StepStone Group Inc. (STEP) Earnings Call Transcript & Summary

Good morning. Thank you all for being here today. I'm Seth Weiss Head of Investor relations for StepStone. We're thrilled to present to you all today. Since our public offering nearly 3 years ago, the common themes in our discussions with investors include the power of our scale, the breadth of our platform and the wide geographic reach of our firm. Today, you're going to see that all firsthand. For today's event, we've gathered an incredible roster of executives from New York, La Jolla, San Francisco; Charlotte; Zurich, Switzerland; and Sydney, Australia. I'd like to walk you through the agenda quickly of the day. First, Scott Hart, our CEO; and Mike McCabe, our Head of Strategy, will present an overview of StepStone and our role in the private market ecosystem and our performance and growth drivers. Then you're going to hear from the heads of each of our asset classes. Scott, in private equity and venture capital, Marcel Schindler in private debt, Jeff Giller, in Real Estate and James O'Leary in infrastructure. After a short break, we're going to shift to our data and technology and private wealth platforms. You're going to hear from Tom Keck, one of our founding partners and our Head of Research, and Tom Sittema, the Executive Chairman of StepStone Private Wealth. We're going to conclude with Q&A, where you'll have an opportunity to ask questions of our senior leadership team and the heads of each business. For those of you on the webcast, you'll have an opportunity to ask a question through the virtual tool. We expect the program to end by about 1:00 today, followed by networking and lunch with the team for those that are here in the room. As usual, our comments may contain some forward-looking statements, and you could read those on the disclosure on Page 2. And with that, I'm pleased to turn it over to our CEO, Scott Hart.

Thank you, Seth, and good morning, everyone. As Seth mentioned, my name is Scott Hart, CEO and Head of Private Equity here at StepStone. And on behalf of all of us at StepStone, I wanted to echo some of Seth's comments and say welcome to our 2023 Investor Day, and thank you for taking the time out of your day to spend the next couple of hours with us here at StepStone. It really is hard to believe that it's been almost 3 years since our IPO in September of 2020. And while we've had the opportunity to check in with many of you from quarter-to-quarter since that time, today is really the first day since the IPO that we really had the opportunity to step back, take a deeper dive into the business, really focusing on the long-term potential of the business, which as many of you know, is how we tend to think about running the business here at StepStone. And so we're excited about today for a number of different reasons, not only because we love to tell the StepStone story, but for a few different reasons. One, as Seth just mentioned, you're going to have the opportunity today to hear directly from each of our asset class heads and a number of the key leaders around the firm. Given the importance of our large senior experienced teams to our approach as well as our success, I think, incredibly helpful that you'll have the opportunity to hear from them directly. Second, Mike is going to give you a bit of an update on the progress we've made since our IPO, 3 years ago, and provide a bit of a reminder of the powerful growth algorithm operating here at StepStone. And finally, we're going to spend quite a bit of time looking forward to the future and where we expect some of our future growth to come from. And as a result, this is a slide and a framework that you're going to see us come back to repeatedly throughout the course of the day, really focusing on the market opportunity as we see it, focusing on the StepStone advantages that help position us to win. And when you put those 2 things together, really talking about the drivers of our growth on a go-forward basis. But before we get there, we thought the most appropriate way to start the day was by focusing on our mission. And our mission at StepStone is to be the trusted partner of choice for private market solutions globally. That's not something we've talked about extensively with you, our public market investors. But you can imagine it's something that we talk about all the time internally at StepStone. It's something that we increasingly talk about with our clients as well. And so as we prepare today to dive more deeply into the business to discuss a number of the strategic decisions that we've made over time and to give you a sense for where the business is going in the future, we thought it important that you had an understanding of the lens that we look through when we tend to make strategic decisions here at StepStone. And so whether it was the decision to focus on providing solutions, whether it's in the form of customized portfolios built for our clients or specific products that were designed to meet the needs of an entire investor class, whether it was the focus on building out a global platform with 25 offices around the world today, building out a leading private wealth platform, acquiring a firm like Greenspring to create the clear market leader in venture capital and growth equity solutions here at private equity or the decision to control our own destiny as it relates to our data and technology platform. All of these decisions can be tied back to our goal of building a platform that is viewed as a trusted partner of choice for private market solutions globally. Now if we take a look at the private market, it's been a pretty good place to be over the last 15 years. You can see 12% annualized growth since 2007. The asset class has gone from roughly $2 trillion of AUM at the time of our founding in 2007 to nearly $12 trillion of AUM today. And that growth is expected to continue in the low double-digit rate on a go-forward basis here. Now while private equity and venture capital continue to represent the largest of the private markets asset classes, we've also seen tremendous growth in infrastructure, private credit and real estate. And each of those asset classes today represent roughly $1 trillion to $1.5 trillion asset classes, remarkably similar to the size of the private equity asset class when we got our start back in 2007. And so what you're left with -- I'm sorry. The private markets have not only grown in terms of the size of the AUM, but they've grown in terms of the percent of the allocations that they are representing within portfolios today. And as you can see on the slide here, they've grown in terms of complexity, with a significant increase in the number of managers and proliferation in the number of strategies, sub-strategies and managers operating across the private markets. Much of that growth, approximately half has come from strategies outside of traditional venture capital and buyout strategies. And much of that growth, again, approximately half has come from outside of the U.S., making this an increasingly global asset class today. And so what you're left with is not only a private markets asset class that is focused on maximizing returns. Instead, we've got a range of strategies representing the entire risk and return spectrum from private credit through to venture capital and really everything in between. And on top of that, what you can see on the slide is these private market strategies have outperformed their public market equivalents now over an extended period of time. And one of the things driving that outperformance is what we refer to as the asymmetric risk capture of the private markets. You can imagine this is something we've been talking extensively to our clients about not only during COVID and the more recent tech-driven pullback but over an extended period of time here. And the example I'm going to walk through on the slide here is a private equity specific example, but I suspect you'll hear more about this asymmetric risk return capture from Marcel and others throughout the course of the day. So to walk you through the analysis on the slide here, if we look back at the dot-com bubble, the global financial crisis, COVID or the more recent tech pullback, what you see is that if you measure the peak-to-trough decline in the public equity markets and then compare that to what was experienced in the private equity market, the private equity market has captured only a fraction of the downside. For example, in the global financial crisis, the private equity markets captured only about 61% of the public market drawdown. Now while some will raise questions as to the appropriateness of private market valuations, whether they might be inflated, there's a couple of different ways that we look at that, one of which is outlined on the page here. And that is, if you look at the subsequent recovery and the trough to peak recovery on an annualized basis, what you see is that private equity capture is 100% or more of the related upside not what you would expect to see if those valuations were inflated. The other way that we tend to look at this question is to evaluate the actual exits and realizations that we've seen across the private equity market and how they compare to their prior holding values. And our most recent analysis, which we published in the recent white paper would suggest that when compared to the holding value 3 quarters before ultimate realization, you saw something like a 20% plus uplift in the ultimate realization value. So there's been tremendous interest in the private markets asset classes really driven by the return potential and the outperformance that I just described, but there's also a number of distinct challenges associated with investing in the private markets, whether that is access, how do you go about identifying the right managers and even if you do identify the right managers, do you have access to those that are in the greatest demand. The cost, it's an expensive asset class, and there have only been a couple of different ways that if you merge as ways to bring down your weighted average fees across your private markets portfolio, namely scale-driven discounts and reduce fee and reduce carry co-investment opportunities. Information, unlike the public markets, data is not widely available to anyone who wants it. It's available to those who are participating in the private markets asset class. Expertise, given the proliferation and strategies and managers that I just referenced, do you have the expertise and the range of different strategies to be able to cover increasingly complex private markets landscape. And finally, liquidity, when we think about a long-term asset class, do you have the capabilities to properly forecast your liquidity or the tools to manage your liquidity over time. And finally, resources. And interestingly, if you look at the StepStone private equity clients today, on average, our clients have 5 professionals dedicated to the private equity asset class. And those professionals typically sit in a single office location. And so how do you go about covering an increasingly complex private markets landscape with limited resources. Well, if you were to have asked that question 15 years ago around the time that StepStone was founded, and you came to the conclusion that you wanted to or were required to partner with an outside third party, there are really 2 choices available to you at the time, one, to work with a consultant and two, to work with a fund of funds. And while there were merits to both approaches that the private markets were growing in size, growing in terms of allocations as LPs were growing in terms of their sophistication, we started to recognize the limitations associated with certain of these approaches. One, when we think about the one-size-fits-all approach associated with the fund of funds, what that meant to us was that it was less likely that LPs were going to outsource the entirety of their private markets portfolio to a third party. Instead, our view is that fund of funds would become more relevant for targeted, specialized strategies like venture capital, small buyouts, maybe emerging markets-focused allocations. And consultants generally lack the specialization that was going to be required or the carried interest and economics to attract experienced investment professionals the way that we've been able to do here at StepStone. And so when we put all that together back in 2007, we saw an opportunity to really form a platform that was specialized in the private markets that would provide customized solutions. Again, as I said earlier, whether in the form of portfolios that were specifically designed to meet the needs of our clients or products that were designed specifically to meet the needs of an entire class of investors, we would look to utilize all of the tools available to us as a private market investor. We would operate on a global scale and take a very data and technology-focused approach to our business. And so let's go through each of those in a bit more detail as we talk through again some of the founding principles and the key strategic decisions that we've made at StepStone over time, starting with our approach of focusing on primary fund investments, secondaries and co-investments, in a single portfolio. This has really been the approach since day 1 at StepStone. We really saw these strategies as highly synergistic from both an investment sourcing and a due diligence standpoint. This is something that you're going to hear about repeatedly throughout the course of the day. The importance of our being a large primary allocator of capital in terms of driving co-investment and secondary deal flow. But there's also a feedback loop in the sense that what you learned during your primary due diligence can feed into your decision-making from a co-investment and a secondary standpoint, and vice versa. What you learn during that secondary and co-investment due diligence can be fed back into your primary underwriting. In addition to the synergies that exist between these strategies, we also view them as incredibly valuable portfolio construction tools. And whether you were helping a client that is new to the asset class to build a portfolio and get exposure to prior vintage years that they had missed out on or whether they're helping them to mitigate the J curve in the early years through the purchase of secondary interest at a discount or whether you're working with a client that has a more mature portfolio is now looking for ways to average down their overall fee burn across the portfolio, again, typically through no fee, no carry or reduced fee, reduced carry co-investment opportunities. And so our ability to combine these strategies in a single portfolio has been key to our ability to deliver outperformance for our clients over time. As you're going to hear later on in the day, it's also key to our ability to deliver diversified solutions primarily for the private wealth landscape as you think about some of the initial products that we have designed in SPRIM and SPRING. Now when I think about what it takes to be a successful solutions provider, they're really 3 things in my mind. One is having a comprehensive private markets tool box, at least part of which I've just described, 2 is having a listen first mentality so that we understand the challenges and the problems that we're helping our clients to address. And 3 is having a willingness and an ability to work with our clients in whatever way works best for them. And so what you can see on this page is that in our case, that includes separately managed accounts, commingled funds, advisory and data services as well as portfolio analytics and reporting. And if I start with separately managed accounts, as a reminder, these are essentially funds that are designed for a single client, they can evolve and include any combination of funds, secondaries and co-investments that can be customized to target specific strategies. And as you can see on the slide here, this continues to be the largest part of our business at $82 billion of AUM, really demonstrating our continued commitment to building customized portfolios on behalf of our clients. If you look at focused commingled funds, the reality is we were initially slow to launch focused commingled funds and have really historically thought of those as aggregation vehicles, allowing us to offer our strategies and solutions for slightly smaller investors. But what we came to realize over time is for those smaller investors or for groups who might otherwise be prevented from being the sole investor in a vehicle, focused, comingled funds were, in fact, the preferred way for those investors to access StepStone and our strategies. And so today, post the combination with Greenspring, we've got $43 billion of AUM in our focused commingled fund business and that is a business that Mike is going to dive into a bit more deeply in just a few minutes here. And finally, our advisory data portfolio analytics and reporting business. Here, we work with clients to do everything from initial portfolio construction and design through to the identification and due diligence of underlying fund managers and ultimately the ongoing monitoring and reporting on those portfolios. If you've looked at our financials, you'll see that this is less of a driver of the management and advisory fees today, but it's still an incredibly important part of the business, as we're going to talk about throughout the course of the day here. A key driver of our scale, a key driver of primary deployment, a key driver of the information advantage that exists here at StepStone. And so in my view, there's really no doubt in my mind that having an active advisory business is key to our continued mission to be the trusted partner of choice for private market solutions globally. And speaking of globally, I think one of the other things that we observed early in the life at StepStone was that the private markets were, in fact, becoming increasingly global, both in terms of where we would be making investments, but importantly, where our clients would be based. And so over the last 15 years, we've now built out a 25-office footprint, we have approximately 40% of our investment professionals that are based outside of the U.S. And that's an investment that has really proven to have paid off over time here as nearly 70% of our management advisory fees come from clients that are based outside of the U.S. And today, it's an integrated and complete private markets platform. Although we got our start in private equity, one of the things that we started to hear from clients going back as far as 10 years ago was at StepStone, we love what you've done for us in private equity. We just wish there was a similar solution or a StepStone in real estate, infrastructure or private credit. As we heard that feedback time and again, it became clear to us that there was, in fact, an opportunity, and we could make that happen. And that the approach that I've just described of combining primary funds, secondaries and co-investments into a variety of different structures, whether comingled funds, separate accounts or advisory relationships would work not just in the private equity market but across the private markets. The key for us was identifying and bringing on in-house large senior experienced teams who have really built their businesses in the same way and built their careers in the same way that we at StepStone had built our careers in private equity. And so once again, we're excited that you're going to have the opportunity to hear directly from any of those individuals today. We're proud of the private markets platform we've built and the leading practices that we now have across not only private equity but venture capital, infrastructure, private credit and real estate. Now what we found as we set out on the search to identify those large senior experienced teams, what was oftentimes the types of individuals that we were targeting, those that were entrepreneurial, were business builders, were willing to bet on themselves, were a strong cultural fit here at StepStone, oftentimes, those individuals are actually running their own businesses. And you're going to hear that was true, whether you think about our infrastructure, our private credit, our real estate or our venture capital business today at Greenspring. We're the leaders of these businesses, we're working with their teams that are still with us today at StepStone and had been working with them in some cases, for more than 20 years. But what those teams ultimately came to realize was what they could build within StepStone was even greater than what they could build on their own, and we're excited to have had the opportunity to join forces with each of these teams over the years. And you can see on the slide here that throughout our history, we have successfully been able to utilize M&A to strengthen the platform over time. And that was true whether you look back at the 2010 to '13 period, when we were a bit more opportunistic coming out of the global financial crisis. That was certainly true from 2014 to 2018, as we set about building the private markets platform that I just described and that's been true post IPO, particularly with the acquisition of Greenspring Associates to build a leading venture capital and growth equity solutions business in 2021. So when you put it all together, yes, as the slide says here, we have built significant scale. But when I look at this slide, it also tells me that the approach we've taken and the platform we've built has been incredibly well received and was needed in the market. We, in a relatively short period of time, have built a platform that has over $600 billion of total capital responsibility. and of that, approximately $140 billion of AUM. And what we've also found is that as the platform has grown over time, it has grown stronger as a result of the virtual cycle or the flywheel effects that exists. And so many of you have heard me describe this slide and described the flywheel effects, and the way we think about it is the more clients that we are working with, the more primary capital that we have to allocate into the private markets with that additional primary capital comes incremental GP relationships which means more deal flow from a co-investment standpoint and from a secondary standpoint, it means more information, more due diligence insights. If we could use that deal flow and those due diligence insights to make better investment decisions that leads to better returns and helps us attract additional clients and really keep that flywheel turning. I think the other thing that this slide helps demonstrate is the importance of the position in terms of where we sit in the private markets landscape. Again, if you think about those clients or LPs on the left-hand side of the page, that average 5-person team sitting in a single office location trying to cover an increasingly complex and increasingly global private markets landscape. Many of these clients come to the realization that working with StepStone to leverage our team, our capabilities, our deal flow, our data and technology is a much more efficient approach. So if I turn back to the various different asset classes here and to help put things in perspective, one of the things we've tried to do here is line up on a time 0 basis, how the growth and the trajectory that each of our real estate infrastructure and private credit businesses have been on relative to private equity during its first 8 to 10 years of its life. And what you see here is they've been on a remarkably similar trajectory in terms of the management advisory fees. And so this tells me a couple of things. One, it tells us that the approach I've just described is working. Again, this approach of senior experience, large teams, each of which have ownership stakes in the businesses that they're helping to build, in our view, has resulted in a much more successful approach than if we were working with less experienced teams or didn't have the alignment or the incentive that is driven by that equity ownership. The other thing this page tells us, if you look at the private equity business in particular, is that even beyond Year 8 or Year 10, there is continued opportunity for growth. Clearly, in this case, we were helped by the market tailwinds, but we've also found that there are a number of different things that come easier at that point in one's build-out. Whether it was having a more established track record, whether the fact that at that point in the build-out not every separate account, not every comingled fund is a first-time fund, you have the benefit of re-ups, you have the benefit of being able to expand those existing relationships and I think those are certainly things that help make the growth of the private equity business even more successful in years 10 and beyond here. And so what we're going to try to do throughout the course of the day is give you a sense of where some of that continued growth is likely to come from. And I want to take a minute to explain this slide because you're going to see this or similar versions of this slide for each of the asset classes throughout the course of the day. And so what we've tried to do here is use the darkness of the blue boxes that demonstrate where the largest contributions are taking place today in terms of management and advisory fees. What we've also done is then try to highlight in green some of the areas that we see for future growth, either because there's a white space opportunity or maybe it's an opportunity that we just have not gotten to yet but expect that these parts of the business will be increasingly significant contributors on a go-forward basis. The one thing I wanted to point out is, you'll see throughout these slides, we have not highlighted in green those parts of the business that are currently significant contributors in the darkest blue boxes that is not to suggest that there's not a continued growth opportunity. In fact, one of the things that gets us so excited here is that we think there is continued room to run in many of the areas that we have market-leading positions today, but there are also a number of growth opportunities that are much earlier -- in much earlier stages of development, whether we think about venture capital's ability to offer separate accounts, whereas so much of the Greenspring business was focused on co-mingled funds, whether we think about infrastructure, starting to launch comingled products, whereas to date have been entirely focused on separate accounts or when we think about the private wealth opportunity that exists across the entirety of our platform. So with that, and before we dive into each of these asset class in a bit more detail, I want to hand it over to Mike McCabe to break down our growth algorithm in a bit more detail here. Mike?

