Invesco Ltd Q1 2025 Earnings Call Transcript

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

Question: Alex Blostein - Goldman Sachs - Analyst : Congrats on the announcement this morning. So maybe starting with a strategic update, I would love to get your perspective on how you envision sort of the product and distribution opportunities develop with Barings and MassMutual. Is it more of a gradual product build, so it might take some time to scale? Or are there places where you guys could see more immediate impact on the business through either kind of a larger sub-advisory arrangement or something along those lines?

Question: Alex Blostein - Goldman Sachs - Analyst : I got you. And then, Allison, one for you on the pref. Nice to see that done. So maybe just kind of a couple of comments on what ultimately got MassMutual over the hump to agree to this. And as you think about the remaining, I think, $3 billion, how are you guys thinking about opportunities to repurchase more?

Question: Alex Blostein - Goldman Sachs - Analyst : Yeah. No, that's great. Congrats to everyone involved.

Question: Craig Siegenthaler - BofA Global Research - Analyst : My question is also on the MassMutual announcement relating to the Barings' US Wealth partnership. I'm curious, could this potentially be a first step in an Invesco Barings merger, especially given that your capabilities are complementary?

Question: Craig Siegenthaler - BofA Global Research - Analyst : Thank you, Andrew. And then this past quarter, we saw EQH take a larger stake in AllianceBernstein. And we're watching MassMutual sell part of their preferred. I'm wondering, are there any limitations to them increasing their 18% common equity stake or voting interest in Invesco in the future? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 22, 2025 / 1:00PM, IVZ.N - Q1 2025 Invesco Ltd Earnings Call

Question: Craig Siegenthaler - BofA Global Research - Analyst : Thank you, Allison.

Question: Mike Brown - Wells Fargo Securities, LLC - Analyst : Sorry, can you hear me now?

Question: Mike Brown - Wells Fargo Securities, LLC - Analyst : Okay. Great. So on the partnership announcement, just given Invesco and Barings' current capabilities, can you just expand on that $650 million? How will that be used specifically? Is that just to seed the new fund vehicle? Or is it also to kind of help add capabilities, for example, to maybe expand in the investment-grade private credit side a bit more? And then in terms of the vehicle is -- just to clarify, is the plan to launch like an interval fund type of structure with a public-private sleeve and that would then be targeting the below accredited threshold? Thank you

Question: Mike Brown - Wells Fargo Securities, LLC - Analyst : Okay. Great. And then, Allison, just on expenses, understanding the market volatility here makes it very challenging to kind of forecast where that could be for the year. But maybe if we consider markets stay flattish from here as that kind of a baseline, how should we think about what expenses could look like for the year? Could they be kind of flattish year over year? Does that variable component give you the ability for them to actually be a bit lower year over year? Just some helpful thoughts -- some thoughts there would be helpful. Thank you.

Question: Dan Fannon - Jefferies - Analyst : Andrew, you talked about some of the trends in April. If you could talk more broadly, I think you mentioned China was positive. But as you think about other regions or client conversations in this type of market backdrop, how you're seeing things unfold and maybe also just from a backlog perspective, do you anticipate fundings to maybe be slowed as a result of all the uncertainty? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 22, 2025 / 1:00PM, IVZ.N - Q1 2025 Invesco Ltd Earnings Call

Question: Dan Fannon - Jefferies - Analyst : Great. That's helpful. And then, Allison, just one more on expenses. Just you mentioned a onetime benefit of $7 million in G&A. Can you also remind us how much of the seasonal kind of comp was in first quarter to try to get a sense of just the starting points of the jump-off points for 2Q?

Question: Brian Bedell - Deutsche Bank - Analyst : Congrats also on the partnership with MassMutual and Barings. And maybe just on that, can you talk a little bit about the economic participation for Invesco? Is it simply a matter of the assets that you are managing in the partnership and you're getting your fees for that for the economics? Or are there other sharing arrangements? And do you expect your asset management participation to commensurate with Barings. Or might it skew one way or the other? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 22, 2025 / 1:00PM, IVZ.N - Q1 2025 Invesco Ltd Earnings Call And I don't know if there's any guideposts of how large you think this could end up being over the next, say, couple of years? Maybe it's too early for that one.

