TPG Inc. (TPG) Earnings Call Transcript & Summary

Well, good afternoon, everybody. Thank you for joining us. For our next session, I would like to welcome Jon Winkelried, CEO of TPG. Following last year's acquisition of Angelo Gordon, TPG now manages $240 billion in assets under management across differentiated set of private equity strategies, private credit and real estate. Over the course of 2024, the firm has seen meaningful acceleration across all of their main KPIs, including fundraising, deployment and realization activity with some of its largest strategies expected to hit the market next year and continued progress integrating Angelo Gordon. Momentum in the business clearly seems to be building into 2025. So we'll spend some time with Jon on your progress and what's in store for next year. Great for you to be back here. Thank you again for being here.

Thanks, Alex. Appreciate it. As you know, this was one of my home teams. So I'd love to be back at Goldman Sachs. So great to be here.

And we've got a new background, too. So there you go. So I wanted to start with a bit of a macro question and just talk about the new administration and what that means for capital markets. TPG has obviously already seen a pretty steady pickup in activity already. But have you seen any increase in just the conversational deal flow really since the election because you guys have already been in a pretty interesting and good trajectory, but how have they changed at all since November. And what does it mean for capital deployment and monetization activity into '25?

Well, I mean I think. The conversation and the dialogue that I've been a part of that is a little bit, I described this a little bit euphoric about sort of what's to come and deal activity has been more other GPs that I've brought in to, talked to, including this past weekend when I was with a few people that are kind of doing what we do. And I would say there's an incredible amount of enthusiasm that the election has kind of ushered into our business, as you know, and as you pointed out, our business really started to tick up in terms of deal activity. Maybe a little bit ahead of some of our -- the rest of the industry really kind of the end of 2023, the back half of 2023 got pretty active for us. And I think part of the reason for that was that -- and I think Goldman Sachs knows this very well. There was a fair amount of pickup in terms of corporate restructuring and things like spinning out businesses or corporate carve-outs that started to happen at the end of 2023, our business is particularly heavy in that kind of flow. And we originate a lot of interesting transactions through corporate partnerships and corporate carve-outs. I mean just to give you an idea of the last 13 transactions that we did -- that we've done in our buyout business, in them, have been corporate partnerships or corporate or carve-outs. So it's a very heavy part of our business relative to sponsor-to-sponsor related activity, sponsor-to-sponsor activity was pretty muted at the end of '23 and then when we got into 2024, things clearly started to pick up and what you started -- what you saw in 2024 was lots of liquidity available from a financing perspective. We all know now that credit spreads are at all-time times. There is a lot of liquidity in and finance deals. We started to see increases in valuations. And for some of the stubborn assets where some sponsors were trying to grow into their valuations, I think we've seen a pickup in activity there. There's a tremendous amount of pent-up demand to return capital to LPs. It's really an imperative now in the part of a lot of sponsors. And so I think that's giving way to a number of interesting opportunities, not all, by the way, sort of traditional sort of sponsor-to-sponsor transaction or controlled buyouts. There's -- I would say that looking at the way people are trying to think about returning capital. One of the other things that's quite interesting that we're seeing and a number of our businesses are benefiting from it are sort of middle of the capital structure type of opportunities where people are trying to be creative on how they return capital. So overall, I would say that we're seeing a steady pace of interesting activity. I think we're trying to also be quite selective because valuations are pretty high. Our business still indexes more toward these what I real proprietary situations like corporate partnerships. And if you look at -- we actually did an analysis of our deal flow, looking at our buyout business, our growth business and actually our Climate business and about 60% of our deal activity is sort of purely proprietary where we've been working with somebody for a long time and have an opportunity to do something. But overall, I think in front of us, right, expectation that policy rates will continue to come down in the near term. Regulatory pressures or headwinds will probably loosen. And I think it's just a general kind of very bullish sentiment. I think -- on the flip side of that, if I were to say, is there something I'm worried about as a result of the new administration, I would say that I think that inflationary pressures are sort of lurking again, kind of near the surface. Because when you think about the new administration's trade policies, tariff policies, when you think about labor dynamics, it feels to us that inflation could sort of show itself in certain areas again. And I think if that does in fact happen, I think that there could be some knock-on effects of that, which we can talk more about. But in the interest of time, we can talk about other stuff.