Thanks, Scott, and good morning, everyone. It's great to see so many familiar faces. Thank you for coming out this morning. I'm Mike McCabe, Head of Strategy for StepStone. And for the next 20 minutes, I'd like to try to accomplish a couple of things. The first is to provide a snapshot of our performance. In particular, what we've been able to accomplish over the last 3 years relative to what we thought we could accomplish at the time we took the company public. And second, walk through the core growth drivers, we believe gives us a clear path to double our fee-related earnings over the next 5 years. And that belief system begins with the tools we have at our disposal. The most important tool we have is our people, our teams. We took StepStone public with the intent to foster an equity culture that rewards an entrepreneurial spirit, an organization comprised of highly motivated individuals who think like owners, behave like owners. Why? Because they are owners. And at the time of our listing, the founders made a grant to over 500 employees. And as we stand here today, employees own 47% of the company. Taking StepStone public came with several other strategic benefits. To name a few, brand awareness and transparency. We are particularly -- which are particularly important in certain international markets where being listed on an exchange is a credential in and of itself and helps unveil the mystery about who StepStone is and what we do. Being listed on the NASDAQ also goes a long way in the retail markets, where the individual investor takes comfort investing alongside a well-known brand name. And finally, having access to the capital markets has unlocked 2 growth drivers for our organization. First, it enabled us to use our equity as a form of currency to pursue an accretive acquisition of Greenspring. And second, it's given us the financial flexibility to invest seed capital in exciting new products like SPRIM and Spring. Now in life, we know we're evaluated on what we say we think we can do and what we actually accomplish. When we were on the road preparing for our public offering, we felt that we could -- we felt strongly that we could continue to grow our AUM and top line well above the industry's average and well above the growth rate of our peers. I can't tell you how rewarding it is for all of us to stand up here in front of you today and delivered to you a set of results that have at least met or exceeded on what we believed we could do 3 years ago. And this point of pride extends beyond our top line growth to fee-related earnings, which have compounded by more than 30% per year. Part of this result has indeed come from revenue but it has also come from operating leverage and margin expansion. Now focusing on margins for just another minute. We were pleased to report a 31% margin for the fiscal year ending March 31, which was in line with expectations we had set at the beginning of the year. Importantly, this represents a margin expansion of 700 basis points since we listed. However, as you're all aware, this past fiscal year saw quarterly margins as high as 33% and as low as 28%, which points to the nonlinear nature of our margin progression. In any given quarter, there are puts and there are takes, whether it's the timing of activating funds, deploying fee-earning capital, or just the seasonality of expenses. So we generated this graph with intention to present how our margins have evolved on an LTM run rate basis. Said a little differently, ours is a long-term business. It makes it challenging to read into any 1 or 2 quarterly results in absolute returns. And going forward, we believe we will continue to expand our margins into the mid-30s over the medium to long term due to continued maturation and growth of our private debt, real estate, infrastructure teams, growth of our private wealth platform and strategic cost saving opportunities. Now in addition to the growth we enjoy from fee-related earnings, we also enjoy a second stream of earnings from performance fees. Although a little harder to model with precision, we start by looking at the net accrued carry on our balance sheet, which currently stands at $583 million and serves as a backlog for future revenue. Additionally, we are managing over $63 billion in performance fee eligible capital. This compares to $36 billion at the time of our listing. Now the timing of when performance fees are actually realized is largely a function of how mature the investments are and the health of the capital markets. StepStone employs a disciplined approach towards investing through cycles, not unlike dollar cost averaging, making sure we continue to invest in each vintage year. And as you can see in the pie chart on the right, roughly 60% of the $583 (sic) [ $583 million ] is coming from investments made in 2017 or earlier, which are all in the harvesting phase. Here, we show our realized performance fees from 21 sequential quarters. We're often asked, what's the best way to model out performance fees. It's a tough question. Absent a crystal ball, there really isn't a great answer. This is why we provide this level of detail. The key takeaway is realization activity will not be linear but it will grow as we continue to invest in a disciplined way and build out net accrued carry. So that basically wraps up our review of the performance since our listing. I'd now like to switch gears for a few minutes to walk through our growth drivers. I'm happy to report the drivers of growth we presented 3 years ago are still relevant today, which are: Continuing to grow with the installed base of existing clients; developing new relationships, which have been prioritized, as Scott mentioned on our last earnings call. We recently hired a new global Head of Business Development, who will help coordinate the sales effort across asset classes, strategies and geographies. You can expect us to continue to invest in business development and distribution. And as we grow with our existing clients and we add new clients, we expect to benefit from scale economies and increased operating leverage. Lastly, we've been quite strategic in how to think about M&A. Scott did a nice job of laying out our strategy over the last 13 years. You can expect StepStone to remain opportunistic and pursue accretive transactions that are either accelerating or expanding something we currently do. So let's start with the largest part of our business, managed accounts, which represents approximately $55 billion or roughly 2/3 of our fee paying capital. And this part of our business has been growing at 26% year-over-year for the last 3 years in a balanced way across 4 main drivers. First, our undeployed fee-earning capital currently stands at $16 billion, which will convert into management fees as deployed over the next 3 to 5 years. Second, we continue to enjoy a 90% re-up rate with our existing clients. And as you've probably heard us say, when clients do re-up, they typically re-up by more than 30% of the prior mandate. Third, our growth with existing clients extends beyond scaling up prior mandates to expanding into different things, whether it's a different asset class or a different strategy or a combination of both. And finally, we continue to add new clients and new mandates, which leads us to a point of pride among the senior team. This is a case study, if not a blueprint for how the relationship between StepStone and our clients evolve over time. This example shows a relationship from our earliest days, evolved from a private equity advisory account to a scaled asset management mandate with a series of re-ups for private equity co-investment program and then expanded into asset management mandates for both real estate and infrastructure. This client is still with us today and growing. You heard Scott mention earlier, and this is a fun story because it speaks to our culture. This particular client said, "Hey, we really like the work you're doing with us on private equity. Could you do something similar for us in infrastructure and real estate." And that created a real dilemma for our organization because we did not have those skills in-house. So we went out to the market, and we made the strategic decision to bring on senior veteran teams now led by Jeff Giller, Marcel Schindler and James O'Leary. The key takeaway here is that we have a listen-first culture, and then we customize an appropriate solution. We believe our peers tend to have a bit of a take it or leave it approach. And we've been successful at replicating this model with multiple different clients around the world where our AUM growth has increased threefold to ninefold, and no 2 are the same. Customized managed accounts are incredibly flexible and incredibly scalable. The next core driver of growth comes from our commingled funds, which 3 years ago, consisted of 5 fund families and 17 funds. Today, we have grown our co-mingled fund business to 19 families and 57 funds. Our annual revenue from comingled funds grew over this time period from just under $100 million to $227 million. As a result of increased fund sizes, new fund families, the addition of private wealth funds and the most significant contributor to our comingled business was the acquisition of Greenspring. The next 2 slides provide a lot of new detail about our fund families, vehicles by vintage year and size. I have no intention of doing a forced march through every one of these comingled funds. But there are a few things worth mentioning. You will hear from our -- you will hear from the head of each asset class and our wealth management team, how we have developed a diversified set of commingled funds that can play both offense and defense, depending on the market backdrop. And importantly, at the bottom of this page, we referenced our debut infrastructure co-investment fund. With the exciting launch of this new fund, StepStone can now say we have a comingled fund solution in all 4 asset classes. Turning to the largest fund family, venture capital. You will see that our strategy is intentionally designed to provide investors with access to the entire life cycle of venture-backed companies from micro to early stage to institutional rounds, straight through to growth equity. This was Greenspring's secret sauce to unlocking the opportunity for investors to access the venture capital market at scale. And while the current environment feels challenged, great companies are created in all cycles. And to the extent investors feel overweighted toward venture capital, we manage the largest secondary fund in the market. Rounding out our last family of co-mingled funds. We made the strategic decision in 2019 to launch a private wealth platform that would make our institutional solutions available to individual investors. And as a result, entered a massive underserved and under-allocated market. In a classic StepStone way, we put the cart way before the horse and went out and brought on a deep and large senior veteran team who are with us today, and we'll share more details about the StepStone Private Wealth platform which was managing approximately $1.6 billion of AUM at the end of March. Our debut offering called SPRIM is our core private markets product and has generated a 29% annualized return since inception and currently stands at $1.3 billion. Our second offering called SPRING is our Evergreen Venture and Growth Equity Fund, which is also off to a very strong start, delivering a 20% return and standing at approximately $300 million of AUM Mentioning the product SPRING is a nice segue to our next slide because the name pays homage to our new partners from Greenspring. As Scott mentioned earlier, M&A has been an effective tool for us to build the platform we have today and more recently expand the platform through the acquisition of Greenspring. As a reminder, we had a very good venture capital and growth equity team that was already managing $1 billion of AUM. When we were approached by the principles of Greenspring to consider a strategic combination, the first thing we did was to seek buy-in from our existing venture capital team. And suffice it to say, they were pretty excited about the opportunity to become the clear market leader in venture capital. We closed the transaction in September of 2021, which added more than $10 billion of fee-paying AUM and thousands of new LPs and a world-class team with a 20-year track record. And since then, we closed on the largest secondary fund ever formed in the venture capital industry at $2.6 billion, which is now deploying capital at a time when discounts are the highest ever. Our combined forces have also unlocked synergies that neither organization could have been able to unlock on their own. Specifically, we're winning managed account mandates at a scale we would never have been able to achieve without Greenspring. And our private wealth product called SPRING would never have been able to be accomplished by Greenspring without StepStone's Wealth Management platform. The combination is working incredibly well and has added roughly $0.30 per share to fee-related revenue. well and has added roughly $0.30 per share to fee-related revenue. All right. So now having walked through our performance and our growth drivers, I'd like to switch gears now for a minute to walk through capital management. Everything Scott and I have mentioned so far points to a very capital-efficient business. It follows capital management should come into focus. Our first priority is to fund the business in a way that supports the growth drivers we just outlined. And once those needs are satisfied, our goal is to maximize the distributions to our shareholders in a transparent manner. Late last year, we announced the change to our capital distribution approach by aligning our dividend with our business model. As discussed earlier, we have 2 distinct sources of cash earnings, fee-related earnings and performance-related earnings. One being more predictable than the other, paying out a single dividend from the combined streams potentially builds an unnecessary amount of cash given the unpredictable nature of performance fees. However, we also felt that the earnings power from performance-related fees was both underappreciated and undervalued. So midway through the year, we decided to bifurcate the 2 and implement a payout program intended to generally grow our base quarterly dividend in line with fee-related earnings, augmented by a recurring supplemental dividend driven by net realized performance fees, subject, of course, to board approval. This quarter will be our debut payout from this approach, as shown by the green bar on the left side of the graph. And on the right side of the graph, you will see the step change in how this approach has increased our dividend yield. Now before leaving this slide, it's worth mentioning how proud we are really to have been able to deliver such a healthy payout in an environment when realizations are soft. And we expect our new approach will allow shareholders to tangibly reap the benefits from a stronger realization environment. This takes us to another theme under capital management, how to think about the potential buying of noncontrolling interests? Structured charts are far from ideal for these kinds of presentations, but we included it as a reminder of how seriously we take our equity culture. We want our teams to think like owners, behave like owners because they are owners. So we made the corporate structure intentionally reflect the corporate culture that preserves an entrepreneurial spirit while maintaining an alignment of interest. As such, in its current form, the economics are shared roughly 50-50 between StepStone Group and the infrastructure, real estate and private debt teams. And this structure is working incredibly well. Longer term, our vision is to integrate the economics across the organization, which serves to improve the alignment of interest and will probably come in the form of some combination of an equity exchange and cash. Timing of when this happens is somewhat related to what Scott mentioned earlier about the growth curves and maturation of each asset class. At the moment, each team is incentivized to grow their operations, and there will be a natural point in time when the teams reach a scale when it makes sense to begin the process of a series of exchanges. And we will keep everyone posted on the development in this regard. And with that, I would like to wrap up with a couple of slides that leads perhaps one of the main reasons why you're all here today. Bringing this all together, we wanted to articulate a message that we see a clear path to at least double our fee-related earnings over the next 5 years. We believe the drivers of growth are already in place, namely managed account re-ups, continued success within our co-mingled fund business across both institutional and private wealth clients and operating leverage. It's mostly about our ability to continue to execute. Scott, Jason, Johnny and I are constantly reminding each other and the broader organization that AUM growth really can't be set as a corporate target. Rather, we view this kind of growth as the reward, not the goal. And now wrapping up with my last slide, this was inspired by one of our investment teams. Whenever we underwrite an equity co-investment, the provocative discussion centers around what do you need to believe in order to achieve the expected outcome? Well, we believe the private markets are large and growing. We believe StepStone has successfully built a platform that is well positioned to take advantage of this opportunity. And because we believe we can continue to execute, we see a clear path to at least double our fee-related earnings over the next 5 years. Thank you all very much, and I'd like to turn the podium back to Scott Hart.

