Power Corporation of Canada

Good morning, ladies and gentlemen, and welcome to the Power Corporation third quarter 2024 earnings conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. Analysts who wish to join the question queue may press star then 1 at any point throughout the call. If anyone has any difficulties hearing the conference, please press star then zero for operator assistance at any time. I would like to remind everyone that this call is being recorded on Wednesday, November 13th, 2024. I would now like to turn the conference over to Mr. Jeffrey Orr, President and Chief Executive Officer of Power Corporation. Please go ahead, sir.

Thank you, operator, and welcome to everyone. Thanks for joining us this morning for our results call. With me is Jake Lawrence, who is the EVP and CFO of Power Corporation. And we'll walk through the presentation and open it up for questions. Just draw your attention to the cautionary statements on pages two and three regarding forward-looking information and non-IFRS information. I won't draw your attention to page four, which is our mug shots, but you can admire those later at your leisure. I'm going to walk right forward to page seven if we could, which is overall summary of the quarter. Listen, I'm really pleased with the performance of the businesses across the portfolio of businesses in the third quarter. First of all, Great West Life and IGM, which are the producers of Power's ongoing and repeatable earnings. Each enjoys strong earnings growth, 12% on an earnings per share basis for each of them year over year. They also contributed to strong increases in our net asset value and really great developments across the rest of the portfolio, what we sometimes refer to as the NAV part of the portfolio. and a number of developments we'll talk about through the presentation, including the sale of Peak, which is a substantial step in the monetization of our standalone businesses. Progress at Cigar being recognized with a 39% increase in the value of the general partner recognized in the quarter. Wealthsimple continues to expand its a client base in a very, very meaningful way in Canada and increased the depth and the breadth of the relationships it has with its clients. So a big increase in the value of our stake in Wealthsimple. And it was offset with a couple of reductions in our NAV at Lumen Pulse and Lion, but overall strong growth in NAV of 15% across the portfolio. And that's continued at least in the public parts, which are visible since the quarter end. continued growth and strong NAV rate up through the month of October and November. So really happy about the quarter, excited to tell you about it. I'm going to then turn it over to Jake to walk through some of the financials and the NAV, and I'll pick it up in a few minutes. Jake, over to you. Great.

