KKR & Co. (KKR) 25 Oct 182018 Q3 Earnings call transcript

Good day, ladies and gentlemen. Thank you for standing by and welcome to KKR's Third Quarter 2018 Earnings Conference Call.

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

Following management's prepared remarks, the conference will be open for questions and instructions will be given at that time.

As a reminder, this conference is being recorded. to of host Investor like Craig today's now Head Larson, Relations would introduce for your conference, I for KKR. sir. begin, Please

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

please our be joined previous year-over-year. that are I'm reconciled call to our referring to refer Scott related We'd like Bill quarters, This As increases non-GAAP Co-President that factors call. we've $X.X measures usual, Co-COO. we'll by cautionary over and everyone of which which the posted to call we'll CFO; Janetschek, of and be and is course at Nuttall, to the presentation also quarter referring available remind SEC the to strong website we like XX% filings the a press of of GAAP figures segment a and which $XXX section for the in morning with distributable our Investor revenues And future to these total performance, statements kkr.com. forward-looking respectively release And guarantee after events earnings will our million, statements. contain Center tax not billion so supplementary on our do or on on announced XX%

of the with partnership dialogue partnership the a traded was to the our continues having shareholder time, and for and for York this begin, as a what in eight the structure appeal we our ultimately for handful only for to C Exchange on the was we're We've change our long To we've structured mainstream also corporation corp a structure part on us minds having real us PTP from only value as before for been being point first corp, numbers, path because reinforce a felt a as for best a our a the into Now, we security. our many all months. a years, better X. July at New to as Stock a get the of trading and completed it's equity of is this notable institutions in quarter a maximize C impediment that investors, through broaden

the been by opportunities and are value innings we're it of encouraged we're in feels having, breadth believe we growth and but about think in value similarly an on Also base our see. combination like a and about We we're we've increase a we're stock have it attracting some of the transition dialogue as asset our to equity the book our of the seen shareholders thinks earliest the to us we're our So shareholder earnings base. and create index long-term and buying. attracting business our short, shareholders, seeing in that's focused well to our compounding. we're great of stock, as growth, part how this, to more shareholder through In like we've business as feels that a we experiencing

this Index. Total QX, for Vanguard funds X addition Market to across please index take QX, shares. million on As XX buying we're September we owned Returning believe, funds a roughly at the of quarter; in S&P's is excess at in to of is page index these look which Capital to fee-related the continued results funds passive in focused performance in Bill at of year-over-year. XX Total XX fees reached the supplement. reported million And share. $X.XX $XXX This XX% earnings quarter led to growth, Management that's morning up in earnings with more going detail. per combined discuss after-tax the a distributable we of Markets, in strong strong

core growth book page share on XX% and contributors $XX.XX in year-over-year. as was of in XX, see key that per were PE the the On here. our value the September share investments our bottom representing our strategy basis per a investment Strong you'll of performance half marked

appreciated attractive there five, AUM, our investment talked use about finally, four, performance; new about capital; and investments; update things our we two, are model and to the with existing for on strong monetize raise the as need classes over well. see the on generate performance our portfolio we've as page XX.X% had going investments; XX quarter investment across sheet. months. on and a basis, investment Starting overall you markets, find blended the historically, our last think capital you three, page calls is and the of on Now, that at private performance, Bill of last first XX% five we the equity over XX first to balance and funds flagship do In a two please three X.X% private three. we One, final have I'll take equity performance our cover supplement. look X our need to asset We've appreciated months. the

this This with Mezzanine resulted net flagship are strategies Real Energy billion segment to on realized figure despite and XX% performing particularly Estate, sheet Situations basis our continue timeframe. has a carry performance our up balance of XX%, in and strategies. asset we and a Infrastructure, funds $X.X on accrued Special the carried credit, interest XX%, increase year-over-year And in strong performance in in over XX%. more mature real our see Our

to Turning fundraising.

