Patrick Davitt: Yesterday, the FCC released its planned draft merger guidelines, which appear to crack down particularly hard on platform and roll-up strategies that private equity firms have used to create some of their best outcomes. So firstly, do you have any initial thoughts on how big of an impact those changes could have on how your investment process works? And secondly, if you can try to frame how much of your historical deal volume has been a result of platform and roll-up strategies.
Jon Gray: We believe that what the FTC announced was really just a codification of the way they’ve been operating the last three years. They have had this more assertive approach towards mergers. And we’ve been operating in that environment already. For us, we haven’t seen it as large of an impact as one might expect because oftentimes, we’re not present in a given market. So buying things is not as big of an issue. We have had some strategies where we have done additional acquisitions roll up. That hasn’t been a huge portion of our activity in corporate private equity. And remember so many of the things we do, secondaries real estate, private credit are not related here. But in corporate private equity on the acquisition side, it hasn’t been a major issue.
I would say where it’s more impactful is when we’re looking to exit some of our businesses, and we’re talking to strategics. And there, there’s a real consideration now about what is the likelihood of something getting through. And so that has had an impact on our thinking on what relative attractiveness of nonstrategic players relative to strategic players. So I would say that this has been a reality of the marketplace for some time. We’ve been navigating through it, and we feel confident we’ll continue to navigate through it in the — the key area of focus is really when we’re looking at dispositions potentially to strategic players.
Operator: We’ll go next to Ben Budish with Barclays.
Ben Budish: Sorry about that, still on mute. I wanted to ask about your fee-related performance revenues, they kind of surprised in the quarter and it sounds like you’re still expecting an acceleration in the back half. Is there any way you could sort of size up a little bit kind of the magnitude, that acceleration. And then just sort of thinking about next year, I know there’s often like a 3-year crystallization schedule outside of what we expect from BREIT. So any thoughts on what we should expect from ’23 to ’24 based on what you’re seeing right now?
Michael Chae: Sure, Ben, it’s Michael. Yes, we’ve been saying since early in the year that specifically that on BPP, fee-related performance revenues, we were scheduled to have 4, and we are scheduled to have 4x more AUM crystallizing this year than last year with the ramp really in the second half of the year. And that’s what you’re seeing playing out. Just to put some further granularity on that, right now, about 60% of the net accrued performance revenue balance for BPP, which you can see in our quarterly report represents vehicles with scheduled crystallations in the second half, and that’s substantially weighted towards the fourth quarter. So that should give you some texture around it. That sort of AUM schedule to crystallize next year for BPP will be lower than this year.
But alongside that, our infrastructure fund, will see a significant crystallization event next year. And then I’d actually also highlight on fee-related performance revenues, and we don’t necessarily talk about a lot or we’re not asked about a lot. On BCRED and BXSL, our two credit direct lending perpetual vehicles. They have sort of steadily expanding earnings power, and you can actually see it in the numbers and then and obviously, both generate quite predictable fees each quarter based on investment income. And in the second quarter, those comprised approximately half of our fee-related performance revenues and taken together, they’re up 67% actually year-over-year. So that is a steady sort of embedded, I think, positive thing in our fee-related performance revenue.
