Praxair Q2 2024 Earnings Call Transcript

Quartr
Provided by Quartr
August 8, 2024

There are 9 speakers on the call.

Operator

Hello, and welcome to the P10 Second Quarter 20 24 Conference Call. My name is Latif, and I will be coordinating your call today. Currently, all participants are in a listen only mode. After the speaker presentation, there will be a question and answer session. As a reminder, today's conference call is being recorded.

Operator

I will now hand the call over to your host, Mark Hood, EVP, Chief Administrative Officer. Mark, please go ahead.

Speaker 1

Thank you, operator. On today's call, we will be joined by Luke Sarsfield, Chairman and Chief Executive Officer Amanda Cousins, EVP, Chief Financial Officer and Chief Compliance Officer. Additionally, in the room with us today is R. D. Jensen, our EVP and Head of Strategy and M and A.

Speaker 1

Before we begin, I'd like to remind everyone that this conference call as well as the presentation slides may constitute forward looking statements within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995. Forward looking statements reflect management's current plans, estimates and expectations and are inherently uncertain. Actual results for future periods may differ materially from those expressed or implied by these forward looking statements due to a number of risks and uncertainties that are described in greater detail in our earnings release and in our periodic reports filed from time to time with the SEC. The forward looking statements included are made only as of the date hereof. We undertake no obligation to update or revise any forward looking statements as a result of new information or future events, except as otherwise required by law.

Speaker 1

During the call, we will also discuss certain non GAAP measures, which we believe could be useful in evaluating the company's performance. A reconciliation of these measures to the most comparable GAAP measure is available in our earnings release and our filings with the SEC. I will now turn the call over to Luke.

Speaker 2

Thank you, Mark. Good afternoon, everyone, and thank you for joining us today. Our 2nd quarter performance demonstrates the strong momentum we have in our business, underscores our ability to execute the strategic plan we laid out at the beginning of the year, and we believe positions P10 well for the second half of twenty twenty four and beyond. We raised and deployed $844,000,000 in gross new fee paying AUM and delivered record revenue of $71,000,000 representing 14% year over year growth. We delivered fee related revenue or FRR of $68,300,000 a 12% increase compared to the prior year period and generated approximately $33,600,000 of fee related earnings or FRE, a 3% decrease from Q2 2023.

Speaker 2

This represents an FRE margin of 49%. Amanda will provide additional detail on our Q2 financial performance shortly. We have continued to gain traction with clients in the 2nd quarter. We had 12 co mingled funds in the market, providing multiple avenues to meet the particular investment objectives of our clients and achieve our organic growth goals. I want to take a minute to highlight some of our momentum on the fundraising front.

Speaker 2

Our NAV lending strategy, Heart Capital closed Fund 4 at $645,000,000 meaningfully exceeding its target of $500,000,000 The fund received strong re ups from existing investors as well as significant new commitments and represented more than a 60% increase compared to its predecessor fund. As a credit strategy, Park's fees are generated as capital is deployed, which means we will see the revenue contribution over time. Our venture lending manager, WTI, closed the 2nd quarter with $321,000,000 of fee paying assets in Fund 11, which remains in the market and continues to raise capital. Bonacore, our strategy that provides growth capital to alternative asset managers through non controlling equity interests ended the 2nd quarter with $890,000,000 in capital raised for BCP Fund II, which we expect to close later this year. Given the robust investing opportunities that we are seeing in this business, we continue to expect to launch BCP Fund III in 2025.

Speaker 2

ScrewBridge, our venture capital strategy closed its flagship Fund VIII at $880,000,000 exceeding its target of $750,000,000 TruBridge expects to launch additional funds this year, including Blockchain 2 and Secondaries 2. RCP is positioned to deliver strong performance heading into the second half of the year. They recently launched Direct Fund 5 and anticipate launching secondary Fund 5 later this year. We are excited about the investing opportunities that we are seeing and anticipate strong LP demand. Through 2 quarters, we've achieved 61% of our 2024 goal to organically raise and deploy $2,500,000,000 of gross new assets.

Speaker 2

We remain confident in meeting or exceeding this target and the financial guidance we provided the market in February. With the number of in the market scheduled to increase as the year goes on, we expect continued strength in the back half of the year. Next, I want to highlight the ongoing progress around our key strategic initiatives. We remain steadfast in our commitment to the corporate imperatives we laid out February. We're creating value through doubling down on focus areas that are performing, eliminating ancillary processes and implementing world class systems that are set to yield tangible results.

