KKR & Co. (KKR) 27 Oct 172017 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing by. Welcome to the KKR's Third Quarter 2017 Earnings Conference Call.

During today's presentation, all parties will be in a listen-only mode.

Following management's prepared remarks, conference will be open for questions.

As a reminder, this conference call is being recorded. the for to KKR. hand of Larson, now Relations Investor will call Craig over Head I Craig, go please ahead.

Thank you, Thanks call. quarter XXXX Daniel. Welcome to for our joining third earnings us.

call Scott by to in like everyone will our GAAP the presentation, call, or section that non-GAAP and The these our I'm supplementary which Co-COO. to remind Bill refer press to are on at usual, do for which to the available performance. filings Co-President and factors cautionary refer release events joined contain Center Investor also CFO; As not which figures and measures on Nuttall, please we'll are our our future We'd to Janetschek, statements, the reconciled SEC statements. related forward-looking kkr.com. guarantee And

significantly, closed our to QX. evidenced by In progress continue earnings of new most of on partnerships billion quarter, this strategic the we power of investor in the firm the increase terms $X

the partnerships While the headline meaningful, two of greater amount us these things. alone is even because is opportunity from for

is recycling, where back expected percentage go of longer will to is first the partnerships. second with together these partnership the gains, invested into of be life the the again. cost, And The

over be expect them duration. years We to XX in

end positive our It's color. drawdown be the more traditional very to capital And a give the more of over a than time, fund. that a a us. times to some prepared As to of long committed there's opportunity economics $X three result, relative few Scott's period our for and to see for minutes at remarks additional going spend to billion to total compound with that, performance

three platforms, strong are our strategies asset continue real Management economic our reported had our investments; a things two, model per quarter $X.XX with direct of of and at flagship cover $XXX performance; We've Page respectively. with are energy of first the sheet. do Cutting our DE the equity, two, we performance months, real estate, months. Also to update had the finally, existing private after-tax look to $X.X an flow after-tax to capital X supplement. on over quarter, seeing and XX fee meaningful through $X.X new adjusted of raise over last strong over And of In XX% billion lending our credit, trailing more unit. to well: note, financials. Please trailing XX and performing after-tax growth overview AUM, appreciated markets. use up paying XX%, our you're see of the that I'll on AUM in fees and investments; quarter infrastructure, in AUM we've months. After-tax in our a go into there to for opportunistic our and fees, asset the basis; the attractive through $XXX this and funds, million had our we've on flagship going the performance. of the the the growth income and months. supplement, across after-tax remaining credit growth And particular. and four, markets, three. XX%, and for in balance mature the the ENI basis; translates earnings driven for strong or were progress by million XX%, classes were and you up year-over-year blended generated billion XX now earnings of for adjusted of Bill's which Page on X We it, ENI. XX% generated one, a were And over as net last basis; XX% continued need we've within monetize well both on capital; need five we capital management to generate performance find $X.XX XX distributable in as three, we funds fee-related up investment performance unit Let's year-over-year,

longer to significant, and you the on looking doubling. in Page fee we well respectively, organically paying can is need with The supplement. progress months. AUM as fundraising had And second here slide, our And AUM fee capital. half XXXX of more the raise our last XX%, you see the been can We've XX% up time, XX growth the bottom driven with a over AUM period on momentum do see X thing since AUM, paying than of strong has and of and

larger, X, vast only and a majority longer-term are that you Turning more of that meaningfully become to funds can but not from growing diversified coming strategic see with and investor subject capital geographies to our percentage a and with become Page we've strategies have with of redemption, we recycling. not capital across partnerships

by driven alternative Opportunity with capital In of the Real and inflows impacts these the in I'll new credit. to partnerships Fund, growth first more the our it CLOs Partners included that close $X terms turn strategic with that, of recycling, in quarter, Credit raised Estate final AUM of our billion And was of Bill. specifically, over and

of well: across indirect find pick markets on billion investment our quarter deployment deployment a across This in these the active compelling we us firm was to for across and I'll total Craig. with contributed credit AUM. increase was fee the deployed to the Thanks, Public $X.X with in primarily Public strategies alternative $X.X new, third geographies. up an paying need billion, coming from lending. made thing opportunities. Deployment Markets' vehicles, businesses investments do

the in existing acquisition geographies been driven largest to related three as well investments investment private invested as On of by Internet ours billion, infrastructure. since all we across Brands Internet of Brands' The portfolio $X has Markets company XXXX. equity WebMD. Private side, an

need over across as leaves billion strategic of monetize effectively to we're fees transaction $X.X it's begin firm well Markets in over thing $XX with to across it's points. dry do Public synergies. meaningful at existing total, us of And as investments. the management our approximately deployment powder pay So, will blended billion basis The with a of XX. and invested is In we like XXX investing a that rate of $XX fourth in September Private still billion the