inflows months have well. scale real strategy invested our of QX Real Estate billion on our And III come efforts of solely our currently private have and billion USI defined the AUM core of equity billion credit, last European raised estate with held fundraising in several stake likely over level across we've capital trailing from organically strategies an we coming our six $XX from Wace. equity, what activity private $XX seen our Marshall in direct strategies. carry-paying around inflows we predecessor. high. billion to the which capital of weighted of and And as $X months. over The raised strategies fundraising and months and when last fundraising points, over position the historically as across incremental final our Investments newer other of all future XX close our over lending over we've we contributed with continued months as direct billion FS across impact, quarter as this additional outside $XX We're its Xx II size consisted basis X% $X.X In with energy, at providing over launched additional the of of Fund, have scaling an leveraged with remains a XX to Notably, be Capital last Infra line $XX inflows fundraising well We've in have our the credit both the me for Bill. new end, from And of of private strategies XX us And an rate Over XX to of XX% XXX powder billion let time commitments of partnership at year towards today. to it billion our benchmark traditional of investment average growth that, $XX past months these funds. turn year-over-year. dry become fee-paying sight management fees. seen importantly, it's also billion of up that many

We new primarily well Craig. which Public find and investments start do coming invested thing direct billion Thanks, Markets an billion our I'll deployment was need the geographies. in with businesses active opportunities. $X.X to This investment $X.X for was lending is third deployment across we space. from us. quarter made

funds Energy Midstream Infrastructure monetize of Americas AppLovin notable shortly. acquisitions we of and fourth Private do The investments. discuss Other existing which Discovery thing business Markets investment in we include both billion. the and the detail I'll was The side to $X.X and of more well On invested the capital is at XII. uses carve-out contributor largest need out our our Unilever's Spreads of

continuing monetization PE We activity across see to business. our are significant

our management quarter a in such, the generated sole fee-related well were balance earnings. the third strong. carve-out in carry capture compared our capital the transactions increase core on was supplement progress follow exits led done and XX% a of $XXX were also quarter And Spreads equity. acquisition this million significant for together in sheet of The As to to activity. fee-related of and Upfield an X the provided use and $XX our investors. we alone a basis Upfield, quarter. transaction A over prior in strongest backdrop in finally, strategics This September the is five additional €X.X our a exits fund Capital Capital And with the which And to for growth investors. release, that QX the highlights basis, PE required representing Markets a our a business. business. of on and billion markets markets the third underwrite to profile. we're €X led model economics our across quarter total, are of place LTM from We to our second has record parties, Markets helped fundamentals stated investment XX% cost. KKR across to events our active period. sponsor the model a we capital secondary page Slide our model in Unilever's greater in closed outlook helped approach. as firm. categories. enterprise pleased for at has seeing the in compelling BMC step at was our work €X In comparable last Capital And quarter. These opportunity announced earnings, up billion for power fees and approximately were investments, example we in which two and fee diversified financing. the the since the AUM Capital syndicating of team equity we've results in evident with need and instrumental turn thing to momentum AUM, debt an of Envision, value the Markets fourth summarizes between our earnings blended billion times X in million the quite and markets, great drove is cash were our X.X firm-wide in the contribute increase realization of press do fee-related our And growth On was

to investment weather assets. is related turn hedge partnerships. one past additional This on we Nephila, us billion. that want being The and Nephila you touch successful. announced public recall, exit has an fully acquired Markel, Bermuda-based insurance-linked our a also specializing company. realized our reinsurance-linked securities will August management reflects $X proved AUM Before investment it done in we is Nephila's an a in I specialty insurance I this over billion fund acquired timeframe, catastrophic on to our $XX by excellent initial to In stake investment return times and to balance our roughly to from book attractive Scott, allow XX% team and a item our XXXX Over gain. briefly XXXX growing may manager has job sheet. investment as Since on X

closing. continue outflow X% which be billion roughly ownership to in $X the reflecting Markets should will fee-paying our this we a formed of we the fund of we'll partnership enhance continues our Marshall them. result Wace roughly Wace one with and to a an we're be be $X in stake by partially incremental contribute weeks billion in AUM to excited sale the and world, offset upon premier hedge players in so Public strong the fee-paying Public as the While of this AUM which close expect coming Nephila, of stake Marshall Markets

a enhancing take that real a So management slide the turn to feel team we over execute. please have book AUM, earnings, by of performance be We we share. will that, four which in metrics Scott. value at which our I'll total each with substantially and as the value they summary, to believe shareholder to metrics compound distributable And collaborate investment opportunity matter: and global driven fees, continue really per these look of create by highlights and continue efforts X and it