Speaker 2

I will now run through some of the key second quarter highlights and comment on the progress we've made. First, I'm thrilled to share that last week we announced the appointment of Sareta Narasan Jayarath as Executive Vice President and Global Head of Client Solutions effective in mid September. Sarita brings more than 2 decades of client facing experience in the alternative space at firms such as Blackstone, JPMorgan and Goldman Sachs. She will be integral in developing a comprehensive framework to serve our growing investor base. Further, Sareta will help define the strategy and execution of our organic growth initiatives by expanding our client relationships and developing new products and offerings.

Speaker 2

We look forward to her leadership at the firm as we advance the platform's long term growth strategy. As you will recall, when I let out our steady state P10 senior organizational structure in February, I contemplated a structure that would have 4 Executive Vice President level roles reporting directly to me and focused on 4 critical vectors. 1, Finance and Compliance 2, Administration and Operations 3, strategy and corporate development and 4, client solutions and capital formation. With the appointment of Sareta, we have now established a world class senior team. I'm really excited to have the opportunity to partner with these extraordinary professionals and take P10 to the next level.

Speaker 2

I also want to highlight that we named Tracy Benford as our Lead Independent Director. This new role enables additional effective oversight support from our experienced diverse Board. As P10's Chairman, I cannot be more excited about the opportunity to work with Tracy. Next, we continue to execute on a disciplined and process driven approach to inorganic growth. RJ Jensen and his team are doing a fantastic job as they build an inorganic growth engine and pipeline.

Speaker 2

We are encouraged by the opportunities we're evaluating and we remain on track to announce a strategic transaction in the calendar year. Of course, we will remain selective as we seek to execute on the right transaction at the right terms. On that front, as we announced earlier this week, we increased our total borrowing capacity from our credit facilities from $359,000,000 to $500,000,000 The larger facilities provide us greater financial and strategic flexibility and importantly extends maturities to August 2028. We want to thank our financial partners and our bank syndicate, which is made up of new and existing lenders, many of whom upsize their commitment. Finally, as I addressed in our summary of Q2 results, we are pleased with the reception around the new KPIs we introduced to our reporting structure.

Speaker 2

As our Investor Day approaches in September, we will look for additional opportunities to increase transparency for the investment community. Before I hand the call off to Amanda, I want to touch on our capital allocation efforts, which remain focused on creating value for shareholders. We continue to believe our stock presents a compelling entry point for investors who are looking for access to a diversified alternatives platform focused on the lower and core middle market. In the Q2, we repurchased 1,533,800 shares at an average price of $8.12 That takes the total quantum of shares repurchased since the beginning of 2024 to $42,500,000 Since the inception of our repurchase program in 2022, we have repurchased a total of 8,200,000 shares at an average price of $8.70 As of June 30, 2024, we had approximately $8,000,000 remaining on the program. After the quarter, our Board of Directors authorized an additional repurchase in the amount of $12,000,000 bringing the total available for repurchases to approximately $20,000,000 With that, I'll hand the call over to Amanda.

Speaker 3

Thank you, Luke. P10 delivered strong financial results in the 2nd quarter as our strategies continue to benefit from ongoing improvements to our corporate level organizational structure. During the Q2, fee paying assets under management were $23,800,000,000 an 8% increase on a year over year basis. In the Q2, $844,000,000 of fundraising and capital deployment was offset by $855,000,000 in step downs and expirations. As we mentioned at the start of the year, we expect step downs and expirations for the full year to be approximately $1,500,000,000 with most of the step downs and expirations having occurred in Q2 and the remaining approximately $500,000,000 distributed across Q3 and Q4.

Speaker 3

As we anticipated, most of the 2nd quarter step downs and expirations are attributable to RCP Fund 9, a 2014 vintage and TruBridge Fund II, a 2010 vintage. Revenue in the Q1 was $71,100,000 a 14% increase over the Q2 of 2023. Average fee rate in the Q2 was 115 basis points, which was driven by higher fee rates from direct strategies becoming a larger part of our fee paying AUM mix as well as higher catch up fees. As Luke mentioned, we had 12 commingled funds in the market and saw broad participation across our investment platform. Our private equity strategies raised and deployed $302,000,000 Our venture solution raised and deployed $159,000,000 dollars Our credit strategies added $368,000,000 to fee paying assets under management and our impact strategy added $15,000,000 to fee paying assets under management.

