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Presentation

StepStone Group Inc. misses on earnings expectations. Reported EPS is $0.44 EPS, expectations were $0.47.

Operator: And good day, and thank you for standing by. Welcome to the fiscal third quarter 2025 StepStone Group Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your first speaker today, Seth Weiss. Head of Investor Relations. Please go ahead.

Seth Weiss: Thank you, and good evening. Joining me on today’s call are Scott Hart, Chief Executive Officer; Jason Ment, President and Co-Chief Operating Officer; Mike McCabe, Head of Strategy; and David Park, Chief Financial Officer. Our presentation is available on our Investor Relations website at shareholders.stepstonegroup.com. Before we begin, I would like to remind everyone that this conference call, as well as the presentation, contains certain forward-looking statements regarding the company’s expected operating financial performance for future periods. Forward-looking statements reflect management’s current plans, estimates, and expectations, and are inherently uncertain and are subject to various risks, uncertainties, and assumptions.

Actual results for future periods may differ materially from those expressed or implied by these forward-looking statements, due to changes in circumstances or a number of risks, or other factors that are described in the risk factors section of StepStone’s periodic filings. These forward-looking statements are made only as of today, and except as required, we undertake no obligation to update or revise any of them. Today’s presentation contains references to non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are included in our earnings release, our presentation, and our filings with the SEC. Turning to our financial results for the third quarter of fiscal 2025, beginning with slide three, we recorded a GAAP net loss of $287 million.

The GAAP net loss attributable to StepStone Group Incorporated was $190 million or $2.61 per share. GAAP earnings were impacted by the change in fair value related to our potential future buy-in of the StepStone Private Wealth profits interests. David will speak to the GAAP accounting dynamics in more detail in his section. Moving to slide five, we generated fee-related earnings of $74.1 million, up 46% from the prior year quarter. And we generated an FRE margin of 39%. The quarter reflected retroactive fees primarily from our special situations real estate secondaries fund, our infrastructure co-investment fund, and our multi-strategy growth equity fund. Retroactive fees contributed $9.7 million to revenue, which compares to retroactive fees of $8.6 million in the third quarter of fiscal 2024.

Finally, we earned $52.7 million in adjusted net income, or $0.44 per share. This is up from $42.1 million or $0.37 per share in the third quarter of last fiscal year, driven by higher fee-related earnings and higher net realized performance fees. I will now hand the call over to Scott.

Scott Hart: Thank you, Seth, and good evening. It was a standout quarter for both fee-related earnings and fee-related asset growth. We generated fee-related earnings of $74 million, our highest level ever, and increased our fee-earning assets under management by nearly $10 billion, which is the strongest quarter of organic growth in StepStone’s history. We now manage over $114 billion of fee-earning AUM, up 28% from a year ago. We are very proud of this result, which in large part is a function of our strong fundraising over the last year. As you are aware, a portion of our fundraising over the past twelve months has been building in our undeployed fee-earning capital or UFEC, and we were able to deploy and activate a significant portion this quarter.

We took advantage of attractive investment opportunities in the market, deploying over $2 billion of capital and activating over $6.5 billion of capital this quarter. We tend to look at our growth over a longer period than just one or two quarters in order to reflect cumulative efforts of fundraising, investing, and relationship building that span cycles. Measuring our progress since the fall of 2021, or just after we closed on the Greenspring acquisition, we increased our fee-earning AUM by 70% for a compounded annual rate of 18%, with all this growth generated organically. This success came during a period where many private market managers experienced fundraising pressure as private capital commitments across the industry fell each year from 2021 to 2024.

Our results for both the quarter and the last several years are validation of our strategy and business model, which we deliberately constructed to be flexible by commercial structure and strategy, broad in geographic reach, and diversified across asset classes. While certain investment approaches may be in or out of fashion in any given period, the diversification of our offerings provides a complete array of solutions for our clients and provides a ballast for consistent growth for our shareholders. Highlighting a couple of specific milestones from our fiscal third quarter, first, we closed on our inaugural infrastructure co-investment fund, with a total fund size of approximately $1.2 billion. This is a tremendous result for a first-time fund and a testament to the strength of the team and demand for real assets.

Infrastructure is quickly becoming an integral component of LP’s portfolios due to its benefits of diversification, inflation protection, and income generation. While co-investment funds may be a new offering from our infrastructure platform, StepStone has a very experienced team with an extensive track record built through managed accounts. We have over $100 billion of total capital responsibility in infrastructure, including $36 billion of AUM, making us one of, if not the, largest infrastructure solutions providers in the world. Second, we grew our private wealth platform to over $6 billion and raised over $1 billion of new subscriptions. This is our best private wealth growth quarter ever, and our first quarter raising more than $1 billion of private wealth subscriptions.

