00:00Can most players survive several quarters of redemptions if you're a fund constantly being hit, constantly getting more than that
00:065% breach?
00:07Are there impacts on portfolios and maybe wider asset classes if they're having to attempt to sell in a liquid
00:14asset?
00:15Yeah, I think a lot of this comes down to how reliant the manager is on retail, right?
00:20There have been managers that have raised significant retail capital.
00:24And in fact, if you look at their AUM, it's 50, 60% retail, right?
00:29So when they get pressured to redeem or provide liquidity to their investors, it could very well trickle through their
00:36underlying portfolios.
00:38But if you're looking at institutionally validated, institutionally backed managers, for example, our portfolios are 96% institutional.
00:47We're only 4% retail.
00:49So when you look at the underlying composition, I think increasingly investors are going to start focusing on that.
00:54You know, a question in due diligence is going to be how reliant are you on retail versus institution?
01:00And by investors, you mean LPs, like institutional investors looking at investing in funds.
01:05Institutional investors and wealth advisory platforms.
01:09How far are you getting that question?
01:10Are they asking you, Ken, how much retail exposure do you have?
01:12I've got it in every single meeting I had in Asia.
01:15Every single meeting.
01:16First question was obviously fundamentals.
01:18Talk to us about your portfolio.
01:19What are you seeing?
01:20A lot of nodding heads, by the way.
01:22So a recognition that they're not hearing about fundamental credit performance, not just from us, but I would say more
01:28broadly from their institutional managers.
01:30But the next question was, okay, well, how much of your portfolio or how much of your investor base is
01:35institutional versus retail?
01:37How reliant are you?
01:38How are these redemption requests going to impact your portfolio?
01:42Presumably you're not the only one getting that question at the moment.
01:44Do you think that slows down overall growth of retail funds?
01:48Do you think this period makes everyone start to tap the brakes or, I don't know, maybe even slam on
01:52the brakes with the kind of expansion some funds are doing?
01:54I think it definitely will tap the brakes for several quarters as funds deal with those redemption requests.
02:00But I think it's interesting two things.
02:02One is, I think, the private wealth platforms, really the overseers of that retail capital will start asking the question
02:11as well, which is we should have managers that have significant institutional backing, institutional capital that have been validated, if
02:18you will.
02:18So I think we're going to hear a lot more about that.
02:21I think which could open up opportunities for managers in the retail space that are more institutional historically.
02:27The other thing I would say is that it is absolutely creating an opportunity in the marketplace.
02:32So we are seeing real time for a core middle market manager like us.
02:37So we focus more on traditional core middle market companies.
02:41We're actually seeing the runway of opportunities expand, right, since you have pressure on kind of the large cap and
02:48the private credit managers that focus on those large cap names.
02:50So there's redemption pressure forcing them to step back from the market a bit.
02:56So it's widening out the opportunity for us with larger companies.
02:59And I would say overall spreads widening a bit.
03:03So we're seeing 25 to 50 basis points, better spreads underlying for new loans.
03:09And finally, I would say based upon what's going on in the Middle East and overall oil prices, base rates
03:14were obviously not coming down as quickly as we expected.
03:18So between potentially better base rates, certainly not declining as quickly, potentially wider spreads and an overall widening of opportunities
03:27within some of the larger cap names,
03:30I think we're seeing we could be seeing an interesting opportunity open up, you know, as this plays itself out.
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