AMG - Earnings call transcript Q2 2020 | Affiliated Managers Group, Inc.

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Operator

Greetings, and welcome to the AMG Second Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions].

As a reminder, this conference is being recorded. to conference like host, to now Ms. would turn over the your I of AMG. Relations Aggarwal, Investor Anjali Head for Thank you.

You may results joining us quarter begin. you XXXX. today thank Anjali of to Aggarwal Good discuss AMG's for second morning the and for

Investor reconciliation Relations will to remind results with Before this including call that assumes materially be number non-GAAP on forward-looking and call, the announced like differ website could obligation a during statements make AMG our available you today's which this financial guidance of of along section on we update a earnings replay may our from release, of measures, of would A copy earnings begin, of I call. these and to statements. we any a our no actual any

posted to presentation for I’ll results site the our Wojcik, website In to turn to encourage and With Officer; today over Jay. updated regularly for the Chief and and quarter addition, Jay investor Financial Tom us to that, our discuss investors Officer. With we Horgen, morning this President are Chief consult Executive the call company’s updated information. an

Jay Horgen

everyone. Anjali, Thanks, morning, and good

is Before nascent want a I in startup a condolences, to mentor year a ago to, alone everyone appreciation feeling and of express transformed battle and AMG. to about I I'm behalf wanted business the at results, global quarter's And moment years He XX AMG our know passed and you I pioneer his thoughts Sean not your it to was send for of in my today. following take friend on Healey. over years, again, the industry. two from this speak Sean my XX loss. Sean discuss May I in with Many ALS.

all execution. vision and at the While through of it we passionately to proud on Sean been relentlessness excellence time AMG, and shared carry are us shaped for difficult has entrepreneurialism,

a our interest have market feel well we and next fortunate right a perspectives combination operational be long-term over value stakeholders. to AMG evolving work in motivated than in Since and strongly that four will environment effective And missed, greatly shareholder our and tremendously While generation across of talented, and leadership shareholders. is create the fresh I to serve have a business and transitioning experience of that a key adapt highly the organization, time. have Sean is months with affiliates environment, and our clients we remote rapidly fully team remained history, energized to continuing to more our aligned ago,

has While to necessitated progress approach, COVID-XX our changes our agenda. it has against not strategic meaningfully slowed

period, Our be extraordinarily our existing during this prospects, relationships with well as proven to new our relationships longstanding both valuable investment relationships. distribution have proprietary as

areas across closely these as leverage local have and they We and pickup during our reengaging. activity period, valuable worldwide sales in a dialogue the both focus are connected around recent clients affiliates as more has ability to become And to AMG's world with even teams challenging on prospects remaining clients. this seen the

demand are managers those having asset most in volatility market we fundamental themselves. on A to time, our capitalized in generated periods. to particularly successful increased the anticipate for and fixed have volatile have that investment in the active further year-to-date affiliates pandemic, of specialty performance intact, remained believe as of number distinguish market illiquid. alpha additional income, recovery continue the and affiliates uncertainty our owned And themes dispersion, ongoing strong opportunities including and generating particular, global Throughout strategies. We for partner over number macro a managing equity out, play

for investing, an improving management. of accelerated, the environment active increasing such all responsible against as appetite for have backdrop and While the impact other trends

increasingly investors to time take already in seeing and role the their recognize portfolios. While will client active allocation decisions out, value play management of are we

quarter. quarters, outflows quantitative Now $X.XX. our reported earnings per for by share with Consistent redemptions economic net of and the were elevated strategies. AMG driven turning results recent to almost entirely

strategies our of discussed, our more AUM, previously than account have than currently X% of less XX% these but for EBITDA. we As

strategies As due outflows and performance challenges to the persist anticipate to across in in performance in we the near-term. these value, part under category continue

position year, these back, fundraisings meaningfully areas taken to the results. we were alongside of reposition fixed as of action invested resources across broadly a strategic our the strategies, quantitative and affiliates reshaped continue business reallocate capabilities AMG number enhance collaborated growth, footprint illiquid our support and you in differentiate areas Excluding inflows specialty to our know, and as in net for Stepping position long-term our to continue stable with to flows contribute and market. over income past their actively our businesses, opportunities and growth enhanced and We to to certain to position. capital AMG's to growth capital affiliates have

