Q4 2024 Onex Corp Earnings Call
And there will be a question and answer session to ask a question. During this session you will need to press star one on your telephone. If your question has been answered and you'd like to remove yourself from the queue. Please press star one again as a reminder, today's program is being recorded.
Speaker Change: Now I'd like to introduce your host for today's program Jill harmonic shareholder Relations communications that Onyx. Please go ahead.
Jill Harmonic: Thank you al good morning, everyone and thanks for joining US we're broadcasting this call on our website hosting the call today are Bobby Le Blanc, Onyx as Chief Executive Officer, and Kris <unk>, our Chief Financial Officer.
Speaker Change: Thank you for standing by and welcome to ONIC's 4th Quarter Earnings Results Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session.
Jill Harmonic: Earlier. This morning, we hit our fourth quarter and full year 2024 press release, MD&A and consolidated financial statements, which are available on the shareholders section of our website and have also been filed on SEDAR a supplemental information package is also available on our website.
Speaker Change: To ask a question during this session, you'll need to press star 11 on your telephone.
Speaker Change: If your question has been answered, and you'd like to remove yourself from the queue, please press star 11 again.
Speaker Change: As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Jill Homenuk, Chair Holder Relations and Communications at Onyx. Please go ahead.
Jill Harmonic: As a reminder, all references to dollar amounts on this call are in U S. Unless otherwise stated I must also point everyone to our webcast presentation for our usual disclaimer and cautionary factors relating to any forward looking statements contained in today's presentation and remarks.
Speaker Change: Thank you. Good morning everyone and thanks for joining us. We're broadcasting this call on our website.
Speaker Change: Hosting the call today are Bobby LeBlanc, Onyx's Chief Executive Officer, and Chris Govan, our Chief Financial Officer.
Bobby: With that I'll now turn the call over to Bobby.
Bobby: Good morning, everyone.
Speaker Change: Earlier this morning, we issued our fourth quarter and full year 2024 press release, MD&A, and consolidated financial statements, which are available on the shareholder section of our website and have also been filed on CDAR. Our supplemental information package is also available on our website.
Bobby: <unk> had a solid fourth quarter.
Bobby: Wrapping up a year of significant progress across all our platforms.
Bobby: Our private equity teams delivered a meaningful return of invested capital toward investment partners.
Bobby: While also achieving fundraising success.
Speaker Change: As a reminder, all references to dollar amounts on this call are in U.S. unless otherwise stated. I must also point everyone to our webcast presentation for our usual disclaimer and cautionary factors relating to any forward-looking statements contained in today's presentation and remarks.
Bobby: Our credit platform had an excellent year.
Bobby: Outperforming our expectations on capital raised while continuing to attract new investors with our consistently strong performance.
Bobby: We ended 2024 with the completion of our substantial issuer bid or S. A b.
With that, I'll now turn the call over to Bobby.
Bobby: We bought back two 3 million shares under the bid at.
Good morning, everyone.
Bobby: Adding meaningfully to our overall buybacks for the year.
Onyx had a solid fourth quarter.
Speaker Change: wrapping up a year of significant progress across all our platforms.
Bobby: While the amount tendered was below what we had originally allocated we view this as a positive statement for shareholders.
Speaker Change: Our private equity team delivered a meaningful return of invested capital to our investment partners.
Bobby: Like us <unk>.
Bobby: <unk> ongoing upside for share performance beyond the upper range of the $117 per share offered.
while also achieving fundraising success.
Our credit platform had an excellent year.
Bobby: Turning to our businesses starting with private equity.
Bobby: In total across our platforms, we raised $1 5 billion in 2024.
Bobby: This was accomplished through a broader range of initiatives, including continued.
Bobby: Puget co investment partnerships.
Bobby: The teams are working hard to expand our client base, which creates more opportunity for fundraising outside of traditional fund formats.
Bobby: 2024 was also a positive year for our P teams and returning capital to our limited partners.
Speaker Change: See ongoing upside for share performance beyond the upper range of the $117 per share offered.
Bobby: <unk> and <unk> together returned over $3 billion of capital to investors, including 1 billion the Onyx.
Speaker Change: Turning to our businesses starting with private equity.
Speaker Change: In total across our platforms, we raised $1 5 billion in 2024.
Bobby: This was two five times more than what we achieved in 2023.
Bobby: Differentiated achievement and evidence of our ability to deliver positive realizations across multiple investments and vehicles.
Speaker Change: This was accomplished through a broader range of initiatives, including continued.
Speaker Change: Egypt co investment partnerships.
Bobby: And its partners are successfully completed fund raising towards opportunities fund.
Speaker Change: The teams are working hard to expand our client base, which creates more opportunity for fundraising outside of traditional fund formats.
