Q: How is the company addressing the transition in leadership, and what strategic changes are planned? A: Chairman Steffen Meister announced a leadership rotation where CEO David Layton will transition to the role of CIO and Chairman of the Investment Committee from January 2027. Yuri and Roberto will step in as co-CEOs. Layton reflected that in hindsight, the firm would have expanded the breadth of its investment engines earlier, particularly given the shift toward perpetual investment vehicles. The new leadership will focus on broadening investment strategies and maintaining the firm's market share gains, which have been driven by diversification across asset classes and client segments.

Q: What is the company's strategy for capital management, including dividends, M&A, and potential share buybacks? A: Steffen Meister clarified that the board's priority remains paying a stable or growing dividend, which may occasionally exceed 100% payout. M&A opportunities will not impair this policy. Regarding share buybacks, Meister explained that discussions are centered on using excess carry from years with high realizations for buybacks, but this is not a near-term plan and would not replace dividend payments. The company remains selective on M&A, having been "less courageous" recently, but expects more attractive opportunities to emerge as market consolidation impacts the industry.

Q: How is the recurring fee margin evolving, and what factors are driving the changes? A: David Layton attributed the decline in the recurring fee margin to 109 basis points to a mix shift, driven by strong fundraising in infrastructure and private credit. He noted that an upcoming private equity fundraise would shift the mix back in due course. CFO Joris Groeflin added that the company remains within its historical bandwidth of 1.18% to 1.33% and continues to protect overall margins through cost discipline, maintaining an EBITDA margin above 60%.

Q: What is the status of the evergreen platform, particularly regarding redemptions and gates? A: A company representative confirmed no change to the guidance provided in July, with mature evergreen strategies experiencing redemption dynamics that will be managed over the next 12 to 18 months. The company expects $20 billion to $30 billion in growth from the broader evergreen platform and joint ventures. Steffen Meister provided context, noting that liquidity limitations on three mature strategies are common in the industry and reflect investors harvesting significant returns, with early investors having made five times their money. He emphasized that this is not an issue for smaller, newer funds.

Q: How is the company positioning itself in the private credit market, and does it need to scale up? A: Steffen Meister explained that the large-cap private credit space is becoming more like public market credit, while the firm focuses on PE-style, entrepreneurial credit underwriting in the extended middle market. In Europe, Partners Group is a top-three player, and it is building out its presence in the US and Asia. Meister acknowledged that the firm could be more active in targeting large individual credit accounts in the US, which is a planned focus for the next few years to gain market share.

Q: What is the company's view on the exit environment and the demand from buyers? A: David Layton described the exit environment as "quite reasonable," with a balanced mix of IPOs, sales to strategics, and financial buyers. He noted that some processes may be delayed, with a handful of exits potentially slipping into next year, but this is not a significant concern. The company's active capital markets team is managing refinancings for six or seven portfolio companies, consistent with recent years. Layton emphasized that the transformation case for businesses is as important as financing conditions, and the firm tends to use less leverage than peers.

Q: How is the company leveraging AI in its investment process, and what impact will it have on costs? A: Steffen Meister highlighted the development of the "PGAI Fab," a proprietary AI tool that will leverage the firm's extensive data and documentation from 25 years of investing. This tool aims to provide context for agents in data rooms and, more importantly, to inform value creation plans by analyzing historical successes and failures across sub-sectors. Meister believes this is a unique advantage that will make the firm a better investor. He suggested providing an update on these efforts at the annual results in March.

Q: What is the outlook for the insurance AUM growth, and how will it impact margins? A: David Layton stated that the insurance opportunity is naturally weighted more toward credit and infrastructure, and the fee base will follow the appropriate mix. The company aims to quadruple insurance AUM to $100 billion by 2033, contributing to the $450 billion AUM target. Steffen Meister added that there is no current bias toward a change in overall margins, but if disproportionate growth occurs in infrastructure and credit, it could lead to a more permanent shift, which the company would communicate.

Q: How are financing conditions affecting transaction activity, and could there be a rerun of the 2022-2023 slowdown? A: David Layton acknowledged that changes in the financing environment can temporarily impact transaction activity as the market digests new rates. However, he emphasized that the transformation case is as important as financing, and the firm uses less leverage than peers, which should mitigate the impact. The company has signed $5 billion of additional investments in July and August, indicating accelerated deployment in the second half, and remains confident in closing on its pipeline.

For the complete transcript of the earnings call, please refer to the full earnings call transcript .