Hamilton Lane INC Q3 FY2020 Earnings Call

Good morning, my name is Denise, and I will be your conference operator today. At this time, I would like to welcome everyone to the Hamilton Lane Incorporated Third Quarter Fiscal Year 2020 Earnings Conference. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. I’d like to hand the call over to John Oh, Investor Relations Manager. You may begin your conference.

Thank you, Denise. Good morning and welcome to the Hamilton Lane Q3 fiscal 2020 earnings call. Today, I will be joined by Mario Giannini, CEO; Erik Hirsch, Vice Chairman; and Atul Varma, CFO. Before we discuss the quarter’s results, we want to remind you that we will be making forward-looking statements based on our current expectations for the business. These statements are subject to risks and uncertainties that may cause the actual results to differ materially. For a discussion of these risks, please review the risk factors included in the Hamilton Lane fiscal 2019 10-K and subsequent reports we file with the SEC. We will also be referring to non-GAAP measures that we view as important in assessing the performance of our business. Reconciliation of those non-GAAP measures to GAAP can be found in the earnings presentation materials, which we will be referencing throughout the call and will also be shown on the webcast. These materials are available on the public Investor Relations section of the Hamilton Lane website. Our detailed financial results we’ve made available when our 10-Q was filed. Please note that nothing on this call represents an offer to sell or solicitation to purchase interest in any of Hamilton Lane’s products. Beginning on Slide 3. Year-to-date, our management and advisory fee revenue grew by 12% while our fee-related earnings also grew by approximately 12%. This translated into year-to-date non-GAAP EPS of $1.41, based on approximately $76 million of adjusted net income and GAAP EPS of $1.44 based on approximately $40 million of GAAP net income. Consistent with the two prior fiscal quarters, we have again declared a dividend of $0.275 per share this quarter, which keeps us on track for the 29% increase over the last fiscal year and equates to $1.10 per share for fiscal year 2020. With that, I’ll now turn the call over to Mario.

Thank you, John, and good morning. As John noted, we are pleased that Atul has joined us as our new Chief Financial Officer and Treasurer, which became effective on January 6. Atul brings to our firm two decades of leadership experience in financial services, most recently at Bank of New York Mellon, where he held the roles of Head of Business Strategy and Chief Financial Officer for wealth management. As many of you know or saw in the press release, Atul will be succeeding Randy Stilman, who retired from Hamilton Lane after having served the company for over 22 years. Randy will be staying on into the year to ensure a smooth transition. I, along with everyone at Hamilton Lane, extend our sincere thanks to Randy and wish him the very best in his retirement. Now shifting gears a bit, I want to address a topic that we here at Hamilton Lane are very proud to discuss. For the eighth consecutive year, Hamilton Lane was recognized as a best place to work in money management by Pensions & Investments magazine. We are one of only five companies to earn this distinction for eight consecutive years, which is as long as they've been bestowing the award. For those who have followed us since we became public, you have consistently heard us speak to the importance of fostering a workplace and a culture that our employees are proud to be a part of every single day. We believe that pride directly correlates to a willingness to go above and beyond for our clients and a strong desire to win at whatever we are doing. We employ terrific people who in turn make Hamilton Lane a truly unique and special place to work. Next, I want to touch upon a recent piece of news regarding the relocation of our global headquarters to Conshohocken, Pennsylvania. For those unfamiliar with the suburbs of Philadelphia, our new location is less than 10 miles west of our current location. We have signed a 17-year lease to occupy approximately 130,000 square feet in a newly constructed building slated for completion in late 2020 or early 2021. This nearly doubles our current footprint and, combined with the long lease, gives us plenty of room to grow well into the future. Having significantly outgrown our expectations, we have been extremely short on space for the past several years and have been forced to split our team across two locations here in Bala Cynwyd. We are excited to bring everyone back together under one roof and frankly continue to believe that our headquarters location is an advantage for this firm, both from a cost perspective as well as from a cultural one. Atul will cover the financial specifics in his section. Turning to the results for the quarter, beginning on Slide four, here we highlight our total asset footprint, which we define as the sum of our AUM (assets under management) and AUA (assets under advisement). Total asset footprint for the quarter stood at approximately $488 billion and represents a 4% increase to our footprint year-over-year, continuing our long-term growth trend. Consistent with prior quarters, AUM growth year-over-year, which was approximately $7 billion or 13%, came from both our specialized funds and customized separate accounts and continues to be diversified across client type, size of client, and geographic region. Our focus remains simply growing and winning across both lines of business, and we are pleased with the success. Moving to AUA, as we're seeing with AUM, growth year-over-year, which came in at approximately $12 billion or 3%, was from across client type and geographic region. As we mentioned on prior earnings calls, AUA can fluctuate quarter-to-quarter for a variety of reasons, but the revenue associated with AUA does not necessarily move in lockstep with those changes. And while this quarter saw an increase in AUA dollars relative to the previous quarter, we'll continue to emphasize that no direct correlation exists between the scale of AUA dollars and revenue generation. Continued growth and scale of our AUA remains an area of focus over the longer term given the advantages these dollars bring. However, growth in scale will not supersede our disciplined approach to ensure that we are finding the appropriate match between our services and the needs of the particular client. Let me now turn it over to Erik.

