All right, good morning, everyone. Welcome to our next session here. I'm Ben Budish. I cover the U.S. brokers, asset managers, and exchanges. For our next fireside chat, we've got from StepStone, Scott Hart, CEO, Mike McCabe, Head of Strategy. Gentlemen, welcome. Thanks so much for being here. Thanks for having us. Thank you, Ben. Maybe just to kick it off, you know, StepStone sits in a pretty unique part of the private markets world as a connector between LPs and GPs. Given that position, you know, give us your current view of the world. How are LP allocations to private markets trending? Where's the room for upside? Where's their cause for concern? How important is the upcoming realization cycle for further private markets allocations? Yeah, I think it's the right question to start off with. You can probably imagine that over the last number of months here, we've spent a lot of time traveling around the world, sitting with our clients, sitting with potential clients, and talking about this question in particular. I think we have been encouraged that the appetite for private markets continues to be strong and in some cases maybe running counter to some of the headlines that you read about. Frankly, in our conversations, you can think of very few LPs that we've interacted with who are thinking about decreasing their long-term allocation to the private markets. You do have a situation where some are still over-allocated relative to their targets, and that may therefore slow down their current deployment. In terms of the long-term trend, most of the investors we are talking to are maintaining, if not increasing, their allocations. I think the asset classes where they are increasing allocations may vary. There's probably a bit more room to run in areas like private credit and infrastructure compared to some of the other private markets asset classes. Continued strong appetite there. You asked about the realization environment. Yes, that is resulting in and contributing to why some LPs are still over-allocated relative to their targets, which may result in this temporary slowdown. Overall, I feel very good about the long-term appetite for private markets allocations. Right. Even with some questions about the upcoming realization cycle, you feel like there's still upward momentum? Yeah, look, I think the questions are leading to innovation in the market. I think the questions are leading to certain strategies that are very much in demand today. I mean, one that we've been talking about with you and others over the last several years has been the secondaries space, where we've seen a growing trend towards GP-led secondaries. We're even seeing more of our clients that are looking to opportunistically tap the secondaries market. It really is more of a portfolio construction tool than anything else. Yes, I think it is having an impact on either which strategies are in demand or some of the innovation that's taking place across the industry, but not impacting the longer-term appetite. Got it. Let's talk about fundraising a little bit. The last four or five quarters saw a pretty meaningful step up in SMA fundraising. Talk a bit about what's going well here. How should investors think about the right growth algo for this business, retentions, re-ups, new clients, the like? Look, I mean, the way we have described our growth algorithm really dating back to our IPO five years ago now really started with our growth with our existing clients. On top of that, you've clearly got growth with new clients and new products around the world. Private wealth has been a strategy that has contributed significantly to the growth algorithm. Hopefully, as the business scaled, there'd be opportunities to improve margins as well. It always started with the growth with existing clients. Yes, this past year, really coming off of a record year from a fundraising standpoint, one of the things that contributed significantly to that was our separate account business, as you referenced. This was a year where we had a very strong pipeline of sizable separate account opportunities that were fully invested and therefore up for and eligible for a re-up. We've been very fortunate to maintain a north of 90% re-up rate across our separate account business over time. Have also been fortunate that upon re-up, our clients have tended to increase the size of those accounts by 30% on average. That alone is an important part of the growth algorithm. I talk a lot about this 90% re-up rate, not only externally, but even internally with our team, as one of the single most, if not the single most important sort of KPI and measure of our overall level of client satisfaction that clients have with us, whether that is driven by the returns that we're generating for them, whether it's driven by the client service that we have to offer, whether it's driven by the data and technology solutions that we make available to their teams. That 90% plus re-up rate tells us that we're doing something right. I think we're doing something right for our existing clients. It probably suggests that we have something attractive to offer to new clients as well. One of the things that contributed in this last year to us really firing on all cylinders was that in addition to the strong re-up cycle, actually about 40% of our gross AUM flows came not from re-ups, but from new relationships or expansion of existing client relationships into new strategies or asset classes. That, to me, is a very healthy balance of growth with your existing clients and bringing on new clients around the world. You think back to times like COVID, that mix might have been 90% re-ups, 10% new, as it was much more difficult to be out there developing relationships, working in partnership to launch new separate accounts. Today, we have a very healthy balance across the business. Great. Maybe just one more question on the separate accounts. Just curious, you know, what asset classes are seeing the strongest allocations? How do inflows compare from U.S.