Yes. All right. Sounds good. So as you think about the path of monetization and just the activity in the space picking up, let's shift gears and talk about fundraising a little bit. You guys had a very active year in 2024, raising over $21 billion through the first 3 quarters with lots of momentum heading into next year. I think on the last call, Jack and you both talked about being in the market with something like 25 strategies, including some of your larger flagship funds as well. As you kind of gear up for that, what kind of conversations are you having with LPs, how is that shaking up? What's the appetite and the sentiment on their side of the ledger? And what does that ultimately mean for your fundraising goals for 2025?

Yes. Good question. I mean, first of all, I think that in our industry generally with respect to capital raising, I think that the stronger getting stronger. I think there's clearly this -- and we've talked about this before, but there's clearly this continuation of some level of concentration, of focus going on in our industry with respect to LPs flowing capital to their most important strategic partners. And I think that manifests itself in a number of different ways. I think what's important to LPs is that they want, obviously, strong performance. They want to partner with GPs that can deliver a number of different types of return streams and opportunities, meaning some diversification across your platform. They also want thought partnerships. They want co-invest opportunity. That's very important to most of the large LPs. And I think as a result of that, we're in a position, fortunately, where we're being positively selected. So as a result of that, I think we're hearing, I think, encouraging things from our LPs even on the private equity side because our performance there has been very strong, but we're hearing generally encouraging things from our LPs as we go around the world. I think what's interesting is that if you look at where we've sourced capital, there has been a bit of a systemic shift away from the U.S. If you look at what the U.S. looked like in terms of the proportion of our capital may be going back 2 fund cycles and compare it to today, I would say that there's been a noticeable change in terms of the percentage of capital coming out of the Middle East. There's been an increase -- there's been a general level of increasing capital flow coming out of Asia into our funds. And I would say North America generally has been under more pressure in terms of being able to allocate, particularly on the private equity side. I would say in credit -- it's kind of been student body left, meaning that everybody has been allocating more capital to the credit markets. So kind of wherever you go, it's been sort of more of a kind of a positive flow into credit markets and I think it's been the result of kind of 2 things. One is interesting alternative strategies on the credit side, which are producing on a risk-adjusted basis, some pretty interesting returns over the last couple of years, particularly in a higher interest rate environment. As well as a migration from what were traditional fixed income allocations that are now -- that have now moved to the private credit world. Private credit used to be thought of as kind of like as sort of alternative credit or an alternative asset class. Private credit is increasingly being viewed as just an alternative to public credit, right? And so better return, more interesting opportunities, et cetera, a migration generally away from the public side to the private side. So what was a fixed income allocation that was pretty chunky, part of it has now moved into the private credit world. So as a result of it, there's a lot of capital to give in that part of the market. So -- and I think that, that is generally, if you look at flows of funds institutionally just across the market, I think that generally, you're still seeing a flow into the credit asset class. I think it's being a little bit now more I think, selective in terms of where it's going. So rather than just sort of everybody barreling into direct lending, which is essentially is leveraged finance, people are now trying to be a little bit more deliberate about looking at things like structured credit diversifying exposure to non-EBITDA risk, looking at maybe more bespoke opportunistic credit solutions for overlevered capital structures, things like that. But we're still seeing that. And then lastly, I would say on the real estate side, because we have a pretty broad footprint in real estate, I would say that -- was a pretty kind of locked up market for a while because of interest rate increases and what was generally happening in the real estate market is starting to break loose a little bit. We were very quiet in 2023 in deployment and 2024 has been a much more interesting year in terms of assets that were generally hard to come by available for sale. And so we've been a lot more active in the market. As well as, by the way, on the real estate credit side, where you had a significant withdrawal from the market of traditional providers of liquidity like regional banks as an example, where there just isn't as much liquidity available. So we've kind of stepped in on the real estate credit side. So I mean, overall, I think the picture is I think, generally trending positive in terms of LP kind of posture, but I do think that, again, more and more, they're sort of like the haves and have-nots in the business.

Just broadening out. But to your point, it sounds like more bifurcated. So let's zone in a few specific platforms within TPG. Starting with the impact franchise. It's an important growth driver for you guys. TPG is on track to raise, I think, $10 billion between your next Rise Climate Fund and Global Southwest Initiative as well. You're off to a good start with new Climate infra. Also I think you talked about a $2 billion in commitments already. How do you expect the impact franchise to evolve from here, including potential adjacencies, adjacent strategies there, but also timing of your next kind of broader rise impact private equity fund?

