Good day and welcome to the Ares Management, L.P. Second Quarter 2014 Earnings Call and Webcast. All participants will be in listen-only mode. (Operator Instructions). After today's presentation, there will be an opportunity to ask questions. (Operator Instructions). Please note this event is being recorded. I would now like to turn the conference call over to Mr. Carl Drake, Managing Director, Head of Ares Management Investor and Corporate Relations. Please go ahead sir.

Good afternoon and thank you for joining us today for our second quarter earnings conference call. I am joined today by Tony Ressler, our Chairman and Chief Executive Officer; Michael Arougheti our President; and Dan Nguyen our Chief Financial Officer. In addition, Greg Margolies, our Head of Tradable Credit will also be on the call today and available for questions. Before we begin I would like to remind you that comments made during the course of this conference call and webcast contain forward-looking statements and are subject to risks and uncertainties. Our actual results could differ materially from those expressed in such forward-looking statements for any reason including those listed in our SEC filings. We assume no obligation to update any such forward-looking statements. Please also note that past performance is not a guarantee of future results. Moreover investors should note that an investment in any of our funds is discreet from an investment in Ares Management L.P. During this conference call we refer to certain non-GAAP financial measures including assets under management, few earning assets under management, economic net income and distributable earnings. We use these as measures of operating performance not as measures of liquidity. These measures should not be considered an isolation from or as a substitute for measures prepared in accordance with generally accepted accounting principles. In addition these measures may not be comparable to similarly titled measures used by other companies. Please refer to our earnings release and Form 10-Q for definition and reconciliations of these measures to the most directly comparable GAAP measures. I’d like to remind you that nothing on this call constitutes an offer to sale or solicitation of an offer to purchase an interest in any Ares fund. We’ve also posted a new second quarter earnings presentation under the Investor Resources section of our website at aresmgnt.com which we will refer to during our call today. I will now turn the call over to Mr. Tony Ressler, Ares’s, Chairman and Chief Executive Officer.

Thanks Carl. On our last call, we highlighted our investment thesis and growth strategy as a new public company following the IPO in early May. Today, I’d like to start by expressing our views on the current market environment and the opportunities to raise and invest capital before I turn the call over to Michael and Dan for details about our second quarter results and additional comments. In short, we feel the marketplace has enjoyed very, very low interest rates for quite a while which we believe has led to very full valuations in both United States and Europe. We view all of our investment activities through this perspective or as the co-heads of our private equity business say to their fund investors “we see the investment universe with blinking yellow lights move slowly and carefully”. On the capital raising side of our business, there is robust demand for the strategies of each of our Direct Lending, Tradable Credit, Private Equity and Real Estate groups. Investors of all types across various geographies are increasingly in need of compelling risk adjusted returns and increasingly and more frequently looking to firms like Ares with our deep expertise in alternative assets. Our investment capabilities are stronger today than they have ever been. And when we overlay investor trends such as the growing appetite for alternative investment strategies and the consolidation of relationships with proven scaled managers, we are very excited about our ongoing fund raising prospects. Pension funds, both corporate and public, sovereign wealth funds, high net worth clients, insurance companies and retail investors are all consistent in their objectives drive additional yield without access of risk and all four of our businesses are well positioned to continue to raise AUM from these investors. Particular growth in our mandates in the direct lending…

