Q1 2025 GCM Grosvenor Inc Earnings Call
[inaudible]
Please stand by.
Good day and welcome to the GCM Grosvenor First Quarter 2025 Results Webcast.
Later we will conduct a question and answer session. If you are interested in asking a question, please ensure you dial in using the numbers you have been provided for this call and press to start one on your keypad to join the queue. If anyone should require operator assistance.
Speaker Change: Please press star than the zero key on your telephone. As a reminder, this call will be recorded. I would now like to hand the call or to Stacie Selinger, head of investor relations. You may begin.
Stacie Selinger: Thank you. Good morning and welcome to GCM Grosvenor's first quarter 2025 earnings call.
Stacie Selinger: Today I am joined by GCM Grosvenor's Chairman and Chief Executive Officer Michael Sacks, President John Levin, and Chief Financial Officer Pam Bentley.
Stacie Selinger: Before we discuss with Quarters Results, a reminder that all statements made on this call that do not relate to matters of historical fact should be considered forward-looking statements. This includes statements regarding our current expectations for the business, our financial performance, and projections.
Stacie Selinger: These statements are neither promises nor guarantees. They involve known and unknown risks, uninsurinties, and other important factors that may cause our actual results to differ materially from those indicated by the forward-looking statements on this call.
Stacie Selinger: Please refer to the Factors and the Risk Factors section of our 10K, our other filings at the Securities and Exchange Commission and our earnings release, all of which are available on the Public Shareholder section of our website.
Stacie Selinger: We will also refer to non-get measures that we view as important in assessing the performance of our business.
Stacie Selinger: A reconciliation of John Gettmetrics to the nearest Gettmetric can be found in our earnings presentation and earnings supplement, both of which are available on our website. Thank you again for joining us and with that I'll turn the call over to Michael to discuss our results.
Thank you, Stacie.
GCM Grosvenor had very strong results in the first quarter.
Stacie Selinger: We beat profitability expectations, enjoyed exceptional fundraising, our portfolio investment performance was solid, and importantly we made progress on strategic initiatives.
Stacie Selinger: With regard to fundraising, our first quarter total of 2.9 billion, Luke is our highest quarterly fundraising level in over two years and second highest level since we began reporting publicly.
Stacie Selinger: Approximately half of that total was for infrastructure, including a strong final close of nearly $500 million for a second infrastructure advantage fund.
Stacie Selinger: IAF's 2's final fund size of $1.3 billion was nearly 50% larger than its predecessor fund and is an important part of the success of our broad $16 billion infrastructure strategy.
Stacie Selinger: We launch the next vintage of our Global Diversified Infrastructure Fund, TIS-4, later this year.
Stacie Selinger: Following infrastructure, private equity was the second greatest contributor to first quarter fundraising with over $720 million raised for the strategy.
Stacie Selinger: That included the final close of our private equity co-invest fund, GCF 3, bringing the fund's total size to approximately $615 million, also a material increase over its predecessor fund.
which brought PE Co-invest total AUM to $9.6 billion.
Stacie Selinger: Within the private equity vertical, the next fund coming to market will be our second area fund, GSF-4, which we expect to launch later this year, while the market volatility through April requires no recap.
Stacie Selinger: It's worth noting that the man for alternatives and in particular private markets remains strong.
Stacie Selinger: At this time, outside of certain idiosyncratic pockets, we have not seen investors backing away at all.
Stacie Selinger: We came into the year forecasting that 2025 fundraising would exceed $2024 total of $7.1 billion and despite the volatile conditions, we continue to stand by that view.
Stacie Selinger: The strong IAF-2 final close led to meaningful catch-up fees in the first quarter of 7.6 million. As a result, total private markets management fees for the quarter increased 20% year-over-year.
Stacie Selinger: First quarter fee-related revenue grew 12% year-over-year, and fee-related earnings grew 22% year-over-year.
Stacie Selinger: First quarter, adjusted EBITDA, grew 26% and adjusted net income, improved 30% year-over-year. It was a very solid quarter in terms of financial performance.
Stacie Selinger: At the end of the day, our ability to fundraise and grow the business is a function of the value proposition we deliver to clients in large part driven by the risk adjusted returns we deliver over long periods of time and across market cycles. We are pleased with our results in that regard.