Question: Brian Bedell - Deutsche Bank - Analyst : Yeah. That's helpful. And then maybe just to go to the global landscape, your local profile globally, both in China and really, across the world. How are you seeing -- or I guess, are you seeing any substantial differences within those local regions, given the -- all of the tariff negotiations that are going on and any kind of sentiment globally towards investment products and investment in US products?

Question: Bill Katz - TD Cowen - Analyst : Congrats on all the news today. Just maybe on the retirement market, sort of curious, there's an increasing focus for that market to potentially have great allocation to alternatives. I was wondering if you could talk a little bit about how you're positioned both maybe the opportunity set and if there are any threats to the extent that, that would move forward and sort of see a pickup in all allocations? Thank you.

Question: Bill Katz - TD Cowen - Analyst : Okay. Thank you. And just as a follow-up, I think you mentioned in your prepared commentary and not surprising that the institutional decision make has been pushed off a little bit. I was wondering in those conversations that you are having with them, are allocation dynamics shifting? And if so, to where might they be shifting?

Question: Patrick Davitt - Autonomous Research - Analyst : I have a follow-up to Brian's question. Chatter -- I think he was trying to get to this, but chatter about like large institutions pulling money from US institutions for either ESG or just anti-American sentiment. I think you've guys actually won some of that money in motion to your point earlier. So could you speak to what extent you are hearing any of those conversations, how non-US investors are evaluating those issues? And to what extent you believe having that established local presence is enough to avoid being painted with the, quote-unquote, US manager tag? Thank you.

Question: Patrick Davitt - Autonomous Research - Analyst : Okay. Helpful. Thanks. And obviously, you've been more focused on fixing the balance sheet, organic growth. But historically, big dislocations like this have opened up rare inorganic opportunities for asset managers. So could you update us on your willingness to do a larger transaction if something came up? And if so, what would be at the top of your wishlist for kind of a once-in-a-lifetime type deal? Thank you.

Question: Ken Worthington - JPMorgan - Analyst : So maybe first, Allison, you mentioned in the prepared remarks, the ability to make expenses more variable if needed. Is this largely comp? And how far can you take it? And given that the market volatility or market levels have been more recent, but deeper correction, have you already started to take the steps to adjust to the more challenging environment?

Question: Ken Worthington - JPMorgan - Analyst : Okay. On the wealth management side, with the announcement today, is what you plan to launch different from what you're seeing in the market already, either by structure, distribution or target customer? What we're seeing is maybe more success from the alternative managers sort of REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 22, 2025 / 1:00PM, IVZ.N - Q1 2025 Invesco Ltd Earnings Call launching alternative products into the wealth management channel than traditional asset managers launching alternative product into the wealth channels. So if your products or focus is similar to what's already there, how do you frame what drives success for you when maybe some of your direct peers have not been as successful going along this path?

Question: Michael Cyprys - Morgan Stanley - Analyst : Just wanted to dig in for a moment on the SMA platform. It sounds like you guys are having some good traction and success there. I think you mentioned $30 billion of assets, 25% organic growth. Maybe just remind us how many strategies you guys offer in SMAs today, how you see that evolving? And if you could just talk about your ambitions, how you think about meaningfully scaling these capabilities as you look out the next couple of years?

Question: Michael Cyprys - Morgan Stanley - Analyst : Great. Thank you. And then just a quick follow-up on the Alpha implementation. I think you mentioned, Allison, $10 million to $15 million range for the next quarter. Maybe you could just remind us how we should think about the cadence of that throughout the remainder of the year and into '26? And ultimately, how do we see the path of that and timing for that falling off?

Question: Michael Cyprys - Morgan Stanley - Analyst : So that $10 million to $15 million continues until early '27. Is that right? And then trails off pretty quickly after that?

Question: Benjamin Budish - Barclays Capital - Analyst : Just one final follow-up perhaps on the Barings deal. Could you just maybe talk about the sort of distribution time line? You have the relationships already with a lot of the platforms, the wires, the RIAs. Once you sort of are able to file a registration statement, how long does it take to start getting the product available on the platform? When might we start to see some more meaningful inflows? And could you maybe provide some color on the investment required here in terms of adviser education, placement fees, anything like that? Thank you.

Question: Benjamin Budish - Barclays Capital - Analyst : Great. And thanks again for squeezing me in.