00:00I do want to start where John was talking about this idea of the tech build-out and how much
00:04private asset managers have been instrumental in that. I'm just wondering how much you are
00:10continuing to accelerate your investments into digital infrastructure, given that everyone is
00:14worried about an AI bubble. Are we investing too much? Are we seeing the fruition of our money?
00:19Sure. So we've sort of transitioned that business to be broader and at scope. Historically,
00:24we've been largely a lender to the space, so a senior lender and a mezzanine investor as well
00:29through our debt infrastructure business. We did a recent acquisition that you may be aware of,
00:35of a business focused on industrial logistics investing, mostly in Japan, but it's global,
00:41and they have real digital infrastructure development capability. So we've started to
00:46roll that out. We've done two completed projects now in Tokyo. We have a third underway just on the
00:52outskirts of London. So we're getting more active on the development front. I think that the
00:58measured approach that we've taken getting into the market doesn't, frankly, put our investors
01:03at risk, right? Our goal is to generate great returns for our investors. So we think if you stay
01:08in tricky markets, i.e. hard to find entitled land, and then you're building really high quality
01:15facilities, which we think we are because we have an in-house team that came with the acquisition,
01:20it's pretty easy for us to find great leases from investment-grade tenants like the hyperscalers.
01:26Are you passing up opportunities that concern you? Do you see things out there that do worry you?
01:30I think we're selective. And I think if you look historically in areas like this over the last
01:3620 or 30 years, typically when this much capacity comes online, some of it at the end of the day is
01:42going to have to be marginal, right? These trends tend to lead to overbuilds in certain places. So I
01:47think us being selective and being measured in what we build is super, super important.
01:51One thing that we've seen over the past five years is an incredible consolidation
01:55of market capitalization of the biggest asset managers, the biggest private asset managers.
02:00I'm thinking of the ones that you won't name, like Apollo and KKR and, of course, Aries.
02:04Well, happily name them.
02:05I'm just wondering whether you think this is the sort of path to follow, that you think the
02:09biggest are going to only get bigger and dominate the space.
02:12Look, I mean, we've believed since the beginning, frankly, of the company that the
02:16more scaled platform, both in terms of diversity of asset classes, but also diversity of geographies,
02:23was a huge advantage, right? So we think we get better information, participate in more markets.
02:29We probably do better due diligence because we have better access points.
02:33So I think the both investing advantages, but also the capital raising advantages are real.
02:39And you'll see you see that with the growth of Aries, with the growth of Apollo and the growth of all the Blackstone,
02:44KKR, all these folks that have consolidated share.
02:47You just actually did see another record year for fundraising, and it feels like it's accelerating
02:52with respect to how easily it is to really get interest from investors.
02:57What's sort of been the tipping point? Where are you seeing that interest really coming from?
03:01Yeah, I mean, we grew up raising most of the capital from the firm from institutions.
03:06So it was pensions, sovereign wealth funds, etc., etc., and we've really diversified the way that we raise capital today.
03:14So I would say an increased focus on the wealth channel, for sure, an increased focus on what our insurance clients are looking for,
03:22because they're very challenged in a tight spread, lower rate environment.
03:26So it's just become more and more diverse.
03:28And I think as we're able to educate and offer access to investors that didn't have access to certain products before,
03:36there's just a lot of uptake from a new set of clients that are interested in what we can deliver at Aries.
03:41How much is that going to be turbocharged by some of what's coming out of Washington, D.C.
03:46to open up some of the private asset management field to 401k accounts?
03:51Look, I mean, I think our view is that it's probably a ways off for that to really provide a lot of lift.
03:59But we are incredibly supportive, obviously, of bringing our products into channels where there's interest.
04:05And I do think that those groups of investors today who have not had access to alternatives deserve access to alternatives.
04:13So right now, one thing that is another theme for the year has been American exceptionalism and this question of, is it still the best place to invest?
04:22And I wonder, as the co-president of Aries, whether you see the greatest opportunity in the United States
04:28or whether you increasingly are expanding overseas, that you see better investment opportunity there.
04:32Well, I mean, so I think holistically, we've been looking to expand geographically for a host of different reasons,
04:37just to give our investors more access points in terms of geographic diversification and asset class diversification.
04:45But to actually answer your question, I do think, despite some of the instability that people may feel here,
04:52that most of the investors that we see around the world are most excited still about investing in America.
04:57It's one thing that we've seen sort of this idea that everything was going to fall apart in the first half,
05:01and suddenly we're talking about a reacceleration, and suddenly the M&A that everyone had been expecting is coming back online.
05:06We're actually seeing those deals come to place.
05:08How active has it gotten for you?
05:11I mean, how much are you seeing this in your business as well?
05:12Well, so, I mean, look, the first three to four months of the year were pretty rocky,
05:16particularly up through April, and that really slowed transaction volume everywhere.
05:21But I'd say in most of the asset classes that we're in, everything has rallied back to where it was pre-liberation day
05:28and even through that.
05:29So credit spreads are incredibly tight, whether you look at high-grade corporates or high-yields or loans.
05:35The equity markets are obviously up through highs.
05:40The thing that we're most excited about is actually kind of a shift for folks that see maybe some of those markets as expensive
05:46into some of our real assets businesses.
05:49So the recovery in real estate, which we think is real, is offering a lot of opportunity for us to kind of play into the sectors that we like.
05:59We refer to kind of as the new economy, real estate.
06:06And we're seeing, we talked about it for a moment earlier, a lot of investment in the infrastructure space,
06:11whether it's traditional or digital.
06:13How much is that predicated on the idea of Fed rate cuts?
06:15Or how much is that completely independent and a sort of secular bet on some sort of shift in the economy?
06:21I don't think it's particularly, you know, reliant on rate cuts.
06:25I think rate cuts help equity more than it helps credit and lending businesses.
06:29So our own view is the yield curve is probably over predicting cuts.
06:36I frankly think the economy here is pretty good.
06:41And policy, while it's a bit restrictive, doesn't seem to be slowing too much down here in the state.
06:48So transaction activities picking up and valuations, as I mentioned, have recovered in almost every asset class.
06:53So I do think we'll see a slow decrease here in rates to try to provide some relief and keep the economic growth that's slowed growing.
07:03But my own view is I don't think rates are going to get down as quickly as maybe you're reading about in the newspaper.
07:08So I have a feeling I know how you're going to answer, but what concerns you more?
07:11Some sort of downturn in the next six months or some sort of reacceleration in inflation?
07:15The latter. The latter.
07:17I mean, I think we see the economy as good, although the growth has slowed and that's partially as a result of rate increases, you know, by design to obviously try to deal with inflation.
07:26But I think that the real scary moment is if you see a reignite of inflation and the Fed has to really dramatically rethink their policy, which I think has been one to leave rates where they are slash reduce them a bit,
07:39which is obviously going to accommodate more growth and more rise in valuation.
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