Thanks, Mario, and good morning. Moving on to Slide five, we highlight our Fee-Earning AUM. As a reminder, Fee-Earning AUM is the combination of our customized separate accounts and our specialized funds with basis point driven management fees. We will continue to emphasize that this is the most significant driver of our business, as it makes up over 80% of our management and advisory fees. Relative to the prior year period, total fee-earning AUM grew $4.6 billion or 14%, stemming from positive fund flows across both our specialized funds and our customized separate accounts. Taken separately, nearly $2.1 billion of net fee-earning AUM came from our customized separate accounts and, over the same time period, nearly $2.5 billion came from our specialized funds. Growth continues to be driven by four key components: one, re-ups from our existing clients; two, winning and adding new clients; three, growing our existing fund platforms; and four, raising new specialized funds. What you also see here is that our fee rates have remained steady even while we continue to grow fee-earning AUM. Moving to Slide six, fee-earning AUM from our customized separate accounts stood at approximately $23 billion, growing approximately 10% over the last 12 months. We continue to see growth coming from a variety of avenues. As you've heard us say in the past, re-ups from our existing client base remain a key component of the growth. In addition, we continue to expand our existing client base by winning and adding brand new relationships, which in turn provide a growing base for future re-up opportunities. As for our specialized funds, growth continues to be strong. We are executing well across our product suite, and demand remains robust, coming, like the rest of our business, from a diversified set of investors around the globe. Over the last 12 months, we achieved positive inflows of nearly $2.5 billion, resulting in a nearly 23% increase in fee-earning AUM. The main driver is our current secondary fund. During the quarter, we held an additional close that totaled approximately $265 million of commitments. This now brings the total dollars raised for this product to approximately $1.4 billion. Two quick reminders: First, our previous secondary fund totaled approximately $1.9 billion in size. Second, we have until Q3 fiscal 2021 to complete the raising of this current fund. Given that fees on this fund started in a prior quarter, this closing did generate retro fees. The next largest drivers of AUM inflows were the finalization of our most recent co-investment fund followed by our credit fund. Rounding out the AUM growth was continued success across our various white label initiatives as well as positive net inflows for our semi-liquid vehicle. We remain encouraged with the growth we have achieved with our fee-earning AUM through this fiscal year to date. The interest in demand for private market exposures continues to grow, and we continue to be a beneficiary of this growth as a leader in the asset class. Let me now shift and talk about technology. You've heard us speak in the past that we see investing in technology as critical to our leadership in this asset class. Our approach has been simple: identify unique technology solution providers who we believe we can help make better, and the industry better, and put our balance sheet capital behind them. We not only become a user of the technology but a strategic partner as well. This strategy has thus far proven very successful, and we are excited to announce our most recent partnership with Canoe Intelligence. Canoe is an early-stage SaaS company aiming to eliminate the industry-wide problem of manual data entry for investors in alternatives. Canoe automates the end-to-end workflows related to data extraction, validation, and delivery of hard to interpret, unstructured financial documents including partner capital statements, cash flow notices, K1’s, all items that we and others throughout the industry deal with in high volume. We are optimistic that Canoe will help unlock new efficiencies for us and for private market investors around the world. We are investing in Canoe's Series A, participating alongside NASDAQ ventures and others. Let me end this section with what we believe is a very noteworthy announcement. On January 31, Hamilton Lane acquired the limited partner version of a software platform called Cobalt from Cobalt's parent company, Bison. While specific terms of the deal are confidential, the transaction was a mixture of cash from our balance sheet and agreeing to retire some of our stock in Bison. As some of you will recall, we invested in Bison, the parent company, in 2016 and became the single largest shareholder of the company. Our original thesis, which has played out nicely, was that the industry was in desperate need of an analytically driven software solution to manage data and risk. We have worked closely with the company over the past four years to build out offerings for both general partners and limited partners. This transaction now allows us to fully control the service offering that we believe over time can be a growth driver for our company; and most importantly, allows us to meet the needs of our clients who are increasingly putting value on private market-focused data, analytics, and technology. Bison remains fully focused on its platform, Cobalt GP, which provides the GP market with the essential tools they need to collect, analyze, and report on fund and portfolio company metrics. We intend to continue using the Cobalt brand for our LP offering and remain in close strategic partnership with Bison, as well as remain a key shareholder. As part of our original investment in Bison, not only did we become a large user of the software, but Hamilton Lane had secured exclusive distribution rights to the LP version along with a revenue sharing arrangement with Bison. We began selling that LP offering in January 2017 and we have been using Cobalt LP both offensively and defensively. Offensively as a way to provide a service for LPs with whom we’ve not yet had any relationship, and defensively as a way to differentiate from competitors and/or to hold overall pricing. At present, we have three types of clients utilizing Cobalt. The first is simply those who have purchased a subscription to the software, independent of other Hamilton Lane services. These clients represent the largest component of our subscriber accounts. The second are clients who have committed a large amount to one of our specialized funds, and have received an initial free subscription with the ability to renew as paying customers. And the third are separate account advisory and/or back office clients, who have secured a Cobalt subscription as a component of their overall relationship with us. For competitive reasons, I will not go into the granular metrics around our Cobalt offering, but as of the end of January, the annual recurring contract value for direct subscribers of Cobalt LP was $1.8 million. In addition, we receive additional revenue from Bison for data licensing to their GP product. Now while admittedly starting at a base of zero just a short while ago, our annual growth rate year-over-year does stand at over 100%. The dedicated Cobalt revenue today sits in our reporting and other revenue line item. We are extremely excited about adding a full-blown SaaS offering to our platform and believe that our willingness to invest in technology and data continues to set us apart from competitors. Most importantly, it enables us to best serve the needs of our existing and prospective clients. Continuing our focus on wanting to be able to work with any eligible investor seeking any level of assistance in the private markets. And with that, I'll now turn the call over to Atul to cover the financials.

