TPG Inc. (TPG) Earnings Call Transcript & Summary

Okay. Thanks, everybody. We're going to get going with our next session. I'd like to welcome Jon Winkelried, CEO of TPG. TPG is a global alternative asset manager with a strong track record in private equity and real estate, which was further enhanced by the recent acquisition of Angelo Gordon. With now over $210 billion in assets under management, the deal gives TPG meaningful scale in private credit and further advances its capabilities in real estate on top of obviously several other compelling growth opportunities in private equity, impact, climate and the list goes on. So lots to talk about. Very timely on the deal closing, only, I guess, about a month ago or so. So looking forward to spending some time together.

Thanks, Alex. It's always good to be back to my homeland here at Goldman Sachs.

There you go. I was going to say welcome back, but I said that last year, so now it's just welcome.

And look, why don't we start with Angelo Gordon and the acquisition, given just the timing of when the deal closed pretty recently here. Maybe talk a little bit about how the 2 businesses are coming together so far. And what are the kind of key integration priorities you have into '24?

Yes. Well, I think -- I mean, the good news is the businesses are coming together really well. And you wouldn't be surprised to hear that we really started the integration process right after we actually signed the deal. So we've been at it now for a while. And what we did is we tried to take a very sort of organized approach to how we were going to integrate the businesses, recognizing that our -- one of our important goals was really to bring sort of 2 firms together as 1. We were not interested in kind of having a business that -- or we weren't interested in having a credit business that was sort of operating as kind of a separate subsidiary. The integration into kind of a one-firm culture was very important for us. And so the -- and by the way, it was also something that, importantly, the Angelo Gordon team wanted as well. They saw the opportunity to come together with us and really have a franchise across private equity, real estate and credit that was very powerful. And so they wanted the same thing. So we put together basically a series of what we called working groups right after signing. And we focused on that. I won't go through them all, but we focused on things like our back-office structure, our services structure, so IT ops, our finance infrastructure because, obviously, they're a private business coming into a public company. We focused on importantly, our go-to-market. So all of our client-facing, our LP-facing resources and focusing on how to bring that together and begin to think about the integration process of that. One thing we really wanted to do on that front is we didn't really want to break anything because lots of dialogue and lots of engagement and process with LPs all over the world. So we've taken a careful approach to how we're going to do that. We had -- and people that know me won't be surprised to hear that we had a group called People and Culture, because, again, bringing these cultures together was very important to us. Obviously, retaining our best people is very important to us. So off the back of how we structured the consideration for the transaction, the team that was there essentially got 85% of their consideration in stock that vests over 5 years, which essentially harmonizes it with the stock that we gave our team during the IPO. So we're very focused on that dynamic as well. And importantly, we put together some integration streams where we are working on what are the revenue synergy opportunities and how do we really -- how do we drive that? And how do we turn that into something that's actionable. And I'll give you an example. Like we got together parts of our private equity team with the Credit Solutions team at AG at one of our partner's place out in Sonoma, California. We brought these teams together because in private equity, we really kind of covered the landscape on a sector-by-sector basis. In Credit Solutions, they cover the market sector by sector. They're not a bunch of generalists, they cover it sector by sector. So we got our teams together. And it's already started to create a process where we're looking at opportunities together and really working together. And I've sat through some of the investment committee meetings that we've had on some opportunities that are sort of middle of the capital structure, capital solutions types of opportunities that this environment in particular, is creating. And it's very tangible. So there's lots of interesting opportunities in front of us, but we've taken the integration process very seriously. And I think you have to do that when you -- this is essentially a transformative acquisition for us, right? So I think you have to do that. So we're off to a good start.

Great. All right. Well, we'll talk about AG in a little bit. But I want to zoom out and speak to kind of TPG's fundraising backdrop, really what we saw over the course of '23 and the priorities of '24. And the theme of the year, for the most part, has been it's been a really difficult environment, a difficult environment to raise private equity money. It's been difficult environment to raise real estate. I think for the most part, TPG really stood out as, I think, the only firm that we cover that has been able to sort of successfully finish or finishing up, I guess, your private equity campaign, exceeding the prior vintage, which not many folks have been able to do that. So I guess a 2-part question. What -- number one, I guess, what differentiates TPG in the marketplace and what you've found differentiates you guys most this year? And what are some of the capital raising priorities into '24?