Encouragingly, even as we layered on new products such as STRUX, our infrastructure fund, and CredX, our private credit fund, we continue to grow subscriptions in S Prime, our all-private markets fund, and Spring, our venture capital and growth equity fund. Both S Prime and Spring had their strongest subscription quarters to date. At the end of January, we have increased the private wealth platform to over $7 billion, including a more than $600 million secondary transaction by CredX of a high-quality private credit portfolio, which occurred at the beginning of the year. The purchase was executed through the issuance of CredX shares to the sellers. We believe this investment by CredX should enhance the returns of the fund, offer greater loan diversification, lower expenses for investors through scale economies, and amplify the fund’s marketability to additional platforms.

Shifting to our financial results, we generated $192 million in management and advisory fees and $74 million in fee-related earnings, which are up 26% and 46% year over year, respectively. This is our strongest fee-related revenue and fee-related earnings period on record, even as retroactive fees have moderated over the last couple of quarters. Excluding the impact of retroactive fees, our fee-related revenue and fee-related earnings increased 27% and 53% year on year, respectively, driven by robust growth in our fee-earning AUM across structures. Our FRE margin was 39% for the quarter. If you were to exclude the impact of retroactive fees, our FRE margin was 36% for the quarter and 35% for the trailing twelve months, our best quarterly and twelve-month core margin levels on record.

I will now turn the call over to Mike to speak to fundraising and asset growth in more detail.

Mike McCabe: Thanks, Scott. Turning to slide eight, we generated over $27 billion of gross AUM inflows during the last twelve months. $18 billion of these inflows came from our separately managed accounts, and over $9 billion came from our focused commingled funds. In the quarter, we generated over $2 billion of commingled fund gross additions. Notable commingled fund additions included about $600 million in our real estate secondaries fund, and about $200 million for the final close of our debut infrastructure co-investment fund. Our infrastructure commingled offering finished with a fund size of approximately $1.2 billion, our largest ever first-time fund. Our real estate secondaries fund has raised $2.4 billion since December, already exceeding the prior vintage of $1.4 billion.

We anticipate executing final closes on our real estate secondaries fund and in our multi-strategy growth equity fund within the next couple of quarters. We remain in the market with our debut infrastructure secondaries fund, our corporate direct lending fund, and our opportunistic lending fund. We have also recently launched the next vintages of our multi-strategy global venture capital fund and our private equity co-investment fund, which outside of our evergreen products we anticipate will be the biggest contributors to our commingled fund inflows over the next year. Turning to private wealth, as Scott mentioned, we generated over $1 billion of subscriptions in our evergreen funds, growing the platform to $6.3 billion as of the end of the calendar year.

Most of these subscriptions came from S Prime and Spring. We are continuing to make progress in STRUX and CredX as we build momentum with our current distribution partners and add new distributors to our syndicate. Pivoting to managed accounts, we generated just under $1 billion of gross additions for the quarter. This is a relatively lighter quarter for managed account gross inflows compared to recent periods, but it was a record quarter for managed account fee-earning AUM growth, which was up $8 billion as we activated over $6.5 billion of capital, much of it raised in recent periods. We also deployed nearly $2 billion from our SMAs, which is our largest level of deployment out of our managed accounts in more than two years. The timing and magnitude of our managed account fundraising and fee-earning growth can be lumpy, so as Scott mentioned, we believe it is more appropriate to measure our progress over longer periods of time rather than quarter to quarter.

Looking forward, the pipeline for new SMAs remains strong. Slide nine shows our fee-earning AUM by structure and asset class. For the quarter, we grew fee-earning assets by almost $10 billion, our best period of organic growth ever. Our UFEC moderated from nearly $30 billion last quarter to about $22 billion this quarter given the strong level of activation and deployment. As you can see on the slide, we are sitting with a similar level of UFEC today as we had at the end of fiscal year 2024. Following the activations this quarter, the overwhelming majority of our UFEC balance represents undeployed as opposed to not yet activated capital. We anticipate drawing on the remaining UFEC balance as we deploy these funds over a normal three to five-year cycle.

