Q2 2026 GCM Grosvenor Inc Earnings Call

August 10, 2026

Speaker #1: Good day and welcome to the G . C m Grosvenor second quarter 2026 Results Webcast Later , we will conduct a question and answer session .

Operator 2: Good day, and welcome to the GCM Grosvenor Q2 2026 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 star one on your keypad to join the queue. If anyone should require operator assistance, please press star zero on your telephone. As a reminder, this call will be recorded. I would now like to hand the call over to Stacie Selinger, Head of Investor Relations. You may begin.

Operator: Good day, and welcome to the GCM Grosvenor Q2 2026 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 star one on your keypad to join the queue. If anyone should require operator assistance, please press star zero on your telephone. As a reminder, this call will be recorded. I would now like to hand the call over to Stacie Selinger, Head of Investor Relations. You may begin.

Speaker #1: 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 star one on your keypad to join the queue.

Speaker #1: If anyone should require operator assistance, please press star zero on your telephone. As a reminder, this call will be recorded.

Speaker #1: I would now like to hand the call over to Stacie Selinger, Head of Investor Relations. You may begin.

Speaker #2: Thank you . Good morning . Before we discuss our 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 .

Stacie Selinger: Thank you. Good morning. Before we discuss our 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. These statements are neither promises nor guarantees. They involve known and unknown risks, uncertainties, and other important factors that may cause our actual results to differ materially from those indicated by the forward-looking statements on this call. Please refer to the factors in the Risk Factors section of our filings with the SEC related to these statements. We will also refer to non-GAAP measures that we view as important in assessing the performance of our business. A reconciliation of non-GAAP measures to the nearest GAAP metric can be found in our earnings presentation and earnings supplement, both of which are available on our website.

Speaker #2: This includes statements regarding our current expectations for the business , our financial performance and projections These statements are neither promises nor guarantees . They involve known and unknown risks , uncertainties and other important factors that may cause our actual results to differ materially from those indicated by the forward looking statements on this call Please refer to the factors in the Risk Factors section of our filings with the SEC related to these statements We'll also refer to non-GAAP measures that we view as important in assessing the performance of our business .

Speaker #2: A reconciliation of non-GAAP measures to the nearest GAAP metric can be found in our earnings presentation and earnings supplement, both of which are available on our website. Thank you again for joining us.

Stacie Selinger: A reconciliation of non-GAAP measures to the nearest GAAP metric can be found in our earnings presentation and earnings supplement, both of which are available on our website.

Stacie Selinger: Thank you again for joining us. Now I will turn the call over to Michael Sacks, our Chairman and CEO.

Speaker #2: And now I'll turn the call over to Michael Sacks, our Chairman and CEO.

Speaker #3: Thanks , Stacy , and thank you to all listening to the second quarter 2020 earnings call . I'm pleased to report that GCM Grosvenor had another strong quarter , both generating returns for our clients .

Michael Sacks: Thanks, Stacie, and thank you to all listening to the Q2 2026 earnings call. I am pleased to report that GCM Grosvenor had another strong quarter, both generating returns for our clients while growing revenue and profits for the firm and our shareholders. We ended the Q2 with $97 billion of AUM and $78 billion of fee-paying AUM, an increase of approximately 13% for each from a year ago. Constructively, all investment strategies and all investor channels contributed to that growth. During the quarter, as expected, we saw an increase in fundraising from the Q1's $1.5 billion to $2.3 billion in the Q2, bringing H1 fundraising to approximately $3.9 billion. Importantly, those results were again broad-based across the platform.

Speaker #3: While growing revenue and profits for the firm and our shareholders, we ended the second quarter with $97 billion of assets under management and $78 billion of fee-paying assets under management, an increase of approximately 13% for each from a year ago.

Speaker #3: Constructively , all investment strategies and all investor channels contributed to that growth during the quarter . As expected , we saw an increase in fundraising from the first quarter's $1.5 billion to $2.3 billion in the second quarter , bringing first half fundraising to approximately $3.9 billion .

Speaker #3: Importantly , those results were again broad based across the platform . We continue to expect second half fundraising to exceed the levels experienced in the first half , and are pleased to report that our pipeline remains full .

Michael Sacks: We continue to expect H2 fundraising to exceed the levels experienced in the H1 and are pleased to report that our pipeline remains full. Credit was the largest contributor to Q2 fundraising, accounting for more than $900 million of the $2.3 billion raised in Q2, making credit $1.4 billion of the H1's $3.9 billion of fundraising. Jon is going to go into some detail on our credit vertical in his remarks. It is worth mentioning that the individual investor and insurance channels were significant drivers of fundraising, representing 23% and 18% of our year-to-date fundraising against the 5% and 4% of AUM they represented, respectively, at the start of the year. As you know, both channels are areas of focus for us.

Speaker #3: Credit was the largest contributor to second quarter fundraising, accounting for more than $900 million of the $2.3 billion raised in Q2, making credit $1.4 billion of the first half’s $3.9 billion of fundraising.

Speaker #3: John is going to go into some detail on our credit vertical in his remarks. It's worth mentioning that the individual investor and insurance channels were significant drivers of fundraising, representing 23% and 18% of our year-to-date fundraising, against the 5% and 4% of AUM.

Speaker #3: They represented , respectively . At the start of the year . As you know , both channels are areas of focus for us from a revenue and profitability perspective .

Michael Sacks: From a revenue and profitability perspective, we saw Q2 fee-related revenue grow by 11%, fee-related earnings grow by 21%, and adjusted net income grow by 22% as compared to the Q2 of 2025. On the last couple of earnings calls, we have been asked about the impact of AI disruption generally. We have maintained that we have more upside from AI disruption than risk associated with it and noted that we have some direct exposure to disruptors. We continue to believe that. Last quarter, we were specifically asked about SpaceX, and we said that we thought that in the wake of a successful IPO, it would likely be appropriate to address that exposure. I want to do that now.

Speaker #3: We saw second quarter fee related revenue grow by 11% fee . Related earnings grow by 21% , and adjusted net income grow by 22% as compared to the second quarter of 2025 .

Speaker #3: On the last couple of earnings calls , we have been asked about the impact of AI disruption . Generally , we have maintained that we have more upside from AI disruption than risk associated with it , and noted that we have some direct exposure to disruptors .

Speaker #3: We continue to believe that last quarter, we were specifically asked about space, and we said that we thought that in the wake of a successful IPO, it would likely be appropriate to address that exposure.

Speaker #3: And so I want to do that now. GCM Grosvenor, in our ARS and private markets portfolios, through primary fund allocations to managers, direct investments into dedicated vehicles, and secondary market share purchases, invested approximately $150 million in the space.

Michael Sacks: GCM Grosvenor in our ARS and private markets portfolios, through primary fund allocations to managers, direct investments into dedicated vehicles, and secondary market share purchases, invested approximately $150 million in SpaceX, a conservative sum for our capital base. The average cost of our investment is approximately $6.37 per share, and as of last week's market close, those investments had a value of approximately $3.5 billion, split fairly evenly between ARS and private market portfolios. While these gains have not yet been realized and generally remain subject to lockup, that investment is the largest single issuer gain in the history of the firm. For the overwhelming majority of our SpaceX exposure, the timing and form of exit is controlled by underlying managers. Should we receive shares in a distribution, we will decide on a course of action in real time based on facts and circumstances.

Speaker #3: A conservative sum for our capital base: the average cost of our investment is approximately $6.37 per share. And as of last week's market close, those investments had a value of approximately $3.5 billion.