Yes. Okay. Good. Well, look, I think one thing that hasn't changed about TPG and probably won't change going forward is that we have a pretty intense focus on the quality of our investing process and delivering differentiated returns to investors. And if you look across our platform, I think our platform has never been stronger from strategy to strategy in terms of really delivering differentiated returns. So we continue to do that, and we continue to be focused on that. And I would say, over time, our LP base, particularly in a constrained environment, is getting much more focused, among other things, on performance. That's one thing they're focused on. By the way, they're managing to other things as well, which is an important topic. If you look -- also, if you look at what we've done in terms of managing our business and engagement with LPs over the last number of years, I actually asked somebody to -- one of our team members to run the numbers. In the last 5 years, up to kind of 2023 to date, we -- in our private equity business, we returned $70 billion of capital to our LPs, and we invested about $69 billion. So -- and if you look at our DPI in our funds in terms of return of capital, in a very constrained environment where most LPs are frankly constrained, something that's very much on their minds is, are they getting capital back? And what we did going through -- and this was not a smooth curve, by the way, but what we did going into kind of 2019, 2020 is we were sort of conscious of the environment that we are living in. We are conscious of where multiples were. We were looking at our funds and sort of what kind of returns we were creating. And we recognized that, frankly, there was an opportunity to really be proactive in monetizing and creating realizations in our funds. And we did that kind of in earnest. In fact, if you go back to, like, I think it was '19 or '20 in our buyout business, I think for every dollar we invested, I think we returned $2.4 during that period of time. So we were very kind of forward leaning on that process. That's -- I'm not saying we had great vision or anything like that, but that's turned out to be a very good set of decisions because our LPs in particular, have appreciated that. And it's also, as you return capital and you create realizations, it's very defensive as it relates to preserving IRR in your funds. So it was a tactical decision of ours to look at managing our business that way. Besides investing in good companies, managing our business that way. And so as a result of that, I think we're getting rewarded from LPs. As LPs face an environment where they're more constrained, what they're doing is they're saying, I'm going to do more with fewer GPs. I want to do more across the platform. And I also want to be important to my GPs. I want to be important in the context of that relationship because they won't co-invest, they want co-underwrite. It's very much turning into a holistic dynamic in terms of the relationships between LPs and GPs. So we have been positively differentiated in that respect. And as a result of that, to your point, we've been able to essentially go through this campaign and successfully end up raising larger funds in every one of our strategies. And I think that's now going to carry us into this next phase, which we'll talk about, which is now bringing other products and capabilities like AG to our partners. So anyway, that's how we got here.

Got it. So with that in mind, let's talk about '24 a little bit more. I know you guys have a couple of larger funds and probably a handful of smaller funds and likely to be fundraising next year. How are you thinking about that? What's kind of the outlook for fundraising for '24?

