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spk05: Good morning. My name is Chris, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Hamilton Lane first quarter fiscal 2023 earnings conference call. All lines have been placed on mute to prevent any background noise. A supplemental slide presentation to accompany the... After the speaker's remarks, there will be a question and answer session.
spk02: If you'd like to ask a question during this time... simply press star followed by the number one on your telephone keypad.
spk05: If you would like to withdraw your question, please press star one again. Also, as a reminder, please limit yourself to one. Mr. O, you may begin.
spk04: Thank you, Chris. Good morning and welcome to the Hamilton Lane 2-1 Fiscal 2023 Earnings Call. Today, I will be joined by Ed of Investment Solutions 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.
spk02: These statements are subject to risks and uncertainties in the Hamilton Lane fiscal 2020-2022 10-K and subsequent reports we file with the SEC.
spk04: 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 material site.
spk02: Our detailed financial results will be made available when attending to this file.
spk04: Please note that nothing on this call represents an offer to sell or a solicitation to purchase interest in any of Hamilton Lane's products.
spk02: Beginning with the financial highlights. For the quarter, management and advisory fee revenue grew by 16%, while our fee-related earnings grew by 10% versus the prior year period.
spk01: This translated into GAAP and non-GAAP EPS of $96 million of adjusted debt income.
spk02: We have also declared a dividend of $0.40 per share this quarter, which increased over last fiscal year, equating to the targeted $1.60 per share. The targeted dividend since going public in 2017, each over 10%, and with an average increase of over 18%.
spk04: We've had another extremely strong quarter reflecting the strength and the resiliency and attractiveness of the overall asset class in which we operate.
spk02: We remain challenged, shrinking asset bases, rising rates, and Fundraising is harder, and our teams are working together. The results, however, speak for themselves.
spk04: The diversified solution suite is globally strong, and in our separate accounts and technology offerings is, in the vast majority of cases, the sole service provider for the client. In order for the client to remain active and grow their exposure, which they want to do, their relationship with us continues. We also look to lean on our various strategic technology investments and partnerships that are clear differentiators and are further advancing our brand and market position. We are proud of the results this quarter and our continued growth, and we remain optimistic and encouraged by what we see in the pipeline. Our total assets footprint which we define as the sum of our AUM, assets under management, and AUA, assets under advisement, stood at approximately $832 billion and represents a 10% increase to our footprint year over year, continuing our long-term growth trend. AUM growth for 18% came from both our specialized funds and customized separate accounts. As for our AUA, similar to that of our AUM, growth was from a cross-client type and geographic region, and came in at $59 billion, or 9%. Key-earning AUM stood at $51.1 billion and grew $8.4 billion, or 20%, relative to the prior year, stemming from positive fund flows across both our specialized fund and our customized separate accounts. Taken separately, $5.4 billion of net key-earning AUM came from our customized separate accounts, and over the same time period, $3 billion came from our specialized funds. Our blended fee rate across both customized separate accounts and specialized funds. I'll start with our customized separate accounts. The earning AUM from our customized separate accounts stood at $31.7 billion, growing 20% over the past 12 months. We continue to see the growth coming across geographic location of the clients. Over the last 12 months, more than 80% of the gross inflow came from our existing client base and continues to be a steady source of growth for our separate account business. With that, I'll turn this over to Brian to cover the specialized fund update.