Speaker #3: Split fairly evenly between ARS and private market portfolios. While these gains have not yet been realized and generally remain subject to lockup, that investment is the largest single issuer gain in the history of the firm for the overwhelming majority of our space exposure.

Speaker #3: The timing and form of exit is controlled by underlying managers. Should we receive shares in a distribution, we will decide on a course of action in real time, based on facts and circumstances.

Speaker #3: The Space investment is a good example of the strength of our origination platform and the breadth and quality of opportunities we can bring to investors, as well as the way our various verticals strengthen and enhance the whole of our firm.

Michael Sacks: The SpaceX investment is a good example of the strength of our origination platform and the breadth and quality of opportunities we can bring to investors, as well as the way our various verticals strengthen and enhance the whole of our firm for our investors. We are, of course, pleased with this investment thus far. Given the magnitude of the SpaceX success, real time versus one quarter lag timing differences in mark-to-market policy between ARS and private markets, and stock price variability, we feel it is important to highlight for all of our constituents ARS returns both inclusive and exclusive of SpaceX impact. For the quarter, our ARS multi-strategy composite delivered gross returns of approximately 14% inclusive of SpaceX and 10% excluding SpaceX. Year to date, those numbers are 15% and 11%.

Speaker #3: For our investors , we are , of course , pleased with this investment thus far , given the magnitude of the space success Real time versus one quarter lag timing differences in mark to market policy between Ars and private markets and stock price variability , we feel it is important to highlight for all of our constituents , Ars returns both inclusive and exclusive of space impact .

Speaker #3: For the quarter, our ARS Multi-Strategy Composite delivered gross returns of approximately 14%, inclusive of SPACs, and 10% excluding SPACs. Year to date, those numbers are 15% and 11%.

Speaker #3: It is worth noting that, excluding SPAC, ARS performance is very strong on both an absolute and a relative-to-peer and benchmark basis. Pam will talk in a bit about how to think about SPAC with regard to annual ARS performance fees.

Michael Sacks: It is worth noting that excluding SpaceX, ARS performance is very strong on both an absolute and relative to peer and benchmark basis. Pam will talk in a bit about how to think about SpaceX with regard to annual ARS performance fees. The combination of strong Q2 investment performance and positive net ARS inflows drove a 22% year-over-year increase in ARS fee-paying AUM as of 30 June, and our ARS pipeline remains full. Investment results were also strong across private market strategies, without the benefit of the SpaceX IPO marks, where private equity, infrastructure, real estate, and private credit all delivered positive quarter-over-quarter performance. We remain long origination with considerable operating leverage, meaning our sourcing capacity meaningfully exceeds our current investment pace, leaving substantial room to scale activity without sacrificing selectivity.

Speaker #3: The combination of strong second quarter investment performance and positive net ARS inflows drove a 22% year-over-year increase in ARS fee-paying AUM.

Speaker #3: As of June 30th , and our Ars pipeline remains full . Investment results were also strong across private market strategies . Without the benefit of the space IPO marks where private equity infrastructure , real estate and private credit all delivered positive quarter over quarter performance .

Speaker #3: We remain long origination with considerable operating leverage , meaning our sourcing capacity meaningfully exceeds our current investment pace , leaving substantial room to scale activity without sacrificing selectivity The middle market , the area of private markets where we primarily operate , has held up better than the broader private equity market .

Michael Sacks: The middle market, the area of private markets where we primarily operate, has held up better than the broader private equity market. While deal activity and realizations are not yet firing on all cylinders, we see the opportunity for a pickup in activity and acceleration of realizations going forward. The precise timing of that is not predictable. Importantly, as we have discussed in the past, we have a high ratio of firm unrealized carry relative to market cap, meaning that as the realization environment improves, there is significant upside to our earnings. We remain confident in our ability to achieve the profitability targets we laid out at our investor day and think that our durable, highly visible management fee growth, significant upside from embedded incentive fee earnings, full fundraising pipeline across verticals, operating leverage, and dividend provide an attractive value proposition for shareholders today and over the long term.

Speaker #3: While deal activity and realizations are not yet firing on all cylinders, we see the opportunity for a pickup in activity and acceleration of realizations going forward.

Speaker #3: The precise timing of that is not predictable Importantly , as we have discussed in the past , we have a high ratio of firm unrealized carry relative to market cap , meaning that as the realization environment improves , there is significant upside to our earnings We remain confident in our ability to achieve the profitability targets we laid out at our Investor Day and think that our durable , highly visible management fee growth significant upside from embedded incentive fee earnings , full fundraising pipeline across verticals , operating leverage and dividend provide an attractive value proposition for shareholders .

Speaker #3: Today and over the long term. And with that, I'll turn the call over to John. Thank you, Michael.

Michael Sacks: With that, I'll turn the call over to Jon.

Jon Levin: Thank you, Michael. Today I will cover our credit platform, which is one of the fastest-growing areas of our business and an increasingly important differentiator for the firm with clients. As of quarter end, our credit platform managed nearly $18 billion of assets. The credit vertical was the largest contributor to fundraising in the quarter, reflecting strong client demand in what has been, frankly, an uncertain credit environment. That, to me, is a great endorsement of our capabilities. We raised over $900 million for credit strategies in Q2, doubling what we raised in Q1. During the quarter, we successfully closed our inaugural Credit Secondaries Fund, which raised approximately $1.2 billion across the flagship fund and related vehicles. We are pleased with that outcome, but believe it is just the beginning of what can be a huge opportunity for us. Secondary markets develop, of course, after the formation of the primary market.

Speaker #4: Today I will cover our credit platform , which is one of the fastest growing areas of our business . And an increasingly important differentiator for the firm with clients As of quarter end , our credit platform managed nearly $18 billion of assets .

Speaker #4: The credit vertical was the largest contributor to fundraising in the quarter , reflecting strong client demand in what has been , frankly , an uncertain credit environment That , to me is a great endorsement of our capabilities .

Speaker #4: We raised over $900 million for credit strategies in Q2, doubling what we raised in Q1. During the quarter, we successfully closed our inaugural credit secondaries fund, which raised approximately $1.2 billion across the flagship fund and related vehicles.

Jon Levin: During the quarter, we successfully closed our inaugural Credit Secondaries Fund, which raised approximately $1.2 billion across the flagship fund and related vehicles. We are pleased with that outcome, but believe it is just the beginning of what can be a huge opportunity for us. Secondary markets develop, of course, after the formation of the primary market.

Speaker #4: We're pleased with that outcome, but believe it is just the beginning of what can be a huge opportunity for us as secondary markets develop.

Speaker #4: Of course , after the formation of the primary market , the primary market matures . The secondary market growth almost always grows considerably faster than the overall category .

Jon Levin: The primary market matures, the secondary market growth almost always grows considerably faster than the overall category. When you think about the total addressable market here, it is important to remember that the overall size of the credit markets far exceed that of the private equity markets. So being early and meaningful in a category with such massive growth opportunities is an exciting opportunity for the firm. Providing liquidity to the private credit markets through purchasing other investors' positions in funds or specified assets at a discount to market is a huge opportunity. Not all of the headlines surrounding private credit this year have been positive. Certain parts of the market, particularly direct lending, have experienced increased scrutiny around valuation, exposure to software categories, leverage levels, and liquidity, particularly in the evergreen semi-liquid market. Fortunately, our exposure to those more challenged areas is relatively limited.

Speaker #4: And when you think about the total addressable market here, it's important to remember that the overall size of the credit markets far exceeds that of the private equity markets. So being early and meaningful in a category with such massive growth opportunities is an exciting opportunity for the firm. Providing liquidity to the private credit markets through purchasing other investors’ positions and funds or specified assets at a discount to market is a huge opportunity.