Reaching total commitments, including affiliated vehicles of $1 2 billion.
Bobby: Across <unk>, five and the opportunities fund.
Speaker Change: 2024 was also a positive year for our P/e teams and returning capital to our limited partners.
<unk> invested $1 2 billion of capital in 2024 across four companies all within our core areas of specialization.
Speaker Change: <unk>, an uncapped together returned over $3 billion of capital to investors, including 1 billion asks.
Bobby: Three were owner managed or complex carve outs and for all for the team is differentiated value creation strategies.
Speaker Change: This was two five times more than what we achieved in 2023.
Differentiated achievement and evidence of our ability to deliver positive realizations across multiple investments and vehicles.
Bobby: On cap accounted for more than $500 million of the return of capital to investors.
Bobby: And fundraising momentum for uncapped five remains positive and we expect a final close at the end of Q1.
Speaker Change: And its partners has successfully completed fund raising towards opportunities fund.
Speaker Change: Reaching total commitments, including affiliated vehicles of $1 2 billion.
Bobby: The fund has already completed three investments with a total of approximately $400 million invested.
Speaker Change: Across <unk> and the opportunities fund.
Bobby: The pipeline for new investments is good.
Speaker Change: <unk> invested $1 2 billion of capital in 2024 across four companies all within our core areas of specialization.
Bobby: And the fund is off to a very good start.
Bobby: In total the team has raised over $700 million of capital in 2024.
Speaker Change: Three were owner managed or complex carve outs and for all for the team is differentiated value creation strategies.
Bobby: Our credit team had another active quarter capping off a banner year.
Bobby: For 2024, we ranked as the number seven issuer on global broadly syndicated CLO.
Speaker Change: On cap accounted for more than $500 million of the return of capital to investors.
Bobby: Overall, the team executed 30 transactions last year raised.
Speaker Change: And fundraising momentum for uncapped five remains positive.
Bobby: Raising our extending $13 billion of fee generating AUM.
Speaker Change: We expect a final close at the end of Q1.
Speaker Change: The fund has already completed three investments with a total of approximately $400 million invested.
Bobby: And they are already priced three transactions this year.
We're confident the team will deliver another successful year in 2025.
Speaker Change: The pipeline for new investments is good.
Bobby: Including substantial FRE growth.
Speaker Change: And the fund is off to a very good start.
Speaker Change: In total the team has raised over $700 million of capital in 2024.
Bobby: Across the broader credit platform.
<unk> actively pursuing new opportunities to generate increased revenue.
Speaker Change: Our credit team had another active quarter capping off a banner year.
Bobby: As an example, we recently closed on a $775 million tab.
Speaker Change: For 2024.
Bobby: Tactical allocation commitment with a large institutional investor.
Speaker Change: We ranked as the number seven issuer on global broadly syndicated CLO.
Bobby: These types of commitments leverage the full breadth of talent across our credit team and products and will contribute to the scale required to continue to grow fee related earnings.
Speaker Change: Overall, the team executed 30 transactions last year.
Speaker Change: Raising our extending $13 billion of fee generating AUM.
Speaker Change: And they are already priced three transactions this year.
Bobby: In these instances the incremental revenue is highly accretive to bottom line profitability.
Speaker Change: We're confident the team will deliver another successful year in 2025.
Speaker Change: Including substantial FRE growth.
Bobby: Overall I feel good about what our teams achieved in 'twenty four and.
Speaker Change: Across the broader credit platform.
Bobby: And how we are positioned to drive growth in 2025 and beyond.
Speaker Change: Or actively pursuing new opportunities to generate increased revenue.
Bobby: Over the last couple of years, our portfolio to weather uncertain and sometimes challenging conditions.
Speaker Change: As an example, we recently closed on a $775 million tack.
Bobby: But I am confident that the investments we have.
Speaker Change: Tactical allocation commitment with a large institutional investor.
Bobby: We will drive long term invested capital growth and returns consistent with our objectives.
Speaker Change: These types of commitments leverage the full breadth of talent across our credit team and products and will contribute to the scale required to continue to grow fee related earnings.
Bobby: In the meantime, we're making the right operational decisions to optimize resources across the firm.
Bobby: And rollout of performance compensation structure that is aligned to shareholder interest.
Speaker Change: In these instances the incremental revenue is highly accretive to bottom line profitability.
Bobby: I'll read more about this in our upcoming information circular.
Speaker Change: Overall I feel good about what our teams achieved in 'twenty four and.
Before turning over to Chris I want to thank our team for their hard work and our shareholders for their continued support.
Speaker Change: And how we are positioned to drive growth in 2025 and beyond.
Speaker Change: Over the last couple of years, our portfolio to weather uncertain and sometimes challenging conditions.