better our on are advancing fully today and now focus strategy. positioned initiatives these growth With to executing complete, we largely

our focuses the needed. our Garda trends Turning to examples benefit engagement its as our secular its growth. quality from two strategic the form record. in providing outstanding global and significant execution Comvest and outstanding support of fundraising has of More proprietary of Comvest, existing growth strategy, firms is secular recent Since in evidenced for demand approach existing and sales new and as our high quarter. as distribution affiliate our initiatives. areas the second identifying capital firms affiliates, include in demand. expanded new resources firms, of client and time variety which support doubled investments, XXXX, the relationships be with given are entrepreneurial track investments Comvest's growth firms, of and Garda together capital focused AMG as for our on wide which operating a by successful investment as broadly, secular needs enhanced its investment new most as to with by has strength strategies growth we activity our the resources inflows have earnings. on continue in firm's That the Pantheon meet it provided our team, to well good activity along capital the partnership rebounded case growth Over to such evolving of of growth and In as on and we such investment affiliates, to Comvest, positioned from to has partner have benefited of nearly new

to AMG's recent to their team retail For favorable and to example, wealth out collective with due distribution access Today, and strategic products prior and build for further positioned partnership well initiative. And is market. we retirement developments this significant in to equity growth recent been funds strategic private regulatory on iCapital had efforts. Pantheon client our capital access working channels this in investors, accelerate our to to for opportunities enhances with Pantheon these resources invested channels Pantheon's

and firms. While inevitable opportunities. on succession years, evolve, generations remains AMG and to planning owned as for differentiating a succession of is creating transition partner develop solutions partners affiliates success new transition affiliate in execute today for Generational our we succession to our as and are planning a partner. matters and worked continue approach. affiliates expertise collaborating is across plans component align long-term significant partnership core AMG's with XX expertise their And having management And these in of incentives factor institutional with itself firms select

demand is a investment for accordingly needs partners for responsible by to leadership outstanding long flexibility affiliate partnerships. transition on a truly our over wholly Client are succeeded our generation This group AMG's to considering which of has This Morfit. ValueAct's The generation was relationships, affiliate continued across In-Cap ValueAct and been the exceptional our moment attractiveness XX affiliate new partners entrepreneurial I'm strength a Partners. the time partnership inclusive to model long-term will founder of demonstrated of affiliates For particularly and and capital approach. with Inclusive ongoing ValueAct the that AMG's led partnership Mason Inclusive plan exemplary by AMG's Mason successful is capital. of new was of ValueAct's Capital retire at and its in Capital new allocating an and launch by years, relationship founding ValueAct. our quarter, the confident our by first sustainability in next investing important next at over generation the of has Partners, our with transition intensifying, and of focused announced our managers And and executed In-Cap now course success example, are through resources of we asset business enabled the to and of of during meeting who partnership teams he represents years, the completion testament generational investment address existing with continued With to success. the time ways capital enabled a investor and investment the evolution and we allocation more to in guide capitalism. dedicated client

strategy on We that is focused are Looking in when ahead, independent economic is executed we on ongoing which in important those AMG's are uncertainty. highly owned approach to confident by our and than partner growth firms and environment, opportunities, firms and this executing more arise management, believe particularly market these may unparalleled. from active investing including in ever

details on and by to corporate that, on strong hallmarks citizenship. execute of over turn With for with quarter. a the to flexibility, a focus it culture partnership our further before to significant us enhanced the is the orientation, review opportunities our enabled ability entrepreneurialism, by Our Tom its corporate financial I'll

Tom Wojcik

Thank you, Jay, and everyone. morning, good

generate balance earnings of cash to With value. organic unique investment and we growth AMG's flexible shareholder the accretion and our our sheet, strategy earnings distinctive execution are partner growth new through and affiliates, our profile well long-term ability and stable positioned both combination flow generate of owned to the

strategy posted of which Anjali unique evolution reflects a value website, As have proposition. and AMG's we the the our presentation more noted elements investor fully of new to our earlier, describes

to this quantitative by More of with those outflows than elevated cash of the $XX.X outflows driven beginning of were We performance basis. EBITDA a quarter challenges rate Now strategies XX% certain billion that in net run X% turning than flows. ongoing reported client less and on contribute quarter.

