Ridgepost Capital, Inc ($RPC)

So let's get started here. I think this is our final session for today. So you're in the way of cocktail.

On the way of cocktail and air conditioning.

Exactly. Well, thanks, everyone, for staying with us. I'm Mike Cyprys, Equity Analyst covering brokers, asset managers and exchanges from Morgan Stanley Research. And I'm excited to welcome Luke Sarsfield, Chairman and CEO of Ridgepost Capital, also formerly known as P10, just for a little hope there for folks. Ridgepost Capital is a multi-asset class private market solution provider in the alternative asset management industry with over $30 billion of fee-paying assets under management. So Luke, thanks so much for joining us here today.

It's great to be here. We always love your conference. So thank you.

Great. So Ridgepost describes itself as a private market solution provider, which is a little bit different from the standard large-scale GP providers that we see across the marketplace, the KKRs, the Blackstones. So maybe just unpack what it means in practice to be a solution provider and where you sit in the broader alternative ecosystem.

Well, look, great question. And as you mentioned, we have $30-plus billion of fee-paying AUM. We operate in many of the most attractive segments of the private markets, including a swath of alternatives in private equity, a swath of alternatives in private credit and venture capital as well. And when we think about the franchise, we're really, really focused on the middle and lower middle market. That is our raison d'etre. So unlike some of the peers you mentioned who focus on the upper part of the market, we really focus on the middle and lower middle market. And I think what's important to understand about that part of the market is there's a lot less capital, but it's very opaque and it's often very hard to navigate if you're not really a deep expert in that. And we've been capturing data. We've done analytics. We have 20 years of data in that part of the market. We've literally been operating many of these businesses for multiple decades. And so that gives us a real unique and differentiated perspective to be able to drive insight on behalf of LP clients. And so when we talk about a solution provider, it's a client or a prospective client who says, look, I really think that there is alpha. I really think there is, as we sometimes call it, riches in the niches in that middle and lower middle market. But it's really hard for me to access that. And I need a partner who is broad-based, who can act across asset classes, who can act across strategies on my behalf to help me get that access, but also help me find kind of where the real opportunity sets are, because it's complicated, it's diffuse, it's opaque. It's not something you read about in the Wall Street Journal every day. And so you really need an expert who can help guide and deliver a solution and a result for you. And so our raison d'etre is to be that partner, whether you're a family office, whether you're a pension, whether you're a sovereign wealth fund to say, what's it -- what's your portfolio use case? How are you thinking about the middle market as part of that portfolio use case? And then we can be your partner to help craft a solution to address that use case. And so when we talk about ourselves as a solution provider, that's what we mean by the terminology.

And why would you say that matters more today than, say, a decade ago?

Yes. So I think what happened, right? I think there has really been -- as markets have gotten, I would say, more professionalized and more scaled. I think one of the things that happened was in the earlier days, 10 years ago of private markets, there was a real desire on behalf of many allocators to try to say, I want to find that unique niche solution provider, whether it's the leading manager in Southeast Asian private credit or the leading manager in the Seattle small-cap private equity market or whatever may be your area of expertise and try to build a portfolio and build expertise that way. And then I think what happened was a lot of these large allocators looked at their roster of managers. And it was pages and pages long of folks who were acting for them in this particular thing or that particular thing and they said, we just don't have time to manage all these counterparty relationships. This can't stand at some level. And so what we need to find is people that bring that depth of investment excellence, that consistent persistent alpha generation, but also kind of have an institutional scale to them, right? And so once I assess the platform and decide it's scaled, I don't have to worry about reunderwriting it, right? I don't have to worry about the kind of existential stability of that platform. And I think that's the raison d'etre for somebody like us, because when you look at it, we have world-class investment expertise, consistent persistent alpha generation in every one of the unique strategies that we execute on, on behalf of our clients. But we can package it and deliver it at an industrial scale and at a scale that's appropriate for a larger allocator of capital who might want to write a larger check as opposed to saying, well, look, we're raising a very small fund, and so we can only take a very small percentage in it. And so with that, I think, that shift in allocator psychology is something that I think has really sort of accrued to our benefit in many ways, and we exist to serve.

