Earnings Call Transcript - CG Q3 2025

Daniel Harris, Head of Public Investor Relations

Thank you, Michelle. Good morning, and Happy Halloween, and welcome to Carlyle's Third Quarter 2025 Earnings Call. With me on the call this morning is our Chief Executive Officer, Harvey Schwartz; Chief Financial Officer and Head of Corporate Strategy, John Redett; and incoming Chief Financial Officer, Justin Plouffe. Earlier this morning, we issued a press release and a detailed earnings presentation, which is available on our Investor Relations website. This call is being webcast, and a replay will be available. We will refer to certain non-GAAP financial measures during today's call. These measures should not be considered in isolation from or as a substitute for measures prepared in accordance with generally accepted accounting principles. We have provided a reconciliation of these measures to GAAP in our earnings release to the extent reasonably available. Any forward-looking statements made today do not guarantee future performance, and undue reliance should not be placed on them. These statements are based on current management expectations and involve inherent risks and uncertainties, including those identified in the Risk Factors section of our annual report on Form 10-K that could cause actual results to differ materially from those indicated. Carlyle assumes no obligation to update any forward-looking statements at any time. In order to ensure participation by all those on the line today, please limit yourself to one question and return to the queue for any additional follow-ups. And with that, let me turn the call over to our Chief Executive Officer, Harvey Schwartz.

Harvey Schwartz, CEO

Thanks, Dan. Good morning, everyone, and thank you for joining us. We delivered another strong quarter of results, as we continue to execute our strategic growth plan. For the third quarter, we delivered FRE of $312 million and now have generated $946 million year-to-date, up 16%; record AUM of $474 billion, up 7% year-to-date; organic inflows of $17 billion in the quarter and nearly $60 billion over the past 12 months with significant capital coming from credit, secondaries, and global wealth. With this momentum, we feel confident about exceeding the financial targets we updated last quarter, which included full-year FRE growth of approximately 10%, up from our prior outlook of 6% and full-year inflows of $50 billion compared to our prior outlook of $40 billion. Before I dive into more specifics of the quarter, I'd like to address the macro environment. As we look across markets today, this remains a somewhat complex, but quite resilient environment. While the markets have been impacted by ongoing headlines related to policy shifts and geopolitics, the underlying health of the global economy continues to be strong. Inflation has moderated, balance sheets are healthy, and overall, consumers are still spending. With official government data delayed by the shutdown, earlier this month, we released Carlyle proprietary U.S. economic data. These indicators are derived from our portfolio of nearly 300 operating companies and more than 700,000 employees. These insights provide one of the few real-time views into the economy, steady EBITDA growth, continued investment in technology and AI infrastructure, and resilient consumer demand. Turning to credit markets. There's clearly been a lot of focus here over the past several weeks. To date, our own market and portfolio data are not signaling any broad deterioration in overall credit quality or systemic risk. Consistent with the economic data I just walked through, fundamentals remain pretty solid and credit events have been idiosyncratic. Of course, the credit cycle is evolving, as it should, repricing where necessary, but again, not flashing broad stress. Capital markets activity has meaningfully accelerated. Announced M&A volume was up more than 40% year-over-year in the third quarter. IPO volumes are up 60% year-to-date with increased activity during the quarter. Now turning to our global private equity business. We've capitalized on an improving transaction environment, returning capital to our limited partners. Over the past year, we have returned $19 billion in capital to investors in global private equity, 150% of the industry average. Note, this does not include $5 billion of signed transactions. Our momentum internationally continues. In Japan, we announced the successful IPO of Orion Breweries. This marks a positive indicator for the broader IPO market and is another important milestone for our team in the region. In Europe, we recently completed the sale of Calastone and announced the sale of HSO. Lastly, in private equity, we recently announced the EUR 7.7 billion carve-out of BASF's coatings business, leveraging our global industrial platform and deep carve-out expertise. In the past 20 years, Carlyle has done 19 industrial corporate carve-outs with an average IRR of 25%, another great example of the unique operating skill set we bring to our investors. In Carlyle AlpInvest, the team continues to deliver exceptional growth with FRE more than 80% year-to-date. Last month, we closed our largest-ever secondaries fund of $20 billion, further scaling the business. We recently closed a $1.25 billion publicly rated, GP-led collateralized fund obligation, the largest of its kind to date. This underscores Carlyle's leadership and innovation within a rapidly expanding segment of the marketplace. We also recently completed a $550 million credit secondaries continuation vehicle, reflecting the evolution of our business across newer asset classes. Carlyle AlpInvest is a market leader at the forefront of an industry with strong secular and cyclical tailwinds. In Global Credit, our platform continues to scale. During the quarter, inflows into our asset-backed finance strategy were almost $2 billion, highlighting the continued demand for private investment-grade assets. Our strategic approach to insurance solutions continues to pay dividends across all aspects of our investment management capabilities, including our partnership with Fortitude Re and with our third-party insurance clients. Justin will get into more details about Fortitude Re, but insurance remains a key driver of growth for Carlyle, and we continue to see momentum across the platform. Finally, moving on to Global Wealth, our momentum remains strong. When I first joined Carlyle, we were attracting about $300 million per quarter in evergreen wealth inflows. Today, we're running at 10x that level at $3 billion of inflows, our best fundraising quarter in Global Wealth ever. To be successful across all aspects of wealth, retail, and retirement, you need experience, scale, brand recognition, and diversification. Part of our strategy is partnering with extraordinary brands, like our recent announcement with Oracle Red Bull Racing. This marks the first-ever private markets partnership in Formula One and aligns directly with our long-term global wealth strategy to reach new clients and deepen engagement in key markets. Over the last 2.5 years, we mobilized quickly to capitalize on the growth of private markets and retail. We continue to invest heavily into the business, adding resources and platform partnerships to drive growth. To wrap things up, we are well on our way to exceeding our financial targets for this year and have very strong momentum heading into 2026.