Yes. Well, look, on the impact side, I think that we're going to be -- so we're in the market now, obviously, as you mentioned, with our second Climate Fund. We've got about $6 billion of our $10 billion commitments in our first close. We've got $2 billion in our first close commitments for our first transition infrastructure fund. And just to help people understand what we're doing there. Essentially, our climate strategy has evolved into a private equity strategy, which started with Rise Climate and has now got essentially a transition infrastructure strategy alongside of it. And think about those as kind of like I think about them almost like sister funds because what's happened is because of our penetration in that market and our presence and being an early mover in kind of climate-related investing, we have seen a lot of infrastructure-related types of opportunities. And when we first started the PE side of it, we are actually seeing some what you would call sort of transitionary kinds of opportunities where they look a lot like infra but they were sort of priced and valued like private equity. And what we're seeing, not surprisingly, is because of the level of capital that's required, we are seeing naturally this move sort of down in terms of cost of capital or down in terms of return profile. So it makes sense to have these 2 strategies side by side. So that's kind of what the business looks like today. What's happened naturally and what's kind of been evolving is that on the PE side, there has been a fairly significant acceleration in terms of the number of substantial sized companies that fall into this category of in one form or another climate-related strategies or energy transition or efficiency within kind of the energy world. And on the infrastructure side, there's just so much capital that needs to be raised, right, that it's kind of attracting more and more of that lower cost capital. And so I think we expect to see sort of a dynamic sort of evolution between what is available in private equity investing, what's available in terms of infrastructure investing. In terms of what's next there, I think one of the obvious next move for us there is essentially the credit space in climate, what we call it climate credit. And our private equity business alone is throwing off and generating a tremendous amount of activity on the financing side. And I would put that kind of in 2 categories. I'd put it in sort of the leverage finance side of financing buyouts in the climate space, and on the other side, I would put it more in sort of the project finance type categorization, which is more sort of infrastructure finance. So we are in the beginning stages of thinking about how can we leverage off of that flow to build something that's more purpose-built on the credit side, focusing on climate. And so that's kind of like I would call that kind of in the workshop right now that we're expecting to build something behind. So that's what that looks like. And then I think the last part of your question was on the buy...

Yes, exactly. Just given the pace of deployment activity seeing in the space, curious if you had any thoughts on the timing for the next broader kind of Rise impact private equity fund.

Rise impact, right? Okay. Yes. Our Rise -- so in the sort of the general Rise Fund in the Impact platform, we're going to be in the market in 2025 with our fourth fund. And we'll start fundraising for that really kind of right out of the gate in January. So -- and my expectation is that we'll sort of target something that's similar size to what our current fund size is maybe slightly larger. And what's happened is as a result of the build of the climate business, the traditional RISE business now is essentially focused on the other sectors of impact that we've been investing in. So -- but we'll be in the market raising that in the beginning of the year.

Got you. Okay. Staying with this topic for a second, but maybe flipping to potential risks given the current environment. One of the topics that's come up is that the incumbent administration potentially could drive some changes to the Inflation Reduction Act. You and many of your peers previously talked about as being a pretty big tailwind to the business. I guess, how could potential changes impact both client demand as well as the investments that are already in the ground and how you're managing through that, understanding that nobody has a crystal ball, but I'm curious how you think about it.

