Q3 2025 StepStone Group Inc Earnings Call
Good day, and thank you for standing by walking through the fiscal third quarter 2025 steps down group earnings Conference call.
At this time, all participants in listen only mode.
After the speaker's presentation, there will be a question and answer session to ask a question. During the session you will need to press star one on your telephone you didn't hear an automated message advising him as race to withdraw your question. Please press star one again please.
Speaker Change: Please be advised that today's conference is being recorded and I like to hand, the conference over to your first speaker today.
Why.
Speaker Change: <unk> relations. Please go ahead.
Speaker Change: Thank you and good evening.
Jason Mann: Joining me on today's call are Scott Hart, Chief Executive Officer, Jason Mann, President and co Chief Operating Officer, Mike Mccabe head of strategy and David Clark Chief Financial Officer.
Jason Mann: During our prepared remarks, we will be referring to a presentation, which is available on our investor relations website at shareholders that steps down group dotcom.
Jason Mann: Before we begin I'd like to remind everyone that this conference call as well as the presentation.
Jason Mann: Certain forward looking statements regarding the company's expected operating and financial performance for future periods forward looking statements reflect management's current plans estimates and expectations and are inherently uncertain and are subject to various risks uncertainties and assumptions.
Actual results for future periods may differ materially from those expressed or implied by these forward looking statements due to changes in circumstances, where a number of risks or other factors that are described in the risk factors section of step downs periodic filings. These.
Jason Mann: These forward looking statements are made only as of today and except as required we undertake no obligation to update or revise any of them. Today's presentation contains references to non-GAAP financial measures reconciliations to the most directly comparable GAAP financial measures are included in our earnings release, our presentation and our filings with the SEC.
Jason Mann: Yeah.
Jason Mann: Turning to our financial results for the third quarter of fiscal 2025.
Jason Mann: Beginning with slide three we reported a GAAP net loss of $287 million.
Jason Mann: The GAAP net loss attributable to stop some group incorporated watch $192 million or $2 61 per share.
Jason Mann: GAAP earnings were impacted by the change in fair value related to our potential future buying of the steps on private wealth profits interests.
Jason Mann: David will speak to the GAAP accounting dynamics in more detail in his section.
Jason Mann: Moving to slide five we generated fee related earnings of $74 1 million up 46% from the prior year quarter.
Jason Mann: And we generated an FRE margin of 39%.
Jason Mann: The quarter reflected retroactive fees, primarily from our special situations real estate Secondaries fund.
Jason Mann: Our infrastructure co investment fund and our multi strategy gross equity fund.
Jason Mann: Retroactive fees contributed $9 7 million to revenue, which compares to retroactive fees up $8 $6 million in the third quarter of fiscal 2024.
Jason Mann: Finally, we earned $52 $7 million and adjusted net income for the quarter or <unk> 44 per share.
Scott: This is up from $42 $1 million or <unk> 37 per share in the third quarter of last fiscal year, driven by higher fee related earnings and higher net realized performance fees I'll now hand, the call over to Scott.
Scott: Thank you Seth and good evening.
Scott: Standout quarter for both fee related earnings and fee related asset growth.
Scott: We generated fee related earnings of $74 million, our highest level ever and increased our fee, earning assets under management by nearly $10 billion, which is the strongest quarter of organic growth step stones history, we now manage over $114 billion of fee, earning AUM of 28% from a year ago.
Scott: We're very proud of this result, which in large part is a function of our strong fundraising over the last year.
Scott: As you are aware a portion of our fund raising over the past 12 months has been building in our unemployed fee, earning capital are you fake and we were able to deploy inactivate significant portion this quarter we.
Scott: We took advantage of attractive investment opportunities in the market deploying over $2 billion of capital and activating over $6 $5 billion of capital from our debt balance this quarter.
Scott: We tend to look at our growth over a longer period than just one or two quarters in order to reflect cumulative efforts of fund raising investing the relationship building that span cycles.