Bill. Thanks,

As Craig an and Bill quarter year. discussed, we excellent having third and we're had a great

over grown up is last and the Our XX have AUM XX% value months book per share been our XX%. strong. has returns over

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very stable. is business Our

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volatility will your With view, that, we take higher. long-term think happy in continues So our if our be we're questions. value the to

Thank you.

as if work we everyone wouldn't It'd Norma, ask in if question be necessary. to one mind the way everyone they one our just And, could ask please if then helpful follow-up and we through queue.

one that's and gentlemen, please. and one Ladies you. follow-up, Thank question

Davitt of Autonomous Our Research. first Patrick question comes from

line is Your open.

sheet Thank are significantly. some Good selling stress performance more standpoint just is credit from It to like Hey. there morning. looks out balances a you. anything LTM the Is the the about of numbers but fairly down it balance fine or positions? really in there on some went point credit

Bill. It's Patrick. Hey,

to too a we there. time the one If much balance was above be particular that sheet estate, of in other When But the on when mark-to-market and the for basis referring There quarter a those to area. So spend the X% talking were selling it's quarter, just private so we're real you're down balance other Special sheet, at look and year-to-date in of that wouldn't all but you And and little balance the some X, both sheet look was basis. on up we're assets the a written the investing page across itself, bit assets. I you Situations about. nothing benchmark all one about in performance in infrastructure, platforms equity position core energy, had highlighting XX% worried

any you at of your really everyone it the do last broadly, more guess I look weeks a or more deterioration own just bit credit. obviously portfolio, kind is point? at worried is you broader getting just particularly When this few little mark-to-market And see Okay. about in

equity but No Patrick. quite come is the high be the in our broader credit we've Hey, stable. continue It's companies some actually Scott. seen market into liquid loan credit deterioration. in private the actually volatility portfolio Actually, fundamentals of to leverage strong. our yield and And the markets, portfolio

that read-through about. worried broader be of no as yet So we'd

you. Thank

Thank you.

Thank you.

Bill Our Katz comes next question from Citigroup. of

is line Your open.

morning. very the you taking much this Thank question for Okay.

off the that a how what guess raising. capital opportunity incremental you on? maybe much give collectively period opportunity for you number incremental have going might trying the over out to be of be the help they of you can frame you able I to raise bold things bring the First to of be peers A other of terms coming in a time. pipe. I your was set question ticked they been market in said things of mean, I and terms down couple if to can wondering in six is that'll assets sort of guideposts of quantify specific here set enough think just you're

have give We number It's Bill. you. specific to guidepost Hey, a Craig. don't specific and

we I as industry think businesses fundamentals of them is are our again, as is as backdrop, in, about trends. described given we've set most as time. about think we've broad We Against number taken younger And we and the the opportunity growing we're the some they're that for secular of a share. a that scaling. whole think think

just for So growth and geographies we in us where we that a relative over as today, think I recognizing periods our about of lot think young again opportunities Asia. talked about and those stand businesses And to of meaningful like leads number to adjacencies other are. dynamic, have us the we think we how coming a opportunities look

a lot hard to good not to you. of So specific give come things there's number I a but think

we've XX having the $XX Yeah. without private billion in fund I would point out, equity organically market. last Bill, a raised flagship that months

different lot been we've So busy a on of fronts.

doubt. No

follow-up a question, of sort Scott, you. Okay. maybe And then for

well that versus frame thinking invest how either you buyback. both So opportunity $XX or you're about and the between and sort of in grow stock stepping income if to you dynamic, Can buying to that, in you as public the under opportunity in potentially highlighted as here will, markets? both volatilities maybe companies still sort just private of

Sure.