Stacie Selinger: Our absolute return strategies business which delivered relatively flat performance in Q1 was viewed quite positively by our clients given the drop in equity markets over the same period.
Stacie Selinger: Our multi-year performance has been strong there, driving increased client interest in strategy.
Stacie Selinger: Our multi-strategy composite has generated a 10.6% annualized gross return over the last two years, outperforming industry benchmarks and exceeding our run rate performance assumptions.
Stacie Selinger: Since the start of 2024, we have raised $1.6 billion for absolute return strategies and our late-stage pipeline is stronger now as compared to any time over the past few years.
Stacie Selinger: Similarly, we enjoyed solid investment performance across private markets and we saw our carried interest balance grow to 865 million dollars and 11 percent increase from a year ago and more than double our 2020 balance.
Stacie Selinger: The firm's share of carried grew by 12.5% to $450 million as of quarter end.
Stacie Selinger: Importantly, realization activity remains muted amidst the ongoing market uncertainty, but our carry, which is particularly diversified in nature, continues to represent strong earnings potential.
Stacie Selinger: We announced two exciting strategic initiatives this quarter, a joint venture called Grove Lane which is a distribution platform focused on the individual investor and a strategic partnership in Japan, an important market with exciting growth prospects.
Stacie Selinger: John will talk about both in a minute, but through both of these initiatives we are leveraging our core strengths, open architecture investing across the full range of alternative investments, and a client-centric approach to developing tailored investment solutions.
Stacie Selinger: We believe over time after an adequate period to rant, both of these efforts can be significant in contributors to revenue and profit.
Stacie Selinger: Before I hand it over to John , it's important to acknowledge that despite the great quarter, the solid fundraising picture, the still strong pipeline, the progress on strategic priorities.
Stacie Selinger: We believe that the uncertainty related to trade and tax policy is likely to keep deployment and transaction levels depressed.
Stacie Selinger: In addition, while it was still early in the year and anything can happen, the challenging equity markets make it harder to see the ARS business achieving the same level of returns this year as it did last year.
Speaker Change: It's important to reiterate that at this time we do not see tariff and tax uncertainty affecting fundraising.
Speaker Change: Therefore, the FRR and FRRE impact of policy uncertainty is thus far limited to the loss of compounding on ARSF-POM due to the tougher market environment and somewhat slowed private markets deployment of dry powder.
Speaker Change: As a result, utilizing our standard budgeting with flat ARS flows assumptions, we would expect 2025 ARS management fees to be about the same as 2024 ARS management fees.
Speaker Change: We expect full-year private markets fee-related revenue, including ketchup fees, to grow in the mid-single-digit 5-8% range compared to 2024.
Speaker Change: As we mentioned last quarter, we have limited additional petrippies anticipated between now and year end due to the mix of offerings in market.
Speaker Change: As always, Pam will speak more specifically to what we see for the second quarter in a few minutes, but I do want to close by saying that our clients value us most in the midst of market volatility.
Jon Levin: Importantly, we remain confident in our ability to achieve our goal to double FRE from 2023 levels by the end of 2028. And with that, I'll turn the call over to John .
Jon Levin: Thank you. As Michael noted, I will dive deeper into the recently announced strategic initiatives.
Jon Levin: Although the Grove Lane Joint Venture targets RIA distribution in the U.S., and the partnership in Japan targets investors in Japan, both initiatives reflect our consistent goal to create distribution capabilities that we can grow and that we can leverage.
Jon Levin: Through these efforts, we can offer our value proposition to more investors and fully harness the strength of our origination and manufacturing platform.
Jon Levin: As we've highlighted before, our investment engine scales well, and we are long origination in short capital. Put simply, we are highly confident in our ability to deploy additional capital through our existing pipes.
The much talked about individual investor channel represents a massive opportunity.
Jon Levin: The Grove Lane Joint Venture marks an exciting next step in our evolution, enhancing and extending our distribution reach into the RIA and IBD markets, and complementing our existing individual investor distribution footprint in the U.S.