Yes. Well, first of all, I think in '24, to your point, we're coming off of a big fundraising bulge. There are a few of our strategies that are now coming into market, like our growth equity fund, obviously, is coming in and raising capital right now. But importantly, and we talked about this back during the time of the IPO, what's happening to our franchise is that to look at it at any one point in time and say, this is sort of like the big cliff in fundraising, it stops, right, and then kind of we go through a drought for a period of time, is really not the way we've designed our platform. Because what we've been doing all along is we've been focusing on creating organic growth and innovating to create new strategies. And the way we describe how we grow is we sort of describe that we grow kind of both vertically and horizontally. We can increase the size of our funds appropriately, in the context of the opportunity, but we also identify opportunities to do things like step-out strategies, to start new strategies and to build organically. And it's a very effective way to build because what we're doing is we're identifying an opportunity in the market that might not be served where we're seeing some interesting opportunities. We're delivering that to our LPs, which they find very interesting and innovative. We're doing it with our existing team before we start adding new resources. We're basically establishing the basis off of which we can build a new fund or a new strategy and then kind of titrating resources into it as we see the ability as we get anchor investors, et cetera, as we form capital around it. So we're not really building too much in advance of fee flow. Tech adjacencies is a great example of that. We saw an opportunity in the market where tech companies were needing more flexible types of capital. We -- it didn't really fit into the buyout fund. It didn't really fit into the growth equity fund. We raised $1.5 billion for the first tech adjacency fund. It was very successful, deployed very creatively. The second fund we raised was $3.3 billion. We more than doubled the size of the business. We then started to add a couple of dedicated resources. So it's a very accretive way of building. The other great example of that, which is really sort of a core part of our platform now, is how we got into the Impact in climate business. We saw an opportunity through the growth equity business. We recognized what was going on in Impact that we could invest at scale in a nonconcessionary way and Impact. We saw what was going on in climate and climate technologies. So we basically got into the business with the Rise Fund. We then raised the dedicated Climate Fund, which was a very substantial fund, basically $7 billion of capital. As a result of doing that, right, we have established ourselves as a leader in climate-related investing in the market. We were one of the innovators, one of the leaders. We've put a lot of resources into it, like Y Analytics that essentially measures the impact of what we're doing. We've gone around the world and talked to all of our LPs about it. We have a strong following within the fund. We're 65% invested. We're talking to other pools of capital that are interested in helping solve these problems and along comes what happened last week with the UAE hosting comp and trying to make a strong statement that they're going to flow a lot of resources to this problem. So they create a $30 billion pool of capital, and they essentially pick 3 partners to work with. They pick BlackRock, they pick Brookfield in infrastructure, and they pick TPG in private equity. And that is obviously -- it's a testimony to our franchise and the depth in what we're doing. But what it's also done is it's essentially -- and what we announced was they gave us a $1 billion commitment for our Rise Climate Fund II. But they also did something very innovative, which is there's been a problem mobilizing capital into what they call the Global South, which is essentially the Southern Hemisphere not OECD countries. And so they wanted to make a statement about we can help mobilize capital there. So they created a -- so what we did is we created this Global South -- essentially a Global South sleeve, where $1 billion from TPG Rise Climate II, $1 billion we're going to raise from third parties in the market, comes together with $500 million of their additional capital, which is called catalytic capital, which essentially think about it as it goes into our investments when we make them, it comes out of our investments when we monetize them, and it's at a capped mid-single-digit return. So think of it as sort of a very unique form of leverage for the fund that boosts the return from other capital that's joining to try to mobilize other capital into the fund. So what's happened is, we went through a big kind of wall of fundraising. We're now into 2024, right? We now have -- we've now talked to the market about a $10 billion capital raise for Climate II, which will be accelerated as a result of this relative to where we were before. And then, as you know, we're also working on putting together an infrastructure pool of capital alongside of that dedicated to climate because it's another clear opportunity to have these sort of overlapping circles in the market, if you will, between PE and infrastructure. So you innovate, create, drive interesting types of returns to your LPs and all of a sudden, the profile of what you have to do and form capital around changes.

So let's talk about climate infra. It's definitely an interesting opportunity for you guys and the UAE news from last week, probably creates somewhat of a positive halo around that as well. How are you thinking about the opportunity set for climate infra? How are you thinking about sizing that? And again, what kind of a positive knock-on effect the climate private equity investment could have on that business?