Now 5 years ago, I think many investors would have described Ridgepost as a collection of specialist boutiques, whereas today, you're increasingly presenting it as a unified solutions platform. So what's changed?

Well, I think that is -- I think what has changed is exactly that at some level. The foundational story of Ridgepost was that it was sort of an M&A rollup, right, or P10 at the time. To your point was that it was an M&A roll-up. And the beauty is they acquired generally best-in-class managers in whatever the asset class or whatever the area of investing focus was. And so obviously, I like to make a kind of glib one liner. I say that if you want to be a great asset manager, it really helps to be great at managing the assets. And it turns out that in all the different sort of areas that we serve, we have consistent persistent track records of alpha generation. In many cases, our earlier strategies founded in 1980. We have strategies that were founded in the early 2000s. So they've been doing this across cycles, across market environments, across all sorts of economic conditions, and they've been able to deliver that on a consistent persistent basis. But I would say just putting that together, it's a necessary but not sufficient condition. What do I mean by that? Well, Part of the power we're trying to harness is the power of the platform, the power of the combined, what we can bring to clients, what we can bring to each of our strategies, how we can engage more broadly and more comprehensively around what we do. How do we bring all the incredible data together that we have across all the various sundry strategies and really leverage that to make us even better investors to bring even better insight on behalf of clients. And so we embarked when I got here on sort of a very dedicated strategy of basically saying the thing that has always made our investing teams great is they're investing autonomy. And we want them to preserve that for all time. We never want to impair or impinge on that investing autonomy. But on most other things, right, whether it's distribution, whether it's human capital management, whether it's data and technology and cybersecurity, whether it's legal and compliance, whether it's vendor management, there's a lot of benefit to acting collectively, to leveraging economies of scale, to sharing best practices. And so how do we integrate all of that without upsetting that kind of app la carte, which is the core of it, which is this great investing autonomy that yields the great results. And so we've built out all these functions. The rebrand to your point, from P10 to Ridgepost was an important component of that as we just thought about how we talk about ourselves. And so take our largest strategy is our RCP advisers. And for many, many years, RCP advisers went to market as surprisingly, RCP advisers, right? Now if you were at their latest AGM, which was a few weeks ago, you would see the branding is RCP Advisors, a RidgePost Capital strategy. And so in everything we do, we're now talking about the power of the collective. We're talking about that in terms of how we brand ourselves, how we hold ourselves out to clients, but most importantly, how we operate many of these core shared service functions every day. And I would say probably most important for us are the data and technology function and the distribution function.

On that latter point around adding by Ridgepost Capital sort of a by line, would you envision adding that across the other...

I was using that as a for instance, it will be everywhere, right? So it will be across all of our strategies in the reasonable near term.

Okay. Pivoting here to the macro. Headlines this year are focused on software disruption, private credit concerns. I saw some of the wealth channel volatility, geopolitical, it goes on and on. How exposed is Ridgepost to these themes? And where do you think the market is getting the start wrong?

Well, look, here's the really good news. Let's take some of those in turn. The answer is little to none in terms of our exposure to most of those themes, right? And so take them in turn and some of the volatility, right? People talk about, to your point, private credit was a thing and continues to be an area of concern and disruption, right? And so first of all, I start with our private credit portfolio, right? And it's only about 25% of our overall assets, even pro forma for the Stellus transaction that we're hoping to close here soon. But I think importantly is how we go to market. And the vast majority of those strategies, we're going to market in traditional delayed draw closed-end vehicles. right? So this whole concern about what is going on with redemptions and where goes the retail investor relative to others, it just doesn't have a lot of impact on us. And then I'll just give you another anecdote. In the one place that we do or that we will shortly, which is in Stellus, they have relatively small evergreen vehicle. We've all seen these rumored redemption rates of low double digits that many others are talking about. In the last 2 quarters, their redemption requests were 2.9% and 3.0%, right? And so we just have not seen that manifest itself in our portfolio in the same way. You mentioned software. Obviously, that's a concern for a lot when we look at our portfolio. And remember, we do have a venture portfolio, and that venture portfolio is leaning very, very heavily into AI and next-gen technologies. But when you take that aside and you look at the rest of our portfolio, our software exposure is less than 10%. Stellus is private credit software exposure is less than 8%. But then the other thing I would say is, remember the middle market. When we're talking about our software exposure, this is not the large enterprise software and solution sort of SaaS thing that everybody else is worried about. These are very niche applications for regular way sort of middle market operating businesses. You talked about -- you mentioned kind of the geopolitics and the upset with geopolitics. Obviously, it's a concern. It's something we're monitoring closely. But when we look at our portfolio, given our middle market focus, we just don't have broad-based exposure to things that generally will be disruptive. Energy inputs are not a massive driver of any of our portfolio performance. And then even your point on retail, right, I know in certain pockets, there have been concerns around retail. About 1/3 -- a little more than 1/3 of our LP base is what you would call ultra-high net worth. But it generally has an institutional bent, because it tends to be either very ultra-high net worth investing in traditional closed-end vehicles, so more of an institutional bent or high net worth coming in through some sort of aggregator vehicle that really has kind of more of an institutional flavor to it. And so in every way, we feel great about our portfolio. If you look at our results, by the way, in the first quarter, I think they bear that out. And you hope over time, again, I can't perfectly predict where markets will go, but you hope over time that investors understand that.

