Earnings Call Transcript - GCMG Q4 2022

Operator, Operator

Good day, and welcome to the GCM Grosvenor Fourth Quarter and Full Year 2022 Results Call. Later, we will conduct a question-and-answer session. As a reminder, this call will be recorded. I would now like to hand the call over to Stacie Selinger, Head of Investor Relations. You may begin.

Stacie Selinger, Head of Investor Relations

Thank you. Good morning, and welcome to GCM Grosvenor's fourth quarter and full year 2022 earnings call. Today, I am joined by GCM Grosvenor's Chairman and Chief Executive Officer, Michael Sacks; President, Jon Levin; and Chief Financial Officer, Pam Bentley. Before we discuss this quarter's results, a reminder that all statements made on this call that do not relate to matters of historical fact should be considered forward-looking statements. This includes statements regarding our current expectations for our business, our financial performance and projections. These statements are neither promises nor guarantees. They involve known and unknown risks, uncertainties, and other important factors that may cause our actual results to differ materially from those indicated by the forward-looking statements on this call. Please refer to the factors in the Risk Factors section of our 10-K, our other filings with the Securities and Exchange Commission and our earnings release, all of which are available on the Public Shareholders section of our website. We'll also refer to non-GAAP measures that we view as important in assessing the performance of our business. A reconciliation of non-GAAP metrics to the nearest GAAP metric can be found in our earnings presentation and earnings supplement, both of which are available on the Public Shareholders section of our website. Our goal is to continually improve how we communicate with and engage with our shareholders. And in that spirit, we look forward to your feedback. Thank you again for joining us. And with that, I'll turn the call over to Michael.

Michael Sacks, CEO

Thank you, Stacie. During the fourth quarter of 2022, our financial results were in line with or moderately exceeded the expectations that we communicated on our last earnings call. Despite a challenging backdrop, we performed well for clients while raising $1.5 billion of capital to achieve total funds raised of $7.8 billion for the year. Our private markets verticals continued to grow with the fourth quarter private markets management fees, excluding catch-up fees rising by 10% over the fourth quarter of 2021 and 14% for the full year 2022. Fee-related earnings for the full year increased by 7%, while FRE margin improved by 100 basis points. As was the case for the entire category, adjusted EBITDA and net income were lower than the prior year due to the capital markets environment. On a bright note, during the quarter, we were pleased to launch a new and important specialized fund, Elevate, with a $500 million anchor investment. As with our investment in Grosvenor Insurance Solutions, we believe that the Elevate strategy, part of a broader Sponsor Solutions category, provides the firm with a lot of promise, and Jon will take you through that in his remarks. Looking ahead, the continued growth of our private markets management fees, combined with our strong fundraising pipeline, including our five private markets specialized funds in market, leaves us confident that we can compound fee-related earnings in 2023 and beyond at mid-teens rates. While forecasting incentive fees is always a challenge, the earnings power represented by our absolute strategies performance fees combined with our significant carry asset give us confidence that we have similarly strong rates of growth in adjusted EBITDA and adjusted net income over time. For 2023, we can achieve these objectives with lower levels of total fundraising than we saw in 2022. That said, like last year, we believe total fundraising in '23 will be weighted towards the back of the year and will exceed or equal 2022 levels. Overall, we expect full year 2023 growth in private markets management fees in the mid to high teens over 2022. For Q1 '23, we expect continued strong private market management fee growth, excluding catch-up fees of 11% to 13% over Q1 of '22, with overall private markets management fee growth a couple of points below that due to minimal expected fund closings in the quarter. Due to the back-end weighting of our fundraising, the limited Q1 catch-up fees, the full effect of the 22 absolute return strategies results, and the timing of certain compensation-related expenses, we expect Q1 fee-related revenue and fee-related earnings that are both slightly lower than Q4 of '22. This month marks the two-year anniversary of our first earnings call as a public company, and it is worth reflecting on our performance over that period of time. Since coming public, we have raised $17 billion of new capital, of which $9 billion was in fee-accretive strategies such as co-investments, secondaries, and direct investments. With more than $10 billion of dry powder across strategies as of year-end, our fundraising success leaves us enthusiastic about our ability to capture investment opportunities and generate alpha for clients. During the last two years, we have grown both private markets fee-paying AUM and management fees by 32%, with private market strategies now comprising 63% of our fee-paying AUM, up from 54% just two years ago. We believe that this double mix shift, the movement towards more private markets AUM and more fee-accretive strategies will continue to be a driving force of value creation going forward. In addition to the growth we have achieved, we have made strategic investments in our business to capture white space and lay the groundwork for continued growth in the coming years. Our offices in Toronto and Frankfurt are new efforts in insurance solutions, where we've already seen results and our new Sponsors Solution efforts all provide significant opportunity. Our fee-related earnings margin increased from 31% two years ago to 36% at year-end as we realize the scalability and operating leverage embedded in our business. We believe we have continued room to expand in that regard. Our existing clients are re-upping at higher rates and in greater amounts, and we are growing our specialized fund franchises with successor funds achieving larger size and scale than their predecessors, all while bringing new funds to market. Finally, we have made good on our commitment to return significant excess cash to our shareholders. Since going public just two years ago, we have paid $0.74 in cumulative dividends per share, increasing our quarterly dividend four times from $0.06 to $0.11 per share. As of Friday, our annualized quarterly dividend was 4.7%. In addition, we've returned $44 million of capital through share and warrant repurchases. We have managed our share count, and as Pam will describe, we intend to significantly mitigate any dilution associated with our LTIP and stock-based compensation going forward. In closing, despite last year's tough environment, we are proud of our results both last year and over our first two years as a public company. We delivered value for our clients despite a powerful paradigm shift, significant market losses, and record-setting volatility. The value proposition for clients and the strength of our business model have shown well, while the opportunities for clients and shareholders in '23 and beyond are as compelling as they have ever been. Importantly, investor demand for alternatives remains strong. We continue to believe that our stock represents good value, and we look forward to delivering for all of our stakeholders going forward. And with that, I will turn it over to Jon.

