AlTi Global, Inc.

Greetings, and welcome to Alty Tiedemann Global Second Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during a conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Lily Arteaga, Head of Investor Relations. Thank you. You may begin.

Good afternoon to everyone on the call today. Joining me this afternoon are Michael Tiedemann, our CEO, and Reid Parmalee, our interim CFO and global controller. We invite you to visit the investor relations section of our website at www.alti-global.com to view our earnings materials, including our updated investor presentation. At this time, I would like to remind everyone that certain statements made during this call are not based on historical facts, including any statements relating to financial guidance and may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Because these forward-looking statements involve known and unknown risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. ALTI assumes no obligation or responsibility to update any forward-looking statements. During this call, some comments may include references to non-GAAP financial measures. Full GAAP reconciliations can be found in our earnings presentation and related SEC filings. With that, I'd like to turn the call over to Mike.

Thank you, Lily. Good afternoon, everyone, and thank you for joining us today for our second quarter 2023 earnings call. In the second quarter, Alt-C advanced the strategic priorities we laid out on our last call, and our performance is beginning to reflect these initiatives. As we discussed on our first quarter call, we're focused on the primary goals of streamlining our operations and growing our base of recurring revenues. As we move forward, we are confident that this approach and strategy will drive higher and sustainable margins. Another important goal in 2023 was to increase our public float and simplify our capital structure, both of which we accomplished in the first half of the year. Altogether, these steps position the firm for long-term growth in the broader financial sector. For a brief summary of our Q2 performance, on a consolidated basis, ALTI generated revenues of $52 million, of which 95% represent recurring revenues, adjusted EBITDA of $11 million, and ended the second quarter with $69 billion in assets under management and advisement. Our net income for the quarter was $29 million, and adjusted net income normalized for one-off items was $2 million. We are confident that our diversified platform is well positioned to capitalize on opportunities in any economic environment. This is evidenced by the sequential growth we reported across key operating and financial metrics. We delivered steady asset growth in the second quarter. On a trailing 12-month basis, we have increased total assets by 15%. Our second quarter performance was led by 7% sequential asset growth in wealth management, the majority of which is organic. In parallel, we have successfully maintained asset levels across all alternatives platforms despite strategy-specific headwinds in the short term. However, the hallmark of our asset management strategies is resilience. We pride ourselves on the ability to preserve capital during turbulent times and generate returns as the environment improves. We expect our strategic initiatives to accelerate momentum in the current operating environment. and ensure we capitalize on opportunities as we lean into our strengths. As a reminder, we spent the first 90 days as a public company identifying our near-term strategic pillars, which include leveraging our competitive advantages to accelerate organic growth and execute disciplined and creative acquisitions, and simplifying the organization through cost-savings initiatives as well as capital structure improvements. These priorities are complementary in nature, address the current market environment, and prioritize organizational enhancements for long-term growth and margin expansion. Our business is built on a solid foundation of recurring revenues, which has been bolstered by our recent acquisitions and investments. We'll now offer an overview of our two operating segments. Starting with wealth management, in April, we completed the acquisition of AL Wealth Partners, a multifamily office based in Singapore with approximately $1 billion in assets and their management. This accretive transaction grew our presence in Asia, and specifically in Singapore, which has emerged as the global financial capital for wealth management. We believe that Singapore will be a key growth engine for our wealth and asset management business segments over the coming years. Subsequent to quarter end, we signed a definitive agreement to purchase the remaining ownership stake of a Lugano-based multifamily office that has been part of the legacy ALTI wealth management platform since 2019. This firm is approximately $1 billion in assets and offers exposure to the northern Italian market, an important region for our global wealth platform. This team is already largely integrated into the Alti ecosystem and operating platform, which provides expanded solutions to its current and prospective clients. We will seek to identify and execute further strategic opportunities within wealth and asset management that align with our competitive advantages. The