Justin Plouffe, Incoming CFO

Thanks, Harvey, and good morning, everyone. Q3 was yet another strong quarter, consistent with the long-term growth trajectory we've established. We generated $368 million of distributable earnings or $0.96 per share. Year-to-date, distributable earnings totaled $1.3 billion or just over $3 per share, up 10% from last year. Fee-related earnings were $312 million for the quarter, up 12% year-over-year. This increase in FRE has been fueled by organic topline growth. For Q3, total fee revenue increased 11%, and year-to-date, a 13% growth rate represents our fastest pace of growth in the last 3 years. Roughly 55% of firm-wide FRE now comes from Global Credit and Carlyle AlpInvest. That's up from about 25% just 5 years ago. FRE margins remained strong at 48% for the quarter and year-to-date, exceeding last year's record of 46%. Capital markets and transaction fees were $32 million, up almost 20% year-over-year and have more than doubled over the past 12 months. As we said throughout the year, our FRE growth is entirely organic and reflects the scalability of our model and operating discipline across the firm. We are on track to exceed our full-year target of at least 10% growth in FRE while continuing to invest for the long term. Let me turn to a couple of highlights for our businesses. Carlyle AlpInvest delivered another excellent quarter, raising $6.3 billion of capital, bringing the year-to-date total to more than $15 billion. Third quarter inflows were driven by both institutional demand and strong momentum in our global wealth products. AUM at AlpInvest now sits at $102 billion, up more than 20% year-to-date. FRE at AlpInvest now represents 23% of Carlyle's FRE, about triple the level from just 2 years prior. Global Credit generated nearly $10 billion of inflows this quarter, and over the last 12 months, inflows have totaled $31 billion, helping lift total AUM to $208 billion. Global Credit AUM now comprises 45% of firm-wide assets and has grown at a 33% CAGR over the past 5 years. And Global Credit's FRE is now nearly 1/3 of Carlyle's total. Our Global Credit business is comprised of a diverse set of platforms that deliver attractive risk-adjusted returns for our investors. Our $87 billion insurance solutions platform is anchored by our strategic partnership with Fortitude Re and has been quite active over the past few months. It closed its $4 billion reinsurance agreement with Unum, its fourth reinsurance transaction this year, issued an inaugural $500 million funding agreement-backed note, and recently launched a reinsurance sidecar focused on driving growth in Asia. Together, we believe these initiatives will lead to more than $20 billion of new AUM in the intermediate term. Our leading nearly $50 billion global CLO platform had inflows of more than $3 billion in the quarter. Credit quality remains strong, and the business has recently been recognized for having among the best performance across all U.S. CLO managers this year with the defaults running well below the industry average. Our $13 billion direct lending platform has been growing at a 20% CAGR in the past 5 years. We believe the market opportunity for direct lending will continue to grow, and we are continuing to invest in this platform, adding resources across leadership and origination. Credit quality remains healthy across the portfolio with realized losses running at an average of just 10 basis points per year over the past decade. Our $10 billion asset-backed finance business raised $2 billion just this quarter, and our leading $20 billion opportunistic credit strategy continued to deploy its third vintage fund and is quickly approaching its next fundraise. Shifting now to Global Private equity. Over the past year, we have attracted nearly $9 billion of capital into our GPE strategies. And today, we have $40 billion of available capital to deploy across the platform. We're excited about our growing transaction pipeline as we head into the fourth quarter, including the recently announced EUR 7.7 billion transaction with BASF in partnership with the Qatar Investment Authority. We also have nearly $5 billion of announced exit transactions that we anticipate to close in the coming quarters. While Q3 was a lighter realizations quarter, we expect a significant step up in Q4. In addition to this, as you may have seen, one of our U.S. bio portfolio companies, Medline, filed a registration statement with the SEC in connection with the proposed IPO. We remain excited about the future of Medline and congratulate the management team on all they have accomplished so far. In Global Wealth, our evergreen vehicles continue to scale quickly. We currently have more than $32 billion of evergreen capital, and we raised $3 billion across our evergreen wealth products this quarter. The $6 billion raised over the past year reflects a 90% growth rate from the same period last year. Notably, our new Carlyle AlpInvest CAP solution in partnership with UBS saw strong demand in its first full quarter and has already surpassed more than $1 billion in assets. Finally, I'd like to say a few words about the state of our balance sheet and capital management activities. During the quarter, we took advantage of strong debt markets and issued $800 million of 10-year notes at 5%. This extends the duration of our liabilities and leverages our strong credit rating. This capital provides additional flexibility to invest in growth initiatives in the coming years. We also repurchased over $200 million of stock in the quarter, reflecting our conviction that Carlyle shares continue to be an attractive investment. We are disciplined and opportunistic when allocating capital, balancing share repurchases with investments to drive future growth. Our balance sheet is strong and well positioned to support our organic initiatives and the firm's long-term financial flexibility. To summarize, our third quarter results highlight continued growth earnings diversification and operating momentum across the platform. We're executing well, scaling efficiently and delivering attractive results for both shareholders and investors. I look forward to meeting and working with all of you more over the coming months. And before we get to Q&A, I'd like to hand things over to John for some concluding thoughts.

