Operator: Next question is from the line of Ben Budish with Barclays. Please proceed with your question.
Benjamin Budish: Hi, good morning, and thanks for taking the question. I want to ask about Global Atlantic. There was some press earlier, I think, last month about the possibility that KKR might have to buy back the ownership stakes from some of the old Goldman Sachs Asset Management clients. I was wondering if you could speak to that. Is there any truth to it, and if not, could you at least remind us of how that arrangement works and what we should think about or expect going forward? Thank you.
Robert Lewin : Yes. Thanks for asking that question. I’m glad you asked it because I know when that article came out, Craig Larson and his team got a lot of inbounds and questions. And since the shareholder agreement is not public, there is only so much color that him and his team are able to provide. To be very clear, KKR has got no contractual obligation to buy out the minority shareholders at Global Atlantic. What we do have is an obligation in the future to the extent that they want to seek liquidity to help them in that process, which of course, we’d be happy to do. So no obligation on our part in any way. But of course, that option remains open to us in the future as well.
Operator: Our next question comes from the line of Brian Bedell with Deutsche Bank. Please proceed with your question.
Brian Bedell: Great, thanks. Good morning, folks. Thanks for taking my questions. Maybe just to focus on the FRE margin comment. I think, Craig, you started off with that in your prepared remarks, the migration up to the mid-60s from the low 60s. Can you just talk a little bit about the timing around that? And is it mostly a scale-based improvement? And so therefore, does that require the flagship fundraising cycles to come in? And then I guess, just strategically, how you think about that in terms of — versus investing in growth initiatives? And I think the big one I’m thinking about is the wealth distribution, particularly if you’re having good traction there. Is that something that you’re sort of happy to spend into to grow that, and maybe delay the improvements in the mid-60s?
Robert Lewin : Yes. Brian, thanks for the question. I’ll start. So I think we can do both is the short answer. I think we can invest into the firm for growth like we’ve been doing and expand our margins. No timetable as at least today to when we think we can achieve that mid-60 sustainable FRE margin. But I can tell you sitting here today, I have more confidence than I ever have in our ability to be able to achieve that over time. I also — I don’t think that’s the cap for us. As we look at the business that we’re building across our asset management platform, I think there’s opportunity over the long term to expand margins north of that mid-60% level. But one step at a time. We’ve got, again, a lot of conviction that we’re going to be able to achieve that on a more sustainable basis, and we’ll give you updates, of course, on our progress.
Operator: Our next question is from the line of Mike Brown with KBW. Please proceed with your question.
Michael Brown : Great, I want to ask on the 2026 targets. Clearly, the growth from your next flagship fund raising campaign and the margin comments you just made Rob will put you on a visible path to that 2026 FRE target, but can you maybe help me unpack the key drivers to the doubling of DE. So I assume — if I assume GA can maybe grow at like a low teens growth rate and maybe correct me if I’m wrong, but if I use that assumption and then I assume –it seems to imply, I guess, a meaningful ramp in the performance fees. Is that the right way to think about the building blocks? And then what kind of gives you confidence that you’ll get to that performance fee contribution piece since that’s somewhat out of your control? Thank you.
Robert Lewin : Great. Thanks for the question, Mike. So I think it’s really multiple different factors. I think it’s FRE growth, as you stated, and we can unpack that a little bit. And we definitely see further opportunities to grow and expand what we’re doing with Global Atlantic to increase our earnings contribution from there. And then it’s our $11 billion plus of embedded gains that sit on our balance sheet today. And that gives us a great deal of comfort in terms of our forward-looking earnings power. So it’s a combination of those three things working together that ultimately gives us confidence in our numbers. And we said it last call, and I’ll reiterate this call, we feel more comfortable today than we did when we initiated that guidance, I think, two years ago now in our ability to achieve our numbers.
And I think that’s saying quite a bit because if you think about what’s happened at least in our space since we initiated that guidance two years ago, we’ve had very tough overall operating conditions. Tough fundraising market, tough overall monetization, volatile marks across the board, but we’re sitting here now telling you two years in that we feel, even in spite of that, more confident than ever in our ability to achieve our targets.
Scott Nuttall: Yes. Let me pick up, Mike and I appreciate you asking the question about ’26. Inside the firm, it just feels really optimistic, candidly. We’ve got a lot of different ways to grow. As Rob and Craig mentioned, we’ve been raising a lot of capital, but our flagship fundraises have not been in those numbers and those are coming. We have a lot of younger and scaling strategies, and I’m not sure it’s fully appreciated just how young the firm is. But if you look at the last 12 months, nearly 80% of the money we’ve raised has been from strategies less than five years old. If you look at the next 12 to 18 months, there’s roughly 30 different strategies we will be in the market with, 22 of those are Fund 1, 2 or 3 or equivalent.
So we’re quite young, and we’ve been able to scale through the cycle. And as we gain more traction and find our way at that inflection part of the curve, we see a lot of upside as these businesses start to get closer to top three in everything we’re doing. Private Wealth is newer for us. So we have a lot of upside ahead of us. GA, we talked about. Asia has significant growth opportunities as well. So the reason you’re hearing the optimism is probably 5 to 10 years ago, we were talking about all these businesses that we started that would take 10 plus years to get to scale. And a lot of that is just starting to happen in this period of time, which is why despite the operating environment, we’re still quite optimistic.
Operator: Our next question is from the line of Michael Cyprys with Morgan Stanley. Please proceed with your question.
Michael Cyprys: Good morning. Thanks for taking the question. Just wanted to ask on private credit with the new bank capital rules. Just curious how you see that opportunity set, potentially unfolding. Any particular areas you view as most attractive coming out of the banks versus less attractive for KKR? And are there any steps you guys need to take at this point in order to capture that? Any gaps you need to fill in? And then just a housekeeping question for Rob, just on the deployment and realizations off the balance sheet in the quarter. Thank you.