Great, thanks Tony. Good afternoon everyone. As Carl mentioned, I'll refer to our second quarter earnings presentation as I’ll discuss a few key highlights of our performance. As shown on slide three, during the second quarter, we continue to make progress on a number of areas, but most importantly we achieved strong growth in several key metrics, our AUM, our fee earning AUM, fee revenue and fee related earnings. At the end of the second quarter, our AUM had increased to $79.2 billion and more than 30% year-over-year driven primarily by capital inflows. We had yet another solid quarter in this area with 4.4 billion new capital flows in a range of our strategies, across long-only leverage loans including two new CLOs in the U.S. and Europe, inflows into our high yield and global credit strategies and new accounts in U.S. and European direct lending. We also held additional closings in our U.S. value add and European opportunity real estate equity funds currently in the market. Our fee earning AUM also increased at a healthy 21% pace over the last 12 months. So, when we take the new capital raise against our net capital deployment and other reductions our dry powder increased from $18.2 billion at the end of the first quarter to a record $19 billion at the end of the second quarter. As a reminder a significant portion of our dry powder is eligible for fees once we actually deploy this capital. For example our total AUM not yet earning fees increased to $10.2 billion representing approximately $86 million in potential management fees that could be generated from these assets. Our assets are also growing through our investment performance which continues to be strong across all of our strategies. In our credit funds we’ve achieved solid performance in…

Thanks, although we would have a public company for the full quarter ending June 30th we provide a pro-forma information in our earnings release as if we have completed our IPO on January 1 of 2014 to make our information more useful for our unitholders and analysts. Let me start off with a discussion of the component of our economic net income. As Mike stated we continue to enjoy strong management fees and total fee growth from a balance and diverse of source of strategies. We have also invested heavily in new technology, new front and back office personnel and new office location to support future growth. Although our top-line has grown nearly 30% during the second quarter and year-to-date periods our fee related earnings have increased as a slower rate due to the infrastructure expenses about 15% this quarter and about 1% for the year-to-date period. The quarter-over-quarter growth in our fee related earnings for the second quarter of about 4.1 million highlights the higher margin opportunity as we invest and raise new capital. We expect that our fee related earnings will continue to grow from a combination of new capital raises and the deployment of our significant capital both current and new and from a slower growth rate in expenses as the year progresses. Our performance related earnings have also improved compared to the year ago period, both on a quarterly basis and a year-to-date basis, but they were down slightly from the first quarter level. Performance related earnings were 30 million in Q2 '14 versus a negative 12.4 million a year ago. The variance was attributable to high net performance fees in our private equity group in Q2 '14 versus Q2 '13. As valuation last year was generally impacted across the PE sector by greater volatility. While…

Great. Thanks Dan. So, looking out to the third quarter, we’re continuing to have strong success on the fund raising side. Our BDC Ares Capital Corporation completed an equity offering in July, raising $258 million. In early August, we priced a $1.26 billion CLO, the largest in our firm’s history and we believe the second largest CLO since the financial crisis and clearly one of the largest ever transactions. We are also experiencing strong interest in our fourth flagship special situations fund on the heels of strong performance for our third special situations fund which was up over 40%, as I mentioned before. In fact, last week we held our first closing of over $700 million in our fourth special sits fund, as we work towards our target of $1 billion. Our two most recent real estate equity funds, U.S. value add and European opportunity have received about $500 million and $650 million in commitments respectively relative to their targets of $750 million and $1 billion with final closings, all expected by year end. We are also in active discussions with investors for European real estate debt opportunities, long-only loans and high yield credit opportunities and European direct lending. Within private equity, we expect to be fully invested in our first Asian private equity fund shortly and we are planning to launch our second Asian private equity fund by the end of the year. So, needless to say, we are excited about our position as a global alternative asset manager with market leading, highly collaborative and integrated investment groups. We believe that we are well positioned in the fast growing segments of the alternative sector, have a terrific and long tenured investment team in place and possess a loyal and growing base of diverse investors. Our investment strategies give us…

Thank you, sir. We will now begin the question-and-answer session. (Operator Instructions). The first question we have comes from Michael Carrier of Bank of America Merrill Lynch. Please go ahead.

Thanks guys. Maybe first on the DU, the distribution outlook just given some of your color on the third quarter looking more promising than the second quarter I don’t you gave some incremental color on the fund raising in terms of what has happened in the third quarter I don’t know if you can provide any granularity on the distribution outlook, you do things that have happened or things that are in the pipeline so we can get some sense of why the more favorable outlook?

