Release Date: February 12, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: As we look ahead to the next couple of quarters, where is your sales team focusing? What are the bigger funds in the market, and which are most important for hitting your $4 billion target? A: Luke Sarsfield, CEO: We expect to have 19 funds in the market at different times in 2025, including four from Qualitas. Our focus includes RCP strategies like co-investment, secondary, and primary fund-of-funds, as well as TrueBridge's blockchain and seed micro strategies. Five Points will raise a new credit strategy, and Bonaccord will have updates later in the year. Our platform's diversity is a key strength, and we're excited about 2025's momentum.
Q: Can you update us on your goals to broaden across new vehicles and channels, and the investments planned for 2025? Also, any updates on SMA fundraising? A: Luke Sarsfield, CEO: We're focused on meeting clients' needs with diverse product offerings and appropriate wrappers, including SMAs and pooled vehicles. Under Sarita's leadership, we're exploring various client access methods, including RIAs and high net worth channels. While we won't disclose product-specific details quarterly, we'll highlight significant progress, especially regarding SMAs, as we advance in 2025.
Q: What does the M&A pipeline look like for 2025, and how are initiatives under Arjay progressing? A: Luke Sarsfield, CEO: We've developed a disciplined, programmatic approach to M&A, maintaining a robust pipeline. Feedback from potential partners is positive, and we're seen as an attractive partner. Arjay Jensen, EVP, Head of Strategy and M&A, adds that we're actively working on opportunities in private credit, direct lending, and asset-backed areas, with Qualitas opening up European interest.
Q: Why is the average fee rate expected to decrease from 107 to 103 basis points in 2025? A: Amanda Coussens, CFO: Catch-up fees in 2024 were elevated due to Bonaccord II's extraordinary results, which won't repeat. We expect catch-up fees of $4-5 million in 2025, with the core fee rate stabilizing at 103 basis points, consistent with historical levels.
Q: Can you elaborate on the FRE margin outlook for 2025 and beyond? A: Luke Sarsfield, CEO: Our guidance remains unchanged, with core FRE margins in the mid-40s in the near term, expanding to 50% in the future. Catch-up fees in 2024 temporarily boosted margins, but core business margins are expected to remain stable. Investments in distribution and a mix shift in strategies will impact margins, with Qualitas having a modest downward effect factored into guidance.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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