Good day everyone, and welcome to Petershill Partners Q1 2023 trading update call. At this time, all participants are in listen-only mode. After the speaker presentation, there will be a question and answer session. I would like to advise all parties that today's call is being recorded. By remaining on the line, you are representing to the company and Goldman Sachs that you are located outside of the United States and are not a U.S. person, as defined under Regulation S of the U.S. Securities Act of 1933. You are a qualified purchaser, as defined under the U.S. Investment Company Act of 1940, and that you are not located in or resident of any jurisdiction where to attend this Conference Call would constitute a violation of the relevant law of such jurisdiction. I would like to hand the conference over to Gurjit Kambo, a member of Petershill group at Goldman Sachs Asset Management, who is responsible for investor relations for Petershill Partners. Please go ahead. Thank you. Good morning everyone. A very warm welcome to you, and thank you for joining us today to discuss Petershill Partners' first quarter 2023 trading update. Before we begin, I'd like to remind you that during this call, we may make a number of forward-looking statements which could differ from our actual results materially, and Petershill Partners assumes no obligation to update these statements. A replay of today's call will be available on the investor relations section of our website, along with a copy of our trading update. With us today to discuss the company's trading update for the first quarter, we have Ali Raissi-Dehkordy, co-head of the Petershill Group at Goldman Sachs Asset Management, and Adam Van de Berghe, a member of the Petershill Group at Goldman Sachs Asset Management, who is responsible for the CFO function for Petershill Partners. With that, I'll turn the call over to Ali. Thanks, Gurjit, and good morning, everyone. Thank you for joining our call today as we present our first quarter trading update for 2023. This quarter's performance that Adam will speak to stands against the backdrop with the start to 2023 reflecting turbulent period in the markets. Concerns of recessions in developed markets grew and financial conditions tightened. The U.S. continued to see interest rates rise at a rate that it had not experienced over the last 30 years as it has tried to fight inflation. M&A activity, including IPOs, were down significantly year-over-year. More recently, the strength of the U.S. and European banking systems have been tested. Although there wasn't widespread distress, it fueled market uncertainty and clearly impacted transaction activity. During calendar Q1 2023, the global buyout industry experienced roughly 50% decline in deployments year-on-year, and realizations were down roughly 80% year-on-year. We believe that the company is well-positioned for the current market environment, and that our value proposition and diversification are strengths for our shareholders today. Our partner firms manage over 200 funds at every stage in the lifecycle, representing management fee, performance fee, and fundraising diversification and resilience. On fundraising, our model or profitability is not over-reliant on any single raise, with fundraising expected to come from around 10 firms this year. The vast majority of our partner firm AUM is long-term locked up capital. Our company has minimal net debt, with KBRA recently reaffirming our A rating this month on long-term debt with a stable outlook. We have a resilient business model that positions us to perform through market uncertainty due to our long-term lockup management fee economics from a diversified pool of largely locked up funds. In the last month, to support our partner firms, we hosted our inaugural Petershill Firm Infrastructure and Operations Forum on the fourth of May for our COOs and CFOs. The gathering featured industry leaders and Goldman Sachs professionals who discussed risk management, operations, capital raising, and client development, as well as other key opportunities and challenges faced by general partners today. These events allow us to be a strategic partner to our partner firms, assist them in navigating the market environment, and allows them to establish direct dialogues for the sharing of insights with their peers. We did not undertake any acquisitions during the period. Given the uncertain macro environment, we continue to remain highly selective. We have a strong cash position and can take advantage of market opportunities when they arise, and we will continue to be targeted, as we have demonstrated since the IPO, in areas where we think our capital can go the furthest and can best position the company for future growth. Our cash flow and profitability has, however, allowed the start of our buyback program this quarter, following on from an increased dividend for the year that we announced at year-end. With that, I will turn things over to Adam, who will run through some financial updates. Thank you, Ali. We believe the