Thank you, Mike. So what we're now going to do is take a closer look and a deeper dive into each of the 4 asset classes, starting with private equity and venture capital and beginning with the key attributes of those asset classes. Thank you, Mike. So what we're now going to do is take a closer look and a deeper dive into each of the 4 asset classes, starting with private equity and venture capital and beginning with the key attributes of those asset classes. I mentioned earlier, private equity and venture capital continues to be the largest of the private markets asset classes. From a risk return standpoint. It's also the one that has the potential to offer the highest potential rewards. But as I'm going to come back to just a moment, also has the widest potential distribution and dispersion of returns. In terms of the benefits over time, we've seen increasing allocations to the private equity and venture capital markets, at least partially driven by the strong performance relative to the public markets, driven by limited correlation to the public market, driven by the long-term control-oriented investment strategy. And finally, some of the diversification benefits and really opening up an opportunity set that's not available through the public markets, when you think about the shrinking number of publicly traded companies here in the U.S., when you think about the fact that the average market cap on an S&P 500 company is measured in the tens of billions of dollars versus you look at the transactions, tracked in our SPY database, which have averaged enterprise values of just over $1 billion over the last 5 years. And when you think about the fact that the venture capital and the innovation economy is not easily addressed and invested in through the public markets. And so as a result of some of these trends, what we've seen is private equity AUM growing at mid-teens rates over the last several years, again, with continued expectations for growth in the years that lie ahead. Now if we think about the StepStone private equity platform, we have grown over the last 15 years to become one of the most active investors across the private markets. Today, we've got $72 billion of AUM, $242 billion of assets under advisement. And importantly, we and our clients have committed over $90 billion to over 500 different funds over the last 3 years. So not only significant from a dollar standpoint, but incredibly significant in terms of the number of underlying GP relationships, which once again helps drive deal flow, diligence, insights and data flow. And this is really a point that I can't emphasize enough. And once again, you'll hear about from each of our asset class heads in terms of the primary capital deployment and how this level of scale is differentiated in the marketplace today. We also, on the private equity team have a very large team of over 160 professionals, a very senior team with approximately 50 senior investment professionals and 20 years of experience on average. And what we've done is we've organized those teams into 10 different sector teams to allow us to address and to cover an increasingly complex private equity landscape. And those teams are tasked with not only developing the appropriate strategy for investing in their part of the market, but for mapping and covering all of the underlying managers and ultimately diligencing those managers and sourcing investment opportunities alongside of them. So as I said, I want to pick up with my comment around the dispersion of returns in private equity and venture capital. And as you can see here on the slide, that actually varies pretty significantly, depending on the size and the strategy that we're talking about. With venture capital and small buyouts demonstrating the widest dispersion of returns certainly when compared to large and mega buyout funds. So not only do you see that there's great potential to generate outperformance if you select the right managers, but you are penalized if you select the wrong managers. And interesting, when you look at, for example, the small buyout space or the venture capital space, these tend to be the areas where there are the largest number of managers, but they're also the most difficult to diligence when you think about less mature track records, newer strategies, perhaps teams that have recently spun out of other firms. And so what I wanted to also spend a minute on is this slide here, I know there's been a -- there's a growing narrative around the amount of capital flowing to the large cap managers. But what this slide shows you is that an incredible amount of our time and effort and activity actually goes into working with our clients to identify and to analyze small and mid-cap managers. You can see over the last year, when we look at the individual approvals to funds, approximately 85% of those were to funds that were less than $4 billion in size. And so again, when we think about where we can add the most value for our clients and helping them to identify the right managers or investment opportunities and helping them to avoid the wrong opportunities. Clearly, the small and mid-market is an area that we spend a tremendous amount of time. Another area we spend a tremendous amount of time is in the co-investment space. And I mentioned earlier that despite being an expensive asset class, there have really only been a couple of ways that have emerged as the key ways to bring down your weighted average fees across a private equity portfolio. Those being scale-driven discounts and reduced fee reduced carry co-investments. The interesting thing is that most clients on their own do not have the scale to drive those discounts on their own. They don't have the deal flow, the capabilities, the investment process to execute on a co-investment strategy on their own. And so instead, one of these services that StepStone's able to offer to our clients is the ability to access these discounts in a way that our clients would not be able to do on their own. If you look here on the slide, StepStone has become one of the most active investors across the co-investment space and private equity. Over the last couple of years, have reviewed over 300 new opportunities per year that has allowed us to remain incredibly selective when we think about the percentage of deals that are making their way through to the bottom of our funnel. And that's really only possible for a few different reasons. One, it comes back to the significant amount of primary capital that we're deploying and the number of GP relationships that we have. Two is our proactive sourcing approach. But three, and perhaps most importantly here, is our ability to participate in pre-signing or co-underwriting opportunities. And this is really the direction of the market has moved over the last several years. This is the largest, most active part of the market, it's also the most difficult to address when you think about the speed at which opportunities move and the need to have in place a dedicated team that can drop anything else they're doing and have an investment process and decision-making process in place to be successful. And so when you think about the fact that only 2 of the deals that we've done over the last several years have been post signing. And of those, only 17% have been broad syndications, what that means is overall, only approximately 5% of what we've done in the co-investment space over the last number of years has been broadly syndicated. Instead, we tend to work with GPs as sole or select co-investor or as a co-underwriting partner. Now as we shift gears to secondaries, this is obviously an opportunity that we've spoken about at length over the last several quarters here. And it's going to be a continued theme throughout the course of today, not only in private equity, but across each of the asset classes. As you can see here, the secondaries market has more than doubled when you compare to the 2016 and 2017 time period today. It's a more than $100 billion per year market. And while much of that growth over the last several years has come from GP-led secondaries which we will come back to in a minute. It's the LP secondary opportunity that we think has grown particularly interesting and that oftentimes runs countercyclical to other parts of our business. And so after a nearly 10-year period where pricing was in the mid-90s as a percentage of NAV. We're now seeing buyout strategies pricing in the mid-80s, implying a mid-teens discount and venture capital pricing at much more significant discounts to that. Now clearly, this is largely driven by LPs looking to rebalance their portfolios and bring their private equity allocations back into line with their target allocations. And given our position in the marketplace, given our GP relationships, our sourcing capabilities, our information advantage, we've been able to buy at an average discount of closer to 18% throughout our history here at StepStone. Now that has not come by sacrificing quality. In fact, if you look at all the purchases we've done since 2019, over 90% of those funds that we purchased in the secondary market have been first or second quartile funds. And this focus on buying quality is part of what attracts us to the GP-led secondary opportunity as well. Not only are we well positioned given our relationships with GPs, which is essentially who you're sourcing from here and our information advantage and our ability to underwrite both single asset or multi-asset GP-led secondaries. But back to my point about quality, unlike the pre-2018 period where GP-led secondaries were primarily a solution for GPs to restructure underperforming funds. Today, what we're seeing is an increasing number of very high-quality all the GPs, again, first and second quartile managers who are looking to the GP-led secondary market as an opportunity to continue to own and invest in some of their highest quality assets. And so when you look at 100% of our GP-led secondaries have been alongside first and second quartile managers, 77% of that being alongside first quartile managers. If I shift now from the broader private equity opportunity specifically to venture capital, we're going to see some similar trends. So again, you can see on the slide here, the wide dispersion of returns not only of venture capital relative to other private equity strategies, but certainly relative to other public equity strategies. And this in a way, is our job security. Again, why so much of our time is focused on helping to identify the right managers, helping to avoid the wrong managers given the potential downside of selecting the wrong managers here. And so when we think about, again, that average 5-person private equity team trying to cover thousands of underlying venture capital managers, understanding the potential for outsized returns, but also the risk of getting that wrong. This is clearly an area that many LPs decide they will be better off either with the support of or outsourcing their venture allocation to a group like StepStone. These LPs understand that, as Mike mentioned earlier, great companies are created in all market cycles. They also understand the point that I made earlier, which is that the venture capital and the innovation economy is not easily accessed through the public markets. I think this is one of the reasons that we're seeing such interest in the spring product that our private wealth team will talk about later in the day. And while the correction that we're currently going through in the venture space will cause some pain for existing portfolio companies. We also think it's likely that it will lead to opportunities on a go-forward basis. The big question for LPs today is whether they have capacity in their portfolio to continue to allocate to venture capital. And on this question, I don't think there's a single answer or one that you can necessarily generalize about. We have ourselves been encouraged that as we speak to investors around the world, we hear from many who say, look, we've been thinking about allocating a venture for a number of years. The one thing holding us back was the valuation environment and feel more excited about allocating today than over the last several years, particularly 2021. On the other hand, there are LPs who were heavily invested in venture capital and may now be over allocated or at a minimum, feeling some fatigue. And this, as Mike mentioned, is what's creating such a sizable venture capital secondaries opportunity. As you see on the left-hand side of the page here, there's currently over $1.5 trillion of unrealized net asset value and vintages that are 2018 or older, meaning is a large opportunity today. But quite different than the global financial crisis, where prior vintages had generated modest returns and therefore, selling at a discount would have resulted in crystallizing a loss. Today, these previous vintage years have generated strong returns to date, meaning that even if you sell at a discount, you may be able to lock in a gain, meaning the opportunity is not only large, it's also more actionable than it otherwise would be. And so if we look at the life cycle partner that Mike referenced earlier and our StepStone Venture Capital platform, not only do we have the largest, most active team in the venture capital and growth equity space today post the combination with Greenspring, we've also created a true life cycle partner for LPs, for GPs, for portfolio companies, with solutions, including primary funds, secondary investments, direct investments from seed through to late stage and growth equity and everything in between. So when you put this all together, what we've seen over the last several years now is 20% plus organic growth, plus a very meaningful acquisition of Greenspring Associates creating the clear market leader in venture capital and growth equity solutions. And the good news is we're not done yet. When we look at the private equity space here today, you can see that the parts of our business that are the most significant contributors today, co-investments and secondaries are areas where we see continued demand. Whether the secondaries market where I've just described the market opportunity and the continued desire for LPs to mitigate the J-curve or the co-investment market, again, is one of the few ways for you to average down your fee burn across your private equity portfolio. But there also continue to be a number of growth opportunities across our separate account business. I think this GP-led secondaries opportunity lends itself nicely to separate accounts, particularly when you think about the scale of that opportunity. primary separate accounts, primarily fund focused separate accounts, maybe more specialized in nature, targeting strategies like small buyouts or maybe geographically focused strategies. And as you heard from Mike, we find that these separate accounts are quite scalable and also have a variety of different ways that they can grow over time. And last on this slide, the private wealth opportunity, we've started to tap into with our SPRIM product, and Tom Sittema will talk about that in more detail shortly. Now if you look at the venture capital white space opportunity, it's a bit different than what I just described in private equity. Greenspring had built a world-class venture business, but largely focused on comingled funds. And so when you bring together the combined venture capital capabilities with StepStone solutions-oriented approach and the ability to offer separately managed accounts, I think we have a real opportunity here that Mike referenced. And some of the separate accounts that we've brought on to date have been with legacy StepStone clients, some of them with legacy Greenspring clients and some have been with net new clients to the platform, which we think is a great sign. Clearly, the launch of the SPRING product, another great example of the synergy potential that exists, but maybe one more that you can't see pictured on the slide here. But if you look at the geographic mix of the Greenspring LPs, it was quite different to what we saw at StepStone. Again, StepStone, you're aware that nearly 70% of our management advisory fees come from clients outside of the U.S. It was very close to the opposite at Greenspring. And so we clearly think there's a cross-selling opportunity here, and it's one of the reasons that we're spending so much time with our venture colleagues traveling around the world. So in conclusion, despite being one of the more mature parts of the private markets business and despite it being the area that we at stepson have operated in the longest, we continue to see opportunity in private equity. The challenges that investors face, whether it's this complex universe of strategies and managers, the wide dispersion of returns that exist, the limited ways to average down one's costs are all challenges that StepStone is very well equipped to help address. Certain areas that are currently in very high demand like secondaries again are areas that StepStone has a leading position. And we clearly think there's an opportunity to capitalize on the synergy potential post the combination with Greenspring. With that, let me hand it over to Marcel Schindler to talk about private debt.