Chris: Our objective is to be transparent and responsive in our engagement with you and I appreciate your ongoing feedback.
Speaker Change: I am confident that the investments we have.
Chris: Our team is committed to driving more shareholder value in the years to come.
Speaker Change: We will drive long term investing capital growth and returns consistent with our objectives.
Chris: Now I'll turn it over to Chris.
Speaker Change: In the meantime, we're making the right operational decisions to optimize resources across the firm and.
Chris: Thanks, Bobby and good morning, everyone.
Chris: On X ended Q4 with investing capital per share of $113 70.
Speaker Change: And rollout of performance compensation structure that is aligned to shareholder interest.
Chris: Up slightly in the quarter and up 6% from a year ago.
Speaker Change: I'll read more about this in our upcoming information circular.
Chris: In Canadian dollars invested capital per share generated a 15% return over the past year.
Chris Govan: Before turning over to Chris I want to thank our team for their hard work and our shareholders for their continued support.
Chris: The increase reflected portfolio gains accretive share repurchases and a strengthening of the U S dollar.
Chris Govan: Our objective is to be transparent and responsive in our engagement with you and I appreciate your ongoing feedback.
Chris: While our U S. Dollar return was below target this year over the last five years U S dollar invest in capital per share at a compound annual return of 13%.
Chris Govan: Our team is committed to driving more shareholder value in the years to come.
Chris Govan: Now I'll turn it over to Chris.
Chris: As Bobby mentioned, we completed the substantial issuer bid and repurchased a total of two 3 million shares in Q4, bringing our total repurchases for the year to $5 7 million shares.
Chris Govan: Thanks, Bobby and good morning, everyone.
Speaker Change: On X ended Q4 with investing capital per share of $113 70.
Chris Govan: Up slightly in the quarter and up 6% from a year ago.
Chris: Over the last five years Onyx has repurchased approximately 28 million shares and reduced our shares outstanding by almost 30%.
Chris Govan: In Canadian dollars invested capital per share generate 15% return over the past year.
Chris Govan: The increase reflected portfolio gains accretive share repurchases and a strengthening of the U S dollar.
Chris: We've been able to do this while building our PE portfolio.
Chris: <unk> the growth of our credit franchise, and maintaining strong liquidity, which today is about $1 6 billion or 19% of investing capital.
Chris Govan: While our U S dollar return with below target this year over the last five years U S dollar invest in capital per share at a compound annual return of 13%.
Chris: Looking at our investing returns.
Chris: Our PE portfolio of returns were impacted by unfavorable foreign exchange in the quarter from a strengthening U S dollar driving a mark to market loss of about $60 million on the roughly $900 million of non U S dollar investments.
Chris Govan: As Bobby mentioned, we completed the substantial issuer bid and repurchased a total of two 3 million shares in Q4, bringing our total repurchases for the year to $5 7 million shares.
Chris Govan: Over the last five years Onyx has repurchased approximately 28 million shares and reduced our shares outstanding by almost 30%.
Chris: Returns in the quarter and for the year reflect generally solid returns across our financial services and industrial verticals.
Chris Govan: We've been able to do this while building our PE portfolio.
Chris: Offset by challenging results at a few of our health care and consumer companies.
Chris Govan: The growth of our credit franchise, and maintaining strong liquidity, which today is about $1 6 billion.
Chris: But it's important to remember that returns in any quarter or year will vary across verticals and businesses.
Chris Govan: Our 19% of investing capital.
Chris: However, each investment benefits from a long term value creation plan.
Chris Govan: Looking at our investing returns are.
Chris: Our teams remained focused on their operating companies and delivering attractive returns over time in line with our targets.
Chris Govan: Our PE portfolio will returns were impacted by unfavorable foreign exchange in the quarter from a strengthening U S dollar driving a mark to market loss of about $60 million on the roughly $900 million of non U S dollar investments.
Chris: Turning to credit results, our credit investments delivered a $16 million net gain or 2% return in Q4 and.
Chris Govan: Returns in the quarter and for the year reflect generally solid returns across our financial services and industrial verticals.
Chris: And a 9% return for the year.
Chris: The net gains were driven by our structured and opportunistic strategies.
Chris Govan: Offset by challenging results at a few of our health care and consumer companies.
Chris: With the CLO returns aligned with the leveraged loan market.
Chris Govan: But it's important to remember that returns in any quarter or year will vary across verticals and businesses.
Speaker Change: On the asset management side of the business.
Speaker Change: <unk> ended the year with just over $35 billion of fee generating AUM.
Chris Govan: However, each investment benefits from a long term value creation plan.
Speaker Change: A 3% increase in the quarter reflects new commitments made to on <unk>, five and the Onyx partners opportunities fund as well as new CLO in both the U S and Europe.