And in your conversations with institutional clients, how would you describe the mood today? And are allocations simply just more constrained? Are they simply becoming more selective the LPs in terms of who they back? And how much of the current environment is an allocation issue versus more of a liquidity issue?

Yes. We're not seeing what you would call an allocation issue in the traditional sense. One of the benefits we have, I think, and any other large diversified manager will have is we have multiple products that are kind of in the market at any given time, right? At any point in time, we have 15 to 20 or more products in the market, right? And so you hope that with a diversified product base, you will find products that are resonating with clients, and we find that to be the case. I mentioned our venture solution business before, it's called TrueBridge. Within TrueBridge, they're out raising a number of different funds. They have a secondaries offering. They have a direct offering. They have their main flagship fund. And you can imagine, in light of what's going on in the world, there is a lot of receptivity to venture right now, right? And so that has seen massive uptake, and it was one of the big drivers in our strong first quarter kind of distribution results. Similarly, we're out in the market with some credit products. NAV lending is one that seems to have a lot of resonance. We have a number of secondaries products. Secondaries have a lot of resonance right now in that sort of vein of liquidity that you mentioned. And GP stakes. We're out with our GP stakes product, Vintage III, and that has a lot of resonance. And so I think, certainly, if you're in a, what I would call a core private equity business, right, which we are not in generally. But if you were in a core private equity business, I would imagine that was your flagship product and you went out to try to raise a fund right now and you had sort of the average track record of DPI success that seems to sort of be prevalent right now, it might be a little harder to raise that fund, I would imagine. But that's not our experience because that's not our product portfolio.

On fundraising more broadly, I think you've said it's not going to be linear, but the recent pace has been quite robust.

Knock on what?

And I think you've provided some near-term guide of $10 billion growth in fee-paying AUM.

Over the next 2 years.

Over the next 2 years, '26 and '27, aspirations for $50 billion of fee-paying by the end of '29. That was from your Investor Day number a year ago.

Can we stand by that? I will reiterate again here today.

Already said. Making news. So to what extent might there be upside to those targets given the strong growth we've seen in the first quarter? And where would you say are some of the biggest drivers of capital formation that you're seeing across the platform?

