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Operator
Welcome to ONIX's fourth quarter and full year 2021 conference call and webcast. During the presentation, all participants will be in listen-only mode. Afterwards, we will conduct a question and answer session with pre-qualified analysts. At that time, if you have a question, please press star 1 on your telephone keypad. If any time during the conference you need to reach the operator, please press star, then zero. As a reminder, this conference is being recorded. I will now turn the conference over to Jill Hamanuk, Managing Director, Shareholder Relations and Communications at Onyx. Please go ahead.
Jill Hamanuk
Thank you. Good morning, everyone, and thanks for joining us. We're broadcasting this call on our website. Hosting the call today are Jerry Schwartz, our founder and CEO, Paul Blanc, Onyx's President and Head of Onyx Partners, and Chris Govan, our Chief Financial Officer. Earlier this morning, we issued our fourth quarter and full year 2021 press release, MD&A, and consolidated financial statements, which are available on the shareholder section of our website and have also been filed on CDAR. Our supplemental information package is also available on our website. As a reminder, all references to dollar amounts on this call are in U.S., unless otherwise stated. I must also point everyone to our webcast presentation for our usual disclaimer and cautionary factors relating to any forward-looking statements contained in today's presentation and remarks. With that, I'll now turn the call over to Jerry.
Jerry Schwartz
Thanks, Jill. Good morning, everybody, and thanks for joining us today. Next month marks 35 years, hard to believe, since our IPO on the Toronto Stock Exchange. When I look back on it, what a time it was. At that point in time, nobody knew what private equity... There was not even a phrase, private equity. And nobody knew what the letters LBO stood for. So most of the roadshow was spent just explaining to people what an LBO was and what kinds of things we'd do. It was really interesting because the... underwriters had initially thought they would raise $75 million of pure common stock for us. In the end, they closed on $246 million, which I think was the largest equity offering at that point in time. Anyhow, that's 35 years ago. In our prospectus for that document, for that offering, we described ourselves as an entrepreneurial investment company with a well-defined acquisition philosophy, seeking value creation opportunities, and always keeping a strong focus on alignment and relationships. And I'm really proud of the company we've built and our ability to stay true to our core values. Today, quite differently, we offer multiple investing strategies to a global base of investors including institutional and high net worth clients. So I look back on this particular past year, 2021, and I see it was a good year for Onyx. We invested wisely, we continued to strengthen our team, and we grew our fee generating assets. This momentum helped deliver solid financial performance. Bobby and Chris will provide more detail shortly about that financial performance, but I'd like to touch on some of the highlights of the year. Our investing capital per share, sometimes referred to as net asset value per share, increased by 24%, which is the highest annual increase in our history. In private equity, it was an active year for both realizations at around $3.25 billion and deployments at around $3 billion. Our portfolio companies grew organically and through our value creation levers. At Onyx Credit, we continued to strengthen that platform. Last year, we integrated Onyx Falcon, which we've owned for a little over a year now, and happily so, and also merged our credit and Gluskin Chef investment teams. We now offer investors a pretty full spectrum of private credit public credit, and public equity investing opportunities. Within our wealth management platform, strong client interest for our private strategies persists. At year end, our wealth management clients had more than $1.3 billion allocated to these private strategies. Earlier this year, we announced our new head of Glasgow Chef, I'm very happy to tell you, Dave Kelly, who came to us from a long career at the Toronto Dominion Bank, who brings valuable operational expertise to this business. Looking ahead, we're excited by the opportunities to grow and expand. We've laid out our strategic plan at Investor Day, and we think we're well-positioned to achieve our long-term goals. We have a strong foundation and a terrific bench of talent at Onyx. Our One Onyx culture is driving collaboration across our organization as we leverage our expertise and relationships. As always, we remain focused on continuing to generate good returns for all our stakeholders. And with that, I'll now turn it over to Bobby for more on the quarter. Bobby?