John Redett, CFO

Thanks, Justin. Good morning, everyone. Let me make a few points on the progress we've made on our strategic plan over the last 2 years. We grew AUM 25% to nearly $475 billion. In the last 12 months, we grew FRE more than 50% to $1.2 billion. Not only did we grow FRE, we improved FRE margins by over 1,200 basis points. We overhauled our capital allocation and compensation strategy. We returned more than $2 billion in capital to shareholders through dividends and repurchases. We also implemented a strategic update to our compensation strategy to increase alignment with all stakeholders. This allowed us to pay more carry to our employees and more fee-related earnings to you, our shareholders. We overhauled our global wealth strategy. As Harvey said, we increased our inflows 10x. And lastly, our focus on capital markets has clearly generated momentum. We have more than tripled our revenues over the last 2 years to almost $240 million. The positive momentum we carry into 2026 is the direct outcome of the extraordinary work of our people. I'm excited to begin my next role, leading global private equity, a business with world-class investors and significant momentum. With that, let me turn the call over to the operator for your questions.

Brian Mckenna, Analyst

So looking at inflows for the quarter, it was clearly a little bit lighter in private equity, but credit and solutions both came in above expectations, and there's a lot of momentum there. It would just be helpful if you could talk about the outlook for inflows by business into year-end. And how you're thinking about flows throughout 2026 and some of the different drivers there? And then, I guess, do you have any visibility into some of the larger insurance transactions that might be coming in over the next couple of quarters?

John Redett, CFO

Thanks, Brian. It's John. Look, we feel very good about where we are in terms of inflows. This is an area where I think we have tremendous momentum and really reflects we have strong investment performance across the firm. And I would say client engagement remains positive and remains elevated. So $17 billion in the third quarter, obviously a very strong quarter, it's nearly double the third quarter from 2024. If you look at kind of an LTM basis, we're $60 billion, and year-to-date, we're around $45 billion. So we feel good about the revised guidance that Harvey alluded to in his script, which we provided last quarter, which was around $50 billion. Again, we're at $45 billion year-to-date. We obviously had a very strong quarter in credit and AlpInvest. Harvey talked about how we closed on the secondaries platform, where we raised $20 billion, but we had a really strong quarter without any real private equity funds in the market. So I feel good about the diversification that's driving this growth. So overall, I'd say in terms of inflows, we have tremendous momentum going into the fourth quarter, but more importantly, going into 2026.