Jonathan Levin, President

Thank you, Michael. Our $7.8 billion of fundraising in 2022 was once again noteworthy for its high level of diversification across strategy, client, and geography. Private markets, which now represent 69% of total AUM, represented 93% of fundraising in 2022 and was diversified across each of private equity, infrastructure, and real estate. This year, 56% of private market capital raised was within fee-accretive strategies such as co-investments, secondaries, and direct investments. Notably, we reached the final close of our secondaries opportunities fund, GSF III, which at $972 million was 38% larger than its predecessor fund. As with past years, our existing clients were a key driver of capital formation, contributing 85% of new commitments in 2022. Our clients' validation of our value proposition, especially against the difficult market, is not only rewarding but a strategic advantage as investors currently have a high bar for where they commit their capital. Importantly, many of these new commitments were to new programs or new strategies as clients expanded the scope of their relationship with GCM Grosvenor into new areas. Our ability to evolve and expand with our clients has been and will continue to be one of the strongest drivers of our future growth. A perfect illustration of this phenomenon was the launch of our new Sponsored Solution strategy in the fourth quarter. The first initiative in this category is our Elevate strategy, which will focus largely on seeding small, emerging, and diverse private equity managers and which was launched with a $500 million investment from the California Public Employees Retirement System. CalPERS has been a GCM Grosvenor client for over a decade, and we're very excited to be expanding our long-standing relationship with their team with the new Elevate strategy. The Sponsor Solutions category is also a fantastic example of the extension possibilities of our platform and our ability to build on our existing strengths. Our expertise investing in small, emerging, and diverse managers is already a key differentiator for the firm. We have invested in small and emerging managers for 30 years, culminating in nearly $18 billion of assets under management as of year-end and have had a dedicated effort investing in diverse managers for the past 20 years with more than $13 billion in assets under management. We have consistently believed that there is a significant, too frequently overlooked opportunity to generate exceptional risk-adjusted returns by investing in small, emerging, and diverse managers. And as you'll see in our public disclosures, our track record with diverse managers exceeds that of private equity investors more broadly. As a result of our long-standing leadership, we have built a fantastic network of relationships and a reputation as a preeminent source of capital for any new investor looking to launch a fund. The Elevate strategy is a natural extension of these efforts. We are leveraging our existing expertise in partnering with successful firm founders early in their life cycles to make catalytic seed investments structured as minority investment partnerships that enable managers to scale successfully while generating compelling returns for our investors. This product is also an example of extending into adjacencies that enable us to leverage the existing platform resources to a large degree. The Sponsor Solutions category will be led by a new senior partner and one of our existing senior partners who is moving roles. Last quarter, I discussed the significant value inherent in our customized separate account relationships, which were 74% of assets under management as of year-end. We are constantly in dialogue about new potential customized separate accounts, which represented 78% of capital raised in 2022 and will continue to be an essential growth driver going forward. While we do not anticipate meaningful specialized fund closings in the first quarter, we expect specialized funds to have a greater impact on our 2023 fundraising and results as the year moves on.