quantitative equities to turn go texture equities. by Outflows customary provide and I impact flow on through quantitative a I'll can discussion billion including in strategies, bit class, I more in majority profitability. where by we our $X flows of and so in Before alternatives, global then what's liquid class, of in $XX.X that provide asset totaled the excluding the asset $XX breakdown within of $X billion our U.S quant, areas billion strategies happening a generate billion, those

see management, factors as markets, strategies relative and outflows business, momentum across fixed value stability private As including to performance areas lagging In elevated. due persist, anticipate near-term we continue strategies. challenges in the across positive well growth, active equity wealth of our as we contrast, to remain particularly growth these income, secular will fundamental

money by net total in our significant certain inflows illiquid recent regional saw distribution key saw managers team is raising return to and strong driven each by outflows to billion demand raises them cash Comvest less its levels multi-asset illiquid attractive Turning significant primary net markets affiliates, environment. put will we private where and infrastructure were client work equity class asset quantitative of and flows which of strategies, and inflows fundraising. powder and dry lending, strategies. excluding at billion particularly in completed private current non-sponsor-backed playing alternatives we in fund; at to into a for to we $X in capital our The momentum across outflows from alternatives, EIG, our capital offset by and income In Pantheon, debt fundraising continued role continue of direct and the $X Xth enable at where strategies, than fixed reported

And seeing corresponding We at and and demand Capula of recent Garda light currency see capitalize thematic client client in in their continue interest as focused to and and strategies inflows value also are opportunities income market strong track on well macro. dislocation. volatility records relative near a strategies, to fixed as result and as including long-term investments, of in strong we global

in in levels developed Loevner, of billion to in grapple with of performance global continue Genesis $XXX the strategies uncertainty clients global portfolios. Veritas a quarter, number to strategies. adjust our of including and and strong emerging market global reported million. equities, stability Harding outflows outflows across primarily $X.X continue of by this driven Moving to area, their net and as showed Several market U.S largest generate equities affiliates with risk we

long-term outperforming in benchmarks performance over time assets X-year performance and improved this basis. fundamental has improving new managers, are are under of strong investment significantly including River XX% today a records. Yacktman Our Road our of business management and momentum, category their and track on given building Several

we income, products steady Artemis. the $XXX fixed continues business fixed income GW&K remains future. million momentum our at the recurring area This to generated Finally, positive multi-asset driven by in of and quarter of and in and well for net in inflows growth continued positioned drive

financials. Now to turning

of and AUM the performance levels. declined $XXX $X a on average of For result year-over-year of fees second quarter, adjusted included impact as EBITDA the million million pandemics

In also impact per of mix the versus year-ago. addition, Economic contributed our of benefited the change compensation shape the million $XXX and fees a revenue, $X.XX activity. net of lower reflect share economic repurchase shift from cash lower flows on share-based and and the income accelerated performance ongoing to modestly earnings of taxes share resulting

to moving modeling specific items. Now

performance X.X% $X on lower of range of AUM million to We quarter levels, expect in third fees current blend, $XXX was as of market up adjusted be to EBITDA million. in and our million the Friday million the reflecting seasonally $XXX based $X to which

of we expect quarter, the quarter expense expense $XX share be million Our $XX interest approximately and was second third to interest for million.

reported of $XX In third for and second quarter, impairments be the million. $XX to was share line the amortization million approximately item expect Our this quarter. we

GAAP result in lower benefits. one-time as second were the effective primarily and of a and XX%, tax cash rates Our of respectively tax X% quarter,

be negative Other modeling $XX included and approximately impairments, taxes purposes, third amortization third and deferred expect we million cash our to the given the more and the GAAP seed negative tax related be of intangible capital impact deferred economic approximately and were in were million items economic return to impact million. excluding expect any related quarter primarily impact normalized items quarter, $X to forward. expect and we we the GP to levels going $X mark-to-market purposes, investments. In on for of $X respectively taxes XX%, For modeling quarter, million. and other rates second in mark-to-market Intangible XX%

average was share count and third for for million adjusted share expect XX.X quarter million count the second be Our quarter. XX.X weighted to the we approximately

and sheet balance the to turning Finally, capital allocation.