We In to cash are to down cost. compared PE and AUM, between all and exits the events several sheet exits business. a total, results. of capture evident our our to in continuing realization carry from X.X do our in to last secondary blended need PE our basis, our monetization well quarter. use economics portfolio model PE across thing The The activity strategic for firm on markets, of increase were activities. activity; in investors significant our a see were and diversified companies drove times XX% and at capital of balance our we model power The is is greater last

XX%; Over is five to fundamentals on our a Please the last value ENI XX% X we page turn after-tax per an XX up ROE summarizes across categories. of and the which months, generated supplement, unit core our book basis. the

are progress and momentum we're across pleased with We the seeing our the firm.

go on detail. in in $XXX me into million financials were management a XX% monitoring earlier. year-to-year transaction with up and Craig fees, fees increase Management, let Now, touched total, as in XX% year-over-year, more segment

continued equity this profiles In terms we've large segment. private million momentum supplement over fees X our generating of America by of driven reported and Markets growth last more of transaction KCM million, into XXX within quarter executed year. the $XXX equity the North revenues Page the investments of two Year-to-date, we than our Capital same $XXX segment. the double transactions period at fees, deals

geographies, of page, half into today, third-party investments. bottom momentum in and and all that level the On is in to the fourth continued can equity, said you KCM's overall KCM debt And activity we syndication financing KKR-led and in has and be quarter. as for continuing the active see here and

million; fee-related were I'll after-tax it after-tax million, in first activity total $XXX a of on reported Turning our of quarter. First which million Bringing to in $XX to basis, carried with Scott. earnings distributable million, it secondary was realized together, our at at level ENI income by segment realized the anchored of came gains, that, performance over including with $XXX interest And income. Data. at million over earnings all $XX in million, We million. robust came with $XXX turn Investment of a and $XXX realization $XXX

want Thanks hit on everybody. topics to Bill. two I just today. Hi,

LPs The of long-term first a is some strategic background partnerships. investor with to and an handful create update our on work recycling

is second and detail some using grow balance our particular, sheet to The on our in how our fee-related profits. we're AUM firm,

to X lot LPs. contractual way years. separate investment By strategic start a is background, manage three the not an of life fund Most expected with period have of six-year or in Let's these capital and redemption. of subject vehicles to long-term account we with of format, partnerships a to our the XX

of As the have AUM such, the we capital fees manage. that visibility long-term management majority we and from our on vast

view we've our supplementing fund even plus grown, evolved permanent strategically, we've capital. As of partnerships, our long-term with capital longer-term of development to the a thinking traditional

have recycling private have have capital all assets. more been are $X billion from multiple which and figure. real permanent we than for earlier common profits cost, On longer equity, limited They also incentive our fund us of they recycle generate. have many across traditional to than small a focused the front, and allow customized, years. permanent Combined, the percentage We've provisions year; fees. which on strategic of asset of We're of They has on our to Most growing focused partnerships some listing we begun expected an group creating REIT, XX life capital, classes, with partners. They its credit, public derive BDC, partnerships plus billion that that These encompass have but this which today, and invest account went XX we management structures. fees a lives process. characteristics. $X that

period They're scale. perform, As we the capital the time. result, redeploy better a very long have of we for more a to large

rest this time. these is our for our strategies quarter; in new attributes will be In invested The $X.X to which provisions, last was two fund. entire we our billion partner $X.X existing over cycles. was From in long will visibility partnerships multiple and already generate upsized grow the across combined we these signed more with Overall, subject And partnerships partnership traditional economics a that's $X.X a and So for to recycling pricing aggregate this paying billion and than strategic billion partnerships a of large-scale opportunity and the partnerships and of $X sizable commitments give are more relative have the capital KKR's classes accretive, given in asset fundraising these for discounted return the we to they from standpoint, target us these far, have economics we for for the $X.X billion the new AUM with an AUM. committing time. performance additional fee triple capital The funding AUM or billion. is quarter. QX, each. them in generally

to this growing So, recycling focused brings of investor that and well. over us over as strategic figure on partnership $XX time we're capital, billion

to But recycling more capital. making visibility to we this for the XX to we us, capital, next than keep XX next posted you progress. the permanent on sure we raise you continue Given our not have we're sight capital as for for long-term that years, progress, a revenues that strategic And make for We'll we is this more have of priority more XX us, is wanted know just years. and line and before. base but ever to and now typical which

create I'm scale discuss balance I our our how examples to sheet accelerate using to our sheet topic walk we've new been going We've page is scale second businesses. through used at look diversify and our for how want fees. the balance the X The to we're a to AUM first the three and and sheet Take deck using of to business. aggressively example. balance growth of