Good morning. My name is Marcel Schindler. I'm heading StepStone's private debt business and my accent tells you the rest. Let me start first with private debt, the market and as well some of the key attributes. We don't consider private debt necessarily as an asset class, much more as an instrument, financing the other asset classes like infrastructure, real estate and corporate or specialty finance or I call it very often, if my partners on the other asset class is actually focused on equity, they're the ying, I'm the yang actually on the other side financing these asset classes. So in our approach, we differ significantly probably in some of the aspects. The higher yield compared to public debt market is owed primarily due to the fact that the borrowers will gain speed in executing transaction, and they gain the ability to do more gross financing or more complex transaction that can be financed. A significant part of the overall broad market, not just corporate but as well as asset-backed, real estate and other others are actually floating rates, providing exactly the borrowers with the flexibility, but the investors actually have no interest rate duration, which is extremely attractive as we've seen over the last years. Through private debt investments, Investor can harvest additional risk premier, as I mentioned and depending where we position in the capital structure, private debt can either be a fixed income replacement if we position more on the senior part of the capital structure or it can be an equity replacement if we have more flexibility allocating across the capital structure or use opportunistic strategies, private debt participated in the growth generally across all private market asset classes. And we believe that growth to continue in the future, considering that banks as well as the public debt markets are withdrawing. And I will talk about this in a second. Private debt is often reduced when we talk about it to one of the core market, which is the corporate direct lending space. Now if we look at the past returns, specifically of this market, we see that the market since 2005 has been able to produce equity-like returns at much lower volatility. But in our minds, much more important, if you look at the right-hand side of the chart, the drawdowns in all the crisis, GFC, pandemic as well as 2022, have been much lower than in the public markets. That is what we simply call actually better risk-adjusted returns. Admittedly, this is a bit looking in the rear mirror, but looking for but looking forward, are very positive on the market as well and the returns and the following reasons. Considering the uncertainty that we see in markets in terms of global growth, inflation and interest rates, we see a lot of volatility to continue hitting the public markets on the debt and the equity side first of all. And second, we believe investors will continue to look for stable yield solutions. If you look a bit in more detail into the past return since 2004 here, we showed the vintage year returns of the senior direct lending space here. And per vintage here, you always see in blue actually the risk free rate prevailing in the respective vintage here. You see in green the credit spreads and you see in yellow the realized losses per each vintage years. Just a few comments that I would like to make here. First of all, you see the consistency of the recurrence across all the vintage years. Second, even in the worst vintage years, 2006 and 2007, Credit Spreads have more than sufficiently covered realized losses. And last but not least, the best vintage here is actually where the vintage years during the crisis 2008 and '09. And fast forward, looking at 2023, '24, we currently are in an environment where gross asset yields are between 11% and 12% based on the place rate that we see in the Spreads, which obviously at the level of 2008, and again, providing sufficient coverage for any potential losses going forward. Now we often get confronted with the argument hasn't there been too much capital flowing into private debt markets actually. And so I think it makes sense not just to look at the demand side but as well as the supply side. What you see here is an example of the global corporate lending market across the different regions where you always see the public markets high-yield and syndicated loan markets, which are probably the most comparable to the one actually that you see in the colored bars, which is the direct lending market. The direct lending market in all regions has already surpassed mostly actually the high-yield bond market, first of all. What we see on the other hand is that banks have been largely dis-intermediated. I mean the U.S., there are a minority in the corporate lending market; in Europe, they're still relevant; in Asia, they're still dominant, but we believe going forward that even in those markets, this intermediation will accelerate. Why do we believe this trend of growing private debt markets to continue against public debt markets and banks. First of all, the recent banking crisis on top of the tight regulation has further reduced the appetite and the ability of banks to finance not just corporates but real estate, asset-backed lending and other spaces. Second, there is a trend of going private that Scott mentioned as well before. We see more and more larger companies to look for alternative financing solutions, which provide a more flexibility and growth potential going forward. And that obviously, even if it comes at a higher cost. Now after having a look at the market, I'd like to show how we operate in the space. With allocation of over $30 billion over the last 3 years, we belong to the largest allocators in the space and currently oversee a bit more than $50 billion in essence. Our team consists of over 70 investment specialists covering the broad universe across all asset classes, as mentioned, corporate aim for real estate and specialty finance. But as well, if you look at the right-hand side of the graph, covering from performing to nonperforming and distressed debt. Considering that the team was incorporated in '98, so the last century, I know you can see that. It's not just one of the most experienced team that has gone more -- through more than 1 cycle actually. It's as well a very well-diversified team with expertise across credit origination, underwriting, trading on top of analysts that have been in the debt advisory space. In our approach, we differ significantly from other allocators or advisers in the market. And that has to do that we are not just doing investment or GP selection. Our core competence is actually in the construction of private debt portfolios. And why is that so important? We talk about strategies that are normally actually single-digit return expectation and so efficient portfolio construction yield production is of major importance. So 3 elements that are very relevant to construct portfolios, deal flow, deployment and diversification. I will talk about diversification and deployment in a second. Let me focus for a second on actually the deal flow and the sourcing. So we have, through our proprietary private debt platform, 3 sourcing channels. Whereas our other asset class is on the primary side, allocated to comingled funds, we have taken a different approach. We have onboarded over 40 GPs globally with so-called co-investment accounts. What are co-investment accounts that I show on the box here on the left-hand side. They are separately managed accounts that actually bring us in the allocation engine of these GPs, but provide us with more flexibility in terms of allocating, stop investing and bite size. Through that channel, actually, we've produced just over the last 12 months, more than 400 single transactions. That's actually double the amount or number of transactions that the largest GP has produced in the market over the last 12 months. We add on top of these 2 other sourcing channels, which are secondaries and co-investment like the other asset classes. Here, we reviewed just over the last 12 months, over 17 billion of opportunities executed around 1.2 billion. And we believe these channels over the next 18 to 24 months will become more importance. I would like to point out one additional point on this slide actually, that is that the other asset classes very actively contribute into the sourcing for the private debt space. And that's the beauty of our platform actually. Now why does our approach offer a differentiated solution for investors to access the public market. And here is a small example, what is the traditional approach, how investors, allocators actually go into the market. They do commitments to single phones. And although this might be for certain strategies, the right approach, it has certain what I call disadvantages. For example, a GP might not be at all time in the market. The GP very often calls the capital very slowly, which I will explain why it's so important capital at work. And last but not least, very often, the funds have very broad strategy or risk ranges, which do not always fit that specific LP demand. Now in order to overcome these deficiencies, we have created our platform on the right-hand side, where I explained, we had the 3 sourcing channels. And what we can do through this platform ultimately is the following advantages that we can offer to our LPs. First of all, we can deploy the capital more efficiently, faster and to a higher investment percentage, more capital at work at all times. Second, we can be very selective in construct portfolios really tailor-made to a risk return profile of a specific LP. And probably, the most compelling at the end, we can produce this offering actually without additional costs to the LP compared to the traditional model because we have economies of scale and rebate when we execute the transactions. Now I mentioned various times why is it so important to have an efficient portfolio construction and management in the background. I mentioned diversification and deployment. Diversification is extremely important because we're in the debt space. That's a short put strategy. The upside is actually the interest rate that we can clip in principle. The downside is 100%. We need to get diversification, very different than if you have an equity approach. Why is deployment so important? If capital is not called and what you see here on the left-hand side in the graph, that's typical what a single fund does, it calls capital relatively slow in a limited amount compared to the committed capital, there are some opportunity costs or inefficiencies that we call. If you look in the middle, these are the statistics that we've taken. The dotted line actually is the Prequin statistic of single funds in the market. They call about 60% in 2 years. And you see in comparison, the other colored lines actually, that's the deployment speed and level that we have been able to achieve through our platform for the investors in the vintage year '16 to '22. What does it mean? More capital at work, more distributable income to the investors, over 80% in the first year, 35% plus actually over the investment period compared to the single funds. And not to forget, in a very attractive environment like the current, you want to get deployed at the attractive spreads within a reasonable time frame, not to miss out. Now in an environment like the current where the availability of financing is limited. And actually, general liquidity is drying up, we see very attractive investment opportunities on both sides of the spectrum. On the defense side, where fixed income can be effectively replaced and additional premium can be harvested without unnecessary risk-taking. I mentioned 12% gross asset yields, actually, at historical high can lead to outstanding investment returns as long as the elements of diversification and deployment can be addressed. On the other hand side, on the opportunistic side or the offense side, the liquidity tightening the funding gaps, but as well, the recessionary risks that we see obviously lead to an increased set of opportunities in the market. We believe that this opportunity set is probably more attractive than traditional equity investments because it provides better downside protection. Here, investors really need to look for an investment solution, though, that can access the broad funnel of opportunities that might come across where I believe our platform offers an ideal solution. Now we have been growing nicely over the past 6 years, the average industry public private debt has grown over 10 years, 10%, we were roughly at 30%, we grew nicely, originally mainly in the areas of separately managed account and commingled products that we were offering. They are multi-strategy access and co-investment secondary entities co-investment accounts that I mentioned at the beginning but we see future potential as well to grow in very specific separate managed accounts on co-investment and secondaries and as well through the wealth management channels because we believe that yield-oriented products will become more important as well in that channel. To wrap it up, I truly believe private debt can substitute fixed income as well as public equity, depending on the investor need. The addressable market is growing because banks and actually public debt markets are withdrawing. Our flexible solution and the ability to customize and tailor plus the efficient investment considering we call capital much faster and bring capital at work, make it very attractive. And I think we can be a good contributor as well going forward to the overall growth of StepStone. With this, I would like to introduce my partner, Jeff Giller.