Pamela Bentley, CFO

Thanks, Jon. The strength and scalability of the GCM Grosvenor platform were evident in our '22 results and remain the key factors driving our growth in '23 and beyond. In the fourth quarter, private markets was again our primary area of growth with private market fee-paying AUM up 11% from a year ago. Excluding the impact of catch-up fees, which were $1.6 million in the quarter, private markets management fees increased 10% from the fourth quarter of 2021. For the full year '22, private markets management fees increased 12%. And while we are satisfied with this growth, given the challenging market backdrop, we expect to exceed that growth rate in '23. For Q1 '23, we expect continued strong private market management fee growth, excluding catch-up fees of 11% to 13% over Q1 '22. As we foreshadowed on our last call, absolute return strategies management fees declined 0.5% this quarter as compared to the third quarter of '22. Given the '22 starting point of ARS fee-paying AUM, we expect ARS management fees in Q1 '23 to be slightly down on a sequential quarter basis. We realized $7.2 million of incentive fees in the quarter, the majority from carried interest. While we cannot predict the timing of when a more active transactional environment will resume, our carried interest earnings power continues to improve. As of year-end, we have $789 million in gross unrealized carried interest across 131 programs, the firm's share of which is $368 million. Despite the market environment, this figure is 11% higher than a year ago, given the outperformance of our private market portfolios versus the public markets. Our annual performance fees are tied to ARS investment returns and typically crystallize in the fourth quarter each year. Given the '22 public market impacts and the high watermarks of our ARS funds, our '23 performance fee earnings potential, assuming an 8% growth rate of return for multi-strategy and a 10% growth rate of return for opportunistic investments, is approximately $17 million, which compares to $30 million if all portfolios were at high watermark. Turning to expenses. Fee-related earnings compensation in the quarter was approximately $38 million, down slightly compared to the third quarter as we finalize year-end results and made our discretionary compensation decisions. Consequently, we expect fee-related earnings compensation in the first quarter of '23 to generally be consistent with the first quarter of '22. Other than strategic investments in the business, we do not expect significant headcount growth over the coming year. We continue to focus on alignment of our team's compensation with the performance of the business through the use of stock awards to both reward and retain our talent. As we have said before, this tool was one of the factors that made coming public attractive. We have two basic prongs to our approach to stock-based awards. First, we want to continue to use our LTIP to align and incentivize our employees, and we grant restricted stock with varying vesting periods to provide both current reward and long-term retention. In '22, we granted 4.5 million restricted shares to employees. Second, we have and will continue to buy back shares to offset dilution from stock-based compensation. As of year-end, we had more than $45 million remaining on our stock buyback authorization. Non-GAAP general and administrative and other expenses were approximately $19 million in the fourth quarter, up modestly from the third quarter. We expect a slight sequential increase in this figure in the first quarter of '23 and continue to tightly manage expenses despite inflationary pressures. Our fee-related earnings margin expanded to 36% in '22 from 35% in '21. We anticipate continued long-term fee-related earnings margin expansion in '23 and beyond. To reiterate, we anticipate private markets management fees will grow in the mid to high teens in '23, resulting in fee-related earnings growth in the mid-teens. While we are not immune to the impact of the current market environment, our track record of strong performance, the scale and diversification of our platform, combined with the strength of our team and culture, provide us with great confidence. We remain focused on delivering long-term value to our clients and shareholders. Thank you again for joining us, and we're now happy to take your questions.

Operator, Operator

Thank you. And our first question will come from Chris Kotowski with Oppenheimer.

Chris Kotowski, Analyst

Yeah. Good morning and thanks for taking my questions. I wanted to start on the Elevate program. And first, I was wondering, has there been any precedent in your experience where you had an anchor tenant of this nature come in with a big commitment? And is there any way to think about how the ultimate fund resulted compared to the initial commitment?

