're navigating this environment, where syndicated bank loan market seems to be back in kind of full fourth thanks.
Alex: Alex It's Craig why don't I start so first just as it relates to private equity and you would have seen some of this in the.
Speaker Change: Page in our press release.
Speaker Change: We are have a very healthy backlog of traditional private equity investments steels.
Speaker Change: Feels like in the second half of the year, we're going to continue to see an acceleration of activity, there which is great to see.
Speaker Change: On your point on the syndicated versus the direct lending a private debt markets.
Speaker Change: It just provides optionality.
Speaker Change: When we think back or when we all think back to a year ago in the syndicated debt markets were closed I think we saw M&A volumes.
Speaker Change: Honestly be pretty modest and as Scott had mentioned, we were very constructive on risk reward.
Scott C. Nuttall: Many of those financing market is effectively shut in the syndicated markets in particular, it just led to a reduced level of activity. So I think it's actually very helpful.
Speaker Change: In terms of private equity deployment honestly in terms of.
Speaker Change: In terms of private debt deployment in the outlook to have a very healthy syndicated debt market.
Speaker Change: But we will be able to from a again a P standpoint, it it gives us the flexibility to.
Speaker Change: Thanks for what we think the right solution is in the framework of that particular investment. So I think with that with our private debt hat on you may see a smaller market share versus those environments, where the syndicated markets are really volatile, but youll see overall volumes being a lot higher.
Speaker Change: Yeah. This is Scott I think that's well said we use both.
Scott C. Nuttall: It depends on the circumstance and the deal.
Speaker Change: You know the way I'd think about this is last year the deal volumes were still muted.
Speaker Change: Quite a bit of focus on how large a share.
Speaker Change: Credit market had this is one of these environments, where it becomes clear that a smaller share of more pie.
Speaker Change: There'll be more pie.
Speaker Change: And so that's how I would think about it.
Speaker Change: Okay.
Speaker Change: Next question, Patrick Davitt with Autonomous research. Please go ahead.
Speaker Change: Okay.
Unknown Executive: Hey, good morning, everyone.
Unknown Executive: Could you give us an update on the case series distribution rollout and to what extent you can give specifics on any large platforms coming online with certain products over the next few quarters, and then more broadly any update or thoughts on plans to add new products to the suite. Thank you.
Speaker Change: Patrick It's Craig why don't I begin.
Speaker Change: And just to step back to level set for everyone.
Speaker Change: As of June 30, we had around $75 billion of assets under management from individuals and that number.
Speaker Change: Does not include policyholders that global Atlantic So if anything.
Speaker Change: That would understate.
Speaker Change: Our presence as you think about the breadth of activities that we have now most of that capital is from high net worth and ultra high net worth individuals and family offices.
Speaker Change: Our invested directly in our funds and strategies and over time, we've tended to see a teens percentage of our new capital raise come from individuals. So it's been a healthy part of our fundraising now most recently again as I know you know.
Speaker Change: Wonderfully well we've introduced our case series suite of products. These are their funds and strategies that are designed and tailored specifically for that wealth market.
Speaker Change: We've cayenne friend Caf or the U S and non U S vehicles focused on infrastructure. Similarly, we have U S and non U S vehicles focused on private equity private Bdcs also and then we also have additional real estate and credit vehicles and so all of that 75 billion around 11 are from these case series suite of.
Speaker Change: And a year ago that was three so we're in the early days, but we feel really good about our progress and I think that's particularly true in infrastructure as well as in private equity, which are newer asset classes here and it feels like we have an opportunity as a first mover.
Speaker Change: Now in terms of ramp and pace at the end of 'twenty. Three we mentioned that we were raising about 500 million a month.
Speaker Change: In Q1, we raised 1 billion as we were at 600 million a month.
Speaker Change: Q2, we raised $2 8 million, some $900 million a month or thereabouts.
Speaker Change: So it seems like reception and interests and momentum feels really good we don't have a specific update in terms of number of platforms, but to be clear. We do expect the number of platforms, where we're present to increase over the coming months and quarters I think that's going to be particularly true.
Speaker Change: In terms of the private BDC, which is the youngest of those of those products.
Speaker Change: For us what feels like great progress and again I wouldn't take the eye away from the price like we.
Speaker Change: We do think the more interesting point here is really that long term secular opportunity.
Speaker Change: Mass affluent individual investors have not had an easy way to access alts.
Speaker Change: Over the coming years, we do expect an opportunity for trillions of dollars of assets to flow into these products.