Thanks, Marcel, and welcome and excited to be talking today about what I think a lot of people are seeing as everyone's favorite, then you talked about the investment market these days, real estate. It's become quite -- it's gone through quite some profound changes recently as I think everybody knows. So I'm Jeff Giller. I head StepStone Real Estate and I'm excited to share our views on the events occurring in the current market for real estate and StepStone real estate in particular. There's a transformational change going on in the market at present, which is more significant than anything I've seen in my over 3 decades in the industry. These changes are a result of rising interest rates and as importantly, the way space is being used, driven by technological and broader social changes in the market. Everyone's familiar with the work from home event that is really changing office space. And it really changes like that transcend across the real estate market. We expect these changes to result in opportunities for StepStone Real Estate. Like the other areas of StepStone, real estate has an advisory side and investment management side, both of which have very strong and sticky revenue streams. Institutional vendor -- institutional investors, depending on our advice more than ever to navigate the unsettled waters of this market environment. On the investment management side, our core strategy of providing capital to liquidity-constrained investors and investment vehicles for our secondary products and structures designed for downside protection means that our investment portfolio is holding strong. And there are substantial opportunities to make attractive investments in the dislocated market period ahead. But, as a restructure side, periods of inflation present a great opportunity for real estate since real estate leases and the way the assets are financed, act as inflation hedges. Also, real estate is an exceptionally large asset class. And with StepStone's global reach and expertise, we can lean into whatever points in the capital stack we feel are appropriate to drive the strongest risk-adjusted returns. We can focus on the -- also on the right geographies and product types and really drive risk return relationships through this kind of diversity. StepStone's investors and clients are seeking real estate exposure because it adds diversification to their overall investment portfolios. And because it's uncorrelated to equities, it has lower volatility -- has lower volatility of equities and the same volatility as bonds but with higher returns. The power of StepStone is based on our broad global reach and our significant involvement in the real estate market, providing us with information expertise and deal flow advantages. We'll hit on these points in the coming slides, but the sheer volume of our business tells an important part of the story. So we have $13 billion in AUM, and we have a $172 billion in AUA assets under management. And we do that with 50 investment professionals. Last year, in real estate, we invested $18 billion into real estate funds on a primary basis and $2 billion into second areas in co-investments through our separate accounts and discretionary funds. So we're -- like private equity, private debt, in the infrastructure. We're a very important asset class and a big driver in the business, and that scale is very, very important to our success. And so is the expertise of our team. My cofounding partners and I have worked together through market cycles, executing our key strategies for nearly 2 decades. So we're a well-tested team that's been through this market cycle tested. Collectively, the 9 real estate partners averaged over 2 decades of experience. And our investment team members come from strong backgrounds in direct real estate investing, in advisory and consulting and in market research. So importantly, and we feel very strongly about this. We're a tight culture and we have a very collegial work environment. We have very -- consequently, we have very little turnover in our team. StepStone Real Estate was purpose built on the 4 pillars of market research, technology, fund investments and secondaries and co-investments, which is the active corner on the right. All of these elements work in concert to drive our strong performance. We start by understanding where risks and opportunities in the market with our house views which is produced together by our real estate market research team and our deal teams in concert. So we take a top-down and a bottom-up approach to developing our house views. Our house views informs our investment decisions and it is also a great resource for our partners and our clients, who really come to depend on it to help plan their investment strategies in real estate. As you've heard from Scott, the real power of StepStone's platform is that our system of focusing on primary, secondaries and co-investments, provides a differentiated deal sourcing and information advantage. So in this positive feedback loop, allocating significant capital to GPs, fund Investments makes us our partner of choice for GP-led secondaries recapitalizations and co-investments. On the other end of the loop, our ability to test drive managers by rolling up our sleeves and doing deals together through our secondaries, recaps and co-investments gives us experience working with managers ahead of making decisions to allocate discretionary primary capital to their funds. All the information we pull out of this process is collected in our SPI and Omni databases to facilitate our underwriting deal sourcing and portfolio management capabilities. This slide depicts how the power of StepStone's platform creates a deal sourcing advantage that leads to exceptional performance. Having a very broad pipeline of opportunities is key so that you can cherry pick the best deals to execute. Our advisory practice really drives a substantial pipeline. So the section on the left shows that we've invested $159 billion into real estate funds. Again, last year alone, we put out $18 billion into real estate funds into 65 different funds. And in doing that, we had over 900 meetings with GPs. So we use those meetings not only to learn about the GP and their funds, but we turn it around and ask them in every meeting about secondaries, co-investments and recapitalization opportunities they may have in their funds and in their operating subsidiaries. So we've driven an exceptional pipeline of opportunities from that. We've looked at $325 billion in secondaries and co-investments in the last 3 years and executed $4.5 billion of that, so 2%. And as I think everybody knows, it's the ability to cherrypick from the best deals from a large pipeline that really drives performance. So the numbers that really evident how important that is, is that 80% of the deals -- of our secondaries deals were done without a broker in off-market transactions and 26% of those deals came directly from manager meetings, where the manager came to us to talk about funding their funds and we were able to convert that into a conversation that led to a secondary co-investment or a recap. So 26% of our deals came from these manager meetings, which really shows the power of the platform. By contrast, 29% of the overall secondaries market is not brokered. So, I'm going to go a little more deeply into our secondary strategy because in many ways, excuse's me, it's our flagship approach, our flagship product. So we -- so looking at this time line, the StepStone Real Estate Partners really were pioneers in the business. We started investing in real estate secondaries in 2005 when the market was quite nascent. There are only a few hundred billion dollars of -- sorry, of investments in secondaries at that time. So it was a very small nascent market with only a couple of players. We were focused primarily on LP secondaries at the time. Following the global financial crisis, we saw a need to recapitalize funds and to really focus on what's now called the GP-led space. It didn't really exist at that time. We called it special situation secondaries. We only changed the name of GP-led secondaries later when that name really took over. So we pivoted our business in 2010 to focus exclusively on GP-led secondaries, again, which we call Special Situations secondaries. In 2014, we merged our business into StepStone to form StepStone Real Estate. And we were really compelled by the opportunity to join a platform like Stepstone, where we felt the culture was the same as ours. It was an investor first due diligence oriented culture, but really we hadn't had the exposure to was the global reach, the global distribution capabilities and the model of investing in primary secondaries and co-investments since we were just a secondary shop. We were also attracted to the technology platform. So it -- so we made the merger in 2014. And as you'll see in the slides ahead, it's been a tremendous success. We've grown from -- we went from a boutique nascent firm to one of the global leaders in the real estate market right now. To enhance that success, in 2018, we acquired Courtland Partners, which is one of the largest real estate consultancies in the world. And immediately, we were able to increase our AUA from about $5 billion to almost $100 billion which really propelled us forward. Today, we've expanded our secondaries business. We're raising our fifth GP-led secondary fund right now. We've built out our co-investment practice really from nothing to quite substantial and our advisory practice is one of the largest globally for real estate advisory. So while we've been able to raise and deploy substantial capital in the real estate secondaries market, we think the best days are ahead and the market is about to expand considerably. Annual volume in the real estate secondary market is running at about $12 billion a year. By contrast, the PE market is $108 billion. So 9x is large. While the real estate secondaries market may never grow to get as large as PEs, it's clear that based on the spread that there's ample room for the real estate secondaries market to grow. One factor is that institutional investors own about $11.5 trillion of real estate, which is nearly 2x the size of the PE market, but the secondary market is much smaller. On an earlier slide, I discussed how we looked at $325 billion in transactions over the past 3 years. Obviously, a much bigger number than the $12 billion that's actually transacted. This large volume of opportunities that we evaluate is because we execute secondaries outside this $2 trillion market size. So we're looking at the entire $11.4 trillion, meaning that we execute secondaries not just in the funds world, like most of our competitors do, but we look at secondaries from developers, operators, financial institutions, families REITs. So we've really taken a broader approach to secondaries at the overall market, which makes our market potential much, much larger, we think, than with the $12 billion in volume might imply, excuse me. So this slide shows how the growth in real estate secondaries market over the last 6 years. It's grown from about $5 billion per annum in volume to about $12 billion today. And again, the $12 billion is really mostly the LP secondaries market and some of the newer GP elements of the GP-led market. It's grown even further from when we helped to pioneer the sector in 2005 when trading volume was only a couple of hundred million dollars a year. We expect current market conditions to catalyze substantial deal flow in the real estate secondaries market. As both LPs and GPs become a liquidity constraint and drive these numbers to be larger in the years ahead. LPs are seeking liquidity to solve denominator effect issues, to fund capital calls and to fund their institutional obligation as distributions slow across their broader investment portfolios. GP's new liquidity to fund capital needs in their real estate portfolios at a time when banks are pulling back -- banks are pulling back on lending and their LPs are liquidity constrained and are unable or unwilling to fund the capital needs of the real estate investments. Well, both the GP and LP-led secondaries market are poised to grow. The GP-led market is growing at a much faster rate and went from basically nonexistent when we pioneered the space in 2010, 230% of the market in 2017, 280% of the market today. This is important because we began focusing on GP-led secondaries in 2009 and are now approaching it the biggest part of the market, the most -- largely expanding part of the market as a market leader. So we led the market in developing GP-led secondaries business by providing liquidity to real estate vehicles to help them restructure their balance sheet in the wake of the GFC. That's really when we developed our GP-led secondary strategy. At the time, real estate vehicles needed additional capital to fund the spread between their existing loan balances and the refinancing proceeds they could obtain given their property bags had declined and banks have pulled back from lending. It sounds pretty familiar, right? I think that's right where we are today. So we're now back to the future and recapitalization needs by GPs are going to be tremendous in the coming years. With interest rates having risen, capitalization rates are higher, so property values are lower, and refinancing proceeds are insufficient to pay off debt leaving property values -- leaving property owners with really just 3 choices. If there's a funding gap between their loan payoff amounts on what they can refinance for, they've either got to come up with the money to fund the gap and a lot of GPs, investment vehicles are constrained and LPs are as well, so may not want to do it. They can recapitalize that gap which is where we come in or they can sell the property or give it back to the lender. So those are the really 3 choices. So certainly, there'll be a lot of activity in that recapitalization space, which we'll be able to exploit. And you can see by the charts on the right that there's a substantial wall of maturing debt. Marcel talked about it as well because it's going to be helpful to our private debt business as well. But there's $0.5 trillion of commercial real estate debt maturing in the U.S. and Europe just in 2023 and about $3 trillion over the next 5 years. So again, this is going to drive the GP-led secondaries market in a huge way. So another big driver of our GP-led secondaries business has been and will continue to be the recapital -- the recapitalization of best-in-class, small and mid-cap managers as they've struggled to raise capital because commitments have increasingly shifted to the mega cap managers and the large cap managers. As you can see in the chart, the upper sections of the bar is in blue and orange are getting -- taking an increasing proportion of the space of the overall capital allocations in the market. So that's really showing how the large cap managers are becoming more and more important at the expense of the small and mid-cap managers. So the top 10 managers in real estate now account for about 1/3 of the total AUM. So that means lot of the small and mid-cap managers that are left out of -- being squeezed out of the capital markets are needing funding to -- for their investment activities and that's where our recapitalization programs come in. And during our last 2 funds, we did a lot of deals in that -- with that investment premise and we are going forward as well. So this slide shows redemption queues among limited partners and open-ended funds and has risen to over 12% of total NAV from nearly 0% before the pandemic. Although the level of investors seeking to exit closed-ended funds is not tracked, there's no reason to believe that the levels aren't similar. The LPs will be looking for liquidity for the same reason. So this implies that there'll be a large and growing market in LP secondaries as well. And our funds and separate accounts cover LP secondaries. So we expect that to be a big part of the market as well. This is really evidence that the LPs are already seeking liquidity. So now let's shift over to the real estate businesses performance. The bottom line is the power of the StepStone platform and the synergistic approach to investing in primary secondaries and co-investments, the global reach of the platform, our distribution capabilities and the data systems that we've been able to employ as part of StepStone has caused the business to grow tremendously. So it doesn't show it on the chart that basically from very small amount of fee-paying AUM to about $1 billion in 2018 and to over $6 billion today. So a 40% compounded annual growth rate. So it's worked. And we expect the strong continued levels of growth going forward as we continue to expand our well-established GP-led secondaries fund practice, our co-investment practice, which is principally executed through separate accounts and our retainer advisory practice. So those are large established businesses for us right now, and we'll keep focusing on their growth. But we're going to look to drive additional growth by building out our LP secondaries and discretionary primaries investment practices through separate accounts and also to develop and distribute products into the private wealth channels, working with our Stepstone Private Wealth Partners. So just in conclusion, we think the current market conditions will drive exceptional growth opportunities in the real estate market overall, but especially for StepStone Real Estate, which is well positioned for the growth. As an early pioneer in establishing, the real estate secondaries business back in 2005 and as market leaders in the GP-led space, the most significant and growing part of the real estate secondaries business, we expect to succeed and grow in this upcoming market environment. So thank you for your time. And if there's any questions later. Okay. So I'd like to introduce my partner, James O'Leary, who heads our infrastructure business.

