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Q & A Highlights

Q: Can you talk about the outlook for further acquisitions this year, given you've already exceeded the top end of the range with the acquisition of Fraser? A: Ali Raissi, Co-Head of Goldman Sachs Petershill Group, stated that while they have exceeded the $300 million range, they maintain a high bar for acquisitions. They will continue to seek opportunities that fit their medium-term strategy and focus on high-quality sector specialists.

Q: How do you see the realization environment to drive PRE, and is there growing pressure to exit given the lack of exits in recent years? A: Ali Raissi noted that while there have been some exits, the current macro volatility, especially on the larger scale side, creates hesitation for capital deployment. The outlook for 2025 is not as clear as it seemed earlier in the year.

Q: Regarding the fundraising target of $20 billion to $25 billion, how do you see the dynamics changing this year, and what are the flagships driving this fundraising? A: Gurjit Kambo, Head of Investor Relations, mentioned that they expect a similar number of firms to be raising funds in 2025 as in 2024. They remain comfortable with the guidance range provided and anticipate multiple funds contributing to asset raising over the next 12 months.

Q: Can you provide a rough asset class breakdown of the fundraising target, particularly between private credit and private equity? A: Gurjit Kambo explained that the asset raising is reasonably diversified, with a significant portion biased towards private equity, particularly from firms like ClearLake. They expect a balanced environment with contributions from private credit and real assets.

Q: What was the rationale for Fraser Healthcare Partners selling a stake, and are they looking to expand or launch new strategies? A: Ali Raissi clarified that the investment in Fraser Healthcare Partners was a passive minority investment to support the firm's growth and enable increased investment by the general partner in existing and new funds.

Q: How are GP plans to expand into private wealth, and do you expect more consolidation within the mid-cap GP space? A: Ali Raissi noted that while institutional saturation is less of a feature in the mid-market space, there is potential for expansion into private wealth channels. The firm is strategically positioned to benefit from consolidation trends in the industry.

Q: What has driven the improvement in discount rates for the valuation of your investment firms? A: Gurjit Kambo attributed the reduction in discount rates to a combination of factors, including a shift down in US interest rates, improved earnings visibility, and strong asset raising across their firms.

Q: Have you seen any changes in the net IRRs of your partner firms, particularly in 2024? A: Gurjit Kambo stated that there has been no meaningful change in the net IRRs of their partner firms compared to previous years.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.