Affiliated Managers Group, Inc.

Greetings and welcome to the AMG third 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 the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Patricia Figueroa, Head of Investor Relations for AMG. Thank you. You may begin.

Good morning. and thank you for joining us today to discuss AMG's results for the third quarter of 2023. Before we begin, I'd like to remind you that during this call, we may make a number of forward-looking statements which could differ from our actual results materially, and AMG assumes no obligation to update these statements. A replay of today's call will be available on the Investor Relations section of our website, along with a copy of our earnings release and a reconciliation of any non-GAAP financial measures, including any earnings guidance announced on this call. In addition, this morning, we posted an updated investor presentation to our website and encourage investors to consult our site regularly for updated information. With us today to discuss the company's results for the quarter are Jay Horgan, President and Chief Executive Officer, and Tom Wojcik. Chief Financial Officer. With that, I'll turn the call over to Jay.

Thanks, Patricia, and good morning, everyone. AMG's strong third quarter and year-to-date results reflect the positive impact of our capital allocation strategy across both growth investments and share repurchases. During the quarter, the changing market environment continued to challenge investors, as the collective impact of higher rates, persistent inflation, and increasing geopolitical risks pressured clients' ability to achieve their investment objectives. High-quality, independent managers have distinguished themselves in volatile times, as uncertainty and asset dispersion create opportunities to generate differentiated returns in both liquid and private markets, and we believe this dynamic is playing out again. Differentiated return streams are critical for clients to achieve their long-term objectives. Independent, partner-owned firms have fundamental competitive advantages in generating those differentiated returns, especially during periods of heightened uncertainty. With specialized expertise, entrepreneurial cultures, and alignment with our clients, our affiliates are among the highest quality independent firms globally. And for our shareholders, AMG offers a unique opportunity to access the long-term growth and profitability of this diverse set of high quality independent managers through a proven partnership approach. In 2023, we have continued to add to this diverse set of affiliates, having made two new investments in specialized private markets businesses operating in areas of secular growth. In August, We completed our investment in Forbian, a leading European private markets investor in the fast-growing life sciences sector. And in October, we completed our investment in Ara Partners, a private markets manager specializing in industrial decarbonization. Given the heightened global focus on achieving a lower carbon economy, investor allocations to fund this transition are accelerating. and Ara Partners is well-positioned to continue to benefit from these secular tailwinds. As Ara entered the next phase in its evolution, aligning its business with a long-term strategic partner was critical, and the team chose AMG based on our distinctive approach of magnifying firms' long-term success while preserving their independence. With our investments in Ara Partners and Forbian, AMG now has eight affiliates managing more than $100 billion in private markets assets across a broad range of specialized strategies, including private equity, private credit, secondaries, real estate, infrastructure, growth equity, and venture capital. And given our affiliates' strong alignment with client demand trends and excellent investment performance, their fundraising momentum has remained strong this year. including approximately $7 billion raised year-to-date and approximately $10 billion pro forma for Forbian and Aura partners. These strong flows in an otherwise challenging fundraising environment highlight the appeal of our affiliates' specialized strategies. Stepping back, we have strategically evolved AMG by deliberately investing in high-quality independent managers operating in areas of secular growth. The growth investments we have made over the last few years have played a critical role in reshaping AMG from a business profile largely characterized by traditional long-only exposures to one with a substantial contribution from alternatives. Today, alternatives account for approximately half of our earnings, and we expect the composition of our earnings to reflect an even greater contribution from both private markets and liquid alternatives in the future as we continue to execute on our growth strategy including investments in new and existing affiliates. Fundamentally, we partner to magnify the advantages of independent firms. And as part of our strategy, we collaborate with existing affiliates on their growth strategies, investing our capital and resources to develop new strategies and products to meet evolving client needs. As part of our capital formation capabilities, AMG offers affiliates a comprehensive, vertically integrated U.S. wealth platform that enables them to access this large and growing market that is difficult or even impossible for independent firms to enter on their own. And our U.S. wealth platform is uniquely positioned to enable our affiliates to participate in the ongoing democratization of alternative strategies. as wealth investors increase their allocations to both private markets and liquid alternatives. We have been successful in bringing affiliate strategies to market through this platform, having launched one of the first evergreen funds in the private equity space, the AMG Pantheon Fund. With approximately $2.5 billion in assets under management, the fund has nearly doubled over the past year and is one of the largest and most established private markets products in the U.S. wealth channel. And we recently filed to register a new fund, the AMG Pantheon Credit Solutions Fund, a private credit secondary strategy that will be the first of its kind in the wealth channel. After a decade of growth in direct lending, the private credit secondaries market is gaining significant momentum as an asset class, with growth in both allocations and deployment opportunities. And having built a leading position in this fast-growing segment, Pantheon is well-positioned to capitalize on the significant market opportunity that's unfolding. In addition, we expect to bring a series of unique and differentiated alternative offerings to the market by combining our multi-decade experience in U.S. wealth with our affiliates' investment expertise. For example, we are collaborating with Comvest Partners to bring non-sponsored middle-market direct lending to wealth clients. AMG's distinctive approach continues to attract outstanding firms seeking a strategic partner that can magnify their long-term success while preserving their independence. Given our broadened partnership solution set and our successful strategic engagement with affiliates, prospective affiliates are increasingly attracted to AMG's model, especially in this evolving landscape. In addition, by increasing our origination resources and focusing our efforts on secular growth areas, the quality and size of our prospect universe has been enhanced. Our two growth investments in 2023 for BNNR partners, which both operate in our strategic focus areas, are strong evidence of the success of our enhanced new investment approach. Looking ahead, having advanced several attractive new investment opportunities during the quarter, we are well positioned to increase our new investment activity. further evolving the composition of our business towards in-demand strategies. Finally, I want to emphasize our continued focus on disciplined capital allocation, particularly during this period of heightened volatility and uncertainty. We will continue to evolve our business through growth investments in new and existing affiliates, given our unmatched 30-year track record of successful partnerships, our new investment prospects, and our significant financial flexibility. That said, as we evaluate opportunities to deploy our capital, we will remain disciplined as we make growth investments and continue to return excess capital through repurchases. Our discipline is evidenced by our track record having invested more than $1.6 billion in growth areas over the past five years, while also returning more than $2 billion in excess capital to shareholders over the same period. Today, as a result of our ongoing evolution, AMG's profile is truly unique, with independent firms operating in private markets, liquid alternatives, and differentiated active equities. Our diversified portfolio of high-quality entrepreneurial businesses is a competitive advantage that both enhances our earnings stability and supports our capacity to continue investing in areas of the highest growth and return to benefit our shareholders. Looking ahead, given the combination of our unique competitive advantages, our excellent capital position, and our disciplined approach to capital allocation, we are highly confident in our ability to create significant incremental shareholder value going forward. And with that, I'll turn it over to Tom to review the details of the quarter.