Chris Govan: <unk> remained focused on their operating companies and delivering attractive returns over time in line with our targets.
Chris Govan: Turning to credit results, our credit investments delivered a $16 million net gain or 2% return in Q4 and.
Speaker Change: In total Onyx raised approximately $2 $8 billion of FCA AUM in Q4, and $8 8 billion for.
Chris Govan: And a 9% return for the year.
Speaker Change: For the year.
Chris Govan: The net gains were driven by our structured and opportunistic strategies.
Speaker Change: Our structured credit business had an outstanding year and another active quarter.
Chris Govan: With the CLO returns aligned with the leveraged loan market.
Speaker Change: Q4 included the pricing of two new U S CLO and one new Euro CLO that were part of a quarter were $4 $3 billion of FTE AUM was raised or extended.
Chris Govan: On the asset management side of the business.
Chris Govan: <unk> ended the year with just over $35 billion of fee generating AUM.
Chris Govan: A 3% increase in the quarter reflects new commitments made to on cat five and the Onyx partners opportunities fund as well as new CLO in both the U S and Europe.
Speaker Change: Key generating AUM in our structured credit business increased 34% in the last 12 months.
Speaker Change: Contributing to a CAGR of 16% over the last four years.
Chris Govan: In total Onyx raised approximately $2 8 billion of FCA AUM in Q4, and $8 8 billion for.
Speaker Change: With about $90 million of run rate management fees.
Speaker Change: Our structured credit team has done a great job building the franchise over the last few years.
Chris Govan: For the year.
Chris Govan: Our structured credit business had an outstanding year and another active quarter.
Speaker Change: And as I pointed out before this growth has been achieved while significantly improving the platforms capital efficiency.
Chris Govan: Q4 included the pricing of two new U S CLO and one new Euro CLO that were part of a quarter were $4 $3 billion of FTE AUM was raised or extended.
Speaker Change: Since 2020 on excess ownership at the platform CLO equity has decreased by more than half from 87% to 41%.
Speaker Change: Making the platform's growth all the more impressive.
Chris Govan: Key generating AUM in our structured credit business increased 34% in the last 12 months.
Speaker Change: As I mentioned last quarter. The team has done a great job managing the portfolio. This year with 90% of the CLO AUM in its reinvestment period at year end compared to 63% at the beginning of the year.
Chris Govan: Contributing to a CAGR of 16% over the last four years.
Chris Govan: With about $90 million of run rate management fees.
Chris Govan: Our structured credit team has done a great job building the franchise over the last few years.
Speaker Change: Furthermore, the weighted average reinvestment period now ends in March 2028 over two years longer than where we stood a year ago.
Chris Govan: And as I pointed out before this growth has been achieved while significantly improving the platforms capital efficiency.
Speaker Change: The team's success has laid the groundwork for strong recurring fees, while we continue to grow the broader credit platform.
Chris Govan: Since 2020.
Chris Govan: Next is ownership, but the platform CLO equity has decreased by more than half.
Speaker Change: Turning to fee related earnings.
Chris Govan: 87% to 41%.
Speaker Change: We reported a modest FRE loss of $1 million for Q4, with a $6 million contribution from the asset management platforms.
Chris Govan: Making the platform's growth all the more impressive.
Chris Govan: As I mentioned last quarter. The team has done a great job managing the portfolio. This year with 90% of the CLO AUM in its reinvestment period at year end compared to 63% at the beginning of the year.
Speaker Change: Reflects increased fees from <unk> and structured credit.
Speaker Change: At the beginning of the <unk> opportunities management fee period, and the continued impact of cost management initiatives.
Speaker Change: You'll note in our disclosures that we've begun to break out earnings from our structured credit products to give you insight into the contribution from this part of an ex credit.
Chris Govan: Furthermore, the weighted average reinvestment period now ends in March 2028 over two years longer than where we stood a year ago.
Chris Govan: The team's success has laid the groundwork for strong recurring fees, while we continue to grow the broader credit platform.
Speaker Change: FRE from structured credit was $12 million in Q4 and $44 million for the year, representing a full year increase of roughly 45%.
Chris Govan: Turning to fee related earnings.
Chris Govan: We reported a modest FRE loss of $1 million for Q4, with a $6 million contribution from the asset management platforms.
Speaker Change: And with management fees from new CLO closed in 2024 fully online for 2025.
Chris Govan: Flex increased fees from <unk> five in structured credit.
Speaker Change: Structured credit run rate FRE contribution is about $50 million at year end.
Chris Govan: At the beginning of the <unk> opportunities management fee period, and the continued impact of cost management initiatives.
Speaker Change: Before moving to questions I wanted to provide a brief update on our 2023 investor day targets.
Chris Govan: You'll note in our disclosures that we've begun to break out earnings from our structured credit products to give you insight into the contribution from this part of on X credit.