Speaker #4: Not all of the headlines surrounding private credit this year have been positive . Certain parts of the market , particularly direct lending , have experienced increased scrutiny around valuation , exposure to software categories , leverage levels and liquidity , particularly in the evergreen Semi-liquid market Fortunately , our exposure to those more challenged areas is relatively limited What continues to resonate with clients is the highly diversified and flexible nature of our credit platform .

Jon Levin: What continues to resonate with clients is the highly diversified and flexible nature of our credit platform. From an investment perspective, our competitive advantage begins with sourcing and broad coverage of the market. Across our global platform, we review approximately 1,400 investment opportunities annually, spanning virtually every corner of the private credit market. That breadth of sourcing allows us to identify attractive opportunities across primary funds, co-investments, secondaries, and direct transactions, which we then combine into client portfolios diversified across strategy, sub-strategy, geography, vintage year, and industry. The result is portfolios with dozens of underlying investments rather than concentrated exposure to a small number of transactions or a specific part of the credit market. Equally important is the flexibility on how we deliver those investments to clients. Every client enters the credit market from a different starting point.

Speaker #4: From an investment perspective, our competitive advantage begins with sourcing and broad coverage of the market across our global platform. We review approximately 1,400 investment opportunities annually, spanning virtually every corner of the private credit market.

Speaker #4: That breadth of sourcing allows us to identify attractive opportunities across primary funds . Co-investments secondaries , and direct transactions , which we then combine into client portfolios diversified across strategy , sub strategy .

Speaker #4: Geography, vintage year, and industry. The result is portfolios with dozens of underlying investments, rather than concentrated exposure to a small number of transactions or a specific part of the credit market. Equally important is the flexibility in how we deliver those investments to clients.

Speaker #4: Every client enters the credit market from a different starting point. Some have mature credit programs and are seeking complementary strategies or specialized exposures.

Jon Levin: Some have mature credit programs and are seeking complementary strategies or specialized exposures. Others are entering private credit for the first time and need assistance designing an allocation from the ground up. Our platform allows us to partner effectively with both types of investors. A couple fundraising examples from this quarter illustrate that flexibility. First, in credit co-investments, we expanded our relationship with a long-standing institutional client by developing a strategic partner designed to accelerate deployment into credit co-investments. The program combines our sourcing capabilities with the client's own deal flow and includes both discretionary investments as well as client-originated opportunities, enabling the client to pursue attractive opportunities that otherwise would have been difficult to execute on. The result is a highly tailored solution that leverages the strengths of both organizations. A second example highlights the range of our broader capabilities, of which credit is an important piece.

Speaker #4: Others are entering private credit for the first time and need assistance designing an allocation from the ground up. Our platform allows us to partner effectively with both types of investors.

Speaker #4: A couple fundraising examples from this quarter illustrate that flexibility. First, in credit co-investments, we expanded our relationship with a longstanding institutional client by developing a strategic partnership designed to accelerate deployment into credit co-investments.

Speaker #4: The program combines our sourcing capabilities with the client's own deal flow, and includes both discretionary investments as well as client-originated opportunities, enabling the client to pursue attractive opportunities that otherwise would have been difficult to execute on.

Speaker #4: The result is a highly tailored solution that leverages the strengths of both organizations. A second example highlights the range of our broader capabilities, of which credit is an important piece.

Speaker #4: We were selected by an institutional investor making its first allocation to private markets. Rather than starting with a single strategy, we designed a customized program providing diversified exposure across both private equity and private credit.

Jon Levin: We were selected by an institutional investor making its first allocation of private markets. Rather than starting with a single strategy, we designed a customized program providing diversified exposure across both private equity and private credit. The solution incorporated co-investments and secondaries alongside fund investments to accelerate deployment, reduce the J-curve, and provide immediate diversification. These examples exhibit that we are not tied to a single part of the credit market or implementation style. Instead, we begin with the client's objectives and then utilize the full tool set we have as a platform to deliver a solution that best fits the needs. We believe our position in delivering those solutions for clients has never been stronger. With that, I will turn the call over to Pam.

Speaker #4: This solution incorporated Co-investments and secondaries alongside fund investments to accelerate deployment , reduce the j-curve and provide immediate diversification . These examples exhibit that we are not tied to a single part of the credit market or implementation style Instead , we begin with the client's objectives and then utilize the full toolset we have as a platform to deliver a solution that best fits the needs We believe our position in delivering those solutions for clients has never been stronger , and with that , I'll turn the call over to Pam .

Speaker #5: Thanks , John . Fee paying a UN , grew a healthy 13% year over year , ending the quarter at $78 billion . Contracted not yet fee paying AUM grew to $9.7 billion , up 11% from a year ago , which provides a strong foundation for continued organic growth .

Pam Bentley: Thanks, Jon. Fee-paying AUM grew a healthy 13% year over year, ending the quarter at $78 billion. Contracted, not yet fee-paying AUM grew to $9.7 billion, up 11% from a year ago, which provides a strong foundation for continued organic growth as that capital is deployed and converted into fee-paying AUM over the coming years. Private markets management fees this quarter continue to benefit from solid fundraising and investment activity and increased 10% over the Q2 of last year. As we look ahead to the Q3, we expect private markets management fees to increase in the mid-single digits year over year. As a reminder, based on the timing of our specialized funds in the market, we are not expecting material catch-up fees in the back half of the year. Absolute return strategies had another outstanding quarter, driven by strong investment performance combined with positive net inflows.

Speaker #5: As that capital is deployed and converted into fee-paying AUM over the coming years, private markets management fees this quarter continued to benefit from solid fundraising and investment activity, and increased 10% over the second quarter of last year.

Speaker #5: As we look ahead to the third quarter, we expect private markets management fees to increase in the mid-single digits year over year.

Speaker #5: As a reminder, based on the timing of our specialized funds in the market, we are not expecting material catch-up fees in the back half of the year.

Speaker #5: Absolute return strategies had another outstanding quarter, driven by strong investment performance combined with positive net inflows. IRS management fees in the quarter increased 11% year over year, as management fees are primarily charged in advance.

Pam Bentley: ARS management fees in the quarter increased 11% year over year. ARS management fees are primarily charged in advance, so given the strong Q2 investment performance, we expect Q3 ARS management fees to increase by approximately 10% sequentially, which would equate to a nearly 20% growth rate year over year. Total fee-related revenue for the quarter was $111 million, an increase of 11% year over year, reflecting solid management fee growth across both private markets and absolute return strategies. Turning to expenses, we remain disciplined in managing our expense base while investing thoughtfully in the business. FRE compensation and benefits totaled approximately $38 million during the quarter, and we estimate FRE compensation to be $1 million higher in the Q3. Q2 non-GAAP general, administrative, and other expenses were almost $22 million, in line with our expectations.

Speaker #5: So given the strong second quarter investment performance, we expect third quarter Ares management fees to increase by approximately 10% sequentially, which would equate to a nearly 20% growth rate year over year.

Speaker #5: Total fee revenue for the quarter was $111 million, an increase of 11% year over year, reflecting solid management fee growth across both private markets and absolute return strategies. Turning to expenses, we remain disciplined in managing our expense base while investing thoughtfully in the business for compensation and benefits.

Speaker #5: Totaled approximately $38 million during the quarter, and we estimate free compensation to be $1 million higher in the third quarter. Q2 non-GAAP general, administrative, and other expenses were almost $22 million, in line with our expectations.