Sure obviously as we have talked in the past distributable earnings can be somewhat lumpy quarter-to-quarter and we do encourage people to look at long-term trend lines in terms of the distributable earnings. In terms of visibility into Q3 and some of the activity we’ve had post quarter data as we’ve mentioned we’ve a number of funds in our tradable credit group that are giving us very good visibility into the third quarter distributable earnings and its currently our expectation that the DU should return to our historical average level starting in Q3. And as you’ve highlighted, given the assets under management trajectory that we have given our fund raising momentum I would expect that growth rate to continue into Q4 as well.

Okay that’s helpful. And then just on incentive income or the performance fees look like the comp ratio is a bit on the higher end and I know that like the mix can fluctuate that around, so I guess just in terms of outlook is there any maybe like a range of where that can fluctuate from quarter-to-quarter depending on performance fees are coming from the private equity of real estate business versus direct lending or tradable credit?

Yes, I think you highlight mix generally speaking where formulae can consistent in in the way that we have our payout ratios and comp structured around incentive generating funds. Some of our funds, i.e. our private equity funds will have higher payout ratios than some of our tradable credit and direct lending funds and so mix will generally impacted, but generally speaking we should see ourselves somewhere in the 60% to 80% type payout range depending on the funds structure.

Okay. And then lastly two components but on the FEAUM and then the incentive AUM I think for both of those buckets I know you have some future like potential. So I think you guys mentioned the 10 million of capital that's not earning fees yet and then on the incentive AUM you reported the eligible versus what earnings and I think it's about 55%, 56% ratio currently. So on both of those, is there any way to give some granularity or some color on the timing of increases or what can be like the potential catalysts for the start to kick in, obviously as you deploy or on the incentive AUM there is new funds that will eventually be incentive generating or if it's performance until ones the funds cross the hurdle. Just to get some insight on where there is numbers could go?

Sure, I could, I don't know if people have the slide show, but it may be helpful to look at page five of the slide deck if people have it, just to get a sense for some of the numbers that you just raveled off. But clearly as I mentioned we have significant momentum in fund raising both in our SSF, Special Situation funds that seem to be launched Asian private equity fund and a lot of momentum in our PE and incentive generating real estate funds. So if you look at the growth in incentive generating AUM obviously, we're showing good sequential quarter-over-quarter growth and good year-over-year growth. But to you specific point if you look at the incentive generating AUM as one example, our fourth private equity fund ACOF IIV which is $4.7 billion fund given where it is and its life cycle was actually just at the hurdles. I mentioned it's performing very, very well from an IRR standpoint at just at the hurdle. So you'll start to see some of the PE style funds roll into the incentive generating category as they mature. So I’d expect to see that percentage go from that mid-50s range obviously to continue to increase as those funds develop.

Okay, thanks a lot.

Next we have Ken Worthington of JP Morgan.

Hi. Good afternoon. So, maybe we see the other topic, investing the capital. So about $19 billion of dry powder at work and I think in your prepared remarks you talked about the low rate investment and the credit environment that we’ve heard in many places as quite floppy right now so how do you see the pace of putting that $19 billion to work? And then I'd love to hear your outlook for credit environment say over the next 12 months and how that will factor into how you deploy the capital?

So, I guess maybe I will take a crack and maybe Greg you’ll help out. But I think from a pace -- we're finding assets certainly to invest in what we try to highlight on the call clearly in both tradable credit and self-originating direct lending, despite they have come in a bit. But we're still seeing very attractive opportunities, credit opportunities again maybe we are talking about 8% to 10% return rather than 15% 17% return that we saw in the prior five years. So, returns and certainly come in but there is enormous amount of access available. And for what it’s worth it’s our view that we are putting meaningful dollars to work both in direct lending and tradable credit. So, that is the outcome. I think on a private equity side and real estate side, really on private equity and real estate and corporate. I think what we're seeing a little bit more prudent or we're putting meaningful dollars to work on real estate side. I think we generally put $1 billion plus to work in our private equity business, that continues without change. So, again we feel pretty good albeit with a little bit lower rate of return in our tradable credit business and direct lending business. Greg, I'm not sure if you'd agree, but

