Scott Hart: And maybe to follow up on your second part of your question there, as the buy-in occurs over time, again, we report FRE on a consolidated basis. So don’t expect to see margin expansion through these buy-ins per se. But again, I think it ties back to the broader comment about as we scale up broadly as an organization, we should expect to see some operating leverage continue to kick in and add to FRE.
Michael Cyprys: Great. Thank you.
Operator: Thank you. One moment, please. Our next question comes from Alexander Blostein of Goldman Sachs. Your line is open.
Alexander Blostein: Hey, everybody. Good evening. Just another quick follow-up around the transaction. Mike, can you clarify if you guys are buying all of the earnings or you’re just buying FRE or you’re doing FRE and carry? And how, if at all, will compensation dynamics at the existing subs or the real estate, infra and debt, how would the compensation change, if at all, for folks that work there? So would they start getting more equity in StepStone? Does anything change in like the carry payout, anything like that?
David Park: Sure. Maybe I’ll start with the first part of your question and maybe invite Scott to layer on a few comments as well. But yes, the buy-in is all cash flows, FRE as well as PRE. So its management fees as well as performance fees. And given the episodic nature of how performance fees work, that was really what led to the thesis behind taking a longer-term gradual approach so that we have this cadence of a series of buy-ins that will happen over a period of time, which would smooth out some of the ebbs and flows that we find in the performance fees. And also, as Scott mentioned, the buy-in will be largely equity to just foster that important alignment of interest with some cash. But as far as the underlying compensation to the teams is concerned, maybe I’ll invite Scott to share a thought.
Scott Hart : Sure. So no real change, for example, to how carry is treated as carry will continue to go 50% of the team, 50% to the house. Obviously, the ownership of that will change over time. I think the biggest change from a compensation structure standpoint is the ability to increasingly utilize StepStone, RSUs, and stock as a component of one’s compensation, consistent with the approach that we’ve taken really across our team since the IPO. And so going forward, particularly for the investment team, we’ll have now multiple levers to pull or components of stock between base, bonus, carried interest, as well as RSUs.
Alexander Blostein: I got you. Great. Thanks for that. My second question around the secondaries business, it seems to be quite active and the momentum in the market continues to sort of build there for many reasons we talked about. Can you help us frame how much of the $21 billion of capital that’s not paying fees yet is sitting in secondary strategies? And when it relates to those specifically, should we expect a little bit of a faster pace of deployment relative to maybe what we’ve seen in the past, given recent market dynamics?
Scott Hart: Yeah, thanks Alex, for your question. I mean, we’ve never provided an exact breakout of the undeployed fee earning capital by either strategy or asset class. But what I would tell you is, when we think about the $2.5 billion of commingled funds that will activate shortly, those are entirely secondary funds between our venture capital secondary fund and our special situation real estate secondary fund. But the activation of those will be less driven by sort of this rapid deployment that you talked about. It will be driven by the fee holiday on the real estate fund which will expire in early March here, as well as the completion of the investment of the prior venture secondaries fund, which again we expect sometime middle of this calendar year.
As we think about what remains in that undeployed fee earning capital number, again, haven’t ever provided an exact breakdown, but secondary is not as meaningful of a component of the undeployed fear in capital relative to some of our co-investment and primary strategies today.
Alexander Blostein: I got you. That’s helpful, color. Thank you.
Operator: Thank you. One moment, please. Our next question comes from the line of Adam Beatty of UBS. Your line is open.
Adam Beatty: Thank you and good afternoon. Quick, a couple of questions on the NCI buy-in. Great to see the structure laid out and kind of the culmination of that sort of long-term process. So just wondering if there are any contingencies around the performance of the teams in any way, just either around timing or amount or valuation and also a quick clarification around the potential acceleration after five years. Is that like an all or nothing kind of scenario or could it be sort of accelerated without necessarily completing the process? So it would be great to get some color and some details, and also maybe if you could, whether or not you would, to the extent that you did more M&A in the future, whether you would look to have a similar structure or something different. Thanks.
Scott Hart: Yeah, thanks Adam for the questions there. So maybe taking them in order, is there a performance-related component to it? The main part of that is the financial performance of the businesses, which will ultimately drive the value of those businesses over time. And so really our view there is we’ve come up with a structure that will continue to incentivize those teams to grow their businesses over time and to the extent they are able to or successful in doing that, they will benefit from that performance. On your second question around the acceleration, really any time after the five-year point, if we were to mutually agree to accelerate, that would result in the complete buyout to where we would own 100% of the relevant asset class.