The combination of fee-earning assets plus UFEC grew to almost $136 billion, which is up roughly $2 billion sequentially and is up $25 billion, or 23%, from a year ago. Slide ten shows the evolution of our management and advisory fees. We generated a blended management fee rate of 64 basis points for the last twelve months, higher than the 59 basis points from the prior fiscal year as we benefited from retroactive fees and positive mix shift from a higher fee rate associated with our private wealth offerings. Before turning the call over to David, I would like to highlight an exciting milestone for our venture capital business. As you recall, when we acquired GreenSpring in September of 2021, part of the purchase price included an earn-out that was contingent on achieving certain revenue targets.

We are pleased to report that our venture capital team exceeded these targets. This is notable considering the challenges the technology industry went through in 2022 and 2023, which included a 36% peak-to-trough drop in the NASDAQ composite index. The success of our venture team in raising capital during this period is a validation of the team’s superior track record and relationship with our clients. To put the GreenSpring deal into perspective, since announcing the acquisition in July of 2021, we have more than doubled the venture capital fee-earning AUM. This includes fundraises in commingled funds, managed accounts, and Spring. This result would have been impossible for GreenSpring or StepStone to achieve alone, but the combination is very powerful.

Our use of earn-outs and shared equity among the teams has proven to be an effective incentive tool across the asset classes and is demonstrating to be a very effective tool within private wealth where results are surpassing our expectations. David will speak more to this in a moment. And with that, I will turn the call over to David.

David Park: Thanks, Mike. I would like to turn your attention to slide twelve to touch on our financial highlights. For the quarter, we earned management and advisory fees of $192 million, up 26% from the prior year quarter. The increase was driven by strong growth in fee-earning AUM across commercial structures and a higher blended average fee rate. Fee-related earnings were $74 million, up 46% from a year ago. FRE margin was 39% for the quarter, up more than 500 basis points versus the prior year quarter. Normalizing for retroactive fees, core FRE margins were 36%, expanding more than 600 basis points versus the prior year period. The quarter benefited from roughly $2 million in advisory fees that may not necessarily recur, as well as favorability on timing of expenses.

We tend to look at our margin on a trailing twelve-month basis, which smooths some of the quarterly fluctuations. Our twelve-month margin has consistently risen since our IPO in 2020, and we would expect our margin to continue to grow over time. Looking at expenses in more detail, cash-based compensation was $86 million, up 4% from last quarter. General and administrative expenses were $30 million, up roughly $2 million sequentially and up about $3 million from a year ago. As a reminder, we will be hosting our annual venture capital conference this month, so you should expect to see a slight uptick in G&A expenses next quarter. Gross realized performance fees were $52 million for the quarter, $27 million net of related compensation expense.

This reflects $24 million of gross realized carry in our managed account and drawdown funds, and $28 million of incentive fees. Our fiscal third quarter is our strongest seasonal period for incentive fees, due to the annual crystallization of Spring in this period. While the $24 million of realized carry is up relative to a year ago, this still represents mostly partial realizations. We are optimistic that a broader pickup in M&A and capital market activity will support realizations, but the timing is difficult to predict. Adjusted net income per share was $0.44, up 19% from a year ago, driven by growth in fee-related revenues, FRE margin expansion, and higher net performance fees. Non-controlling interests were relatively higher this quarter due to growth in our infrastructure, real estate, and private debt asset classes, retroactive fees in real estate, and very strong growth in private wealth.

Particularly strong were private wealth incentive fees, which drove the outsized growth in performance fee-related NCI in the quarter. We are excited to see strong growth across our businesses, which will increasingly benefit StepStone’s bottom line as we buy back a portion of the infrastructure, real estate, and private debt businesses each year. We will also have an opportunity to call the interest of the private wealth business beginning in 2027, and the private wealth team will have the opportunity to put their interest to StepStone beginning in 2026. The put-call price is structured to be at a discount to the prevailing StepStone multiple. As Mike mentioned, the progress of our wealth management platform is significant. GAAP accounting requires us to present a change in fair value of the potential buy-in of the StepStone Private Wealth’s profits interest through our income statement, which has meaningfully increased with our higher expectation of private wealth’s results.

This is why you see a GAAP net loss this quarter. The accounting treatment of the potential future buy-in is similar in this regard to the treatment of the GreenSpring earn-out, which flowed through the income statement even though the earn-out was part of the purchase price consideration. This may continue to create variability in our GAAP results until the put-call is exercised but will not impact our adjusted net income. As discussed on prior calls, these buy-ins are hardwired to be accretive to NII per share. Moving to key items on the balance sheet on Slide thirteen, net accrued carry finished the quarter at $744 million, up 6% from last quarter and up 31% over the last twelve months. We view our net accrued carry as potential future performance fees that will convert to cash as realizations start to pick up.

