DigitalBridge Group, Inc. Q4 FY2023 earnings call

2023 Recap - Fundraising: Fourth quarter saw strong growth in fee revenues and fee-related earnings driven by new capital formation, InfraBridge acquisition, and FEEUM activation. $7.7 billion in new capital formed since January 2023, including over $1 billion in inaugural credit strategy. - Simplification: Successfully deconsolidated operating segments like DataBank and Vantage SDC, monetized value, deleveraged balance sheet by over $5 billion, and realigned financial reporting. - Portfolio Company Performance: Digital infrastructure verticals performed well with MRR growth across all verticals, led by data centers with nearly 25% MRR growth. ### 2024 Plans - Fundraising: Targeting over $7 billion in fresh capital across multi-strategy platform, with flagship strategy and co-invest raises. - Portfolio Companies: Over $15 billion in CapEx budgeted for mission-critical greenfield construction, particularly in data centers. - Scaling DigitalBridge: Focus on driving corporate operating leverage, developing new investment management products, and potential M&A.

DigitalBridge saw significant growth in key metrics. Assets under management (AUM) ended the year at over $80 billion, representing a 52% year-over-year growth. Fee-earning equity under management (FEEUM) reached $33 billion, a 47% increase year-over-year. The investment management segment saw fee revenues up 59% year-over-year and fee-related earnings up over 64% year-over-year. Deconsolidation of operating segments like DataBank and Vantage SDC occurred, with significant value creation and balance sheet deleveraging.

2024 Guidance - Fee-related earnings projected to be between $150 million and $165 million. - Target of over $7 billion in fresh capital across multi-strategy platform in 2024, with significant portion from flagship strategy and co-invest raises.

Risks - Fundraising challenges in a tough environment with increased competition. - Competition in verticals where DigitalBridge operates. - Grid power availability issues impacting data center growth and development.

Q: How has the fundraising environment evolved and what about power availability for data centers?

A: Investor interest is high with deep pipeline, but fundraising is tricky. On power, DigitalBridge has been ahead in sourcing power and renewable energy for data centers, with focus on energy independence.

Q: Any potential for re-acceleration in growth in 2025?

A: Acceleration would depend on amplified fundraising, but focus is on current products, portfolio performance, and exits to drive future fundraising.

Q: Pacing of $7 billion fresh capital in 2024 and DPI pacing?

A: Bulk of $7 billion will be from flagship strategy with rolling closings, and DPI has been strong with $4.6 billion in last 18 months, with more planned this year.

Q: Return rate on $11 billion data center CapEx and sustainability of demand?

A: Returns depend on market, but rental rates expected to continue rising with market-specific dynamics. Pipeline of over 5 gigawatts with qualified land, permits, and power sources.

Q: M&A opportunities in alternative asset manager space and buy vs build?

A: M&A activity expected to continue, but in data centers focus is on greenfield due to high costs of brownfield. Fiber has seen multiple degradation, small cell has bid-ask spread.