months, past company the by position market enhancing several the to for growth. Over remained future prudent we've extending and liquidity, duration uncertainty, given building flexibility

During million senior the a in issue $XXX the cost on lowest grade is the coupon notes at of a market rate, quarter, neutral we advantage leverage of investment X.X% strong financing to took AMG basis. history

disciplined remain to advantages creation. of to focused levels services shareholder for in million and our billion centralized strategy We shares. and markets repurchasing whether continue We on common our going We competitive expect access our decisions new cash investment or forward. and resources our to similar our in shares an differentiators value earnings subject against the proven and on quarter, and forward growth investments a flow we be evaluating to liquidity, all drive third capitalizing fund generated repurchased substantial to to business, under investment support at the allocation, XX revolver capital free including approach $X.XX growth investments have access to framework, remain core by quarter our capital affiliate, existing the highly growth to accelerating execute conditions. assessing during to that new repurchase a in prospects selective adding and long-term market prospect, We as

to we take questions. your Now, are happy

Operator

[Operator you. Instructions] Thank

Our first from KBW. Robert of proceed question line Lee your with Please the comes with question.

Robert Lee

kind from of would the mix we of just cash Good terms the of X% the do if should that into you flow the passing Thanks. everyone. of appreciate think is the that contribution going a at, given -- the flow to outflows -- of Great. be of color morning, on bulk mix, you think, looking positive drill of flow EBITDA. EBITDA in I kind contribution, Maybe

suggests it's growth? organic on that So positive a EBITDA it of basis, kind

Tom Wojcik

a It's of got I to I thanks for the all But hard little there. think you hear Rob. it. So question,

prepared with try that it by Obviously, you flows, and it couple over numbers were basis. quantitative and give now of as kind Let flows right EBITDA X% on and overall a past about years. the from come just quarters, bit contribution our a we've consistent contributing what start rate EBITDA different But of remarks try me the One, maybe of those of in little down outflows quite of at a less course XX% in seen come my driven answer couple bit run angles. I'll directly. then last to on said than just strategies color of of

respect To surface, in given earnings. more the question side respect impact his impact do with fundamentally quant we're impact Jay having suggested on remarks, way EBITDA asset that the the prepared think answer to is continued AUM, seeing to With of to noted nearly the of the and that quantum As of pattern a Certainly see overall beneath I'd these we're from few, directly your asset are there think fact in suggest. the I on the oriented what our to right that of that would strategies that experiencing. the the not happening there also mix XX% flows kind what about call in few what's headwinds I are asset disconnected of business, on those are the you've the is we rest represent expect then a flow quant terms of guess, it. positives flows a

global bit ownership affiliates In some larger percentage. inflows the very are a space, of certainly of their equity relative I have number those And side, positive an fixed consolidated in a particular, our we're EBITDA tend you positive in did do markets, of value equity the to terms alternatives, this outflows. global on to think, contribution be income around as see quarter, little elevated we private over seeing time. in the illiquid where On

bit seen outflows. little of percentage it, of of in we relatively own a terms have rates where high mix this. businesses, just some larger fee So we've working There, we a do against

investments the the when I clients but in of of base look deliver performance happening time. over the continue surface. new better say With new a our beneath as of believe that is to independent of we're of the think, managers number number fee growing to we over we these to well time, and areas basis parts look, strong in on what our or growth as this really are a records, quant the we're as well an terms believe track an overall, through forward flows some on navigate alpha that should base seeing organic moving very to significant impact EBITDA we're shape I time our is once you significantly translate ability we through the deliver of positioned affiliate uncertainty a to side, to across as confident the business kind certainly EBITDA basis, would obviously when So And that respect that able on to impact market can help the organic overall work there asset of affiliates than asset were and of kind headwinds. at future organic are that add active picture both

Operator

Thank you.

from question. Please your Blair. Our of proceed with with comes Shutler next William line question the Chris

Chris Shutler

elevated the guys. global a morning. I little Good the the provide talk at the there, be? look detail Hey, the want reasons to you for Maybe as there to about outflows the just and on about appears pipeline what point outlook bucket. equity more follow-up

Jay Horgen

more detail give and then bit Hey, speak a Tom, little I'll want broadly. more do it you to

Tom Wojcik

question, Chris. your for Thanks Sure.