Speaker Change: And given our brand our track record and the investments we've made in distribution and marketing. It just feels like we're really well positioned to continue to be a winner and our strategic partnership with capital group as we touched on in our prepared remarks, just increases this opportunity set so hopefully that's helpful. Hey, Patrick is scheduled to occur.
Patrick: Couple of quick editions.
Unknown Executive: The platform rollout is kind of at or slightly ahead of our expectations.
Speaker Change: As you know it takes a while once you get on a platform to have it really kicked in and worked in between the advisors and the sales team. So I'd say, we're really pleased with the progress, but the kind of capital raising power is an embedded yet in the numbers that Gregg walked through to your <unk>.
Speaker Change: Question on new products, but not anything new to announce in the K series run today.
Speaker Change: In the prepared remarks, we did mentioned our capital group partnership as.
Speaker Change: As a reminder, there were creating hybrid.
Speaker Change: In partnership with capital group.
Speaker Change: We announced two credit products that we're going to launch in the first half of next year together.
Speaker Change: To be clear that is not the extent of the vision, we expect to rollout hybrid products across the other parts of the alternative space as well.
Speaker Change: So more to come on that over the next few quarters.
Patrick: Yeah.
Patrick: Next question, Dan Fannon with Jefferies. Please go ahead.
Daniel Thomas Fannon: Thanks. Good morning, So just wanted to build upon that on.
Daniel Thomas Fannon: The capital Group partnership if you could maybe talk about the context in the background of how you came to you know choosing each other in terms of the partner and then you just mentioned a couple of products next year, and then kind of a longer term vision. So.
Speaker Change: Thank you said previously that you're not looking to have.
Patrick: Whole suite of products out there for the retail market, but its okay.
Speaker Change: This is how you're going to differentiate between the case series and the capital good partnerships and what you think a more mature product lineup looks like.
Patrick: Thanks, Dan I'll take a crack so.
Speaker Change: How did it come together.
Capital Group: Capital group called Us.
Speaker Change: And they had been thinking about.
Speaker Change: How they wanted to participate in the alternatives space.
Speaker Change: And if you go back to I think the original press release it.
Lin: Our partner might get Lin did a really nice job laying out how they thought about it should they acquire something sure.
Speaker Change: Should they partner should they buy pieces of different businesses and they decided that partnering with the best path.
Speaker Change: So to be clear they called us.
Speaker Change: Spent quite a bit of time together you got to know each other really really well as firms and his people and I think the reason. This came together is the reason most things come together just an extraordinary cultural fit we thought about the world. The same way same focus on delivering value for all of the clients are counting on us and understand.
Speaker Change: Really who we work for them. So that's how it came together it was kind of a joint vision and shared values and how we see the world.
Speaker Change: In terms of kind of where we're going and how this is different.
Speaker Change: One simple way to think about it let's just take the U S market and the numbers are never precise but to be close enough.
Speaker Change: Our case series, we're targeting the accredited investor and a qualified purchaser.
Speaker Change: It's roughly 5% give or take of U S households are closed, but it's single digits mid single digits percent, depending on what you're looking at.
Speaker Change: That means there is 95% of U S households that it does not access.
Speaker Change: And so what we're doing with capital group is creating a product that will have.
Speaker Change: The other 95% of households to participate in what we do.
Speaker Change: <unk> one that's what we're doing so it's hybrid so theres going to be an element that is going to be the liquid strategies that will be managed by capital group and then a portion that is the private market strategies that will be managed by us. So think of all of these products as having a component of both and geared toward that broader audience that mass market.
Speaker Change: And as I said, we're starting with credit so think of it as a component of liquid credit private credit and for US that will include both direct lending and asset based finance in the private credit sleeve.
Speaker Change: And then for the other products that we're talking about launching infrastructure private equity real estate. We're in the design phase. So I would expect over time I'm not going to put a timeframe on it today, but over time, you will likely see products from us.
Speaker Change: Together across all of those areas.
Speaker Change: So that's how we expect it to play out over the coming years, but we'll keep you posted but hopefully that helps.
Speaker Change: Alright. Thank you. Thank you next question, Brian Bedell with Deutsche Bank. Please go ahead.
Brian Bertram Bedell: Great. Thanks, Good morning, Yeah lots of questions to ask maybe if I can wrap in the two party here on the capital markets that you talked about for the third quarter.
Brian Bertram Bedell: Being elevated is there.