Thank you, Erik, and good morning, everyone. As Mario mentioned earlier, I have come on as the new CFO for Hamilton Lane. I'm excited to help build upon all the great work already in place and look forward to working with you all. Now moving to slide eight of the presentation, here we show the year-to-date financial highlights for fiscal year 2020. We continue to see very solid growth in our business with management and advisory fees up 12% versus the prior year, driven by stronger growth across our core products and services. Our specialized funds revenue increased $14.6 million from the prior year period, driven by approximately $1.4 billion raised in our latest secondary fund in the current fiscal year and approximately $500 million raised between periods for our latest co-investment fund. We recognized $2.8 million year-to-date in retro fees from the co-investment fund compared to $1.1 million in the prior year period. As many of you are likely aware, investors that come into later closes at the fund raise, for many of our products, the retroactive fees dating back to the fund's first close. Therefore, you typically see a spike in management fee-related debt fund for the quarter in which subsequent closings occurred. Revenue from our customized separate accounts increased approximately $4 million compared to the prior year period due to the addition of several new accounts and re-ups from existing clients. Revenue from our advisory and reporting offerings was relatively flat compared to the prior year period. The final component of our revenue is incentive fees. Incentive fees for the period were $17.5 million, or approximately 9% of total revenue. Noteworthy this quarter was that we saw an additional four vehicles move into realized incentive fee provision. While the dollars were small, it continues to show a positive trend of strong performance, the increasingly diversified forces of carried interest and lastly, the overall aging of our carry-generating vehicles. Moving to Slide nine, we provide some additional detail on unrealized carry balance. We saw strong growth this quarter with the balance up 15% from the prior year, even as we recognized approximately $27 million of incentive fees over the last 12 months. As you can see from this slide, the growth came from both adding new carry-generating funds as well as appreciation in existing vehicles. Turning to Slide 10, which profiles our earnings. Our fee-related earnings year-to-date were up approximately 12% versus the prior year period as a result of the revenue growth we discussed earlier. In regard to our expenses, total expenses year-to-date increased $4.4 million compared with the prior year period. G&A increased $7.3 million due primarily to increases in commissions from fund closings in the current year period, an increase in consulting and professional fees and an increase in technology-related expenses. Total compensation and benefits decreased $2.9 million due to the non-recurrence of the earn-out expense from our Real Asset acquisition included in the prior year period, as well as a decrease in incentive fee-related compensation. The final item on expense is related to the commentary Mario provided earlier on our new lease. Over the last five years, we have grown headcount at over 10% a year. At the same time, our headquarters space has not changed. As we contemplated our new headquarters, it was important to find a solution that could support our expected growth far into the future, hence the large expansion in footprint coupled with the 17-year lease term. The new lease expense will start when we have the right to take possession of the space, which is expected to be in late Q3 or sometime during Q4 of this calendar year. Due to this timing, we will likely see expense impacts in both our current and future headquarters leases for a short time period. As it stands today longer-term, we expect the impact to our G&A expense will be a run rate increase of $4 million to $5 million stemming from the new lease. We expect the base rent and any upfront spend for the buildout of the space to be expensed evenly over the 17-year term. However, at the onset of the lease, the cash outlay for rent, excluding the buildout, will likely be less than what gets expensed due to the built-in gradual step-up in rent payments over the 17-year term. A portion of the new rent expense is likely to start in our next fiscal year. We are, however, still finalizing the details and the exact timing is not yet final. Given the prior public disclosure around our move, we have wanted to share what we do know as soon as practically possible. Moving through our balance sheet on slide 11, our largest asset on the balance sheet is investment alongside our clients in our customized separate accounts and specialized funds. The growth of this asset, which increased 27% compared to the prior year period, reflects the growth of our business. In regard to liabilities, our senior debt is our largest liability, and we continue to be modestly levered. And with that, we thank you for joining the call and are happy to open it up for questions.