transactions we have completed expand our client base, continue to build upon our recurring revenues and will drive margin expansion. Organically, we generated 4% sequential asset growth in wealth management this quarter. Our team is producing strong performance as evidenced by robust client wins globally. Additionally, Alty has emerged as a destination of choice for leading ultra high net worth multifamily offices and premier wealth management firms seeking strategic investment. These firms are located globally in important wealth hubs and are looking for a partner that can offer a fulsome set of solutions to their current and prospective clients. Firms are looking to unlock growth while maintaining and enhancing a high-quality client experience. In summary, we are delivering substantial growth in our wealth management business, opportunities to grow are global, and our outlook is strong. Turning now to asset management, We largely sustained our AUM levels despite market headwinds. The public and private real estate businesses, as well as our real estate bridge lending strategy, have been impacted by this historic shift in interest rates and increased cost of capital. This has led to a temporary reduction of activity in the real estate sector. However, we see normalization on the horizon and are evaluating opportunities to capitalize on the cycle ahead by focusing on private real estate strategies with long-dated and predictable revenue streams. We have a global opportunity set and have a leadership team in place to capitalize on the near-term environment. Most recently, we've added to this team by bringing on Lord Andy Hay, former global head of Knight Frank's residential business to chair our private real estate platform. We anticipate making additional appointments in the coming months and look forward to updating you on future calls. We are leaning into this current environment as we see a robust opportunity in real estate from stressed and performing credit to equity. The team is prepared to capture market share in the near to medium term. Earlier in the year, we also increased our stake in two of our affiliated managers, Zebedee, a long short equity managers based in London, and ARCAN, an Asia credit and special situations fund based in Hong Kong. Both funds have consistently outperformed their peers across market cycles, and are examples of the types of differentiated strategies we seek in our asset management segment. Turning to our events-driven business, the second quarter proved to be challenging. The sector faced unprecedented and coordinated resistance from regulators and reduced deal flow due to the sharp increase in cost of capital. This has recently abated due to favorable outcomes in the courts, as our team had anticipated, and the environment has improved measurably in the third quarter. Our public real estate strategy experienced a decline in market capitalization in the second quarter, trading a discount to NAV despite excellent financial performance. In the second quarter, UK listed REITs traded down en masse due to persistent inflationary pressures and resulting interest rate hikes in the UK. Subsequent to quarter end, the assets have begun to recover as investors have a better line of sight on the underlying fundamentals and believe interest rates are leveling off. as inflation abates. Turning now to our cost and capital structure, we are on track to achieve our stated goal of at least $16 million in total net savings on an annualized basis. These initiatives include the restructuring of underlying businesses across both wealth and asset management, consolidating our facility footprint, SG&A cost reduction, vendor rationalization, and professional fees associated with our public listings. In the coming months, we will continue executing on these initiatives while growing recurring management fee revenue streams and increasing profitability. We expect the cost-saving initiatives will be fully reflected in the first half of 2024, creating a simpler P&L and contributing to enhanced margins. While on this topic, I also want to mention that as we continue to streamline our platform and invest into our strengths, we may exit certain non-core assets to generate capital to recycle into our core strategies. In the second quarter, we also significantly improved our capital structure to benefit shareholders and encourage long-term ownership. In June, we completed a warrant for share exchange, which increased the share count by approximately 5 million shares and alleviated the warrant overhead. We also finalized the registration of 19 million pipe shares. These efforts quadrupled our public float to approximately 22% of shares outstanding and significantly enhanced liquidity for all of our fellow shareholders. I'm pleased to report that in June, we completed the issuance of celebratory grants associated with the company's public market listing. This resulted in an issuance of approximately 4 million additional shares to all ALTI employees. This is another important step in aligning ALTI team members with our broader ownership base as we foster an ownership culture at the firm. With that, I want to turn the call over to our interim CFO and global controller, Reid Parmelee, for a review of our financial performance in the quarter.