Speaker 3

The performance of P Pen's strategy is reflective of our diverse global investor base comprised of family offices and wealth managers, public pensions and endowment foundation as well as our seasoned deal teams to continue to execute on best in class investments and generate durable alpha. In the Q2, catch up fees were $6,000,000 bringing the total for the year to 13,700,000 dollars Touch of fees are driven by the timing of fund closing and in the 2nd quarter the fees were primarily attributable to closings related to Bonacord II, RCP Fund 18 and RCP MultiStrap II. Based on the projected fund closings that may occur in the second half of twenty twenty four, our catch up fees could exceed our previously stated annual guidance of $16,000,000 Operating expenses in the Q2 were $54,200,000 a 4% increase over the same period a year ago. The increase was primarily driven by compensation expense and placement fees. GAAP net income in the 2nd quarter was 7,400,000 dollars an increase compared to $2,100,000 in the comparable period a year ago.

Speaker 3

Adjusted EBITDA in the 2nd quarter was $35,400,000 an increase of 2% from the Q2 of 2023. For the quarter, our adjusted EBITDA margin was 50%. Our margin came in a bit higher than expected due to the strength of our direct strategies and product mix. We still expect margins for the year to be in the mid-40s as we continue to make key investments that we believe will deliver clear ROI. For the 2nd quarter, adjusted net income or ANI was $28,800,000 an 8% increase over the Q2 of 2023.

Speaker 3

Fully diluted ANI EPS was $0.24 per share, an increase of 9% on a year over year basis. As discussed in our Q1 2024 earnings results, we've included the following metrics for increased transparency and to help the investment community draw better apples to apples comparisons with the asset management landscape at large. Fee related revenue or FRR fee related earnings or FRE and complementary FRE margin. FRR in the quarter was $68,300,000 representing a 12% annual increase and FRE was 33 $6,000,000 representing a 3% decrease. Our FRE margin was 49% in the 2nd quarter.

Speaker 3

Cash and cash equivalents at the end of the 2nd quarter were $31,000,000 At quarter end, we had an outstanding debt balance of 303,000,000 dollars 56,000,000 available on the revolver. Today, we have an outstanding debt balance of 325,000,000 dollars 175,000,000 available on the revolver. We are pleased to have amended and extended our credit facility, which positions PTEN for enhanced flexibility as we continue to evaluate potential transactions in the market. Our syndicate increased to 14 lenders with many upsizing their commitment. I am exceptionally thankful to all our banks who participated, especially our joint leader rangers, JPMorgan Chase Bank, KeyBanc Capital Markets and Texas Capital Bank.

Speaker 3

We've worked with many of our lenders for years and appreciate their confidence in the company's ability to execute on our strategic growth plan. We enter the second half of the year with a strengthened balance sheet, while maintaining relatively modest leverage levels, which we believe is prudent in the current environment. We also continue to pay our quarterly dividend for Class A and Class B common stock. Today, we declared a quarterly cash dividend of $0.035 per share payable on September 20, 2024 to stockholders of record as of the close of business on August 30, 2024. Finally, as of June 30, 2024, our Class A shares outstanding were 53,471,354 and Class B shares outstanding were 58,000,000 207,544.

Speaker 3

Last month, we announced our Investor Day will be taking place on September 19, 2024,

Speaker 4

at the

Speaker 3

New York Stock Exchange. Additional details can be found on the Investor Relations page of our website. We invite you to join us and hear directly from our management team and affiliated managers on our financial outlook, growth levers, strategic vision and investment thesis. Formal presentations will be followed by a Q and A session, all of which will be webcast on our Investor Relations website. We look forward to updating TheStreet on our growth plan and meeting with our investment community in person in September.

Speaker 3

Thank you for your time today. We look forward to updating you on our continued progress in the second half of the year as we execute against our growth initiatives. I'll now pass the call over to the operator to begin the Q and A session.

Operator

Thank you. Our first question comes from the line of Ben Budish of Barclays.