Your first question comes from Ken Worthington with JPMorgan. Your line is open.

Hi, good morning. Maybe first the incentive fee outlook; accrued incentives continue to rise. How should we think about the growth in incentive income in 2020 versus 2019 and maybe any color you can share on cadence if that is at all possible?

Sure Ken, thank you; it's Erik. We're happy to take that. I would say as we kind of delve within the script, this story continues to be a positive one. The pieces that we can control are how many vehicles we are raising that actually have a carry component, and you see that, that continues to grow very strong year-over-year. We've essentially added about 20 accounts over the last two prior years. The other piece that we can control is making sure that we're investing in good transactions. I think you can sort of see that reflected both in the performance of the vehicles, and you can sort of see that flowing through in terms of the unrealized carry appreciation and what we're sort of showing on the other income, which is effectively our investments alongside clients. So all of that to us points to good results, good growth around that. You also see that those assets are continuing to age. We note that four vehicles rolled over and are now in a realized carry position. You'll recall that we're using again sort of the most conservative scenarios here around how we treat carry. We've got to be in a full cash position. So I think this is all then becomes we would say very well positioned now it sort of depends on what happens with the markets. If the markets continue to stay as they are, I think we expect to continue to see good results across the carry pool.

Could you provide some insights on the pricing of Cobalt? I believe you are retiring shares. Is there a taxable loss or gain involved? Will this have any significant impact on the P&L? Also, is this the first instance where you've fully acquired a technology company? You've made numerous investments, but is this your first time achieving complete ownership? Finally, why does acquiring all of Cobalt make more sense than continuing to engage in a revenue share for Bison?

So Ken, it’s Erik. I'll stick with that one. The answer to your first question around is there going to be any kind of tax will impact or flow through, the answer to that is no. So, the acquisition was a mix of some cash off a balance sheet, and not simply agreeing to retire some of our stock, but no impact there on P&L. Your second question in terms of what does this all mean? Is this the first time? The answer to that is yes, this is the first time that we have wholly acquired technology 100% and have fully brought that piece in-house. To your third point, does this sort of make sense or was there another way to participate? The business at Bison was set up as we noted into sort of two components. One that is very clearly selling to GPs, and one that's selling to LPs. For us, we don't want to be in the business of selling to GPs. That's not our focus. It's not our core target audience. We deal with LPs only. So, I think having Bison, the parent continuing to focus on the GP market makes the most sense. The reason we believe it makes sense for us to fully acquire the LP side and bring it in-house is really it lets us control our destiny. Bison has been an incredibly important strategic partner to us, and it's a relationship that we value today and will continue to value in the future as a large shareholder. I think the fact that we're keeping the brand reflects the fact that we intend on working very closely side-by-side with the two components. But us owning this outright means that we can decide pricing strategies, investment in R&D, technology direction, footprint for that. We feel like the product has good traction, it has good brand. We have obviously a customer base that's using it very successfully. And so we think it's at a maturation point where we think we can help sort of move it to the next level and be core and strategic to our business.