Yes. Well, I think the way we sort of positioned ourselves in the market is because we built this climate private equity business early on, and we had enough capital, what happened is that at the beginning of this cycle, we were seeing both what you would think of as corporate opportunities as well as sort of some infra opportunities. And those infra opportunities were generally higher returning. So we actually have some of those in the first fund. We also -- if you look at our team, there's actually a core part of our team. There's about 4 members of our investing team that actually came from the infra world. So this is something that's not sort of foreign to us. The other thing that's happening in climate, not surprisingly, is the amount of capital required that needs to be mobilized to build out some of these technologies, build out some of these businesses, it's pretty substantial. And so when you look at the capital required and the cost of capital required to basically fund it, what's happening is it's naturally -- as it evolves, it's naturally coming down the return spectrum, right? But there is a lot of overlap and a lot of things we're seeing and learning as a result of our presence in the private equity side. So it's a natural extension for us. Our approach to it is not to sort of set them aside completely from one another. Our approach is essentially that they will feed off of one another and kind of live next to one another. There will be some overlap in the teams. And I think given our approach to the market climate, it's resonated with LPs. We're hopefully going to have something to announce, not too dissimilar to what we announced with the UAE, with another partner that will be structured in a similar way, not catalytic capital, but structured in a similar way in that it will help anchor our infrastructure strategy. And so we're working on that as we speak. And then there are a number of other LPs, significant LPs of ours that we're talking to about the infra side. As far as sizing it, Alex, I think that it needs to be substantial, right, over time, it needs to be substantial over time. I think our first fund will probably -- I don't know how to size it right now yet, but I think it -- I'm going to guess, order of magnitude, it might start off as half the size of our private equity fund as an example, kind of order of magnitude. And then that will be sort of our first-generation fund, and we'll go from there.

Great. Let's go back to AG for a couple of minutes. So you talked quite a bit about revenue synergies. And for anybody who's covered the space for a while, revenue synergies in an asset management deal is always a little bit difficult to underwrite. But you guys talked very explicitly and directly that there's only 10% LP overlap and I think that's the stat that most investors kind of gravitated to pretty easily. So you've seen some wins already. I think of this teach-in you did a couple of weeks ago. You talked about a multibillion dollar win, the direct lending business got on the back of the TPG relationship. Talk a little bit about how that came about. What other kind of structural things you're putting into place to kind of ignite this cross-selling opportunity for the firm as a whole?