Yes. Look, I think there's a lot we don't know in terms of how things are going to play out in the administration. I think what we do know is that there's likely to be changes. Remember, going back to when the IRA was actually put in place, our climate investing process has started in advance of that, well in advance of that. We were probably about 40% deployed in our fund before the IRA came into effect. So a lot of the tax-related effects, some of the beneficial kind of overlay of the IRA was, frankly, a little bit of sort of like kind of icing on the cake, if you will, to a number of the portfolio companies that we had. But -- so I don't know how it's going to change. Our guess is we have done a lot of work on it, but it's been essentially just trying to take a step back and look at what might change and how might things be affected? I mean one obvious thing is that there are some tax benefits that you could see rolled back. On one hand, the new administration will probably be pretty forward-leaning in terms of extending some tax benefits, not in the IRA, but just generally kind of tax benefits, corporate tax rates, things like that. In terms of trying to balance the ledger and pay for some of those benefits, it's very possible they may look for sort of pay for opportunities as a result of -- from the IRA, okay, and essentially roll those back. That would probably be sort of like low-hanging fruit, I would say. If you then take a step back and look at what's happened in -- generally within the space, in terms of let's not forget sort of like that the overall kind of macro as it relates to what's going on in this country that still, I think, creates a very compelling case for what we're doing are the following things: One is that there's not enough power period. And that's a growing problem and it's not going back the other way. Two is, there's a strong administrative -- so there's a strong focus and there will be a strong focus from this administration on continuing to reduce dependency on other sources of energy, foreign sources of energy, so energy independence. That's a high-level kind of priority. Third is that when you look at the dynamics of what's going on, whether you believe in climate change, global warming, doesn't matter what you believe in. One of the things that's undeniably true is that climate-related events are causing increasing numbers of interruptions in power, dislocations and power supply which cause dislocations and interruptions in productivity. So when you just take a step back and you look at what's going on, all of those things are absolutely true and will continue to be true. In addition to that, if you look at -- if you actually look at the development of where are the industries located that are focused on efficiency of energy, renewable energy, clean energy, other types of technologies. If you actually look at it, most of those industrial complexes have been built in Red States, okay? So there's been actually a lot of job formation that's taken place within Red States which clearly local lawmakers are not going to want to roll back, okay? So there's a lot of fundamental underpinning to kind of what we're doing there in terms of investing. The way we think of climate now as we think about it as -- if you think about the various sectors of the market that we invest in, health care, financials, software enterprise technology, Climate for us has basically become a large sector of the market. I think of it as kind of like Energy 2.0 in a way, right? And -- you look at the economics now of clean renewable sources of energy, the cost curves have come way down. They are competitive now in terms of the source of energy. So one great example of what we're doing is, I don't know if people saw it, but today, there was a press release today, and we announced a partnership with -- a 3-way partnership with TPG, a portfolio company of ours called Intersect Power and Google. And we announced basically a partnership where Intersect Power, which is essentially building and creating clean and renewable sources of energy that are essentially colocation projects, with large data center projects or other industrial warehouse related or industrial complex related projects that are not dependent on necessarily connectivity to transmission. That are colocated that are available energy supplies for those projects that are clean energy. Intersect builds that and creates that. Google and we are investing $800 million together in the company. And then the platform is expected to essentially invest another $20 billion in the development of those power sources for Google data center projects, again, that are all co-located projects. Those are examples of projects that -- they're not getting rolled back, okay? There's nothing that's rolling those back. We know how competitive the world has become for -- given what's going on in AI, what's going on in terms of the need of data, the need for power, et cetera. So that's a great example of kind of what we're finding in terms of the power of our franchise, our brand, combined with the Google franchise and the ability to then scale something and scale a company like Intersect as a result of having that behind it. Google is the offtake essentially, the offtake for the power that Intersect will be providing examples like that. Another great example is a recent deal that we just did in Europe and Germany for this company, Techem, which is essentially a digital metering business. It looks a lot like an infrastructure business, right? It's basically digital meters that exist inside multifamily residences all around Germany. It's a much more efficient way to monitor and meter energy supply. It's -- that's kind of foundational and built into the fabric now of sort of the power infrastructure. So those are the kinds of things that we're doing in the business. So we feel fundamentally that there may be some toing and froing as a result of the Trump administration here. I don't know what will happen in EVs. I mean I guess, Elon will probably have a word about that with the incoming President. But -- so maybe some of the EV mandates will get rolled back or whatever, that's going to have very little impact on our business overall. I guess.

Got you. That's helpful. Let's shift gears a little bit. I want to spend a couple of minutes on Angelo Gordon and the progress you guys are making there. It sounds like the deal has gone quite well so far. Talk to us a little bit about the opportunities on the revenue synergies into next year, both either on the product creation side or distribution. And then within that, let's just double click into credit. It's been obviously very important part of the story for you guys, a big reason why you decided to do the deal. The management fee growth there has been relatively muted over the last couple of years. So how do you think about a couple of quarters rather? How do you think about that accelerating into next year?