Speaker 5

Hi, good evening and thanks for taking the question. I guess maybe to start just on the fundraising. Luke, you mentioned your 60% of the way to your full year target. It sounds like there's a lot of momentum you feel good about. I guess just from a messaging perspective, why not raise the target?

Speaker 5

I guess there's still a couple of quarters left to report, but just curious about what the upside to that might look like if there's any more color you could give there?

Speaker 6

Thanks, Ben. Well, as you recall, I think when we did the 61% that was obviously off the $2,500,000,000 but our guidance was, as you recall, dollars 2,500,000,000 or more. And I think we're feeling really good about the or more. I think we really have clear momentum to be able to organically raise and deploy $2,500,000,000 or more. As we mentioned, we had 12 funds in the market last quarter.

Speaker 6

We think those numbers are going to expand as we get into it, as we get into the second half. And when you look at some of the individual strategies, we think we have a lot of momentum, right? So you look at TruBridge closing the flagship fund at $880,000,000 up from the target of $750,000,000 You look at Hart closing fund 4 at $645,000,000 ahead of the $500,000,000 target. You look at the initial success of WTI and we're still in the market raising. You look at the ongoing momentum in Bon Accord and that that we're still raising.

Speaker 6

And then I think we're really going into an exciting fundraising cycle in RCP. So I think we feel really good about the number in the back half and frankly beyond. We're obviously going to talk a lot more about the longer term fundraising momentum and the client activity that we're seeing at our Investor Day. But I think we feel really, really good about our ability to meet and exceed the targets we laid out.

Speaker 5

Got it. Helpful. And then maybe just thinking about the deployment environment, we saw sort of a mix of performance from some of your larger cap peers, but a number of them showed like very meaningful step ups quarter over quarter in deployment. And yours stepped down a little bit quarter over quarter. Now you operate in some different markets and probably go to head to head a bit less than I think some might expect.

Speaker 5

So just could you comment on what you expect for the back half of the year there? Any sort of nuances about the markets in which you operate that would be less obvious from what we're seeing from some of your peers?

Speaker 6

No. Look, I think and again, I can't comment on our peers, but just on us, I think we continue to see a really attractive investing environment across many of our businesses. Recall that a lot of our businesses where we report, we report on committed capital. And so that's what you're seeing in the fundraising. The big place I think where we're really charging on deployed is in our NAV lending strategy.

Speaker 6

And I think we're seeing some really, really robust opportunities to deploy capital there. We just raised the larger fund. I think we're obviously given some of the stresses and strains that the buyout market is under, where we're a lender to many of those funds, whether it's to be able to do portfolio add ons, whether it's to be able to sort of stretch and do new strategic transactions within the funds, we're really affording our underlying clients the ability to do that. That we think that continues to be a really robust environment. We're obviously going to be it is a credit strategy and in credit strategies we're going to be very prudent about risk underwriting.

Speaker 6

Obviously, we want to generate great returns for our LPs. And so we're going to be balanced. We're going to be measured. When we think there's an opportunity to lean in, we'll lean in. But we're very comfortable with our pace of deployment right now.

Speaker 5

Understood. And if I could squeeze in one more just kind of detailed question. Your other revenue has been is quite a bit higher in the first half of this year versus prior years and higher in Q2 than Q1. Could you just remind us what's in that exactly and why has it been going up? And is this like an okay run rate to think about for the rest of the year?

Speaker 6

Amanda, do you want to take that?

Speaker 3

Yes. I think in general, in the Q2 in particular, we had a bit of incentive fees that came through other revenue that is not typical for our start our model as you're aware. And really these incentive fees get earned based on performance and structure of the specific investments. The incentive fees you're seeing in the financials this quarter in particular are the result of just one client at RCP. And so we feel like disclosing FRR, FRE and FRE margin certainly make it easier to appreciate the nature of our business model, which is built upon leading carry with underlying strategies as we've said in the past.

Speaker 3

There is a bit of ongoing other revenue, but I would say in general, it's fairly minimal.

Speaker 5

Okay. All right. Great. Thank you.