Speaker #5: While we continue to invest in technology, including AI initiatives across the firm, we remain focused on driving operating leverage and expect G&A expenses in the third quarter to remain relatively consistent with Q2.

Pam Bentley: While we continue to invest in technology, including AI initiatives across the firm, we remain focused on driving operating leverage and expect G&A expenses in the Q3 to remain relatively consistent with Q2. Putting these factors together, fee-related earnings for the quarter were $50 million, representing growth of 21% year over year, and our FRE margin was 45%. We believe there is significant scalability embedded in our business and remain confident in our ability to further expand margins over time. Turning briefly to incentive fees, investment performance across the platform remained strong. We earned approximately $7 million of annual performance fees in the H1 of the year, and we estimate, based on recent ARS investment performance, we have approximately $35 million to $40 million of unrealized annual performance fees.

Speaker #5: Putting these factors together, the related earnings for the quarter were $50 million, representing growth of 21% year over year, and our free margin was 45%.

Speaker #5: We believe there is significant scalability embedded in our business and remain confident in our ability to further expand margins over time. Turning briefly to incentive fees, investment performance across the platform remained strong.

Speaker #5: We earned approximately $7 million of annual performance fees in the first half of the year, and we estimate, based on recent ARS investment performance, we have approximately $35 to $40 million of unrealized annual performance fees.

Speaker #5: The majority of our performance fees crystallize in the fourth quarter. So, the amount of performance fees ultimately realized will depend on our investment performance.

Pam Bentley: The majority of our performance fees crystallize in Q4, so the amount of performance fees ultimately realized will depend on ARS investment performance in the H2 of the year, of which SpaceX is an important driver. Specifically, as Michael discussed, SpaceX has been a great investment for the firm and is a terrific example of our origination power. We made investments across many different ARS and private market portfolios that were appropriately sized for their risk at the time, and we have generated billions of dollars of profits for our clients. Given the current size of the position, you can expect some variability in our unrealized incentive fees as the price moves. The $35 to $40 million of unrealized performance fees I mentioned assumed $110 share price for SpaceX. That number would be higher as of the end of last week.

Speaker #5: In the second half of the year , of which SpaceX is an important driver Specifically , as Michael discussed , space has been a great investment for the firm and is a terrific example of our origination power .

Speaker #5: We made investments across many different areas and private market portfolios that were appropriately sized for the risk at the time, and we have generated billions of dollars of profits for our clients.

Speaker #5: Given the current size of the position, you can expect some variability in our unrealized incentive fees as the price moves the $35 to $40 million of unrealized performance fees.

Speaker #5: I mentioned an assumed $110 share price per SpaceX share. That number would be higher as of the end of last week. Each additional $10 movement in SpaceX's share price is worth about $4 million of performance fees.

Pam Bentley: Each additional $10 movement in SpaceX's share price is worth about $4 million of performance fees. Ultimately, performance fees will fluctuate based on broader ARS investment performance for the year. As of 30 June, gross unrealized carried interest was $965 million, with $493 million attributable to the firm's share. A variety of factors can cause fluctuations to our unrealized carry balance from quarter to quarter. Our private markets portfolios are marked on a one-quarter lag, meaning that next quarter's unrealized carry balance will reflect valuations as of 30 June. For example, the SpaceX exposure in our Q2 unrealized carried interest was marked at $84 per share. So we could see a meaningful increase in our unrealized carry next quarter due to our SpaceX exposure, again, given the one-quarter lag. Our balance sheet remains strong, providing us with significant financial flexibility.

Speaker #5: Ultimately, performance fees will fluctuate based on broader ARS investment performance for the year. As of June 30th, growth unrealized carried interest was $965 million, with $493 million attributable to the firm's share.

Speaker #5: A variety of factors can cause fluctuations in our unrealized carry balance from quarter to quarter. Our private markets portfolios are marked on a one-quarter lag, meaning that next quarter's unrealized carry balance will reflect valuations as of June 30.

Speaker #5: For example, the space exposure in our Q2 unrealized carried interest was marked at $84 per share. So, we could see a meaningful increase in our unrealized carry next quarter due to our space exposure.

Speaker #5: Again , given the one quarter lag , our balance sheet remains strong , providing us with significant financial flexibility . We are maintaining our quarterly dividend of $0.12 per share , while also investing in the long term growth of the business and opportunistically repurchasing shares .

Pam Bentley: We are maintaining our quarterly dividend of $0.12 per share while also investing in the long-term growth of the business and opportunistically repurchasing shares. We continue to actively manage dilution through our buyback program, repurchasing 1.6 million shares for approximately $17 million during the quarter. We have $55 million remaining in our buyback authorization. Overall, we are pleased with our results for Q2 and H1 of the year. Accelerating fundraising, strong investment performance, expanding management fees, growing embedded incentive fee earnings, and ongoing operating leverage position us well for the balance of 2026. We remain confident in both our near-term outlook and our long-term financial objectives. Thank you again for joining us today. We would now be happy to take your questions.

Speaker #5: We continue to actively manage dilution through our buyback program, repurchasing 1.6 million shares for approximately $17 million during the quarter. We have $55 million remaining in our buyback authorization.

Speaker #5: Overall , we are pleased with our results for the second quarter and first half of the year , accelerating fundraising , strong investment performance , expanding management fees , growing embedded incentive fee , earnings and ongoing operating leverage .

Speaker #5: Position us well for the balance of ’26. We remain confident in both our near-term outlook and our long-term financial objectives. Thank you again for joining us today.

Speaker #5: We'd now be happy to take your questions.

Speaker #1: Thank you. As a reminder, if you would like to ask a question, please signal by pressing star one on your telephone keypad.

Operator 2: Thank you. As a reminder, if you would like to ask a question, please signal by pressing star one on your telephone keypad. Please make sure your mute function is turned off to allow your signal to reach our equipment. Once again, star one for questions. We will take our first question from Chris Kotowski with Oppenheimer.

Operator: Thank you. As a reminder, if you would like to ask a question, please signal by pressing star one on your telephone keypad. Please make sure your mute function is turned off to allow your signal to reach our equipment. Once again, star one for questions. We will take our first question from Chris Kotowski with Oppenheimer.

Speaker #1: Please make sure your mute function is turned off to allow your signal to reach our equipment. Once again, press star one for questions. We'll take our first question from Chris Kotowski with Oppenheimer.

Speaker #6: Hi . Yeah . Good morning , and thanks for taking the question . Pam mentioned that the market on space was $84 a share .

Chris Kotowski: Yeah, good morning, and thanks for taking the question. Pam mentioned that the mark on SpaceX was $84 a share, I think, at 30 March. I am curious what that was at year-end. I guess, I think, how typical is that kind of lift in the marks between, say 6 months before an IPO or monetization event and the ultimate outcome? I guess I am curious if you think about some of the other high profile IPOs that are in the pipeline. Is that a typical lift that we might expect if some of these major IPOs come to fruition in the next 3, 6, 9 months?

Speaker #6: I think at at March 30th . I'm curious what that was at at year end . And then I , I guess I think how typical is that kind of , you know , lift in the Mark's between , between , you know , say three , six months before an IPO or monetization event .

Speaker #6: And , and , and the ultimate outcome and I , I guess I'm curious if you think about some of the other , you know , high , high profile IPOs that are kind of in the pipeline , it is that kind of a typical lift that we might expect , you know , with if , if some of these major IPOS come to fruition in the next , you know , three , six , nine months .

Speaker #3: I , I thanks Chris for the questions . Michael . I don't think anything about SpaceX is typical . And I think it would be I think it would be a , a mistake to Look at that and try to project that out onto , you know , onto anything .