diversification through investments in our partner firms continues to differentiate us. Our partner firms continue to expand the foundation on which the company's earnings are based. Gross Fee-eligible AuM raised in the quarter was $6 billion against a full year target of $20 billion-$25 billion. Aggregate partner firm AuM rose 9% year-on-year to $290 billion. Aggregate Fee-paying AuM was up 6% year-on-year to $195 billion, driving base management fees up 6% over the comparable quarter. Partner Net Management and Advisory Fees were $82 million for the quarter, 6% higher than Q1 2022. Excluding transaction fees net of offsets, management fees were $87 million for the quarter. We expect $21 billion of AUM already raised to begin generating fees later in the year. Year over year, FRE was largely stable. We highlighted previously that expenses were higher at our partner firms over the past year as they invested in their people and ahead of fundraises that had yet to switch on fees. Notwithstanding this investment, our partner firms were able to generate FRE margins of approximately 60% for the quarter, demonstrating their profitability in a challenging environment. This still remains amongst the highest in the alternatives peer group. Our 2023 FRE guidance of $220 million-$250 million is unchanged as we expect to benefit from growth in our fee-paying AuM over the course of 2023. Partner distributable earnings were $61 million for the quarter, which was down 21% compared to Q1 2022, attributable to lower Partner Realised Performance Revenues and Partner Realised Investment Income, reflecting the broader slowdown in the realization environment we previously mentioned, cyclicality in this fee group, and the particularly strong performance in the comparable period. In the quarter, our partner firms realized $4 billion in AUM, demonstrating the middle market sector's ability to transact when the public markets are mostly closed. During the quarter, our partner firms recorded $5 million in Partner Realised Performance Revenues and $7 million in Partner Realised Investment Income. Our performance revenue potential continues to be significant. Partner Private Markets Accrued Carried Interest, which is our share of the value of the partner firm's accrued performance revenues from unrealized profits, stands at $600 million. In 2023, in total, we expect gross Fee-eligible AuM raised by our partner firms to be $20 billion-$25 billion and realizations to be $5 billion-$10 billion, consistent with the guidance we provided at the 2022 preliminary results on 28th March. On capital return, the previously announced $50 million share buyback program commenced on May 17. As a reminder, we will be holding our AGM later today at 1:00 P.M. We would like to open it up for questions. Operator, could we please have the first question? Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question. We'll take our first question. Hubert Lam from Bank of America. Your line is open. Please go ahead. Hi. Good morning. Thank you for taking my questions. I've got three of them. Firstly, you have a lot of assets that you've raised but yet to be activated, $21 billion. When do you expect this to happen, and are you still confident it can still be all activated this year? That's the first question. The second question is on fundraising. You've raised $6 billion this quarter, and you're still on track to hit your targets of $20 billion-$25 billion for this year. Can you give us a little more color in terms of where you're getting the fundraising from, which partner firms, what type of strategies are driving investor interest and where the fundraising is coming from? The last question is on performance fees. Q1 was obviously a very low period, and the environment still seems tough for realizations, but at the same time, you're still targeting 20%-30% of your revenues coming from performance fees. Is this something that's still realistic, or should we expect something below the bottom end of the range now? Thank you. Hey, Hubert. Good morning. Maybe just to sort of touch on the first question around the AUM raise year to date. Look, I think we're targeting capital, the $20 billion-$25 billion to be raised by 10 partner firms. So far we've had a handful of different closes, the $6 billion that you touched on. Also since the quarter period, we've had an additional $7 billion post that quarter, and that's coming from a number of different firms across different strategies. Within that group, we've had announcements in the market by the likes of STG and Accel-KKR. Both have had closes sort of post that period as well. In aggregate, that capital of $6 billion and the $7 billion post period makes up about $13 billion. I'd say that's probably a little earlier in the year than we would've expected at the time of the year, and when we were providing the guidance of $20 billion-$25 billion. Our expectation is and probably remains that the asset raising and its activations are probably gonna be sort of weighted towards the second half. You