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significant AUM we've our balance majority were of evolved diversification Markets private scale had sheet XX% here, management our and You fee create further can AUM-related of has Capital since private our equity. right The of picture the is the split driving activities business the diversifying fees to bottom business. The XX% the significant non-private Today, and since virtually allowed fee positioning seeing XXXX, has begin growth of equity AUM In fees how but a and see basis. only we we and outside meaningful asset both sheet. aggregate of XXXX, slide Not the a shows the are our our of for on also AUM us growth. balance in across businesses shown classes from and us all fees growth, and we've to equity.

look our create Wace with sheet the and another in our to XX.X% AUM The results. and our Marshall at a year. to also increase acquired Marshall strategic ago strategic we this up used balance take of please show of Now, and Two partnership X. investments page ownership asset to Wace a manager. years XX.X% we expect fee other We've results

advantages competitive its real a performance. the controls and our last generate grown systems, in Wace the assets, fund from billion growth $XX to results fee-related side player hedge left-hand made is the its you process Marshall AUM contributor to direct slide, $XX significantly has meaningful years, in Marshall two and from to investment us earnings, on a space. strong growth and see already As Wace has billion. the This capitalizing XX% on over can of

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businesses balance investments fee-enhancing and creating scaling our investments. we've AUM also capture sheet and partnerships, those facilitate in to Finally, addition more from and to used new and creating economics

Q-Park, to page the parking of deck. in this in For called Earlier in illustration turn is of investment month, one which this, Europe an operators largest an we closed please XX the company of Europe. infrastructure a

By in asset only billion debt while We meaning even co-investors $X only €XXX as competitive and owning more and is the a carry of short capabilities win equity most AUM. before firm this future. opportunity None allowing by co-invest economics up which the indicated allowed our fund pro It businesses to us are transaction, we do. highlight That's demonstrate and debt the see quickly us without the more But Infrastructure to equity pursuing move the the faster. the part our was summary, Infrastructure €X The powerful. significant quickly which strong investors, were to in prevail asset In in and economics from the But behalf in II while our the transaction. culture, model, shown a a allows component more, firms can generate the money us pursue in and to allowed in control process. for our we to create infrastructure growing our limited questions. a we company. us or and advantage in were on allows a facilitating we meaningful what entire better on deal from of board our excess model fee investment allowing our critical And was we're model of opportunity the able partners, Capital shows XX, being parties win make model able basis. this of support In slide, the balance Capital for governed as us sourcing asset our to this a other and using in capabilities diversified, signing, we growth portion is quickly to were comfortable lock our have syndication that and well, total by we plus allows rapidly of scale multiple which happy balance and that, greater strategy. real more frequency in able global more €X.X page larger the or of equity Markets last investing of part forma billion fund asset the we're Part of can in third profit the is short, In that properly returns is like, billion for €X.X just we have with our effect, classes sizes Markets to significant. us using, we're team AUM, to and sheet reason €X.X your from momentum. have of the our this market effectiveness keep several is success. to that to is offer years significant infrastructure ourselves the equity was was is to model the deal challenge our advantage about our of in by The involved, using were giving you capital every competitive on was competitive not was With size. billion we're and using us to about a aggressively investments model the more take ideas we're effect, the make. and we needed requiring down platform our As deliver move To fund. and able a II to of to debt. that were fully-financed the billion of our our able fund submitting with to required. and largely that underwrote fund ultimately process The our €X.X model a we million syndicate With fund what equity, billion sheet position,

And Daniel, quite got people queue. of in a we've the number

we queue, back if appreciate ask a the ask it. and if please get follow-up, could we'd necessary, everyone So, then, question to one into and

question first from comes Michael our And America. Bank Carrier of with

now Your open. line is

guys. sheet Yeah. the balance first just Thanks, results. income Maybe, investment the question, or on

quarter, the investments on during credit You some I guys noted think, the weak there's side.