Speaker Change: Based on its strength and momentum we're confident the overall on ex credit platform will achieve its target of 2025 year end run rate FRE of <unk> $55 million.
Chris Govan: FRE from structured credit was $12 million in Q4 and $44 million for the year, representing a full year increase of roughly 45%.
Speaker Change: As I pointed out before on ex credit is a valuable business and as you know on asset not reflected anywhere in our NAV.
And with management fees from New CLO closed in 2024 fully online for 2025 ruptured.
Speaker Change: Looking at the rest of our operations, which are pay platforms and on X is investing in public company costs.
Chris Govan: Structured credit run rate FRE contribution is about $50 million at year end.
Speaker Change: We do not expect to reach our goal of a breakeven run rate contribution this year.
Before moving to questions I wanted to provide a brief update on our 2023 investor day targets.
Speaker Change: In Q4. These operations contributed a combined FRE loss of $7 million.
Chris Govan: Based on its strength and momentum we're confident the overall on ex credit platform will achieve its target of 2025 year end run rate FRE of <unk> $55 million.
Speaker Change: And while the P/e teams are making progress developing new sources of fees. We do expect some decline in existing management fees over the course of the year from realizations.
Speaker Change: However, I think it's worth noting what the net cost of our non credit operations represents for shareholders.
Chris Govan: As I pointed out before on ex credit is a valuable business and as you know on asset not reflected anywhere in our NAV.
Speaker Change: Using very simple math, if you annualize the $7 million of net costs and compare that to the almost $6 billion of on X as invested capital managed by the P/e teams.
Chris Govan: Looking at the rest of our operations, which are pay platforms and on X is investing in public company costs.
Chris Govan: We do not expect to reach our goal of a breakeven run rate contribution this year.
Speaker Change: At an implied annual management fee expense ratio of around 50 beats during Q4.
Chris Govan: In Q4. These operations contributed a combined FRE loss of $7 million.
Speaker Change: A very low cost per p/e, where fees can approach 200 basis points on invested and committed capital.
Chris Govan: And while the P/e teams are making progress developing new sources of fees. We do expect some decline in existing management fees over the course of the year from realizations.
Speaker Change: And that's all before the meaningful net carry opportunity on X enjoys from P/e.
Speaker Change: When you include any reasonable additional contribution from Carrie.
However, I think it's worth noting what the net cost of our non credit operations represents for shareholders.
On excess capital is actually being managed for free.
Speaker Change: A good position for shareholders, while we continue to build our p/e fee streams and overall profitability.
Chris Govan: Using very simple math, if you annualize the $7 million of net costs and compare that to the almost $6 billion of Onyx has invested capital managed by the P/e teams.
Speaker Change: As Bobby indicated theres been positive activity across all on X platforms in 2024, and we've entered the new year in a strong position.
Chris Govan: At an implied annual management fee expense ratio of around 50 bps during Q4.
Speaker Change: Our focus continues to be generating shareholder value through opportunities, where we have a right to compete and win.
Chris Govan: Very low cost per p/e, where fees can approach 200 basis points on invested and committed capital.
Speaker Change: That concludes the prepared remarks, we will now be happy to take any questions.
Chris Govan: And that's all before the meaningful net carry opportunity onyx enjoys from P/e.
Speaker Change: Certainly and as a reminder, ladies and gentlemen, if you do have a question at this time. Please press star one on your telephone.
Chris Govan: When you include any reasonable additional contribution from Carrie.
And our first question comes from the line of Nik Priebe from CIBC capital markets. Your question. Please.
Chris Govan: On excess capital is actually being managed for free.
Chris Govan: A good position for shareholders, while we continue to build our p/e fee streams and overall profitability.
Speaker Change: Yes.
Speaker Change: Yes. Thanks, just following on that last comment from Chris I appreciate the outlook for FRE across the various platforms I guess when you tie. It all together can you just talk a little bit more about.
Chris Govan: As Bobby indicated theres been positive activity across all on X platforms in 2024, and we've entered the new year in a strong position.
Speaker Change: The outlook I suppose for consolidated FRE and twenty-five like would the objective be to sustain neutral FRE margins or do you think there is the possibility of.
Chris Govan: Our focus continues to be generating shareholder value through opportunities, where we have a right to compete and win.
Chris Govan: That concludes the prepared remarks, we will now be happy to take any questions.
Speaker Change: A more meaningful positive FRE contribution in your head.
Speaker Change: Certainly and as a reminder, ladies and gentlemen, if you do have a question at this time. Please press star one on your telephone and our first question comes from the line of Nik Priebe from CIBC capital markets. Your question. Please.
Nick: Yes, so Nick I think we're really.
Nick: Excited and optimistic about the performance at credit as we've articulated.