Our net accrued carry is relatively mature, with over 80% tied to programs that are older than five years, which means that these programs are ready to harvest. And of this amount, over 50% is sourced from vehicles with deal-by-deal waterfalls, meaning realized carry may be payable at the time of investment exit. Our own investment portfolio ended the quarter at $266 million, and we had unfunded commitments to our own investment programs of $116 million as of quarter-end. This concludes our prepared remarks. I will now turn it back over to the operator to open the line for any questions.

Operator: Thank you. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. One moment for our first question. Our first question will come from the line of Ken Worthington from JPMorgan. Your line is open.

Ken Worthington: Hi. Good evening. Thanks for taking the questions. So always good to hear about the build-out of wealth management. So as we think about sort of accomplishments this quarter, what would you highlight in terms of building out the wealth footprint, particularly distribution this quarter? And what I would really like to hear is, as we are in the new calendar year, what gets you most excited about the wealth management business and opportunities you look at over the next twelve months?

Jason Ment: Thanks, Ken. We are really proud of the work that we did this past quarter in continuing to build out the syndicate for the newer funds. Cross-sell remained high as we add platforms. We crossed about 450 platforms globally in the quarter, and 40% of them are selling two or more funds. So really building the brand in the platforms, and those in this channel are looking at StepStone in the same way that institutional investors are, which is once they understand the story in one asset class, it is easier for them to understand the same story in additional asset classes and solutions. So that is something that we are very happy with. Second, the progress with the ticker-eligible funds. So that is S Prime US, that is CredX, and that is STRUX.

The flow is coming from ticker continue to tick up, pun intended. I apologize. With what was about 60% coming through ticker last quarter, now nearly 70% coming through ticker. So sanding off that rough edge has proven to be a strategic advantage for us and ultimately accruing to the benefit of the FAs and the clients that are filling these things out. As we look forward, you know, in our prepared remarks, we spoke about the CredX secondary transaction, so that added over $600 million of NAV to the fund in January. So we are very excited about that fund scaling up and now being of relevant size for more platforms that will make cross-sell and new platforms a bit easier, for sure. And we continue to look to innovate within the product suite and think about how we can be better partners to our distribution partners.

Ken Worthington: Okay. That was excellent. This may be a little esoteric, but I will try it anyway. Can you talk a bit about the market for secondaries? What are you seeing in terms of sort of activity levels and interest in the market, and in particular, the discounts that are applied to these transactions? How are those discounts sort of looking today versus how they may have looked, I do not know, six, twelve months ago?

Jason Ment: Yeah. No. So I think it is a good question. It has clearly been a very active year in the secondaries market. 2024 set another new record really across LP and GP-led secondaries. You have seen your average market pricing tick up slightly. So in the buyout space, that is probably somewhere in the low to mid-nineties as a percentage of NAV. In areas like venture capital, it is going to be a much larger discount, think 70% to 80% of NAV. But clearly, part of the trend that we have talked about over the years is just the expansion of the secondaries market to also include GP-led secondaries, to also include secondary transactions across asset classes. And just to help put things into perspective a bit here, if you rewind the clock just across the industry to, you know, 2008, we were at a level where there was about a trillion dollars of dry powder in the private equity market, and there was about a trillion dollars of NAV in the private equity space.

When you fast forward, that has only grown dramatically, and specifically, the dry powder has increased to about $2.5 trillion or so of dry powder today, whereas we have seen a much more significant level of growth in unrealized net asset value to record levels of over $8 trillion. And so when I look at those balances, to me, that screams a secondary’s opportunity, whether in the form of LP secondaries, GP secondaries, or even sponsor-to-sponsor transactions where we would have the ability to participate through co-investments as well. So a lot of excitement as we look at the secondary space coming off, you know, really a record year across the industry, but for us here at StepStone as well.

Ken Worthington: Okay. Excellent. Thank you very much.

Operator: One moment for our next question. Our next question comes from the line of Ben Budish from Barclays. Your line is open.