Yes. So look, I would say we hope -- we work hard every day to execute, right? And that's to execute on behalf of clients, but that's also to execute on behalf of our shareholders, right? And so we want to do right by our clients, and we feel like if we do that, good things will happen for our stakeholders and in particular, for our shareholders. And I think we've seen that in the last period of time. I would say, right, we have when we go to market, we have expectations for how large funds will be. Some of our recent experience, if you look last year, we actually got passed the stated cover number and we have the hard caps. If we're so fortunate to be able to continue to do that, I think that could well yield upside for us. Secondly is we're always trying to think about new product opportunities. A great example of that. We bought Qualitas, which is a private equity business in Europe, which is kind of the analog to RCP advisors, which I mentioned. And it turned out there was demand for a Qualitas distributed and wrapped product in Europe, but with RCP mixology inside it. And so we launched that product and the early client feedback is very good. And my guess is there are multiple other kind of client intersections and things we can do that will be client enhancing, but will also help us potentially achieve upside. And then I think the big one and something we've talked a lot about is how can we do more with existing clients and how can we broaden our client base. And so we talked about at Investor Day, you'll remember this, that less than 5% of our clients, of our 5,000 clients were clients across multiple strategies. The good news is we've already made a lot of progress on that. One of the thing we talked about in the last earnings call is more than 10%, close to 15% of the capital we've raised since Investor Day has been from a client of one strategy investing into another strategy. But I still think there's a big growth opportunity for us. And if we execute on it right, I think it creates upside. And then the last one is doing more with some new clients. And we talked last year, we had achieved one really big SMA with a large sovereign wealth fund. This year, we talked about within our TrueBridge Venture strategy in the first quarter, they had some success with some SMAs. And so I think to the extent we can bring that SMA expertise to more clients who are looking for the investment acumen that we bring to the table, that's another real driver of upside.

I want to dig in on the cross-sell, and that's quite encouraging that statistic you just shared there that near 15% since Investor Day on the capital raise. I guess what have you learned about client behavior as you're cross-selling additional strategies? And what are some of the hurdles that you may need to overcome as you try and take that cross-sell even higher?

I wish I could tell you the impediment to it was client driven. It was actually not. The impediment to it was how we had captured data, how we had organized ourselves and some of this branding conversation we had, how we approach the client. And so first thing was when I got there and I hired somebody to come in as our Head of Global Client Solutions, we discovered that across the different strategies, it was -- we could figure out who the common clients were, but it was a very intensive exercise, because we had 7 different at the time, CRM systems that each coded the clients differently. So you literally had to take it all download it into Excel and literally do like a lookup to figure out who the clients are. We went back. We retrofit, used AI, used a lot of technology, great new CTO team. We retrofit all the technology, so that now we have a single Ridgepost-wide data lake, codes all the clients, looks across strategies. We know who our clients are now, step 1. Step 2 was then how do we think about getting things in front of them that are most relevant, right? So it doesn't feel like we're just product pushers, but we're really being thoughtful and creative about what they're trying to accomplish. So again, we can use data. We're really good with data. So what we did was we looked at all of our clients with one strategy, which of the competitors of another one of our strategies had they become a client of? And then we understood, okay, you're a client of ours in Strategy X, but instead of investing in our strategy Y, you're investing in somebody else's analog to strategy Y. So maybe we ought to talk to you about our strategy why, right? And so then we had that list. It was a targeted list. So it wasn't like, hey, we're throwing stuff against the wall to see what sticks. We're really doing it in a customized way that reflects our understanding of your business and of your investing needs. And that was really important. The third thing was we needed to create kind of this culture of coordination and collaboration. And so we revamped sort of how we talked about it. We talk about a one Ridgepost Capital approach. We've augmented incentive systems to reward collaboration, to reward sort of acting in concert and acting for the great of the whole. But then -- and this was this branding discussion we were talking about before. When we actually started approaching clients, it was interesting. You're concerned that the piece of feedback you're going to get is, oh, yes, we thought about that, but we decided to go with your competitor instead for the following reasons. The feedback we actually got is we didn't even know that, that strategy was part of the same enterprise as that's really interesting. That's a new fact. And so tell us more. And so on the one hand, frustrating. On the other hand, heartening in many ways, right? And so part of the thrust of the rebrand is to do exactly that, right, as we start talking about the fact that we're all strategies of Ridgepost Capital that will build client knowledge, client awareness, client affiliation and will able to -- it will enable us to accelerate this deepening and broadening of the client relationships. And so that's what we're up to. I feel very optimistic about our ability to do this. We've also, by the way, continued to, in a targeted but appropriate way, invest in our sort of core distribution client-facing function, and we've got some great folks out there who -- this is what they do all day. I feel very good about our ability to execute on this.

Now ultimately, these clients are coming in for performance, and that's what's going to drive.

We always do exact.

And I like your comment earlier around the riches in the ...

Riches in the niches.

I love that. So question is, what is the excess return that these investors are looking for? What's needed from the private markets to drive investors to come in, particularly given the DPI limited liquidity experience over recent years? And to what extent has that impacted that excess return expectation?