Yes. Okay. Well, to level set everybody. So when we did the -- when we came together with Angelo Gordon, what we did is we looked at our LP base. And interestingly, we have about 550, 600 institutional LP relationships at TPG. There's about 400, 450 or so at AG. When you look at them, we only overlap on 10% of those LPs. The other thing I would say is that because of the evolution of our business versus AG's business, I would say our LP relationships tended to be larger pools of capital. So immediately, we saw a clear opportunity where we could kind of leverage one another into those relationships. What's -- one example of that, we used this example at this teach-in we did with the analyst community on AG, one example of that is we have a very good relationship with a platform that is -- that's very focused on the direct lending space and delivering that product to the [ REA ] community. And so -- and we have developed a very good relationship with them. AG actually had a previous relationship with them, but much smaller. And so as a result of that sort of combined relationship, we basically sat down together, said we should be doing something strategically together and that resulted in this essentially $2 billion customized facility, which is very important, by the way, in the context of our direct lending franchise at AG. The direct lending franchise there goes under the name of Twin Brook, which is in Chicago, and it's basically a lower middle market direct lending franchise. So think of it as $25 million of EBITDA or less. And the opportunity -- the immediate opportunity for us is that the business is undercapitalized. So they basically syndicate away a fair amount of what their production looks like. The business probably can grow 50% in size just on the basis of capitalizing it better. So there's sort of -- that's with no more production, no more team, just on that basis. So that's an example of kind of putting kind of 2 and 2 together. The other thing that we've been doing is in terms of these revenue synergies, particularly as it relates to extending their capital base, is we're actively going out and meeting our LPs now together to do exactly this, which is to sort of really rev up and power up their ability to form capital around their strategies. All of the strategies deserve to be larger based upon the opportunity set relative to their capital base. And the 3 big pieces of the business there are what I said, Twin Brook, which is direct lending franchise, Credit Solutions and then also structured credit. And -- which is probably one of the reasons we were attracted to the platform because it's a multi-strategy platform that's fairly well built out. It's not a monoline business. So it gives us an opportunity to take advantage of interesting opportunities wherever they're coming from in the market right now. And I think it's well positioned to take advantage of this kind of current environment that we're in, in a higher rate cycle. So that was basically -- so we're out there systematically doing that. So I'll give you an example. Like yesterday morning, I went down with the whole AG team to see one of their larger LPs, which is a state fund, an East Coast-based state fund. They have about $1.4 billion of capital with them. After the transaction was announced, naturally, they said, like, whoa, like what's going on here, okay? I mean, is something going to change? Is the strategy going to change? Are people going to leave? Are people going to stay? So systematically kind of breaking that down and demystifying what we're doing together. So I went down there with the team and it was literally a 2.5-hour session where they were just asking me all kinds of questions about what are we doing, how are we going to doing it? How are we bringing this together, how are we going to run it? How are we going to govern it? And we left the session feeling really good about it. Earlier in the week, I was in California. I was in Sacramento with a couple of our big LPs there, bringing the AG team there. Both of those meetings ended with them essentially saying, why don't you send us a framework around an SMA, a multi-strategy SMA across a range of strategies, both of those sessions. Last week, one of our senior capital formation people took Ryan Mallett, who runs Credit Solutions at AG, over to the Middle East. We have many, many relationships and deep relationships in the Middle East. AG has none. And they came back from that session and Ryan called me coming back from the session and said, "Wow, like that was like mind blowing, okay?" And just in terms of the quality of the meetings, the quality of the dialogue, we have so much opportunity, okay? And when you look at what's happened, when you look at how LPs are allocating in the market right now, obviously, PE has been tougher. PE has been a little slower. Credit has got a massive tailwind, which remains, by the way. I mean every LP I talk to, and I talk to a lot of them is talking about where they're allocating from, what they're allocating to. There's been obviously a significant move of taking fixed income allocations and moving that into the private credit space because of the quality of the opportunity. And what I've learned in going through this process is that also the -- what I think of as the velocity of -- and kind of liquidity of capital formation on the credit side is faster, quicker and frankly, in a lot of respects, in some ways, a little bit more transactional in a sense where they look at -- where, based upon what they're seeing in the market, they can look at it and say, "Look, I want to get invested in on the lending side a little bit more. I see this wall of refinancing coming as a result of the leverage finance activity and the buyout activity over the last 5 years." There's going to be a bunch of interesting capital solutions, capital structure solution-based financings that are going to go on. Not every -- realizations are slowing, right. So this wall of refinancings that's going to hit '25, '26, '27, not all of those companies are going to get financed regular way. So there's going to be some -- and by the way, the underlying capital structures, the covenant structures, really have no protections. Cov-Lite, unitranche stuff, right? It's kind of Swiss cheese, to be honest with you. So there's going to be a lot of opportunity that comes out of this. So an LP says, I need exposure to that, right? So structure a 3-year SMA, right? $0.5 billion, $1 billion of capital, right? I want to get exposed to that. Run through that. That leads to the next thing in terms of like where do we want to pivot to in terms of our exposure. So there is a ton of opportunity for us. And the sort of the rebranding, if you will, of AG from a private firm that had a base of LPs to part of TPG with the LP relationships that we have is a very, very tangible opportunity.

I got you. Well, a lot there. So besides the LP expansion and the cross-selling, you guys also talked quite a bit about new product development and distribution. So why don't we hit on a couple of those things as well. So I think on the product side, you talked about hybrid solutions. climate credit, obviously, going upmarket in direct lending. And on distribution, we talked about retail, we talked about insurance, which, frankly, the whole industry is talking about both of those channels. So what is your sort of time line on both of those? How meaningful do you think these are going to be to the overall growth of the organization?