Great. Thank you very much.

Thank you.

Your next question comes from Michael Cyprys with Morgan Stanley. Your line is open.

Hey, good morning. This is Peter Kaloostian standing in for Mike Cyprys. I just hoped you could give some color on a potential seasonal uplift in fundraising in calendar Q1, just knowing that, that's historically been one of your stronger quarters? Thanks.

Sure. It's Erik. I'll take that, Peter. Thanks for the question. I think what you see is there is some seasonality, but I would say it's also largely driven by just where we are in the product cycle mix. We have said on prior calls and we'll reiterate here again. Our products tend historically to have more barbell approaches to fundraising. You're giving clients oftentimes an incentive to come into a first close with some sort of a closing discount that's very much industry norm today. And so you entice people to come into an early closing to be anchor and to be supportive. And then, you have the rest of the group that tends to want to wait until the very back end. And so you tend to have heavy front and heavy ending. I think for us on the secondary side, the fact that we're at the $1.4 billion number and are sort of sitting here in the middle, we think bodes well for where that is. We've got a lot of time left on the calendar to continue to raise that. We note that it's really in Q3 of fiscal 2021. And so, we think we're very, very well-positioned for that. The other part that does tend to be calendar-oriented is around some of the separate accounts. Not surprising to you that some of the clients will make decisions at the end of the calendar year. And so, you often tend to see clients focusing on re-ups, new contract extensions at the end of their calendar year period in effectively the fourth quarter.

Your next question comes from Alex Blostein with Goldman Sachs. Your line is open.

Hi. Good morning. So, maybe follow-up to Ken's question earlier around Cobalt and the opportunity you guys see for Hamilton Lane by owning 100% of that part of the business. So, I think you said the ARR is $1.8 million. Can you expand on that a little bit, meaning, are there other sources of revenues that could be a little bit one-off-ish as that business grows? And more importantly, how do you think about the addressable market for this part of the business now that you own it? Maybe talk a little bit about the percentage of your LPs that currently use them, where they could go over time just to kind of help frame the opportunity better?

Sure. It's Erik. I'll take that. So, I think the way we think about this as we noted is kind of this offense and defense. So on an offensive side, Cobalt is a very much of an empowering tool to LPs who want to have some element of kind of do-it-yourself component to their analytics and data. And so for some of those clients they may not be core Hamilton Lane customers. So it opens up another part of an addressable market for us. For some of the existing Hamilton Lane customers, they're already paying us to do a lot of that work for them. And so, the way we can use that defensively is a way to differentiate between what we're offering and what competitors are offering. We've talked in the past about one of the ways we're able to kind of maintain our fees at a very steady rate, is that we're kind of working harder for that dollar today. We believe that the wider that the service package gets, we think that's more pressure that we're putting on competitors. We're going to struggle to kind of match us service for service. We think by owning this technology, it again sort of positions us in a very clearly differentiated way. The other piece that's nice, and again we're using it as sort of an enticement of, hey, if you're looking at our secondary fund or someone else's secondary fund, this is a little perk that we can include again by owning this technology outright. It’s just another thing that we can provide to the customer to have their experience with us be very, very different than what their experience would be with competitors. We think the addressable market here is very large. We continue to see more and more LPs flowing into the marketplace. And so, as we know, it's early days; the growth has been very attractive. And so while what we have today in ARR is not obviously driving our business forward, we think we can use this in a lot of different ways to have both a positive revenue impact and positive differentiation against peers.

Great. That makes sense. And just a follow-up around the expense guidance. So, I heard your comments around the lease and the impact on G&A. But maybe just taking a step back as we're looking into your fiscal 2021, help us frame kind of the outlook for expenses both for comp and non-comp as you'll account into next year?

Sure. It's Erik. I'll stay with that one. I believe what we're observing is that the General and Administrative expenses have been diverse. In the early years of being public, we incurred additional expenses related to that status. Now, what you're observing is primarily due to our growth as a company. You can see ongoing spending related to taxes. The commissions we mentioned earlier stem from successful fundraising efforts, resulting in some payouts. That being said, these factors will likely remain significant. However, aside from the recent rent increase, we're making strong efforts to keep additional G&A expenses in check. We've already made many investments, and you can see those results. Additionally, on the compensation front, there's actually a decrease occurring. This is partly due to the absence of earn-out expenses. More importantly, we're starting to see improvements in operational efficiency thanks to technology, which reduces the need for a large influx of new hires with each new business opportunity. These tools are beginning to show promise. It's still early, but we find it very encouraging.