Scott: Measuring our progress since the fall of 2021 or just after we close on the Green Spring acquisition, we've increased our fee, earning AUM by 70% or a compounded annual rate of 18% with all this growth generated organically.
Scott: This success came during a period, where many private market managers experienced fundraising pressure and private capital commitments across the industry fell each year from 2021 through 2024.
Scott: Our results for both the quarter and the last several years are a validation of our strategy and business model, which we deliberately constructed to be flexible by commercial structure and strategy broad and geographic reach and diversified across asset class.
Scott: While certain investment approaches may be in or out of fashion in any given period. The diversification of our offerings provide the complete array of solutions for our clients and provide the ballots for consistent growth for our shareholders.
Scott: Highlighting a couple of specific milestones from our fiscal third quarter.
Scott: First we closed on our inaugural infrastructure co investment fund with a total fund size at approximately $1 2 billion.
Scott: A tremendous result for the first time fund is a testament to the strength of the team and demand for real assets.
Scott: Infrastructure is quickly becoming an integral component of lp's portfolios due to its benefits of diversification inflation protection and income generation.
Scott: Well commingled funds, maybe a new offering from our infrastructure platform stepped soon is a very experienced team extensive tracker built through managed accounts.
Scott: We have over $100 billion of total capital responsibility and infrastructure, including $36 billion.
Scott: AUM.
Scott: That's one of if not the largest infrastructure solutions providers in the world.
Scott: Second we grew our private wealth platform to over $6 billion in.
Scott: And raised over $1 billion of new subscriptions.
Scott: As our best private wealth growth quarter ever and our first quarter raising more than $1 billion of private wealth subscriptions.
Scott: Encouragingly, even as we layered on new products, such as stress our infrastructure fund and credits are private credit fund, we continue to grow subscriptions in S. Prime are all private markets bond and spring our venture capital and growth equity fund.
Scott: But thats prime in spring had their strongest subscription quarters to date.
Scott: As of the end of January we have increased the private wealth platform to over $7 billion, which included a more than $600 million secondary transaction by critics of our high quality private credit portfolio, which occurred at the beginning of the year.
Scott: This was executed through issuance of chronic shares to the sellers we.
Scott: We believe this investment by credit should enhance the returns of the fund offer greater loan diversification lower expenses for investors through scale economies and amplify the funds marketability to additional platforms.
Scott: Shifting to our financial results, we generated $192 million in management and advisory fees and $74 million in fee related earnings, which are up 26% and 46% year over year, respectively.
Scott: This is our strongest fee related revenue and fee related earnings period on record, even as retroactive fees have moderated over the last couple of quarters excluding.
Scott: Excluding the impact of retroactive fees, our fee related revenue and fee related earnings increased 27% and 53% year on year, respectively, driven by robust growth in our fee, earning AUM across structures.
Scott: <unk> margin was 39% for the quarter. If you were to exclude the impact of retroactive fees. Our FRE margin was 36% for the quarter and 35% for the trailing 12 months.
Scott: Our best quarterly and 12 month core margin levels on record.
Mike: I'll now turn the call over to Mike to speak to fund raising and asset growth in more detail.
Mike: Thanks Scott.
Mike: Turning to slide eight we generated over $27 billion of gross.
Mike: Inflows during the last 12 months.
Mike: $18 billion of these inflows came from our separately managed accounts.
Mike: And over $9 billion came from our focused commingled funds.
Mike: In the quarter, we generated over $2 billion of co mingled fund gross additions.
Mike: Notable commingled fund additions included about $600 million on our real estate Secondaries fund at about $200 million for the final close of our debut infrastructure co investment fund.
Mike: Our infrastructure coming on offering finished with the fund size of approximately $1 2 billion.
Mike: Which is our largest ever first time fund.
Mike: Our real estate Secondaries fund has raised $2 4 billion through December already exceeding the prior vintage of $1 4 billion.
Mike: We anticipate executing final closes on our real estate Secondaries fund and in our multi strategy growth equity fund within the next couple of quarters.