Michael Sacks: Thanks, Chris, for the questions. Michael, I don't think anything about SpaceX is typical. I think it would be a mistake to look at that and try to project that out onto anything. Obviously, a lot of these companies, they have built tremendous revenue streams and tremendous value in a short period of time, and there are a range of views as to how that plays out going forward. SpaceX, just everything about it is a little bit one-of-one, and I wouldn't look to put that onto anything. I think you just got to see how it all rolls forward.

Michael Sacks: Thanks, Chris, for the questions. It's Michael, I don't think anything about SpaceX is typical. I think it would be a mistake to look at that and try to project that out onto anything. Obviously, a lot of these companies, they have built tremendous revenue streams and tremendous value in a short period of time, and there are a range of views as to how that plays out going forward. SpaceX, just everything about it is a little bit one-of-one, and I wouldn't look to put that onto anything. I think you just got to see how it all rolls forward.

Speaker #3: I think it's, you know, obviously a lot of these companies have built tremendous revenue streams and tremendous value in a short period of time.

Speaker #3: And there are a range of views as to how that plays out . Going forward . But , you know , SpaceX is just the the , you know , sort of everything about it is a little bit a little bit one on one .

Speaker #3: And I wouldn't look to put that onto anything . And I think you've just got to , you know , see how it how it , how it , how it all rolls forward .

Speaker #6: Okay . Fair enough .

Chris Kotowski: Okay. Fair enough.

Speaker #3: I , I mean , you saw , you know , you , you're from the fourth quarter of last year to the first quarter to the IPO .

Michael Sacks: From the Q4 of last year to the Q1 to the IPO, and frankly, since the IPO, you have just seen a tremendous amount of movement and valuation. For what it is worth, they seem to have done a terrific job. Some of the concerns with regard to the magnitude of expiring lock-ups seem to have been a bit overinflated. I don't think you project anything from that onto anything else.

Speaker #3: And frankly , since the IPO , you know , you've just seen a tremendous amount of movement and valuation and and , you know , for what it's worth , they seem to have done a terrific job .

Speaker #3: Some of the concerns with regard to the magnitude of expiring lock-ups have seemed to have been, you know, a bit overinflated.

Speaker #3: But I don't think you project anything from that onto anything else.

Speaker #6: Okay . And then can you remind us how is a r s build ? Is that build a value at the beginning of each quarter or the beginning of each month ?

Chris Kotowski: Okay. Can you remind us how is ARS billed? Is that billed a value at the beginning of each quarter or at the beginning of each month?

Speaker #3: Yeah, for the most part, in ARS, it's quarterly fees that are billed quarterly in advance based on the beginning of the quarter AUM number.

Michael Sacks: Yeah. For the most part in ARS, fees are quarterly in advance based on the beginning quarter AUM number. The performance of Q2 is in the Q3 beginning AUM number. You bill on that number for Q3. You then have your inflows and outflows, and you have your appreciation and hopefully not depreciation, and then you bill for Q4 and so on.

Speaker #3: So the performance of the second quarter is in the third quarter beginning AUM number. You bill on that number for the third quarter. You then have your inflows and outflows, and you have your appreciation and, hopefully, not depreciation.

Speaker #3: And then you bill for the fourth quarter, and so on.

Speaker #6: Okay, great. That's it for me. Thank you.

Chris Kotowski: Okay, great. That's it for me. Thank you.

Speaker #3: Thank you .

Michael Sacks: Thank you.

Speaker #1: We will take our next question from Bill Katz with TD Cowen.

Operator 2: We will take our next question from Bill Katz with TD Cowen.

Operator: We will take our next question from Bill Katz with TD Cowen.

Speaker #7: Okay . Thank you very much . So I wanted to come back to a couple of different things in your prepared remarks on , at least on the press release , Michael , you sort of quoted saying , excited around the momentum of the franchise .

Bill Katz: Okay, thank you very much. I wanted to come back to a couple of different things. In your prepared remarks, at least on the press release, Michael, you got quoted saying, "Excited around the momentum on the franchise." I am wondering if you can maybe as you look ahead, where you see the greatest lift. It sounds like a lot of good things are happening on the ARS side. Maybe just broaden out the pipe of what your perspective is on that "exciting momentum." Thank you.

Speaker #7: I wonder if you could, maybe as you look ahead, share where you see the greatest lift. It sounds like a lot of good things are happening on the ARS side.

Speaker #7: Maybe just broaden out the scope of when you—what your perspective is on that, quote-unquote, exciting momentum. Thank you.

Speaker #3: Yeah , I , I , I think Bill , and I'm not being , you know , I'm go into anything with you .

Michael Sacks: Yeah. I think, Bill, I am not going to anything with you. We are doing well everywhere. This would have been a good, upbeat, positive call without the SpaceX conversation. The reality is that SpaceX IPO and the increase in value in Q2 didn't really impact revenue at all yet in Q2. I mentioned our insurance efforts, our individual investor efforts. We highlighted credit, which we think has real momentum. We mentioned our pipeline. We are head down, we are working. Nobody is taking anything for granted. We have all been around for a long time and get that. We are enthusiastic about a lot of different areas of the business right now, and it feels good to us.

Speaker #3: I , I , it's really , we are , we are doing well everywhere . And this would have been a good upbeat , positive call without the space conversation and the reality is , is space , you know , IPO and the increase in value in Q2 didn't really impact revenue or , you know , or at all .

Speaker #3: Yet . So in Q2 , so , you know , we're we talk , we talked , I , you know , I mentioned our , our insurance efforts , our individual investor efforts , we highlighted credit , which we think has , has real momentum .

Speaker #3: We mentioned our pipeline , we , you know , so we're just , you know , we're head down , we're working . Nobody's taking anything for granted .

Speaker #3: We've all been around for a long time . Get that , you know , but , but it we're , we're , we're enthusiastic about a lot of different areas of the business right now .

Speaker #3: And it feels good to us.

Speaker #4: Bill, I would just add one other comment there, which is we mentioned that we thought second quarter fundraising would be larger than first.

Jon Levin: Bill, I would just add one other comment there, which is we mentioned that we thought Q2 fundraising would be larger than Q1, and it was. We mentioned again that we think H2 fundraising will be larger than H1. Obviously what we see in our pipeline and in our activity gives us the confidence to go out there with that prediction.

Speaker #4: And it was we mentioned again that we think second half will be fundraising will be larger than first half . And you know , obviously what we see in our pipeline and in our activity , you know , gives us the confidence to , you know , go out there with with that prediction

Speaker #7: Great . Thank you . Just as a follow up , you mentioned , excuse me , that you also feel good about the realization opportunity .

Bill Katz: Great. Thank you. Just as a follow-up, you mentioned that you also feel good about the realization opportunity. How should we be thinking about that on the kind of line of sight you have, just given your footprint? Then just from a technical perspective, when we think through the compensation waterfall, how are we thinking about the carry payout ratio and the overall firm payout ratio once you get to the net level? Thank you.

Speaker #7: So how how should we be thinking about that on that kind of line of sight you have just given your footprint and then just from a technical perspective , when we think through the compensation waterfall , how are we thinking about maybe the Carey payout ratio and then the overall firm payout ratio ?

Speaker #7: Once you get to the net level. Thank you.

Speaker #3: But let me take the last piece first because and then kind of just get back to the macro market environment . We've maintained a you know , roughly , I think for 50% margin , I think where the firm holds 50% of the firm share of the incentive fees .