Sure, I would. And just far as a follow up to that, I think what we're seeing on a tradable credit side, we continue to see there will be selective in how we're investing in both leverage loans and bonds, obviously we take a specific duration view given the potential for rising rates, while managing through that well for our clients. Our view for the 12 months or so is to continue to find high quality franchise credits that we can invest that are more defensive in nature, but setting ourselves up for overtime, a potential credit cycle and having the liquidity and available capital to take advantage of that overtime as the market will eventually bifurcate into a more traditional and credit cycle of both performing assets that are available and attractive and potential stressed or distressed assets that are available as well.

And just as tradable credit, if you were widened it's fair way in special situations to include U.S. and European assets to include certainly European non performing loans as well as traditional distressed and post org equity. So, widening the fair way is part of the process.

Okay, great. And then just one maybe to on ARCC, you made some management changes within ARCC maybe talk about the catalyst there and then investment income was down for ARCC in the quarter maybe talk about the dynamics there and the positioning, you talked about positioning, but just the dynamics for the quarter in ARCC?

Sure. So, for those of you who don’t know the management changes that being referred to is that on our most recent earnings call we made announcement that I moved from being the CEO of the BDC to become Co-Chairman, I was still very actively involved in that business given that that’s where my roots are and my very long time partners and friends [Kip De Vere], Mike Smith and Mitch Goldstein were all elevated to the roles of CEO and Co-presidents respectively. The catalyst really is just the natural evolution of leadership in any business I’ve been running that company for 10 years, obviously I am spending significant amount of my time now at Ares Management, but to make sure people understand Kip, Mike and Mitch as well as the team of 125 people below them has been presiding over the growth and success that ARCC since its inception as a public company in 2004, so really just the continuation of how the business is being managed today and I couldn’t be happier for them for the company, I think it’s in great hands. With regard to the investment income, as we mentioned this is the kind of environment where you have to be selective, when you look at deployment whether it’s in tradable credit, private equity or ARCC what we do think we bring is not only flexible capital to find the best return in the market but real competitive advantages in terms of our unique origination and size. And so when you look at ARCC as we communicated on the call the deal pipeline is very strong, the forward calendar is very strong we expect Q3 and Q4 to be strong as we highlighted on that call a lot of the softness that we saw in Q2 frankly was just a factor of timing. We had a number of refinancings that showed up in the portfolio early in Q2 and we had a very back end loaded deployment pace in ARCC specifically in Q2 as well. So I think when we look at the run rate for Q3 we are pretty excited about what’s in store for ARCC.

Great, thank you.

Next we have Chris Harris of Wells Fargo.

Thanks hey guys. So appreciate your comments on M&A activity that you might want to be looking at I am sure you guys can’t talk about potential candidates but maybe you can talk to us little bit about some of the capabilities or strategies at Ares management that you would potentially like to build out or grow through inorganic opportunities?

Sure. So maybe just to take a step back and frame the consolidation discussion then we could give you a little bit of a sense as to what’s on the strategic roadmap without getting into details. But the consolidation trend in our industry we think is very real it’s been driven by a number of different factors. First and foremost as we just talked about there are meaningful economies of scale in our business, not just in terms of how the profitability of the business develops but in terms of how you are driving investment advantages as you grow the balance sheet and really drive synergies across the platform. There are increasing regulatory and infrastructure demands being placed on asset managers of all different sizes and we’re seeing a growing investor appetite particularly among the larger global institutional to investor to invest more dollars with fewer managers I think recognizing the benefits of scale. We’re also seeing meaningful trends and changes in distribution of alternatives that I think augers well for the larger platforms to take disproportionate share. So what we’re seeing now and area is really a perfect example of this is there are a number of partnerships and smaller but very successful asset managers that are going through generational transfers or finding that they are disadvantaged as the market continues to consolidate and are looking to platforms like Ares where they can attach, diversify their product offering, enhance their distribution, provide more incentives and frankly more investing advantages to their people. So, this is a trend that we think we’re on the front end of and is very exciting. In terms of how we think about M&A and the filters, clearly anything we do from an M&A standpoint needs to be accretive and it needs to be accretive…