Speaker 6

And maybe if I could just add one thing to that. That is times like these are expressly the reason we wanted to give you what I would call a more apt and easy comparison with our peers. And so this is why we rolled out the KPIs like FRR and like FRE so that you could take out sort of any volatility in any given quarter, obviously positive volatility in this case and we're happy to have it. We're really excited about that relationship that we have and the client that we have there and the success we've had for them, which ultimately generated that incremental incentive fee revenue. But on the long run, we want to really make sure we're giving you the apples to apples comparison and that's why we did move to FRR and FRE.

Speaker 5

Understood. Thank you for taking my questions.

Operator

Thank you. Our next question comes from the line of Kenneth Worthington of JPMorgan.

Speaker 6

Hi, it's Alex Bernstein on for Ken.

Speaker 7

Thanks so much for taking my questions.

Speaker 2

For my first question,

Speaker 7

I wanted to double click on fee raise. I know they stepped up quite a bit even when we're comparing on an ex cash and fee basis. You mentioned there are some direct strategies coming online that are driving these. How should we think about Fury on a go forward basis and say for a reasonable timeline maybe the rest of this year and next year to the extent you're able to comment?

Speaker 3

Yes. Thank you for the question. Our core fee rate ex catch up fee should be approximately 105 basis points for 2024, as we've guided in the past. Our average all in fee rate in the Q2 of 115 basis points was really driven by higher fee rate direct strategies becoming a larger part of our fee paying AUM mix as well as higher catch up fees in the quarter. We look forward to unpacking our dynamics around our fee rate, catch up fees and growth framework across our base strategies at our upcoming Investor Day.

Operator

Thanks so much.

Speaker 7

Maybe to ask a bigger picture question. You mentioned the M and A topic again, definitely seems like an area of focus. You mentioned that you're planning on announcing a deal at some point this year. What areas are you looking at specifically? Or where are you seeing interesting opportunities?

Speaker 7

There's obviously been quite a bit of M and A in the broader alternative asset management space. Are you thinking of a geographic expansion? Would it be a certain type of strategy that you're currently potentially missing that you want to add to the fold? Just more commentary on your strategy there, or at least that you can provide? Thank you.

Speaker 6

Sure, Alex. Happy to. And obviously, as you mentioned, M and A is an important part of our business model. It has been, and it will continue to be. And we think that ability to drive inorganic growth is really valuable.

Speaker 6

It's valuable to us. We also think that ultimately it's valuable to our LPs and that's why we engage in it. And I'd just say a few things. One is, when we think about what we want to accomplish, one is we want it to be additive to the whole of PTEN. We want it to be simpatico and symbiotic with our other strategies.

Speaker 6

That's really important. And obviously, we're only going to do transactions that we believe make both strategic and economic sense for PTEN and for our shareholders. And so those are kind of the constraints as we think about. When we look out in the broader environment, I'd really highlight kind of 4 areas or 4 different kinds of M and A transactions that we're evaluating at any point in time. One is what I would call what you think of as bolt ons to existing strategies, tuck unders to things we already do.

Speaker 6

We have 7 market leading strategies. That doesn't mean that there aren't things that we could tuck up or tuck under those individual strategies. We're always on the lookout for those. And the good news is we often run into them because our strategies are out there in the market every day doing business and they're seeing and running into some of these other smaller institutions. And so if there's an opportunity to do something that fits very nicely and tucks under and adds a capability or some sort of investing acumen to one of our existing strategies, we're always open to do it.

Speaker 6

I would then say to your point, there are 3 areas we really think about as broadening our remit and our footprint. First, and you mentioned it was geography. Certainly, our business is predominantly a North American business at this point. And we think some of the strategies we execute on very ably in North America have analogs outside the U. S, in Europe, in Asia.

Speaker 6

And so being able to deliver on a global basis for our clients is something that is really important to us. We can obviously do that synthetically right now, but if we could do it with proprietary P10 investment strategies that would be even better. And so we really look at what might be out there in the geographic landscape. And then to your other point, we also look at capabilities and what are some of the capabilities that we may not have in the broad based way and that we're also hearing loud and clear from our LPs that they would like and they would like to have from us. And so I think 2 areas to think about there.