Mike: We remain in market with our debut infrastructure Secondaries fund, our corporate direct lending fund and our opportunistic lending fund.
Mike: We have also recently launched the next vintages of our multi strategy global venture capital Fund and our private equity co investment fund, which outside of our evergreen products. We anticipate will be the biggest contributors to our commingled fund inflows over the next year.
Mike: Turning to private wealth.
Mike: Scott mentioned, we generated over $1 billion of subscriptions that are evergreen funds growing the platform to $6 3 billion as at the end of the calendar year.
Mike: Most of these subscriptions came from S Prime in spring.
Mike: We're continuing to make progress instructs and credits as we build momentum with our current distribution partners and add new distributors to our syndicate.
Mike: Pivoting to managed accounts, we generated just under $1 billion of gross additions for the quarter.
Mike: This is a relatively lighter quarter for managed account gross inflows compared to recent periods, but it was a record quarter for managed account fee, earning AUM growth, which was up $8 billion as reactivated over $6 $5 billion of capital much of it raised in recent periods.
Mike: We also deployed nearly $2 billion from our SMA, which is our largest level of deployment out of our managed accounts and more than two years.
Mike: The timing and magnitude of our managed account fund raising and fee, earning growth can be lumpy. So as Scott mentioned, we believe it is more appropriate to measure our progress over longer periods of time rather than quarter to quarter.
Mike: Looking forward the pipeline for new SMA has remained strong.
Mike: Slide nine shows our fee, earning AUM by structure and asset class for the quarter, we grew earning assets by almost $10 billion, our best period of organic growth ever.
Mike: Are you in fact moderated from nearly $30 billion last quarter to about $22 billion. This quarter, given the strong level of activation and deployment.
Mike: As you can see on the slide we are sitting with a similar level of your effect today as we had at the end of the fiscal year 2024.
Following the Activations this quarter the overwhelming majority of our youth balance represents unemployed as opposed to not yet activated capital.
Mike: We anticipate drawing on the remaining <unk> balance as we deploy these funds over a normal three to five year cycle.
Mike: The combination of fee, earning assets plus <unk> grew to almost $136 billion.
Which was up roughly $2 billion sequentially and is up $25 billion or 23% from a year ago.
Mike: Slide 10 shows the evolution of our management and advisory fees we.
Mike: We generated a blended management fee rate of 64 basis points for the last 12 months higher than the 59 basis points from the prior fiscal year as we benefited from retroactive fees and positive mix shift from a higher fee rate associated with our private wealth offerings.
Mike: Before turning the call over to David.
Mike: I would like to highlight an exciting milestone for our venture capital business.
Mike: As you recall when we acquired Green spring in September of 2021 part of the purchase price included an earn out that was contingent on achieving certain revenue targets.
Mike: We are pleased to report that our venture capital team exceeded these targets.
Mike: And this is notable considering the challenges the technology industry went through in 2022, and 2023, which included a 36% peak to trough drop in the NASDAQ composite index.
Mike: The success of our venture team and raising capital during this period as a validation of the team's superior track record and relationship with our clients.
Mike: To put the green spring deal into perspective since announcing the acquisition in July of 2021, we've more than doubled the venture capital fee, earning AUM.
Mike: This includes fund raising commingled funds managed accounts and spring.
Mike: This result would have been impossible for green spring or step stone to achieve alone.
Mike: But the combination is very powerful.
Mike: Our use of earn outs and shared equity among the teams has proven to be an effective incentive tool across the asset classes and is demonstrating to be a very effective tool within private wealth, where results are surpassing our expectations Dave.
Mike: David will speak more to this in a moment.
David: And with that I'll turn the call over to David.
David: Thanks, Mike I'd like to turn your attention to slide 12 to touch on our financial highlights.
David: For the quarter, we earned management and advisory fees of $192 million up 26% from the prior year quarter.