Ben Budish: Hi. Good evening, and thanks for taking the question. I wanted to ask kind of a nitty little modeling question, but your NCI, not attributable to SPW, stepped up quite a bit sequentially in the quarter. In the prepared remarks, you talked a little bit about VC, the legacy GreenSpring asset sort of exceeding some of their targets. I am just curious, was that the big piece of the driver or anything else contributing there? And how should that number look maybe in the next couple of quarters sort of based on the way things are trending right now? That would be helpful. Thank you.

David Park: Yeah. Sure. This is David. The largest driver this quarter of the non-private wealth NCI was the retroactive fees associated with our real estate secondaries fund that closed this quarter. So absent that, generally, you would see just a natural growth from just the growth of all the other asset classes. And just specifically on the venture capital-related question, as a reminder, we acquired 100% of that business. We did not acquire the legacy carried interest. But as it relates to fee-related revenue, fee-related earnings, we acquired 100% of the business and would not see that flowing through NCI.

Ben Budish: Got it. Helpful. And then maybe just a high-level question. Scott, in your prepared remarks, you talked a bit about infrastructure. It has been coming up on the calls of a lot of your peers that are sort of really digging into the data center opportunity, and obviously, with the DeepSeq news, people are sort of revisiting that thesis. Can you maybe just talk high level about your infrastructure business? What are the sort of key areas of investment just to kind of help us understand where you guys are focused there?

Scott Hart: I mean, like, I think if you know, across our entire business and across each of our asset classes, we are very well diversified really across any metrics you might look at, whether that is industry, whether that is underlying managers, certainly underlying portfolio company. And so, you know, we, like others, are obviously closely tracking the DeepSeq news there given our position not only in infrastructure, GPs, and portfolio companies over the last several weeks. But just to come back to your specific question in infrastructure, if I were to look, for example, at the three largest industry categories across our most recent co-investment fund, they are going to be in power and renewables, transportation, and communications, which would include data centers there.

So again, very well diversified though across really the entire infrastructure spectrum. I think similarly, you would make similar comments had the question been about, you know, our sort of real estate and or venture exposure as it relates to data centers or large language models.

Ben Budish: Alright. Understood. Thank you very much.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Alex Blostein from Goldman Sachs. Your line is open.

Alex Blostein: Hey. Good evening. Thank you for the question as well. You guys talked about quite an event and of an active deployment quarter. Last quarter shows up, obviously, in the results as well. Was there anything specific that drove that? Was there or was it a couple of larger opportunities that you saw, or was the activity across multiple sectors, multiple industries? Is that likely to continue? How are your pipelines for deployment shaking out so far for the next few quarters?

Scott Hart: Yeah. So it was definitely broad-based. I mean, if I think about some of the figures that Mike touched on, as it related to the conversion of UFEC into fee-earning AUM, the outlier there was really the activations, not the deployment. The deployment, which was over $2 billion, we mentioned was our most active quarter over the last two years, would have been diversified across asset class, strategy, etcetera. But if I were even to step back as a reminder, that $2 billion is only going to show accounts that pound invested capital are therefore converting into fee-earning AUM. If I step back and look across our business, despite what has gone on in the broader market, it was a very active calendar 2024 for us. As I just mentioned earlier, it was our most active year in secondaries really across asset classes.

If I look at our private equity co-investment business, where driven by the increase in some of the size of the transactions that we invested in as well as the quality of some of the deals that we were seeing, and that really played out in our approval ratio, we ended up having about our second most active year in private equity co-investments in 2024. We have seen a pickup in activity, not only in infrastructure that I was just talking about, but private credit as well. And then if I look at real estate with our real estate secondaries fund that is currently in the market, we have started to really see some interesting opportunities there. Now have eight or so seed assets in that fund. So it has been broad-based really across asset class and strategy here.

Alex Blostein: Great. And just in terms of the outlook, in terms of the pipelines, how are you kind of thinking about it for calendar 2025?

Scott Hart: Yeah. I mean, look, I would expect that to continue really just driven by where we source deal flow from. I mean, if I step back and really think about it, obviously, there is a bit of an optimistic view that perhaps with less regulation, we see an increase in M&A activity, capital markets activity. I would say right now, we are having to see some of the pipeline transition and certain things wrapped up by calendar Q4. We are now in the process of rebuilding some of those pipelines. But given the diversified nature of our business and, again, our ability to source through a variety of different channels and through different GPs, I would really expect that to continue.

Alex Blostein: Perfect. Then my second question, just a little bit of a modeling dynamic. I know you mentioned the earn-out from the GreenSpring acquisition, which is obviously a high-class problem, as that deal was done obviously very nicely. Can you just remind us how that will show up in your financial statements? Is it cash? Is it NCI? Is it stock? So when that is supposed to hit and in what form?