Speaker 6

We have a number of private credit strategies, but in the vibrant middle of the private credit spectrum, whether it's direct lending, whether it's asset based lending, we don't really have a full broad based strategy there. And so if there was something we could do that would leverage our ecosystem in the middle and lower middle market around private credit, we'd be very excited about that. And then I think the other place that we frankly get a lot of LP inquiry about is real assets. And I think that's both real estate and infrastructure, but I think particularly many of our clients are looking for infrastructure exposure and they've asked us, we think PTEN would be a great partner to help provide that. Is that something you would think about over time?

Speaker 6

And of course, the answer is absolutely yes, if we define the right strategy and the right platform. And so those that's kind of the quick roadmap of the things we're looking at. I would say that R. J. And his team have done just an absolutely fantastic job of building out a framework and approach, a process, one that's replicable and one that really focuses on not just reacting to what comes to us, but focusing on what are the right platforms for us that we want to own and what the engagement and cultivation strategy to be with those platforms such that when they do decide the time has come for some evolution in their ownership structure, we're at the top of the list.

Speaker 6

And so we're really focused on that as well.

Speaker 7

That's very helpful. Thank you so much for the detailed answer.

Operator

Thank you. Our next question comes from the line of Stephanie Ma of Morgan Stanley.

Speaker 4

Hey, thanks for taking my question. Maybe just one follow-up on the M and A question. Can you just give us an update on how you think about uses of capital here as the debt balance is growing and you increase your total borrowing capacity? How are you thinking about share buybacks, potential M and A and pace of debt pay down at this point?

Speaker 6

Right. Well, let's start here. So first and foremost, our capital allocation priorities have not changed, right? And they remain the same, they will remain the same. So as we've always said, number 1 is that we're going to maintain our dividend and presumably over time grow our dividend at a reasonable pace consistent with our historic practice.

Speaker 6

Our next two priorities then and it will obviously depend and it will be conditioned on where is our share price, where are the opportunities in the broader M and A market, but it's always going to be share repurchase and M and A. And you can see, again, we highlighted some of the activities we've taken on share repurchase. When we see an opportunity and we think our stock price, for whatever reason, is dislocated, we're going to lean in there. And I think we did that particularly in the 1st and second quarters of the year. And obviously to the extent touch wood it doesn't.

Speaker 6

But if it were to happen again, we would be very focused on it and continue to lean in. You saw that we increased the authorization under our share repurchase to do share repurchases back up to $20,000,000 And then M and A is a really important strategic priority for us as we've talked about. We want to do a deal. We want to do many deals, but we want them to be the right deals over time that is. I've talked before about this approach of crawl, walk, run.

Speaker 6

And so we're going to be really thoughtful about the kind of M and A that we do. And we want to make sure that we've really built the M and A and the inorganic muscle in the right way so that we can execute on it, integrate on it and then deliver the IRR or ROI out of the M and A deal in the right way that we think our shareholders demand. And so those are going to be probably the next two priorities. And obviously, at any point in time, maybe the relative positioning of them changes, but they're very close. And then debt pay down is going to be kind of the last priority.

Speaker 6

One of the things I would know here is as a factor of the fact that we did this new facility and we upsized the credit facility. We haven't yet started that hasn't yet started to amortize. When it does start to amortize, we'll obviously pay it down. And so whenever we have excess cash, we're generally not going to hold that cash. We're going to use it for one of our four priorities that I outlined there.

Speaker 6

But we may just be for a minute at a moment in time, where our ability to pay down any of our debt is a little bit constrained because we put a new facility in place and there's nothing drawn on the revolver right now.

Speaker 4

Great. And I

Speaker 3

would add to that. We also have an accordion feature on the facility. So we increased from $359,000,000 to $500,000,000 of availability, but also have an additional $125,000,000 potentially as an accordion. So we have a lot of room for future transactions. But again, I think

Speaker 6

these transactions at the right price.

Speaker 4

Yes. And maybe just a broader question on data. BlackRock's recent acquisition of PreQuint that's brought the value of private markets data to the forefront. Maybe you can just talk to how you see your data sets as differentiated and your approach to leveraging data as a private market solutions provider?

Speaker 6

Stephanie, that's an outstanding question. And I will give you a very high level answer here. But I would tell you, there is going to be a whole module at our Investor Day September 19 where we're going to talk about how we utilize data in our business and actually give a demo of our proprietary data set. And so I think that will be really exciting and I know you'll be there, but I encourage everybody to look out for that and that will be something that will be on our website afterwards. So if folks want to do a deeper dive on our data, they'll be able to.