spk01: Thank you, Eric, and good morning. Moving to our specialized funds, growth here continues to be strong. Fee earning AUM from our specialized funds stood at $19.4 billion at quarter end. Over the past 12 months, we achieved positive net inflows of $3 billion, representing growth of 18% relative to the prior year period. This growth stems from additional closes for funds currently in market, robust investment activity, and continued growth of our evergreen platform. Let's now go into some detail around recent drivers of this growth. On July 6th, we announced the final close for our inaugural infrastructure opportunities fund and side fund, which totaled nearly $575 million of investor commitments. While this fund marks our first commingled infrastructure vehicle, Hamilton Lane has been a longstanding active investor in the infrastructure space for the past 22 years, managing separate accounts and providing advisory solutions for clients of all sizes. We began raising this fund just as the pandemic started to take hold and are proud of the fact that we were able to execute well while having to navigate a remote environment where we could not physically meet with investors during much of the fundraise. What's more, the last few years, typically a strong period for traditional fundraisers, also occurred in a challenging market environment, which only adds to our pride in getting this kind of first-time fund done. Nearly half of the investors that came into the Hamilton Lane The success here also speaks to the power of our global platform where we are able to leverage existing client relationships and a global distribution network. Next is our annual direct credit series. We're currently raising our seventh installment of this series, and the momentum continues to be strong. During the quarter, we held multiple closes that totaled over $573 million of LP commitments, and now bring the total amount raised to over $890 million for this installment. We will look to hold the final close in the coming months, but as it stands, this installment already marks the largest in the series. As a reminder, this capital reflects a single year investment vehicle with management fees charged on invested capital. We've already begun deploying this capital and we'll begin fundraising for the next series shortly after holding the final close for this installment. Moving on to our direct equity fund, fundraising continued to progress well. During the quarter, we held closes that totaled over $190 million of LP commitments, which generated approximately $600,000 in retro fees for the quarter. Post-quarter end, we held an additional close for the fund that totaled nearly $72 million and will result in retro fees that we recognized in Q2 of fiscal 2023. Stepping back, the total amount raised for the fund now stands at nearly $1.8 billion, a level that surpasses the size of the prior fourth fund and already makes this our largest direct equity fund to date, and with which we will still be in market through the fourth quarter of this year. Let me now turn to an update on our secondaries platform. On our prior earnings call, we announced that we had held the first close on April 22nd for our sixth secondaries fund. That close totaled over $611 million. Subsequently, on July 21st, we held the second close on nearly $450 million, which will result in a modest amount of retro fees that will be recognized next quarter. The combination of the first two closes brings the fund to nearly $1.1 billion and demonstrates the continued demand from investors for this strategy, coupled with our strong track record of delivering results. We are pleased with the early days of the fundraise, and we are appreciative of the meaningful investor support to date. We will remain actively in market for 24 months, two years, from that April 2022 close date, and look forward to providing you with updates on future closes over the coming quarter. Let me now turn it back to Eric to cover our evergreen platform.
spk04: Thanks, Brian. I'll wrap up this section with an update on the Evergreen platform. In total, the platform now stands at nearly $2.8 billion, and we had another quarter of strong net inflows. The months of April and May saw net inflows over $100 million each month. Similar to comments you have heard from other private market managers this quarter, we also experienced some softness in June and July and expect much of the same for August. The outflows we saw, while modest, largely came from our Asian investor base, again, similar to what you have heard from other private market managers. We attribute this office to a combination of summer doldrums across the retail sector and significant public debt and equity decline that have caused investors to simply pause their investments. Performance of the product is strong, significantly outpacing the public equity markets. Our focus continues to be on expanding our channel penetration and building relationships across the space. In addition to flows into our evergreen products, these relationships are also delivering flows into our traditional specialized funds. Our latest secondary fund, as an example, has already seen commitments totaling more than $145 million from retail investors and represents nearly 14% of the total capital raised in the fund so far. Again, this is capital raised from this segment separate and apart from the evergreen flows. As the public markets stabilize a bit and as we push into fall, we expect to see a rebound in flows and reward for the expansion of relationships. Let me now take a moment and introduce our newest strategic technology-oriented investment off our balance sheet. On June 28th, we announced our participation in the most recent fundraising round for CASE, where we joined other strategic investors such as Apollo, Motive Partners, and Franklin Templeton. CASE operates a technology-enabled open marketplace for alternative investments where financial... CASE's platform empowers over 5,300 unique advisor firms and teams who oversee more than $2 trillion in network assets. CASE provides financial advisors with a broad selection of alternative investment strategies coupled with a powerful learning system, CASE IQ. to help those advisors drive adoption and improve client outcomes. This investment represents the latest example of our strategic technology thesis and commitment to enabling broader access to the private markets by investing in and partnering with those companies who we believe are on the cutting edge of driving that accessibility. Case now joins our other strategic partners in the wealth space, iCapital and Tiffin, the structure and trust that these companies and their platforms have built within. We are excited to begin this mutually beneficial journey with Case and look forward to writing with updates in the future. And with that, I'll now turn the call over to Atul to cover the financials.
spk02: For the first quarter of fiscal year 2023, achieved strong growth in our business, with management and advisory fees of 16% versus the prior year period.
spk04: Our specialized funds revenue increased by $10.3 million, or 31%, compared to the prior year, driven primarily by a $1.5 billion increase, re-earning $600 million raised from our latest secondary fund in the quarter, and over 1.3
spk02: Retro fees for the quarter were approximately $600,000 versus minimal amount of the prior year period.