know, but this is sort of relatively good progress against those targets and across a wide number of different firms. Hopefully that covers your questions on AUM. I'll pass over to Adam to cover the question on PRE. Thanks, Ali. Yeah. Hubert, you know our guidance at the end of the year for this year was 20%-30% in terms of, you know, performance fees. You know, as we mentioned, I think at the start, obviously this year, you know, realizations in the markets, you know, and in the industry are down quite a bit year-on-year. I think we continue to remain cautious about, you know, the markets, but we still feel comfortable with our 20%-30% guidance for the full year in terms of realized, you know, PRE against, you know, total partner revenues. Okay. Thank you. Again, press star one to ask a question. We'll take our next question. David McCann from Numis, your line is open. Please go ahead. Morning. Actually, Hubert's just basically asked the two that I was gonna ask, but I just wanted to touch a bit more on this, sort of fee, Fee-paying AuM that, you know, currently isn't paying fees. I'm not quite sure if I caught the answer to that question on when exactly you'd expect... Yeah, what was $17 billion, I think you said at the end of last year and is now $21 billion. How should we think about that actually timing of that coming into Fee-paying AuM this year? Thank you. David, just to sort of clarify the mechanism. As firms raise capital they sometimes raise capital before the capital in the previous fund is fully invested or before they actually call capital from that new fund. In some cases, the trigger for charging fees on those new funds is either a call from the new fund or it's, you know, the previous fund, you know, effectively being fully invested. Effectively what we have in the case of, you know, one partner firm last year where they'd raised about $17 billion of capital, they'd raised ahead of sort of needing the capital. We expect them to activate that fund, you know, sort of this year. Really that's gonna be driven off new transactions that would go into that fund or fully invest the prior fund. The other sort of part of that $21 billion was additional capital that was raised after that $17 billion. I'd say since the period, we've had an additional $7 billion of additional new capital also raised. Our expectation across the board in the $20 billion-$25 billion of capital to be raised this year is that we would expect it to both be raised and activated in the second half of the year. I hope that clarifies it. We'll take our next question. Luke Mason from BNP Paribas Exane, your line is open. Please go ahead. Thanks for taking the question. Firstly, on deployment, heard your comments around the overall industry being down in terms of deployment. Just wondering if you can give any insight into what your partner firms are seeing in terms of deployment activity and just financing availability of deals. Secondly, just a clarification on the management fee offsets. If you look last year, transaction fees were $21 million, offsets $16 million, so roughly kind of 80% offset. On a go forward basis, what percentage of transaction fees should be offset in a kind of normalized period? I appreciate there's some a kind of timing difference related to that. Thirdly, just on M&A, heard your comments on M&A, but just in terms of what you're seeing in terms of valuations for new potential partner firm acquisitions. Thank you. Thanks for the questions. I'll take the question on the activity levels and sort of financing availability and all of that. Maybe I'll ask Adam to sort of cover your last question. The sort of the activity level at the underlying partner firms, clearly it's a more expensive environment for financing. I again, do think that there's a bit of a contrast in that the traditional sources of realization and capital in the mid-market space do still have a lot of capital availability. Private debt availability, mid-market buyers, large cap buyers, secondary realization availability, all of those areas still have capital and strategics. I think in the, in the largest cap space where there's sort of has historically been a bigger reliance on public markets both for sort of debt and equity financing, that is clearly more challenging. Having said that, cost of debt is higher. I think what we've seen across the board, both within our partner firms and more widely, is that GPs are being more selective in terms of assets that they're taking on. They wanna make sure that they can navigate the current inflation environment, current, sort of, financing availability. We've continued to see some of that selective activity kind of continuing, maybe not at the pace that we were seeing in 2021. As it relates to our own M&A activity, you saw that we didn't have any transactions in the first quarter. I think we don't feel beholden to sort of deploying capital. You know, historically, we've ranged between three and six transactions a year. Clearly, in this period, we're lower than that. I'd say part of that