Yes. Look, and to your point, right, the reason you take illiquidity is that you think you're going to generate a superior risk-adjusted return. Otherwise, why would you do that? And to your point, probably unsaid point, it's gotten harder in a world where public markets, at least sort of the headline, maybe not under the surface, but at the headline, probably driven a lot by tech and Mag 7 and some other things have really ripped higher, right? And so that's been something. So look, I think it's really important to have conversations and understand what clients' returns expectations are, right? Some of them think about it much more in a relative fashion. Some of them think about it much more in an absolute fashion, right? Like I have to pay my pensioners X and to achieve X, this is the return I need, right? And so I'm threshold driven at some level. The one interesting thing we look at when you think about excess returns is why people should be in the middle market relative to the upper part of the market. And if you look across time, and obviously, there's a distribution. And so great -- there are going to be great managers who outperform and there are going to be many who underperform. But at the midpoint, when you look at the middle market relative to the upper market over the last number of decades, at the median, the middle market has outperformed by about 200 basis points on average, the upper part of the market in terms of returns, right, meaningful outperformance. And so I think that is one of the reasons why -- and by the way, we aspire to do better than just the average return. But if you just were to be wildly average, you would do better, all things equal, being in the middle market relative to the upper part of the market and then if you can add real manager selection alpha on top of that, obviously, you continue to do better still. And the other interesting phenomenon is if you look at the distribution returns in the middle market, there's a much higher probability of sort of finding those first quartile returns in the middle market. It tends to skew a little bit if you can find those best-in-breed managers. And so when you think about that, I actually think that's why allocators are increasingly coming to us and saying, okay, like I sort of started -- I started with whatever it was 80-20 or 75-25 public versus private. But now I'm really thinking about what are the components of that 20 or 25. And how do I think about that, not just at the macro level, but at a more targeted level. And so yes, I should have some private equity. I should have some private credit. I should have some real assets. But I think increasingly, you're seeing people think on other metrics like geography and like things size. And so I think that's a real benefit, because unlike in the upper part of the market where we can point to a number of great institutions who can probably execute on your behalf if you're an LP. I think that number is much smaller if you want sort of a diversified, scaled professionalized manager in the middle market, and we can be that solution provider.

And as you look out from here, how do you think about the durability of that excess return, whether it's the middle market relative to the larger that 200 or relative to public markets? And how do you think the components of that excess return may evolve over the next decade versus the prior couple of decades?

Yes. I mean, look, at the core, the reason it has existed has been like everything else, it's sort of simple economics, supply and demand, right? And so what you've had in the upper part of the market, and we've looked at this, when you look at companies in the upper part of the market, that's about 15% of the companies by count, you define it as companies with greater than $250 million of revenue. But somewhere between 80% and 85% of the private capital deployed goes against that 15% of the opportunities. So what's the corollary? In the middle and lower middle market, companies between, say, $30 million and $250 million of revenues. By the way, that's about 80% of the companies that exist, and it's about 15% or 20% of the capital that goes against those. Why is that? One, I think it's harder in many ways, right? The upper part of the market, it's very visible. It's very transparent. There's a lot of great data sources you can analyze. The financing packages are public. Everything is well known, right? And so if you want to educate yourself in that part of the market, you can do so in a pretty comprehensive way. In our part of the market, you're generally buying something that's private. You're generally buying it from the founder. You're generally buying it at some very reasonable multiple. By the way, entry multiples in our part of the market tend to be high single digits versus low mid-double digits at the upper part of the market. Leverage packages are much more moderate in our part of the market. 3, 4, 5x versus 6, 7, 8x in the upper part of the market. Their deals generally much less intermediated, right? You generally don't have the Morgan Stanleys of the world retained to sell in the middle market. They're focused on the upper part of the market, and they do a really good job extracting that value. Here, it's either direct or maybe it's a business broker. And so less competition, lower value, you're buying from the founder, so the opportunity to professionalize is there, and you're using less leverage. So you're not winding the capital structure is tight. So when you put that all together, that advantage exists. So then the question is what might erode that advantage? Well, obviously, more capital and new entrants would be the thing that would erode that advantage. But the benefit we have and we will continue to have, as I talked about, is we've been collecting data in this part of the market for the last 20 years. So we can tell you -- if you want to look at health care services buyouts in the Southeast in 2008, we can tell you who did them. We can tell you what multiples were paid. We can tell you who was the lead partner on the deal, what was the leverage level, what was the growth, what was the margin. That's just invaluable to be able to drive that, right? And so in 10 or 20 years, could somebody else create that? Conceivably, they're willing to make the investment. But we have -- and by the way, we're still augmenting our data set and accelerating our data set. And so we have not just like a head start, we have a multi-decade head start in this part of the market. And I think that's why we view it as so defensible.