spk04: As a reminder, investors have come into getting back the funds first close.
spk02: We expect to generate additional retro fees as we hold subsequent closes for both our latest direct equity fund, as well as our latest secondary fund.
spk04: Moving on to customized separate accounts, revenue increased $3.9 million for new accounts and continued investment activity. Revenue from our advisory reporting and other offerings decreased $2.1 million. Compared to the prior year period, we primarily did a decrease in revenue from our distribution management business. Lastly, the final component for revenue is incentive fee.
spk02: Incentive fees for the quarter total $49.6 million.
spk04: The relative increase in incentive fees compared to the prior quarters is due primarily to the fact that a number of our specialized ponds entered into GP catch-up portion of their respective fund waterfalls. We find GP catch-ups in connection with European-style waterfalls, which is the most conservative method related to earning carried interest and represents the method that the vast majority of our carry eligible funds employ. While this method does delay the receipt of carried interest, it is more favorable to the client and avoids any clawback risk and thus represents our performance across our funds remains strong as evidenced by this continued move
spk02: for its greater performance fees.
spk04: For those less familiar with how a European-style waterfall works, investors are first allocated dollars that result in all of their invested capital's preferred return being satisfied.
spk02: After that, Hamilton Lane, as the manager, once that is satisfied, the return is carried into its percentage.
spk04: During the GP catch-up period, you typically see an outsized amount of value that flows to the GP, which is what we experienced this quarter. Let me now turn to some additional color on our unrealized carry balance. The balance is up 36% from the prior year period, even as we recognized $98.1 million of incentive fees during the last 12 months. The unrealized carry balance now stands at $1.1 billion.
spk02: increased $29.7 million compared with the prior year period.
spk04: Total compensation benefits increased $25.5 million, driven primarily by compensated fees in the quarter.
spk02: These $4.3 million have a cost. quarter or fee-related earnings prior year as a result of management fee revenue growth we discussed earlier.
spk04: I'll wrap up here with some commentary on our balance sheet. Our largest asset continues to be our investments. Over the long term, we view these investments as an important component of our continued growth and will continue to invest our balance sheet capital alongside our clients. In regard to our liabilities, we continue to be a modest endeavor. And with that, we thank you for joining the call and are happy to open it up for questions.
spk05: Thank you. As a reminder, if you'd like to ask a question, please press star then 1 on your telephone keypad, and please limit yourself to one question and one follow-up. Our first question today is from Michael Cypress with Morgan Stanley. Your line is open.
spk04: Hey, morning. Thanks for taking the question. quarter being so strong relates to uh down entered uh into the uh european waterfall stage point if i have if i have that right i was hoping you might be able to elaborate on which fund or account this related to and can you recall when you last had uh this sort of meaningful impact as you kind of look back over the past couple years and and if you were to look forward which sort of fund or strategy
spk02: strategy might that be? Take that, although I'm going to take that. As you know, that sort of billion dollars of value is across so many different vehicles. The majority of our specialized funds utilize the European waterfalls. Some are American, some are European. has occurred, we certainly have had this occur in the past as we've had other large vehicles roll over. So you can see as we report out dollars invested, dollars distributed on our specialized funds, you can just see which of those funds are getting closer to that.
spk04: But this is an event that, you know, all willing with strong performance continuing over our history that we will again see in the future. Understood. Okay, thanks. And then just maybe a follow-up question on fundraising. I think, Eric, you mentioned that you were seeing the broader on that. Just what are you seeing across the industry? How does that sort of impact your outlook in terms of magnitude and time you'll be looking to raise in both the institutional marketplace, but maybe you could also comment on the retail side as well? Thank you. Sure, Mike. It's Eric. I'll stick with that. I think it's what you have heard generally reported in prior earnings calls from other managers, which is to say you've had a lot of value knocked out of both institutional and retail investors over the last several months. That just means that there's kind of less capital in the markets that's available for people to raise, invest, et cetera. So we've been talking about kind of the denominator effect. It's real. That said, once you see volatility in the public markets, you also allocation strategy. I think it's important to remember that they have a goal, and that goal tends to be a target rate of return. And they need to do that to continue to sort of meet their funding obligations and their investment needs. And that in their current asset allocation model, they're going to redo that model to tilt towards higher returning strategies, which would be the private markets. So
spk02: today i think you're just seeing a combination of factors i think one it seems like everyone on their cousin cousin except for all of us that are working hard today is on vacation and so i think you definitely have just seen a summer slowdown not surprising as people are kind of returning to a bit more normalcy but you're also seeing just again capital tight and investors just not they're not in a hurry
spk04: to make a decision today. But as you heard me state earlier, our pipeline is big. People are back on the road beginning to travel. Events are returning. And so I think we remain very focused on continuing to deliver the same growth rates that we've been delivering over our history. We always talk about that this firm is kind of built for a marathon, not a sprint, and that's exactly how we're positioned today.