Jon Levin: We believe our institutional product, our registered product, and our separately managed account capabilities will all be relevant to this market. In particular, we believe our 30 years of experience providing separately managed accounts and related services will be a differentiated offering in this market.
Jon Levin: And we will continue to launch new products similar to our seeded and almost fully invested registered ticker enabled infrastructure interval fund that we launched earlier this year.
Jon Levin: We will support Grove Lane as they build out their team and business and have structured our investment to ramp as the business enjoys success.
Jon Levin: We also have the option to purchase groveling management's interest in the entity at a future point in time and would likely do so when and if it is accretive.
Jon Levin: Before turning to our strategic partnership in Japan, it's important to understand the strength of our brand and business across Japan and the broader Asia Pacific region.
Jon Levin: We've built long-standing relationships in Japan and across the Asia-Pacific market since the 1990s.
Jon Levin: Nearly a quarter of our AUM is from Asia Pacific-based clients and some of our deepest and most involved strategic partnerships are from the region.
Jon Levin: Case in point four of our top ten largest clients are Asia-based and are approximately 50 total clients in the region represent nine countries.
Jon Levin: We've seen consistent strong growth from the region raising over $3 billion from Asia over the last two years alone.
Jon Levin: Our non-exclusive partnership in Japan aims to raise at least $1.5 billion in additional assets by 2030.
Jon Levin: We expect this growth to come primarily from private market strategies and to utilize our separate account capabilities, our franchise of specialized funds, and possibly new products catered to the Japanese market.
Jon Levin: To underscore their commitment to the partnership, our Japanese partner also purchased approximately $50 million of newly-issued chairs of GCM Grosvenor Class A common stock at $13.32 per share.
Jon Levin: As Michael noted, amidst the daily turmoil and ups and downs, we are content to keep our head down, delivering for our clients while growing the business and investing for the future. And with that, I'll turn it over to Pam.
Pam Bentley: James John , we are pleased with our first quarter results which highlight the multiple avenues we have to achieve success and drive growth.
Pam Bentley: Given our strong fundraising this quarter, assets under management grew to $82 billion dollars and fee-paying AUM, grew to $66 billion dollars.
Pam Bentley: Our contracted not yet fee-paying AUM grew 16% year over year to $8.2 billion, providing a foundation for continued organic growth as that capital converts to fee-paying AUM over the next few years.
Pam Bentley: Private Markets was the key driver of our results in the quarter with private market management fees increasing 20% over the first quarter of 24, inclusive of $7.6 million of catch-up
Pam Bentley: Given that IAS2 reached its final closes quarter, we expect very little in the way of catch-up fees for the remainder of the year. In the second quarter, we expect private markets management fees, excluding catch-up fees to increase slightly over the first quarter.
Pam Bentley: Absolute return strategies perform well against the broader market downturn and are providing a key source of stability in many of our clients' portfolios.
Pam Bentley: That said, with flat ARS investment performance and flows in the first quarter, we anticipate that ARS management fees in the second quarter will remain in line with first quarter levels.
Pam Bentley: Turning to our expenses, our compensation philosophy is to invest in, align and motivate our greatest asset, our talent.
Pam Bentley: through a combination of annual and long-term awards, including FRE-related compensation, Incentive FRE-related compensation, and equity awards.
Pam Bentley: We remain disciplined in managing compensation expenses and first quarter FRE compensation with $38 million consistent with our 24 quarterly average.
Pam Bentley: We expect FRE compensation to remain at similar levels in the second quarter.
Pam Bentley: non-GAAP General and Administrative and other expenses were $21 million in the first quarter, and we expect a consistent level in the second quarter.
Pam Bentley: Pulling together these factors, our first quarter fee-related earnings grew 22% year-over-year with a 44% fee-related earnings margin.
Pam Bentley: Turning to incentive fees, we realize $15 million in the quarter comprised of $4 million of annual performance fees and $11 million of carried interest.
Pam Bentley: Market conditions are likely to result in muted incentive fee realizations in the near term, but we are well positioned to enjoy significant long-term cash flow generation from the embedded value of both our carry and performance fees.
Pam Bentley: Our growth on real life-carried interest increased to $65 million as a quarter-end, up from $836 million last quarter, which provides significant future earnings potential.