Speaker 6

But to come to the point, we think data is kind of the currency of the kingdom in this business at some level. And it's what makes you better at what you do in almost every aspect of your business. Certainly, it's critical in capital raising. We capture a lot of data around capital raising around clients And hopefully, we use that data to better inform next best actions. And then obviously, in our investing processes, in our sourcing process, in our execution process, data is incredibly important.

Speaker 6

We're very lucky because of our footprint and presence in the middle and lower middle market. We have data longitudinally going back decades. And our ability to leverage that data to glean insight, around types of transactions that we're contemplating, investments that we're considering is really differentiating. And it really I think it's one of the other reasons that really informs the frankly the raison d'etre of PTEN because this stretches across all our strategies, right? The access to that data can inform a decision to become an LP in RCP.

Speaker 6

It can inform a decision to take a minority stake in Bon Accord. It can inform an ability to make a NAV loan in HARC. And so that data is really foundational to what we're doing across the platform. And as I said, we'll talk a lot more about it and actually share a demo of how that data works and how we apply it at the Investor Day.

Speaker 4

We'll stay tuned. Thank you.

Operator

Thank you. Our next question comes from the line of Chris Kotowski of Oppenheimer and Company.

Speaker 8

Yes. Good afternoon and thanks. Most of mine were asked, but I just wanted to follow-up on the fundraising side about the RCP secondaries and co investment funds. I'm curious how long is the marketing period for those typically between the first and the final close? What should we be expecting there?

Speaker 8

And I don't know if you've shared the target size for those funds or if you can give an indication of that?

Speaker 6

Yes, I would say so. I'll take a couple of questions. So first observation, you asked about our RCP co investment fund, we call it our direct fund and direct 5 by the way. And then our secondaries fund, we call it SLF or secondaries. So just some sense.

Speaker 6

Generally, I would say, and again, it will obviously depend on the environment, it will depend on the momentum, it will depend on a lot of things. But usually, we're in the market for somewhere between 3 6 quarters with these strategies, right? And I think my guess is this time would be similar. So think of it as a year to a year and a little bit of a plus. I don't actually I want to be a little careful here.

Speaker 6

I don't know what we've said in terms of sizing publicly. And so I want to be just a little bit careful on it. But obviously, anything we can share, we can share. But I will tell you as a directional kind of thought, you've seen what we did in the last of those strategies, right, in terms of direct 4 and secondaries 4. Both of these strategies, I think are very timely and very resonant with the LP base.

Speaker 6

And so I think it'd be very reasonable to assume that there's a lot of momentum in those strategies and we think that will lead to successful outcomes.

Speaker 8

Okay, great. That's it for me. Thank you.

Operator

Thank you. I would now like to turn the conference back to Luke Sarzfeld for closing remarks. Sir?

Speaker 6

Well, thank you, Latif, and thank you so much to everybody for joining us today. To close, we are extremely proud of the demonstrable progress that we've made in the first half of the year as our team thoughtfully structures the platform for continued growth. Further, we are confident we have the right strategy in place to deliver long term value for all of our shareholders. I look forward to seeing many of you at our Investor Day in New York on September 19, and I wish you all a happy and healthy close

Speaker 2

to the summer. Thank you.

Operator

This concludes today's conference call. Thank you for participating. You may now disconnect.

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Key Takeaways

  • The firm delivered a record Q2 revenue of $71M, up 14% YoY, and fee‐related revenue grew 12% to $68.3M while maintaining a 49% FRE margin.
  • Fundraising momentum continued with $844M in gross new fee‐paying AUM deployed, several flagship funds closed above targets, and 61% of the $2.5B year‐end target achieved by midyear.
  • High step downs and expirations of $855M in Q2 offset fundraising gains, and the company anticipates approximately $1.5B in step downs and expirations for the full year.
  • The company expanded its credit facility capacity from $359M to $500M with maturities extended to August 2028, enhancing strategic flexibility for financing and M&A.
  • Share repurchases reached 1.53M shares for $42.5M in 2024, and the board authorized an additional $12M, increasing total buyback capacity to about $20M.
AI Generated. May Contain Errors.
Earnings Conference Call
Praxair Q2 2024
00:00 / 00:00