-based LPs to those outside the U.S.? The good news for us is that a very well-diversified business that has really built market-leading practices across not only private equity and venture capital, but private debt, infrastructure, and real estate. The answer is all have been contributing. If you look back since our IPO, in any given quarter, it might be a different asset class that's driving the growth. When you look over the long term, each has been contributing in a very meaningful way from an asset class standpoint. We do talk a lot about our geographic mix. Today, still roughly two-thirds of our revenue comes from clients based outside of the U.S. It is a very global business. One of the things that we have highlighted over time is that there is probably more room to grow in terms of allocations with our international LPs, who are starting from a lower base, in some cases still starting from no allocation to the private markets, and has been a very interesting driver for us. The exact trends may vary from geography to geography, asset class to asset class. To give an example, I've had the opportunity to travel with the Head of our private credit business in various parts of Asia over the last couple of months. I would say there the appetite for private credit, but also for what we have to offer, has been quite strong. Really benefiting from the diversification of our business, whether across asset class or geography right now. Interesting. Maybe moving to the co-mingled business. Here too, you've seen a real structural step up in fundraising over the last several quarters as more of your strategies are continuing to scale. Maybe talk a bit about the near-term fundraising pipeline. I think there was some press, maybe not from you guys, but in the media about some expectations for an upcoming PE fund. What does the next, I don't know, 12-18 months look like on the co-mingled side? Great, thanks, Ben. Of the $200 billion of assets under management that StepStone looks after, a little over $60 billion of that comes from co-mingled funds. To your point, we had a great year in the past 12 months where we raised $10 billion of commitments to our co-mingled funds, which is a 21% year-over-year growth. In summary, our co-mingled fund business has been growing. It's strong. We've had a lot of first-time funds that have come back to come to market and had a lot of success as well. We're currently in market with products across our asset classes, which is what's unique about StepStone. Every asset class, whether it's venture, private equity, real estate, infrastructure, or credit, has its own family of co-mingled funds across the three strategies and some combination of secondary investments, co-investments, and some fund investments. Currently in market within venture capital, we have our flagship global multi-strategy fund. It's off to a strong start. In private equity, we announced earlier that we were in market with our flagship co-investment fund. More recently, you picked up in the press that we are back in market with our flagship secondaries fund. Excited to have both our co-investment and secondary funds in market for private equity. In infrastructure, we enjoyed an incredibly successful raise with our first-time co-investment fund. We are hoping to have similar success with our debut secondaries fund that we're currently in market with on our infrastructure platform. In private credit, we recently wrapped up our direct lending fund, but we are in market with our opportunistic fund. Real estate, we had a very successful fundraise at our secondaries product in that area as well. Within our total co-mingled fund family, we also have our private wealth products, which I suspect might be of interest to discuss here today, Ben, because that's certainly come into focus largely. We have a handful of very exciting semi-liquid evergreen products, again, across our asset classes. We'll certainly come back and talk about the wealth channel. Maybe one more on the co-mingled side. Maybe kind of a high-level question, but one of the challenges that asset managers tend to face is scale. Your funds are scaling nicely. You don't seem to be running into this law of large numbers issue. How do you think about potential fund size, given sort of the nature of what you do is kind of different from the traditional private equity drawdown strategies we see from your very, very largest peers? How do you think about the potential of your funds to scale over time? What are the sort of limits to size? How should investors be thinking about that over a very long time period? I think there are a couple of important points here. The first is, I think you made reference to it, Ben, which is the fact that StepStone has not hinged its strategy on a couple of large flagship funds that are $20 billion, $30 billion in size, which frankly are hard to continue to scale and grow. Having a suite of co-mingled fund families that are modest in size, call it roughly $2 billion to $6 billion across our asset classes, gives us plenty of room to scale. We don't really see a limiting factor to our growth beyond our discipline. I think Scott talks about this every quarter, that as an investment partner, we're very disciplined in how we deploy capital. We tend to spread out the investment period of our co-mingled funds to roughly three to five years. Without naming names, you can look back to the 2019 and 2020 period where GPs would deploy 100% of their capital in 18 months and then come back to market with a bigger fund size. I think that's going to be a harder and harder behavior to succeed with. Our discipline also spreads our capital out over a period of time, gives us plenty of room to grow. Right. I think