We’re in this pyramid that Doug has talked about before. At the top of the pyramid, we’re doing the largest companies with the largest sponsors, which we like for credit reasons, not some other reason really headlines and the like, it’s better credits in our view. That remains the domain of a handful of people, many of whom have raised a lot of money. So the dollars — if you look at the dollar flows, a lot of the dollars are in the hands of the same handful of people that had them before. So the top of the pyramid isn’t really changing meaningfully. The bottom of the pyramid, there’s definitely been a lot of new people jocking down there. It’s not where we operate.
Bill Katz: Okay. Thank you. I didn’t meant to interrupt you. So my second question, Alan, for you, one housekeeping item, one bigger picture question within that. The transaction line was particularly strong, because wondering if you could flesh out maybe what was going behind that. But the broader question is, you mentioned the 60% margin, which certainly is quite strong, and you continue to reinvest back into the business. A number of your peers who have started much later than Blue Oil in terms of trying to get particularly into the wealth management business have spent heavily in sort of signaling that they’re on the other side of that investment spend cycle. I’m just sort of wondering if you could just unpack a little bit what’s behind the still elevated spending for Blue Owl and then how quickly do you think that, that could ramp up production as an offset? Thank you.
Alan Kirshenbaum: Sure. Thanks, Bill. So on the transaction fees, we’ve talked in the past about that generally follows the trend of gross originations, they don’t follow lockstep. So we could have a bigger quarter, one quarter and a little lower transaction fees in next quarter. 4Q was our second biggest ever growth origination quarter. So we had — following that, we had a very strong transaction fee quarter. On the 60% margin, look, we will — we talk a lot about not being complacent in the industry and we’re going to continue to put very valuable dollars back into fundraising. And we’re focused on both institutional and wealth in those regards. And we have a very built-out institutional and wealth fundraising teams. We want to continue to grow that.
We want to continue to expand. We want to expand both in the US, we want to expand both around the world for institutional and for wealth. So we’re going to continue to invest dollar in that. We’re also launching new products. And so when you think about each scale product, I think I talked about in my remarks, every big scale product that we raise like a real estate Fund VI or GP Stakes Fund VI. We have other new products we’re launching that have much lower margins. And so everything blends back to that 60% that we see for the next few years.
Bill Katz: Thank you.
Alan Kirshenbaum: Thank you, Bill.
Operator: Your next question comes from Steven Chubak with Wolfe Research. Please go ahead.
Steven Chubak: Hi. I wanted to ask on the Cowen Healthcare acquisition, which you gave some great color in response to an earlier question just on the broader strategy. It gives you a great foothold in healthcare life sciences space. But what I was hoping to get a better sense of is how quickly you could scale the strategy. Should we think about it following a similar growth trajectory to some of your tech-focused funds? Or could it be even faster just given greater brand recognition, better distribution capabilities that you have today?
Marc Lipschultz: Well, look, we certainly see a meaningful opportunity. These things take time to develop well and right and to be able to develop the value add. And so look, tech has been extraordinary, and I — we’re lucky and we appreciate that we were able to create that opportunity. I wish that was somehow the future of health care and maybe someday, it will. I don’t think that’s the template we would have in mind. I think this is about methodically building across the platform. It’s already an area we’re very active and to be clear. As I said, we’ve already done $11 billion of investments in this arena. So I think it’s too early to really give you a lot of direction on scale and timing, but it is safe to say it’s an area we’re very focused on developing our platform.
Tech, I think, was a pretty special case. It is true we have a much more developed infrastructure and much more developed platform and a much more developed set of LPs. But software is such a mega trend, and we were so early with that. I think that was pretty special. But this is definitely an exciting opportunity. I’m talking about another huge part of the economy in health care is certainly it. And we now have a complete set from life sciences to structured solutions to health care services capabilities. So we’re going to work on it, and we’ll certainly keep you all posted as we develop.