Jill
Thank you, Jerry, and good morning, everyone. Earlier today, we reported segmented net earnings per share for Q4 2020. of $3.65 and net earnings per share of $2.45. Segmented net earnings per share for the year were $18.42 and net earnings per share were $15.76. We made good progress in 2021 and feel confident as we look ahead to the remainder of 2022. We've expanded our capabilities and reach and now have a clear plan for growth. Our focus this year across all platforms will be on growing our fee generating assets under management. In total, we expect them to grow by more than 15% by the end of 2022. Our private equity portfolio performed well in Q4, reflecting the benefit of strong diversification. ONIX's return from private equity investments was 5% in the quarter and 32% for the year. At Onyx Partners, we're just beginning to fundraise for OP6, and we're looking forward to a first close in late Q2 or early Q3. Despite a relatively crowded fundraising environment, our goal is to increase the amount of fee-generating AUM relative to the amount we raised for Onyx Partners 5. We also recently announced two new investments in OP5, Res and Analytic Partners. We still have capacity to invest, and our current pipeline and expectations line up well with the timing for OP6. OnCap's primary objective is to finish the job of fully investing OnCap 4. Last week, we announced our latest partnership with Merithew, a global leader and mindful movement. The fund is now 77% invested, and we expect to be fundraising for OnCap 5 later this year. ONIX credit is seeing good momentum across the strategies. Last quarter, I told you that we were close to our short-term fundraising goal of $500 million for our ONIX structured credit strategy. We now expect to exceed that goal with a final close late in Q1. There will be additional opportunities to add AUM throughout the year via separately managed account for this strategy. For our ONIX capital solution strategy, considering recent team changes, we have established more modest expectations for the size of the first fund. We're seeing continued interest from investors, especially given recent market volatility, which is a positive for this product. Early returns are ahead of target, and the pipeline continues to be robust. At ONIX Falcon, We've raised over 240 million of fee generating AUM last year for our direct lending strategy through Gluskin Chef and are now marketing this strategy to institutional investors. Our Onyx Falcon mezzanine lending strategy has begun fundraising for the seventh vintage with an overall fund target of $1.5 billion and is anticipating its first close in Q2. The Onyx Falcon team has been a great addition to Onyx Credit. and LP interests in their strategies remain strong. In Q4, we closed CLO 22 and CLO 23, and completed the reset and upsize of CLO 10, adding a combined $1.1 billion in fee-generating AUM. Last month, we also priced Euro 5, our first new European CLO since 2020, raising 400 million euros. It was a successful return to market for our European team that we've invested in and repositioned over the last year. Market volatility has weighed on CLO formation in Q1, and issuance could remain lower in the face of the geopolitical tension. However, rising rates should continue to be a tailwind as investors rotate into floating rate assets. If the credit markets are relatively constructive for the remainder of the year, we would still expect to achieve our 2 billion annual CLO net issuance target. Turning now to Gluskin Chef. We were pleased to welcome Dave Kelly to the team last month. Dave's experience building strong operational functions comes at the right time in Gluskin's evolution. From day one, Dave has been focused on leveraging OneOnix to drive further growth. This includes continuing to broaden access for Gluskin clients to Onyx private strategies, including those that we're fundraising for this year. Operationally, Dave will be focused on digital capabilities and increasing automation, allowing the business to better scale as it grows. It's early days, but under Dave's leadership, expect to see a sharpening of our client value proposition, including more opportunities to leverage the Onyx brand and product offerings. Finally, two updates on ESG. In December, we published our responsible investment policy to our website. Last month, we committed to the ESG Data Convergence Project, an initiative backed by more than 100 global GPs and LPs. The group's aim is to standardize ESG metrics and create comparative reporting for the private market. Recognizing the benefit of increased standardization for all stakeholders, including shareholders, you can expect to see more of these partnerships from us in the future. Reiterating what I said at the start of my remarks, we're confident in our strategy and plan to execute, and we continue to see great value in Onyx as an investment. This will be an important year for us in demonstrating our ability to grow fee-generating AUM, leading to increased fee-related earnings, as outlined at our investor day. As you heard earlier, we have several strategies that we'll be fundraising this year. We also continue to explore other opportunities to add to our fee-generating AUM capabilities. We look forward to providing updates on our progress throughout the year. I'll now turn things over to Chris.