Michael Sacks: Let me take the last piece first and then kind of just get back to the macro market environment. We have maintained roughly, I think for 50% margin where the firm holds 50% of the firm share of the incentive fees for a long time. We have said a number of times, and it starts out in the beginning of the year, we hold a little bit less. We see how the year evolves, and we have landed at about 50%, at least I think the last two years. We have said at times when we start to see that carry asset cash flow more, and/or you see extraordinary performance fees out of the ARS business growth and extraordinary performance fees out of the ARS business. We think the firm can hold more of that over time.

Speaker #3: For a long time , we've set a number of times . And , you know , it starts out in the year we hold beginning of the year , we hold a little bit less .

Speaker #3: We see how the year evolves and we have landed at about 50% at least . I think the last two years . And we have said at times when we start to see that , Carey Asset , you know , cash flow more and or you see extraordinary performance fees out of the Ars business growths and extraordinary performance areas , we think the firm can hold more of that over time .

Speaker #3: And so we do think we have margin there over time. When we start to see the sort of real value of that come through, we have never put a number on that.

Michael Sacks: We do think we have margin there over time when we start to see the sort of real value of that come through. We have never put a number on that. We are not going to put a number on that. 50% assumption has been a safe base case the last couple of years. We do think we have opportunity in excess of that over time because as you have noted in the past, it is a very big asset relative to our market cap. As far as realizations, as mentioned on the call, improving. Not yet I would not say robust. You have got a better IPO market for us in the middle market that is probably a little bit less relevant. Like we see in our co-invest business, transaction activity is up pretty significantly from this time a year ago.

Speaker #3: We're not going to put a number on that. Fifty percent assumptions have been a safe base case, you know, for the last couple of years.

Speaker #3: But we do think we have opportunity . We do think we have opportunity . You know , in excess of that over time because as you've noted in the past , it's a very big asset relative to our market cap as far as realizations , you know , as I mentioned in the call , improving But , you know , not yet .

Speaker #3: I wouldn't say, like, robust. You've got a better IPO market for us in the middle market. That's probably a little bit less relevant.

Speaker #3: But you know, like we see in our co-invest business, transaction activity is up pretty significantly from this time a year ago.

Speaker #3: And so we've the , the number of transactions that have been done , you know , inside our Co-invest portfolios is up significantly .

Michael Sacks: The number of transactions that have been done inside our co-invest portfolios is up significantly, and that is a positive sign. We just cannot. Nobody can predict timing. Frankly, I think the whole industry has been waiting for this for a little while. It has been a volatile world.

Speaker #3: And that's , that's a , you know , that's a positive sign . And , and so we , but we just can't , nobody can predict timing .

Speaker #3: And frankly , I think the whole industry has been waiting for this for a little for a little while . So . And , you know , it's , a , it's been a volatile , it's been a volatile world You know , the important thing is that the assets they're .

Bill Katz: Thank you.

Michael Sacks: The important thing is that the asset is there, and that the value of the asset is growing, and Pam touched on that a little bit in her remarks. We are going to see a lift in that asset next quarter as Q2 values roll through for the Q3 mark. SpaceX alone is going to give you a lift there. That value continues to move in the right direction.

Speaker #3: And that the value of the asset is growing . And Pam touched on that a little bit in her remarks . We're going to see a lift in that asset next quarter is Q2 values grow through for Q into , you know , for the Q3 mark and and space alone is going to give you a lift there .

Speaker #3: So, you know, that value continues to move in the right direction.

Bill Katz: Thank you again.

Speaker #1: Thank you. We'll take our next question from Jeff Schmidt with William Blair.

Operator 2: Thank you. We will take our next question from Jeff Schmitt with William Blair.

Operator: Thank you. We will take our next question from Jeff Schmitt with William Blair.

Speaker #8: Hi . Good morning . On the Ares business performance was obviously really good . Michael , I think you mentioned the timing of fees earlier .

Jeff Schmitt: Hi. Good morning. On the ARS business performance was obviously really good. Michael, I think you mentioned the timing of fees earlier. Is that what kind of drove the average fee rate down a bit, the strong AUM growth and the denominator effect versus any sort of fee pressures?

Speaker #8: So is that what kind of drove the average fee rate down a bit? The AUM growth in the denominator effect versus any sort of fee pressures?

Speaker #3: Yeah . So no , no fee pressures , anything that impacts that fee growth is really just about mix of investor size . And the size of money coming in that type of thing .

Michael Sacks: Yeah. So no fee pressures. Anything that impacts that fee growth is really just about mix of investor size and the size of money coming in, that type of thing. We haven't had any kind of rewriting of fees or anything like that, and we're not feeling that, and that's not any place we're feeling any pressure. I do not believe that the Q2 numbers were impacted by anything that went on with profitability in the funds or marks or anything like that in Q2. That would not affect the Q2 numbers at all.

Speaker #3: It's there's no , we haven't had any kind of rewriting of fees or anything like that . And we're not feeling that . And that's not a , that's not a really , you know , any , any place we're feeling any , any pressure .

Speaker #3: And , and I , and I , and I don't believe that the second quarter numbers were impacted by anything that went on with , you know , profitability in the funds or marks or anything like that in Q2 that wouldn't affect the second quarter numbers at all .

Speaker #8: Okay , great . And then in international fund raising , it's been pretty strong . I think you recently added some senior talent in a couple of markets .

Jeff Schmitt: Okay. Great. Then in international fundraising, it's been pretty strong. I think you recently added some senior talent in a couple of markets there. Just curious, how scalable is your international platform today? Will you need to make additional investments as you scale that, or would you expect to see operating leverage from here?

Speaker #8: There . Just curious how scalable is your international platform today , what you need to make additional investments as you as you scale that or , you know , would you expect to see operating leverage from here ?

Speaker #3: You want to take that, John?

Michael Sacks: You want to take that, Jon?

Speaker #4: Sure . General . I would say . Jeff . Yes and yes . Meaning the business overall is scalable . So our ability to continue to raise assets from all of our channels , whether it's the insurance channel , the individual investor channel , the institutional channel in the US , outside the US is something we've , you know , proven the ability to do .

Jon Levin: Sure. In general, I would say, Jeff, yes and yes. The business overall is scalable. Our ability to continue to raise assets from all of our channels, whether it is the insurance channel, the individual investor channel, the institutional channel in the US, outside the US, is something we have proven the ability to do now over the last several years as we continue to raise capital from the investments we are making. The nice thing is those are relatively modest investments because we have been able to do that with pretty good controls around expenses generally. That being said, we are always looking to add talent and where we see opportunities to accelerate distribution efforts. We continue to think there is just great opportunity out there, kind of everywhere, for alts businesses and particularly for our business that can meet anyone where they are on their alts journey.

Speaker #4: Now over the last several years is we continue to raise capital from the investments we're making . And the nice thing is , is those are , you know , relatively modest investments because we've been able to do that with pretty good controls around expenses generally .

Speaker #4: That being said, we are always looking to add talent and to identify where we see opportunities to accelerate our distribution efforts. And so we continue to think there is just, you know, great opportunity out there kind of everywhere—for adults, businesses, and particularly for our business that can meet anyone where they are on their alts journey.

Speaker #8: Great . Thank you

Jeff Schmitt: Great. Thank you.

Speaker #1: We will take our next question from Ken Worthington with J.P. Morgan.

Operator 2: We will take our next question from Ken Worthington with J.P. Morgan.

Operator: We will take our next question from Ken Worthington with J.P. Morgan.

Speaker #9: Hi, good morning, and thanks for taking the question. So, solid fundraising quarter. You mentioned the $900 million in credit. How much of the $2.3 billion this quarter was in private market funds versus the SMA business?