Good morning, everyone. Thank you, Jeff. So my name is James O'Leary, and I run the infrastructure business at StepStone. I actually noticed when Seth gave the introduction this morning, of all the people from StepStone today that I'm also the only representative from the Southern Hemisphere. So it's nice for me to going to come here and talk with you, but also escape my winter for a few days. So thank you very much. So, now it's an important business, infrastructure. So infrastructure is the newest and fastest growing of the private market asset classes having experienced year-on-year growth of 30% over the last 20 years. So what's been the reason behind that? Why have investors started looking at infrastructure more seriously. There are largely 3 principal characteristics of infrastructure investment that attracts these investors. The first is the downside protection that is inherent in defensive assets such as infrastructure assets. The second and probably the most topical one in the market right now is that infrastructure assets through their revenue mechanisms tend to have very high correlation rates to inflation. So, inflationary periods, they're able to generate very strong returns. And third, infrastructure assets tend to generate fairly stable and predictable yield because those assets are less exposed to cyclical swings from time to time. Investors then have looked at this sector and invested right across the risk spectrum from the sort of core, low return cash yielding to higher returning value-add strategies. Investment performance has been very strong over the life of infrastructure and part of that comes from the natural maturation of the sector. But, in truth, I think it's something a little more simplistic than that, which is really what infrastructure is at its essence. And infrastructure, while there are lots of definitions, the simplistic one that that I would be for is infrastructure are those assets that help a society to function, as simple as that. And obviously, societies need to change from time to time, and that is what creates potential for great opportunities for investors. So if we turn now to some of the thematics that are underpinning the way people are investing in infrastructure now. There's lots of pretty pictures up there. But in the sector, people are referring to it at the moment is the 3Ds. The first D is digitalization, which is obviously the increasing use of data, the mobile telephone communication, more pressures on preserving privacy, fiber rollout. And the second D is around decarbonization as we see industries look to invest into renewables and energy transition assets as companies look to reduce their carbon footprint. And the third D, which falls under the transportation banner here is around what we call the globalization as different countries have adopted strategies of onshoring and have reacted to a change in trade flows that occurred during the course of the COVID pandemic and beyond. Now whilst I hope that's all fascinating and interesting for you. It's not the main message I want to give you. I think the 2 things that are important here are, first of all, the size of expenditure required on these strategies. And you can see here some of the numbers in the many trillions of dollars of expenditure that's required for these sorts of investments to be made. That's the first point. The second point is that it's going to change. It's -- when I first started in infrastructure, the concept of any mobile phones existed actually. So the concept of a lot of the investments we're making now don't exist. And these 2 elements together, the fact that the needs continue to change and the assets will change and the scale of investment required means there will be a meaningful opportunity for investment and for returns over the long term. I might just talk quickly about the market evolution for the infrastructure sector, and this will hopefully give you some context of why you're hearing an Australian accent at this point of the presentation. Infrastructure investment really only started 25 years ago at an institutional level. And it began in Australia off the back of a significant privatization program that the Australian government led. And it wasn't until after the financial crisis that we started to see a significant uptick in allocations by investors all around the world. And that led to very significant AUM growth in the sector, increasing 4x since 2012. What's interesting about that, just as an anecdote, is that Australians and Canadians have paved the way for a lot of that investment. If we look at estimates of allocations from institutional investors globally now to infrastructure. Depending on your source, it ends up being between sort of 3% and 4% of total portfolios. What's interesting about that is Australian and Canadian investors now tend to be between 10% and 15%. So to the extent the rest of the world continues to follow the actions that those sorts of investors have taken, there's an opportunity for even more inflows going forward. So in addition to the scale of the market, one of the other big changes has been just the number of managers and number of funds, effectively an equivalent increase of about 4x over the same period. So what does that all mean for us here today? What's happened here is our sector has grown very dramatically and become significantly more complex. And that has meant that there's a much greater need for solution providers like StepStone. So with that, I'll turn to the StepStone Infrastructure business. Like the other asset classes today, you can see a fairly significant scale with AUM of $27 billion and AUA of $51 billion. And a couple of things I wanted to focus on, first of all, was the team. We have one of the largest infrastructure teams amongst the solution providers. But apart from the scale, I actually wanted to talk about the nature of the team because I think it's pretty unique and has helped fuel our growth over recent years. And part of -- the essence of it really comes from StepStone's commitment to specialize within the asset classes. And that's meant you're hearing from different people from different parts of the world. If we look at the infrastructure team today, about half the team is based in Australia and Canada. And for good reason, because Australians and Canadians were the first to be investing in this asset class. So that brought with them certain levels of experience that they could bring to bear. If we look at our team, in particular, we have 15 partners and senior managing directors with almost 20 years of experience. Now that sounds like other asset classes and other businesses. But remember, our sector has only been going for about 20 years. So to have that number of people that have effectively been working together for their entire career in the sector is a unique point of differentiation with a number of our competitors. We have, by its nature, brought people into our business from a range of backgrounds, most significantly managers from GPs that have been responsible for leading GPs, which helps us tremendously with our engagement with the GP market, but also from the LPs from the big Australian and Canadian pension funds, we have a number of team members who've had that background, which helps us with our high client touch model. In addition to the team, like the other asset classes, we've become a very significant allocator. And you can see on the slide, over $50 billion of primary commitments, and we're now deploying at the rate of about $15 billion a year across our primary secondaries and co-investments. And again, like the other asset classes, the coverage across the manager universe is significant with almost 1,000 GP meetings being conducted a year. And it's the combination of the skills and experience of this team and the access that's created by having a large platform like this that gives us a competitive advantage in being selective, so we can drive strong returns for our clients. So where do we stand from a market position point of view. As you can see from this diagram, where we've benchmarked to a number of our peers on an anonymous basis. We are the largest by reference to AUM. And this critical mass, both in terms of the AUM we have and the money we deploy in the market, the size of our team and the coverage we have effectively creates a flywheel for us to be able to support more clients and deliver even stronger returns. But I think perhaps the bit that's even more interesting on this slide, whilst we're very pleased to be in the position we are in this market, perhaps the bottom access is more interesting. We're also, by far and away, the last one to set up this business. So we've done this in a very short period of time. And we've tested this with our clients because clients are always concerned to hear about high levels of growth. And the feedback that's come back to us is their view on why we've been able to do this, and we'll continue to do this is, first of all, the team expertise and credibility we talked about; second, that we've effectively been adopting a proven strategy in StepStone's model to a new asset class, and it is borne out in a way very similar to private equity, which started before us. As Mike and Scott both alluded to, we have not only had an equity culture, but we also have a very client-centric model with our clients. So we work closely with them. And last of all, I know you're going to hear more about it later on today around our data intelligence position, and you'll hear a lot about that today. But in infrastructure being such a new asset class, having that much data at this early stage of the asset class is a huge advantage relative to some of our competitors. So that's our market position. What does this mean for the market opportunity? So looking at co-investments first, I thought I'd give you a snapshot of the growth of the co-investments over the last 5 years. And not surprisingly, it's grown very significantly. You can see there by 3x the number of deals and 5x by dollar value. So there's been significant growth in the market. And the intent of the circle charts on the right-hand side is that you can see that the number of sectors, not surprisingly is expanding. So actually, the process of selecting co-investments and building a portfolio has become more complicated, which again supports solution providers like StepStone. Our experience has been similar, probably growing a little bit faster than the market. We have -- in 2021, we deployed $3 billion into co-investments. Since inception, actually, we've done $15 billion of coinvestments across 139 discrete investments, which is very significant scale. But the point I wanted to make here, which is, again, consistent with the other asset classes at StepStone is we still remain very selective. We only execute between 10% and 15% of the opportunities that we see each year. If I turn now to secondaries. What I thought was interesting was just to overlay the growth in private equity and infrastructure secondaries. And there were sort of 2 things I wanted to call out here. One, as infrastructure AUM increases, we would expect secondary volumes to increase. But I think the bigger issue and the one -- the thing that we're seeing right now is as the infrastructure sector has matured, we're starting to see very increased flow. And by that, what I mean is it's a point where investors get to a point in their portfolio where they have multiple vintages, and it's time to think about portfolio optimization. And you can see that spread there between secondaries as a percentage of AUM. And you can see we're about a full percentage point below private equity. My expectation is that over time, that will increase and I'll move to being in a much more similar position. And frankly, in the last 6 months, we've seen a very significant uptick in secondary flow, partly because of the denominator effect, but also because of this multiple vintage exposure that people have, when you think most people in the market really only started investing from 2010. So it's about the right time that you see this sort of activity. This is probably looking like a pretty repetitive slide for you today. This is the fourth asset class with the same chart. So like the other asset classes, we've obviously enjoyed very significant AUM growth each year. And I believe that, that is something that is going to be sustainable in the years ahead, which brings me to, I guess, the growth focus for infrastructure. First of all, I would say that given our market position, my expectation is, as clients continue to allocate and clients continue to grow our existing strategies, particularly around the separate managed accounts in primaries and co-investments and multi-strategy will continue to grow. The second leg of our growth strategy is highlighted there is around secondaries. As I've just mentioned, that is a market that is now rapidly increasing in volumes, and we expect to be able to participate in that by adding more separately managed accounts to the stable of our business. But the 2 other parts of the growth strategy were alluded to a little bit at the beginning, which is that the infrastructure business to date has only been an SMA and advisory business. There have been no comingled solutions offered. And so part of our growth strategy going forward will be to launch comingled funds that are consistent with the funds that we've developed across the StepStone Group. And lastly, for us to be able to access the private wealth channel where we think there's a clear opportunity in infrastructure given so few players have done it today. So to summarize, -- given the nature of the infrastructure assets, the scale of the opportunity is not only significant but I think is sustainable. The sector is growing in complexity maturity, and that has increased the need for solution providers. We have been fortunate to build a dominant market position and a critical mass to enable us to strongly participate in the growth in the sector going forward. That growth in the ordinary course will come through a continued extension of our advisory and SMA business across the multiple facets that we operate, but we also believe we have the opportunity to accelerate growth through launching some of the co-mingled products and accessing the private wealth channel, consistent with the broader firm offering. And that, I think it's almost time for a break there.

Thank you, James. We're going to take a quick break for those on the webcast. We're targeting 1210 to return. So we'll take a 15-minute break. Thanks all. [Break]

Let me introduce Tom Keck, who heads our research and he's going to speak to StepStone's Data and Technology advantage. Thank you.

Good afternoon. Thanks for coming on. I'm Tom Keck, one of the founders of StepStone, Head of Research and Portfolio Management. I was our first technologist when we founded StepStone in my spare room. I'm happy to report that we actually have a pretty qualified team now as opposed to when we started out. I want to talk to you today and try to pull together some of the messages that you've probably heard underlying a number of the presentations that you've seen so far today. When we first founded StepStone, we really saw the potential for Data and Technology in the private markets. There was a lot of data being generated, but it was all locked in Word and Excel and third-party databases that weren't particularly easy to get data and information out of. So when we founded the firm, we had this sense that this flywheel you've heard us talking about was going to really be empowered by having technology at the center and data as a real driver of our investment decisions. So we try to use Data and Technology to enhance our investment process, not only to make better investment decisions, but to make that process scalable. So as we grew the business, we'd be able to cover more and more of the private markets. Along the way, we discovered that enhancing the client experience actually made our advisory and AUM clients stickier. They hang around longer because as they sort of see the technology and embed it in their own investment processes, it makes it a little more painful for them to consider going to one of our competitors. We found that institutions value the data and actually will pay us for it. A lot of our actual AUM conversations these days start as a technology conversation where they're interested in SPI or Omni as a technology that they want to buy for themselves but say, "Yes, StepStone, maybe we don't really need you guys. But once they start to see the power of the platform, they understand why they should have a deeper relationship with the broader firm. Data and Technology have been powering new products. We'll talk a little bit about how that's been happening. But really understanding the performance of private market assets, not only on risk and return, but most importantly, on liquidity has been key to unlocking new products and capabilities to tap into underpenetrated markets. We've chosen to develop an in-house [Audio Gap] about 8 data science professionals. They're really an industry-leading team, I think is a really exciting. It makes it exciting for me to come to work every day because I get to learn from people that are smarter than I am and highly motivated. I'm going to talk to you today to try to make our Data and Technology a little more real by talking about 4 different products that we've pulled together. Originally to do our everyday jobs of investing our clients' capital, but increasingly, pulling insights out of those products to drive new capabilities. So SPI and Omni are what we call workflow engines. They essentially -- we do our jobs every day using these tools. They not only distribute information every day, but they collect information. So the garden kind of weeds itself. The data that we collect through those workflow engines powers DVE and pacing which really distribute the insights that we gain from understanding these asset classes better. So we thought a SPI as a repository of market intelligence. We wanted to have a place where we could communicate across the platform, across all the different activities that we are conducting, but also be able to see patterns over a longer period of time. In the private markets, you can't just buy assets off the screen. You have to look at what's available today, and we wanted to have the capability of comparing things that are in the market today to things that were going to be in the market in the next 12 to 18 months. But even more important than that, because managers have access constraints, you actually have to be talking to these managers well ahead of when they're actually going to be in the market to develop the allocations and to have the ability to invest in them when they do come to market. So having that visibility into when managers are coming back, which managers we should be focusing our time on actually drives the scalability of the overall business by creating more allocations available and driving deal flow across secondaries and co-investments. This has also become a repository for our corporate memory. So we keep track of meeting notes. We do something like 3,000 to 5,000 GP meetings every year. The notes from those meetings go into SPI and become available to everybody around the platform. They also become available to our clients. So not only do we -- are we able to see patterns evolving across the different markets, but our clients have access to that information as well. And therefore, when they use SPI it becomes embedded into their investment process, and we locked them in a little bit closer. It automates a number of the analysis that we do for our due diligence process, this allows our analysts to not have to do that first level of analysis, and they can go straight to the level 2 and 3 questions that are the ones that are really going to be dispositive on whether we want to make an investment or not. I alluded to before, but SPI is a great conversation starter. A lot of institutions have their own investment teams, and they feel like, well, we've got people covering the markets. We just need more information. So StepStone, just sell us SPI and then we'll take it from there. But as Scott talked about, these are small investment teams that are trying to cover a pretty big market. And as they start to peel back the layers of the onion by looking at SPI, they actually realize how powerful it is and how much leverage it gives them in doing their day-to-day jobs. We have research, the white papers, general partner profiles, a lot of intellectual property that's available to these clients through SPI. It also -- I talked about the GP meeting notes. So that's the access and transparency. They get to see not only what's in the market today, but what's coming down the pike. And probably most importantly, what interactions we've had and what we think about those different opportunities. And I talked about the sophisticated analytical tools. I think the biggest testimony is really when we do these initial conversations and we show SPI, we had 1 client in particular comment that every firm that we see talks about their data and technology advantage, but StepStone, you guys actually have it. SPI kind of embodies our approach to working with our clients. We think greater transparency actually builds a deeper relationship with the client, but it also helps to develop trust and confidence. Mike talked about the transition from on different clients where we start out with 1x, and we wind up with 9x to 11x AUM over time. Part of the reason is this philosophy of transparency and communication with the clients. And our data and technology are important ways to act on that. It develops trust and confidence, deepens the relationships. It also sharpens the focus of our investment team because they know that clients are going to be able to see their work products, they spend a little bit more time and attention to detail in developing those work products. Now you might say, well, Tom, this sounds a little bit risky. If the clients see how the sausage gets made, maybe they'll know how to do it themselves. What we find is actually the opposite is true. The more they see all the activity that we're doing the more they realize that they can't really do this themselves. And so again, that just locks them in a little bit deeper. So more data and information. You've heard it from all the different asset class heads. It really gives us an unfair advantage when investing in the private markets. You see some big numbers here, 16,000 general partners, 195,000 investments. That sort of understates how much data is actually there. So on these investments, we actually know GICS codes. We know geographies. We have information on capital structure, sales, profitability. So a tremendous amount of information about the private markets. This allows us to do a really deep level of diligence, not only at the fund level but all the way down to the portfolio company level. So we can really dig into not only what have the returns been but how have they generated the returns. Have they delivered these great returns that pretty much every manager is able to represent these days, particularly after the last 10 to 12 years in the capital markets. Have they done this because they were good or because they were lucky? Being able to peel back the onion to the gross level allows us to get more insight into that question. We also know that our clients are using this information in their own investment processes. So our active daily users and page views are up about 20% on SPI in the last year. So on average, about 86 users per day, looking at over 200,000 page views per month in SPI. So that's a lot of engagement with these products. We find that the power users of this product tend to be the larger institutions. I mean we talk about these 5-person teams, you still have to be a pretty big investor to fund a 5-person team. And so we have over 27 clients that are logging into the system -- have 1 person on their team logging in at least once per day. Omni is another workflow engine. This is our portfolio analytics and reporting platform. We developed Omni because the third-party systems that were available, we found to be too slow to innovate and too difficult to use to generate insights. We have data that's more comprehensive than any third-party available database and it gives us the insights into the underlying funds and transactions that powers a lot of the investment decisions that we make, but also the DVE and pacing products that we've developed. Average daily users for Omni are up 27% just in the last 12 months. Page views are up 64% in the last 12 months. So we have more clients that are using this product and they're deep engaging with it at a much deeper level. So Pacing is an example of a product that we've developed using the information that's available to us because of the workflow engines that I talked about. There are a lot of Excel models out there that will give you projections for what the cash flow is from a private equity portfolio are likely to be. But we wanted to be able to use this historical data and information to make better assumptions to power those models, but also to really understand, well, how wrong could we be in that projection. The one thing we know for sure when we make a projection is that it's wrong. But understanding how wrong it is, is the most important thing when you think about portfolio management and particularly risk management. When we talk about putting together the private wealth platform portfolios which involve providing liquidity in addition to just giving exposure, that risk management is really a key element. And having the data and information and the confidence that comes from knowing where those data come from and how they're put together is extremely important. Because we design SPI and Omni to communicate with each other, it allows us to pull this information out seamlessly and again, to use our in-house team to develop these new products and capabilities. Our Daily Valuation Engine is another tool that uses historical data information to glean more insights into how private market assets perform, but also to provide new capabilities that unlock new customer channels and new capabilities. We're able to use the historical information and look at the past correlations to pull information out of public market movements to inform what the private market portfolio is likely to be. This allows us to make more accurate assessments of what the values of a private market portfolio are in real time. But these estimates also have the advantage of being unbiased, historical sort of now casting techniques to try to figure out what a private market portfolio is worth today, systematically underestimate what the value of that portfolio is. The estimates that we get from our Daily Valuation Engine are not only more accurate, but unbiased, which means that they unlock capabilities in new applications, whether it's pension funds who are trying to mark-to-market at year-end and understand how much they need top up their portfolio. 401(k) plans or superannuation plans that require daily valuation and also some of these private wealth products that Tom is going to talk about in a minute. So all-in-all, the value of Data and Technology, which is kind of underpinned a lot of the messages that you've heard today is really that it gives us this unfair advantage in the market. It allows us to deliver better and more scalable investment decisions through our investment process. It provides a superior client experience by not only enabling this transparency that is a little bit of our secret sauce in working with clients, but also helps them to understand the value that we're providing in what we're doing every day. Those capabilities drive AUM growth, they drive re-ups and retention of clients, both on the AUM side and the advisory side. And then finally, new products, whether it's penetrating insurance channels, private wealth channels, or defined contribution channels, having the ability to risk manage and produce daily valuations are key capabilities that are going to unlock those opportunities. To get a little bit more deeper into one of the key opportunities that this capability is unlocked. I'm going to turn it over to my partner, Tom Sittema, who's going to talk to you about our private wealth capabilities.