Jerry
Thanks, Bobby, and good morning, everyone. We had a good quarter, adding $3.65 of segment earnings per share to cap off a very strong 2021. in which ONIX generated $18.42 of segment earnings per share. This performance translated into the record 24% growth in investing capital per share, Jerry noted. These results were driven by the performance of our private equity investments. Our PE portfolio was up 5% in the quarter and 32% for the year, outpacing a very strong year for the public markets. Onyx PE returns continued to be broad-based in the quarter, with solid returns across our private company portfolio and continued post-IPO appreciation for RSG. The decrease in PowerSchool's trading price muted overall Q4 results. However, we haven't sold a share of PowerSchool and expect to enjoy strong returns as Hardeep and his team continue to execute on their strategy and grow the business. You can see the broad-based value creation from our portfolio when you look at the returns by vertical. Strong growth across financial services, industrials, and consumer and retail more than offset very small net losses in services and healthcare in Q4. On a full year basis, we saw double-digit returns across all verticals and remain well diversified going into 2022. a PE portfolio made up of 38 separate investments, the largest of which accounts for less than 6% of ONIX's investing capital. Credit investing also contributed to segment earnings. ONIX's credit investments returned 3% in Q4, capping off a very strong year in which they delivered a 20% return. Credit returns in the quarter and year were driven by CLO investments, that returned 28% over the course of 2021. Although we are happy with the returns from our CLO investments, as you know, we're working to reduce the capital intensity of our CLO platform. I shared this chart last quarter, and as you can see, we continue to make progress increasing our CLO platform's return on capital. Recent progress includes sales of 40 million of CLO equity in Q4 and the pricing of Euro CLO 5 with ONIX holding only 5% of the equity tranche. The CLO platform is a great early example of progress toward our goal of improving the ratio of fee generating AUM to ONIX capital across our platforms. an important step in expanding ONIX's capacity to generate fee-related earnings. While our CLO platform is quickly pivoting, progress in private equity, where funds have 10-plus year lies and successor funds get raised every four or so years, will happen over the long term and in step functions. Stepping back and looking at the investment segment as a whole, Onyx generated segment earnings per share of $2.90 in Q4 and $14.22 in the year, driving investing capital per share to $90.75, or based on the year-end exchange rate, just over Canadian $115 per share. And we entered 2022 well-positioned to deliver growth going forward, with about 84% of ONIX's investing capital at work after adjusting for recently announced investments. And that's after a year in which ONIX received almost half a billion dollars of net distributions from the PE portfolio, with $1.3 billion of realizations, meaningfully outpacing a very active year in which $840 million of ONIX corporation capital was invested in new PE opportunities. Before opening it up to Q&A, I'll spend a few minutes on our growing asset management segment. As you can see from the table, ONIX generated $67 million of asset management segment earnings in the quarter and $384 million for the year. Carried interest has been the primary driver of the year-over-year increases in asset management segment earnings. You might remember from last year's Q4 call, I spoke about carry as a meaningful potential contributor as OP4 began to accrue carry and move through the catch-up phase of the waterfall. That thesis played out in 2021 with OP4 in full carry at year end. Turning to ONIX credit, its contribution in Q4 also benefited from carry with about $18 million being accrued. Although our focus at Onyx Credit continues to be growing fee generating AUM and restoring management fee margins, the platform's $14 billion of carry paying capital is a meaningful asset that should not be overlooked. Before I wrap up, I'll pivot to fee related earnings and distributable earnings the new KPIs we introduced at Investor Day. As I've explained a couple times over the last handful of months, ONIX's 2021 FRE loss stems from the high proportion of non-fee-paying ONIX Corporation capital managed in the PE platform and significant OpEx investments we've made at ONIX Credit to support the launch of new fee-generating strategies. Looking forward, we expect growth in FRE to come gradually and consistently from ONIX credit as it grows its top line and restores profit margins. With improvements in private equities contribution coming in step functions connected to fundraising cycles and then possibly new product launches. Growth in fee-generating AUM will be a leading indicator over the next 12 to 18 months as it relates to our progress in building ONIX's capacity to generate FRE. Finally, this slide details ONIX's distributable earnings, which includes both carry and investment gains on a realized or cash basis. ONIX's strong distributable earnings, $135 million in the quarter, and over $700 million for the year, provide a solid foundation and support for our growth plans. Next quarter, we'll transition to FRE and distributable earnings as the primary measures of the asset management segment, allowing shareholders to track progress against the 2026 targets we provided at investor day, and more easily compare ONIX to industry peers. With a very successful 2021 behind us, we've turned to the very important year already underway. With fundraising efforts ramping up for both PE platforms and the continued execution of our growth strategies at ONIX Credit, ONIX's capacity to generate FRE is poised to expand materially in 2022. With that, we'll be happy to take questions.
Operator
As a reminder, if you'd like to ask a question at this time, please press the star, then the number one key on your touchtone telephone. To withdraw your question, press the pound key. Our first question comes from a line of Scott Chan with Canaccord Genuity.