Nick: And we expect that business to contribute meaningful growth in their FRE during 2024.
Speaker Change: Yes. Thanks, just following on that last comment from Chris I appreciate the outlook for FRE across the various platforms I guess when you tie it all together.
Nick: Sorry, it's only 35 I think full year 2024 was about $25 million from credit <unk>.
Speaker Change: Can you just talk a little bit more about.
Speaker Change: The outlook I suppose for consolidated FRE and 25 like would the objective be to sustain neutral FRE margins or do you think there is the possibility of.
Nick: <unk> 25 at a run rate of 55, you can kind of guess that.
Nick: 2025 actual will be somewhere.
Nick: Most of the run rate then 24 actual.
Nick: So that's been a really good position.
Speaker Change: A more meaningful positive FRE contribution in your head.
Nick: In our <unk> business is a little more difficult to predict because fund raising is more episodic and.
Speaker Change: Yes, so Nick I think we're really.
Speaker Change: Excited and optimistic about the performance at credit as we've articulated.
Nick: Difficult to predict when assets will come online.
Speaker Change: And we expect that business to contribute meaningful growth in their FRE during 2024.
Nick: And as I mentioned, we've got a little bit of headwind likely from realizations that will decrease fees.
Nick: And the rest of our operations, but we still expect to get to.
Speaker Change: Sorry, it's only 35 I think full year 2024 was about $25 million from credit.
Nick: Positive FRE contribution overall.
Speaker Change: Existing 25 at a run rate of 55, you can kind of guess.
Nick: In 2025.
Nick: But not meaningful it will be slightly positive.
Speaker Change: 2025, actual will be somewhere closer to run rate then 24 actual.
Nick: But I think it's really important to remember, especially for our <unk> business kind of stopping at FRE is really just short changing the value of that platform given the real meaningful carry opportunity.
Speaker Change: So that's been a really good position.
And our <unk> business is a little more difficult to predict because fund raising is more episodic and.
Nick: So, although we're not going to be positive FRE for pay in the public company combined.
Speaker Change: Difficult to predict when assets will come online.
Nick: Sure.
Speaker Change: And as I mentioned, we've got a little bit of headwind likely from realizations that will decrease fees.
Nick: If you include any meaningful carry that part of our business is cash generative and adding value.
Speaker Change: And the rest of our operations, but we still expect to get to.
Nick: Yes, yes, Okay fair enough and then just on the comment about realizations in the PE portfolio.
Speaker Change: Positive FRE contribution overall.
Speaker Change: In 2025.
Nick: We're hearing talk from other alternative asset managers about sort of your expectation for greater velocity of transaction activity in the private market space.
Speaker Change: But not meaningful it will be slightly positive.
Speaker Change: But I think it's really important to remember, especially for our p/e business kind of stopping at FRE.
Yes.
In your pipeline do you see.
Really just short changing the value of that platform given the real meaningful carry opportunity.
Nick: Maybe a few items that could be actionable in the first six months or was that just kind of a general comment about how they will be kind of gradual attrition as a part of the normal course activity.
Speaker Change: So, although we're not going to be positive FRE for pay in the public company combined.
Speaker Change: I think Bobby I think as a general comment, but I also think you should expect to see return of capital. This year from both our <unk> and non cap platforms. Their specific plans in place, obviously always market dependent but.
Speaker Change: <unk>.
Speaker Change: If you include any meaningful carry that part of our business is cash generative and adding value.
Yes, yes, Okay fair enough and then just on the comment about realizations in the PE portfolio.
Nick: I expect us to be active on that front this year.
You are hearing from other alternative asset managers about the expectation for greater velocity of transaction activity in the private market space.
Speaker Change: Okay.
Speaker Change: And then just last one I wanted to ask for an update on power school and.
Speaker Change: You recently sold half your interest I think the investment is only about 3% of your now so it's pretty small, but I was wonder if you could elaborate on some of the actions being taken by the team there just to address the cyber incident in.
Speaker Change: I guess.
Speaker Change: In your pipeline do you see.
Speaker Change: Maybe a few items that could be actionable in the first six months or was that just kind of a general comment about how they will be kind of gradual attrition as a part of the normal course activity.
Speaker Change: Maybe give an indication on kind of expected scale of.
Speaker Change: I think Bobby I think it is a general comment but I also think you should expect to see return of capital. This year from both our <unk> and non cap platforms. There are specific plans in place I mean, obviously always market dependent but.
Speaker Change: The earnings impact or whether you and your partner would maybe anticipate the need to downstream any capital to that.
Speaker Change: That business.
Speaker Change: No and again I won't get into too much specifics, but I think the management team has done a very good job communicating with all of its customers as to what happened in the limited.