Yes. Well, I think all those opportunities are very meaningful. I think let's start in reverse, if that's okay, Alex. So the insurance opportunity in our industry is a fascinating one. The convergence, in terms of the convergence, this convergence going on between alternative asset management and insurance, particularly life and annuity, is really kind of a fascinating evolution and different firms are approaching it different ways. We find ourselves now in a very interesting position because prior to the Angelo Gordon acquisition, we were without sort of that credit prong. It's very important in terms of servicing insurance that you have that credit prong. And what we've now got because it's multi-strategy and it runs from basically more liquid credit to less liquid credit is perfectly situated for that insurance opportunity. The issue now is how do we go after it? What do we do? How do we do it? And there are different ways of doing it. As you know, there's sort of everything from now the Athene model, which is sort of like basically Apollo Athene as an insurance company, to the other end of the spectrum, which would be more balance sheet light, if you will, and there are things in between. What's happened, though, as a result of the AG acquisition is and the fact that we don't have an insurance partnership yet, we're the beneficiaries right now of a bunch of incoming from people that are from the insurance side, where they're looking to do something with a capable alts manager. Two things that they're looking for, right? They're looking for capital with which to grow because you need capital to grow. If you're writing annuities, you need capital to grow. You can do that on balance sheet. You can do that in sidecars. You can do that in different ways. They're looking for partners like us to help with that capital provision, either ourselves directly or partly off our balance sheet or with LPs coming along with us. And then the other thing they're looking for is much more effective asset management capability to drive and fund the liabilities they're creating. That's what's going on in the market. We have an opportunity to figure out how we want to partner and what we want to do. More to come on that because we're actively working on it. We're actively in dialogue. I don't know exactly the timing. And frankly, I'm not sure yet precisely the best way for us to do it as sort of the environment is changing as we do it. There are sort of these kind of midsized or smaller writers of annuities, products, et cetera, that need a lot of capital. There's something there if we want to do it. Then there's the larger guys that are looking at themselves and saying, you know what, we're not as competitive, okay? Either we don't have the asset management capability, we may have -- we may not be as well positioned vis-à-vis bringing the asset management capability, particularly sourcing the broad set of assets that you would want to source that will essentially drive what you can deliver on the product side. So the competitive dynamic is starting to shift around. And so we're trying to be patient and smart about how we want to enter that FRE. So that's what's going on in the insurance side. I think it's clearly a source of growth for us because if you create one of those partnerships, what you end up having is you have some form of an IMA where you're managing a boatload of assets, and you're getting paid fees to do so. And that obviously is very important to our FRE growth. So that's very much front and center. It's one of the things that I'm spending a fair amount of my time on. The -- as it relates to the other products, and as I said before, as it relates to AG, number 1 is, one clear source of growth is just capitalizing the existing business better. That's number 1. Number 2 is there's other opportunities that come out of it. So you mentioned going more upmarket in direct lending. The opportunity set for us there immediately is probably 2 things. One relates to climate and essentially, the vast capital requirement there and our credibility in the space. And I think in order to mobilize into that, we probably need to do that outside of the Twin Brook brand because it's really not a Twin Brook product. So that's one thing that we're evaluating and thinking about. The other opportunity is Twin Brook focuses on lending at the lower middle market because they have a lot of controls over what they're doing. They're usually the only lender. They're controlling the revolver, and they're always lending with a combination of at least 2 financial covenants. So what that does is it's basically when you think about the lending business, the way you risk management -- the way you risk manage in lending is you have an ability to get back to the table. And so that's why they like that lower middle-market framework. If you look at their portfolio, they have about 230 some-odd companies in their portfolio. They range from EBITDA of $15 million to $100 million. What happens is when companies basically -- when they banked the company for 3, 4, 5 years, and know that company better than anybody because they banked that company for 3, 4, 5 years, when that company is moving on to its next stage, either refinancing or it's being sold by that sponsor to another sponsor, they're essentially letting it go, okay? And they know the company better than anybody. So I call it sort of the graduating company opportunity, right? There's a bunch of companies that are leaving the nest from Twin Brook, right? There is absolutely no reason why -- I mean we could provide basically a stable, okay, when they're essentially trying to sell the company. At a minimum, okay, we have relationships with sponsors that Twin Brook doesn't have, right, because, we know all the sponsors in the market. We have a capital markets business. We're doing deals with other sponsors, et cetera. So that graduating company opportunity is very kind of tangible and there for us. So we have to figure out how we want to structure into that. But it's definitely an opportunity to grow the platform on the lending side in the business.