Scott Chan
Oh, good morning. Chris, just actually going back to your last comment on slide 26. kind of getting back to distributable earnings. The realized gain on investment line that gets out of back from FRE, is that mainly private equity monetization through the year? Like, is there any credit involved in that number? I'm just getting some clarification on that, yeah.
Jerry
Yeah, so there likely is some credit in that number, Scott. I don't think it would be all that material this year. We did have gains. as we sold down our CLO portfolio. But the bigger driver, the biggest driver is private equity. And it's a good opportunity just to remind people that in distributable earnings, those gains are realized gains, cash gains. And so in the case, for example, of the sale of the Geldwin stock in 2021, the gain that goes into that line is proceeds versus original cost. So if you think about it, it doesn't tie directly to our mark-to-market income that would have seen that gain come into income over, you know, many years. It's a different measure that's common in the industry that's a cash basis calculation.
Scott Chan
And the same thing on carried interest, right? It's realized in the quarter, so.
Jerry
Yeah, that's correct. For this purpose as well, carried interest is realized. It's actually cash received. which, again, is just a little bit out of sync with how we report it for financial statement purposes. But it's, you know, another interesting way to look at it, I think.
Scott Chan
Okay. Just wanted to clarify that. And then I get asked a lot, and you kind of touched on it in terms of higher rates benefiting floating rate products. But in general, when we think of Onyx and all its businesses and, you know, the prospect of accelerated higher rates, on both sides of the board, or maybe globally. Can you maybe talk at a high level, you know, where you may see headwinds and maybe opportunities over time? Some of the stuff I think of on the private equity would be like impacting refinancing or DCF valuations, but just kind of curious to see your thoughts as the rate has really shifted in your quarter.
Jill
Yeah, hi, this is Bobby. So clearly higher interest rates and a higher cost of capital has a negative impact on the private equity business almost by definition. Now, it does depend on how the businesses do and how higher rates might lead to different growth rates for the underlying businesses, but a higher cost to borrow is typically on the margin a negative for the PE business. On the credit side, you know, given how much of our current credit business in that mix is floating rate, it's not as obvious that it will be a net negative. We do have some exposure to high yield and other things, but, you know, those products tend to be pretty short duration. But the CLO business and structured credit, which are floating rate, we expect that to maybe be a net positive over time. So it'll vary. It varies a bit depending on the product.
Scott Chan
And... Maybe just lastly, just on the cash, you talked about the pro forma cash being 16% versus 20% at your end based on recent investments. I'm just curious to see maybe your visibility over the next few quarters in terms of cash deployment and maybe more interestingly, just in terms of the NCIB, just what your share price is and what the discount is right now.
Jill
Yeah, so again, I don't think... We should look out more than a couple of quarters, but just looking at on the PE side of things, the pipeline versus potential sale processes, I think we're probably net sellers over the next couple of quarters just based upon current activity. So I would expect the cash balance and the credit markets cooperate to be going up based upon those things, based upon those factors over the next few quarters.
Scott Chan
Okay. That's helpful, Bobby. Thank you very much.
Operator
Our next question comes from Nick Preeb with CIBC Capital Markets.
Nick Preeb
Okay, thanks. Good morning. I just wanted to start with a question on one of your portfolio companies. I was wondering if you could give us an update on the performance of ASM Global. That's one I would think of with a bit of a longer recovery tale. I'm just wondering how that business has been managing from an earnings standpoint liquidity and balance sheet point of view?
Jill
Yeah, so obviously ASM was one of our four portfolio companies at OP that sort of had a direct hit vis-a-vis COVID. But when we look at where the business now to start with is, we're seeing for 2022, we're budgeting to be above the 2019 earnings level. So the activity around stadiums and arenas and other things like that has really, really picked up over the last little while. So the business is really beginning to operate what I would call normally. We never had high leverage going into that business. We were only levered two times, so there was never any hint of a liquidity problem at that business, and that remains true today. So pretty good. Where that business is now, we feel good about it.
Nick Preeb
Okay, that's interesting. And then, you know, one of the goals that you've pointed out over the past couple of years, one of your ambitions has been to de-emphasize participation in competitive bidding processes from a deal sourcing perspective. I mean, you've announced a handful of new transactions here over the past, you know, six months or so. Can you give us a sense of how many of those maybe would have been, you know, privately negotiated versus a formal auction process and, or maybe how the pipeline looks from that perspective as well?