happening So a here. things couple

we've side, things relatively a say And gross What in the of consistent. feel particularly quarter long-term delivering of a side. was the global particular, At markets. are level, there. very really emerging good across strong a in We prospects who a had different managers I'd couple the related has impact a of we about about active we number bit good and to both environment of overall things seen, redemption this that of for this on of some on outflows, on in terms We there see nature. having. that where flow the model number performance of didn't the conversations in high been a feel retail strategies overall, said, quality pickup of any a First, equities global quarter. of really did more client the the picture the have idiosyncratic kind one happening a side do we're fundamental that couple as idiosyncratic performance just I were of We have and that a change allocation and

Jay Horgen

up array Loevner, do Yes. Chris, Harding thanks where this, on And go X started global have Veritas, X-year broad with question. of including I to Browne. I Tweedy, managers, -- going We was for Tom across numbers to your and Genesis, and very pick good a

So a performance slowdown. is pandemics nature, its Obviously, unusual was by quarter this good. global

us. pickup in dialogue a We in seen brands and space very global feel have the good products. activity. about We global for the about very good We as feel our And increasingly contribution do going them that lead see to active our cash and forward. is element a investors look global we this our flows of key managers to to through success environment,

Operator

you. Thank

comes the Fannon of question Dan Our line next your with from with proceed question. Please Jeffries.

Dan Fannon

Thanks. Good morning.

I X-year to gives wondering global term talk if X-year and for follow-up equity? the X or that, either talk about us could just you about you was slide U.S performance, Can as So numbers. on performance equity shorter X

Jay Horgen

Yes. take moment. that. a if anything to Thanks, add Dan. pause you for I'll have Tom, I'll

had you. equities, have as We've over years, Beutel performance, well. with for back on had Our difficulty including would flow of X, really X pretty the X Road, U.S equity it last be highlight mixed X-year but performance. over three Yacktman, period, we on the side in but improved would short-term has and the River the off significantly, the that the I especially U.S was

has U.S performance equity Our on the greatly side. improved

value. is think Obviously, going most us, well that higher people positioning a for about slightly have forward. think I concentration that and I we -- know this our bodes in

in been longer a story, volatility The for the distinguish we and has affiliates affiliates our for good most play especially our been seen recent story. seen management, numbers. the period, of has But the X-year, this we've have term X-year active out that in number so that And themselves.

also and not equities, numbers but Our alternatives. strong only put Garda a distinguishing saw up year-to-date Capula perspective, from U.S We equities, year-to-date. it very global spans, performance

in quadrant. have had very, numbers very as well PFM We strong who first

So in we've the period. number number a seen distinguish -- affiliates year-to-date a our themselves large of frankly,

Operator

Thank you.

Goldman Our line Alex next Sachs. question. of proceed your with with Please question comes Blostein from the

Alex Blostein

Hi, flows Thanks you the the is all and contribution. the Quick quant on taking good EBITDA I profit question. only have incremental appreciate color I affiliate guys at this the AQR share follow-up point. business. morning. for on both believe

So maybe can through anything does maybe profitability you you negative? And EBITDA continued that? outflows holding how risks like potentially if into or what margins there, there, navigate shield walk company like us it with would of the and looks there from pressure EBITDA slip

Jay Horgen

talked John, Jay. focused and Thanks as you mentioned take We all that. X% do I EBITDA. of a of my saying a point the and Cliff, our than prepared of Tom it's we've remarks, out. have are the mentioned, interest our profit Alex, AQR David, strategies just contribution And for in of is bit partners, your the last aligned. I'll in several very rest Look, as less start quant question. quarters. by they about quite the I'll

of calculation do profit. is into of business, $XX diversification to at we our to the partnership able but $XX model, other if structural percentage means partners, X% that, distributions. a which relates before a of as we out of element that million translates -- any to for look the but EBITDA, and be then then more with expense directly there, of space all as it come yourself, entity. partners we our should including affiliates, come at million, You before distributions X%, to us And And broadly, as AQR affiliate that all after structures large each out have aligned the assume individual have we our partner the are you

really contribution in felt of has our the the to already So numbers. AQR has been decline us

Operator

Thank you.

next Deutsche Our proceed with with of Brian your Bedell from question the line question. comes bank. Please

Brian Bedell

Thanks Good very morning. much. Great.

remaining that continued Just EBITDA maybe on get on in in altogether is want Maybe strategies a believe you appreciate you settled AUM you you on are think of what elements from appealing and to some the the can near-term, to about for strategy, just steps that trajectory? contribution quant the strategy. look contribution invest of there most a go are I bigger to might you the risk the said as other from to side, quant sense at quant if strategies of with as XX% maybe And investing of talk in back AUM just the of you marketplace that outputs to future, of or the picture then that road? sort down strategies investment quant longer continue -- there have you still and commentary

Jay Horgen

Yes, thanks, Brian.