Alex Blostein: Great. Thanks so much for taking my questions.
Marc Lipschultz: And by the way, I love the — nothing blue about 72 in your flash note. Thank you for that.
Alex Blostein: Thank you very much.
Operator: Your next question comes from Patrick Davitt with Autonomous Research. Please go ahead.
Patrick Davitt: Hi, good morning everyone.
Marc Lipschultz: Good morning.
Patrick Davitt: This view out there that like middle market lending is less exposed to bank disintermediation and deal activity than the larger market where you play. So in that vein, what are you guys seeing in terms of that give and take between new deal volume and refinancing outflows from larger borrowers as the broadly syndicated and high-yield market opens back up?
Marc Lipschultz: So whether it’s less susceptible to bank, I mean, at the end of the day, the flow lines have been away from the traditional syndicated market toward us, not the other way back, of course, as you know, it’s certainly true. You’re not going to take small companies and do syndicated loans. But that’s kind of part of the problem with the nature of those credits and the scalability. We always get offered brought these smaller transactions. And listen, nothing — not a one size fits all, but I can tell you on average, the credits are nowhere near as good and the terms are no better. So I genuinely don’t understand the argument for the smaller cap alone strategy. It’s a perfectly fine strategy. But somehow, I don’t know if you want to try to position us, oh, here’s an advantage over large cap.
There isn’t an advantage. That doesn’t mean it’s not a perfectly good business. With regard to banks and the flows, so you make a really good point. There’s two forces at work, and they’ll show up in different ways at different times, which is the return of some functioning liquid market, and I think we are seeing the return of some function in liquid market. Again, with the kind of the Asterix on I’ll say, we’re happy about that. I mean we need that to have a good functioning and vibrant marketplace. The abstracts, is of course, it’s nice when the market is entirely in the private hands. But that’s not a bad dynamic in aggregate. And then, there’s going to be this by directional point when those liquid markets return, of course, that means that’s going to be an option for users when it wasn’t an option.
But remember, that was a wide open option in 2021, when we were thriving and having some of our biggest origination periods, which kind of speaks to the point that activity meets our value proposition, ends-up often being the net positive even when there’s, other people bumping around or even very active in the market. And what’s happened over the last several years. And we’ve talked about this, I think, on a lot of the calls, once people try using the private solution, many, not all, decide that’s absolutely what they want to do going forward. The value proposition of the 3Ps, Predictability, Privacy, Partnership, is something that has been now tested by many people. And they said, of course, it’s true. And by the way, just I don’t mean this to be, again, overly conclusive.
I don’t have anything like the knowledge every private equity investor asked, but I did do private equity for 20 years. And I can say this there is no private equity transaction that will work or not work from a return point of view because you paid a little bit more and we do charge more for the loan. And you had a stricter document. Look, if you’re performing well, it won’t matter if you have a stricter document. You get in trouble, it will matter. And that’s of course, how we protect ourselves. And so at the end of the day, a lot of people, I think, are realizing the ease of execution having the predictability of Terms, having a truly Private Capital Structure, so I’m not dealing with quarterly reporting now to bondholders, instead of stockholders.
And most importantly, that phone call, when times change for better or worse, that partnership preferably for better. And we’ve had a lot of that, people calling up and saying, “Hey, can I add on what an opportunity in 2022. No one else can buy right now. I want to buy. Can you provide me capital?” And our answer is, absolutely. So I think that will continue to thrive as an option. And then last, as you mentioned, there will be less, some things will go to the syndicated market. We are not suggesting otherwise, but something that in the syndicated market are going to come down, our market. As you have noted with your question and we’ve already seen that, right? We’ve done that with Finastra. We’ve done that with PetVet things that are coming out of that market, I would suggest there’s probably a lot more opportunity for them to flow in that direction than people who have had a great experience in the Private Market saying, “Oh, I’m really excited to be back to the market of having 100 different lenders when I can otherwise deal with one or two.