Great. Thanks very much.

Your next question comes from Chris Kotowski with Oppenheimer & Company. Your line is open.

Hi, good morning. This is Kevin Trippe filling in for Chris. And thank you for taking the question. Looking at the overall landscape for the year ahead, what expectations do you have on general fundraising trends? And has recent news had any impact on that? For example, with the LPs focused on geography for SMAs, has it been impacted by news around the coronavirus? We've been seeing figures floating around of roughly say like a 50 to 100 basis point impact on China's GDP as a potential result?

Hi Kevin, it's Mario. We haven't noticed that if Chinese GDP decreases by 1%, it would have much effect on fundraising. The trends in fundraising we observe are more long-term regarding the growing interest in alternatives, whether that involves equity, debt, or real assets. Everything we've seen and read suggests that this trend will continue. The move toward incorporating more alternatives into investment portfolios across various types is something we believe will persist into 2021 and beyond. Therefore, while the landscape might not show immediate changes on a month-to-month basis, we do not see any significant impacts when looking at it on a quarter-over-quarter or year-over-year basis. People are increasingly seeking alternatives for their portfolios. Overall, we don't expect any shifts in this trend, especially considering current news or market developments.

Okay, perfect. Thank you. Appreciate it. That's it for today.

Your next question comes from Robert Lee with KBW. Your line is open.

Great. Good morning guys. Thanks for taking my questions. Maybe just following up on the fundraising. Clearly Erik, you talked about the secondaries fund you're raising and stuff. Can you give us a little bit maybe updated color around? I know, that there's, as you mentioned the credit and Evergreen fund, but also other strategies maybe not listed here that maybe are starting out or that could be coming on board over the next year?

Thanks, Rob. It's Erik. I'll take that. You've got it right that our secondary fund is the main focus for us. As you know, credit is always a priority since it involves a one-year investment cycle, meaning we're consistently in the market for raising funds. We won’t detail every quarter's fund flows for the Evergreen, but we have experienced positive inflows and are pleased with the strong traction. Although it's early, we are encouraged by what we see. Regarding new products, I prefer not to share specifics on our developments for competitive reasons. However, we are committed to expanding our product offerings, and once we see more traction and feel ready to discuss it, we will share more information.

Great. Well then also maybe on the separate count business, if there's any kind of a color you could give on maybe kind of like pipelines, if we look at our next 12 months is it kind of steady as she goes with kind of this relatively consistent kind of 10%-ish type growth? Or is there any change in kind of investor appetite around that increased or decreased?

Rob, it's Mario. No, it looks to be the way it's been. The pipeline's good. Investor demand for separate accounts remains healthy. And we feel like we're well positioned to meet that demand. The separate account market is one where people want very different things. Some want just geography or this kind of risk return profile. And as portfolios develop, people want more separate accounts, because they want something that is tailored to what they are trying to achieve in the private markets. So our outlook and our experience based on what we're seeing in terms of the flow of interests that is a very robust part of the market. And we just don't see any big change in that from what we've experienced.

Great. I have a follow-up question about the secondary fund. I know the last one was $1.9 billion and you're still fundraising over time. How do you view this? Some competitors seem to manage larger fundraises and close them more quickly. Is there something different about your approach to fundraising and your preferred timeline for closing the fund compared to what you observe from some competitors?

Sure, Rob. It's Erik. I'll take that. Look, I think it's a mix. I think everybody has a different approach of when they fundraise and how invested they are, and what their approach is with LPs. I think we frankly have liked more of this kind of steady approach. We would like the funds being open over a longer period of time, recognize that some of our separate accounts invest in the products. So having that open, having that product accessible to our customers we think is a very positive thing for us to kind of try to raise that. We don't see a lot of advantage to it. And so I think this is sort of to each their own and we all have a different style on doing that. But from our end, I think we feel good about where we are. We feel good about the capital that's flowing in. And as Mario mentioned, the pipeline on the product side also remains as robust as it does on the separate accounts side.

Great. Thanks for taking my question.

There are no further questions queued up at this time. I'll turn the call back over to Erik Hirsch for closing remarks.

Great. We wanted to say thank you. We appreciate the support. We appreciate the time today. Have a nice day.

This concludes today's conference call. You may now disconnect.