before we get to the wealth, just a couple of questions on some newer opportunities. A number of your competitors are now partnering to deliver public-private products. How do you think about this type of opportunity for StepStone? Yeah, look, I think we're certainly seeing a blurring of the lines between private and public markets, whether it is the demands for investors to be able to access the private markets with an increasing amount of liquidity and daily valuations or daily subscriptions and more transparency into what they are investing in. You're seeing investors demand the ability to evaluate their portfolio at the total portfolio level. As a result, I think we are seeing a blurring of these lines. That has led in a lot of ways to the launch of these semi-liquid vehicles, which, as you mentioned, we'll get into in a bit more detail here. It's leading to private markets being included in model portfolios that we're seeing more of. It's something that plays into our thinking around some of the strategies that we launch over time here. It's certainly a trend that we're mindful of and evaluating. I think StepStone, as a pure-play private markets firm, one that has a multi-manager approach that is able to build very diversified private markets portfolios and a group that is very partnership-oriented. When we think about our mission to be the trusted partner of choice for private market solutions globally, you see that in how we interact with our GPs as partners, with our clients as partners. We've launched a few new partnerships in recent months on the data side. I think we are a logical partner for these conversations and are having a number of them. I think at the same time, as a solutions-oriented firm, we often ask ourselves, what is the challenge or the problem that these types of products might provide a solution to? That's something that I think we and others are still evaluating. Certainly having a number of interesting conversations around the trend today. Got it. One of the other emerging themes is retirement. With the opening up of the 401(k) market, how do you see this shaking out? Is it going to be direct allocations, target date funds? What are your thoughts? How do you think about how StepStone is positioned to participate there? We think StepStone is well positioned to participate there for some of the reasons I just mentioned. It's an opportunity that we've had people internally focused on for many, many years at this point. It's an opportunity that when you think about the international opportunity and defined contribution plans, whether in Australia, Mexico, Latin America, that we have been an important partner to some of the institutions there as they build out portfolios. I think all contributes to why we think we are well positioned. Our expectation is that it plays out in the form of more target date funds as opposed to single line items where you're selecting individual managers or funds. I think in a lot of ways, some of the technology and the structures that have been developed for the wealth business will be relevant here as we think about the retirement market. For all those reasons, we think we are very well positioned. It is early days here in the U.S., obviously encouraged by some of the progress that we see, but an opportunity that we think will play out over many years here. Got it. Let's bring it to your wealth business now. This has been a pretty meaningful source of growth, as you mentioned before. Just to high level start it out, what's been going well here? Yeah, I mean, the good news is a lot's been going well. We were proud to announce in our last earnings call that we had just hit a major milestone, having reached $10 billion of AUM and have been encouraged by how much more quickly each incremental billion dollars has come certainly than the first billion took to raise. I think when you ask the question about what's going well, it all starts with our, again, solutions-oriented approach. When we launched this business over five years ago now, we first started by spending a lot of time listening to the various different partners in the channel and understanding what was really needed to address this part of the market and understand the challenges that the individual investor faced when allocating to the private markets. I think there were a number of things that we and others could address, whether that was products that had no capital calls, that had 1099 instead of K-1 tax reporting, et cetera. I think there were also some challenges where StepStone was pretty uniquely positioned. When you think about the individual investor who might not have either the capital or the resources to build out a diversified portfolio on their own, StepStone's ability to provide either a single-ticket solution to the private markets, which is what we launched with S Prime as our debut fund, or the ability to build a diversified portfolio in any of the areas that we have expanded, whether venture and growth, infrastructure, private credit over time, I think we are uniquely positioned for. That's diversification not only across some of the metrics that Mike just talked about being vintage-year, but also underlying portfolio company, strategy, and by manager. With a StepStone product, you're not getting access to a single manager, but a diversified portfolio of very high-quality private markets investments. Got it. Before we dig into some of the specific products, similar to the SMA discussion earlier, how would you describe your current distribution footprint? How much exposure do you have to the wirehouse channel versus RIAs? How much is U.S. versus international? Under that umbrella, where do you see the most opportunity to expand? Yeah, so today is largely weighted towards the U.S. with the opportunity to expand internationally. I think we were pleasantly surprised at some of