Speaker Change: And he telecom Italia on Lumpiness in that and do you see.
Brian Bertram Bedell: The environment for cap for your capital markets fees, improving as we move into the end of the year given the pent up demand that you were talking.
Speaker Change: Talking about and and then just if I can squeeze in an FRE margin question are the incremental margin on cap markets, obviously, I think being up.
Speaker Change: Well, maybe you can comment is that above your your overall margin therefore accretive in and do you see the 68% as sort of a peak.
Speaker Change: Alright, Thanks, Brian.
Speaker Change: Good morning.
Speaker Change: So as it relates to capital markets Youre right. The Telecom Italia transaction closed July one we will generate a meaningful capital markets fee as part of being involved multiple different aspects of that transaction, but I would tell you as I look at our broad based capital markets pipeline.
Speaker Change: Pipelines for that business are certainly good one quarter out, but probably two quarters.
Speaker Change: As I look at that back half of the year I would tell you that our aggregate pipeline.
Speaker Change: Is as good as we've ever seen it and that includes 2021.
Speaker Change: When we generated roughly $850 million of revenue our capital markets business. So we're quite encouraged around what the back half of the year could look like again. These are pipelines, therefore indicators a lot of stuff needs to come to fruition, but it is broad based it's across that it's across equity. It's U S. Europe Asia. It's also a third party.
Speaker Change: So we're feeling really good about what the back half of the year could look like as it relates to FRE margin I would say, absolutely and an elevated capital markets quarter, you are going to see higher FRE margin flow through is just higher.
Speaker Change: Given our our operating expenses are more fixed in nature relative to that incremental capital markets revenue.
Speaker Change: Here's how I described our RF already margin in the past.
Speaker Change: I believe that today, we can operate sustainably in the mid sixties on FRE.
Speaker Change: Margin basis across the firm and that includes in most market environments.
Speaker Change: That is definitely not the cap for us and if we're successful with the business model that we've got a lot of conviction in here as a management team, we're going to scale. Our revenue we're going to scale our fees at a pace that's meaningfully above our head count growth and our operating complexity across the firm and we would expect more margin expansion in the future. If we're successful.
Speaker Change: So hopefully that gives you some color on the back half of the year and what we're feeling in capital markets and how that might translate into FRE margin.
Speaker Change: Super Super helpful. Thank you.
Speaker Change: Thank you.
Speaker Change: Question, Brian Mckenna with citizens JMP. Please go ahead.
Brian J. McKenna: Hi, Thanks, Good morning, everyone. So you have $215 billion of carry eligible AUM, that's above cost and accruing carry would be great to get an update on how much. This has grown over the past year, specifically on the heels of strong performance and then as you continue to deploy capital and then is there a way to think about the breakdown of it.
Speaker Change: AUM by vintage how much is less than a few years old versus how much is older than that I'm, just trying to get a sense of the magnitude of the step up in accrued performance fees and ultimately realizations over the next couple of years, Yeah. Thanks, Brian and let me, let me take a shot at that and we don't break out it.
Speaker Change: The vintage, but we can tell you that our you know we've spent a lot of time around linear deployment as a firm and so feel good that as you look back over the past seven or eight years youre going to find out a healthy level of dispersion across different vintages.
Speaker Change: I think that to me that's the metric that I look at them as.
Speaker Change: The best forward indicator honestly, it's the simplest one and that's our gross accrued carried interest that today on our balance sheet is roughly $7 $1 billion. If you look back just two quarters ago that number was $6 billion. So in an environment, where we've actually been realizing a little bit more carry than we were expecting to realize.
Speaker Change: Those are pretty healthy levels of step ups across the firm and I think paints a pretty good picture for what the.
Speaker Change: Forward could look like as it relates to monetization related revenue boat carried interests, but also we feel good about how investment income might ramp from here as well.
Speaker Change: And Rob just one additional statistic there in this this is not going to tie.
Robert H. Lewin: To your question specifically on the capital that is about costs and accruing carry but just to look at the private equity portfolio as a whole and give you a sense.
Speaker Change: Well over 50% of that when we look at our remaining fair value.
Speaker Change: Is marked at one five times cost or greater and roughly 30% of that capital dollars is is it is it roughly third roughly.
Speaker Change: Roughly 30% of that excuse me is marked at two times constant greater so I think you know one of the things that our team talked about at Investor day.
Nate: And Nate was this approach we've had on linear deployment I think that has really served us well in terms of having a more mature portfolio.