David: The increase was driven by strong growth in theory, AUM across commercial structures and a higher blended average fee rate.
David: Fee related earnings were $74 million of 46% from a year ago.
David: <unk> margin was 39% for the quarter up more than 500 basis points versus the prior year quarter.
David: Normalizing for retroactive fees core FRE margins were 36% expanding more than 600 basis points versus the prior year period.
David: The quarter benefited from roughly $2 million in advisory fees that may not necessarily recur.
David: As well as favorability on timing of expenses.
David: We tend to look at our margin on a trailing 12 month basis, which drew some of the quarterly fluctuations.
David: Our 12 month margin has consistently rhythm since our IPO in 2020, and we would expect our margin to continue to grow over time.
David: Looking at expenses in more detail cash based compensation was $86 million up.
David: 4% from last quarter, reflecting increased head count.
David: General and administrative expenses were $30 million up roughly $2 million sequentially and up about $3 million from a year ago.
David: As a reminder, we will be hosting our annual venture capital conference. This month. So you should expect to see a slight uptick in G&A expenses next quarter.
David: Gross realized performance fees were $52 million for the quarter and $27 million net of related compensation expense.
David: This reflects $24 million of gross realized carry and our managed account in drawdown funds and $28 million of incentive fees.
David: Our fiscal third quarter is our strongest seasonal period for incentive fees due to the annual crystallization of spring in this period.
David: While the $24 million of realized carry is up relative to a year ago. This still represents mostly partial realizations.
David: We are optimistic that a broader pickup in M&A and capital market activity will support improvement in realizations, but the timing is difficult to predict.
David: Adjusted net income per share was <unk> 44.
David: Up 19% from a year ago, driven by growth in fee related revenues FRE margin expansion and higher net performance fees.
David: Non controlling interests were relatively higher this quarter due to growth in our infrastructure real estate and private debt asset classes.
David: Retroactive fees and real estate and very strong growth in private wealth.
David: Particularly strong where private wealth incentive fees, which drove the outsize growth and performance fee related NCI in the quarter.
David: We are excited to see strong growth across our businesses, which will increasingly benefit stepson's bottomline as we buyback a portion of the infrastructure real estate and private debt businesses each year.
David: We will also have an opportunity to call the interests of the private wealth business beginning in 2027, and the private wealth team will have the opportunity to put their interest to steps down beginning in 2026.
David: The put call price structure to be at a discount to the prevailing step multiple.
David: As Mike mentioned, the progress of our wealth management platform has been even stronger than we anticipated.
Speaker Change: GAAP accounting requires us to present the change in fair value of the potential buyers of the step stone private wealth profits interest through our income statement.
Speaker Change: Which has meaningfully increased with a higher expectation of private wells results.
Speaker Change: This is why you see a GAAP net loss this quarter the accounting treatment of the potential future buying is similar in this regard to the treatment of the green screen earn out which flowed through the income statement, even though the earn out was part of the purchase price consideration.
Speaker Change: This may continue to create variability in our GAAP results until the put call has exercised but will not impact our adjusted net income.
Speaker Change: As discussed on prior calls. These are these buy ins are hard wired to be accretive to NII per share.
Speaker Change: Moving to key items on the balance sheet on slide 13, net accrued carry finished the quarter at $744 million.
Speaker Change: Up 6% from last quarter and up 31% over the last 12 months.
Speaker Change: We view, our net accrued carry as potential future performance fees that will convert to cash is realized realizations start to pick up.
Speaker Change: Our net accrued carry is relatively mature with over 80% tied to programs that are older than five years, which means that these programs are ready to harvest.
Speaker Change: And of this amount over 50% source from vehicles with deal by deal waterfalls, meaning realized carry may be payable at the time of investment exit.
Speaker Change: Our own investment portfolio ended the quarter at $266 million, and we had unfunded commitments to our own investment programs of $116 million as of quarter end.
Speaker Change: This concludes our prepared remarks, I'll now turn it back over to the operator to open the line for any questions.