Alexander Blostein, Analyst

Justin, welcome to the call, and John, congrats again on the new role. Harvey, maybe just building on that a little bit. You alluded in your prepared remarks, in the script as well, just around the strong momentum you guys think for 2026. Maybe expand on that a little bit. What are the key top-of-the-house priority in terms of growth for next year? What do you find to be most needle moving? And what do you guys ultimately that could mean for management fee growth into '26?

Harvey Schwartz, CEO

At this time, the momentum for the firm has never felt better. This is evident in our global client engagement and the strategic execution by the team, which spans all areas of the firm. You can see this in our solutions, wealth channels, and credit offerings. Although it’s a quiet year for private equity and fundraising, the team's performance has been outstanding, returning 150% of the average of capital. As we look ahead to 2026, the demand for capital is expected to be strong, which bodes well for deployment and opportunities. We see prospects across the platform, particularly in credit where we are expanding the asset-backed business and there's continued strong engagement with insurance clients investing in private credit. The team has done an excellent job in this regard. Our two flagship wealth funds, including the evergreen funds and CPEP, will be entering the market next year, offering another opportunity for our wealth investors. Overall, whether viewed through the client perspective or specific business lines, I feel very optimistic about our momentum, inflows, and growth. The capital markets still have significant potential for growth linked to activity. The initiatives we've been implementing over the past couple of years are starting to yield results, and I appreciate John's leadership in that process. However, I believe we are still very much at the beginning of this journey.

Glenn Schorr, Analyst

So I'm curious, you had a lot of good things to say about the forward momentum in realization pipeline, and all the banks are super supportive in the deal environment coming through. So when you go through your comments of your $5 billion of announced transactions, I don't know if you can help us a little bit on timing with that. But fourth quarter better than third quarter, Medline IPO happening, I guess my question is if we could peel back that onion a little more because I think that's the part of softness in the quarter and just a light realization quarter. And then, as you move into next year, I think that's where the extreme bullishness on the bank's part was, as we head into early '26, does your forward pipeline align with that? And then, again, trying to get at what some of the other questions get in that is what does that mean for an FRE story for next year? This year, you beat your 10%, is it shaping up to be a bigger story than that next year?

Harvey Schwartz, CEO

Sure. I think that was 4 questions. Glenn, I just want to point out you're violating Dan's rule, but we're going to address it all. So I'm going to ask John to talk to the extreme bullishness in the pipeline. One thing I will say is that's not a quarter-to-quarter thing in our business, and so I think people should understand it. But John, why don't you give a little more color on how we think about that pipeline, monetizations, and realizations?

John Redett, CFO

Yes, I want to reiterate what Harvey mentioned. As a management team, we take a multi-quarter view rather than focusing on quarterly results. This approach is typical in the private equity sector, where deal closures can be unpredictable. Stepping back, our management team and investors are highly focused on performance, and we are very satisfied with our investment results. The investment teams have concentrated on realizations, showing a 35% increase in realization activities over the past year. In global private equity, where most of our carry funds are, we have returned nearly $20 billion in the last 12 months, which is 30% higher than the previous period. As indicated in Harvey's statements, in the third quarter of Global Private Equity, we are performing at 150% of the industry average, clearly positioning us as a positive outlier. Our communication with investors remains strong. Addressing your question about the pipeline, our U.S. private equity business is returning more capital than our targets. Since the end of the third quarter, we've finalized $1 billion in transactions, including a successful deal with Calastone across multiple funds. We are also likely to announce and close another deal today in our U.S. private equity sector. The $4 billion in signed and pending deals does not include the Medline IPO, which we publicly filed for on Tuesday. While I can't guarantee that all $4 billion will close in the fourth quarter, we expect a significant portion to do so, with some possibly extending into the first quarter. Overall, we are effectively returning more capital to our investors than we are investing, which is a positive sign in the current environment. Looking ahead to 2026, our deal teams are very active with both deployment and realizations, and the pipeline, especially with the Medline IPO, indicates our strong business momentum.

William Katz, Analyst

Okay. Maybe just a 2-part. I just want to make sure I understand the math; if it's $4 billion to $5 billion of announced transactions, is the typical MOIC 2x to sort of think through the realization opportunity? And then a broader question is just as I think about you getting towards the end of your repurchase activity, can you maybe refresh a bit on capital management priorities? How are you thinking about maybe where the stock is trading today versus any kind of inorganic opportunity now that the core business has stabilized?