Thanks, Jeff, and good morning, everyone. I'll start on slide eight. As Jeff noted, PowerCorp reflected strong results, and it really came from our main operating businesses, Great West and IGM Financial. And there was a few non-cash items, which I'm going to detail in a moment. As Jeff reminded everyone, Great West and IGM are our main earnings contributors, and this quarter we're pleased to report the double-digit earnings growth from both businesses. Adjusted net earnings from continuing operations was $542 million. That compared to $1 billion in the same quarter last year. I'll address the breakdown of these results on the following slide, but we'll note that both the current and comparative quarters include one-time items. On a per-share basis, adjusted net earnings were $0.84, and that's compared with $1.52 in the same quarter last year. We remained active buying back shares, and the year-over-year reduction in average share count contributed to approximately a $0.02 improvement in our earnings per share. We've spoken about NAV a little bit. The adjusted NAV was $57.92 per share at the end of the quarter, or September 30th. That was up 15% compared to the end of Q2, and it does reflect growth both in our earnings and NAV-focused businesses. As Jeff just noted a moment ago, the share price momentum in our group companies has continued post-quarter end since our opcos reported results last week, both Great West and IGM. And our NAV per share as of yesterday's close was up an additional 6% to $61.33. Finally, it's worth noting this quarter the Board of Directors declared a quarterly dividend of 56.25 cents per share, and this is in line with what we had declared last quarter. Turning to slide 9 to break down the earnings, Great West once again delivered strong base earnings of over $1 billion with both momentum and growth from each of its four segments. I would like to highlight that this marks the sixth consecutive quarter of base earnings increases at Great West, and the 12% year-over-year growth reflects the actions taken by Great West to support and accelerate their strategies to grow both in the U.S. and in Canada. IGM Financial. reported strong year-over-year earnings growth, and Power's share of its earnings were also up 12%, with increased contribution from both wealth and asset management, as these two segments each reported record-ending average assets at the end of the period. GBL's results, they do have non-recurring items in both the current and the comparative quarter from last year. In Q3 2024, GBL's portfolio company, Emeryus, disposed of certain assets, and as a result, recognized a non-cash loss related to the reclassification of currency translation and earnings, or CTA. In last year's comparative period, GBL's contribution also included a significant gain on the decon consolidation of WebHelp following its merger with Concentrix. Moving to our alternative investment platform, Power Sustainable's results were comprised of fee-related losses consistent with the prior year. as well as some acquisition costs related to its newest investment strategy, as well as power share of losses on its consolidated energy assets. Cigar and Power Sustainable continue to deliver solid fundraising despite some headwinds in the alternative asset space, with year-to-date having raised a combined $1.9 billion in new commitments. This quarter, we further refined our presentation by showing standalone businesses as its own line item while grouping corporate operations and other, which includes charges such as our operating expenses, financing charges, depreciation, income taxes, as well as our dividends on preferred shares. We believe this enhanced disclosure will help investors better see through our results. In Q3, the contribution from standalone businesses primarily included non-cash impairment charges that Jeff referred to, and that was both at LMPG as well as Leon. I'll note that while we expect to generate a gain of almost $200 million U.S. on the sale of Peak, This will only be reflected in our P&L upon closing, which we expect to happen next quarter. Now turning to slide 10. Here we break down the $57.92 of net asset value per share as at the end of the quarter. Our growth in NAV and our growth in NAV per share were headlined by the strong share price performance in our publicly traded operating companies, notably Great West and IGM. Our alternative asset investment platforms also contributed to the NAV growth this quarter, as the fair value increases of both Wealthsimple and Cigar's asset management business led to a roughly $400 million increase in Power Corporation's net asset value. As Jeff mentioned, in addition to the announced sale of Peak this quarter, Peak also previously announced the sale of Rawlings. This generated about $83 million in proceeds, which we did receive during the quarter. The proceeds from this sale are reflected in the cash and cash equivalents line, and the combination of this cash, the increase in peaks valuation, and the impairments at LMPG in line essentially result in a flat contribution from the standalone businesses quarter over quarter. Looking a bit closer at the balance sheet, Power's cash and cash equivalents ended slightly lower at $1.4 billion as we remained active in buying back shares this quarter. We transacted over $120 million of repurchases under our NCIB program. Of this current $1.4 billion balance, approximately $1 billion is available cash when we consider dividends declared but not yet paid. And I'd also note that this $1 billion does not include the approximate $440 million of proceeds from the sales peak that we do expect to receive in Q4. They overall were pleased to report NAV growth that was driven by contributions across the portfolio. I'll now turn it back over to Jeff to continue the call.