spk01: Great.
spk04: Thank you.
spk01: the next question and sort of following up on that. So from a macro perspective, to what extent does secondary activity act as a barometer for private market investment sentiment? And to the extent it does, what is it telling you about sort of the near term?
spk04: And to the extent you can address it, are there different messages being sent by asset class? Are the messages this real estate creditor infrastructure in the way investors are sort of looking at the macro market conditions we're seeing today? Sure, Ken. It's Eric. I think the secondary market is an interesting data point to look at because in some cases, if you were to see higher or abnormally high sort of LP selling about the asset class or that there's a need to rebalance or that there's a need for liquidity,
spk02: Today, the data is very clear, which is you're not seeing that. We're not seeing at all any abnormal or elevated levels of LP selling.
spk04: And so if we want to use it as a barometer, then I would tell you that the barometer is probably indicating it's kind of stay the course business as usual. So where we've seen a slight uptick or maybe sort of a change in the competitive mix is around kind of the GP-led single asset transactions. I think they're I think you've got some buyer's remorse from some folks out in the market who I think were just very active in that space and maybe got themselves a little bit too concentrated. I think you look at our fundraising area, attractive partner in a market where capital is going to get a little bit more scarce. And so I think we look at that as a net positive. Great. Thank you. And then if you could, could you just sort of clarify the retail fund commentary you made earlier? You mentioned that, I think it was July – it was either June or July that – about, I think, more elevated redemptions. Was that elevated gross redemptions? Did the retail product go into net outflows? If you just sort of clarify your comments on the change in fund flows there. Sure. I think all we were saying is, again, I think similar to what you've heard from other sort of the beginning of the year, very strong January, February, March, April, May. You hit the summer, and I think you sort of saw the combination of what the month looks like. But I think you came into the summer, and I think you had the effect of two things. One, Again, I go back to my vacation comment, which I think is real, and sort of the combination of people just not feeling pressured or needing to make decisions at this moment in time. You add that to just, again, the huge volatility and sort of geopolitical uncertainty that's sort of looming out there, and the market is gyrating, and I think the combo of that just has people taking a pause. So I think you've heard from us. You've now heard from a number of other public managers who are also raising product in that retail space today. that we all had just seen a slowdown. I think we're all, I think, also signaling that fall looks to be better.
spk02: We expect, again, portfolio decisions. We had not really seen, you know, outflows that were even worth mentioning before. We saw them, as I said, we saw them in Asia. And so that's kind of where we're at. where we sit today.
spk04: But I mean, I go, I sort of take a step back and forget the month to month piece. I think the big picture takeaway is you've got a product that is still relatively young in its infancy, sitting at $2.8 billion of capital raised and continuing to drive forward, continues to position us as a real differentiator among certainly our peers. Great. Thank you very much.
spk05: The next question is from Alexander Blossstein with Goldman Sachs. Your line is open.
spk02: in the retail products, right, or you guys are seeing net outflows.
spk04: And then as we think about the distribution of those products, I know to your point, Eric, Asia is something we've heard from others as well. Any way to help frame how much of the $2.8 billion in the kind of combined retail AUM sits with the Asia-based, customer-based? Yeah, Alex, Eric, so I think I probably don't want to disclose kind of exactly the breakout of the geographic mix. Asia is certainly not the biggest driver of our asset flow. If you look at kind of the non-U.S., a lot of flows throughout Europe, a lot of flows in Australia in particular, and so it's been geographically diversified across that.
spk02: The numbers are still kind of getting tabbed. I mean, again, August is under. unknowable right now.