Just months, the issues? some balance longer or know color the weighed on maybe just performance terms on XX for sheet. what on of it, any strong just last quarter But color I overall a that? that's in short-term long-term, anything still then, any meaning the it's and outlook, like term the

Mike, top this over on this balance issue numbers. went more drove a balance numbers lot the out you we certainly, sheet if XX, page line just balance of look on if just positions credit flat take to the over return you the to with regard of which a in results, importantly, sheet up is which is modestly, at sheet, down XX% Bill. results investments year-to-date five. There's When large no those X% the Most sheet. or sheet the on is were our with balance look particular the the a the you that expectations. either had, But year-to-date we've look balance of and roughly quarter,

it. Got

the then, accounts, Scott, big obviously, just maybe strategic And Okay. on quarter.

four you Just a sort of from going three you're a to given deployment, broader? that the and just funds, to to period over flexibility run is deploying more assets it years that meaning or you guys it's much cross do carry have be it's how similar of

three the it next two, will but in likely, capital, it underlying will committed amount more and these of partnerships most underlying economics funds way are question, you're drawn to funds a do of the strategic over years, opportunistic. then, for which have significant A varies Mike. elements right, flow similar from there. Generally, be get down I'd say some Thanks the bit. the we a to

more are have invested immediately. going that We be to some

going really be majority rapidly. vary. is over more committed a say it portion to of so, it I'd work it, to And of But the and a drawn of minority get much time will and does it portion

already $X detail, $X billion in for partnerships being deployed. and billion. these just year. $X We've it's billion working been And of on Michael, the AUM strategic is about of talked little this the one part better that we already

to see So particular billion $X $X in this that we $X already AUM. look capital. raised AUM billion when we've is Only because than importantly, the you the in up at AUM billion, we've of more that showing and you work on can already more got recognized $X deploying table, quarter billion

Okay. lot. sense. It makes Thanks a

Thank you.

question from comes Katz Thank you. Bill Citi. And our with next

Your line now open. is

for very leveraging of KCM. as questions, sort Okay. Thank morning. the you well, much you the through the bit, platform curious perhaps, this time some Scott, or spend about taking a talking of

can reflects of very you a sort in quarter. of a of much if robust third backdrop of the at just of sense more the to sort sustainable pick are yield us How wondering up the coming Just concept, give that just of of markets systemic and of level. the business? revenues I'm sort off trying a activity, how this versus sense the a get strength transaction

things using Bill. just there's say we're Thanks, I'd couple overall frequency, the model with going on. One, a generally I'd speaking. say much more

our So transaction our looking and make doing balance Markets asset across approach opportunity, sure our early, new debt the it to same. if opportunity, there's to basic there's at underwriting and work equity if business with when sheet now classes, an syndication capturing a we're we're that we're is Capital a

broaden using this the year-to-date uplift, with of from So, we're just the to terms frequency you're is just it in increasing I QX the think period, seeing part firm. better and and what of I'd across model

say we're thing is asset utilizing Second I it classes. across would more

penetration activity every more content your asset the and year, of of having we from recurring about find that look partnering this business, the deployment. across with aspects terms significant of seen is it, But reasonable more our question our We've lot able capture Now, by business been global amount There better has we're new own growth had investment of our both Markets year-to-date portion one some of are example. has our if a those Japanese just the year, which in this areas Capital are in others. classes. period. buyouts, activity you in at but it by economics of of all infrastructure Q-Park of to a of

think is. I So, there

and look third is you portfolio one-third. slide our X deck of back two-thirds, bottom much right, to about in right go If the it's the that how party, KKR on you companies versus

We have plus companies own with of two-thirds the that piece, lot seen new a deals. it's on existing and portfolio activity companies our

it not And more necessarily tied to it activity overall with so, what tied activity. investing is and of we're our really to market is piece the That portfolio. doing

other amount The are having frankly, and origination success our support. penetration a with And piece and of party, that third-party of as having out is and we them a the significant where financed it of lot there in markets cases, growth sponsors we're business third in we much in team well. capital and and providing market also advice better built we're corporates

significant together accelerating work a and call per been have look our it been with, So it's of base that using our not contractual have we a the find our scale level more whole and wouldn't recurring in that, we've year a global there's underlying I at yield. you third from effectively help plus working we in clients the activities, activity activity if firm not, it's Having others. of investment we as se, better activity party the all to model said fee our tend because that's yield, own businesses the companies,

citing spending you new using institutional global of your just type opportunity? Sort the your more terms further of of leverage depth peers appreciate Can under-allocated maybe ratios update? particularly sort sort Okay. retail, a enhance Worth, Net opportunity That's a an the Where of to breadth talking of set very sort as both have us balance give your bucket. of the U.S. opportunity couple flow sheet lot helpful. in just your to businesses. versus in been time in stand to well about the And of of retail investments follow-up, as model and of High you

Hey. Craig. it's Bill,

I'd porch things. a few So,

effort Net the a we've First, and individuals Worth directly calls High an that as team offices. within firm well as have Ultra family direct a built

of really be leverage do the The others. second of to piece with work that distribution the platforms would we

funds creating our those marketing again that's also are through to second whether the products would offer So, platforms platforms, unique piece. be that through

what we be through would piece the third broker network. independent dealer The do