Yes. Well, first of all, I think we're 1 year basically, a little more than a year since we closed the transaction. I honestly couldn't have hoped that it would go any better than it's gone so far. I mean the integration of the 2 organizations, the integration of Angelo Gordon into our business, the level of collaboration that's happening between the credit business, the private equity business, deals that we're working on together, I mean, it's gone incredibly well. The culture will fit, which obviously is always a hard thing to judge when you're sort of like when you're kicking the tires and kind of getting to no one or another, but ultimately, you make a call on that. I think it's gone incredibly well. Obviously, the thesis behind the deal itself was putting ourselves back into the credit markets. We like the fact that it was a multi-strategy business and that we could build on each of those strategies. All of that is still in place. Part of the real challenge for us was to help scale the business. All of the businesses inside of Angelo Gordon were out originating their capital base. And so we had the ability to essentially help them scale, introducing them to new relationships, build the capital base, continue to scale the business and then ultimately do other things as we build the franchise. What's happened on that side is that, first of all, the origination capability of the platform has continued to expand and increase. Just to give you an idea, for instance, one piece of the business is our Twin Brook franchise. That's our lower middle market direct lending strategy. It's a best-in-class player in that market. It's a $25 billion platform. This year, it will originate $10 billion, okay, in proprietary flow, $10 billion proprietary flow from sponsor-backed companies, and the way that business works is essentially 50% of it is new platforms that we're financing for sponsors. And then 50% of the flow is add-ons to those portfolio companies, okay? So there's sort of an embedded base of growth that's within that business. So ultimately, Twin Brook, in my view, has the ability to be something like if you -- as we build the capital base, it has the ability to be something like a $40 billion platform, okay, just in the lower middle market. So that's going incredibly well. What we're doing there is obviously, we're -- just in terms of the capital raising process, we're introducing Angelo Gordon businesses, Twin Brook, credit solutions, structured credit, we're introducing the PMs, the teams to our LPs. For anybody that's ever done this or been in this business, and I think this will make sense to people, when you think about the cycle of really opening up a series of new relationships for a new business that we've acquired, I think of it kind of like a I think of it like a 2024, 2025, 2026 cycle. The first year basically is introducing the PMs and the people that are really making the investment decisions and driving the business to sovereign wealth funds, big state pension funds, LPs that we've had as part of our franchise for a long time. When people meet them, obviously, they're very open to meeting them because they know we acquired them. There's a reason we acquired them. So it's got immediate credibility, okay, in terms of getting in the door. But then you've got the natural sort of like, if anyone's ever done this before, it's like 3, 4, 5 meeting cycle. It's meet the people, understand the strategy, kick the tires a little bit, and you get to a place ultimately where one of your clients, one of your LP says, okay, let's do an on-site visit, right? And they show up at 245 Park, let's do an on-site visit. Let's get to see exactly kind of the depth of the team. Let's walk through some case studies, et cetera. That's the process we go through, okay? If you look at the -- we told you that we're going to raise $10 billion in credit this year in 2024. We've raised $9.5 billion through the third quarter. We'll exceed the target. 75% of the capital we've raised this year were from historical Angelo Gordon relationships, 25 new relationships that we've introduced them to. If you look at the pipeline in terms of 2025, working with LPs on SMAs, on fund investments, on funds of one or whatever, it's the inverse. So we're going to be opening up those relationships and establishing partnerships, which will look like some combination of strategic partnerships, bespoke SMAs, things like that. We've also got a few -- we also have some continuously offered vehicles in the private wealth channel. For instance, we launched TCAP, which is the BDC for the Twin Brook business, as an example, that's on -- that's live with Wells and Morgan Stanley. We are going live with BofA Merrill essentially in the first quarter of the year. Again, for the size of that business, right now, we're sort of somewhere in the range of around $65 million a month of inflows on that BDC for Twin Brook. I think when we go live on the next platform, eventually, we'll be sort of hopefully around $100 million a month. That will be [ $1.2 billion ] of just on an annualized basis, hopefully, that will grow over time. But that's just an additional source of capital for us in the business, right? So that's the cadence of which we are sort of going to market. One thing I can tell you is that I think that the engagement with our LPs in terms of the quality of dialogue, the openness that people have to sort of establishing partnerships is absolutely visible. So the kind of the visible forward of us scaling this business is absolutely there. The disconnect between that you're talking about Alex, between sort of the level of deployment, which is up substantially this year. And the FRR following that is that as we scale the capital base, a lot of these relationships as they go into place, right? You get through -- you go through investment committee. It then takes you 3 months to document a fund of one or an SMA, et cetera. So as these things come online in 2025, and we deploy into them, as you know, that's when fees start to pay, right? So this year, essentially what we've been doing is we've been using some combination of committed capital that we have, some combination of co-invest opportunities being presented to these LPs, so they actually have a real experience with us in terms of seeing flow and then also leverage facilities that we have so that we can speak for these opportunities as we see them, right? Because one of the things that's critical to anybody that's operated in the credit market knows is that deals are going to come to you and opportunities are going to come to you based on 2 things. One is that they think you're smart and you can structure them. And secondly, that you have the capital to get to the finish line. Those are the 2 things, right? I mean when I was at Goldman Sachs and we built this business on the fixed income side, we built SSG, that's why we did so well. We had smart people and people knew we were going to get to the finish line because we had the capital, right? That's how you scale these businesses. So that's the process that we're going through there in that business. And we'll get there.