Michael Sacks, CEO

Sure. So the short answer is we have had large anchors that have helped to launch funds in the past. And all of our specialized funds that we've launched have turned into, I don't know if the right word is franchises, but if you will, Chris, and have then gone on to successor Fund II and successor Fund III, et cetera. So we are incredibly excited about Elevate, and we're excited about it on a few different levels. One, starting with an anchor of that size and quality is a terrific thing, and we think it will get attention in the marketplace and enable us to have this first one be larger in size than simply the anchor investor. We're not putting a number on that, and we don't do that, but we do - and Jon did mention in his remarks, we will be raising money for this fund for the next 18 to 24 months. Second, we think the fund itself is a fantastically exciting fund that addresses a real need in the market, which is seed capital and all kinds of other support for new small, emerging, and diverse managers to launch private equity firms. We believe there are ample opportunities for us to deploy the capital to generate very good returns on that capital on behalf of our investors in Elevate and to own interests in new private equity sponsors that will grow and turn into immensely valuable businesses. As you know, we have been in the business of allocating capital to early-stage Fund I private equity managers and the small emerging and diverse manager space for a long, long time, decades. And so we feel very confident in our ability to deploy the capital wisely, knowing that the returns available to the capital when you get that right are outsized. So we're very excited about it. The last point I want to reiterate on Elevate, which Jon touched on and tried to talk about in his comments, is that it is a Sponsor Solution program where we are delivering value to sponsors. We believe that there are other ways we can deliver value to sponsors over time and other opportunities, and we're excited about building out Sponsor Solutions broadly defined as we move forward into the future. So it was a terrific, very bright spot in the fourth quarter, and we're thrilled to have that fund in market this year, which is not something we had communicated about prior, and we think it's a very positive development for the firm and for our future.

Chris Kotowski, Analyst

Yes. And you said you'd be fundraising for 18 months or so. Presumably, it turns on before that time. But financially speaking, it's probably not an event for 2023 numbers. Am I thinking about that correctly?

Michael Sacks, CEO

No. The fees for that fund have turned on already on January 1. So we will enjoy some revenue from that fund from the anchor investor in 2023. The structure of that fund has fees on committed capital with a catch-up. So as we raise money for that fund, those fees will revert back to January 1.

Operator, Operator

And our next question comes from Jeff Schmitt with William Blair.

Jeff Schmitt, Analyst

Hi, good morning. The infrastructure fundraising was pretty strong in '22, I think it was around 27% of the total. And then you'll be in the market this year, you are right now with the diversified infrastructure fund, labor infrastructure is supposed to start up at some point this year. So I'm just thinking about the inflation protected characteristics of those strategies. Are you seeing competitors get more aggressive there and raise additional funds? Or do you think there could be potential upside to your fundraising for those funds this year given demand?

Michael Sacks, CEO

We're enthusiastic about the Lyft fund. We're enthusiastic about the diversified fund. And importantly, we remain enthusiastic about our separate account infrastructure vertical, where we've raised a lot of money over the last couple of years. We don't see any change at all in demand for infrastructure. It remains very strong. In fact, we don't see any demand change at all in demand for alternatives. I think it remains very strong. We've seen a slowdown in fundraising just due to the macro environment and, as much as anything, the decline in traditional assets and transaction levels. As transaction levels come back, the whole space will loosen up, and you'll start to see fundraising pick up. We got so used to infrastructure dominating the fundraising for many quarters that over the last couple of quarters where private equity has kind of taken a lead, it's raised questions. But that should not be a question. There's a lot of demand out there, and we have a great team, and we've raised a bunch of money over the last couple of years, and we're going to continue to do that this year.

Jeff Schmitt, Analyst

Okay. And then on the adjusted EBITDA margin, it's fairly flat for the year, which is a pretty good result, I guess, given the drop in revenue. But how should we think about that margin in a more normalized environment just in terms of its run rate? And how much of future expansion is sort of dependent upon revenue growth?

Michael Sacks, CEO

It's a great question. We feel it's very hard, as Pam noted, to predict carry levels. They are very much correlated with transaction activity levels, and transaction levels were down significantly last year in light of the general macro and capital markets environment. Our belief is that as rates stabilize and transaction levels resume, and we feel like we're seeing some green shoots there, maybe starting to pick up a little bit, we’re not making sharp timing predictions. But we believe there’s a very real asset there for us, and that asset has maintained its value. And as transaction levels pick up, we'll start to see more carry come in. The difference between FRE and adjusted EBITDA is a result of our incentive fees, our carry, and our performance fees at ARS. We've got great earnings power there. It's hard for us to predict when that will come, but it will come. The earnings power and asset underlying the carry is there and its impact has grown slightly, and we know that that will return. It's just a question of when. And when it does, that is a good thing for our growth in EBITDA, growth in net income and for our margins in that regard.