That's a great segue to my next question on data and also AI. I guess you mentioned data. It's helping drive sourcing, underwriting, client development. You've mentioned that in the past. What would you say is your most valuable data set today? And how might you quantify the sort of tangible impact that it's having on improving outcomes?

I would bifurcate our data because I'll answer your question, but I would bifurcate it. I think there is what I would call client and LP data and then there is investing data, right? And I think you have to think of them as 2 different things. And I'm not going to say one is more valuable than the other. If you're trying to sort of partner with a client, that LP data is pretty valuable and the investing data, maybe a little less so in the first instance. But if you're trying to generate consistent persistent alpha, that investing data is pretty darn important because that's the secret sauce. And as I said, we have hundreds of thousands of data points going back 20 years. We have it in the U.S. also now through the acquisition of Qualitas, we have about 10 years' worth in Europe. They had a very similar data-centric philosophy to RCP in the U.S. and to our other strategies in the U.S. And so what does it do? Number one, it makes us better investors because we can do pattern recognition, right? I mean when people talk about AI and all these models and doing it, we use all those to power and inform us. But ultimately, the human judgment, right? We've had professionals who have been doing this 20, 30, 40 years. Those professionals informed by that data are the category killer combination, right? And so that's the first thing we think a lot about. The second thing we think a lot about is it actually makes us -- what's interesting is we often have GPs we work with invest alongside come to us and say, "Hey, we're looking at this deal". Here are the parameters of the deal. Can you actually put the deal through your algorithm with all your data and tell us how will the deal do in this kind of macro environment. And we've -- that makes us a really attractive partner, but it also helps us drive better investment performance in our underlying managers, and that's really compelling. Where I would say it really helps you, it's not necessarily going to help you decide this is a fifth percentile deal versus a seventh percentile deal. It's really going to help you avoid the 65th, the 75th, the 85th percentile deals, right? We can really derisk that tail, and we know what's going to work. And so I think that, that data and that ability to use the data in that way is really central to what we do. Because to your point, you've got to be a great investor. You've got to generate alpha. And the only way you do that consistently and persistently over a period of decades, you have to have that insight edge, and we have that insight edge to the data.

Let's turn to Stellus. The acquisition is expected to close this year.

Midyear.

Midyear.

Hopefully soon.

What made that business fit strategically for Ridgepost? And does it change the calculus, the types of firms you might consider to acquire going forward?