Got you. All right. Well, we've got a couple of minutes left. And I did want to touch on insurance as one of the important topics we'll try to squeeze that into 2 minutes here. So an important part of the thesis for you guys when you acquired Angelo Gordon, credit is obviously incremental and very instrumental part, I guess, of the insurance thesis for a lot of folks. Can you update us on the strategy there, especially any potential partnerships you're considering? How important is control in these discussions? And how do you weigh sort of the risk of impact on the stock valuation versus owning a higher control liabilities. That could take more than 1.5 minute.

Well, okay. Well, let me fit in a couple of things. One is that first of all, the AG transaction has been transformative to our dialogue with insurance generally, okay? We have -- one of the things we did initially is we took the insurance coverage team on TPG, insurance cover team and AG, we put them together. We've added some resources to it. Since the closing of the transaction, we've added about $3.5 billion of capital from insurance company relationships just in the form of LP relationships, right? They look like sort of IMAs or they look like funds on or they look like SMAs. It's coming from life and annuity companies it's coming from P&C. It's coming across the landscape. It's -- so we made a lot of progress just there. I think one of the things that's in the -- I think the backdrop that's pretty -- very interesting in the market right now is that as a result of this convergence between alts and insurance, and in some cases, alts owning and controlling insurance companies, the insurance companies -- the insurance industry more broadly, has woken up. And I said, look, we've got to think more strategically about what we're doing on the asset side, partnerships that we have with investors in the market, partnerships that we have with all players. And so one of the things that -- and -- it sort of felt like this was going to happen kind of a year, 1.5 years ago because there were early stage conversations with large established insurance companies, but they were clearly starting to wake up to the fact that the competitive dynamic has changed. The ability to drive returns and how that transfers across into in-force business, right, is very directly linked now. So not surprisingly, we are now getting -- we're now involved in conversations with very established large insurance companies who are coming to us saying, look, it'd be interesting for us to figure out whether or not we can figure out how to do business together, whether we can establish some relationship, et cetera. So for instance, I'll give you an example. We have a close relationship with a P&C company, a large P&C player that's very well known in the market that we're talking to right now, about $1.5 billion separate account. And that is composed of a fund investment into our asset-backed fund into ABC, when we were raising [ ABC too ] as well as a billion -- a large piece of it essentially being a kind of flow and sourcing arrangement and a co-invest arrangement for investment-grade exposure that we are seeing and driving off -- out of our structured credit business. So in our structured credit business, we are now seeing and driving some opportunities that are creating IG exposure as well as the bottom of the capital structure, which fits well into some of our funds that's generating higher return. But the top of the capital structure, the IG stuff is really very well suited for the insurance industry, right? So those are the kind of conversations that we're now starting to have. So I think that our business is poised as a result of us being the brand that we are and delivering the returns that we've delivered, our brand -- our platform is really well positioned to expand very significantly with insurance generally. On the topic of strategic relationships or strategic partnerships, or owning an insurance company, I think we continue to focus and look at opportunities that are available in the market. We have looked at a couple where we had the opportunity to control it. But neither platform, in our view, was a strong enough platform, okay, to bring on because one of the things that we want to make sure is if we actually do something strategic that it's actually really going to help us. It's going to grow organically and it's not going to -- and it's also -- we also have to understand how much additional capital that's going to require from us. And one of the things that I think we feel strongly about is we don't want to transform our profile from essentially a fee-related earnings business and a balance sheet light model to something that is essentially more dependent on spread-related earnings or insurance-related earnings and a much more balance sheet heavy model. And we do not want to migrate all the way there, okay? So whatever we do, I think it will be with an eye toward maintaining the characteristics of the business that we've built so far. And we feel like we do that very well. We feel like we enjoy a very -- we enjoy a premium multiple as a result of that. But I think that we will continue to look at opportunities that present themselves where we do have some level of permanent capital available to us, so that we can use that permanent capital to drive business expansion, grow new opportunities, grow new strategies, create sort of sourcing flow arrangements with other platforms in the market. So we are still out there on the hunt for the right thing, but it's got to be the right thing.

Got it. Okay. We'll leave it there. Thank you very much.