Speaker Change: I expect us to be active on that front this year.
Speaker Change: Okay very good and then just last one I wanted to ask for an update on power School and I know you recently sold half your interest I think the investment is only about 3% of your now so it's pretty small, but I wonder if you could elaborate on some of the action being taken by the team there just to address the cyber incident and.
Speaker Change: Aspects of a risk around that data you know its always its always concerning to me procure on a sale process for a particular product that somebody would try to use that against you, but I don't anticipate any capital needs for that business really been put out of that.
Speaker Change: Okay very good.
Speaker Change: Thats It for me I'll pass the line. Thanks.
Speaker Change: So maybe give an indication on kind of expected scale of potential earnings impact or whether you and your partner would maybe anticipate the need to downstream any capital.
Speaker Change: Yes.
Speaker Change: Thank you and our next question comes from the line of Graham Ryding from TD Securities. Your question. Please.
Speaker Change: To that business.
Speaker Change: Yeah.
Speaker Change: No and again I won't get into too much specifics, but I think the management team has done a very good job communicating with all of its customers as to what happened in the limited.
Speaker Change: Hi, good morning.
Speaker Change: Just looking at your at your discount to NAV.
Speaker Change: Do you believe that if you can be active this year on the portfolio realization activity within your <unk> business.
Speaker Change: Aspects of a risk around that data, it's always its always concerning to me procure on a sale process for a particular product that somebody would try to use that against you, but I don't anticipate any capital needs for that business related to that event.
Speaker Change: Will help.
Speaker Change: Maybe validate the value within your knobs and help to tighten the discount.
Speaker Change: And then maybe a second a second part to that beyond buybacks. What else are you focused on here to tighten the discount.
Speaker Change: Okay very good that's it for me I'll pass the line.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Thank you and our next question comes from the line of Graham Ryding from TD Securities. Your question. Please.
Speaker Change: No.
Obviously, you're selling things at or above NAV will always help validate that the discount doesn't make sense.
Graham Ryding: Hi, good morning.
Speaker Change: I tried to point out consistently there is also a secondary market for Rps trades, well well above the implied discount on the P. If you'd give proper credit for cash and our credit products so that arbitrage.
Speaker Change: Just looking at your at your discount to NAV.
Speaker Change: Do you believe that if you can be active this year on the portfolio realization activity within your <unk> business.
Speaker Change: Today as sort of a 30 to 40 points of discount, which really makes no sense to us hence the SCB and the other.
Speaker Change: That will help.
Speaker Change: Maybe validate the value within your knobs and help to tighten the discount.
Speaker Change: Share buybacks that we've been doing.
Speaker Change: And then maybe a second a second part to that beyond buybacks. What else are you focused on here to tighten the discount.
Speaker Change: Again to create to create value on top of that now like again.
Speaker Change: Point back to credit.
Speaker Change: Yes.
Speaker Change: No.
Speaker Change: Chris just again that business did 25 of FRE last year's <unk>.
Speaker Change: Obviously, selling things at or above NAV will always help validate that the discount doesn't make sense.
Speaker Change: Run rating $39 million going into the year on things that have already been done in 2024 and the spread between structured credits profitability in the rest of the business that's scaling.
Speaker Change: I tried to point out consistently there is also a secondary market for Rps trades, well well above the implied discount on the <unk>. If you can give proper credit for cash and our credit products so that arbitrage.
Speaker Change: Also has decreased meaningfully on a run rate basis between 2024 actual in 2024 run rate. So as we and we've already done three newest yellows and closed at $780 million institutional deal. The medicine utilizes all subscale products and every dollar of revenue from those products is accretive so.
Speaker Change: Today as sort of a 30 to 40 points of discount.
Speaker Change: Really makes no sense to us, hence the SCB and the other.
Speaker Change: Share buybacks that we've been doing.
Speaker Change: Again to create to create value on top of that now again.
Speaker Change: Point back to credit.
Chris Govan: Chris just again that business did 25 of FRE last year.
Speaker Change: Hunting towards that credit business and getting people to understand it I think could be a <unk>.
Speaker Change: True source of shareholder value above and beyond what people are looking at today on the NAV and not to mention all the carry opportunity in everything else.
Chris Govan: Run rating $39 million going into the year on things that have already been done in 2024 and the spread between structured credits profitability in the rest of the business that's scaling.
Speaker Change: Chris pointed out on top of that I am spending a lot of time on just general capital allocation and what to do and how to investigate in a $5 billion over time as it comes back I don't have much to say on that now other than the fact that it is getting.
Chris Govan: It also has decreased meaningfully on a run rate basis between 2024 actual in 2024 run rate so and we've already done three newest yellows and closed at $780 million institutional deal medicine utilizes all subscale products and every dollar of revenue from those products is accretive so.