Okay, Jake, thanks very much. So then I'll just dive in a little more on each of the pieces. And on slide 11, you've got the earnings, the last five quarterly base earnings and net earnings for Great West Life. And I'll just point out, in addition to the 12% year over year for the quarter, year to date, the base earnings are up 14% from 2023 levels. And that's really been led by Empower. but it is broadly based to pick up Jake's comment. If you look at it on a pre-tax basis, each of the four segments had earnings growth quarter over quarter from last year, but the minimum tax impacted the capital and the reinsurance segment in effect, and also there was some tax noise on the Canadian segment, but all four segments were ahead from last year and continue to show strong growth. Also, importantly, on the return on equity, the company reported ROE on base earnings of 17.3, which is above the high end of its targeted range, and so really strong growth in the efficiency of the capital and the earnings on the capital. Just a page on page 12, diving a little bit into Empower a bit more, and this is a reprint of a slide I think that Great West had in their presentation last week, so you may have seen it already, but just pointing out that the empowered growth story, we continue and Great West Life continues to be very confident in the thesis that we've had and in the strategy that we are engaging in. Some questions around the industry, around is the DC industry mature and is it in outflows? And the answer to that question is the DC market is mature and it's in outflows. And that's a core part of our thesis. But notwithstanding that, we believe we can create and have been creating strong earnings growth through a whole number of factors that we're playing on, which includes growth in market share organically, growth in market share through acquisitions, other revenue drivers that are going on in the DC market, as well as cost and efficiencies as you get scale. All of those are driving profitability in the DC market itself. And then the wealth management opportunity that is being driven by the outflows that are coming from that mature DC market are growing even faster, are creating even faster earnings growth in the wealth management segment of Empower. You see that in the bottom right hand. That's certainly been the experience over the past 12 months. And we expect that those trends will continue well into the future. So we remain highly confident in the Empower story and are feeling really good about the performance there. I'll then, just one small note on page 13, Empower reported a small acquisition, but it just shows really what Empower is up to. The main acquisitions have been in increasing the DC footprint that they have, the mass mutuals and the PRUs, but they're also going to continue to look and be active in broadening out the breadth of products that they offer to their clients, and the option tracks adds a very important capability that we think will increase their competitiveness as they bid for new business. Turning that on page 14 to IGM, I think the overall story at IGM is strong performance by each of the two main core businesses in wealth management and asset management, being IG Wealth Management and McKinsey. Great momentum in terms of earnings. We've got great momentum in terms of gross sales, and importantly, the flows are turning in the business. which I'll come back to in a second. And then the rest of the portfolio, the strategic investments, all four of them performing really, really well. So here on page 14, you just see the industry flows. And although IG Wealth and McKinsey play outside of the mutual fund business, this is just put here as there's good data on the mutual fund business. So it's more an indicator of what's happening more broadly in the wealth management market in terms of managed assets. And you see after a couple of years of big outflows driven by a number of factors, driven by high inflation pinching, high interest rates pinching households, and then some money going in outside of managed products into cash products and certificates of deposit, you've got some of that starting to abate. And we saw in the fourth quarter, or in the third quarter, excuse me, you know, our return deposit of flows, and that's benefiting IG Wealth, which is back in net flows from both an AUA and an AUM basis. And McKenzie's having improvements, but still in a negative flow position, but improvement in their net situation. But the main message on this page is that we're starting to see a turn in the industry flows. That would be a great thing, whether hopefully it continues with the environment going forward, but we saw it was an important milestone for me in the way we look at it. 15 just picks up on my point about the strategic investments continuing to deliver. We've got a slide later on Wealthsimple, so I'll just leave that one there. But Rockefeller showing 33% growth in its client assets through a combination of organic growth, new advisors coming on board, and market. And so both Wealthsimple and Rockefeller on the wealth management side, really strong growth. And then on the asset management side, China AMC, 34% year-over-year growth in its assets. It's increased its share in one-year basis to 6.3% from 5% of the long-term fund market. Good momentum at China AMC, offset somewhat by some fee declines. So the earnings aren't growing as quickly as that, but the franchise itself in a very strong position. And then Northleaf in really a very difficult fundraising environment for alternatives. $1.5 billion of fundraising in the quarter, $4.8 billion overall. AUM has grown 21% compounded since we formed the partnership in late 2020, so great growth at Northleaf. Just on page 16, a word on GBL. As you know, all of our companies in the past few years have come out with guidance, have been clear on their objectives, Great West Life, IGM, Power Itself, Here's what we're trying to do. Here's what our strategies are. Here's our benchmarks. And GBL did that last week with their shareholders going public with their goals and their strategies and gave mid-year guidance. And basically, the strategy is summarized in this page. They're continuing to generate cash on the left side of the page. And they expect to use that on the one part for reinvestment. And as they do that, they're shifting the portfolio to more privates. And then the third element is they're also returning cash to shareholders through buybacks and through dividends. So that was articulated with some specific goals as to what they were trying to achieve. And then importantly, if you recall, when we had this call last quarter, we reported that GBL had increased its dividend about 80%. I don't have the number exactly. PowerShare and Canadian dollars went from what was $90 million in 2023, received in 2024, a bump by 80 million to 170 for next year. And