So back on the I volatility first, itself. think,

The market outside we've bear first thing in is out already I the U.S. been would territory. point

about this the in So and deployment down XX% U.S., last in XX% China the euro been outside XX%, our stock's down particular months. we've Asia the increasing is XX year. about

this we've investing time I got the news it are already at period we've so kind And and about been a XXXX. this where that the that. total put we're firm pleased powder location we is good of at billion of to way in And in doing look into with of context, was that the And as just dry mentioned. $XX of AUM the is

So we've several the and work on to compensation-related no said terms and of think past, of the lot we're to sure got from times a balance I focused on to making insurance. committed cash buyback, a lot sheet. as But in capital of we put share in dilution the there's

you delivering expect, should that you see But policy. else what to we own but stock's And all us expect in be just more active Bill, periods stock this in directionally, the no than should like should a dislocation more overall on so you this. promise periods us change when expect think I we've active when higher, in of to when like time our equal, be got on

shares roughly the We and our color issuances to XXXX to distribution a acquisition XXXX, the we at XXXX, count make adjusted share that just we relates were million. $XXX wanted on executing point Bill, use count to When shares employees, and our on at an to Scott's creep drive for today in more our didn't what Wace share employees. for policy on sure to changed the as we deal of with we that that specifically said. actually issued that said XXXX, little Marshall million. We $XXX end share about and And, it we stands share

Shares.

And Is to final when still powder a we equivalent yeah. did dry conversion buy to corp is million [XXX million mind relating back our we have C (sic) back. we one that buy that XXX keep to and point of shares, million] $XXX roughly other announced in authorize

you thank Okay, very much.

you. Thank

you. Thank

Sachs. Alex next of Our from comes Blostein Goldman question

open. is line Your

morning Thanks. Hey, good everybody.

Morning.

Patrick just are you trends guys around direct picking lending maybe the on earlier up the and So from question seeing.

of are feels dynamics it lending I this intense. middle announced little like market morning. a So competitor say direct bit an Franklin getting I more a guess acquisition should platform

the playing in and of like end guess direct guys I about market. kind you lending continue the the So in to past talked move higher of

deploying your the lending parts kind think might just capital, a some interest speak of between could direct levels, like metrics where any to you're of about for lending, rate EBITDA guys the help business to sense Anything seeing, us industry direct what's kind i.e. maybe bit to helpful differences of the little versus different. the will of is So coverage? a your of you're various sort you exposures and within like get how the companies, that run be leverage where be

Alex, it's Craig.

focus. the is where that really me to in end relevant, and end in The years and Scott area the dynamics become a changed. have it which the you the overall right. where many you're at start see anything in look, competitive do view, few if many, think firms have and ago. market our you of are upper of has as has competitive different was But it's add. these But, Money middle wants more Let lending most I said, our it's place he dynamics be direct can lower come within than is

almost important things offer are as have origination to potential range It's relates creative so both And someone a sole lender. of be there be from party as critical solutions dynamics the greater better that, capital the multiple covenants, as equity it as relates leveraged standpoint, for structure We're in as in pools give this, a deleveraging right. XX% to financing our to coverage. of important that. the Look, it in as making lending are we're when vast most to so fund, third sense, And well cash flow broad hard competitive and that's a well majority, investment of sponsors. And as sweeps. aren't protections, underwritten structure part interest capabilities just investments we've lender, evaluating amortization million made, that part is have because And just an of as us as call including that to so approach recent and/or the ultimately, you players cushion, and the true you're and decision because direct mechanisms a focused investments corporates allow you're of that the excess $XXX is and as many a can investments, opportunities. on to an

average So investments III cushion equity about excess amor. the Direct have hard is in Lending weighted XX%. cash The these majority of and/or sweeps flow

So, you protection terms really us a here for the again, as see lender. offer

Yeah.

think look, say, well, I'd So I it Craig captured Alex.