Speaker Change: Thank you as a reminder to ask a question.
Speaker Change: Need to press Star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.
Please standby or compile the Q&A roster.
Speaker Change: One moment for our first question.
Speaker Change: Our first question will come from the lineup Ken Worthington from Jpmorgan. Your line is open.
Ken Worthington: Hi, good evening, thanks for taking the questions. So always good to hear about the build out of wealth management. So as we think about sort of accomplishments this quarter.
Ken Worthington: What are you what would you highlight in terms of building out the wealth footprint, particularly distribution this quarter.
Ken Worthington: And what I'd really like to here is as you know we're in the new calendar year. What gets you. Most excited about the wealth management business and opportunities as you look out over the next 12 months.
Jason Mann: Thanks, Kevin Jason here.
Ken Worthington: We are.
Ken Worthington: Really proud of the work that we did this past quarter in continuing to build out the syndicate for the newer funds cross sell path remains high as we add platforms, we crossed about 450 platforms.
Ken Worthington: Globally in the quarter and 40% of them are selling to our more funds. So really building the brand and the platforms.
Ken Worthington: And.
Ken Worthington: Those in this channel are looking at steps are in the same way that institutional investors are which is once they understand the story in one asset class.
Ken Worthington: Easier for them to understand the same story and additional asset classes and solutions. So that's something that we're very happy with second the progress with the ticker eligible fund so that's S. Prime U S.
Cred X and that is struck U S.
Ken Worthington: Flows coming from ticker continue to tick up.
Speaker Change: Intended I apologize.
Ken Worthington: With.
Ken Worthington: What was about 60% coming through ticker last quarter.
Ken Worthington: Now nearly 70% coming through ticker so.
Ken Worthington: Handing off that rough edge has proven to be a strategic advantage for us and.
Ken Worthington: Ultimately accruing to the benefit of the Fas and the clients that are filling these things out.
Ken Worthington: We look forward.
Ken Worthington: In our prepared remarks, we spoke about the credits secondary transactions, so that added over $600 million of <unk>.
Ken Worthington: To the fund in January So we are very excited about that fund scaling up and now being a relevant size for more platforms that will make cross sell and new platforms.
Ken Worthington: A bit easier for sure and.
Ken Worthington: We continue to look to innovate within the product suite and think about how we can be better partners to our distribution partners.
Speaker Change: Okay that was excellent this may be a little esoteric I'm going to try it anyway can you talk a bit about the market for secondaries. What are you seeing in terms of sort of activity levels and interest in the market and in particular at the discounts that are applied to these transactions how are those discounts sort of looking.
Speaker Change: Today versus how they may have looked I don't know 612 months ago.
Speaker Change: Yes, so I think it is.
Speaker Change: Yes. Good question, it's clearly been a very active year in the secondaries market 2024 set another new record really across LP and GP led secondaries you have seen your average market pricing at kick up slightly so.
Speaker Change: In the buyout space, that's probably somewhere in the low to mid <unk> as a percentage of.
Speaker Change: In areas like venture capital is going to be.
Speaker Change: A much larger discount fee, 70% to 80% of AAV.
Speaker Change: But clearly part of the trend that we have talked about over the years is just the expansion of the secondaries market to also include GP led secondaries to also include <unk>.
Speaker Change: Secondary transactions across asset classes, and just to help put things into perspective, a bit here have you rewind the clock just across the industry to 2008.
Speaker Change: We were at a level, where there was about a trillion dollars of dry powder in the private equity market and there was about a trillion dollars of NAV.
Speaker Change: In the private equity space when you fast forward that that'd be grown dramatically.
And specifically the dry powder has increased about two five times call. It two five trillion dollars or so of dry powder today.
Speaker Change: As we've seen a much more significant level of growth in unrealized net asset value to record levels of over a trillion dollars and so when I look at those balances to me that streams are secondaries opportunity whether in the form of LP secondaries, GP secondaries or even sponsor to sponsor transactions, where we'd have the ability to participate.