we were unclear as to whether that was going to be a one-time or whether management expected that to be repeated. And they clarified in their presentation last week that they expect that new higher level of dividends, which work out to about €5 per share, is the new base level. Obviously, dividends, as you know, are declared by the board. It doesn't mean there'll be a dividend declared next year, but their expectation that they communicate to the market is that new €5 as a base level, and they looked to grow it from there. So that was good news, and we were pleased to have that in the marketplace. I said I'd talk about Wealthsimple, and I know IGM covered this, but just continued incredible growth of Wealthsimple. They've got 2.6 million clients. They've got multiple touchpoints with the clients. They've expanded the breadth of their offering. It started off as a simple wealth product. How's that for turning their name around? But they've got five or six different products, and they continue to broaden the number of services they provide to their clients. The AUAs up materially year over year, and the mark on Wealthsimple was increased in the quarter by 46%. At the IGM level, in the way that they account, that does show up in terms of their We consolidate Wealthsimple at the power court level, so we don't show the increase in fair value through our P&L. It doesn't show up in the earnings, but it's a very important mark on the growth and the success of the business. As we turn to other parts of the portfolio, as Jake mentioned, we also increased the value in cigar. and our GP interest in cigar. And you see that's based on a number of factors, but you see the funding and the growth and the assets over the last five years on page 18. And that's really been a combination of fundraising, hiring new teams and launching new products, and also M&A and acquiring new firms. So all the tools and toolkit being used to grow the scale and the success of cigar and the general, the GP itself, the manager, The value of that was increased by 39% to about $800 million. We own roughly half of Cigar. As you know, we've got partners in there, Lunaid, Bank of Montreal, Canada Life, as well as management. So the power stake is about 50% in the business. Turning to page 19, I think Jake went through most of Peak, so not too much to add. As I said, I think this is an important step in our continued development monetization of the standalone businesses. This is a big one and it's a very, very good return for power, about a three times multiple on the capital invested. We did that with our partner. And so this is just generally a great success story for the group and really nice to see it and looking forward to the cash coming in in the fourth quarter. Okay, then with that, I am going to... Also make a couple of comments on page 20 of overall in our, I jumped forward. Yeah. Okay. Then back to the asset management businesses, just a couple of words overall on the growth of the businesses you've got on the left-hand side on page 20, the overall growth of both a cigar and power sustainable, those numbers that's funded AUM different ways to measure the business. There's fee bearing AUM committed AUM, and then there's funded. So that's the funded basis. And we talked about the growth and the value of the GP. We also create value through the carried interest. And you've got $178 million at the end of the quarter of carried interest that has been accrued for the shareholders of our GPs. And again, we own roughly 50% of that. A lot of that is in cigar, but some of that is in the energy infrastructure, as you see. And we own more of power sustainable. So our share of that is not 100%. But that's a key value driver. It's growth in the GP, growth in the carried interest. And then finally on page 21, the other value drivers, we have about $2.5 billion of capital that are in the different strategies. And overall, we are expecting a return of over 10% in that capital. It's not all going to come every quarter, every year. The fixed income type strategies at the top of the page, the energy, the private credit, They tend to be in the real estate, tend to have cash flow attached to them, and obviously the venture capital and the private equity have higher targeted returns, but the returns are episodic. They come as there are monetizations, so they're not steady cash. But overall, we are looking for earnings and value growth through this part of the strategy as well. All right, page 22 is our continued quest to return capital to shareholders. Jake mentioned it. You've got $1.4 billion returned over the first three quarters, including dividends and buybacks. And I think Jake, you did a nice job of going through the cash positions, so I won't go through the second point on the page. And both S&P and DBRS reaffirmed our strong credit ratings over the last several weeks. Page 22 is just a look at our total shareholder returns on a one-year, three-year, and five-year basis, compared to a couple of the benchmarks that we follow. And I won't belabor that point. Page 24 is just a tracking of our NAV discount. And we're around 23%, 24% right now. And so we continue to view that as an opportunity for value creation. And we follow it. We don't influence it directly. We influence it indirectly. But the discount, the strong share growth is there, notwithstanding that there's still an opportunity on the discount. And I'm going to finish up on page 25. Just to say we're very optimistic that the tenets of our value creation strategy remain very much in place. The returns that you saw over the last five years, a couple of slides further, or earlier, I should say, have really been based on earnings growth and on NAV growth. they haven't been based upon any material changes in the valuation. So the TSR story that has been created is notwithstanding that the PE multiples of Great West Life and IGM really haven't changed over the period. When you look at where they're trading and you look at the fact that both Great West Life and IGM have given guidance of 8% to 10% growth in earnings per share, and you Compare that to where earnings per share are and where the stock prices are. You're going to see the multiples are pretty reasonable and very reasonable and haven't really changed at either company. Our discount hasn't changed too much. So the story of the returns we produced are not because of a reevaluation of PowerCorp or our subs. It's through earnings growth and NAV growth. and the components of our strategy that we put in place five years ago remain. In fact, they've been validated, and we're growing and have continued to grow in our confidence that we can execute on this strategy, and we're looking forward to doing so and looking forward to the future. So with that, I'm going to close the comments and open it up, operator, to participants on the line who want to ask questions.