spk04: June was a net positive, and August, I think, was probably pretty close to sort of a net zero. Gotcha. All right. That's helpful. Thanks. And then my follow-up question just around the appetite for capital deployment, both in the kind of directly controlled strategies as well as what you guys are seeing on the GP partners that you have in the business. Deployed, there's a couple of products, obviously, that you're raising today still that will bill on Deployed, as you mentioned earlier. So just how sizing that would be helpful, and then in what areas you expect to be most active on the deployment side over the next, call it, 12 months. Sure. Why don't I start in the beginning and I'll ask my partner, Brian, to sort of just talk about what we're seeing on deal flow and generally and kind of activity. As you know, so for us, the vast majority of our assets are on committed capital. The credit vehicle that Brian highlighted as that annual series is on invested capital. But again, I would just echo what he had said earlier. That's a one-year investment period. So it's a relatively modest delay because that capital is basically raised and then deployed within kind of that rolling 12-month cycle. So I think about that product as basically always raising and always spending because that's sort of the rhythm of having that annual series. And the benefit of that is that it allows the investor base to be very tactical about how they want to be sizing commitments each year as they can kind of just look at what they're sort of needing from a yield-based portfolio.
spk02: In addition to that, as we've said before, we have billions.
spk04: Billions and billions of dollars of kind of dry powder that will turn on eventually. I think it's just the nature of the industry. We've not sort of gone out of our way, as I've said in past calls, to go break that out. Our view is it comes online. It's normal. It's sort of how the industry works in a lot of cases. There's nothing special or unique about that. And, again, I think we're not trying to give the investors a sense that, like, we can't wait to deploy the capital so we can get paid. We're here to make good, thoughtful, long-term, be robust, and the deal flow continues to be significant. And I'll turn to Brian to give a little bit of commentary around that.
spk01: Sure. Thank you, Eric. And as Eric talked about that dry powder, one of the real benefits, of course, is that we're able to be diversified and flexible by strategy, by geography, et cetera. So the opportunity set continues to be really robust. I know we talk about a little bit of slower transaction volumes, but if we were to look at our fund investing opportunity this year, we're on pace to see over 1,000 new funds. So That would be down slightly from last year, but that would be our second largest year of fund activity ever. Likewise, in the credit space, where overall industry volumes might be down, we're seeing our opportunity set down by about 10% on a year-to-date basis. So still a massive opportunity set across all of those strategies, and we're able to be highly selective in choosing the things that we think are the best fit for the current market environment.
spk05: Great. Thanks again. The next question is from Adam Beattie with UBS. Your line is open.
spk00: Thank you, and good morning. Just wanted to ask about the partnership with Case, and I know you have other similar partnerships. Could you just remind us about the kind of product rollout strategy that you expect with that, whether that involves existing products or developing some new products around particular needs in the channel, and what the outlook is there? Thank you.
spk04: sure it's eric i'll take that uh the strategy is really leveraging what they've built which is impressive platforms i think this was we chose our partners carefully and coming away with an ownership stake and strategic alignment with i capital case and tiffin i think is noteworthy uh it's clearly a differentiator uh there's nobody else that has stakes across you know across that like we do And the strategy is simple, which is to largely take the products that we currently have. I mentioned secondaries receiving flows from that channel, getting the evergreen products up and running on those channels, and to also just help them as a good partner around customer education. Part of the big gating item is continuing to educate the end customer about and equally important, their decision-making body with the FA, RIA, et cetera, around the asset class. I think there's still too much that's not really understood, and that lack of understanding can cause a real hesitation from participation. And so one of the things that makes us an attractive partner is being able to provide data and insights and hard facts around what's happening in the asset class to try to kind of peel back and provide a little bit more transparency to those folks to get them to be more comfortable to not only, participate, but to participate at higher levels. So early days here, but we like what we see so far, and we're very encouraged.
spk00: Makes sense. Thank you for the comments around the process. And then turning to the institutional side, you mentioned some good success on the infrastructure fund, half of the investors being new relationships. So just wanted to maybe flesh that out a little bit. Where are you seeing the demand, you know, among sort of new relationships or new potential relationships, certain, you know, client types or maybe geographies? And, you know, is the pause, if you will, in sort of, you know, the level of demand similar to among your existing clients or maybe not so much? Thank you.
spk04: Sure, Eric, I'll stick with that. I would say to you that I think this is largely a question the result of an expanding platform. We continue to hire more sales resources. We continue to open up offices around the globe. We continue to do things to invest directly in our brand.
spk02: We continue to get better, smarter on marketing and communication around all of that. And so I think that's,
spk04: That's what's leading to, as Brian said, you know, start that fund at the beginning of the pandemic and support that.
spk02: I think it's just a testament to the power and, frankly, the high caliber on our team who are out there telling the story.