Speaker Change: And I think some of the discipline that you.
Speaker Change: <unk> seen how we've invested capital over the last several years and honestly lessons that we learned dating back to the GSE.
Speaker Change: If an opportunity to really pay dividends in the years ahead.
Speaker Change: Got it thank you guys. Thank.
Speaker Change: Thank you. Thank you. Your next question that British with Barclays. Please go ahead.
Speaker Change: Hi, good morning, and thanks for taking the question.
Speaker Change: A lot of color around the capital markets outlook going into Q3 I was wondering if you could give us an update on the visible pipeline in terms of realizations and along the same lines could you talk about the $500 million in expected realization of revenues thereabouts, what ended up shaking out better than you expected for Q2. Thank you.
Ben: Sure. Thanks Ben.
Speaker Change #102: But let me start with just visibility.
Speaker Change: Around modernization for Q3, it's at a pretty healthy level.
Speaker Change: Plus or minus $500 million.
Speaker Change: Of modernization related revenue for Q3 that is either that has either happened or from deals that are signed up that we expect to close this quarter just breakdown wise, that's roughly 60% Carey and 40% investment income so that pipeline is better today than it's been in quite some.
Speaker Change: Time, and then your question as it relates to the end of quarter press release, we put out on our.
Speaker Change: Monetization update you know that I think that press release went out around June 20th we'd give our best.
Speaker Change: Estimated view.
Speaker Change: Some of the corridor at that time and of course things can happen in the next 10 days and we had a few things.
Speaker Change: That ended up on one side of the quarter versus the other but I wouldn't say anything necessarily.
Speaker Change: A significant in size one thing that was significant decided a few things that added up to create the delta that you're referring to between where we landed which is a bit over $600 million.
Speaker Change: And that June 20th press release that.
Speaker Change: I believe stated we were at greater than $500 million three at that point in time.
Speaker Change: Got it thank you.
Speaker Change: Yes.
Speaker Change: Next question, Steven Shabak with Wolfe Research. Please go ahead.
Speaker Change: Okay.
Steven Joseph Chubak: Hey, good morning so.
Speaker Change: Wanted to squeeze in just.
Speaker Change: Another question on cap markets might want to look at it with a longer term lens. It is something I pressed you guys on in the past.
Speaker Change #100: But just given the pipeline strength sponsor recovery still feels like it's in the early stages, you expect to at least monetize the 100% ownership better you're certainly going to see significant franchise growth over the next few years relative to the prior cycle peak now how would you frame.
Speaker Change #101: What's the capital market's trajectory for revenues might look like is there a way to maybe size what under a normalized lands or by 26, what do you think the fee generation potential could be in that business.
Karen: Thanks, Karen.
Speaker Change #106: I'm going to give you a number we haven't given a number in the past, but let me try and frame it.
Speaker Change: 2021, we did $850 million of revenue now the capital markets were pretty buoyant in 2021, but when you look at KKR and our platform.
Speaker Change: We do so much more across the firm.
Speaker Change: We think the opportunity to expand from a geographic perspective is the Asia capital markets mature is one that's very meaningful.
Speaker Change: It's both across Asia Pac, but also in Japan, and we're building for that effort.
Speaker Change: We're doing a lot more on the equity side of our business and the structure that side of our business in combination as you said with global Atlantic We've talked about that being a couple of hundred plus million revenue opportunity in its own right.
Speaker Change: And I really believe that our third party capital markets business is going to continue to take share. We just have a very differentiated model and how we're approaching corporates and sponsors that we see resonate with the market daily and we think we're also in a position where we're able to continue to recruit and retain best in class professionals.
Speaker Change: To both execute and distribute those capital markets transactions, and so oh well.
Speaker Change: While we're.
Speaker Change: We're not going to give you sort of that number.
Speaker Change: We're painting a picture of the business that we think can grow meaningfully from the base that we're at today.
Speaker Change: It's a really good question Steven.
Speaker Change #103: Maybe we should but you do our budget meetings.
Speaker Change #103: To Rob's point, we're working across more asset classes doing more in Europe, and Asia third parties up G. A we think is hundreds of millions of dollars of potential.
Speaker Change #103: As we get that right and the other thing that I would point out is our portfolio is bigger.
Speaker Change #103: Across all these asset classes and maturing, which I think is at least as big a contributor.
Speaker Change: The other topics. So we're not going to give you a number but if youre positive that it should be a lot more than its been I agree with you.