We will now begin the question and answer session. To join the question queue, you may press star then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speaker phone, you will need to pick up your handset before pressing any of the keys. To withdraw your question, please press star then 2. Once again, that was star then 1 to ask a question, and at this time, we will pause for a moment to assemble the roster. And our first question will come from Nick Preeb of CIBC Capital Markets. Please go ahead.

Okay, thanks. Just in light of the Wealthsimple markup, I wanted to ask about the ownership dynamics. So the Power Group controls a large economic interest, but there are also third-party LPs that would participate through the Portage Venture Capital Platform, and they've done very well in that investment. Do those LPs want to see an exit to crystallize returns, Or, you know, how mature would that investment be relative to, you know, the targeted hold period for that fund? I'm just wondering how those dynamics might inform or influence the timing of a potential public listing or other exit event.

Thanks, Nick, for your question. And it's a good question. Just as a point of clarification, most of the LPs that came into Wealthsimple are not through Portage. The interest of our group is through Portage, but most of those investors came in, I think it was 2021, in a treasury offering, as well as the secondary that PowerCorp and IGM participated. There was a lot of demand, and as you know, we sold some of our position at that point. So those are institutional investors, VCs, a who's who list of really tech players and fintech players around the world. And as you can imagine, they've invested into a private company, and they will have abilities to have liquidity going down in the future. You're asking about timing. I don't have a good view on timing at this point. I don't sit in their seats, and I don't have the shareholders agreement in front of me, but they did come in. I think it was in 2021. The valuation at that point, that was right as fintech valuations were peaking, and they came in at a $5 billion valuation. If you followed the story, fintech values came off quite dramatically in 2022, and the positions of power and IGM were marked down, and now we've marked them up several times, and we're back to the $5 billion valuation. So one way to think of it is when you think about when would they – I'm now getting into the heads of the investors, which I probably shouldn't do, but I just point out that the value that we just marked it back to is equivalent to the value that they came in at three years ago. So maybe that helps inform how they might be thinking about it. But eventually, there'll be liquidity discussions in the future, and we'll need to deal with them at that time. Not sure I can be more specific, and I hope that answered your question.

That's actually very helpful. And then just switching to the asset manager, I want to touch on a pair of themes in the alt space more broadly. So a number of alt players are talking about the prospect of an improving demand environment for private market capabilities because of this easing denominator effect, better rate stability, better capital return. That would be a benefit to your platform. But a lot of the larger alts players have also been highlighting how LPs want to consolidate the number of GP relationships they have with a narrower focus on large platforms with broad capabilities. I just wanted to get your take on that and what you're hearing in your dialogue with LPs as it relates to those themes.

Those are both themes that we would agree with. The easing rate environment, growing confidence in markets, all of that there's an expectation it's going to play into a more active M&A market, more liquidations for PE players, which then will put to work also some of the funds that they've raised, and that will kind of unlock some of the hopefully future fundraising, but also realizations. So that's starting to play out, and it's hoped for, but we'll see how that plays out. I would expect it would be with the enthusiasm in the market and the economy right now, but we'll see how it plays out. On your second point, that is definitely a theme. You've got consolidation going on around the major players. So the very large players are well positioned for that. You know, the top five, I think, are getting something like 50% of the funding. I'm not exactly sure what that period is, but I've seen that figure quoted a number of times. There are hundreds, if not thousands, of alt players. It doesn't mean they're all disappearing. It does mean that you've got to be, if you're a smaller player, you've got to have a very attractive lineup of funds, and you've got to have good returns, and you've got to position yourself with your LPs in a way that you're bringing value added to them. And we could walk through ours as to why we think we have differentiated strategies. We do have very good returns. We have very good products. We've got differentiated products. But there's no question that there's some consolidation that's happening in the industry as to where funds are going. We're well aware of that. So I'm not sure I can, again, add much more than that. That is for sure a force going on in the market. Anything to Jake you want to add?