Pam Bentley: Run rate annual performance fees stand at $31 million as a Q1.
Pam Bentley: As a reminder, we typically retain 40 to 50% of the firm share of incentives after cash and centipede compensation in the first quarter, the number with 40%, which is the same as the first quarter of 24.
Pam Bentley: Our balance sheet is strong, and we are maintaining a healthy quarterly dividend of 11 cents per share.
Pam Bentley: As of Monday, we had a 3.5% dividend yield, and there is room for future dividend growth as we enjoy positive momentum in our earnings.
Pam Bentley: We are also strategically investing in our long-term growth, such as through our joint venture with Grove Lane.
Pam Bentley: We continue to repurchase shares under our Repurchase Authorization Plan and we intend to use the $63 million remaining in our program as of May 1st, largely managed delusion.
Pam Bentley: Our business is built on a strong foundation and is well positioned to capitalize on numerous opportunities for growth and scaling. We are excited to continue creating value for our clients and shareholders.
Pam Bentley: Thank you again for joining us and we're now happy to take your questions.
Speaker Change: Thank you. If you would like to signal with questions, please press star.
Pam Bentley: One on your touchtone telephone. If you're a joyous today, use a speaker phone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, that is Star 1 if you would like to signal with questions.
The first question comes from Crispin Love, with Piper Sandler [inaudible]
Thank you and good morning everyone.
First, just starting on the 2025 markets.
Speaker Change: Private Market Management, PX Expectations, I believe it's up 5-8%. Can you just discuss some of the puts and takes there, fundraising is strong, but what are the key drivers to get you back to the 10% plus range over the longer term? Which are levels that you've talked about in the past?
Speaker Change: So you have a couple of factors that impact that in a short-term timeframe.
Speaker Change: Longer term, very good, strong picture and feel very good about that. How much of your funds raised in a particular quarter go direct to F-POM versus go to CNYF-POM?
Speaker Change: is a factor, and then deployment from CNYF-POM is a factor. So where you have...
Speaker Change: Pay as invested capital. How fast do you invest that?
Bye.
Speaker Change: Realization, the timing of revenue turn on, or those are the factors I guess I should say that are we think are have variability to them.
Speaker Change: and we feel like, as I said at the end of my remarks,
Speaker Change: You know, by our 28, you know, target remain very strong. We were actually very pleased with the quarter of the fund raising it's been great. Thank you very much.
The trailing 12-month fundraising has been great.
Speaker Change: sort of a very significant increase from where we were in in 23. It's building on the increase in 24. The pipeline is full. We said we, you know, see ourselves, you know, beating, beating last year, this for the full year and
Speaker Change: It's really just, you know, how much of that as it hits is Pam committed versus Pam invested and then how the deployment works from the CNYF bomb, which is the Pam invested.
Speaker Change: Just the last question for me, just looking at the last 12 months fundraising, you continue to expand more and more internationally. If I look at the last 12 months, I think fundraising
Speaker Change: America's is at about 58% currently. It's come down from 65% just a couple of quarters ago and you look at over the intermediate and long-term.
Speaker Change: Where do you expect that to trend? Where are the biggest opportunities? Clearly you're leaning into Japan and Asia, but just any additional thoughts would be helpful on your opportunity internationalists. Thank you. The opportunities are significant globally, so there's significance here in the US.
They're significant internationally. We don't really, you know, predict...
Speaker Change: How much is going to be from outside the North America or inside North America quarter to quarter? It's been, as you said, higher, it's been lower. There've been periods of time where we've had higher international fundraising than we've experienced recently. [inaudible]
Speaker Change: So that moves around. I think the important thing is that the demand is very strong.
Globally,
Speaker Change: It's strong in all the investor channels, and then I would say when you're talking about it.
Biggest opportunity.
I don't think we segmented that really.
Demastic Burst
Speaker Change: I'm going to be talking about the the the the the the the the the the the the the the
Speaker Change: International, John may want to add something here, but that individual investor opportunity that John talked about, we think is a tremendous opportunity and we're being...
Speaker Change: Very deliberate and purposeful in trying to go after that and that's a tremendous opportunity here in the U.S. It's also a tremendous opportunity outside of the U.S.