spk04: So we're not sort of divergent paths across geography or type. And, again, the past quarter showed you that I think it's just normal that when everyone wakes up and looks at the headlines, that people's decision-making is going to be purposeful and deliberate, and they're not going to get raced into making a quick decision simply for the sake of doing that.
spk02: Seeing the customers, talking to them, and being patient and waiting to be their long-term partner. And that's exactly what we're doing.
spk00: Excellent. Thank you, Eric. Appreciate it.
spk05: From Robert Lee with KPW. Your line is open.
spk04: Great. Thanks. Good morning. Thanks for taking my questions. Maybe the first one, Eric, is in the separate account business. It's from Reefs. Maybe draw into that a little bit. When you're getting those re-ups, are you generally seeing size, their commitments, or change in the level of capital that they're re-upping and their commitment size? And then this would have one follow-up. Sure, Rob. Eric? No, nothing to draw into that. I mean, part of it is you've got such a large install base there that you're going to have everything. You're going to have some investors that are very mature and so simply need to keep re-upping at levels that maintain the allocation level that they're already at, which is kind of target level. You have investors that are brand new to the asset class. And so they're starting and they're building.
spk02: And so the tranches become subsequently larger as they're building into that.
spk04: You've got really a broad array of scenarios. So that I would say is normal. Again, the result of a large diversified customer base. And we're just not seeing anything that's abnormal or indicative of, you know, they're, they're, Sticking with the separate account, either creating one or re-upping with one, is a fundamental choice of do you want to stay in the asset class or not? It's a very different decision than deciding to back a practical sort of single decision. The separate account is their allocation to the private markets, and I think that's why you're not seeing sentiment change around wanting to be in the asset class or wanting to participate. And so I think that's why the flows there continue to be strong. And then maybe kind of a Modeling question. So, you know, obviously inflation, comp pressure, you know, investing in the business and the wealth channel and elsewhere. So could you kind of update us on how we should think about expense progression from here? Is this kind of a good run-raise or anything we should be thinking about as the year progresses, like additional upward pressure from what we're seeing? Just trying to kind of give you a thought.
spk02: Rob, let me take that in a couple of pieces.
spk04: So what you saw this quarter, really good revenue growth and sort of commensurate expense growth. And if you think about sort of modeling it forward, I would say based on the comments you heard from the pipeline and asset growth, we feel pretty good about sort of where we are from a revenue growth standpoint.
spk02: And expenses kind of follow that, right? So if you look at our G&A expenses, we are up from a year ago, partly that's the, you know, coming out of the COVID environment, travel is up.
spk04: So we think G&A should be, you know, it's a good run rate as you look forward. But compensation, frankly, will move in line with revenue. In growth mode, we're gaining assets, we're gaining new clients, we're hiring employees.
spk02: And so I think that from that standpoint, we are looking good.
spk05: Great. Thanks for taking my questions. The next question is from Finian O'Shea with Wells Fargo Securities. Your line is open.
spk02: Hi, good morning.
spk03: Mostly ask and answer for me, just to follow up on the earlier question on GP-led single asset market being perhaps a bit overheated with buyer's remorse, LPs being too concentrated, or were you suggesting that deals in that part of the market?
spk04: I think maybe sort of neither. Maybe I'll try to be more articulate. If you think about the sort of natural one where you as a secondary buy funds or big portfolios of funds. And so by definition, one of the advantages that you had was the advantage of diversification. that when you were buying funds with lots and lots of underlying company positions and you were buying lots and lots of funds, you ended up with lots and lots and lots and lots and lots of underlying portfolio companies. And so the power of diversification, I think, sort of kept you out of concentration risk. I think what we've seen is that I think some of the secondary buyers maybe sort of forgot about that benefit and asked that was driven by
spk02: buy single assets. Again, these weren't fun.
spk04: And so we were extremely mindful about watching diversification and not sort of straying away from strategy.
spk02: I'm not sure that's the entirety of the market. And so seeing lots of GP single asset deals,
spk04: but the number of buyers or potential buyers for those deals, I think you're seeing at least now, has shrunk. It creates a supply-demand imbalance.
spk02: In the case that supply-demand imbalances favor the person who is the buyer, and with us having capital at the ready, it's one that we intend to take advantage of. Helpful. Thank you.
spk05: The next question is from Michael Cypress with Morgan Stanley.
spk04: Your line is open. Just on expenses, so if I'm hearing you around G&A, good run rate, and comp to grow in line with revenues, then would it be fair to conclude then that
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