AFFILIATED MANAGERS GROUP, INC. Q1 FY2025 earnings call

• Strategic capital allocation: Significant capital was allocated toward growth investments to evolve the business mix toward areas of secular demand, particularly alternatives. - New investment partners: Three new partnerships with Northbridge, Verition, and Qualitas Energy were announced in 2025, with committed capital of approximately $700 million, and these investments are expected to be accretive to earnings. - Product development and distribution: Affiliate partners are leveraging Affiliated Managers Group, Inc.'s strategic capabilities, including product development and distribution through the capital formation platform, and collaboration with affiliates in the U.S. wealth market has driven approximately $2.5 billion in net flows over the last twelve months. - Peppertree's sale: Peppertree agreed to be acquired, resulting in a significant gain on Affiliated Managers Group, Inc.'s minority stake, demonstrating the ability to create shareholder value by supporting affiliates' long-term goals.

In the first quarter, led by significant momentum at AQR and Pantheon, the company generated a record $14 billion in net client cash inflows into alternative strategies, which largely offset outflows from the long-only business. In private markets, three new partnerships with Northbridge, Verition, and Qualitas Energy were announced in 2025, with approximately $700 million committed to these new partnerships year to date, and these new investments will add approximately $18 billion in assets under management across liquid alternatives and private markets. In liquid alternatives, the partnership with Verition, a leader in the multi-strategy space with over $12.6 billion in AUM, contributed to growth. In equities, there were net outflows of approximately $14 billion in the quarter, reflecting industry and near-term performance headwinds. Private markets affiliates raised $3 billion in the quarter, primarily in credit, infrastructure, and private market solutions.

• Adjusted EBITDA is expected to be in the range of $210 million to $225 million for the second quarter, based on current AUM levels and market beta. - The collective accretion in run-rate economic earnings per share from the three new investments in Northbridge Partners, Verition, and Qualitas Energy, net of the sale of the stake in Peppertree, is expected to be approximately 8%, with strong future upside potential. - $173 million in shares were repurchased in the first quarter, and approximately $400 million is expected to be repurchased in full-year 2025, subject to market conditions and new investment activity.

Q: Maybe a little bit on the strategic side for you guys. Over the last couple of years, we've seen several private market manager sales, obviously, Peppertree being the latest one. Can you just maybe walk through what drives the decision to decide to part with one of the affiliates, especially in areas like private markets, which obviously have seen the fastest growth for you and the industry broadly? And as you kind of think forward, should we expect any other potential sales? And would those be limited just to minority stakes, or could you see yourself also selling down one of your majority-owned affiliates as well?

A: Jay Horgen stated that the strategy remains unchanged, partnering with high-quality independent firms to magnify their success and support their independence. Sometimes circumstances change, resulting in the need to evolve the relationship. These liquidity events highlight the underlying business value of affiliates. The strategy continues to focus on alternatives, and no specific mention of other potential sales or whether they would be limited to minority stakes or include majority-owned affiliates was given beyond the general context of collaborative decision-making.

Q: First, maybe a little bit on the strategic side for you guys. Over the last couple of years, we've seen several private market manager sales, obviously, Peppertree being the latest one. Can you just maybe walk through what drives the decision to decide to part with one of the affiliates, especially in areas like private markets, which obviously have seen the fastest growth for you and the industry broadly? And as you kind of think forward, should we expect any other potential sales? And would those be limited just to minority stakes, or could you see yourself also selling down one of your majority-owned affiliates as well?

A: Jay Horgen stated that the strategy remains unchanged, partnering with high-quality independent firms to magnify their success and support their independence. Sometimes circumstances change, resulting in the need to evolve the relationship. These liquidity events highlight the underlying business value of affiliates. The strategy continues to focus on alternatives, and no specific mention of other potential sales or whether they would be limited to minority stakes or include majority-owned affiliates was given beyond the general context of collaborative decision-making.

Q: Thanks. Good afternoon. Just wanted to follow-up on the liquid alternative flows. As you mentioned, record quarter. And you mentioned a few firms, but I was hoping you could talk about just the diversity of flows in the quarter, the conversation with clients you're having around these products, and how to think about this quarter versus the outlook based upon the conversations and the backlog you're having around the institutional products that's driving these flows.

A: Tom Wojcik said liquid alternatives had $10 billion in net inflows this quarter, primarily driven by tax-aware solutions. As market volatility increases, high-quality liquid alternative firms are well-positioned to deliver good risk-adjusted returns and attract new flows. The recent investment in Verition benefits from the growth expected in the hedge funds space, especially in the multi-strat space. The diversification of liquid alternative affiliates and their performance for clients put the company in a good position to attract flows and deliver outcomes.

Q: Okay. Thank you very much. Appreciate taking the question. Good afternoon. Maybe just switching gears a little bit. On the equity side of the equation, I was wondering if you could talk a little bit about what you're seeing there in terms of allocation discussions by investors either coming into equities, just given the market dynamics going out of equities? And if there is any kind of change maybe overlaying growth versus value or international versus domestic appeal?

A: Tom Wojcik said in equities, there are headwinds, but high-quality investment teams at affiliates are differentiating themselves. Some affiliates have a quality-oriented or defensive approach. There is exposure to international global products, and the weakening of the dollar in the quarter had an impact on global strategies. Overall, there are many moving parts in equities, and the excellent long-only firms continue to be well-positioned to deliver for clients.

Q: Great. Thanks. Good afternoon, folks. If I can ask a two-parter. Just to clarify again, I think you said like 8% accretion from the three investments in the sale of Peppertree on a net basis. And I assume that's a run that's an annualized run rate basis after fully completed as opposed to 2025. And then if you can comment on is that 8% on EBITDA and or economic EPS? And then if I can layer another question on organic growth, it's kind of a perfect balance this quarter between alternatives versus long-only equities on both sides, so kind of a neutral overall AUM net flow profile, but can you comment on whether it was a positive or negative base fee organic growth profile considering the fee rates in your ownership stakes in those entities?

A: Deva Ritchea said the 8% accretion is on an annualized basis starting in 2026, and it is to economic earnings per share. On organic growth, on the alternative side, private markets have strong growth with long duration and high fee rates. On the liquid alternative side, driven by tax-aware strategies, it has a sticky asset base and attractive fee rates. On the long-only outflow side, there are lower base fee rates, but the combination of fee impact and earnings from flows is positive in the long term, with duration and stickiness being valuable for long-term earnings growth.

Q: Hey, good afternoon, everyone. You mentioned the alternative wealth opportunity. Maybe update us on how distribution expansion for the existing products is going. If there are any newly filed products you could point to, and then maybe medium to longer term help frame how many, you know, new products are in the laboratory to be launched later in the year and into 2026?

A: Tom Wojcik said Affiliated Managers Group, Inc. has a vertically integrated U.S. wealth platform. Alternatives AUM on the platform has grown more than tenfold in the past five years. Launched three new evergreen products in the past year and filed for two additional strategies to go live later this year, spanning credit secondaries, infrastructure, non-traded BDC, and liquid alternative funds. There are many new ideas in product development, including active ETFs on the long-only side, and collectively, there are six alternative continuously offered solutions in the market, with more product development and innovation ongoing.