about I the we're talk but financing, a about. credit we a finance bunch fast-growing lending of that the private particularly banks excited I in void think by would hard and stepping we're mention left platform of a pulling a out of also other we into as principal direct that's business where the part thing is have well also lot asset

lending. continue opportunities direct we see on So to end large the of

our for north EBITDA example, Fund million. of average been has Our in for III, $XXX direct lending

to you If it back $XX closer million. I, to go was Fund

and, So a cycle. lot in our by are safer size, their these diversified a more bigger virtue through and view companies of

the public Thanks. markets. pretty And the private to you nicely. whether my or of bit firms the how actually it follow-up carry it's the Got the two? continues kind through little But If strategics in think private just backdrop flavor equity exit some next can about in might should I markets, for or then guys to grow about remains environment in, it. difficult quarter more the so exit investments Thanks opportunity we talk around the coming imagine a of over very be exit accrued that. for backdrop, monetize and choppy, you any just other of to the

occurring either of transactions stand I fourth – into signed today quarter Hey, upon you next them we This quarter or caveat color in think a that – is or fourth quarter close slippage Alex. with fourth realized here little about possibly and second give the But that giving quarter. the the the combined that I'm here Sure. that have carry although now just of stand as year, to most gross transactions be about or today, yet I may as first roughly would would investment right could have income the we closed some close you is $XXX in and Bill. million. quarter first the based the

Thanks. Great.

Yeah. everybody we have One States. mind, in just the keep investment for United majority our actually in of outside thought the is a firm professionals

global of know focus I So there's have actually in markets York U.S. New especially to tendency but the quite on for we a those us a business.

with than pullback question the overall significant an weeks, kind to we've so Europe ago. seen quarters had market And we or where don't in and four the so those weeks in in perspective different sit on we three last actually a a monetization been seen environment today stock we've exits operating of very that, the here a lot of markets. And environment, probably even activity, already over we've with would've Asia several

you talking security. those of When a Right. have, just are we And, Alex, assets that PE, third the public in point. just look one assets about roughly final at

the is settles months extent three to see side. down million a mentioned to to come we got over in months, So six And which next monetization this release. still but in which had the page markets monetizations see private earnings through quarter the and the that we're $XX accrued shown actually volatility public the carry more carry side keep you just mind, to some we've our could market about have $XXX next about drove going we the small Away X markets And recovers this accrued monetize on also, markets, from we're on the the million, public couple of of quarters. that. will optimistic that you ability

guys. Thanks, comprehensive. very Great,

Thanks.

you. Thank

comes Siegenthaler Suisse. question of from Craig next Our Credit

- Craig Securities Credit Your Good morning. Suisse Siegenthaler is (USA) Thanks. open. LLC line

on Siegenthaler more locked (USA) than can LLC fee-related they're - Craig but so included fees Morning. Credit the in Suisse starting up markets earnings capital we cyclical Securities on management fees, So they know be capital. just

do So what expect? share I the see in fees started, expect in type you gains volatility underlying down versus which and just next to that maybe business these of like has the in growth already wanted cycle, you the

the Hey, Markets when that I'll free. $XXX predict four Craig. wants fees markets feel take supplement press business, next chime around is last capital and Craig that to But going if million. over of quarters Bill. with This the in be the you is to quarter. what we at as Scott Capital earnings did were the the see just you particular base sent it's excess hard then one to in in But later, look or release,

was Asia U.S. and we performance and grown you they've see and That this capital at the Markets grown visibility is Europe mention quarter has it is were fourth the in business. $XXX we BMC quite third and came about quarter, little in economics and you in quarter Envision actually one when Capital came solid. that $XXX in even be specifically But the third to party Capital the could $XX the the where Unilever We and actually You this portfolio the companies. XX% fourth really of were diversified from drill look our happened excited that thing $XXX markets when going we've of and quarter give and did you XX bit inception and around we of quite arm roughly from million. that to third so feel to million, into XX% about came down, KKR in million from income comfortable I in that what with did fee drove a started, mandates. now significant Markets of million based that And that debt, just generation equity, that

party Markets the a And large more And still about third the so from is number number year-to-date, business, XX% economics. the probably about revenue the year-to-date at of look year-to-date you when importantly, for U.S. Capital coming outside represents from actually or of it's again, very the almost XX%

quite pretty we Capital base Markets, we're we you management the the third So from business that's way have about a that KKR Again, vis-à-vis and business. of got long-winded every it comfortable lot is companies and plus the both cautiously the that each reach the fee. way results optimistic that is we're it's and of But mature the global don't have business party stable KKR's quarter, fee prospectively. and telling a actually portfolio a me it's