Speaker Change: and that's part of what this joint venture in Japan is about. And so we see a lot of... I would argue that could be over a five-year period your biggest opportunity.
Speaker Change: Michael, nothing really to add there. I agree with your point around how hard to look at these trends short-term, the business has been about.
You know, 60 years.
Speaker Change: 65% America's from an AUM standpoint and the balance outside for a very long period of time.
Speaker Change: and you're seeing a slightly less percentage than that. I would say on the margin...
Speaker Change: You probably have some higher growth balance sheets or some healthier balance sheets outside the US in terms of allocators to ALTS but then you have a massive individual investor opportunity globally where the biggest part of that market is in the US.
Speaker Change: I want to expect to see major changes in that kind of pie chart in a very short term.
Speaker Change: I think you where you'll see us have success are on the areas where we're making investments where that it still takes a lot to move the pie chart, but you'll see that individual investor channel obviously continue to grow for us as it is for the industry as a whole.
Great. Thank you and appreciate all the color.
Bill Katz: And the next question will come from Bill Katz with TD Talent.
Bill Katz: Great. Thank you very much. Good morning and congrats on the two new initiatives. I want to start with you on the sum of trust. That seems to be intriguing to me. And I guess when I saw the news, I was just surprised that it's a relatively nominal level of capital raise over the next.
Bill Katz: for four plus years. I was wondering if you could talk a little bit about where you see the greatest opportunity. And then related to that, I'm sort of curious, is there an opportunity for Summon Trust to increase their stake in GCMG? Thank you.
Thank you. Thank you.
Thanks Bill.
I think that, you know, two-toned trusses, obviously, a-
Speaker Change: Big player in that marketplace. And so the potential for this partnership as John
Bill Katz: Opportunity in that market with a partner and I should mention it's not an exclusive partnership, we have the ability to...
Enter into partnership with other distributors there. The potential is obviously...
Bill Katz: You know, much greater than the stated number. I think that there wasn't any particular magic to that number. I think that in terms of the stock issuance and so, you know, Bill, a long way of saying we'd obviously. [inaudible]
our goal is to exceed that number. The in terms of...
Bill Katz: The stock issuance, there are no conversations about increasing that. There's no...
There are no plans to do that, and frankly...
You know, I don't know the world.
Bill Katz: We're focused on that at all, so that's not something that was part of conversations that was part of plans. I think that was to stay an investment to strengthen what was already a pretty good relationship. I think that was a good relationship.
Speaker Change: So, what has shifted from more that structural opportunity to play Capitol versus the more cautious view here, particularly since the number of your peers have been accelerating some deployment given the market ball to look both in the equity as well as the credit markets? Thank you.
Yeah, so nothing has shifted.
Everything that took place in the quarter.
Speaker Change: and that's taking place in the business from our perspective is constructive and we feel very good about that. That just simply was intended to be a comment.
Speaker Change: and kind of a bit of realism. It's a little, there's less visibility around the investment committee table.
Today, in light of...
the policy volatility around tariff and tax.
Speaker Change: than there has been so if you're sitting around the table and you're looking at an investment and you aren't sure of your
Speaker Change: Coss the good soul because you don't know quite where the tariff's going to be and you're not sure of where taxes settle, it's just a little harder to have visibility right now. [inaudible]
Speaker Change: Our hope is certainly that by the you know later in the summer you know the visibility will clear up a bit and you'll start to see things moving forward. I think when we started out late last year.
Speaker Change: Early this year, there was quite a bit of enthusiasm with regard to transaction activity levels and that seems to have dissipated somewhat quickly.
Speaker Change: for now. And so, our comments are really reflecting that sort of short-term...
Speaker Change: Impact on Visibility and it's not in any way a substantive comment on the structure of the business, on the structure, in fact what we've seen is the opposite we've seen people.
Speaker Change: We had tremendous fundraising quarter. We've seen people continuing with their programs, continuing with their re-ups. It's just inside of those programs in terms of, you know, transaction levels.
Speaker Change: They haven't rebounded in the way that we thought they would.
Speaker Change: But all of that capital is sitting there with
Speaker Change: A series of policy on certainty now that I think slows deployment for the short term. And I hope it's truly short term, like, you know, the last quarter, this quarter, but we will have this policy.