Yeah, I'll just, Nick, what I'd add on to that second point is it's part of using Cigar as the example. In the past 12 months, roughly, they've wanted to add in capabilities to become more of that one-stop shop. So in addition to their core products, they added in the capabilities of performance equity management around retail funds, the funds, some secondaries, and they've also added in some capabilities in the collateralized loan obligation space or CLOs with Halsey Point. And so that's complementary to existing credit fixed income real estate products and broadens out the product set. At the same time, it brings in from those acquisitions, customers and GPs and allocators they hadn't dealt with before to now cross sell some of the more historical cigar products into. So we definitely see that theme and we're trying to act on it as well strategically. Thanks, Jake.

Okay, thanks for that. I'll pass the line. Yeah, thanks, Nick.

The next question comes from Graham Riding of TD Securities. Please go ahead.

Good morning. Maybe I'll stick on the alternatives theme. Just within Cigar, I believe you recently opened up your private credit fund to sort of the retail wealth channel. So maybe just some color on how exactly are you going about that? Are you targeting both Canadian and U.S.? ? um, channels and then just, uh, you know, how much of a priority is that broadly for your alternatives platform? Uh, what strategies would maybe make sense and how, how do you go about that process?

Yeah, on your, on the broader question, the group has been pursuing, um, in the alt space, bringing alts to different markets, bringing it to the wealth markets, bringing it to ultimately the retail markets. The partnership, in fact, with Northleaf that IGM struck going back to 2020 was all about that, and so that's showing up in various ways across our platform, and I could talk some more about that, but the alts are finding their way into individual products through multi-asset products, through defined contribution channels, through retail channels, through individual funds, and so that is broadly a theme, and it's an important theme, and all the alts players are on it. The institutional market and the family office market were the main players in alts going back over the last 15, 20 years. They've got quite full allocations. The drop at one point or the increase in the fixed income, or excuse me, the decrease in the fixed income market on a lot of those allocators when interest rates went up, in fact, found them to be over-allocated because all of a sudden fixed income assets were, basically the change in the asset allocation is just through markets. So that exacerbated it. And where the flows are coming in the future are going to be increasingly in retail wealth management channels. So that's broad theme. And our group has been active across the board. And private credit is simply one example of that. Private credit is finding its way into products. Wealthsimple has got some retail products that have different forms of retail products. Some of it's in that channel, but they're also going across our channels looking for distribution opportunities. And by the way, not uniquely. Our distribution channels will look to where we have ownership in the asset management space, be it in Cigar or Power Sustainable Capital or Northleaf or our partnership with Franklin Templeton. for example, but also, of course, look more broadly than that. It's not just uniquely products that we're producing. So it's a big topic, very big topic.

Okay, so, you know, just to sort of maybe summarize a little bit, for Cigar and Northleaf, it sounds like you are looking to leverage your channels through, you know, IG Well, Well Simple, and Rockefeller, is that a channel that has potential to be leveraged as well?

Rockefeller, Empower, there's lots of channels here. We've got, you know, Great West itself got three, well, across the group, we'd be over three and a half trillion of assets on the platforms, right? So there's lots of distribution and that's not counting when we wholesale onto other people's products, other people's channels. So it's across the board, we have our teams working to look for distribution opportunities. And the platforms, the distribution platforms, are looking for differentiated product, and obviously the asset managers are looking for distribution.

Okay. Great. We don't often talk about GBL, but you did touch on it in your presentation. With the strategic update last week provided by GBL, what are your thoughts? Is this the right strategy to get your shareholder return moving in the right direction for this asset?