BDC size, that have, almost final an part R&D. of Trust. think Corporate we in and as over mentioned, really That's we'd again, created through this billion the channel. $X of So, Capital Scott our of that's asset being And kind was

to somewhere to I you and appreciation, you is whiteboards through talking basis. that to we our the products ways Over creatively tended like and in capital have a of time, market know which updated on mass that keep that ideas to individuals, about through that R&D something affluent that capital the So, comes look to it's think raised. you an at about as worth we and raised we've think we'll broader like if we is between XX% be XX% new

This quarter XX%. at of was end the higher that. was It

to find area So you'll look think us expand. again, ways it's something an that that to certainly we continue to see for It's in longer I term.

of color only The years. five last are additional give seven the a new those is I'd Yeah. in you lot activities to

it we're feels started. like just So, getting

Craig Thank comes Siegenthaler Credit question you. with next from our And Suisse.

the back Siegenthaler your want to us (USA) Craig in many of immediate get - the used, and I the form more perspective is type could see partnerships calculated you LLC of come across term. also, Your And actually different line metric different is probably assume now Suisse open. performances to Thanks. how just how can morning. classes? these and I strategic hurdle Good we on remind asset and that's the are Credit what Securities

Craig. Scott. Thanks, It's

to These that's take more, to how years two to to tend one negotiate. predict. really many hard In of form and terms

long about to It list to commit for classes period And it's across long the you a going scale capital not do so, a of is because not partners globally requirement that this multiple asset of have quarter, think time. Bill while. long they extraordinarily to process have as We but just when a can quite mentioned, but been an list, happen in two they quite be get this two those be done impactful. for obviously, can happen,

would the So, lumpy. time four or today. from these, say to we it's to standpoint grow of these. done. you have take scale will it a continue the amount find of take do long this And objective more be that we guess. and more a these, get longer But but and not we to that to XX take my in wanted be bit to to a three of will we also of have and We'll effort it's or XX the I'd done, to they time three place they term give have get more less time going number, today, servicing

is with of recycle not to basis longer but how you metrics, of when And think much economics a do at the more profits, these, work, by seven-year the think generate that In traditional portion a would normally the we sight time doing about then partnership we're just line We're suffice or we $X economics to for that on then, billion say, capital quo going firm the than by period than what about a status fund think the we we partnership. vary terms generate period significantly the each, we have really detail compound with ability to do is partner. then in give of for first approach. on it especially way it five the aggregate they the a more specific of to to you able

LLC raise funds about in economics. using discounted in accretive. to it's this and And terms it to way, standpoint, because Scott. have can cycle partner it's think and all that's quite Suisse win-win some - Thanks, creativity environment And the the Siegenthaler Craig next a show structuring. cycles, of and several we So from able (USA) a Securities fundraising Credit our we're we some how fund for actually they're for

you. Thank

next of Our Patrick comes Davitt question from Autonomous.

now open. is line Your

guys. morning, Thank Good you.

AUM winning your understanding work partnerships, the been come strategic to through incremental you trying that these would what much but already you probably pipeline three think four any the cycle? or have size I percentage of done that have would the you what's of the you AUM funds around on have of would normal now, what on mean, top gotten one into anyway? maybe or only Another you're fundraising how with have have

I expected, very say the strategic will they're just and approach. these would to to That's times some one this that probably way don't that a think great size four broader relationships, precise. of it. of to about without hard having That's I around question I the or average, wrap course, kind on normal know have I say would be three partnership answer it's

you if the partner, billion much billion over bigger recycling. end to you $X that, especially a up time about have you think maybe when with So $X partner that's than

to I've funds the the over. X capital huge make we've otherwise and investment, going next not areas the capital able start ability a I to just where us is been But to actually incremental of then, an the have lot generate the go That would incredibly of years, a raised and more not of have it's mentioned, the invest capital XX. we is, a piece the elsewhere. amount. elsewhere. and Patrick, say is pre-committed Some deal might we And I'd as we traditionally to different been what tell raise power how And it a just into go capital to have to be profit, than back where to powerful. subsequent real is you, would raise big have a that's lot product able to

years capital, started beyond confident what would to kind you of be to as if have look so, would new a saying be I'd out majority I'd would of the that. firm. And seven, I say, five the say,

Beyond from that cycle, to go first up it's fundraising there. going

to little hard answer. a you And Patrick, he's just a question color, to asked really and give right, that's

closed that had just fund. GP. relationship new one a relatively with invested in small long strategic with in capital the only partner, particular this of is we a of on they'd They interested were amount One partnerships a a quarter

plus, would the who we year that and over LP have on worked to all very a that that would with so, KKR and other try with be as opposed I that for that number a think what that long the time, couple be past strategics would be. of to And out incremental figure been harder to