John Redett, CFO

It's John. So we are near the end of our $1.4 billion authorization. We repurchased $200 million in the quarter. I think year-to-date, we're around $500 million of repurchases. I would expect a similar amount probably in the fourth quarter. And look, just more broadly, how do we think about capital allocation? There are various ways we can allocate capital as a management team. One of them is we can invest in our businesses for growth. We are clearly doing that. That's our first priority. We are laser-like focused on growth. So any time we can invest capital in the business to accelerate or achieve growth. That is our first priority. We can give capital back to our shareholders via dividends or via repurchase. We still think, and you should assume, based on our repurchase activity that we still view our stock as an expensive and attractive investment. And the other use of capital can be something on the inorganic front, but we focus on all three areas with driving growth our main priority.

Steven Chubak, Analyst

Welcome Justin to the call. So I did want to ask on the FRE growth just looking out to next year. I recognize you're tracking above the 10% year-on-year guide. You spoke of the strong momentum heading into next year. At the same time, you do have some headwinds just in the form of elevated catch-up fees that may not repeat as well as the fee rate step down from CP VII. So just wanted to gauge your confidence level and the ability to drive FRE growth next year, even in the face of some of those headwinds, and speak to some of the building blocks that support that view.

Harvey Schwartz, CEO

We feel very good about the momentum across the platform. You can see it in multiple areas such as capital markets, insurance flows, and our investments in credit and the wealth channel. Additionally, we anticipate a significant increase in private equity flows into next year. Overall, as we near the end of the year, the momentum feels stronger than ever.

Brennan Hawken, Analyst

The credit flows were really strong this quarter. But actually, the fee rate looks a little bit light versus my expectations. Was there anything to do with timing on those flows? I know sometimes that can kind of skew the averages and cause the fee rate to look a little wonky. Did the flows come in at a lighter fee rate with the mix? Or was that fee rate impact more of a timing thing?

Justin Plouffe, Incoming CFO

Yes. Thanks for the question. It's Justin. Look, I think some of that might have been skewed by some of the insurance transactions, where the fee rate can be a little bit wonky. But overall, we have great momentum across credit. We're up 18% year-to-date in fee revenues. We're up 28% year-to-date in FRE. And we really see broad-based momentum. It's not just one business, right? Asset-backed is taking in capital significantly. Our CLO business is really hitting on all cylinders, having another great year. And we're seeing really consistent and strong flows from wealth as well with our CTAC product and our BDCs. So quarter-to-quarter, it sort of just depends on the mix, but really every part of that business is doing well, and we're really excited about the momentum we're going to carry into 2026.

Daniel Fannon, Analyst

There was $3 billion in wealth flows during the quarter, which is quite strong. Can you discuss the diversity of those flows? You have momentum in that business, and I believe you mentioned one product that may come to market next year. Could you share more about the product roadmap and how you see it evolving as we approach 2026?

Harvey Schwartz, CEO

Yes. As we discussed on the call, flows increased tenfold since the new management team took over a few years ago. What you're really witnessing now is the strategy coming together, although I believe it's still early. The core components of that strategy are three main funds: CTAC, which focuses on credit; our Carlyle AlpInvest Solutions business; and CPEP, which will gain more visibility in 2026 across the private equity platform. The mixture has been quite effective. CTAC has been in the market longer and continues to contribute steadily. Furthermore, there has been a notable increase in Carlyle AlpInvest Solutions due to our partnership with UBS. I feel very optimistic about the global momentum we're building. Each of these foundational elements connects, and success in one area significantly boosts the others. Our focus is on brand strength and our relationship with advisers. We've continued to invest in several ways, including human resources, product development, and our partnership with Oracle Red Bull to enhance our global presence. You can anticipate continued positive momentum and growth in that business at a good pace.

Benjamin Budish, Analyst

I had maybe another 2-parter on your sort of public markets exposure. Maybe just in the quarter, it looked like there were a few public investments that were weighing on your private equity performance. Just curious if you could address, is it sort of timing-related end of quarter to end of quarter? Are there any sort of like impaired stories there? Or is it more market fluctuations? And then, as we think out, you've given us some commentary on big specific transactions like Medline, but maybe just philosophically, how should we be thinking about the realization pipeline in terms of strategic versus financial sponsors versus IPOs? What's the historical mix? What would you expect going over into the next couple of years?