is because we have a very high bar. You noted on the pricing side, I actually think the pricing bid-ask spread has continued to narrow, and that's really because capital is sort of being used for lots of good things like GP commitment, acquiring other sort of strategies and businesses, and also rolling out new capabilities, all of which does require capital. Some of those traditional sources of capital aren't as attractive as they used to be. Maybe the public market is not as available to non-listed GPs. Also on the other end of the scale, debt isn't as attractive if you're looking at sort of high single-digit, low double-digit type cost of debt for financing. That, that does mean that we have a sort of a great opportunity, but we also have a super high bar. In particular, what we're navigating is which firms are gonna be sort of doing well in the current fundraising environment, who's able to take market share. I think that that's, you know, if I kind of reflect on the performance of the company so far, I'd say, you've seen a lot of market share gains across our partner firms. You know, 4% of industry flows last year versus 2% of industry stock. You see performance-An AUM raise this year as well across a sort of a different group of partner firms. I think that that's gonna be a critical factor that we continue to look at. Since the IPO, we've always pointed to you that we're gonna be looking at additions across the company that are additive to the overall equity story. We've been pretty targeted in terms of what we've been seeking out. You know, I'd say the environment continues to be interesting, albeit we have a really high bar for what we would look to acquire today. On the question on offsets and transaction fees, the transaction fee revenue generated by the partner firms comes from deployment and realizations of capital, which when collected are offset against future management fees. I think the 80% number that you mentioned is broadly kind of in line with what we would expect over time, in such that the majority, call it 80% of the transaction fees, will be offset against future management fees, not necessarily all of it. However, as you can see from the first quarter to quarter, that number can be much higher or lower. In the case of Q1, we've had offsets coming in from some prior transaction fees with no new transaction fees. There you've got a net negative. There'll be subsequent quarters where there may be transaction fees with much lower offsets. I think broadly, you know, we would expect what's collected to be approximately 80% offset. Great. That's useful. Thanks, guys. We'll take our next question. Angeliki Bairaktari from J.P. Morgan, your line is open. Please go ahead. Yes, good morning. Thank you for taking my questions. Just, two clarifications at this stage, please. How should we expect the transaction fees to progress in the remaining of the year? Is there any element of seasonality in there, or does it mean that effectively a slower deployment, is going to translate into lower transaction fees this year relative to 2022, in the subsequent quarters as well? Secondly, just to make sure I understand, out of the $20 billion-$25 billion Fee-eligible AuM raise that you guide for in 2023, how much of that do you think could translate into Fee-paying AuM this year? Would it be 100% or perhaps a smaller percentage as there is usually a lag between the committed capital being raised and the committed capital turning into Fee-paying AuM? Thank you. Thank you very much. On your first question, around, you know, transaction fees, we broadly expect, as you can see from over the last year, you know, transaction fees were net positive over the last 12 months and last year. In terms of volume, we expect that to be relatively consistent year-on-year, given the, you know, given the markets this year. As you can see on the first quarter, we're broadly consistent both with net transaction fees and net offsets in Q1 of this year relative to Q1 of last year. In line broadly with our expectations. We expect, you know, for the most part over the next, over the full year to be, that number to be broadly similar. Look, I think, Angeliki, I'd also kind of observe that transaction fees sort of come about from portfolio company activity. It could be anything from equity follow-on transactions, debt raising. Really clearly it's gonna be an element of that is gonna be a function of what underlying partner firms are doing at their portfolio firms. Having said that, it doesn't require realizations or acquisitions for it to occur. It can occur, you know, in terms of actual portfolio companies if they are platform acquirers or if they're actually sort of altering their financing over time as well. On the AUM raise, I think our expectation is for the in terms of the $20 billion-$25 billion is for most of that to be turned on this year. I think at the time we gave the guidance, we were expecting that to sort of come in on the second half of the year. So far, you know, with the capital raised in the