Thanks. helpful. Very

you. Thank

question comes Gerald Jefferies. O'Hara from next our from And you. Thank

Your now line is open.

enter the might stands to to percent was committed Great. where fund release, fund Thanks. update as the with per XX quarter-over-quarter. fund, commitment wanted in successor or of Maybe vintage give infrastructure. segment latest page perhaps that a potential us and respect when to on the that was Looks I up Can discussion? touch an like you

give growing. I'll for update the enormous, exactly that's need It's for Hey, have this. a remains unique totally from piece. team, couple first most and both Bill think teams the focus you're Q-Park a the the question. that talking infrastructure. that it's are they in Craig. Sure. commitment standpoint. make about well One, in answer we're Capital the Gerry. – few think Calvin sense, infra Thanks a you're I of an of a momentum quarters global from a terms with of I The the I'll there the for you It's part ago, Look, I for looking team, infra is think true on the downside about, as us, things protection. And part on correct us infrastructure feel we have active one as as deployment Scott and

So, been the we've last we can the pleased we delivering proven it. decade. think have And navigate a pretty disciplined for we've with We're complexity. on focus I returns

the are on I have terms Markets and balance X. at it's Q-Park opportunity transaction correct, in sheet of when you standpoint, that of and with a elements a that think together the see that compelling. business, to Capital sense able you're overall we're there the pretty you put look performance From page of and performance,

strategy. the of infrastructure similar almost billion been we Infra at we're performance have it's of platform, in over the really infrastructure for the $X based. strong fundraising forward in the been the and at terms in XX%, it's SMAs, AUM With II two funds broad up itself and Infra we're funds you when and I look fund And

that And remaining release, remaining it see then, turn the if $X.X page of relates you we've the you commitment. of XX could as to commitment, press billion to got roughly uncalled

being the this so, been mentioned active we've pretty close and in did earlier, infrastructure, Q-Park we fourth quarter. However, and in said, actually that

and quarter million fourth yet in work of the transactions probably signed anywhere have to million put closing the closed. we're the depending between on going $XXX $XXX that to so, And not or the quarter, first

And obviously, of so, much next piece deployment this having we're fund. that with infrastructure – premarketing

Great. Thank you.

you. Thank

from Schorr Evercore. comes with Glenn question next Our

is open. line now Your

only not There's I demand how anyone funds insourcing York of, direct some a into Hi, of terms? in are like different of partnerships. how press pervasive that if client going ways play on the there, but on the been that largest and the asks, thinking New PE, huge all longer about some I'm thanks. Is going conversation City talk on that insourcing is in asked preferred but which does term on that? fan the many the seeing, deal, a few asked versus know we've how whole you're these for

staff say the I'd institutions Scott. themselves. to it's direct that. are able it's few Glenn, many are truly to requirements, the global build there multiple a The and world classes asset do in institutions that to not ability go very staffing Hey. investment able across are team,

and finding last with be themes So the same are that few like trying be basically to global be direct. is press go of strategy. to that our much pursuing over-diversified which that. while discussing institutions in their have firms more of small staff partnership a that cycle, we've basis and much is amount and more out acting are extension And lot on they a theme how a partners. that finding fewer that I they're act desire We're investors been fits structure. them right more basically to in They're out on I small to frequent last to a than think into the capital, pervasive some a the partner been is of ours you conversation with have, to their an trying the closely hearing figure team beginning they What a long-term read we've the from to that of feel to do portfolio just experience, minority they that that years strategic those that that a view institutional of we're

lots better. That your big don't of you on? know in do any do you so economic, what In I numbers. these I billion, the triple the the the set don't me. billion but just makes about willing sense on you seem expect XX of or think limitations is And limitation? terms mind you'd to lot more talked you and you and And have take XX said $X be have I like on, billion then, is pretty $X words, you to in The above. size heard of $X these how other a of follow

draw how do that So like, line? you

Yeah.

operationalize a want per about. is say, period in contractual I limitation, talking I'd But be There se. to just no of limitation, We're So, our clear ability to vis-à-vis, very own and a service today we're across at strategic look, that there's time. long term is in sense. partnerships It provisions partnerships this $X specific have are that term. basically long-term using billion-plus. recycling talking The the very classes are contractual ones quite multiple a asset we're what about

recycling But we We long virtually multiple classes, all we strategic of kind across classes. billion us large $X been except wrapper. multiple invested put hasn't that for have are that characteristics, investors a just billion, into of with size that's of with It lot across work of $X partners partnership have range that the this asset asset in duration a the those us recommitted. whom have with number work

our us look a products is client, And X cross-sell if base, as products client our at XX, you across average if our so, it's per you top over per and at firm X.X look client.