Jill
When I think about overall for OP5, we've had the majority of the acquisitions in that fund either be proprietary or there's only two people really looking at the process. In most cases, we were the preferred partner of management. I actually think our change of go-to-market and how thematic we've been and how much deep knowledge we have about those businesses that we're we're pursuing is really resonating with the management teams, particularly founder-owned businesses. We've had a really good success over the last couple of years buying founder-owned businesses and them appreciating the value and the expertise we bring vis-a-vis how deeply thematic we're being. So I actually think we've made really good progress on that front in the last couple of years.
Nick Preeb
Okay, very good. I think my other questions have been answered, so that's it for me. Thank you. Thank you.
Operator
Our next question comes from Jeff Kwan with RBC Capital Markets.
Jeff Kwan
Hi, good morning. I apologize, I missed the beginning part of the call, so I apologize if it's already been addressed. But with everything kind of going on in Russia and Ukraine, is there any, you know, direct exposures that you would have within your portfolio?
Jill
Nothing, what I would say would be meaningful, Jeff. You know, CareStream and WireCo and Manipri have have revenues, pretty meaningful revenues in Russia and the Ukraine. But overall, for all the revenues of all of our portfolio companies, you know, the number is sort of in the $30 million range.
Jeff Kwan
Okay. And then, okay. You know, I know there's your limit in terms of what you can talk about from the fundraising perspective, but just wondering if you had any early discussions with LPs given you've got an active fundraising year ahead, and if you're able to talk about the nature of those conversations, you know, and how they might have gone.
Jill
No, we're really, like, for OP, like, we're literally just beginning. Like, we haven't really been out formally yet with, you know, very many LPs. But, look, Jeff, it's a crowded fundraising market. Like, a lot of people, a lot of GPs are coming back to market quickly, and they're coming back to market seeking larger funds. given that private equity in particular, putting the credit side of the business aside for a second, performs so well, several, many institutions have their private equity allocations. They're sort of full. So I think this fundraising for OPE, and likely for ONCAP, will be longer than fundraising has been for prior funds. At the OPE level, we're typically in and out of market in sort of five to six months. I would see this fundraise taking a bit longer than that.
Jerry
Yeah, and maybe just picking up on that point, Bobby, Jeff, just to, you know, I think Bobby referenced in his remarks an expectation of growing fee-generating AUM more than 15% this year. I think it's relevant to note that in our plans, more than half of the OP6 capital gets raised in 2023. So that 2022 growth number, you know, has probably less than half of OP6 in it.
Jeff Kwan
Okay. And then just my last question, somewhat on a similar, but just more conceptual thing is, you know, you've had strong performance in your PE funds. You've got greater focus on your core verticals. And we've seen the recent kind of stronger pace of new deal announcements. Are you comfortable doing maybe bigger deals than you've done in the past? And would that potentially result in maybe thinking about bigger fund raises than you've done relative to prior vintages?
Jill
So I think we've always done larger deals, Jeff, relative to the size of our fund. You know, we've done several deals where the equity check has been more than a billion dollars in a $7 billion fund, and we've used Co-Invest, which our LPs and Onyx Corp. obviously like for us to be able to deploy those types of deals. In terms of larger fund sizes, like we're always going to try to raise larger funds, but we've never sort of tried to do like a big step function change in fund size. I'd much rather raise a dollar amount where the investment teams at ONCAP and OP aren't feeling overly pressured to get the money to work if there's a period of time within the five-year deployment period where it's a tougher time to deploy capital. So I would rather go back to market more quickly. Again, Larger funds, but just not step function larger funds. I think that's just a more prudent way to go in an investment business.
Jerry Schwartz
Okay. I just add that I really fully support what Bobby's just saying. I think, personally, I don't think it's terribly wise to constantly be raising larger funds. You've really got to concentrate on the quality of what you put into the fund.
Jeff Kwan
Okay. Thanks for that. And maybe just one, just going back to Bobby, I think it's your response about the five to six months. You know, when you kind of say that would be something more like talking like closer to a year sort of thing, or maybe slightly less than that, be what you're thinking in terms of that timeframe, or would it potentially be longer than that?
Jill
Yeah, it's tough to pinpoint it, Jeff, but like we have had a couple of LPs, you know, know that we're going to come to market this year and say, the calendar is so crowded in 22, could you please allocate us in the beginning of 23? So I think we'll have to see how that dynamic plays out, but I certainly see OP6 fundraisings spilling into 2023. Whether that's Q1 or Q2, I can't really tell you yet.