the exposure and the success we had in certain international markets out of the gate in places like Latin America. We are now increasing our efforts across Europe, Asia, and Australia in particular, where we leverage not only our existing sort of institutional sales team, but have been adding some dedicated wealth-focused professionals, which is starting to pay off for us. If we step back and think about, again, that sort of growth algorithm that we talked about earlier, there's been an opportunity to grow with existing partners here. If we think about today, we have something like 550 different distribution partners that we work with. Certainly by number, that's going to be heavily weighted towards the RIA channel, but in terms of the dollars being raised, we'll be more balanced across the wirehouses, the IBDs, and the RIAs. Across those 550 different distribution partners, of those that we have been working with for over a year, roughly 50% are allocated to more than one product. When you think about the evolution of this strategy when we launched S Prime, clearly a lot of time needed to be spent explaining who StepStone was, why we were well positioned to execute on this strategy, how significant of a player we were within the private markets, and then convince them why S Prime was the right product. Today, the sort of why StepStone question is largely answered, at least with these existing groups that have grown to know and grown to trust us over time. It becomes about, well, what is the opportunity in venture and growth, in credit, in infrastructure that we're now going after with these new vehicles? I think that growth algorithm, adding new clients while also growing with those that have built up that knowledge and trust over time, is working quite well in the wealth space. Got it. You mentioned S Prime a couple of times. Maybe talk about Spring a little bit. That one is smaller, but seeming like very rapid growth. What's going on well there? Is it sort of unique asset access to differentiated venture exposure? What's going well? Spring is certainly a very exciting story for a number of different reasons. I think one, if you think about the individual investor's ability to access the venture and growth strategy, historically was limited to them trying to select individual funds or in some cases select individual venture-backed deals, which we know from being one of the most active venture investors in the industry is a pretty tough challenge. I mean, I think a lot of what you're trying to do is build a diversified portfolio, make sure you have exposure to some of the key value drivers across the venture ecosystem. That's very difficult for an individual investor to do. What I think has led to such significant growth in the Spring product has been it is a very unique product in the marketplace. I think we are one of the few firms that could really execute on this strategy in the way that we do and at this scale. Much of that has been driven by the Greenspring acquisition that we completed back in 2021, this being a great example of the synergies that have existed bringing our firms together. This was a product that we at StepStone, without the expanded venture capabilities, could not have executed on with credibility. Greenspring, without our distribution capabilities, could not have executed on. I think as we brought the two firms together, really created the market leader in the venture and growth space. In addition to Spring, managed the largest venture secondaries practice, are one of the largest allocators across venture managers. Those are the things that drive the significant access to deal flow and importantly to data and information and the network of GPs that allows us to execute this strategy so successfully. Great. What about on the credit side? You've got CredX, S Cred, but the competitive landscape for alternative credit products in the wealth channel is a lot more mature than it is for others. How do these products stand out from the lineup of non-traded BDCs? What's StepStone's right to win here? Look, I think you're right. I mean, it is a space that has more competition when you look at the growth in the wealth business and channel overall. Private credit has been the largest growth there. I think what differentiates us here is our multi-manager approach. There, I think you see far fewer competitors in the market. When you look at the work and the analysis that we have done around the private credit space, not only for our wealth investors, but certainly for our institutional investors as well, in an asset class that has capped upside, the importance of diversification, the importance of downside protection becomes that much more important. That's diversification, again, not only across vintage year, et cetera, but diversification across manager and underlying portfolio company. When we look at our vehicles relative to some of the others out there in the market, I think there's probably less overlap between our fund and others. There's less concentrated positions with the largest positions being sub 1% here. A lot of it comes down to this question of diversification, which we think is so important in the private credit space. How do you feel about the current product lineup? Is there any room to add anything else? We feel great about the current product lineup, but I think there is room for growth. We are in the process of launching a private equity-specific vehicle called StepX. There are a couple of reasons for that. I think one of the most important comes back to the comment I made earlier around model portfolios. We've oftentimes thought about S Prime as sort of the private markets model portfolio. As others look to launch model portfolios that may have a different view as to what the exact asset allocation ought to look like, including within the private markets, we wanted to