So I'm sure anything say. more to not there's

covered Contribution on in very both terms exposure. range. remarks the and I of key well, metric to that's prepared think we've to X% from Q&A. think it is the I the focused that that X% And in stay

Pantheon, EIG, a as Asia our of of orientation illiquids pretty XX% on Baring towards to contribution, a got We've XX% as Comvest. well other there's with EBITDA The lot good most going things contribution. recently strong in that

would sustainable capitalism. do in this is first going business quarter, wholly for us. we on successful an important to is our area focus ValueAct in with time focused area succession which industry is of key governance is the a mention to been to investment I the theme As partner impact in new a responsible And the just a considerations own and that to dedicated In-Cap, through an as that environmental, entity next asset be like believe support to over social, you have at decade. our heard we This capital long-term planning investing. management is allocation

see in a develop in other broadly, seeded more actually in broadly, renewable our have in in a that momentous More our is you'll as a leaders we have affiliates our is being Pantheon then investing of have the responsible see a space, So or we who illiquid are product. sustainable development. us of for including space. well where this a notably a number leader investing, affiliates this as And we EIG number energy number that has products of product to started continuing most affiliates

and businesses that a fixed have Capula, in both but had as AQR us. away alternative those income see products. we from income products, Tom more as Garda in income we've theme. sustainable at and mentioned, been see that highlight fixed Fixed products, flows GW&K you'll So flows, their a broadly significant for

you XX% when of as the driving from numbers the through quant, look away see over contribution, growth transition And we from time. lot perspective the EBITDA the mixed at you'll So, of a there's growth a there.

Operator

you. Thank

with comes proceed Our question. next of Citi. from the line Bill your Katz question with Please

Bill Katz

taking and just you Good Thank for the along AMG again to much condolences Okay. the very questions. passing family. morning my

some from away moving of flow maybe question, a Just the stuff.

the little raise think around one look two Just you. bit one as maybe maybe Thank you opportunities, And you more in terms about capital, now. you particularly on focused then debt or the ahead? or as a areas of acquisition

Jay Horgen

you investments. Tom, why the I'll take come on don’t and back first the capital

Tom Wojcik

Sure.

your broadly So give and bond Why Bill. I thanks don’t question, on bit the maybe a little just issuance, around more also then you for capital.

So time balance uncertainty, some term our us revolver down a squarely of excess see sort to balance a itself of outstanding we terms long-term attractive opportunity. where bond. while camp of us at sheet, having a loan, our opportunity very XX-year market of had I cash pay enhancing a to in issuing the use constant in flexibility. a the sheet challenging to a good at a those put the time of We market bond balance portion duration proceeds bit the our on focus extend on offering more by and improving capital We also hold also enabling our overall and in

the that use resources priced you continue framework, more the of of appropriately know the our context about focused on growth If to business. and that a capital investments to in highly areas represent we're overall structured we believe talk I put our will And in highest allocation our new best capital, when of Jay bit and of allocating our kind that.

can dislocation periods us more opportunities. market, these allocation running And capital our risk our shareholders our making well significant as for earning we those of we're the amount framework a unique All return that that themselves. we market experience opportunities business. front appropriate that the see a uncertainty be a operating create through in want exists decisions to in long-term ensure present best in and the the footed position based we that with period, taught are of ensure common just past an current are to bit we're as caution for to when And that on as decisions adjusted of our

bit we And we're cash prepared that. for of little are holding ensure so a to extra

Jay? So,

Jay Horgen

Yes, and the and the three up maybe pricing. and then discipline environment, we're just opportunity, pursuing, on One on on I'm then trends just that side, secular market picking new growth market investment points.