Jerry
Yeah, I was just going to say, operationally and financially speaking, that's totally fine with us. Just to make the point, you know, the fund typically has a cap of investing no more than 20% of its capital in any one investment. And so, you know, if you have large first and second closings, it still gives you plenty of capacity to put a normal size ONIX investment in the fund. And then also just to make the point that subsequent investors are in addition to coming into previous deals pro rata, also pay fees back to the initiation date of the fund. So, you know, from Onyx's perspective, the timeline, as Bobby said, works out really well with where we stand today with dry powder, and accommodating our clients with some 2023 closes is very easy to do.
Jeff Kwan
Okay, no, that makes sense. But, I mean, we could see possibly still – maybe a first closing in 2022 or are you talking about the first closing in 2022?
Jill
No, no, for sure. I anticipate a first closing in Q2 or Q3 maybe for OP6, right? And as soon as you get that first close, you're ready to invest, right? And the people that come in after that first close participate in those deals, and there's a contractual way that happens in terms of what rate they have to pay given where those deals were bought. But as soon as you have a first close, you're in business on that fund.
Jeff Kwan
Got it. Great. Thank you.
Operator
As a reminder, if you'd like to ask a question at this time, please press the star, then the number one key on your touchtone telephone. Our last question appears to come from Graham Writing with TD Securities.
Jill
Welcome to the coverage team, Grant.
Grant
Hey, good morning. I wasn't sure if my question got in the queue there or not. I'd like to just start with carried interest. So on slide 29, you gave some color there. As you have in the past, just to run the potential from OP5 and on CAP4, I think it's in the range of $225 million to $685 million of carried interest potential. But then you've also previously mentioned that, you know, you've talked about this $19 per share of carry potential in your business, which equates to, I think, about $1.7 billion. So what's the bridge there between what we're seeing in those two specific funds that are pretty key to generating carry interest and then that larger $1.7 billion? Is that largely fixed income related or what are the pieces that would bring you to a larger carry potential of $1.7 billion? Yeah.
Jerry
Yeah, it would be credit-related, Graham. We have, I think I said in the number in my comments, we have about $14 billion of carry paying or carry potential AUM within our credit business in addition to essentially almost all of our AUM and private equity being carry paying. So that would be the bridge between the two. I think, you know, to make the point, you know, credit carry – is a little bit different than private equity carry. Private equity carry will be, you know, typically longer-term hold and therefore a higher MOC, but credit carry will pay more often, and we sort of get to reload more often just because both fund-wise tend to be a bit shorter. But hopefully we expect credit in the years to come to be a very significant contributor to our carry realizations in addition to private equity.
Grant
Understood. So that $14 billion, that's obviously beyond your CLO fee generating AUM. There's some other strategies in there as well that are driving that. That's right.
Jerry
It's in addition to our CLOs. Our CLOs do bring with them a carry opportunity, but there's also all of the additional capital we have, including some of which we acquired with Falcon. And essentially all of our new strategies that we're raising funds for in the market today for credit, how they carry opportunity associated with them.
Grant
Okay, understood. A few related areas. I'm just trying to sort of track your outlook there. It sounds like fundraising on the private equity side, it might fall into 2023 to some extent. What is your sort of expectation for generating positive FRE? Is this more of a 2023 event as your private equity fees step up, or can you get to positive FRE this year?
Jerry
Yeah, I think I don't have a specific number to give you. I think what I would tell you is that progress on the FRE line is not going to be all that significant in 2022. What we'll want to be focusing on, and we'll give you the information on that, is more of a run rate type analysis. particularly because with credit AUM, you typically earn fees only on invested capital. And so there's a lag between raising the capital, getting the funds formed, and actually seeing the increase to the top line. So I think 2023 will be a much bigger improvement in FRE than 2022. But I expect that at the end of 2022, when we're showing you a run rate analysis around FRE, the improvement will be more meaningful.
Grant
Okay. Understood. That's it for me. Thank you.
Jerry
Thanks, Ram.
Operator
That concludes our question and answer session. I will now turn the conference back to the company.
Jerry Schwartz
Thanks, Operator. Look, we really appreciate everybody joining us today, and we thank you, not only for that, but for your continued support. And we'll look forward to many more opportunities to engage with you in the months ahead. We look forward to hearing from you and being able to reach out to you. Thanks everybody. Good afternoon.
Operator
This concludes today's conference call. Thank you for participating.
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