Speaker Change: Okay.
Speaker Change: Alright, thanks, so much for taking my question. Thank you.
Speaker Change: Next question, Michael Cyprus with Morgan Stanley. Please go ahead.
Michael J. Cyprys: Great. Thank you good morning, just a question on infrastructure.
Michael J. Cyprys: While the recent partnership announcement with Harvey on sustainable infrastructure projects seems like an interesting deal sourcing funnel, just hoping you could elaborate a little bit on this partnership how you view the strategically helping kick yard then just more broadly on infrastructure, just curious where you're seeing some of the most exciting opportunities right now for putting capital to work in the infrastructure space and how youre thinking about other.
Speaker Change: Hey, Mike It's Craig why don't I start thanks for the question.
Speaker Change: Sure.
Steven: Again, much like Steven's question would echo a lot of the broad themes and your question on infrastructure.
Mike: I think as we think about the platform and how we're situated today.
Speaker Change: Just really encouraged with our progress to date.
Speaker Change #113: Four years ago AUM was around $15 billion as of June 30, we were at 73 <unk> <unk>.
Speaker Change: 15% to 70 all organic.
Speaker Change: CAGR of 50%.
Speaker Change: And while you seen AUM grow meaningfully you've also seen our deployment stats have increased pretty meaningfully and for deployment. In 2019 was $2 2020 was $2 two and over the trailing 12 months, we have investor day.
Speaker Change: And then as our footprint increases again back to the last topic capital markets the fee opportunity there increase.
Speaker Change: Increases as well and the growth and innovation.
Speaker Change: It Hasnt stopped here so again.
Speaker Change: We're in the early days as it relates to infrastructure and private wealth.
Speaker Change: Climate as you noted is an adjacency, where we think we can be really differentiated given our expense today investing behind the energy transition and then finally again flagship infrastructure is very front of mind for us as we think about opportunities I think broadly as it relates to some of the areas where we're most constructive.
Speaker Change: On investing.
Speaker Change: I do think as it relates to.
Speaker Change: Digital infrastructure in particular and some of those opportunities in particular are ones that are very exciting for us. If we think about our data center investment activity and why don't I hang out there for a moment.
Speaker Change: It's been one of the core investment themes for several years and we do believe we're really uniquely positioned to be a major player across the space given the combination of our capabilities. The number of pools, where we can invest and that's not just in data center. It's also in power generation and transmission renewables technology and then also capital markets plays a piece in this as well as your <unk>.
Speaker Change #111: From the Cyrusone example, so again just to put some numbers around things we have four independent data infrastructure platforms. One in the U S. One in Europe.
Speaker Change #111: Two in Asia Pacific.
Speaker Change: The global footprint here is one that is a real differentiator and we benefit from the connectivity so depending on the risk reward you've got multiple pools of capital that can be relevant. So just in this area alone we have investments in infrastructure Asian infrastructure core private equity real estate as well as our wealth strategies.
Speaker Change: $5 billion of invested capital today with an active pipeline.
Speaker Change: And if anything this would understate the size and scale of our footprint here.
Speaker Change: To give you a sense if you looked at the total enterprise value on 100% owned basis and included in current investments together with that secured and highly visible pipeline you'd be north of $150 billion of enterprise value. So the opportunities that we have in an area. Like this is one that's really exciting on the power side, we have 10.
Speaker Change #112: Renewable developers and real estate were accurate on both real estate equity and credit our credit vehicles alone. This year has evaluated over $10 billion of datacenter financing opportunities that's development stabilize as well as ABS and see MBS and we can be relevant here both at the opportunity opportunistic end of the spectrum.
Speaker Change #105: On one end and insurance on the other and again the capital markets team has also been active you heard in our prepared remarks, the Cyrusone case study.
Speaker Change: It's a great example of the thematic approach that we can bring I think it's also a great example of the connectivity you can see across the firm and in our culture and how were able to work across teams and across geographies, Yeah, Hey, Michael. Thanks for the question I think the two big themes to that part of your question I'd point to is digitalization.
Speaker Change #109: Data centers fiber towers continue to be incredibly active across all of those areas and if you look at recent deal announcements, you'll see that as a big theme and then to Craig's point its energy transition to renewables climate I think that has the partnership that you referenced I would think of that as a bit similar to what we've talked about in the past around partnerships.
Craig: Across asset based finance and real estate.
Craig: We have 35 platform partnerships there.
Speaker Change #122: Part of 10000 people.
