Stephen Schwarzman: Well, I guess I’d start with the facts. Last year, we were actually up year-on-year in private equity realizations, and generated strong realizations from that sector, which I think says something about our portfolio where we positioned it and also the marks there. So I think our optimism comes from where we’re positioned, some of the sectors in terms of digital migration, what’s happening in energy transition, life sciences, a bunch of businesses and sectors that have done quite well, the fact that we had greater than 7% revenue growth in our portfolio in the fourth quarter. We saw margin expansion as costs came down. I’d say we overall feel pretty good about our portfolio. And I think it’s a combination, as we’ve talked about, of good underlying economic growth, the right sectors, and now a more favorable sort of capital markets environment with inflation and rates coming down.
So that leads us to have some confidence here. Things can change, as we saw last year, quickly in March of last year, with the bank crisis in the late summer with rates moving up. But as we sit today, we feel pretty good. And so, I think in terms of what you own, where you carry it, that leads you to your relative level of confidence, I believe, and so we still feel pretty good about the outlook in private equity.
Operator: We’ll go next to Dan Fannon with Jefferies.
Dan Fannon: My question is on BXPE and was hoping to maybe talk about the addressable market for this product. I believe you typically have exclusive distribution relationships at the start. So wondering when you think this will be broadly available and how that potentially could scale?
Stephen Schwarzman: Well, I’d start with the backdrop on individual investors. We’ve talked about it on these calls in the past, but there’s about $80 trillion of wealth globally, folks who have more than a million dollars of investable assets. We estimate that that’s about 1% allocated to alternatives. We’ll just call it 29%, 30% with our institutional clients. We think that has a lot of room to grow. We’ve shown success, obviously, in strong performance with our private real estate vehicle, our private credit vehicle, and we think the natural evolution here is a private equity vehicle. The strategy is broad based, as we talked about on the call, not just traditional corporate private equity, but tactical opportunities, secondaries, growth, life sciences, really plays to our strengths of this broad platform that we have.
And so, as we look forward here, we think individual investors will respond. And of course, it’s a function of how we deliver over time. Initially, we had a very strong start with that $1.3 billion first close, which reflects the relationships we’ve built up over time. I think an interesting fact that was pointed out yesterday is 85% of the financial advisors who allocated to BXPE in that first close had already allocated to BREIT and even a higher percentage had allocated to BCRED, showing cumulatively between BREIT and BCRED, showing that our customers feel tremendous loyalty to us. So, the fact that we have these deep long relationships, we’ve developed confidence, we’ve delivered performance. I think that makes us uniquely positioned in the retail space.
And we think creating access to private equity in a semi liquid format will be more attractive. There will still be investors in the individual investor space who will invest with us in drawdown funds. But of course, you don’t get all that capital back for 12 plus years, and it’s got a little bit of a different structure. It lends itself to a smaller investor universe. We think there’s going to be a lot of receptivity to this product. We’re going to have to do like we did with BREIT and BCRED, which is deliver for the customers. As we do that, we think this product can grow to scale where today it’s $60 billion of equity in BREIT, roughly $30 billion in BCRED, $60 billion of gross assets. And we think this product has the opportunity to grow as well.
But we’ve got to deliver for the customers, get out there, engage and do it over time.
Operator: We’ll go next to Ben Budish with Barclays.
Ben Budish: I wanted to ask on the insurance inflows. I guess, first, for the quarter, your inflows really picked up quite a bit versus Q3, and I think came in nicely ahead of where you had initially at least kind of indicated last quarter. You were looking for the year. So, was there any sort of pull forward? Has that sort of changed the outlook for 2024? And then just thinking tactically, you indicated you’d get to the $250 billion over the next several years? Can you be any more specific? What does several mean? How should we thinking this $15 billion, $20 billion over the next, like, three, four years? How should we be thinking about that, just as we’re kind of fine tuning our models?
Michael Chae: I think, overall, there’s really good momentum sort of embedded in our insurance and credit business. And then just in terms of, in real time, the interest inflows we’re seeing. To answer your first question, we don’t get – the sort of drivers of the inflows I don’t think involve sort of pulling forward from 2025. It was a balanced attack across credit, insurance, between our insurance clients, direct lending, which we highlighted in the 8-K, $7.5 billion, not just from BCRED, but also from institutional clients, our CLO platform or ABS platform and so on. So it’s a very diversified, sort of balanced tack, if you will. I think in terms of the inflows, we see in the insurance areas, specifically, I think earlier in 2023, we talked about sort of a general range and target of $25 billion to $30 billion inflows from the four major partners.
We actually came in a bit above the high end of that range. And this year, I’d just say, as a starting point, and certainly ending point, but as a starting point, we see baseline expected inflows from those four clients in that range or better.