in-house by find to underlying synthetically to element, this the And to strategic of these them those although very, strategies. I'd already us but of have have very that kind continue going XX XX-year multiple of lives don't virtue partner say we're number so, happen recommitting we several just contractual we grow to just of long those, to a across partnerships and have

but look out at we'll the long-term specific it's So, is element really today. what we're contractual, calling broadly, it recycling that's

much. you very Thank right. All it. Got

Thank you.

Goldman Sachs. And our next Alex with question Blostein comes from

open. now is line Your

Hey, good morning, everyone. Great.

gears a wanted I sheet. the little shifting So balance bit, on to touch

up cash the balances nicely. are So,

legacy opportunities that quarter. think M&A thinking sheet of last might period, years? looks so investments coming with is Obviously, the picture, talk to two deploying well months that. three the so like Data be should over bit that just I some about And the evolution or couple might a we the terms I how something think next how about doing thinking all down XX, versus the the you're over well or billion offering, billion think of $X balance the and about next Should XX guys Can as of that be about about of the like of bigger co-invest of well? guess, as $X.X we there we then, cash think that in quite First little to something that much you years? since next

lot remember, the Bill. look balance than a different sheet little When earnings retain compound and is economics that. to today, you our the is sheet that at and that a back the others, on and we this of strategy where Alex, our is Hey. put onto balance

we to doing, what balance just to From so, we actually continue trying need up allocation of where just deploy lot to end you'll time capital. view, hopefully, And figure point spend out grow. sheet is an of the see a

platform-specific is. thought be a just what of right we to might And sort or give we that And around so, out number lot that geography-specific. it make sure trying

we the been ability to that couple satisfy making the over years, investment that we've the sure ability we to And way our But and have model co-invest, and way. capital funds have have mention first, of the the mandate. probably flagship you then, significant syndicate recall, or when in last deploying our we addition, make as works you so, co-invest. we is, to commitments to And certainly funds

the And co-invest so, investors. invested capital have that's by we to ability were party alongside being opportunistically third

made have work we an which page $X of see XX the commitments couple at can last look, progress we have balance you sheet press toward GP contractual nearly funded if of years. you We've sheet got, release, the part the are in we've look way your second model good I'd we for question, and balance allocation makeup, say, the asset our the billion. over which the

also have will that have underlying side those continue down. and new on be that updated. we keep the to use respect we'll with but see part drawn So, we'll get those you business to will go-forward We sheet basis do down it, we're working opportunities done. businesses new to drawn get we've as and strategic of some that balance ideas funds a do what Co-invest on the already on

see And So, X% strategic earnings. on things Wace last from we're other AUM will we've organically largely may years got buying the there but the opportunistic front. I several that be things the which our show up and incremental time fee-related grown our can that the time Marshall mentioned to We've to in equity happen kind on ourselves time. on number. some we're be target the on allocation in things side think And commit is is one focused continue asset of But classes. us interesting that our XX% balance of could frankly, to our you'll capital all And getting I across to of around private that asset XX% the sheet.

that in we've have keep a range. monetizations, we of of make been to As kind sure lot working that we'd

strategic partnerships. Got a around then, again, follow-up, it. just quick And helpful. That's

needle operationally As really in is these mandates the relationships of enough, of these you whole business margins? a or margin need augment could terms the business of of into that's of as to scale that invest FRE profile to so service of a type mover type anything you scaled not kind help kind the generally for the FRE guys,

is this a Scott mentioned this very Alex, And Hey. operational Bill. this, complexity. and That's deals good with question.

think But add of partnership. cetera. economics are you outweigh about few if raise people particular very strategic mandate, to and in and to that customized, finance expense service And sums and the so, capital, when to fee the like with partnerships these with et compliance, far tax, a deal regulatory order the a we ability the have calculations deal having minor strategic large environment, so, have to carry, to billion $X you

much. Thanks Great. it. Got very

Thank you.