Okay, thank you very much.
Speaker Change: And once again, if you would like to signal with questions, please press star 1 on your touchtone telephone. Again, that is star 1 if you would like to signal with questions.
Speaker Change: The next question will come from Ken Worthington with JP Morgan.
Ken Worthington: Hi, good morning. Maybe following up on Bill's question just here, do you see the opportunity for Grosvenor in the announcements by a number of these endowments?
Speaker Change: and the potential for them to meaningfully reduce the size of their PE positions. Does this seem like a big enough opportunity for you to capitalize on somewhere in your private markets businesses? [inaudible]
Speaker Change: Well, there's, you know, there have been a couple of large, so...
First, I should say that we're-
Pretty insulated.
to an endowment.
Speaker Change: Fullback on Private Market's Commitments. It's a small part of our AUM.
Speaker Change: We, and it's just not, you know, that aspect of what you're raising can is not an issue or concern for us.
Speaker Change: You could argue, it's unfortunate, it's not an issue or concern for us, but it's just a small part of our business.
Speaker Change: in terms of capitalizing on what's happening there. Obviously there have been a couple of large public
Secondary Sales
I've...
and there likely will be more.
Speaker Change: Secondary Activity, and we look at all of that in our Secondary Business and thus that is an opportunity to deploy capital there. I think there's a possibility that the mixed shift inside the endowments.
towards alternatives.
Speaker Change: that have more liquidity is a possibility and that's certainly something that our ARS business can capitalize on and so you know we're going to try to capitalize on all the opportunities
Speaker Change: We see, I think, short term what we've seen already is an increase in LP lead secondaries out of that.
Speaker Change: and that's probably likely to continue and there may be a move towards liquidity and more liquid also which is something we're good at.
Speaker Change: Perfect, yeah, from the opportunity side of the perspective. Maybe second question, just go into slide 26 in your deck.
Speaker Change: but the separate account fees are essentially flat. Can you talk about the dynamics maybe weighing on this separate account fee growth that we've seen over the last 12 months and then talk about the outlook that you see maybe for the next 12 months on the separate account side?
Speaker Change: I would say, well, John , you go ahead. I was going to say the first point I was going to say was I think that
You know, we do raise money.
Constantly.
So have it started to pay yet and that comes
as we roll forward, and that's clearly—
Speaker Change: Part of it, John , you want to add to that? Yeah, I was just going to say, can this be actually exactly what we would expect it to look like? So, one of the things we've talked about in the past is some of the mixed shift in our business towards more direct oriented strategies.
Speaker Change: and that coming at a higher feet when you look at the
Speaker Change: Types of investment strategies that dominate the specialist funds tend to be the more direct-oriented.
Speaker Change: Strategies, whereas inside of the separate accounts, you'll have a much broader mix of allocative strategies and direct oriented strategies.
Speaker Change: So the idea that you see the Specialized Fund, you know, rate A the higher but also bounce around a little bit higher as you have more and more direct oriented strategies, make sense to us. The other thing that we always talk about is that you have...
Speaker Change: Feed discounts for clients to work with you at scale, volume discounts, we've always had that in our business going back in time, as you have more cross-selling and growth.
Speaker Change: with your existing separate account clients, which review is a great thing. You get more capital, you get more dollars of revenue, but you also recognize that in terms of the fee rate. And as you look for it, I would expect.
Speaker Change: Stability there. I mean, in both lines, meaning I wouldn't expect you to see much change with the average free rate in those two categories. What I do think you'll see is, as what you've seen in the past is more of the management fees coming from specialized funds.
Speaker Change: Over time and private markets just because we're growing off a still lower base there, given the strengths and the history of the customer's separate account business.
Great. Thank you very much.
and moving on to Tyler Mueller with William Blair.
Tyler Mueller: Hi, good morning. I'll just share some of the grove lane opportunity, the rationale behind the JV structure, and then where the initial effort is going to be focused, I understand it might not be the best environment for individual investors, given the equity market sell
Tyler Mueller: Yeah, so let me take the back part of that question first because I think one of the, I think that that
Tyler Mueller: Well, the market uncertainty is real for now. It's a lot of volatility, a lot of policy conversations that have led to volatility.