Good morning. I'm Tom Sittema. I'm one of the founding partners of the StepStone Private Wealth, and I'm a partner at StepStone, and I am acutely aware that I stand between you and lunch. So I will be very focused. We built a StepStone private wealth business to really take advantage and exploit 4 key market trends that we saw and have been underway in some cases for numerous years. The first, you've heard about for the last couple of hours from the industry heads, just the overall meaningful growth in the private markets business. The second, which is represented by this slide is less well known, and that is the growth in the portion of the financial assets that are controlled by individual investors. In 2021, individual investors crossed 50% of the overall financial assets, and that percentage is expected to grow meaningfully at the expense of some of the institutional and particularly the defined contribution plans. A third trend is the dramatic meaningful underallocation of individual investors in the private market sectors. As you can see on the far right side, most institutional investors are well over 15% invested in private market assets and individual investors are well under 5% allocated to private markets. And the last trend that we saw a number of years ago and is accelerating is the growing institutionalization of this market for individual investors. The bar charts on the left here drill down just a bit more in what I just mentioned. As you can see, sovereign wealth, public pension plans, endowments and so forth, are allocated in the private markets, 30% plus and individual investors are depending on sort of who source 5%, some sources as low as 2% or 3% allocated to the private markets. On the right side of this page, articulate some of the why for that being the case. Some of the early products that have been developed for this space were not great investor products. They were not well structured. There was not great alignment with the sponsors. And most of the products that have been made available in the private markets for individual investors are traditional LP drawdown funds. They're geared for qualified purchaser clients, which means you have to have a $5 million net worth or up to access. Typical minimum investments originally were $1 million. They came down to $250,000 to $500,000. So it's a meaningful downstroke for an individual investor. It's a single strategy, single vintage year fund. Generally non-diversified requires K1s, which individuals hate, because it requires them to get extensions on their tax returns. The cash flows are very unpredictable. So if you make a commitment in these funds, you generally have to keep cash because you don't know when you're going to get a capital call. You might get unplanned distributions as well. So you tend to have excess cash, which burns your returns. You tend not to have meaningful transparency in terms of valuations and communication. And most all of these products have tended to be with single managers. I'm reminded of a quote that's often attributed to build gates that says we tend to overestimate the pace of change in the next 2 years and underestimate the pace of change in the next 10 years. And this is a market where that is true in spades, the level of accelerating change in the Private Wealth market for private markets assets is accelerating at a torrid pace. So how do we at StepStone plan to take advantage of this marketplace? You have heard from our sector heads this morning, and you have to be impressed with the level of capability of our respective teams and the deal volumes and the deal flows. In addition, the information advantage that we have in the private markets is truly extraordinary, and we're putting the combinations of those together to build products for the Private Wealth channel. We are investing sort of institutional quality in the same deals that our institutional, separately managed accounts, investors have access to, and we're investing with Private Wealth products side-by-side, perry pursue with those investors on the same economic terms. Our performance for the 2 funds, which I'll cover in more detail in a moment, have been extraordinary in part because of this information advantage, in part because of the caliber of our investment teams. When you deploy $80 billion a year in the private markets, it allows you to be incredibly deal selective, which clearly enhances performance and returns. It also is helpful that we have the lowest cost products in the marketplace. Importantly, there is no J-curve effect in our products because we have invested extensively in the secondaries and co-investments. So we have immediate deployment of our capital. And lastly, in the lower left, it's something that I think is misunderstood. The concept of open architecture, we think, is a guiding principle to our business, and it is a clear differentiator. There are great managers out there that invest capital and have done well, but no manager is the best investor in every sector, in every industry, in every geography, in every asset class period end of story. A true open architecture model, which StepStone has, enables us to invest with the best managers in their power alleys, in their strongest sectors with the strongest investment teams within their respective organizations. We're also tackling this huge opportunity by building our own distribution team. Some of our competitors have elected to outsource distribution. We from day 1, have decided to build and invest specifically in our own distribution team. We now have a team that's more than 50 professionals dedicated to the Private Wealth channel, and we are also leveraging the business development team that StepStone has built literally around the world. In the U.S., we target 3 specific distribution channels as represented on this page. The first is a registered investment adviser channel, which is a highly decentralized channel. There's thousands of individual registered investment advisers. We're also channeling -- we're also tackling the independent broker-dealer channel and also the wirehouse channel. We are building out and we're in the early stages, but we're building out a distribution team in the rest of the world, particularly in the major countries in Europe, but we're also targeting and raising capital today in Canada, Australia and Latin America. At the bottom of the page, the activity levels simply highlights that this is a single business. It requires a very consistent pace of activity. We don't have grand slam home runs. We don't have investors writing $100 million checks in this business. The checks are much smaller investment size. It requires literally thousands of meetings and it requires a consistent effort every day, every week, every month. The benefit of having our own team allows us to manage the value proposition, the culture, the messaging, but also the prioritization of our own respective funds. So how have we done? We launched our first product, which we call SPRIM in October of 2020. We launched our second product in November of 2022, and we have launched parallel vehicles now in Luxembourg. So we have 4 products today. The AUM growth that you see on the left from literally a standing start has been fairly rapid, and we expect this growth to continue. These are 40 Act registered fund vehicles. The distribution partners on the right just highlights the syndicate partners that we distribute our products through, and that has been increasing on a meaningful pace. And again, we expect that to continue as well. Importantly, the vast majority of this growth has been predominantly to date in 1 product because it's been out for 2.5 years, and our newer products have only been out for about 6 months. Allow me to dig a little bit deeper into the 2 registered products that we have in the U.S., and we have parallel vehicles in Luxembourg. The first is what we call SPRIM. This is a core private markets solution, we believe, individual investors should have an ownership stake in a product like this. It is broadly diversified across all of the private markets with a particular emphasis on private equity, but we also have an allocation of real estate, infrastructure and private credit in this fund as well. Today, we are about $1.4 billion in assets under management in this particular strategy. It is diversified in every way that diversification can be measured. We have over 2,000 portfolio companies. We have no concentration in any 1 company. We don't have concentrations with Vintage year funds with general partners or even in industry sectors. This is designed for accredited investors. It has liquidity. It has no capital calls. It's a 1099, so it does not require a K-1. So we built these products to address the hurdles for individual investors accessing the private markets. Importantly, and you've heard mentioned earlier today by a number of our speakers, the importance of selecting top quartile or second quartile managers or said differently, just avoiding the bottom half of the managers, over 80% of the managers that we've invested within this fund to date, our first or second quartile managers, and all of that has contributed to significant returns averaging 29% annualized returns since inception. The second product that we've launched, again, we've launched it in the U.S. November of 2022 and a parallel vehicle in Luxembourg is what we call SPRING. This is a private equity-focused product specifically focusing on the venture and growth sectors of the private equity market. This product also is broadly diversified within venture. We have today investments in over 600 portfolio companies in this fund, which now has achieved just over $300 million in assets under management and growing. We are in the very, very early stages of this fund. We expect the growth here to be significant, and the adoption from our partners on the syndicate side has been very, very positive. This fund is designed for qualified clients. We have -- again, we have liquidity provided, which is very difficult to do in venture and we've been able to structure a fund around that. So we provide liquidity, 2.5% a quarter, 10% a year. Again, this is not a K-1 product. It's 1099 product. Our returns in the first 6 months have been significant, as you can see here. I should touch on redemptions, which is of interest in the marketplace today, particularly with a number of our competitors. We've had 0 redemptions in this fund to date. Unfair because it's only 6 months old and generally redemptions wouldn't happen in the first year. in our SPRIM product, which is approaching 3 years old, our redemptions have been less than 1% on a quarterly basis there. So as I land this plane, I described the market opportunity initially we believe, is very, very significant with a meaningful under allocation of individual investors to the marketplace and the growing institutionalization of this space. Our advantage should be fairly clear. We have an incredible investment capability and investment advantage over many of our competitors. The ability to deploy $80 billion a year in private markets gives us a massive opportunity to be incredibly selective, which benefits our investors and the information advantage, Tom Keck called it an unfair advantage gives us a meaningful advantage in a marketplace where often information is quite opaque. From a growth perspective, we will continue to build out distribution in the U.S. We're going to continue to build out distribution in the rest of the world that will be partnered with a continued growth in our syndicate and our distribution partners. And lastly, we will continue to develop and launch new products, leveraging the information advantage and the investment expertise that we have. So with that, I'm happy -- I'm sure you're happy to hear me say, I'm turning it over to Seth as we wrap. Thank you for your attention.

Great. Tom, thanks so much. We're now going to shift over to Q&A. So in addition to Scott and Mike, joining us on stage also for Q&A are going to be Jason Ment, our President and Co-COO; and Johnny Randel, our CFO. So while they come on up, just a couple of quick housekeeping items. We have steps on colleagues with Mike, so just raise your hands, and they'll come find you. When you ask your question, please just include your name and your company affiliation and please limit yourself to 1 question and 1 follow-up. So we can get through all the questions in the room. For those on the webcast, as a reminder, you can use the virtual tool to ask a question. Please just include your name and affiliation also when sending in the question. I'll start with Mike Cyprys first on the middle section here.

I think we're live. Great. Mike Cyprys, Morgan Stanley. I appreciate all the detail and the time that went into this. So big thank you for this. First question, maybe you could just talk a little bit more about cross-sell opportunities. That was mentioned a number of different times throughout the presentation today. Maybe you can help flesh out how many of your customers have, say, more than 2 products across -- or excuse me, more than 2 products across more than 2 of your verticals, how many clients have products across all 4 of your asset classes? If there's any sort of color you can elaborate on that. How that has sort of evolved over time? Where you see that going over the next couple of years? And what are some of the initiatives in place that you were thinking about to expand penetration with the customer set across the broader platform?

Mike. So, Scott Hart responding first, others may jump in as well here. I don't think we have the exact stat that you were looking for in terms of how many clients have 2 different relationships or invest across all 4 asset classes. The stats that we have historically pointed to in those regards are the fact that roughly 35% or so percent of our clients have had both an advisory and an asset management relationship and roughly a similar percentage who have had relationships across more than 1 asset class. While not responding -- well, it doesn't address your specific question or specific stat, I would certainly suggest that the cross-selling opportunity is meaningful. One of the things that we've looked at historically and you've seen us disclose in each of our quarterly presentations, the mix of business across both geographies as well as client type. And I think we, as a firm, have had success across each of those geographies and client types. But when you break down by individual asset class or strategy, the results are quite different, and I think represents the opportunity that lies ahead. And I think maybe the one I would just highlight that I referenced very quickly during the presentation was with Greenspring, where on the venture capital side, our LP mix is closer to 2/3 U.S., 1/3 outside of the U.S. That's the opposite of what we've experienced at StepStone more broadly I think demonstrates the potential cross-selling opportunity with international clients. You'd see a similar thing if you looked at the mix by individual client type and certainly by underlying client.

Great. If we could pass it over to Alex.

I've got 1 and a follow-up. All right. So the first one, I wanted to ask about the commingled fund business. You guys provided a lot of color on individual funds and various vintages and sizes. It's been obviously a quite difficult environment for commingled fundraising this year, maybe late part of last year. But at the same time, the absolute dollar amount in these funds is still fairly small. So given the fact that you had a lot of 2020, '21 vintages, maybe talk a little bit about what's coming up and how are you thinking about the ability to still raise larger funds even in this environment?

Yes. Thanks, Alex. No, that's right. The commingled fund industry generally has seen a little bit of a slowdown. I think what Scott has mentioned in the past is -- there's been a general lack of sense of urgency of LPs getting back into the market after a '21 and '19-'20 or 2020-'21 period of a ramp-up, but they're still very much engaged. And so really, what we're seeing is maybe an extra quarter or 2 prior to years in '19, '20, '21 to raise a fund. But as we mentioned, we now have commingled funds across all 4 asset classes. And that itself lends itself to conversations with chief investment officers that we wouldn't have 5 or 6 years ago. So it's just the development of additional products. And to your point, Alex, these are not massive $15 billion to $20 billion, $30 billion funds. These are $1 billion funds to $3 billion funds and smaller. So we feel very comfortable that we have modest sized funds that are growing in a very healthy way and broadly diversified across the asset classes and strategies. So it's really not about 1 or 2 massive flagship fund that's driving our business. Rather, it's a highly diversified pool of commingled funds across the asset classes and across the strategies. But your point is taken, and it's one we've observed as well. And that is the raising of commingled funds and the capital formation in this environment today is just a little bit slower than it was in the bull market of '19, '20 and '21.