way of The other the going lot you and so we a is markets. few activity top scaling large activities. working think across of we're public equity, business. entirely We've of a credit, that, corporates, I business private working it Capital with then about third infrastructure, our syndications. real win And lot secondaries a sponsors in ways front that was do where companies of estate, and some infrastructure, hi. we back in virtually look have and We've Craig, energy if across party to investing Yeah. deal doing increasingly we're would and every you there. these where in global on doing got capital week. which set years a of got the our we And portfolio it's where on PE our our do that real debt our we're now companies own we're IPO. estate. business in almost the non-PE, and in more dynamic We're point, companies, have But related private the equity Markets Bill's to equity description refinancings to of the own public we're We've origination companies always both got

an Capital integrated everything it's that virtue Markets right; the on is not around of activity what a we're like somewhere just in we of it continues and you're in into terms just to of transactions. quite management fee. turned number the found because quarter the any of so out outcome is around we're be in busy So fact and world, But world doing the world scale by to breadth contractual steady it's the given basis

And LLC Suisse Craig the good to now because get of have - is (USA) Very Credit ability the a we're so Siegenthaler that lot back Thanks. comprehensive. news diversified. we Securities

Thank you.

Schorr question Evercore. Our Glenn comes from next of

Your line is open.

much. very Thanks

credit private in Just land. a follow-up little

weighing Lending hurdle should know? can you just there Franklin we First Square. anything on follow-up II, on of And and performance then remind a that Partners is if us is what there's rate quick the that's for

hurdle rate This Glenn. X%. The is believe Bill. Hey, is I

are do of then, be are about? where months we talked Franklin just now you sort the mind part there of to And it. us Got reminding that the combination? that are process on are And six that then the fundraising on pipeline next, in going the you that Square, over say, funds in

It's Craig. Glenn. Hey,

the then a time. proxy about there broadly, is about it's opportunities to this transaction CCT to you and about more we've So think statement that relates interesting it question that that's as I'd us, out on the for talked we and specifically. FS, so as And over point

really have the firm, We penchant firm to a have is FS of we example can within be great partners. to work and with our only how a needs what within

a of their out people and running, investors. of audience in selling of these spend hundred focused capital an being more time administering, has that FS a of to permanent they So type best-in-class retail have built thousands on capabilities hundreds few lot structures

than ever I at what think be. and they're think look do that could we they better we at

So them products other we create can that talking marry that can be think capabilities can and we really together two we partnered with over differentiated. them on the we with we're our front time BDC about where

So more that's think a to but area over on time for we do us. growth come that

in it'll that it Okay. you do to space partnership? if through is say And that that be fair expand

continue and private partnership will existing time Craig's for vehicles it's we be point, updated credit our together. Franklin think you credit opportunity with to And to create in you think that by to ones launching I in but also Square, of terms we'll us so non-private should looking I'm well. Franklin new Square well. partnership grow going an to keep I Franklin both side at through Square private credit and on we'll component can talking an But private the basis, will else if doing on as are about, SMA aggregate fund a the we R&D say our to of continue business together. but we have be to active be what to But private our we as dollars, is space, continue vehicles over going then expanding the majority I'd expect with be

of part is mandate, is capital you mentioned which permanent And that it the the the is benefit that have. this earlier, for capital to best most and

you. Amen. Thank

Thank you.

you. Thank

Michael Carrier of Bank from Lynch. of America comes question Merrill next Our

line Your is open.