Just to pile on a little bit with Mike. Obviously accretive and complementary is the focus we have in any acquisition but the ability to create flow for our direct lending businesses or widening the fair of what our tradable credit business can do through these type of what we define complementary type acquisitions, that's the benefit, that’s the revenue enhancement that we see and have experienced in prior acquisitions.

Thanks for that guys, very clear thorough answer. Just a quick follow-up on fund raisings, it’s a numbers question. If you guys had to aggregate everything, you kind of have in the pipeline right now, could you help us out, maybe giving us a ballpark figure of what you’d anticipate raising over the next couple of years?

Yes, it's hard for us to do that simply because again it’s lumpy depending on how the cycle develops will affect timing and what products we're actually in the market with. I would just simply say, as we talk about our strategic goals of the business, our hope is that we can continue to grow each of our businesses. Our hope is that we can raise at least $10 billion a year in assets across the platform and to frame that then it would also be our hope that we could double the size of that business over the next five or six years. It's been our experience frankly if you look at the historical growth rates that we’ve grown our assets under management 31% CAGR over the last 15 years. And we’ve actually seen accelerated growth from market downturns. So if you look at the 2007 to 2009 timeframe, we actually grew our AUM closer to 40%. So, how this cycle develops frankly, it’s going to have a little bit of an impact as to what funds we are raising and when and the magnitude of those funds. But generally speaking that $10 billion a year and doubling over the next five or six years, good ways to think about the growth opportunity.

Got it. Thanks.

(Operator Instructions). The next question we have from Marc Irizarry of Goldman Sachs.

Great, thanks. Mike, can you give us some perspective on Tradable Credit, the distributions this quarter and I guess what you have seen so far in the first half? How far along are you in, I guess you have 71 active funds in Tradable Credit, but any perspective on which funds have been sort of in distribution mode and how far or long are you in terms of distributions from those funds? Thanks.

Yes. Why don't Dan, I could kind of kicked that off and then I’ll turn it to Greg, maybe just to talk about generally the life cycle on some of those funds. When you look at the number of active funds within Tradable Credit, clearly there is a lot of refinancing, repayment, extension into new funds et cetera. It's probably our most active business just given the diversity of fund structures. When you look at what's been going on there both Q2 and Q3, we’re seeing a fair amount of activity within our existing CLO book repositioning it into new CLOs. We're seeing a fair amount of activity within some of our leverage loan mandates on the cost of building out our fourth special situations fund. Clearly we're trying to see some liquidity within our third special situations fund. So, the good news is that within the Tradable Credit group we have such a diversity of funds and investment strategies that the distributions and liquidity are actually coming from each of those products and each of those fund structures. I don’t Greg, if you want to tack on to that?

I completely agree, it is, word I’d use is organic and diverse. It’s going across all of our funds. As you can tell, we had quite a bit of success originating new CLOs, refinancing old CLOs and also adding new capital to CLOs, and so we’re seeing realizations within the loan only side as we refinance reposition. But we’re also seeing it across our alternative businesses. We are both successfully unwinding alternative funds profitably but also raising substantial new alternative funds as people are asking us to raise the kind of dynamic capital that’s required for this market. So, it is across all of our process.

Okay. And then just broadly in terms of the markets, obviously there is a concern I guess from about high yield outflows and I am curious what you guys are telling your [LPs] in terms of the opportunities for high yield bond, investing in just broadly across credit as rates rise, do you expect to see more opportunities in the sort of 15 to 18 category ahead or maybe you can just give some sense on in terms of what you’ve seen recently with some of the dynamics in high yield?