Speaker Change: Paid through co investments as well so a lot of excitement.
Speaker Change: As we look at the secondary space coming off really a record year across the industry, but for us here at steps down as well.
Speaker Change: Okay excellent. Thank you very much.
Speaker Change: One moment for our next question.
Speaker Change: Our next question comes from the line of Ben bullish from Barclays. Your line is open.
Ben Bullish: Hi, good evening and thanks for taking the question.
Ben Bullish: I wanted to kind of a maybe a little modeling question, but your NCI not attributable to SPD <unk> stepped up quite a bit sequentially in the quarter in the prepared remarks, you talked a little bit about V C.
Ben Bullish: I see green spring asset sort of exceeding some of their targets I'm. Just curious was that the big piece of the driver or anything else contributing there and how should that number look maybe in the next couple of quarters sort of based on the.
Ben Bullish: The way things are trending right now that would be helpful. Thank you.
David: Yeah sure this is David.
David: The largest driver of this quarter of the non private world NCI was the retroactive fees associated with our real estate Secondaries fund.
David: That closed this quarter, so absent that generally you would see.
David: Just a natural growth from just the growth above the other asset classes.
David: And just specifically on the venture capital related question.
David: As a reminder, we acquired 100% of that business, we did not acquire the legacy carried interest but on <unk> as it relates to fee related revenue of fee related earnings acquired 100% of the business it would not see that flowing through NCI.
Speaker Change: Got it helpful. And then maybe just a high level question Scott in your prepared remarks, you talked a bit about infrastructure. It's.
Speaker Change: It's been coming up on the cause of a lot of your peers that are sort of really digging into the data center opportunity and obviously with the deep seek news people are sort of revisiting that thesis could you maybe just talk high level your infrastructure business, what what are the sort of key areas of investment.
Speaker Change: To kind of help us understand where you guys are focused there. Thank you.
Speaker Change: Yes, I mean look I think as you know across our entire business and across each of our asset class is very well diversified really across any metrics you might look at whether thats.
Speaker Change: Industry, whether that's underlying manager certainly underlying.
Speaker Change: Our portfolio company and so we like others, obviously closely tracking the deep Sea news there given our position not only in infrastructure, but real estate and venture capital as well as its been quite a bit of time with our GPS portfolio companies over the last several weeks, but just to come back year specific question in infrastructure.
Speaker Change: If I were to look for example at the three largest industry categories across our most recent.
Speaker Change: Co investment find theyre going to be in power and renewables transportation and communications, which would include data centers. There. So again very well diversified though across really the entire infrastructure spectrum and I think similar it would make similar comments had the question been about sort of real estate <unk> venture.
Speaker Change: That exposure as it relates to data centers or large language models.
Speaker Change: Alright understood. Thank you very much.
Speaker Change: Okay.
Speaker Change: Thank you one moment our next question.
Speaker Change: Our next question comes from the line of Alex Bluestein from Goldman Sachs. Your line is open.
Alex Bluestein: Hey, good evening. Thank you for the question as well.
Speaker Change: You guys talked about quite a bit of an active deployment quarter last quarter shows up obviously in the results as well.
Speaker Change: Was there anything specific that drove that was there or is it pretty broad base in other words was there in a couple of larger opportunities that you saw or the activity was across multiple sectors multiple industries and I guess as you look out.
Speaker Change: That likely to continue how are your pipelines for deployment shaking out so far for the next few quarters.
Speaker Change: Yes.
Speaker Change: It was definitely broad based I mean, if I, if I think about some of the figures that Mike touched on as it related to.
Speaker Change: The conversion of <unk> in the fee, earning EUM.
Speaker Change: Outlier there was really the activation is not the deployment the deployment, which was over $2 billion. We mentioned was our most active quarter over the last two years would've been diversified across asset class strategy et cetera, but if I were even a step back as a reminder, that 2 billion is only going to capture accounts that payment.