I got you. That makes sense. One follow-up for you on insurance. When you talk about that first group of companies of small insurance companies that are looking for growth capital, just philosophically, what is your appetite for balance sheet, like TPG's balance sheet usage, whether entirely or taking a minority stake, kind of how we've seen with others versus really doing it in a balance sheet kind of capital-light format?

Yes. That's a good question. I mean, I think when we talk about capital light, Alex, and I think we've said this before, we've talked about this before, it doesn't mean capital is 0, right? We'll use some amount of capital from our balance sheet to facilitate something that we believe in and that we think is basically ultimately accretive for our shareholders, accretive for our stakeholders. So we will do that. The question, I think, is sort of the -- the question will be very specific to the situation. I think we do have a bias toward high returns on capital and therefore, capital light. So our bias would be to put some capital to work but also find partners among our LP base to bring capital to the situation. That's how we're kind of biased to think about it. But again, I just want to emphasize that the environment is dynamic enough where if I come back to you at some point and I say we're doing something different, it will be for a good reason.

Got it. All right. Well, we'll stay tuned for that. Last question before we run out of time here. I want to ask just the broader outlook on deployment and realization activity. Obviously, 2023 was a very slow year. There are signs of optimism out there for both sides of that coin. So when you look across your business, particularly around private equity, what's the outlook for both deployment and realization?

Yes. I think deployment -- I mean you've seen what's happened in our business. I think the first 4 or 5 months of the year were slow, very slow because there was a lot of uncertainty, right? I mean rates were on their way up. The markets were kind of disheveled and it was very uncertain time. And all of us, I think, in the room know that when there's uncertainty and lack of confidence, what do people do? They don't do stuff. So what's happened is that now that we've gotten to a point where there's stability. Now that we've gotten to a point where people have a little bit more confidence that inflation is more rational in terms of what it looks like, I think people have a lot more confidence. So our pipeline picked up a lot. Going through sort of midyear, our pipeline picked up a lot. And you've seen our level of activity. We've done a number of deals. And by the way, that pickup in pipeline has been across our franchise including areas like real estate where there's some really very interesting kind of breakout kind of opportunities, opportunities to do things that otherwise wouldn't have come along, except for sort of this inversion between cap rates and financing rates and what's going on. So our pipeline has picked up a lot. We continue to see it be pretty robust. I think without sort of some other shock to the system in the market, I think that if things are stable, people have confidence, the bid-ask spread is narrowed, people will do deals. And so there will be opportunities. So my outlook for that is reasonably constructive. On the realization front, I think, it will continue to be slower. I think it will be continued to be slower. I mean, the kinds of deals that we're seeing on the private equity side are less sponsor-to-sponsor related deals and more things like corporate partnerships, like we bought OneOncology in partnership with AmerisourceBergen as an example, where we're using our portfolio to be a strategic buyer in the market. Things like that is kind of what we're sort of seeing more of, which frankly, in a lot of respects, is kind of more interesting deal flow for us. But I think that realizations are going to continue to be slower. Certainly, the public markets don't feel that great in terms of sort of IPOs and things like that. I mean they're doable, but I think that it's not our preferred form of exit. I don't think it's the industry's preferred form of exit. And I think it will be slower. So what will sponsors do? Sponsors are going to try to find other ways of monetizing or returning some capital. It may be -- we're being approached by sponsors to do things like co-control deals, as an example. And the other -- so that's one way. Another way is continuation vehicles. Using this pool -- these pools of capital. I mean we're raising our own continuation vehicle fund, our TGS fund. So that's another sort of pathway and opportunity. And then there's some other stuff going on in the industry, which is definitely nontraditional and I think not necessarily for everyone. So things like people borrowing against their positions, like NAV loans and things like that. We have not done that. We probably won't do that. So I think that there's a bunch of different ways that people are trying to get creative about returning capital. But I think generally, realizations will be slower.

Great. All right. Well, we can keep going, but we're unfortunately out of time. So thank you for doing this. Appreciate your time. Thank you always.

Thank you. Appreciate it.