So I'll answer the second question first. No, it does not change the calculus. When we did our Investor Day, we laid out a road map of the kind of things we would look at from an M&A perspective, and we identified 3 areas. And by the way, our first 2 deals that we've done and have both been very much in line with what we laid out. Number one, we said we would look for international analogs of our U.S. strategies. So that was Qualitas was right on strategy, because that's an international analog of our U.S. private equity strategy. The second thing we said is we think there's a real opportunity in middle market private credit, and we would look for different parts of that spectrum. We talked about direct lending. We talked about asset-based lending. We talked about distressed and opportunistic. So Stellus, middle market, private credit, direct lending, exactly on the road map that we laid out. And the third thing we talked about that we haven't done anything in yet is real assets, middle market focused, again, real estate infrastructure. But so far, our M&A deals have been exactly on the road map that we talked about. So -- but then your obvious question will be why? Why did you design the road map that way? And so one of the things we thought a lot about in middle market private credit is the opportunity to leverage the existing strategies and the existing set of relationships we have on our platform to be able to make whoever the private credit provider was better, increase their sourcing flow, top of the funnel, expanded expansion and also obviously allow us to go deeper with clients. And so when you look at sort of how we approached the private equity business, right, we started as a fund of funds. And so we got to know all the great middle market private equity firms. And then the first thing that happened was because we got to know them and we were one of the key investors, they would show us deal flow. And they would always show us or try to show us 3 kinds of deal flow. The first kind was co-investments, right, the most obvious. They would do a deal, they would say, would you like to look at it? We started, we used to put that in the core fund, and then we said we're seeing some of this flow. We actually need to raise -- we need to raise a co-investment strategy. We've done that very successfully. Last year, we raised our fifth co-investment fund. It was $1 billion. The second thing we saw, secondaries flow, right, because people want to be in the business with people they know and trust. And so they wanted to show us their secondary flow. Again, it got to the point where we were seeing so much secondary flow that we started raising the family. We call it SOF to invest in that. Last year, we raised SOF V, again, $1 billion in a quarter, very successful. The third thing that all of the GPs in our ecosystem would always try to bring to us was whenever a portfolio company was acquired, they would say, "Hey, we just did this deal, would you like to look at the credit? We would say, because we were coming at it through an equity lens historically, thanks, but no thanks, right? But there's a lot of great folks in the world. But we always knew that our ability to turn that dial to really source a ton of stuff would be really profound if we could find the right team and the right platform to do it behind. So we spent a lot of time thinking about who was the best at this, who is just an absolute world-class team. And we kicked a lot of hires. And ultimately, we spent more than a year getting to know the team at Stellus. And we just got a tremendous amount of conviction based on their track record, like all of our track records is extraordinary in terms of what they've done. So they're great investors. They've been at it a long time. These guys were investing together at D.E. Shaw and then they've been doing this together for 29 and 20 years. And then we saw the cultural simpatico, right? They had the shared vision. They thought about the world we did. They had this singular focus on the middle market, as we did. So culturally and strategically, we were fully aligned. And then we thought about this opportunity to really unlock this massive sourcing opportunity given the centrality we have in this middle market GP stakes ecosystem. And when we put that all together, we just thought the deal was incredibly strategic, and we're really, really excited about what we're going to do together.

So we're just about up on time. So final question here in the last 30, 60 seconds. We look out over the next 5 years, which parts of Ridgepost have the greatest chance to scale disproportionately from here? And what will surprise investors most about Ridgepost in 5 years?

Look, I think a lot of our businesses have opportunity to scale in a big way. I talked about sort of what's going on in the venture ecosystem. I talked about what's going on in terms of secondaries. And I think we can do much. I think that is a nascent market that is very fast growing. I know, I'm not the first to observe that. But we have, again, this privileged real estate in middle market secondaries. And I think as that market grows, we're going to be a massive beneficiary of it. I think about so many of the businesses that I would say in one way or another are providing GP solutions, right? So maybe you need an investor, we can do that, come invest in your fund. Maybe you need an equity capital provider. We can do that through our GP stakes business. Maybe you need some credit, we can do that through NAV lending or through other lines. I could imagine a whole kind of GP financing solutions business. And that's just with our existing businesses, right? And then you think about that M&A road map that I laid out and all that still exists. We talked about analogs of our U.S. strategies internationally. We did one deal in one part in one place, right? There's a lot of -- the world is a pretty big place. There's a lot of opportunities, a lot of white space in Europe, a lot of white space in Asia. We participate in none of it. So I think that global expansion opportunity to leverage what we do, but broaden it geographically to clients is huge. I'm excited about that. And by the way, all the dynamics we talked about in the U.S. middle and lower middle market, they're the same or even more amplified in the European and Asian middle and lower middle market as we've looked at it. So that's a really big opportunity. And then I think the other thing that's really important is we've put the team in place to execute, and we've driven this culture, as I said, of one Ridgepost. So I think what hopefully people will take away is that -- we're no longer just a collection of sort of boutique managers who are really great at what they do. We are an integrated comprehensive category killer platform in the middle and lower middle market, and we have the opportunity to execute against that. And I think we're decades ahead of anybody else who might try to challenge that.

I'm very exciting. I'm afraid -- very excited. Thanks so much Luke.

Thanks so much for having me. Really appreciate it. Thank you.