pretty sharp that I in the through before. market opportunities on year environment We're the times This very It's based been really prospecting volatility. market think has expect days seen own close own set forward of unusual we're and uncertain move we has that first as been And time. rebound come this on staying opportunity our been here. obviously. And cautious, we staying a an come We've like to XX rebound out a So environment. with to experience. in the last in pipeline. this We've is a our

opportunities continue in moment space, fixed And secular word opportunities. key those investments, area. We high think out is rate So income also affiliates opportunity quality are ago, that for just and come global by to it's ESG market clients grow a fundamental say the given active finding of the that a this alternatives the example, about but relative fourth applies in alternatives. a illiquid prospect illiquid new And stress bucket. then focused low the for environment, areas to managers, example very be relates then another own on allocations to important managers as value, them would say as would of talked continue would I we is thing it existing second our to I environment. to we

in does as be opportunities over focus we're lastly, that our that that that on for the characteristics we've focus as for the yes, pay, the So our what your well played I answer to individual own would risk new two has last element two investments that Have the having you discipline we've And that then provides pricing costs, something the think the secular enhanced structure transactions I around right people think for is talk that reward or structuring. I that is an done, I -- when thing structuring. us. much think independent that partner framework. about opportunity Clearly how think don't we've the about, relative more well past to think structuring. And outcomes transactions did And enhanced firms. is owned on of that you out you people looking

own it and to -- designed a structured position in in both As we're expectations we're find way to sort Comvest performing that today. above to in a be at Garda was or us allow and I mentioned, that our of

Operator

you. Thank

comes with with Autonomous of Research. from Our the line next Please proceed your question. Patrick question Davitt

Patrick Davitt

about for question. for like But times of Thanks fund It interest strategies. aren't traditional seeing the hinted potential active a increased morning. kind kind in really the Good data. of taking broader you've flow industry that we couple sounds of in my mutual

net that be this do out So a you're the the institutional coming frame but so more year? to relative broadly or pipeline through of last And managers with that's seeing going volatility, bigger could mix. a is trend benefit the one, side be quarter lens, you to a think recent last unfunded institutional you on may to those

Jay Horgen

more for statements Patrick. Yes, really think around do Thanks, Yes. Thanks the has your institutional I retail. it were than question.

did went is due virtual. to It getting contracts processes cause forward the in I through a obviously and in tough think because of as more And I to terms environment. retail think do portfolios when towards historical environment slowdown seeing, the swings more tends we work-from-home a market as active getting predict important institutional portfolios, bit in being well everything are react pivot discussions performance. that our diligence through to

a we of the of we in predict a So And portfolios a that pickup being period I'll particular quarter, environment, a more say we normal during in in harder be as orientation but it's terms it I use XX part of longer a due do was and relates of have important diligence it's as slowdown own one think theme. just example think the days in it to process. again activity and where something tail is seen an our a illiquid active pipeline, -- than of unfunded, we but broadly, to, in that terms would volatility I'll there in a see to the as of the bit because of conversations first in XX last extreme

have closings for material We I And that the end well of year. think quarter. in the seen the rest quarter the right at the bodes of

Operator

Thank you.

America. Carrier your question. with Our of Bank next of proceed Mike line from comes question Please with

Mike Carrier

question. for Thanks taking morning. the Good

the flows. Just a clean on up

the sellers' So transact your And horizon what fundraising update get on lot. of some the just wanted Thanks illiquid any in affiliates? in front, backdrop? in just to an willingness pricing on maybe deal terms on significant this uncertain of then to seeing a and you're

Jay Horgen

Okay.

continue a even this the all see have those and We questions. of of we those expected, cases rest been, So -- year, a will through both well period fundraising, we them. new months slowdown, of they've number do also hopefully fundraising, see towards I different are the campaigns. part open is talking would there although fundraising get number that have I'll planned of early two current regulation don't. see illiquid but couple can, next fundraisings year, year, On -- I'll obviously say some in than do strong. There's we ongoing. end or there's are better I going We of that to careful. if affiliates I of in this be been Tom, has help fundraising. the a if around of to -- about have me the

we will into at into so well start end additional of see go the -- fundraising this XXXX. And year,