So I think the answer to that question is yes. GBL has been on a strategy for a few years of returning capital to shareholders, effectively reducing, not abandoning, but reducing their exposure to public markets and going more into private assets where they think they can get greater value creation and recognition. And in the meantime, not taking all of the cash you're liquidating, but returning some of that cash to shareholders. That's been through buybacks, given their NAB discount. That's been a smart strategy. We haven't participated, neither we nor the Frere family have participated in that. But now they're turning with the cash you're generating to increase dividends, which is, I think, a great thing for us. So we'll receive more cash from that. So overall, I think their strategy is good for value creation, hopefully value recognition and over time recognizing and narrowing the discount, and then in producing more cash for power, I think it's all in the right direction. So, that's, answer your question is yes.

Okay, that's it for me, thank you.

Okay, thank you. Thanks, Graham.

The next question comes from Jamie Gloin of National Bank Financial. Please go ahead.

Yeah, thanks. I was hoping you could just provide a bit more color on the increase in the SAGAR fair value and the drivers of that.

Yeah, so the drivers of that are increased. There are multiple increased assets under management, strong performance in the funds, increased breadth, launch of second funds, in each of the strategies. It gets a little technical when you get into trying to value or when one is valuing an alternative asset manager, when you have a fund that is a first vintage, you have one discount rate. As you have success in that fund and you launch a second product, evaluators in the space will then drop the discount rate because you've now proven that the product has been successful. Your investors have had a good experience. They rolled into a second fund and now you you don't have a first fund, you have a franchise, if I can use the word loosely, in that area. And so an increasing portion of Cigar's funds are onto their second vintage, and the discount rates have come down. So you've got a combination of growth in assets, growth in revenue, good performance, and more maturity of the strategies in place and lower discount rates, and that all turns into a valuation, a higher mark on the valuation. I think you want to add that, Jake?

So they've added in the more capabilities I referred to earlier. So the last time evaluation was done, the performance equity management and Halsey Point interests weren't in there. So that's also increased the value of the entity.

So those are the main drivers, yeah. Thank you. I'll think about the – sorry, did you want to add something? No, I didn't. No, go ahead, Jamie. Oh, okay. I was just going to ask about the capital deployment and sitting on excess cash of call it $600 million above your base cash holding levels. As you continue to do more buybacks, maybe talk through the dividend as well. It looks like it was on hold this quarter and how you're balancing those two uses of capital.

Okay, great. Good question. Thank you. So no change in our approach to share buybacks. That's going to remain the priority with our excess cash. As you know, the receipt of cash can be a little sporadic. And so we don't necessarily get a bunch of cash in and go and kind of spend it all in one quarter. We try and be a little more systematic about it than that so that we can be in the market on a more continual basis. So that's the way we look at buybacks and no change in our approach to buybacks. We just have a lot of receipt of a lot of cash here in this particular period. Your question about the other key component of returning capital to shareholders is through dividends. And on that, we really flow through the dividends that we receive from our three principal public companies. So the way we think of our dividends that we pay out, we pay out dividends from what we consider to be consistent sources of inflows not from the inconsistent sources of inflows like we monetize peak or we have a realization on one of our private equity positions so the way to think about that is we take our great west life dividends our igm dividends and our gbl dividends we deduct our operating costs and financing costs and that's a flow through of those dividends because the last time that we we haven't had a dividend increase that's come through in cash The last time that was when Great West increased its dividend that they announced back in February. And so that was an increase in the dividends received and that resulted in this. When they announced that February and March, we announced an increase in our dividends, flowing that, anticipating receipt and flowing it through. And I don't see any change in that. So that's a long way of saying, you know, we've got, our dividends will increase when we receive higher dividends from those three subs. I hope that's clear. I don't know if that answered your question.

Yep, that's perfect. Thank you. Okay, thank you.

Operator, I don't see any other names on the question list at this point.

Yes, we have no further questions at this time, so I'll turn the conference back over to Mr. Jeffrey Orr for any closing remarks.

Okay, thank you. So, again, thank you. Really excited about the quarter. and lots of momentum building in the businesses. And with that, I'm going to thank everybody for participating in the call. We'll look forward to speaking to many of you in the weeks and months ahead. Thanks, everyone. Operator, that's it.

Ladies and gentlemen, this concludes your conference call for today. Thank you for participating, and you may now disconnect your lines.