Speaker Change: A lot of my mind sure.
Okay.
Speaker Change: Excellent just on the fundraising side can you maybe articulate what your.
Your plans or your targets or perhaps for 2025 for clo's and and otherwise.
Chris Govan: Hunting towards that credit business and getting people to understand it I think could be a <unk>.
Speaker Change: Yeah, I won't get into specific targets, but we expect structured credit overall, which would include <unk>.
Chris Govan: True source of shareholder value above and beyond what people are looking at today on the NAV and not to mention all the carry opportunity in everything else.
Speaker Change: ESCO and on tap for investment product.
Speaker Change: Chris pointed out on top of that I am spending a lot of time on just general capital allocation and what to do and how to investigate and $5 billion over time as it comes back I don't have much to say on that now other than the fact that it is getting.
Speaker Change: Institutional Investor just put the 780 men to actually have another very good year.
Speaker Change: Obviously, the ops fund and <unk> are both ramping up fund raisings for their platform so there'll be in market.
Speaker Change: Preparing for future fund raises but I think most of the new incremental.
Chris Govan: A lot of my mind share.
Chris Govan: Okay.
Speaker Change: Capital will come from.
Speaker Change: Excellent just on the fundraising side can you maybe articulate what your.
Speaker Change: The credit business next year.
Speaker Change: In a way that could also think also could be Cvs and other type of things that Chris mentioned that would come out of the business, but it wouldn't be a new fund raise would be would be things like that.
Speaker Change: Your plans or your targets or perhaps for 2025 for Clo's and otherwise.
Speaker Change: Yeah, I won't get into specific targets, but we expect structured credit overall, which would include <unk>.
Speaker Change: Okay understood and then just my last question.
Speaker Change: You're still sitting on what looks to be a fairly healthy amount of cash at $1 6 billion.
Speaker Change: ESCO and on tap for investment product.
Speaker Change: Institutional investors just put the 780 men to actually have another very good year.
Speaker Change: Should we expect you to continue to be active on your end CIB or would you would you consider another SMB, maybe whereas your where is your preference.
Speaker Change: Obviously, the ops fund on cap are both ramping up fund raisings for their platform so there'll be in market.
Speaker Change: The kind of a 100% you should expect us to be active on the NCI.
Speaker Change: Preparing for future fund raises but I think most of the new incremental.
Speaker Change: Hundred percent.
Speaker Change: Capital will come from.
Speaker Change: As far as the <unk>.
Speaker Change: The credit business next year.
Speaker Change: Certain.
Speaker Change: We'll continue to always look at that.
Speaker Change: In a way that could also I think also could be Cvs and other type of things that Chris mentioned that would come out of the <unk> business, but it wouldn't be a new fund raise it would be would be things like that.
Speaker Change: We appreciate you an opportunity to do that given other competing.
Speaker Change: Uses of the capital.
Speaker Change: We were open to buying shares back anywhere near these levels.
Speaker Change: Okay understood and then just my last question.
Speaker Change: Okay. That's it for me.
Speaker Change: You're still sitting on what looks to be a fairly healthy amount of cash at $1 6 billion.
Speaker Change: Thank you.
Speaker Change: Thank you. This does conclude the question and answer session of today's program I'd like to hand, the program back to Bobby Le Blanc for any further remarks.
Speaker Change: Should we expect you to continue to be active on your NCI be or would you would you consider another SMB maybe what is your what is your preference.
Speaker Change: Thank you all for your time again, if you ever if you have more questions feel free to reach out to Jill and her team are to Chris Chris or to me to answer the questions.
Speaker Change: On the cap of 100% you should expect us to be active on the NCI.
Speaker Change: Hundred percent.
Speaker Change: As far as the <unk>.
Speaker Change: We hope you have a nice weekend and look forward to talking to you either during the quarter or the next.
Speaker Change: Certain.
Speaker Change: We'll continue to always look at that.
Speaker Change: Earnings call I appreciate it bye bye.
Speaker Change: We appreciate you an opportunity to do that given other competing.
Speaker Change: Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program you may now disconnect good day.
Speaker Change: Uses of the capital.
Speaker Change: We are open to buying shares back anywhere near these levels.
Speaker Change: Okay. That's it for me.
Speaker Change: Thank you.
Thank you. This does conclude the question and answer session of today's program I'd like to hand, the program back to Bobby Le Blanc for any further remarks.
Speaker Change: Thank you all for your time again, if you ever if you have more questions feel free to reach out to Jill and her team are to Chris Chris sort of me to answer the questions.
Speaker Change: We hope you have a nice weekend and look forward to talking to you either during the quarter or the next.
Speaker Change: Earnings call I appreciate it bye bye.
Speaker Change: Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program you may now disconnect good day.
Yeah.
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