Operator, Operator

And our next question will come from Ken Worthington with JPMorgan.

Ken Worthington, Analyst

Hi, good morning and thanks for taking the questions. So I wanted to dig into the fundraising environment for the private markets business sort of as we transition from 4Q to 2023. So have you seen a change in the environment as we transition? And I think in the last call, you expressed confidence that fundraising would be higher in '23 than '22. In the comments today, you sort of added the qualifier bigger or equal to 2022 levels. So are you feeling a little less confident? And I guess the kicker here is on CIS III and MAC III, which have their final closes this year. I think fundraising needs to accelerate for you to reach your prior targets for those funds. Is that something you feel confident in? Or if not, can fundraising be extended to sort of reach your prior targets?

Michael Sacks, CEO

Yes. Thanks for the question, Ken. I think that specifically, just to clarify what we said in the call was that our FRE goal of mid-teens FRE growth for '23 can be achieved with even less fundraising than we had last year. That was really to provide context for all of you in terms of what we need to do to make that mid-teens number. That was not intended to indicate what we think will happen. In fact, we do think we'll have more fundraising in '23 than we had in '22. I think that’s very important for you to hear. That was in no way an effort to tell you what we think is going to happen. It was more an effort to give you an appreciation for what's needed for us to reach our mid-teens FRE growth. Our view is that demand for alternatives has remained strong. Nobody is moving away from the strategies. Nobody's changing their allocation of alternatives on their balance sheet. You've had a slowdown last year, and it was related entirely to the macro capital markets environment and primarily to the denominator effect from significantly reduced long stock long bond portfolios, and it was related to reduced transaction levels, which means that cash flows from portfolios are down. As transaction levels increase, everything will loosen up, and you'll see commitments to new funds and new programs increase as well. And that’s our outlook. As for MAC and diversified infrastructure, that fundraising does need to accelerate. We do have the pipeline to do that. I think it's a natural expectation in a slower environment where people want to wait a little to sign their subscription documents, leading to bigger closes towards the end of the period. We do have a solid pipeline across the firm and for those specific efforts. So we do expect to have productive fund closings for both of those funds this year.

Ken Worthington, Analyst

Okay. Excellent. That was super helpful. Okay, catch-up fees. How should we think about catch-up fees this year versus last year, if all goes according to plan? So fundraising a bit back-end loaded. It sort of suggests that these catch-up fees will be more robust in the second half of the year to help us sort of level set how should we think about '23 versus '22 just on catch-up fees?

Michael Sacks, CEO

We expect they’ll be higher. MAC has catch-up fees, and as we just talked about, we expect some good closings for MAC this year. The Elevate fund I mentioned earlier started on January 1. So to the extent you raised money in Q3, Q4, you have catch-up fees there. Lyft will have a first closing at some point and will have a bit of catch-up fees as well. Those are three of the five funds in market that have catch-up fees, and we think they will generate catch-up fees this year that will equal or exceed the catch-up fees last year.

Operator, Operator

Thank you. Our next question will come from Adam Beatty with UBS.

Adam Beatty, Analyst

Thank you and good morning. A couple of questions on Elevate and Sponsor Solutions more broadly. First, just in terms of mechanics, wondering how either the fund or the firm more broadly expects to balance the eventual need for return of LP Capital from the fund with the perhaps need for longer term, maybe even permanent financing on the part of the issuers in question, seems salient given Grosvenor's own history. And then more broadly, just wondering about what you're seeing in the issuer market there are - in terms of capital formation, are small firms being formed at the same rate as before or a little bit less given some of the environment and the challenges? Thank you.

Jonathan Levin, President

Sure. Adam, this is Jon. Happy to take that one. You can think of these investments out of the Elevate strategy as being multifaceted partnerships with the sponsor talent. The way that can look is they won't all be equal, but you could have investments in the funds themselves. You could have co-investment relationships with those managers. It's possible you could have financing for the management company or the GP itself. And then in return, part of that economic package would also be minority interest, whether those are revenue shares or equity interest in the managers themselves. I think for the bulk of the capital, right, whether that's the investment in the fund, the co-investment, or financing at the management company or GP level, that capital would be coming back over the course of the duration of a private equity life in due course. So the LPs of our fund would have their capital back, and the remaining interest would be a cash-flowing interest in the form of revenue share or equity participation that, to your point, could last for a long duration. But at that point, it is cash flow and capital coming back after having had all your invested capital back. We think that's a good profile for investors in this type of strategy. On the second part of your question, there is certainly some cyclicality that exists always in terms of new fund launches, and that has some relation to the general capital markets environment and correlation to denominator effects and things of that nature. But the reality is we have a huge sourcing network and a broad investment funnel. If we're looking to do 8 to 10, or 8 to 12 deals over 3 to 4 years, that’s plenty of time and a small enough number to feel like we can be highly selective and partner with the right firms in their launches.

