Affiliated Managers Group, Inc. Q1 FY2025 earnings call

• The company generated a record $14 billion in net client cash inflows into alternative strategies, offsetting outflows from long-only business. - Announced three new partnerships in 2025 with Northbridge, Verition, and Qualitas Energy, committing approximately $700 million. - New investment pipeline remains strong with active discussions with firms in the pipeline. - Collaborates with affiliates to enhance their success while preserving independence. - Recently announced acquisition of Peppertree resulted in a significant gain on the minority stake, doubling initial investment. - Repurchased $173 million in shares in the first quarter and expects to repurchase approximately $400 million in 2025.

In the first quarter, led by momentum at AQR and Pantheon, the company generated a record $14 billion in net client cash inflows into alternative strategies. Private markets affiliates raised $3 billion in the quarter, primarily in credit, infrastructure, and private market solutions. Liquid alternatives saw $10 billion in net inflows, driven primarily by tax-aware solutions. Equities saw net outflows of approximately $14 billion, reflecting industry and near-term performance headwinds. Multi-asset and fixed income net flows were flat.

• Expected adjusted EBITDA to be in the range of $210 million to $225 million for the second quarter. - Collective accretion in run-rate economic earnings per share from three new investments and sale of Peppertree stake is approximately 8%. - AUM table will be adjusted to include new investments as they close, with Verition's AUM added in the second quarter and Qualitas likely later. - Expect to repurchase approximately $400 million in shares in 2025 subject to market conditions and new investment activity.

Q: Over the last couple of years, several private market manager sales like Peppertree, can you walk through what drives the decision to part with affiliates and if there are potential future sales?

A: Our strategy is to partner with high-quality independent firms. Circumstances can change where independence may not be optimal. Our partnership model doesn't unilaterally impose decisions. Liquidity events highlight underlying business value. We continue to invest in alternatives and expect business mix to move in favor of alternatives. No indication of future sales being limited to minority stakes only.

Q: On liquid alternative flows, record quarter, can you talk about diversity of flows and outlook?

A: Liquid alternatives had $10 billion in net inflows, driven by tax-aware solutions. High-quality liquid alternative firms are well-positioned for risk-adjusted returns. Recently announced investment in Verition benefits from growth in hedge funds space, especially multi-strat. Diversification of liquid alternative affiliates helps attract flows and deliver outcomes.

Q: On the equity side, what are you seeing in terms of allocation discussions?

A: Equities have headwinds, but high-quality investment teams at affiliates are differentiating. Some affiliates have quality-oriented or defensive approaches. International global products saw impact from dollar weakening. Long-only firms with multi-decade track records are well-positioned to deliver for clients.

Q: Clarify 8% accretion from three investments and sale of Peppertree, and organic growth profile?

A: 8% accretion is on an annualized run rate basis starting in 2026. It's to economic EPS. On organic growth, alternatives have strong growth in private markets with long duration and high fees. Liquid alternatives had tax-aware strategies with sticky assets. Long-only outflows have lower fee rates but balanced by other elements. Duration and stickiness of assets are valuable for long-term earnings growth.

Q: Update on distribution expansion for existing products and new products in the pipeline?

A: Affiliated Managers Group, Inc. has a vertically integrated U.S. wealth platform. Alternatives AUM on U.S. wealth platform has grown tenfold. Launched three new evergreen products and filed for two additional strategies. Have six alternative continuously offered solutions. Working on new ideas in alternative products and active ETFs on long-only side with affiliates.