Strategic Evolution and Performance Drivers
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Management attributes the 19% year-over-year growth in fee-related earnings to a combination of organic fundraising momentum and the strategic integration of recent acquisitions in the Brazilian REIT and CLO sectors.
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The firm is pivoting its revenue model toward market-valued assets, with over 70% of fee-earning AUM now charging fees based on market value rather than cost, enhancing predictability and reducing reliance on lumpy performance fees.
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Operational focus in the Private Equity vertical has been bifurcated, with a newly appointed leader dedicated specifically to value creation and divestments to address DPI challenges in mature flagship funds.
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Strategic positioning in Brazil is increasingly focused on non-bank financing and private credit, which management views as a structural multiyear growth opportunity as traditional banks pull back due to regulatory constraints.
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The firm is seeing its Latin American institutional client base expand their engagement into new strategies and new regions, including the European program., effectively expanding its geographic footprint beyond its core regional roots.
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Investment performance remains the primary driver of capital attraction, with over 80% of fee-earning AUM currently outperforming relevant benchmarks since inception.
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The recent $350 million debt issuance was strategically designed to extend the firm’s maturity profile to an average of 8.5 years and provide a flexible, fixed-rate capital base for future M&A.
Outlook and Strategic Guidance
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Management reaffirmed full-year 2026 FRE guidance of $225 million to $245 million, supported by the deployment of $3.3 billion in pending fee-earning AUM and seasonal incentive fees expected in the fourth quarter.
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The firm expects to reach its long-term FRE margin target of 58% to 60% by the end of 2026 as integration costs from recent acquisitions subside and organic fee growth scales.
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Performance-related earnings (PRE) expectations for the 2024-2027 period were revised downward to $80 million to $100 million due to a slower realization environment for Private Equity Fund V, shifting significant carry potential into 2028.
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Fundraising guidance of $7 billion for 2026 remains on track, with management citing upside potential to exceed the 2025 record of $7.7 billion based on strong quarterly performance and momentum across multiple verticals.
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Future M&A and organic expansion will prioritize the U.K. and European markets over the United States, with the goal of becoming a top-five alternative manager in the U.K. across credit, GPMS, and real estate.