first quarter, and the capital raised that's been announced since the end of the quarter, we're about $13 billion against that target of $20 billion-$25 billion. Clearly that number also does need to be sort of activated now that it's been raised. Our expectation is that that would be activated within this year. Thank you. Once again, if you would like to ask a question, please press star 1. We'll take our next question from Michael Werner from UBS. Your line is open. Please go ahead. Thanks very much, guys, for giving me the opportunity to ask some questions. I just got two. Number 1, I believe in the past, in the IMSs and your reports, you published a blended net management fee rate amongst the partner firms. I was wondering, I didn't see that in today's. I was just wondering if you can confirm that's not in there, and if you could give us an idea of where it is or why you've chosen not to include it. Secondly, instead of thinking about acquisitions into the portfolios, just, you know, wondering, you know, from a divestment perspective, you've got 25 partner firms. You know, you have a pretty robust portfolio. How do you think about potential divestments? Is this something where... We've never seen one yet, but just, you know, again, theoretically, is this where you look at the different businesses and, you know, say, "Okay, well, you know, so long as I suspect they can continue or I expect them to continue to grow market share, we're keen"? If that isn't the case, would you know, then consider selling? Is this something that you would be, you know, subject to kind of opportunistic events where if someone comes in with a high bid for one of the assets, you would consider selling? I was just wondering, again, from a high level, how you think about divestments. Thank you. Thanks, Michael Werner. I'll take the first one. You know, at the beginning, when we gave our results call back in March, and we gave guidance for this year, you know, we guided on our, you know, FRE dollar range. We did mention that, you know, the blended net management fee rates and the FRE margins and the ownership rates would be broadly stable. Those numbers we expect, you know, we continue to expect those to be broadly stable and can obviously move up and down a little bit, you know, for a variety of reasons, including just the performance of each of the firms relative to each other. Really, as we think about those three, we expect those still to be broadly stable, but where they triangulate is, you know, in terms of our FRE guidance, which we're still comfortable with, it's kind of the $220 million-$250 million range. That, you know, we think it's. You know, we think that and all three of them will, you know, over the course of the period, be broadly stable. Maybe, sort of moving on to our partner firms and how we think about, divestments or, sales. You know, I'd say over our history, we've had realization activity in the private program. The public company has clearly had a shorter time period, given it was listed a little over 1.5 years ago. You know, in terms of what we've historically have had is, you know, we've had individual sales. In fact, our private program had 2 such realizations that weren't part of the public company within the last year, and those could be either to sort of management or other buyers. In the trend that we're seeing in the market right now with some additional activity or additional focus on things, themes like consolidation, you know, clearly that could be sort of something that does sort of pop up over time. You know, and we've also had some firms, you know, achieve the right kind of scale for either, you know, their own mergers with other firms or even, you know, in some cases, as they sort of think about listing, you know, in the medium term. All of those do represent, you know, potential realization elements for us. You know, I'd say the contracts give us rights and benefits in any of those sort of events. You know, it's a matter for us and the board to consider, you know, if such an event were to sort of occur, whether it represents compelling value for the company. Clearly, you know, it's something we've been able to do in the private program over time, and it may just be that an investment or a partner firm has achieved our target goal or the thesis of where it was gonna be, or it's gonna change what it looks like over the future, whether it's gonna be part of a bigger firm or a different firm or a listed business. So all of those would present opportunities to realize some of the value that's being created in these partnerships. Thank you. This conclude today's Q&A session. Gurjit Kambo, at this time, I will turn the conference back to you for any additional or closing remarks. Yeah, I'd just like to thank everybody for joining the call and for your questions. If you do have any further questions, please do reach out to me, Gurjit, at the IR team at Petershill Partners. Have a good day, and thank you. This conclude today's call. Thank you for your participation. You You may.