Speaker Change: Investor University is significantly under-allocated to alternatives as we know, and while you may have
Speaker Change: You know, different growth rates depending on different market conditions. There's no work out there that doesn't see that growing and doesn't see it growing at a very good rate. It's old.
That is a very real opportunity that I think is...
Speaker Change: You know, going to grow, you know, outside of any, you know, real major exogenous shock, that's going to grow and it's just going to continue to grow and I think you're going to see.
Speaker Change: You know, growth there over time. We've been careful to say it's going to ramp for us.
Speaker Change: and to not, you know, we shouldn't be getting ahead of ourselves in terms of building...
Speaker Change: It's throughout, you know, despite environments kind of having and flowing and, you know, more constructive and less constructive.
Speaker Change: as far as the structure goes, we like the structure a lot.
Speaker Change: The structure enabled us to attract some pretty and we'll continue to enable us to attract some very...
Speaker Change: Solid talent from real places that wants to be part of building something and can have some ownership in a vehicle and can do their, you know, can.
Speaker Change: and do what they're good at in that structure, and we've structured that as there'll be some information on that.
Speaker Change: The team can do well for themselves and be properly insented during the period of time, during a reasonable period of time while that is maturing which I think increases the quality of the team and therefore the results for us.
Intermediate and Long Term
Thank you.
Speaker Change: And the next question will come from Bill Katz with TD Cowan.
Bill Katz: Okay, thanks for taking the next question. Just coming back to ARS, that seems like a great opportunity. If you talk a little bit, maybe quantify how big the pipe players, I think you mentioned, is up to rather strongly.
and then within that...
Bill Katz: How quickly does it normally translate into fee-paying AUM and if you have any color where those allocations are coming from and then believe it or not, I can follow up. Thank you.
Sir, could that be the pipeline? No, go ahead, John .
John: I was just going to say Billy Verne, he's seen it a little bit so recall last year we raised about a billion two for ARFs, which was more than a couple of years.
John: Prior Combined. I think that when you look at, we actually think we're going to have modest net inflows as we sit here right now in the second quarter, anything can change and show some nice winds and contributions there.
John: from my travels around the world which have been numerous over the past several weeks for both me and my partners. One of the things we're hearing a lot is yes, we love our private markets, investments, yes we're going to continue to allocate, but as Michael noted a little bit earlier in response to one of the questions.
John: It's also nice to be able to generate some alpha and return out of a more liquid part of the portfolio in periods of time when distributions from privates are not as strong and that's just been a constant theme especially when that's been
John: in a category that's generated a nice amount of return and alpha in recent periods of time.
John: and in light of the fact that you might be looking at a more volatile market going forward where the ability to protect capital and down markets and make money.
John: That's throughout market cycles is interesting. So I just think we've seen it already in the numbers. We think we'll see some more activity again in the second quarter and it's just kind of activity levels generally.
Yeah, and to your question on the on the fees.
John: A pay-on-committed business, so the few related revenues turn on when you execute the SMA or the fund sale. So the fees ramp effectively immediately.
Speaker Change: Yeah, I mean, I grew up, Michael said, I mean, basic ability to think about it this way, if there is no distinction between committed and
Speaker Change: at Andre and also, as you know, Bill, you get the compounding there.
Speaker Change: Of course, and then one quick one for Pam, and you guys go thank you. The share count, maybe pro-former for Sumo trust as well as the buyback coordinate. Where is that number now, and does that look like a sort of flash number from here, based on your comments around...
Opsetting and Stack-based Camp. Thank you.
Speaker Change: Thank you for the question. Yes, the Sumo transaction was just around 2% dilution and fitting here as of May 1st, relatively modest to little dilution as a result of both the RSU's investing and the Sumo issuance.
Thank you.
Speaker Change: And that does conclude the question and answer session and now turn the conference pack over to you for any additional or closing remarks.
Speaker Change: Thank you. Thank you, everyone for joining us today. We look forward to any follow-up questions and otherwise I look forward to seeing you next order.
Speaker Change: Thank you. Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. We hope everyone has a great day, and you may all disconnect.