Adam Beatty, Analyst

Perfect. Thank you, Jon. I appreciate the detail. And then maybe just a quick one on the fee AUM backlog, particularly the portion charged on deployed or invested capital, I think it's $4.7 billion. Just either historically or in your budgeting or what have you, how long do you think, given the fund set up right now, how long do you think it would take to deploy that? Is that like a 1-year, 2-year kind of timeframe?

Jonathan Levin, President

We've generally said that it's ratable over a few year period of time. There could be some that's a little bit longer, but that's generally the guidance that we’ve given on that front.

Operator, Operator

And our next question comes from Michael Cyprys with Morgan Stanley.

Michael Cyprys, Analyst

Hey, good morning. And thanks for taking the question. I was hoping to dig into the absolute return business in terms of the fundraising outlook there. So I was just hoping you could comment on what you're seeing in the marketplace in terms of LP appetite for absolute return strategies, particularly in light of the strong outperformance versus broad benchmarks last year in that strategy. What do you expect in terms of gross sales into '23? Are there any particular strategies where you're seeing more demand versus less demand? And any sort of expectation around redemption trends as well? Thank you.

Michael Sacks, CEO

Thank you, Mike. I think that the demand there is and the demand for specific strategies is mixed. You'll see people that have an interest in credit-oriented strategies. Commodities had a great year last year, and you're seeing people talk about whether they want to shift capital towards those strategies. That space is so diversified in terms of the number of strategies that take place underneath and the ability to have funds and separate accounts that focus on different strategy sets that there's always a level of demand. We have said for a long time that we think we’re not in a strong net inflow environment. We think that the asset class is kind of growing through compounding, but not through incremental allocations. I think we believe that continues to be the overarching theme there. I don’t see any real change in that macro picture for demand for hedge funds. I do think that when you have an environment like we had last year, people will tend to use liquid strategies and liquid portfolios for liquidity, but some of that money can come from ARS to fund other things in their alt book that they want to keep funding. So we suspect that will abate somewhat this year. Our ARS strategy contains a number of different approaches, some of which had very good results last year and we would expect some of those to experience growth this year, while others could see redemptions. But on a net basis, we're budgeting for some modest redemptions this year, more modest than last year, and we're not seeing a major increase in the allocation to hedge funds overall. That said, Mike, I do want to mention our ARS vertical, which we feel doesn't get the respect it deserves. The performance of the portfolios last year showed the value of ARS strategies to clients compared to traditional strategies. Equally important, the assets and revenues of the ARS strategies last year demonstrated that it was a much better business to be in than to be a long-only traditional manager, and we believe that will continue to be the case.

Michael Cyprys, Analyst

Great. Thank you. And just a follow-up question, circling back on Elevate. So with that, you're launching a fund strategy around the capability that you guys have had for some time now. So just curious as you kind of look at your separate account capabilities and investments, if there are other types of strategies that you guys already have today that you might be able to bring to the marketplace and package in a commingled fund. Just how do you think about that sort of growth opportunity there on the fund side, taking what you're already doing in different pockets on the separate account side?

Michael Sacks, CEO

Yes. We have a lot of manufacturing capability and a lot of origination capability that we believe we can grow both in custom separate accounts and in specialized fund form. We have that in the impact space, in the sponsor solutions space, and there are commingled fund products that can make a lot of sense for that channel. So I think we are sort of long origination and long manufacturing. We have a lot of ability to add new funds and new strategies over the next several years. You've seen us do it over the last couple of years, and I think you'll continue to see us do it as we move forward.

Operator, Operator

Thank you. And I'm not showing any further questions at this time.

Michael Sacks, CEO

Thank you all very much. We appreciate your interest, and we look forward to delivering for shareholders as we move forward. Thank you.

Operator, Operator

Thank you. And ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. We hope everyone has a great day. You may all disconnect.