Sure. Clearly we’ve seen a subset of outflow in the high yield market, last week was slightly over $7 billion outflow which is the largest outflow on record, the prior record was $4.6 billion and for the last four weeks $12.6 billion of outflow. So clearly, there has been a retail outflow in the high yield marketplace and that’s backed up, spread between 75 and 100 basis points in the market. What’s interesting however that’s all happened with a 10-year being flat to slightly tighter that 2.435% so it’s not been rate driven it’s been more liquidity and headline driven not specific credit driven either. So our view is that there are two trends that are important for investors to keep in mind, one is we’ve said this many times in the past which is the ability to be dynamic as we allocated cross capital, whether it would be loans or bonds up and down, capital structures across geographies given the volatility of our markets today as they will be going forward having that dynamic capital is extremely important to manage credit and duration risk and that is a message that is clearly resonating with our investors and the ability to do that with lower volatility in a 2.4% tenure to be able to earn a 6% to 8% rate of return by dynamically allocating capital that’s the message for investors it is working and we are raising substantial capital in that matter, and the second portion of it is positioning yourselves for potential downturn credit cycle downturn, we don’t see a tremendous amount of systemic risk. But we definitely see potential credit risk in the markets and therefore we are out raising more credit opportunity capital as well as special situations CapEx to take advantage of that potential credit cycle when we will be able to invest in some of those parts of the markets they turn stressed.

Well I think we could also add Greg in our tradable credit in this and our direct lending business something in the neighborhood 75% or 80% of our assets in tradable credit are in fact floating rate I think it’s north of 90% in our direct lending business floating rate. So please understand the difficulties in the long duration fixed rate market actually does not hurt our business but does create some buying opportunities from our perspective.

Great. Thanks.

Thank you.

The next question we have comes from Bulent Ozcan of RBC.

Hi. Quick question on the opportunity side here in U.S. for direct lending. Could you just such on regulatory changes that you sated and then also accounting changes that might serve as a catalyst for your business in the U.S.? Thank you.

Sure. Just a quick clarification, we talk about the regulatory changes, are you talking about the BDC specific changes or you just talking about bank regulatory changes more generally?

BDC as it was bank regulatory there was some news out there about some changes in terms of how banks recognize future losses on the loans and (inaudible) that might serve as a catalyst for your business, but I'd like to get your perspective on that?

Sure. We're not going into excruciating detail, I'd say generally and it's not just limited to United States, but our direct lending business in Europe as well is a big beneficiary of regulatory headwinds in the banking system staring with (inaudible) moving towards the implementation of Basel III moving then towards the OCC and leverage lending guidelines. It's just a lot of challenges when the bank community today to hold SME in below investment grade cash flow credit, we're also seeing parts of the direct lending face open up to us that we're attacking with our growing commercial finance business and the specialty asset based lending markets as well as the asset oriented lending market we see that as a big growth opportunity. And when you look at those headwinds we don't think that this is a short term phenomenon and we think there's been a fairly longer term secular shift for the types of assets that we're underwriting and originating outside of the banking community. In terms of a specific catalyst we’ve talked about this before and there can really no assurance that it will happen but there is a fair amount of momentum on new proposed legislation within the House of Representatives to increase the Regulatory leverage limit within in the BDC structure from one to one to two to one and clearly if that were to happen, it would create a very significant growth opportunity for our flagship BDC areas capital corporation. So, the regulatory opportunity if you will is very significant for us.

Our last question will come from Patrick Davitt of Autonomous. Please go ahead.

Hi. Good afternoon guys. As an extension of the direct lending question, more specifically on Europe which is a kind of more nascent business I guess in the direct lending world. Can you talk about maybe how the deal flow has evolved as opposed to that you are starting to see a pickup in deal flow, and maybe give us an idea of what inning you think you are in, in terms of the scaling of Europe relative to the U.S.?