Ken Worthington: Hi. Good morning, and thanks for taking the question. So solid fundraising quarter. You mentioned the $900 million in credit. How much of the $2.3 billion this quarter was in private market funds versus the SMA business?

Speaker #3: Jon, do you have that number handy? Or Stacie?

Michael Sacks: John, do you have that number handy, or Stacie?

Michael Sacks: Jon, do you have that number handy, or Stacie?

Speaker #4: Stacie, I don't know if I have that right in front of me. Do you?

Jon Levin: Stacie, I don't know if I have that right in front of me. Do you?

Ken Worthington: Maybe asked another way, which of the funds in market had closes this quarter, and about how big were those closes?

Speaker #9: Maybe asked another way, which of the funds in the market had closes this quarter, and about how big were those closes?

Speaker #4: Let me just .

Jon Levin: Let me just look to.

Speaker #3: Well , Jon's looking for a specific number . Let me just , you know , what's interesting is so we're in market . We're at a place now where .

Michael Sacks: While Jon's looking, Ken, for a specific number, what's interesting is we're in market. We're at a place now where, and it's funny because we talked about this a little, where we're in market all the time with all kinds of different funds. We're in different markets. We're in traditional institutional markets with traditional closed-end specialized funds. We're in the wealth channel with open-end product. Which fund had a close and when's that fund expire, and those questions are a little bit less impactful today than they were seven years ago, with just maybe the exception of the general comments we give on catch-up fees. Because as you know, some of these funds are in market for 18 months, and last close, the power of that last close is pretty significant when you have a catch-up fee involved.

Speaker #3: And it's funny because we talked about this a little, where we're in market all the time with all kinds of different funds, and we're in different markets.

Speaker #3: And so we're in traditional institutional markets with traditional closed end , you know , specialized funds . And we're in the wealth channel with open end , you know , with with open end product .

Speaker #3: And we're , you know , so there's the , the most we're , we're , you know , that , that , which fund had a close and which ones that fund expire .

Speaker #3: And those questions are a little bit less , you know , impactful today than they were , you know , seven years ago with just maybe the exception of the general comments we give on ketchup fees , because as you know , some of these funds are in market , you know , for 18 months .

Speaker #3: And last closed the power of that last close is pretty significant when you have a ketchup involved . And so we still try to give you a sense of where , you know , what kind of ketchup fees were , were , we're looking at , but there are , you know , we're always , we always have , there's , there are always funds in market now .

Michael Sacks: We still try to give you a sense of what kind of catch-up fees we're looking at. But there are always funds in market now, and there's just a lot more activity than there was originally. I don't know, Jon, if you found anything specific you wanted to touch on or not.

Speaker #3: And they're always , you we're , you know , there's just a lot more activity than there was originally . I don't know , Jon , if you found anything specific you wanted to touch on or not

Speaker #4: I think year to date, Stacie—you can correct me if I'm wrong here—about $400 million of it is for private market specialized funds.

Jon Levin: I think year to date, Stacie, you can correct me if I'm wrong here, about $400 million of it is for private market specialized funds.

Jon Levin: I think year-to-date, Stacie, you can correct me if I'm wrong here, about $400 million of it is for private market specialized funds.

Speaker #2: That's correct .

Stacie Selinger: That's correct.

Speaker #4: Yeah . But just to add on to Michael's commentary , to give you some perspective around it , can we probably have at any given time , 10 to 15 specialized funds in market .

Jon Levin: Yeah. But just to add on to Michael Sacks' commentary, to give you some perspective around it, Ken Worthington, we probably have, at any given time, 10 to 15 specialized funds in market. You are going to have around half of those be closed-end private market funds. You are going to have the other half be evergreen, which could either be for ARS or for the individual investor channel. So at any given time, you have obviously got a lot going on there.

Jon Levin: Yeah. But just to add on to Michael's commentary, to give you some perspective around it, Ken Worthington, we probably have, at any given time, 10 to 15 specialized funds in market. You are going to have around half of those be closed-end private market funds. You are going to have the other half be evergreen, which could either be for ARS or for the individual investor channel. So at any given time, you have obviously got a lot going on there.

Speaker #4: So you're going to have around half of those be closed-end private market funds. You're going to have the other half be evergreen, which could either be for Ares or for the individual investor channel.

Speaker #4: So at any given time, you've obviously got a lot going on there.

Speaker #3: And I think right . Yeah . To that point , I think the number John gave is really the traditional closed end institutional , specialized or commingled funds .

Ken Worthington: Great. Okay.

Michael Sacks: I think, right. So yeah, to that point, I think the number Jon Levin gave is really the traditional closed-end institutional specialized or commingled funds, not including the wealth channel where you had other flows in the H1 in those channels. So that just to put a point on the number Jon Levin gave you.

Michael Sacks: I think, right. So yeah, to that point, I think the number Jon gave is really the traditional closed-end institutional specialized or commingled funds, not including the wealth channel where you had other flows in the H1 in those channels. So that just to put a point on the number Jon gave you.

Speaker #3: Not not including the wealth channel where you had other , you know , other flows in the first half in those channels . So that just to put a point on the number John gave you .

Speaker #9: Perfect. And then you mentioned the pickup expected for the second half. You clearly see the pipeline, and we see the generalized pipeline.

Ken Worthington: Perfect. You mentioned the pickup expected for H2. You clearly see the pipeline, and we see the generalized pipeline. Where do you expect the pickup in H2 sales to come from?

Speaker #9: Where do you expect the pickup in second half sales to come from?

Speaker #4: I think it'll be pretty broad based , Ken . Just like what we've seen so far . You know , this year , meaning all this stuff we just touched on , meaning your special , your specialized funds that are your traditional private market one , your evergreen , specialized funds , which could be either in the Ares space or in the semi-liquid or individual investor channel .

Jon Levin: I think it will be pretty broad-based, Ken, just like what we have seen so far this year, meaning all this stuff we just touched on, meaning your specialized funds that are your traditional private market one, your evergreen specialized funds, which could be either in the ARS space or in the semi-liquid or individual investor channel, your separate accounts. I think you will see it across asset classes. Credit and infrastructure still tend to be the kind of leading contributors right now. I think you will see it from all the different types of channels and geographies. Just in general, when we look across our pipeline right now, the strength is pretty broad-based.

Speaker #4: Your separate accounts . I think you'll see it across asset classes , you know , credit and infrastructure . Still tend to be the kind of leading contributors right now .

Speaker #4: I think you'll see it from , you know , all the different types of channels and geographies , just in general , when we look across our pipeline right now , the strength is pretty broad based .

Speaker #9: Okay, great. Thank you very much.

Ken Worthington: Okay, great. Thank you very much.

Speaker #1: We will take our next question from Crispin Love with Piper Sandler.

Operator 2: We will take our next question from Crispin Love with Piper Sandler.

Operator: We will take our next question from Crispin Love with Piper Sandler.

Speaker #10: Thank you . Good morning . I'm looking at slide nine , focusing on the 20% plus real assets kegger . Definitely a step function , higher .

Crispin Love: Thank you. Good morning. I am looking at slide 9, focusing on the 20%+ real assets CAGR. Definitely a step function higher, looking at 2025 relative to 2024, and then solid momentum recently. Just with all of the anxiety year to date around direct lending and credit uncertainty as you referenced, have you seen investors lean more into real assets? Then can you just share what you have been seeing as it relates to demand and infrastructure versus real estate?

Crispin Love: Thank you. Good morning. I am looking at slide nine, focusing on the 20%+ real assets CAGR. Definitely a step function higher, looking at 2025 relative to 2024, and then solid momentum recently. Just with all of the anxiety year to date around direct lending and credit uncertainty as you referenced, have you seen investors lean more into real assets? Then can you just share what you have been seeing as it relates to demand and infrastructure versus real estate?

