Jason Ment: Thanks, Ben. This is Jason. So as you think about where we are going to have competitive edge in the private – sorry, in the private wealth channels, the credit fund that we are bringing is a multi-manager vehicle, and that compares very favorably in our mind relative to the single manager vehicles, the private BDCs and the like that are out there. In private credit, there is a performance benefit through diversification, through number of loans and number of managers, and we’ve got white paper research out there on that point. And there is also a benefit from being able to scale deployment with an open architecture model. And so relative to the single manager BDCs, we think we’ve got space. There is very few comps out there in terms of the multi-manager, though there is one out there that’s quite prevalent.
What we’ve done to differentiate there is that CredEx will be a blend of direct lending and specialty credit, as opposed to a pure play direct lending or pure play specialty credit fund.
Ben Budish: Okay, got it. Thank you very much for taking the questions.
Operator: Thank you. One moment, please. Our next question comes from the line of Michael Cyprys of Morgan Stanley. Your line is open.
Michael Cyprys: Great, thank you. Good afternoon. Congrats on the NCI buy-in announcement. That’s great to see. Maybe just to start there, maybe you could talk a little bit about how you approached the valuation dynamics with the buy-in. What sort of mix of stock and cash can we expect to see? Any particular lockups on the stock portion? And what’s the sort of expected magnitude of accretion? Thanks.
Scott Hart: Yeah. So Mike, maybe I will start there. This is Scott, and then hand it off to Mike McCabe to touch on a part of the question as well. But first of all, thanks for the comment there and congratulations. We’re quite excited about it as are our teams here. So look, the way that we approached the valuation and really the way that we were able to deliver on what we have suggested all along to you and our public shareholders to deliver an accretive transaction with the structure of the valuation at a discount to the StepStone trading multiple. It’ll be on a sliding scale depending on exactly where it is that we are trading as a firm at that time. But that’s clearly a big part of locking in an accretive transaction. I’ll maybe hand it to Mike to talk through just how you ought to think about sort of the second half of your question there.
Mike McCabe: Yeah, great. Thanks Scott, and thanks Mike. Yeah, we’re very excited about this as we announced that our IPO and our Investor Day in June of last year, this was a priority. And we’ve finally reached a stage of scale and team and global footprint across our platform where it made sense to proceed with this mechanism. As Scott mentioned, the buy-in of the NCI will be done at a discount to the prevailing step multiple. And back to Ken’s question earlier, it will be done at a cadence of once per year. And just the way the mechanism works is the larger the multiple that StepStone is trading at, the greater the discount. That’s the sliding scale that Scott mentioned. You can go into the transaction agreement and conjure up a little more detail, but for the purpose of this call, the range of discount you should expect based on where we’re trading could be anywhere between 10% to 30% of StepStones prevailing multiple at the time.
In terms of other aspects of the transaction agreement, I would encourage you to go into the document and of course follow up with Seth Weiss with any granular detail after that.
Scott Hart: And sorry, maybe to just touch on one part of your question that I skipped over. I mean the cash and stock component, I mean you should think about the cash being somewhere in the 10% to 20% range really with the remainder in the form of stock. And there will be transfer restrictions on that that would allow the team to sell about a third a year over the first three years, which has been a consistent approach we’ve used in the IPO, the Greenspring sale, etcetera.
Michael Cyprys: Nice to see the 33% in the quarter here. And just given some of the changes that you made with selling off the fund admin business, I wonder if there were any other changes as well. I mean, you could just speak to the outlook for the FRA margin. Into the March quarter and also into your fiscal ‘25, do you think we’re clearly above 30% on a quarterly basis going forward? And then with the minority buy-in, how does that impact the FRA margin profile over time as I believe the subs operate with a higher margin? What sort of uplifts can we see from that over time?
Scott Hart: Mike, again as we’ve talked, we’ve really prioritized investing in the business for growth over time, and our investment in the private wealth platform is one such example. The technology and other areas, as well as our global footprint have been key priorities for us to invest. But we feel we have largely invested in the platform across the organization and expect to see a margin expansion through a combination of operating leverage, as well as some other efficiencies that we think we can capture across the organization. But maybe I’ll ask David to comment a little bit on some detail there.
David Park: Yeah, thanks. David here. If you look at our, compensation is clearly the largest expense line item. And we did have some favorability this quarter. If you normalize for the bonus accrual adjustment, you can think about run rate as roughly $75 million. And looking into next quarter, if you layer on merit increases that took effect on January 1, you should largely get there. Looking over time, I think the way we look at it is more on a total comp, cash and equity comp as a percentage of fee revenues and it trended in the low 50% range over the last couple of years. And while this may move, you should see some movement quarter-to-quarter. But we do expect this ratio to trend down gradually over time. Some of the, I guess, movement you’re going to see is going to be due to timing of communal fundraising. But again, over time, we do expect FRE margins to trend down over time.