make sure that we had a pure-play private equity vehicle that we had to offer there, the same way that we do venture and growth with Spring, credit with CredX, and infrastructure with Strux. I think those are some of the reasons we're seeing very good appetite for and interest in our private equity-specific products. That's next on the list for us. Maybe just last thing on the P&L, can you remind us how to think about any financial impact to StepStone as the business grows, and how to think about your call option to buy the rest of that business in 2027? It's a nice way to wrap up the wealth management conversation about what does it mean for our shareholders. We have a hardwired pre-negotiated agreement with our wealth management team. Just as a reminder, for every dollar of management fee that comes in through the wealth management operation, 50%, $0.50 on the dollar, goes directly to the house and pretty much drops to the bottom line. Consider that marginal revenue. That's been a large source of why our margins have been expanding as nicely as they have over the last several years. The remaining $0.50 on the dollar stays with the wealth management operation and is used to cover all of the expenses: compensation, distribution, marketing, back office. What falls out from below all the expenses is what we call a profits interest. That is really where the economic value is being, I would say, is being characterized through the NCI line on our P&L. We have the contractual right to call that profits interest from the wealth management team in July of 2027. They have the right to put that profits interest to the firm in 2026. We think given the rate at which they're growing and the scale of the economics there, that it's more likely to be StepStone calling the profits interest in July of 2027. The question is at what value, what purchase price will we be buying in the profits interest? If you look in our filings, we have that specified as well. There is going to be a discount applied to the after-tax cash earnings of the profits interest. That discount is applied to the prevailing multiple that StepStone is currently trading at at the time. If you just look at that today, as we sit here in September of 2025, StepStone is currently trading at 30 times. In the negotiations with the wealth management team, we agreed on a cap of 20 times their after-tax earnings. If the deal were to be struck today, there's 10 turns of accretion between the 20 times cap and the 30 times trading multiple. I think that's a fair way to say that this is going to be a very highly accretive buy-in of the NCI just on the record date alone, let alone what that accretion might look going forward, given the rate at which we continue to see wealth management growing. Got it. Great. Maybe switching gears now. Earlier this year, you announced a partnership with FTSE Russell to develop indices, data, analytics products. Just yesterday, you announced a private credit benchmarks partnership being launched with Kroll. Maybe just to start, talk about why FTSE and Kroll chose StepStone. Why is StepStone potentially advantaged to do something like this? Sure. We were thrilled to announce back in June the partnership with FTSE Russell. Just yesterday morning, Kroll. I think these announcements really are sending a message to the outside world that StepStone is now starting to unlock its leadership position in the private markets and unlocking the power of the data and technology that we've been accumulating over the last 15 years. FTSE Russell saw the quality of our data, the quality of our access to the private markets and our insights. They, being the market leader of manufacturing and distributing indices, what better partnership than the market leader in data and the market leader in index production? We are very excited about that partnership, which we'll be announcing, as I mentioned on the last earnings call, the first benchmarking index later this year, probably in the private equity asset class. Shortly following that will be infrastructure. I think the reality is there were three themes that you and Scott touched on earlier today, and those themes were innovation, the right to win, and the blurred lines between the public and the private markets. We think that StepStone and FTSE Russell and Kroll will be innovating, market leading, probably the industry standards when it comes to benchmarking performance of the private markets portfolios. The blurring lines of the public and the private markets is coming more and more into focus. Many of our clients are asking themselves, we have these liquid securities, we have these illiquid securities, how do I really measure the total performance of the portfolio? We believe that the benchmarking indices that we're creating with both Kroll and FTSE Russell will provide our clients with the solution they've been looking for for a very long time. We think that may just lead to further allocations to the private markets, given the increase in confidence and transparency into the underlying performance of the private markets. Thinking longer term, what really excites us about the partnership with FTSE Russell and Kroll is the potential opportunity to take StepStone's asset management capabilities and start building out potential products that are asset management related that track these indices as they get deployed over the coming years. You kind of got into what I was about to ask next, which is how do you think about product creation? What products are you going to be launching? Maybe just in terms of the index products that are going to be launched. Who's the end consumer? What does the financial model look like? How do you go to market? How do we think about what the financial opportunity looks like for StepStone? I assume this is the kind of thing, like your wealth business years ago, takes time to