Speaker Change: <unk> capital and are therefore converting into fee, earning AUM, if I step back and look across our business.
Speaker Change: Despite what's gone on in the broader market. It has been it was a very active calendar 2024 for us.
Speaker Change: As I just mentioned earlier was our most active year in secondaries really across asset classes, if I look at our private equity co investment business.
Speaker Change: We're driven by the increase in some of the size of the transactions that we invested in as well as the quality of some of the deals that we're seeing and it really played out in our approval ratio. We ended up having about our second most active year in private equity co investments in 2024, we have seen a pickup in activity not only.
Speaker Change: And in infrastructure that I was just talking about but private credit as well and then if I look at real estate with our real estate Secondaries fund that is currently in market. We have started to really see some interesting opportunities. There now have eight or so as our seed assets in that fund. So it has been broad based really across asset class and strategy here.
Speaker Change: Great and just in terms of the outlook in terms of the pipeline, how you're kind of thinking about it for calendar 'twenty five.
Speaker Change: Yeah, I mean look I would expect that to continue really just driven by where we source of deal flow from I mean, if I step back.
Speaker Change: And really think about it.
Speaker Change: Bit of an optimistic view that.
Speaker Change: Perhaps with less regulation, we see an increase in M&A activity capital markets activity I would say right now we're having to see some of the pipelines rebuild as we kind of went through the year end transition in certain things wrapped up by calendar Q4, we are now in the process of rebuilding some of those pipelines, but given the diversified.
Speaker Change: Nature of our business and again, our ability to source through a variety of different channels and through different GPS I would really expect that to continue.
Speaker Change: Perfect and then my second question, just a little bit of a modeling dynamic I know you mentioned the earn out from the Green Spring acquisition, which is obviously a high class problem.
Speaker Change: Is that deal is done obviously very nicely can.
Can you just remind us how that will show up in your financial statements is it cash is at NCI is it is it stock.
Speaker Change: So when when that's supposed to hit and in what form.
Speaker Change: Yes.
Speaker Change: David here, so the green screen earn out and there is a target of $75 million, we hit that target fully accrued as of December 31.
Speaker Change: We will be payable 100% in cash.
Speaker Change: Great. Thanks, so much.
Speaker Change: One moment for our next question.
Speaker Change: Once again Thats star one for questions.
Speaker Change: Our next question comes from the line Michael Cyprus from Morgan Stanley Line is open.
Michael Cyprus: Hey, good evening. Thanks for the question just wanted to ask about how youre thinking about opportunities around blending public and private assets to our portfolio. If you could talk a little bit about the opportunity set that you see there to what extent could that makes sense, maybe to partner with others, maybe in the context of target date strategy.
Michael Cyprus: And then I'll ask the follow up here as well it's related just broadly if you could update us on how youre thinking about the retirement space with a new administration, just curious your expectations around that and how that might play out. Thanks.
Michael Cyprus: Sure Mike.
Speaker Change: Mike Jason here, Thanks for the question John plural.
Speaker Change: So public private convergence.
Speaker Change: With our joint product model portfolios et cetera, something we're having very many more conversations about.
Speaker Change: Today than we would have been last year or the year before.
Speaker Change: Doubt.
Speaker Change: <unk>.
Speaker Change: Clearly given our focus that's a partnering opportunity.
Speaker Change: Because we don't cover the public market aspects and so we are definitely in conversations with people all the time about what that might look like where we can add value where they can add value and.
Speaker Change: Ultimately actually what the client demand is and what.
Speaker Change: Such a product or solution is actually seeking to solve because.
Speaker Change: Because we do want to look at it through that lens.
Speaker Change: And really ensure that we're trying to solve a problem rather than pushing a product that isn't needed into the market. We do think there's opportunities there.
Speaker Change: And we definitely think that the <unk>.
Speaker Change: Up in the asset owner organization, you go think CIO or chief risk officer, They do want a total portfolio view and they do want.
Speaker Change: Products that blend.