May be let me swing what we have in Europe, how we think about and then maybe Greg can fill in a little bit on some of the specifics of what we're seeing in the more liquid markets. But Europe, I wouldn't use the term nascent, we've meaningfully been in Europe since 2006. We have over 100 people on the ground there. We have assets under management now approaching $15 billion across each of our strategies. But I would say generally, we think we have done well in Europe as we’ve brought the same integrated platform that we have in the U.S. across our core businesses into Europe to drive sourcing and investment advantages. And we’ve positioned ourselves to be active in the primary and the secondary markets self-originating, direct lending flow, self-originating real estate private equity flow, but also using our capability in tradable credit to take advantage of assets as they are coming out of the banking system. We are in the early innings in terms of the resolution of the economic and banking challenges that exist in Europe. We’ve talked about this on the last call, the one thing that I think most people have been a little bit surprised at, it hasn't necessarily affected our business in the same extent that it's affected others is the pace with which certain types of assets are leaving the banking system has probably been slower than some people would have imagined as they continue to raise capital behind that opportunity starting a couple of years ago. Again, I think the good news for us is we have very significant front end primary market origination capability. So, to the extent that the assets aren't actually coming out in the secondary market, we're taking advantage of the bank liquidity and the bank derisking by self-originating the product across the platform. I don't know Greg, if you want to tack on little bit.

Yes, one tack on, there is agree and the biggest change we've seen in the course of the last six months is finally seeing to what Mike's point was on the performing and non-performing assets side coming up mostly in non-corporate coming up the banks’ balance sheet in Europe. It's been well tucked up for the last five years which much to do about not much. But we have seen a substantial increase in our pipeline on the non-performing side coming up the bank's balance sheet with a more diversity we've seen in terms of assets, strategies, geographies and types of banks that are finally letting those assets go. And so we're very excited about that opportunities and having the kind of broad based global funds that we have to take advantage of the best risk adjusted returns across geographies, we’re really liking what we see there today.

Okay, thanks. And then on fund raising side, particularly in direct lending, which I believe the majority of your AUM is in separate accounts in Europe, could you talk a little bit about incoming demand for that product? I imagine in the separate account structure you have a little bit more visibility on mandates there or maybe I am wrong and correct me if I am.

So, just to clarify, the AUM in European direct lending is a very balanced combination between commingled funds and separately managed accounts. We raised our second meaningfully sized commingled direct lending fund last year and surrounded it with a number of SNAs. Deployment -- back to the question earlier, deployment there has actually been quite good. Our expectation is that both the SNA and commingled fund business and direct lending in Europe will continue to be a meaningful area of growth. In terms of investor demand, we have seen a meaningful uptick in investor appetite for European direct lending and self originated credit. And I think the good news for us is we do have a market leading position, both in the U.S. and in Europe with very developed origination teams. And when you look at the European direct lending landscape in particular that is a fairly nascent market. It’s much earlier in its development when you compare it to the non-bank lending opportunity U.S. We have a very long dated track record there and a real we think first mover advantage. So long winded way of saying, both commingled and SNA appetite for direct lending in Europe is very, very strong right now.

Good pipeline.

Okay, great. Thank you.

Well, this will conclude our question-and-answer session. I would now like to turn the conference back over to Mr. Michael Arougheti for closing remarks. Sir?

Great, thank you operator. We really appreciate everybody spending so much time with us to say today. Needless to say we are very excited about the fundamentals in the business, AUM growth of 30% plus with a real meaningful fund raising pipeline, fee growth of 27% with a meaningful opportunity to continue to grow. We’re just feeling really good about where the business is today we’re feeling good about the market opportunity that lies ahead of us. And look forward to updating everybody next quarter.

And thank you sir to the rest of the management for your time today. The conference call has now concluded. Again we thank you all for attending today’s presentation. At this time you may disconnect your lines. Thank you and take care everyone.