The couple of things I would just add quickly. Historically, most of our funds have invested over a 3-year investment period. You heard a lot today about just the broad opportunity set that we have in front of us and our ability to be very selective as a result. And so we generally expect a pretty similar investment pace and therefore, return to market for those funds. I'd say in venture capital has probably been the 1 area that the investment period has been slightly shorter. And it's part of the reason that during our most recent earnings call, we did reference the fact that there are already conversations starting to take place as it relates to the venture capital, secondary space, which is clearly in high demand today. I'm glad you picked up on the point around your sort of overall fund size, I agree with Mike's comments that as a result of our largest fund today being $2.6 billion means there is continued room to run there. And the other thing I would highlight is that these are strategies that are in demand. These are not generic buyout strategies. These are strategies that once an LP has decided are part of their long-term allocation to private markets typically remain as such. And the added benefit is today, certain of the strategies are very much in demand, given the market environment. So when you think about Jeff Geller spent time describing the attractiveness of the real estate secondaries opportunity that lies ahead of us, that's part of what drove the strong $900 million first close of our real estate secondaries fund that we announced last quarter. I think the same is true when we think about secondaries across areas of the asset class.

Great. And just a quick follow-up, I wanted to ask about the equity exchange with the non-PE businesses that you highlighted in the first part of the presentation. So it sounds like ultimately, you're comfortable the way things are today, and it's going to come down to sort of scale and maturity of those kind of verticals or subverticals as you described it. I guess, how do you define that, right? Because it feels like that's going to be the triggering event of you starting to buy more of that equity? And how does the value get determined at the time? I know you said mix of equity and cash. And ultimately, how does that all brought down to the EPS accretion to the StepStone shareholders?

Thanks, Alex. And maybe I'll take your questions in reverse order, if I could. How do you determine value? I think we all recognize that any exchange of equity between holdings and the teams would need to be done on an accretive basis. Now the important thing here is all of the teams are talking on a regular basis about this. This is not something that is a fairly new or recent idea. It's been going on for some time. One of the reasons why Scott presented that slide that showed the maturation in growth curves, particularly of private equity over a 15-year period, the asset classes that, that are on our platform today that are non-PE are in 5, 6, 7 years of operation. So it's really hard to pinpoint exactly what year that might be before they reach that critical mass or scale where it starts making sense, but -- we'll continue to keep you posted, but we are getting closer and closer as each asset class continues to scale much the way private equity scaled over 15 years.

And I think the point that we want to make sure to drive home today and you touched on it, we're comfortable with the current structure is because it's working. And when you look at the growth that we've experienced across those asset classes. We firmly attribute that to the seniority and the quality of the leaders of those businesses that we've been able to attract. And I think part of the reason we've been able to track those types of leaders is because of the potential for equity ownership, which is clearly driving not only the alignment but the incentives to grow those businesses.

We'll take to the other side of the room, to Adam in the back.

Adam Beatty from UBS. A couple of questions on the slide showing the bridge from listing to current on the -- back on the commingled funds. So I'll just lay them all out there, let you respond. First of all, pretty rapid pace of expansion around fund families, new funds. Just looking ahead to maybe fiscal '28 since you've put that out there, how much more expansion would you expect similar pace, maybe a little bit more slowly or maybe even accelerating. And then also, on the contribution from the new fund families, just how you might expect that to ramp over those intervening 5 years?

Yes. So I think a couple of points. And when you think about the commingled funds that we operate today, some of that growth from the start of the bridge to the end clearly came from the acquisition of Greenspring, which contributed a large number of commingled strategies. And you heard throughout the course of the day, some of the new strategies that we have launched recently, not only in infrastructure but the private wealth space would have contributed there as well. Maybe -- I mean, I suspect part of where the question is going is sort of what you have to believe in terms of the 5-year, the 5-year path that Mike described during the presentation. And what I would say there is, look, we've generally assumed that we're talking about existing fund families, historic re-up rates across both funds or fund size growth and separately managed accounts as opposed to -- as opposed to new strategies that weren't at least discussed throughout the course of the day today. But I think what you've seen and if you think about the history and many of the commingled funds that were laid out on Mike's slides, typically, those first-time funds started as quite small offerings, right? What we've done, I mean, the footprint has been or the path has been is we will typically develop a track record through our separate account business if there's demand from LPs for a commingled offering, we've typically done that starting small and then over time, those funds are now existing products and then sort of captured in some of the existing fund growth -- fund size growth.

And the only thing I might add to that, Adam, is the one slide that we did present on the commingled funds, that kind of showed the early days of development was in private wealth. And as Tom stood up and mentioned, we're in market now with our first 2, and you can expect the skunk works are hard at work coming up with what the next one might look like or one after that. So you can expect to see in addition to what Scott just mentioned, maybe some incremental additions to our funds in the wealth management platform.

Move to the front to Mark.

Regarding the 5-year FRE growth target of 15%, what's the difference in the growth expectations for the PE business versus the other 3 businesses where you only own 50% of the economics?

Yes. So look, I think when you think about both the maturation of the private equity asset class, the fact that we are 15 years into the story there as opposed to 6 to 8 years into the story on the other asset classes, and when you think about the expected industry growth across certain of those other asset class, I would just say that directionally, we would expect that we continue to see the non-private equity asset class is growing at a slightly faster rate than the private equity asset class.

And on the SPRIM product, it's sort of a new market. You're going through this education process, trying to convince someone to invest in private markets and explaining the merits of the product and its 40th product, and all these different things that you're explaining -- and then you add this extra element of that it's largely secondaries and co-investments, is that an additional element of complexity that you find as a resistance point or is that something that by the time they're going to buy it, they don't care what the form is when they get in the exposure.

I'll start. Jason, feel free to jump in. I think the short answer is no, because those tools that actually allow you to deliver the solution that Tom described earlier. So when you think about not wanting to have capital calls from day 1, when you think about wanting to be able to deliver liquidity into that product, that's not really possible without the co-investment and secondary strategy. So I think pretty quickly it becomes not an additional layer of complexity but part of the reason we're able to offer that solution. I don't know, Jason, if you'd add to that?

I would say at the wholesaler level, we're getting on to a platform level. It's actually those strategies that the gatekeeper within the institution is most interested in, in the first place. And so views it as part of the value proposition, as Scott said, definitely not complexity. It's actually probably a selling point.

To John.

John Dunn, Evercore ISI. You guys are in 15 markets now and considering that for some asset classes, demand will be stronger overseas. How important is it for you guys to continue and to get into more markets? And then also, can you point to any kind of differences in demand regionally for your 4 asset classes?

So in terms of new markets, look, we continue to be -- we continue to be open-minded about new markets where we're seeing demand from clients or even existing markets where we've had a significant presence but for one reason or another, there has not been a need to have an on-the-ground presence today and maybe that changes over time. But I think when you think about not only 15 different countries, but 25 different offices, I think we have most of those key regions covered and several other very important ones where we have a significant client base, but have generally covered from outside of the region. I think in terms of differences in the appetite by region across different asset classes, yes, and I think part of that is driven by just the overall maturation of investing in the private markets across certain of those geographies. Certainly, the one that's been most talked about and publicized would be U.S. institutions being over allocated to private equity versus us seeing new pools of capital come online in the Middle East, parts of Asia, Latin America, et cetera. But I think the same is true when you think about some of the non-private equity asset classes. You heard James talk about infrastructure, the differences in allocations between Australian and Canadian institutions versus the rest of the world. And I think that will also drive some of the differences in appetite over time as we expect to see other regions eventually catch up with some of the leaders in these asset classes.

We'd go to Ben, far left.

Ben Budish from Barclays. First, I wanted to follow up on an earlier question just about the FRE growth to 2028. And I imagine you're sort of indifferent as to adding FRE dollars versus kind of expanding FRE margins. But you've indicated in the past that you sort of see like mid-30s FRE margin over the medium term. Is that sort of consistent with your expectations for like the FRE doubling guide? Or is it sort of if the top line is growing better, you'll invest more and maybe it stays flattish, but we still get there from an absolute dollar FRE perspective.

Thanks, Ben. No, I think that's right. The progression of our FRE growth over the next 5 years, as we've outlined, is a combination of both top line growth in terms of fee paying AUM and revenue. But with that growth in revenue, we'll come operating leverage. And so we should expect to see margins continue to evolve much the way the run rate chart that I shared laid out since the IPO to where we are today, it's going to ebb and flow, quarter-to-quarter, but as we continue to scale up, we should expect to see margins to continue to grow as well over that period. So it's a combination of both.

I think the only thing I would add, right? You heard Mike during the presentation, talk about and borrow from our co-investment underwriting and talk about what you have to believe case. So maybe the other thing that we often talk about when we're underwriting co-investment is having multiple different levers to pull to achieve your goals, right? And so I think in this case, you've heard us talk for the last couple of years about the trade-off between growth and margins. And I think the good news from our standpoint is there are multiple ways to get there.

We have a question here with Sanjeev.

Sanjeev Math from Baron Capital. So just touching again on the margin point and the kind of ambition to get over to mid-30s. So I just wanted to drill down some of the drivers and levers we can pull to get there. So I guess, the headcount of the business has been growing over time. I think we're up close to 1,000 employees at this point. So I guess kind of part 1 is, do you think at this point that we are kind of sufficiently staffed in terms of our talent of the company to scale into a much greater revenue base? Or do we kind of think that there's still a lot of runway to continue investing in the business and adding headcount. And then, b, I think, you had mentioned that one of the levers would be some cost savings in the business. Curious if you can flush that out in terms of any more color around timing or magnitude? And what kind of areas of the business we'd be talking about to realize those?

Yes. Maybe, I'll start, right? I mean, one of the phrases I think Mike used during the presentation today was putting the cart before the horse in terms of the build-out of our team and resources ahead of the growth opportunity. And this is something we have done from day 1 at StepStone. We think about the size of the team that we brought on in 2007 before there was any business to speak of. When you think about how we brought on large senior experienced teams across the asset classes, again, before that there was really any business to speak of. And most recently, we've done that in the Private Wealth space. So I think we've made a heavy investment in people ahead of the growth, ahead of the key growth drivers, not only across asset classes but also the private wealth business. And so some of that margin improvement will come from the maturation of those businesses as the revenue growth catches up with the teams that we had built out over time.

And the other thing that I would add, as I mentioned, we made a strategic hire this past quarter with Global Head of Business Development to help coordinate the sales and marketing efforts across the regions, across the strategies and across the asset classes. And I think you could expect us to continue to invest in the business development and distribution activities of the firm. But when it comes to cost saving activities, maybe Jason could offer up a couple of thoughts here, but the bigger we get, the larger we get, the more complex we become. There are opportunities to capture some efficiencies. So I don't know, Jason, if you wanted to highlight a thought or two there?

Yes. I think, the investment team is clearly the most scalable part of the platform, right, in terms of -- relative to revenue. And so on the enterprise services backbone, we really think about the use of technology. And Tom talked about some of the tools that we've got. There are others in development as well that can drive efficiency. We talked about outsourcing partners and how we can use vendors to help grow our capability while not growing the headcount. But admittedly, the customization element of the business drives a high-touch model, and it's something that we think drives stickiness with the client. And so it's something that we embrace as part of the business model as well.

The back of the room.

Maybe just expanding a little bit on that last answer around investment in headcount. Just what are you seeing in terms of the battle for talent in this business? And how are you managing that and continuing to provide top client service while hitting these margin targets because that's a very important part of the team you build -- you guys build is crucial for your success?

It's certainly an important part of our success. And you heard each of the asset class team stressing the quality, the stability, the experience of their teams throughout the course of the day. Maybe the one thing that we didn't talk a lot about, but I think there's also what type of team member has proven to be successful within StepStone, which is often someone who realizes that as you heard about all day today, it is much more about the power of the platform and playing within the platform that makes us all better investors and more successful investors than we could be on our own. But to your specific question, on the battle for talent, I think certainly something we were probably talking more about a couple of years ago as we started to see certain groups looking to enter, for example, the secondaries -- secondary space, which has probably been 1 area there has been quite a bit of competition for talent. But I think as -- as one, we've seen fundraising slow down a bit as we have seen some of the banking turmoil. I think, that many look at a platform like StepStone and see the diversified nature of the business, see the culture that we have built, the success we've driven over time, and realize it's a pretty special place to build your career. So I would say that some of those pressures have alleviated at least slightly in more recent years and in fact, probably see an opportunity to bring on some pretty high quality talent going forward.

We're going to throw on 1 from the virtual webcast here. How does your guidance for doubling FRE over the next 5 years? How is this impacted from acquisitions? Is this just on an organic basis? And could you speak to the impact of buying in of minority stakes in this target?

Sure. I think I wrapped up that final slide with the 3 things that you need to believe in order for us to get from where we are today to where we believe we can get and that would be the re-up of existing mandates, the addition of new mandates, and the success of our commingled fund business, the expansion of those families in the institutional world as well as the Private Wealth world. And if you can believe that those 3 things, those 3 things are already in place. And it's really about execution of those 3 elements of growth and those 3 drivers, we believe we can double our FRE over the next 5 years.

On an organic basis.

On an organic basis. Exactly.

And then just quickly on the NCI.

Again, the asset classes are continuing to grow, and we continue to see NCI will grow as those asset classes grow. To the extent that we buy in NCI, we'll certainly keep everyone appraised, but the strategy and the structure we have in place is working quite well at the moment. And we see that mechanism continuing to provide the expected results over the next 5 years.

Okay. I'm going to turn it over to Scott for some concluding remarks.

Okay. With that, I'll keep the concluding remarks quite brief. I know we've been at it for a few hours now. I know we threw quite a bit of content and new information at you, but we appreciate you all sticking with us for the last several hours. We appreciate your interest in the StepStone story. As I started off the day by saying we certainly enjoy telling the story and hopefully, with the opportunity to hear from not just the 4 of us that you hear from on a quarter-in and quarter-out basis, but many of the senior leaders across the firm gives you an even better sense for the power of the platform that we have built and our ongoing efforts to build the trusted partner of choice for private market solutions globally. So with that, we thank you and look forward to speaking again soon.

Thank you, everyone.