Speaker Change: Glenn these exposures.
Speaker Change: No.
Speaker Change: Yes lots of conversations nothing.
Speaker Change: Near term to report on.
Speaker Change: As it relates to what channels that type of opportunity flows into I think youre right to highlight that there are multiple different ways, where such a thing could be.
Speaker Change: Consumed right it could be in the retirement space it could be in model portfolios sold to retail.
Speaker Change: It could be.
Speaker Change: In the insurance space or other institutional asset owners space, particularly smaller and you might think.
Speaker Change: In terms of.
Speaker Change: An update on the retirement market broadly.
Speaker Change: I think as we've said on these calls over the last couple of quarters, we do not believe that any regulatory or legislative action is required for private markets to succeed within the U S retirement space.
Speaker Change: That said.
Speaker Change: Action by Congress or the department of Labor would certainly be welcome and the more full throated endorsement.
Speaker Change: As with that endorsement in essence being please look at the net returns.
Speaker Change: I think the more comfort both plan sponsors.
Speaker Change: Corporate employers.
Speaker Change: And at the asset managers.
Speaker Change: The target date fund managers and at the defined contribution Aggregators, who are focused on.
Speaker Change: <unk>.
Speaker Change: As our managed accounts are all going to be about including private markets inside of these portfolios. Those conversations have been active for a couple of years now and certainly.
Speaker Change: Most.
Speaker Change: Post the election.
Speaker Change: Those conversations have taken on.
Speaker Change: <unk>.
Speaker Change: Somewhat greater degree of urgency as we worked through what the exact solutions are that each of the different strata within the retirement space are are really looking for.
Speaker Change: Great. Thank you so much.
Speaker Change: Thank you one moment our next question.
Speaker Change: Our next question will come from the line of Chris Kotowski from Oppenheimer. Your line is open.
Chris Kotowski: Yes, good evening and thank you I was wondering if you could give us a little bit more color on that $600 million credits.
Chris Kotowski: Action and I guess I'm wondering specifically was looking like.
Chris Kotowski: One shot deal too.
Chris Kotowski: To try to create some critical mass for that fund or is this a potential kind of fund raising route.
Chris Kotowski: On a more regular basis going forward.
Jason Mann: Thanks, Chris Jason here.
Jason Mann: The secondary.
Jason Mann: Was an opportunistic situation. These things do come up in the market from time to time. This is not the first transaction. We've done overall, we did we did a deal.
Jason Mann: Apologies.
Jason Mann: And S Prime back.
Jason Mann: So a couple of years ago.
Jason Mann: Yeah.
Jason Mann: And the.
Jason Mann: So I wouldn't view it as a path towards fund raising per se.
Jason Mann: Credit fund in particular, it was an opportunity to grow the scale, which.
Jason Mann: <unk>.
Jason Mann: Has the benefit of a couple of things it decreases the expense ratio for existing investors. It increases the diversification, which in credit is extremely important.
Jason Mann: And <unk>.
Jason Mann: Because of the increased size will make us a bit more relevant to additional platforms or eligible on additional platforms, which should speed fundraising in the future.
Jason Mann: In terms of looking at these as they come up we're going to evaluate each deal on a case by case basis.
Jason Mann: And.
If they make sense for the fund and their investors then it's something that we're happy to get after.
Jason Mann: Okay, Yeah, no. It struck me as interesting because it's more than three times the size of the fund so that somebody who must.
Jason Mann: Trusts do very well.
Jason Mann: Thank you.
Jason Mann: Okay.
Jason Mann: Thank you.
Speaker Change: And I'm not showing any further questions at this time I would now like to turn it back over to Scott Hart for any closing remarks.
Speaker Change: Great well as usual thanks, everyone for your time and interest in steps down story, we look forward to connecting with you again next quarter. Thank you.
Speaker Change: Thank you for your participation in today's conference. This does conclude the program you may now disconnect everyone have a great day.
Speaker Change: Okay.
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