for the most products of of credit Comvest. illiquid So infrastructure, continues example in I to guess us. for as be across some private And of calendar fundraisings strong the our notable as well

your on my investment side. Pivoting we guess discussions. there question the the different -- I a The fundraising too, would a that's question, on I prepared I illiquid mentioned remarks in new to pickup, So seen have as rebound, other in side. say

to are partner long both point in that standing proprietary We conversation a this perspective number transact but a also I relationships. new us. relationships those a and able in might a out perspective. owned continuing I existing something can have work-from-home that do and firms being investment just pipeline key unique from we the proprietary our maybe environment in environment of Leveraging perspective, is had to proprietary distribution relationships we’ve think

so to is would that point I out. opportunity And like that an

creates while to relates volatility, perspectives. sellers uncertainty, it buyers creates As coming it fresh and together, it also this clearly,

series And of pricing about things all for to pricing acceptable continue in and will us experience obviously, the next returns are outcomes. many that shareholders a structured will are be the that over our one. the to come I we think that we returns and an think return all cases appropriate our that some together Comvest of cases is talked and gives and for to and that Garda, stakeholders on able doing of critical. there's optimism including pace sellers. I being Those right an here to our We us is having -- opportunity pricing disciplined allow in

Tom Wojcik

actually a through. Jay went add just to can I maybe And point the that just each of things

are like a lines those across of our then when a into totality diverse remember it number those of in themselves businesses businesses, that looks think business. of around franchises, And you the private first with the markets pretty different product overall On diverse each businesses very areas.

that not long-term an relationships environment relevant having where on we're year. around the So any drives everything in the I area like. single that consistent dependent one in really it's pretty given market, Jay is our of kind products that is fundraise and It And year think said there. client a the

see in that, for new environment also market today focused respect investment the who more I and there Secondly, are in opportunity lot on the are bit who a bifurcate growth capital just to this a little opportunity, are actually of looking firms with today.

the talking you a little we're bit way So, well. don't to Jay, and as I a there just moment pivoting if want spend know growth capital about maybe

Jay Horgen

that's Yes, Tom, it. appreciate a you very raising point, and good

a in capital at help reasonable is making of you sheet investment, are importantly, investment is I and driven with or opportunities the that investments where launch longer as know, accelerate efforts while just to staying affiliates is That And opportunity an product a These products balance that recently significant into And happened four we what example the is Act seeing we opportunities we milestone, well mentioned, directly capital something an any years CIT and their support to transactions. highlighted, to existing liquidity in. duration and ago wealth of what example. letter own foreshadowing using what the new liquidity our partners and that their their a retirement in but is then we're and by transactions, our was believe planning onto as investments, most but either do And be putting or mentioned, But growth it new do that has now in in released, planning. balance when good an And equity. as is all been affiliates think grow, a on the our stake capabilities does deploy example, would and that affiliates AMG current XX Tom in potential as you Tom to development portion investments. the mean, Pantheon illiquid growth of business. our individual investment because as shift in partnership we new scale. as would As their expanding channel. in a existing we that new dialogues business succession pipeline. ownership to in that leverage that And is mentioned we to that us their affiliates to that channel we That is their our do that, set. partnerships, in access the in strategic and existing We to all scaled. present liquidity capital important strategic that in ways their Comvest wealth beyond direct have strategic of DOL fund, private focused onto about new just here would that and its accelerate in on those limited succession capital scope, new use the invest us to not capital in time a bring and use products this That's for put capital existing accelerate can -- returned to That attitudes looking would recent sheet. capital individual can was invested more

that happening new affiliates. existing in affiliates see we and So

I portion of so strategic would include expect this And of our transactions will capital. that type some new

Operator

the Thank comments. to and I'll gentlemen, allowed concludes you. back for Ladies that Horgen Mr. floor for our turn questions. time any final

Jay Horgen

Thank you all again this morning. for joining us

leverage with to the As value speaking hope discussed, you. time. look you over continue shareholder create ahead, to We about next core and and compelling our opportunities we excited our we are I forward strength Thank everyone remain competitive further will to safe enhance position healthy. quarter. and

Operator

This concludes you. Thank conference. today’s

at You may time. Thank your disconnect this lines your for you participation.

Affiliated Managers (MGR) 27 Jul 202020 Q2 Earnings call transcript