Thank Ryan from question you. JMP comes And from Securities. our next Devin

is line open. Your now

just here, guess question, Good higher FRE the obviously I thanks. my significantly Hey, morning. first question trajectory year-to-date. of

transaction is of outlook it good. fees tied lumpy, Some to sounds the there commentary Capital obviously Markets that's which could the pretty like but be higher

how into the of year? of of off the we should the FRE going how it, the about think Markets the and to been contemplated about FRE, growth maybe trajectory kind dividend, budgeting trying piece to are for just dividend I'm as reexamining with you factor the XXXX in of guys So, kind kind you relative increases capacity this when has strong Capital dividend think of

Devin, look take right. fee-related earnings, Hey. you When Bill. is a at this are you

look view, take of online, compared which and so, is about when of and XX%. so, you a try XXXX, well And think what allocation the component when bit in we're as equity you significant this to we we And III from significant allocation grow income, year-to-date pools you to increase. raised has saw and we're drove do now And the to into try you America what for up yield. both itself trying a of XXXX to Asia XII little when talked of point if And come just dividend capital we earlier, at as our impact private a fee asset about look balance the the size expenses, which an really would yield. net Scott that, sheet,

at about two so, we And those we're taken things when and year, XXXX. the quarterly consideration for distribution deciding would are we're on yet, be distribution a a talking into end when basis, of the the haven't XXXX math that what for done

Got it.

think for trying curious that second area I'm about appetite or And multiples of aspirations for you. kind Income think there. the first be Energy Thank about of Fund billion a to and could for Growth fund outlook exposure quarter, Would just kind and kind be highlighted the there? here, that the you down Okay. size just I maybe of follow-up And coming $X of of last just pike.

Hey it's Craig. Devin,

for follow-on correct, a fundraising fund we strategy. you're are in So, the energy

see on strong. X, you been performance has the page As

target know As big I cetera. providing you we're have sense, on not a et sizes,

your that it returns. of much, look think to on behalf specific raise question is our we whether to pool be risk-adjusted comment of large, attractive a terms of capital but appropriate we'll and how earn no LPs in if so, So of could

There assets, our could to where broadly multiple of for get over Yeah. think that. opportunity. thing growth we a area is with only business you real energy be that fits and us amount ways would assets is young opportunity part tell but has that say energy growth just I The significant obviously is into there energy of across real would we time

Yeah.

Okay. Figure try I'd there. Thank you.

Appreciate attempt. the

Thank Stanley. from with Michael our question Cyprys you. comes next Morgan And

line is now open. Your

Hi, good question. morning. taking Thanks the for

your talk to Basically, you'd data five years, to technology, today. if evolving you Just of wanted the growing you're and how to like over today ask could that about in investment how integrating amounts you where technology process and next lot a and changes see of data about be? relative given that

Hey Michael, it's Scott. Yeah, timely question.

So, this been working spending thinking we've a lot time of it. on and about

better team a five, As led we years a Global and Allocation six Henry joining Asset team join McVey, several is information us KKR inside reminder, lot of could there we that effectively for part us, we the use now, logic we of and years ago Macro a firm more by that that ago, team make had felt to that was the investors. our have

then, more think capital. way think as can. we best that impact information sure in-house, that about and have then, of how a can of the by that's So, spent is data different said time our their that we where a work investing making on across good we're team to having said portion at we a informed long we're in had big think that, do. investment there's looking and discussions a that committees and they have make that we we firm that, the lot I the sure deploying to are our Having we how go all and But

out trends otherwise we portfolio to from see will data to analyzing we of and looking bear the spending ways And coming a companies if make do have technology we more to, figuring so, are good time get we and that bring our data of at how that out see enhance in that access that further our there ability investments. read to are and through terms

time area an spending it's on. so, And that we're

to it's incremental our and the it that so, asset Bit to where we've to have it's a we're advantage, get more kind second give should inning we, that across we relative provide an we're think as competitive to more we'll data. But something think, and specific us say breadth time early spending of I update of globality you there. classes, to would I the with even out use how end but I technology started, up. going given

gave around Okay. And I on sheet, some you. just figures know balance you in Thank the that. the past,

monetized was balance little and Just sheet sheet? bit understanding get much deployed much capital balance the a better hoping to was off how the during the quarter, how on off also,

activity was Hey. this good mention balance Michael, this did there off Nothing but Bill. funds, sheet. we drove from exciting performance minor the is had We the quarter. monetizations terribly the income that which some

So I portion the remarks But mentioned roughly we that position was our in and overall, our for of quarter-over-quarter. X% percent hasn't example, $XXX sold gone up or First that that prepared of roughly a million. meaningfully small Data sheet that you down generated see balance could position

Okay. Thank you.

like at for not I'm I further Larson turn further call this over And to Craig questions showing to would remarks. any time. the back any now

thank you, the call. for Daniel, you, and joining thank everyone,

again. any follow-up with Thanks please directly. have If us questions, you free to feel

program a today's and today's disconnect. does thank you day. for have may in conclude gentlemen, wonderful Ladies all This and participating conference. Everyone, you