evolve and then starts to ramp. How do you think about all those pieces? Did I get ahead of you there, Ben? No worries. You can see Scott and I get pretty excited about this topic. It's going to be a walk before you run approach, much the way wealth management was as well. The rollout of the initial set of indices will happen later this year. You can expect over the coming years, there'll be some number of StepStone FTSE Russell branded indices across the private markets. We think that the FTSE Russell and London Stock Exchange Group, broadly speaking, has a distribution installed distribution capability that StepStone just doesn't have with their clients. StepStone has its installed client base that FTSE Russell doesn't have. It's about taking advantage of our distribution capabilities on both platforms to roll out and build up the adoption rate of these indices. As I mentioned, we'll start with private equity. You can imagine within private equity, there could be large cap, small cap, mid cap. You can imagine some geographically specific indices, whether it's European or whether it's North American. You might find sectors, because our benchmarking capabilities go down to the deal level. They're not at the fund level, which is where you'll find other benchmark services available to the industry stop at the fund level. They're a quarter lag, so they're stale. StepStone's FTSE Russell benchmarking indices will be a daily mark based on granular details at the deal level, which will give us the capability to manufacture a sector-specific index if we wanted to. It could be health care, it could be technology, it could be industrials, it could be energy, something along those lines. I think once we have the private equity indices in process of being rolled out, we'll then follow that with infrastructure. Following infrastructure, you might see something in one of the other asset classes as well, certainly credit with Kroll. While that's a benchmarking solution, there's nothing prohibiting StepStone FTSE Russell from creating an index specifically for private credit. We could expect to see that on the come as well. Much like private wealth, we have this skunkworks, if you will, of product proliferation and development that will be in partnership with these two organizations. Great. Maybe just kind of thinking high level about StepStone, a lot of kind of a lot of different priorities: SMA, co-mingled funds, wealth. In terms of just investing in capital allocation, what are your top priorities at the moment? Where are you hiring? Where are you investing? I think some obvious spots, but what else is sort of top of mind for you as you think about other growth initiatives? This has certainly been one of them on the data and technology side. I think one of the things that, in addition to what Mike said, gets me excited, particularly in the very near term, is just sort of the credibility and the validation that it lends. I think oftentimes we even find this with our investors and clients when we're talking to them about the power of our data. Until you see it at work, until you have access to our SPY database and see the power of that data information, it's hard to get that across. I think the validation that these partnerships provide is something that has us very excited. Data and technology has certainly been one area for investment. The second one I would point to has been the build-out of our global business development team. We've talked publicly about the fact that we brought on a Head of Global Business Development about two years ago. One of the things he was tasked with early on was continuing to build out our global business development team. We feel very confident that once we are in the room, or certainly once we are working with a client, our ability to bring our partnership-oriented approach to bear, our ability to generate strong returns, to offer a strong data and technology solution will allow us to build their trust and expand the relationship over time. We've got to make sure that we're getting in the door in the first place, particularly in certain markets where we had maybe been underrepresented from a sales and business development standpoint. I am proud to say that much of that work is now behind us, and we're starting to see the fruits of some of that labor. That would be the other area I'd point to, has just been the build-out of our global business development team. Lastly, real quick, any thoughts on M&A? Clearly, it's been with the wealth business, with some of your other infrastructure, real estate, it's been successful in the past. How are you thinking about where it might make sense to allocate capital that way? StepStone has had a very successful track record in using mergers and acquisitions to build out its platform, whether it's real estate, infrastructure, credit, and wealth management. Scott mentioned earlier the impact the Greenspring acquisition had on our venture capital and total private equity program. The firm has purpose-built its platform to create this embedded M&A activity over the next three, five, ten years by virtue of the agreements that we've established with our asset class heads to buy in the non-controlling interests of each private credit, infrastructure, and real estate. What I just mentioned a minute ago is the embedded call option that we have on buying in the private wealth channel. We have an embedded M&A activity already underway that I think will be our top priority as it relates to capital allocation over the coming years. Great. That is to say there aren't opportunities out there that could come to us that could augment, enhance, or accelerate something we're currently doing. I think we've had a lot of success in bringing on senior teams and integrating them. Great. We're out of time there. We'll have to leave it. Gentlemen, thanks so much for being here.