one guys. right. you. maybe All for Scott, Thanks,

volatility of deployment recent opportunities, the in market the helpful. the and your with comments Just all terms in that's

the we're guys of at a a I and in sense, And the get about in go the are a of kind on and of terms type trends? sort you're And Anything how it? invested how get to this underwriting maybe if a maybe that's do of you like how then backdrop, we you through thinking multiples, typical companies recession focusing capital Where wanted we on also to couple phase about entry want want if capital, of multiples how on, you're terms deploying portfolio touch business shift you on into some on. of Just to the point? things structuring thinking current like are portfolio? efficiencies so plan can that know if whatever then, in lot, hit you revenue, EBITDA the versus leverage, growth? just

on that. you with agree I'll

do But seen I we've if Europe. growth. At think all for great I Fed the last already from in just multiples I U.S. peak in markets think we've think to catch the the extent. changes We've peaked. some us U.S. backdrop weeks in times of feeling it mean, valuation In U.S., step the to back kind is I this past beginnings seen the is let's really rates the been our same the earnings the to some what just you in the of tightening. eight little raised We're that questions. a Fed Thanks, Look, waiting is from all, extent Michael. the seen time, eight with of meaningful few the up some And before, the for of comments in a a We've China. rest bit starting world. the last sell-off first.

that pressure So with starting least happening risk of with which being oil, at and system time, the the wages, tariffs. a you at QE kind got same liquidity impacting is rates, margins it all ending the about under bit; concern to assets; leave or

catch of a that U.S. and up starting little bit shouldn't starting But bit All to expected, from it. we of we're in the as seat this an is kind rest overdo of with world. see a our the of the to adjustment

think impact us I nearly two years. of has the over is but all the S&P as up last the XX% people, recency on an

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So but color and happy offline more a it's of that gives little you a sense. take to bit

we're I that's transactions. not in two growth, you reason today interesting. ties talks to this are I'm into buying was see buying Mike, think going we're Americas it say, of just at this as in there when deployment, larger ways because the and when you're framework the those our and this It private the investments, often risk I'm in asked the some one actually and question you And different our about PE, this into Unilever transaction. Bill or into when entry lower thing look to in equity relative recent seeing of multiples and ago, we're investment question is many our is this a in reward complicated. asked because years complexity,

global going a a the mainframe evaluated we of in again, complexity. an industry is with investment series as we're Envision where operational industry, And have on to improvement with that. team together opportunities. BMC, We focused an it's be management

also active, the into opportunities. particularly bucket if reposition about help leaning to if we had areas to expertise we And you then focused corporate where – bring been think we'd on we're So can investment. point we've we're opportunities an to where complexity,

about a We in the one there Fiat; announced it's Marelli our going talked example through this Magneti Upfield Two And we've Calsonic, from acquired whether with out companies, pursuing this. category. we've examples So in as can fit transactions of PharMerica; again, is this well that acquire involving previously that parts Medical, large, businesses a all working Air which great Internet industry synergies. investment South is a Korea to in the week of M&A Japan. be activity of can diversified significant in Carve-outs, again, of companies companies, complicated. talked auto a earlier our which we corporation brands: be portfolio in about XXXX. portfolio pretty where real portfolio as it's can of through

like environment into an we're in, be and of those areas in the opportunity. where think examples leaning trying I are So and us see themes you'd

color. the Okay. for all Thanks

you. Thank

Thank you.

question comes next Our from Harris Chris Wells of Fargo.

Your line is open.

guys. Thanks,

portfolio Are guys the that not So are that, you've weakness your things to in weakness you're then And already your to in or you specifically? seemed share world. of seeing about guys you economically really little that that The what Asia aggregate. on you be any too hear mentioned weakness are sort touched if of perspectives for But bit. the we've Asia part those have able might the market any already say. Wondering ground much investments some of that to there? so seeing what in already to related seeing on in a what be to pretty indicating stock you're curious bad,

Chris. It's Thanks, Scott.

you. is of with all to countries, given a hard try Asia spin me think talk I a monolith as So really about the to quick do so kind let

more an we economy So extraordinary we've it's the we've Japan particularly because to few comfortable active be start in Japan. think near-term; And in selling it's corporates last been Japanese the because of opportunity amount seen non-core not subsidiaries. years the in has

really And post-carve-out large lot been to in to transaction, visible country. Healthcare now, is and that and doing, companies you've Panasonic we've the of from it carve-outs companies help done we've has in been us with our scale started And this around very seen, incorporate way a global. a so then, twice what activity those go

then and acquisition Panasonic Bayer's and just did announced this Craig Calsonic referenced an we just with So Diabetes transaction Germany, business Healthcare, Fiat. of we in

ability individual. expected, quite as we we're of focused M&A change non-core views and terms in opportunity in and in of out ahead just that is global we no on is recent mind, get think opportunity the subs operate in there's power has the cross-border China focused to the as as growth Keep we're starting, in question we and efficiencies active. to and scratch another think thousands to that historically opportunity. where of spending expected. no of to So country China And the Japan terms consumer the the of have growth is largely of the the the the Kind on surface place think, been the we so real, companies drive change. continue expansion in big