Speaker #10: Looking at 25 relative to 24 . And then solid momentum . Recently , just with all of the anxiety year to date around direct lending and credits , uncertainty , as you referenced , have you seen investors lean more into real assets ?

Speaker #10: And then, can you just share what you've been seeing as it relates to demand and infrastructure versus real estate?

Speaker #3: So , Sean , you should you should address it . The one thing I would say is that I don't , I think that the demand , you know , we just talked about growth in credit .

Michael Sacks: John, you should address it. The one thing I would say is that I think that the demand, we just talked about growth in credit. Jon just talked about growth in credit in a tough environment for credit with lots of headlines swirling around and all kinds of stuff. I sort of think of it, the demand is pretty significant everywhere. I think in real assets, it is not like demand has increased necessarily. It has been strong for a while, and it has been, as you point out, growing at a terrific rate for a while. Maybe it got a little bit less headwinds and a little bit less noise, fair bit less headwinds and noise than credit has had, but we have experienced growth in credit. I think we are seeing this growth everywhere. Jon, I do not know what you want to add to that.

Michael Sacks: Jon, you should address it. The one thing I would say is that I think that the demand, we just talked about growth in credit. Jon just talked about growth in credit in a tough environment for credit with lots of headlines swirling around and all kinds of stuff. I sort of think of it, the demand is pretty significant everywhere. I think in real assets, it is not like demand has increased necessarily. It has been strong for a while, and it has been, as you point out, growing at a terrific rate for a while. Maybe it got a little bit less headwinds and a little bit less noise, fair bit less headwinds and noise than credit has had, but we have experienced growth in credit. I think we are seeing this growth everywhere. Jon, I do not know what you want to add to that.

Speaker #3: John just talked about growth in credit in a tough environment for credit, with lots of headlines swirling around and all kinds of stuff.

Speaker #3: And , you know , so I sort of think of it , the demand is pretty significant everywhere . And I think in real assets , it's not like demand has increased necessarily .

Speaker #3: It's been strong for a while and it's been , as you point out , growing at a terrific rate for a while . It may be it's just has it's , you know , got a little bit less headwinds and a little bit less noise .

Speaker #3: Fair bit less headwinds and noise than the , you know , than credit has had . But we've experienced growth in credit . So I think we're seeing this growth everywhere .

Speaker #3: And it's , you know , John , I don't know what you want to add to that , but .

Jon Levin: Yeah. Look, infrastructure has been on at least a, I would call it a 10 to 12-year run so far, and I do not see the run stopping anytime soon. I think that it is a fantastic asset class for what investors look for generally in the terms of a stable return profile, a yield-based profile to it, an inflation protection profile to it, a long duration asset that is a nice matching for liabilities. So in general, I just see the infrastructure market continuing to grow. It was 25% of our Q2 fundraising. It has been the highest contributor over the last 12 months. Our platform there is very experienced and has excellent flexibility with respect to how to deliver solutions.

Speaker #4: Look , if infrastructure has been on a at least a . I would call it a 10 to 12 year run so far .

Speaker #4: And I don't see the run stopping anytime soon . I think that it is a fantastic asset class for what investors look for generally in terms of a stable return profile , a yield based profile to it , and inflation protection profile to it , a long duration asset .

Speaker #4: That's a

Speaker #5: Matching for liabilities . So in general , I just see the infrastructure market continuing to grow . It's been 25% of our . It was 25% of our second quarter fundraising .

Speaker #5: It's been the highest contributor over the last 12 months. Our platform there is very experienced and has excellent flexibility with respect to how we deliver solutions.

Speaker #5: And that's obviously before you get into what all the . You know , consultants around the world would be talking about in terms of the trillions and trillions of dollars that are needed over the next , you know , several decades to improve infrastructure globally .

Jon Levin: That is obviously before you get into what all the consultants around the world would be talking about in terms of the trillions and trillions of dollars that are needed over the next several decades to improve infrastructure globally. So I think it has a lot going for it. I do not think that it necessarily has been all of a sudden a good thing because of what is going on in credit by any stretch. Although I do think that it also does show that the ability for the role it to play in a portfolio that you thought private credit played, that it competes well with that. It is not a zero-sum game, but that it is also a nice asset class to have part of your well-constructed portfolio generally.

Speaker #5: So I think it has a lot going for it. I don't think it necessarily has been all of a sudden a good thing because of what's going on in, in, in credit by any stretch.

Speaker #5: Although I do think that it also does show that the ability for the role to play in a portfolio that you thought , you know , private credit played , that it competes well with that .

Speaker #5: Not not it's not a zero sum game , but that its also a nice asset class . To have part of your of , your , you know , well constructed portfolio generally

Speaker #2: Great . Thank you . And then can you just discuss what you're seeing in Grove Lane recently , the wealth channel distribution , just any update there would be helpful

Crispin Love: Great. Thank you. Can you just discuss what you are seeing in Grove Lane recently, the wealth channel distribution? Any update there would be helpful.

Speaker #5: Sure . We mentioned in the prepared remarks that the individual investor and we mentioned insurance being much more meaningful contributors to our capital formation than they are of our AUM , which just means they're obviously growing quickly .

Jon Levin: Sure. We mentioned in the prepared remarks that the individual investor, and we mentioned insurance being much more meaningful contributors to our capital formation than they are of our AUM, which just means they are obviously growing quickly. Our efforts there in terms of the investments we have made to expand our distribution are paying off, but it is still early. Still feel like there is just a tremendous amount of growth opportunity, but also a tremendous amount of product creation opportunity there. We have got infrastructure registered product. We have got absolute return registered product. We talked on the last quarter about coming to market with a private equity registered product that we think will be differentiated in the marketplace. As Michael Sacks has always cautioned, it will be some time before all of that momentum and excitement is hugely meaningful to the financial results of the business.

Speaker #5: So our efforts there , in terms of the investments we've made to expand our distribution , our paying off , but it's still early and still feel like there's just a , you know , a tremendous amount of growth opportunity , but also a tremendous Amount of product creation opportunity there .

Speaker #5: We've got infrastructure registered product . We've got the return registered product . We talked on the last quarter about coming to market with a private equity register product that we think will be differentiated in the marketplace .

Speaker #5: And as Michael's always cautioned, it will be some time before all of that momentum and excitement is hugely meaningful to the financial results of the business.

Speaker #5: But it's absolutely , you know , going , going well and will be a great growth driver for the business for for years to come

Jon Levin: It is absolutely going well and will be a great growth driver for the business for years to come.

Speaker #1: Thank you. With no additional questions in the queue at this time, I'd like to turn the call back over to our speakers for any additional or closing remarks.

Operator 2: Thank you. With no additional questions in queue at this time, I would like to turn the call back over to our speakers for any additional or closing remarks.

Operator: Thank you. With no additional questions in queue at this time, I would like to turn the call back over to our speakers for any additional or closing remarks.

Speaker #3: Thank you. We appreciate everyone joining this morning, and thank you for your questions and engagement. We look forward to speaking with you again next quarter.

Stacie Selinger: Thank you. Appreciate everyone joining this morning. Thank you for your questions and engagement. We look forward to speaking with you again next quarter. Have a great day.

Speaker #3: Have a great day

Operator 2: That will conclude today's call. We appreciate your participation.

Operator: That will conclude today's call. We appreciate your participation.

Q2 2026 GCM Grosvenor Inc Earnings Call

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