Speaker Change: Out originating so you'll continue to see us develop more relationships like that it's in a similar vein.
Speaker Change: Great. Thank you.
Speaker Change: <unk>.
Speaker Change: Next question, Chris Kotowski with Oppenheimer <unk> Company. Please go ahead.
Christoph M. Kotowski: Yeah, good morning, and thank you.
Speaker Change #110: I heard what Scott said about the U S.
Speaker Change #115: The flagship funds, playing a lesser role, but I'm curious kind of about the kind of.
Speaker Change #116: Expected base management fee dynamics that we should be expecting here in the next couple of quarters. So you raised 8 billion in infra five and you said that's up over 10, but Theres still 7 billion left in and for a four.
Speaker Change #121: So does that quote turn on later in the year or is that a third quarter event and kind of similarly with your next flagship private equity fund.
Speaker Change #116: Do.
Speaker Change #138: You still have I think $8 million left in the prior fund.
Speaker Change #107: So it does that turn on.
Speaker Change #107: Later.
Speaker Change #123: Maybe early mid 2025 is that kind of what we should be expecting.
Speaker Change #107: Hey, Chris it's Rob so in the case of infrastructure given.
Speaker Change #119: Some activity through the end.
Christoph M. Kotowski: We ended the quarter and end with some deployment around quite a bit actually turning on in for five in Q3, So you'll start to see management fees flow through for <unk> five.
Speaker Change #118: Starting this.
Speaker Change #117: This quarter as it relates to North America 13 that you referenced in terms of capital still left to deployed I think as of 630, we had as far as that is today, but prior to 630, I think we had four announced but not yet closed transactions and.
Speaker Change #117: And so we would expect.
Speaker Change #117: To be nearing the end, but we still have time to go of our investment period, and that's why we've been out fund raising and launching.
Speaker Change #135: For for next four.
Speaker Change #124: And have you shared kind of the target size of those funds or others that continental.
Christoph M. Kotowski: We we have not Chris.
Christoph M. Kotowski: Okay.
Christoph M. Kotowski: Alright. Thank you that's it for me thank you.
Speaker Change #129: Next question are not get bought with BNP. Please go ahead.
Speaker Change #120: Hey, good morning.
Speaker Change #126: Quick question on.
Speaker Change #134: The opportunity set to address the.
Speaker Change #125: The individual markets I appreciate that you're doing a lot with case series.
Speaker Change #132: Capital agreement to go to go after distributing private market assets to individuals I was just wondering if that's an opportunity to complement there.
Speaker Change #127: So distribution or.
Speaker Change #131: The production and then distributional secondaries.
Speaker Change #137: Thank you.
Speaker Change #133: Good question on it so.
Speaker Change #136: At this point and there might be an opportunity down the road, but it's not fun center for us in terms of the secondaries market, we spend time in that space we've analyzed it.
Speaker Change #120: Never say never but it's not front and center part of how we're thinking about next step strategy at this stage.
Speaker Change #120: We think there's plenty to do candidly in the growth of the asset classes.
Speaker Change #130: Got it thanks. Thank you.
Speaker Change #120: Thank you I would like to turn the floor over to Craig Larson for closing remarks.
Craig Larson: Just like to thank everybody for your continued interest in <unk>, we look forward to giving an update on next quarter.
Craig Larson: In 90 days and if you have any additional follow ups. Please reach out directly. Thank you again.
Speaker Change #139: This concludes today's teleconference. You may disconnect your lines at this time and thank you for your participation.
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Speaker Change #107: Yes.
Speaker Change #107: Hum.
Speaker Change #107: Okay.
Speaker Change #107: Hum.
Speaker Change #107: Okay.
Speaker Change #107: Okay.
Speaker Change #107: Okay.
Speaker Change #107: Okay.
Speaker Change #107: [music].
Speaker Change #107: Okay.
Speaker Change #107: [music].
Speaker Change #107: Okay.
Speaker Change #107: Hum.
Speaker Change #107: Hum.
Speaker Change #107: [music].
Speaker Change #107: Yes.
Speaker Change #107: Hum.
Speaker Change #107: Okay.
Speaker Change #107: Hum.
Speaker Change #107: [music].
Speaker Change #107: Okay.
Speaker Change #107: [music].
Speaker Change #107: Okay.
Speaker Change #107: [music].
Speaker Change #107: Yeah.
Speaker Change #107: Okay.
Speaker Change #107: Yeah.