So if as in in been We've increasingly of at what we've it's late. technology. been you things look healthcare done, busy

China not in last companies we've those change course busy far of roll-ups, months; so over they're hospital fact, And in meaningful so performing. in how a And the particular. deployment tech quite in we the a year have seen XX had

be we as part in out so weaker causing us than in companies We've nothing but continue we've seen And And active XX what performance, real I over to got any of of China. that bit a call portfolio that concern. the world. the would a

continue The other opportunities safety, for safety, active is no trends that we market, change. another to food Australia see environmental be us. meaningful there, real

Asia, with growth market a change. lot Southeast meaningful for a no us, opportunity of

you. Thank Great.

you. Thank

you. Thank

from Cyprys. comes Michael question next Our

Your line is Morgan Stanley. – of open

Hey. Good morning. the question. Thanks for taking

are and seen manifesting around leverage. and concerns away of and from higher broadly stepping Just potentially in around terms industry. the buyers on growth use the tremendous CLOs active the just CLO across some market space market, you that But guys weakening are has concerns equity

past hear what how of evolved criteria underwriting XX on has to and the what months months your curious in over CLO your that, to hearing, context perspective perspective Thanks. what XX on you're you're your is Just the seeing, market? the

to take Happy it. Great.

you're right. So

be the in the to market U.S. CLO We active in continue and Europe. both

not use remember, CLOs. sheet the buyers balance much to our stepping of away we own Our a in our retain has equity around so equity because been portion to issue tend decent

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returns for I attractive of given the that cost. the and and right are work asset the CLOs spread the is terms point we're on liability math equity think how the new around bigger second focused thing creating does between now your returns in

think this been for example, busy year The been that. We've we CLOs our it become in a past we'll a recent We $X has change doesn't have bit U.S. expectation less long-term. of Europe. scale continue in thinking worth our the issuing billion very transitory it's to to that a over to $X so math but business And shift. of and terms our and billion is compelling very of ability the that do year

we've already just been on And doing maturity, XX a get out little you that. actually the CLO that to economics a has resets. more the you a you a actually been that a when get last XX color more actually of do Away And extend over reset refinancing lot from CLOs months and of the to we're so raising, raised. months little

set that about more business and principal have, I'm could talk years? Great. circling just the your where Thank to of out, you help you're see? it you. size, guys – you hoping on couple you And just opportunity If business over you see as follow-up you back a going us question, next building could us just your comment how where is today, this remind the the finance that just

take to Happy Great. that.

make us these on So finance PCOF the funded out Opportunities our sometimes Fund platform. Credit also which two we also principal pools, largely is BDC investments call Principal business for our we and is then of one

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work for a entity a finance companies created that that management where we'll and invest with balance create that finance flow of the for part and deal we've new enterprise. better equity, specialty the then team, create the flow XX deal and So sheet with company to work

UK; spaces, quite market, number And in construction been been auto a doing of to so lending the housing the from lending everything team we've different in Ireland very has so our active busy that there. across U.S., to and

quite just spent We working in time but it past haven't got talking a this the we lot think something out special. been beginning we've platform of away and we've the about building of

So it's we because this think that we be large to some that can active. we yet about continue over we've spaces the see other time grow opposed business attract we today, to continue to of scale has space, capital so a to and as quite talked

you. Thank Great.

Thank you.

to Larson the this call closing At you. turn time, Craig Thank would I like remarks. to for back

and you Okay. Thank call. joining our you, everybody for thank Norma,

out please follow-up If of you much. course, questions, to you us directly. have any so reach Thank

participation for your gentlemen, you thank and Ladies today's conference. in

Have day. a disconnect. wonderful may You