John Redett, CFO

Ben, it's John. Your question is focused on corporate private equity. Similar to realizations, I analyze performance over several quarters. It's difficult to convey a clear story about any particular quarter. This quarter, in particular, doesn't require much commentary due to some volatility in the public markets. However, when I examine corporate private equity performance, especially in the U.S., I'm very pleased. CPA has increased about 15% over the last year. More importantly, the operating metrics within the U.S. portfolio show continued strength. Revenues are nearly up double digits, and EBITDA has risen by 8%. I feel optimistic about the operating performance of our individual portfolio companies. We are relatively unique in terms of realizations; you cannot sustain this level of realization activity without solid performance. It's crucial to recognize that the teams remain focused on performance and realizations. The volatility you mentioned was primarily linked to our CAP franchise, where a significant portion of our managed assets are in public securities, and there has been some market fluctuation. However, those are fundamentally strong companies. I don't have any long-term worries about the situation in Asia. In the U.S., CP VII has also experienced volatility in public markets, specifically with StandardAero and Hexaware, which were down from the previous quarter. However, if you look at their current status, we have already recovered most of the decline in both StandardAero and Hexaware. They are both excellent companies, so I have no long-term concerns regarding the public securities in our U.S. private equity business.

Kenneth Worthington, Analyst

John, it's been a pleasure working with you. Best of luck back in buyout. Justin, I'm sorry, John has set a pretty high bar here. When looking at credit, the Unum block hit this quarter, so congrats. At the same time, we saw the most significant level of credit, I'll call it, distributions in both AUM and fee-paying AUM. Can you talk about the dynamics that drove the outsized, I guess, distributions this quarter? I don't know if it was Unum related or something else, recurring, doesn't recur, anyway? Any flavor would be helpful.

Justin Plouffe, Incoming CFO

Yes, Ken. I’d say it’s part of the regular business operations. It’s a good time to realize some of our investments, particularly on the opportunistic side. When we can achieve a favorable outcome for our investors, we take advantage of that. Additionally, it relates to the usual activities of our CLO business, where our team has performed exceptionally well over the past couple of years. Two years ago, around 40% of our CLOs were in runoff, and since then, the team has executed 41 resets, reducing that percentage to only 12% now. When you call a CLO and reset it, that can impact the numbers. I don’t see anything out of the ordinary; there’s nothing significant on the insurance side, just the standard process of raising new capital and realizing investments for our limited partners.

Patrick Davitt, Analyst

Obviously, been a perfect storm for secondaries here for a while now. But to your point earlier, it feels like the realization window is opening up a bit, though in fits and starts. How are you guys thinking about the sustainability of the so-called golden era in secondaries if the realization window keeps opening up?

Harvey Schwartz, CEO

Yes. Let's take a step back. There's a reason we refer to it as Carlyle AlpInvest Solutions. That entire business is experiencing sequential growth, not just due to secondaries activity but because of the broader capabilities across the platform. While the shorthand for that business is secondaries, they actually provide a suite of solutions, including secondaries, co-invest, and corporate finance solutions. We've pointed out some trends in credit secondaries and co-invest. This represents a bit of the evolution within our industry. As the industry grows and matures, private capital is at the core, leading to a demand for liquidity tools. Carlyle AlpInvest offers a comprehensive solution for that. Regarding secondaries specifically, statistics indicate that demand for secondary capital will continue to rise for several years. We see this in our pipelines and client engagement. It's important to clarify that this is not about distressed portfolios or entities unable to sell. It often revolves around capital allocation and repositioning. We can work with a CEO or CIO to discuss how to realign their portfolio. We should think of this as central to a flywheel of corporate finance solutions. However, regarding secondaries, the outlook feels quite positive.

Justin Plouffe, Incoming CFO

Yes, it's Justin. We're very excited about the ABF platform we've built, which began as a partnership with Fortitude and has since expanded. We now have multiple partnerships with origination platforms that contribute to that portfolio. There has been significant interest from outside the insurance sector, where ABF has traditionally operated, and we're exploring discussions with several counterparties to broaden that business. Currently, we're at $10 billion, and it's gaining momentum. I truly believe this is one of the most promising growth areas in our credit business. Steve has done an excellent job, and I see a lot of potential as we approach the fourth quarter of 2026.

Daniel Harris, Head of Public Investor Relations

Thank you, everyone, for your time today. If you have any further questions, feel free to follow with Investor Relations. We look forward to talking to you next quarter.

Operator, Operator

This concludes today's conference call. Thank you for participating. You may now disconnect.