Affiliated Managers Group Inc at Goldman Sachs U.S. Financial Services Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Alexander Blostein - Goldman Sachs - Analyst : So why don't we start with a little bit of a bigger picture question. It's something we talked about to most asset managers that spoke so far today is around just trends in asset allocation as we look out into 2025. Clearly, lots of macro tailwinds at play, equity market is strong in the US, maybe a little less outside the US Credit spreads are pretty tight. How are clients repositioning their portfolios looking into '25? And more importantly, how is AMG positioned to participate in that rotation?

Question: Alexander Blostein - Goldman Sachs - Analyst : Great. All right. Well, we'll spend time on all of these points, obviously, but I wanted to start with alternatives. AMG has made a very meaningful progress in kind of pivoting the business towards more secular growth areas like private markets, in particular, but even your liquid alts book started to do better over the last year or so. Collectively, as we said, 50% of EBITDA between those two kind of subcategories. Looking at private market specifically, I think it accounts for a little bit over 20% of EBITDA. Over the last two years, most of the industry growth has been in private credit in parts of infra, but we're starting to see a little bit of broadening in fundraising. It's what kind of the sentiment we hear from some of the other alt managers as broadly as capital velocity improves and things like that. So can you talk a little bit about how growth trends within your private markets affiliates are shaping up over the next couple of years? What are you most excited about in terms of kind of organic growth and fundraising there?

Question: Alexander Blostein - Goldman Sachs - Analyst : Can we expand on that a little bit because when people think about AMG's growth algorithm, I think it's easy to sign off on private markets. We see that across the whole universe, right? The liquid alts part of the business has been more challenged in the past. We see some outflows. And to your point, just now, you've definitely struck a more constructive tone on that part of the market. So expand a little bit on terms of what do you think on that part of the business into 2025. I mean it sounds like AQR will be a contributor. But how broad of the strength are you seeing in the liquid alts? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 10, 2024 / 5:20PM, AMG.N - Affiliated Managers Group Inc at Goldman Sachs U.S. Financial Services Conference

Question: Alexander Blostein - Goldman Sachs - Analyst : Got it. Since you mentioned active equities, I just wanted to zone in on a couple of more recent trends. Performance has been a little bit volatile recently. I think some of your affiliates started to underperform a little bit more in the last couple of quarters. Any concerns around that with respect to 2025 in terms of organic growth? Or generally, you expect that to sort of stay within the same range that we've been in over the last 12 to 18 months? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 10, 2024 / 5:20PM, AMG.N - Affiliated Managers Group Inc at Goldman Sachs U.S. Financial Services Conference

Question: Alexander Blostein - Goldman Sachs - Analyst : I got you. Let's talk about the wealth channel. It's key topic for everybody in the alternative asset management space. Obviously, it's a big topic for you guys as well. You're making pretty nice progress here. You expanded your lineup. I think there's about $5 billion in AUM now across several products. So can you discuss AMG's product inspection strategy and really your distribution strategy in this channel, when it comes to private market alts in the wealth channel? And I guess, how meaningful of a growth driver do you expect this channel to be over time?

Question: Alexander Blostein - Goldman Sachs - Analyst : Can you talk about the investment component of that relationship? Because one theme that we continue to hear from both distributors and asset managers that are trying to participate in this channel is that it's very costly. The support required to make these products successful from financial adviser support, education, just customer service is much more significant than you find with many institutional products. Who's bearing the cost at AMG? How do you split that out? Like how does it ultimately contribute to (multiple speakers) --

Question: Alexander Blostein - Goldman Sachs - Analyst : Yeah. Okay. Great. Makes sense. Let's talk about acquisitions. You sort of opened with that a bit to my first question and that echoes, of course, some of the things you said publicly on the last earnings call, just talking about the pipeline being larger and there's a few things in a later stages. So just double-clicking on that, the types of deals and the type of managers that perhaps are closer to the finish line, what does that look like? And maybe as a follow up to that, we've seen quite a bit of consolidation particularly in private market space with a number of buyers, both large and small, at pretty healthy multiple to say the least. Now those are consolidation deals, which are quite different from what you guys offer. So when you talk to potential prospects, I'm assuming there's going to be some overlap between them considering acquire one versus partner with AMG. What do you win? What do people ultimately get attracted to when it comes to you guys?

Question: Alexander Blostein - Goldman Sachs - Analyst : I got you. And then taking into account your active deal commentary, do you think that's kind of what's going to ultimately push you kind of towards a 40%-ish buyback? Or do you think you can sustain the sort of 60% payout in terms of buyback as you look out the next kind of 12 to 18 months?

Question: Alexander Blostein - Goldman Sachs - Analyst : I got you. And just another one on the M&A front. All this extra appetite for private markets from traditional players, all players, how is that impacting purchase prices and multiples? Again, the public multiples that we've seen, frankly, for both publicly traded securities and the deals of public traded companies that have been done are quite high, and that's probably outside of what you'd normally find acceptable for AMG. And I think you've got deals in the high single digit, maybe 10 times EBITDA kind of range. What is that doing in the market multiples?

Question: Alexander Blostein - Goldman Sachs - Analyst : I got you. I got it. All right. So kind of bringing all these pieces together, it's not a metric that you guys talk about publicly a ton, but it's something that obviously we focus on is, which is kind of organic EBITDA growth in the company. And there's a few layers to that. And Tom and I spend I feel like endless hours talking about this, but there's the mix, there's the ownership, there's a growth of the (inaudible) all of that together, right? So when I think about the pivot towards the liquids, which is obviously very helpful to your EBITDA growth trajectory, if you sustain that momentum, what does that mean for kind of your organic EBITDA growth over the next couple of years? What are you ultimately aspiring to?

Question: Alexander Blostein - Goldman Sachs - Analyst : Got it. All right. If you were to zoom out and think about the business over the next five years, you guys have been on a very consistent path towards this private markets alts broadly trajectory, what do you think the business ultimately looks like over the next five years?

Question: Alexander Blostein - Goldman Sachs - Analyst : Perfect. All right. All makes sense. Thank you both very much. We're out of time. So we'll leave it there. Thanks, all, for joining. Appreciate it.