David Park: Yep. This is David here. So the GreenSpring earn-out, and there is a target of $75 million. We hit that target. It is fully accrued as of December 31st. It will be payable 100% in cash.

Alex Blostein: Great. Thanks so much.

Operator: One moment for our next question. Once again, that is star one one for questions. Our next question comes from the line of Michael Cyprys from Morgan Stanley.

Michael Cyprys: Hey, good evening. Thanks for the question. Just wanted to ask about how you are thinking about opportunities around blending public and private assets into a portfolio. If you could talk a little bit about the opportunity set that you see there, to what extent could that make sense maybe to partner with others, maybe in the context of target date strategy? And then I will ask a follow-up here as well. It is related. Just broadly, if you could update us on how you are thinking about the retirement space with the new administration, just curious about your expectations around that and how that might play out.

Jason Ment: Thanks, Mike. Jason here. Thanks for the questions, plural. So public-private convergence, whether joint product model portfolios, etcetera, is something we are having very many more conversations about today than we would have been last year or the year before without a doubt. Clearly, given our focus, that is a partnering opportunity because we do not cover the public market aspects. And so we are definitely in conversations with people all the time about what that might look like, where we can add value, where they can add value, and ultimately, actually, what the client demand is and what such a product or solution is actually seeking to solve. Because we do want to look at it through that lens and really ensure that we are trying to solve a problem rather than pushing a product that is not needed into the market.

We do think there are opportunities there, and we definitely think that the higher up in the asset owner organization you go, think CIO or chief risk officer, they do want a total portfolio view. And they do want products that blend these exposures. So yes, lots of conversations. Nothing near term to report on. As it relates to, you know, what channels that type of opportunity flows into, I think you are right to highlight that there are multiple different ways where such a thing could be consumed. Right? It could be in the retirement space. It could be in model portfolios sold to retail. It could be in the insurance space or other institutional asset owner space, particularly smaller end, you might think. In terms of update on the retirement market, broadly, I think as we have said on these calls over the last couple of quarters, we do not believe that any regulatory or legislative action is required for private markets to succeed within the US retirement space.

That said, action by Congress or the Department of Labor would certainly be welcome. And the more full-throated the endorsement is, with that endorsement in essence being, please look at the net returns. I think the more comfort both plan sponsors at corporate employers and at the asset managers, meaning the target date fund managers, and at the defined contribution aggregators who are focused on the adviser-managed accounts are all going to be about including private markets inside of these portfolios. Those conversations have been active for a couple of years now and certainly post the election. I think those conversations have taken on a somewhat greater degree of urgency as we work through what the exact solutions are that each of the different strata within the retirement space are really looking for.

Michael Cyprys: Great. Thank you so much.

Jason Ment: Thank you.

Operator: One moment for our next question. Our next question will come from the line of Chris Kotowski from Oppenheimer. Your line is open.

Chris Kotowski: Yeah. Good evening, and thank you. I was wondering if you could give us a little bit more color on that $600 million CredX transaction. And I guess I am wondering specifically, was this like a one-shot deal to try to create some critical mass for that fund? Or is this a potential kind of fundraising route on a more regular basis going forward?

Jason Ment: Thanks, Chris. Jason here. The secondary transaction, it was an opportunistic situation. These things do come up in the market from time to time. This is not the first transaction we have done overall. We did a deal in S Prime back a year or so, a couple of years ago. And so I would not view it as a path towards fundraising per se. In the CredX fund in particular, it was an opportunity to grow the scale, which has the benefit of a couple of things. It decreases the expense ratio for existing investors. It increases the diversification, which in credit is extremely important. And because of the increased size, it will make us a bit more relevant to additional platforms or eligible on additional platforms, which should speed fundraising in the future.

In terms of looking at these as they come up, we are going to evaluate each deal on a case-by-case basis. And if they make sense for the fund and their investors, then it is something that we are happy to get after.

Chris Kotowski: Okay. Yeah. No. It struck me as interesting because it is more than three times the size of the fund. So that is somebody who must trust you very well. So thank you.

Operator: Thank you. Now I am not showing any further questions at this time. I would now like to turn it back over to Scott Hart for any closing remarks.

Scott Hart: Great. Well, as usual, thanks, everyone, for your time and interest in the StepStone story. We look forward to connecting with you again next quarter. Thank you.

Operator: Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect. Everyone, have a great day.