Hello and welcome to Ares Management Corporation’s Second Quarter 2019 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded on Wednesday, July 31, 2019. I will now turn the call over to Carl Drake, Head of Public Company Investor Relations for Ares Management. Please go ahead.

Thank you. Good afternoon and thank you for joining us today for our second quarter 2019 conference call. I am joined today by Michael Arougheti, our CEO and Michael McFerran, our COO and CFO. In addition, David Kaplan, Co-Head of our Private Equity Group and Kipp DeVeer, Head of our Credit Group will be available for the question-and-answer session. Before we begin, I will 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. Please note that performance of an investment or funds is discrete from performance of and investment in Ares Management Corporation. During this conference call, we’ll refer to certain non-GAAP financial measures, such as fee-related earnings and realized income. We use these as measures of operating performance not as measures of liquidity. These measures should not be considered in isolation from or as a substitute for measures prepared in accordance with generally accepted accounting principles. These measures may not be comparable to like-titled measures used by other companies. Also, please note that our managed fees include ARCC Part I fees. Please refer to our second quarter earnings presentation we filed this morning for definitions and reconciliations of the measures to the most directly comparable GAAP measures. The presentation is also available under the Investor Resources section of our website at www.aresmgmt.com and can be used as a reference for today’s call. I would like to remind you that nothing on this call constitutes an offer to sell or a solicitation of an offer to purchase an interest in any securities of Ares or any other person, including any interest in any fund. This morning, we announced we declared our third quarter common dividend, $0.32 per share, a 14% year-over-year increase. The dividend will be paid on September 30, 2019, to holders of record on September 16. We also declared our quarterly preferred dividend of $0.4375 per Series A preferred share, which is payable on September 30, 2019, to effective holders of record on September 13. Now I will turn the call over to Michael Arougheti who will start with some quarterly financial and business highlights.

Great. Thanks, Carl. Good afternoon, everyone. Hope everyone is enjoying their summer. As you can see from our earnings report this morning, our core financial metrics continue to steadily grow as Q2 marked our ninth consecutive quarter of sequential AUM, management fee and fee-related earnings growth. On a year-over-year basis for Q2, AUM was up over 17%. Management fees increased 22% and fee-related earnings accelerated 24% as our FRE margin expanded to 31%. A great indicator of our embedded future growth, our AUM already raised but not yet earning fees, increased nearly 22% year-over-year. Our strong momentum in these core metrics reflects our fundraising success, our steady deployment around the globe, quality fund performance and our expansion into new products. Before I briefly walk through each one of those areas, let me update you on the macro environment and how it’s impacting our business. The markets have continued to steadily rebound into the second quarter, reflecting the Fed’s dovish stance on monetary policy amid solid employment, a strong consumer and generally stable economic performance. While corporate earnings growth is decelerating, credit trends generally remain stable. Default rates remain low by historical standards and there’s healthy liquidity in the system. Real estate fundamentals also remained stable and are constructive for selective investing across our broad geographic footprint and diverse investment strategies. In general, we’re seeing increased competition for quality assets, but we are remaining active. In this environment, it’s particularly critical to have deep self-origination capabilities, extensive industry and asset expertise and trusted management relationships in order to be well positioned to invest. Interest rates remain low, and after today, may remain lower for much longer. This should only increase the need for investors to find durable yield and differentiated investment solutions. With a high degree of current income, lower correlations…

Thanks Mike. As Mike stated, we continue to improve in almost all metrics with continued double-digit growth in AUM, fee paying AUM, shadow AUM, management fees and fee-related earnings. Our AUM reached approximately $142 billion at the end of the second quarter, up over 17% year-over-year driven by capital raising in both new and existing strategies and market appreciation. Our 16% growth over the past year in fee paying AUM to over $89 billion is largely driven by deployment of the AUM previously not yet earning fees. Management fees grew 6% from last quarter and 22% from the second quarter of 2018. Similarly, fee-related earnings grew 8% from last quarter and 24% from the second quarter of 2018. Management fee growth benefited from solid deployment, new capital commitments and an improving fee rate. Our fee-related earnings benefit from strong top line growth and an expanding margin from operating leverage with FRE margins reaching approximately 31%. Looking ahead, we believe a 15% plus annual fee-related earnings growth rate is clearly in our line of sight as we continue to deploy AUM that is not yet earning fees, raise incremental capital and benefit from expected future margin expansion. As we sit here today, we expect to achieve a 32% margin in the next few quarters and should be in the mid-30s in the next 18 to 24 months. Our second quarter realized income of $94 million was down slightly year-over-year. But year-to-date, realized income of $199 million was up 10% compared to the same period last year. Our second quarter after-tax realized income per common share of $0.32 was down versus $0.40 per common share at this time last year. However, on a year-to-date basis, it was roughly flat at $0.66 versus $0.67 per common share last year. This flat year-to-date comparison…

Great. Thanks Mike. So in summary, as you can see, our business continues to steadily expand. We have had a great foundation for future growth and we believe that we are well-positioned in what we consider to be a very large and growing addressable market. We have a growing and sticky client base that continues to add funds at a very strong clip and we continue to attract a significant amount of new investors to the platform as we expand our investment solutions and improve our client coverage model across the globe. And while the markets are competitive, we have enduring platform advantages and over 400 very talented investment professionals that enable us to originate and structure unique deal flow and to generate attractive returns for our fund clients and in turn to our shareholders. So excited about where we are and I feel that the forward momentum that we have across all of our internal and external business activities has never been better. As always, we appreciate your time and continued support for our company. And with that, we will now open the line for questions.

Thank you. [Operator Instructions] Our first question today will come from Gerry O’Hara with Jefferies. Please go ahead. Gerry O’Hara: Great. Good afternoon and thanks for taking the question. Perhaps one for Kipp actually, if my notes are right from the ARCC call yesterday, I think the anticipation for moving into that – the midpoint of that target increased leverage was something along the lines of 12 to 36 months. I was hoping you might be able to elaborate a little bit on what some of the puts or takes might be around how that leverage target might occur, what might slow or accelerate the move into that target? Thank you.

Sure. You are welcome. Thanks for the question. So 12 months ago, we had decided to push forward obviously with the regulatory relief and there is sort of a 1-year cooling off period after the Board approval and I think it was June 22 where it became effective. So we have actually been increasing the leverage modestly at the BDC, but I think the key – I don’t know if it’s a put or if it’s a take, but the key consideration has just been that the investing environment as I talked about on the call for ARCC yesterday has just been competitive, challenging, etcetera. So what we tried to do a year back was give people a 3-year model and that’s actually on the Ares Capital Corporation website in the presentation you can take a look at, that showed the leverage increasing from kind of where our target leverage range is today around 0.75x up to again a maximum of 1.25 over a 3-year period. So, we feel comfortable introducing more financial leverage on the company. I think we are marching slowly towards 1 to 1 in our thinking, but the key consideration is that we are not just going to get there to get there. We are going to get there only if we find enough exciting investment opportunities and we don’t want to lower our bar in terms of what we see as a good investment for that company.

I will just add, Gerry, I think Kipp is being appropriately cautious given the market environment, we are probably inappropriately modest, because when you look at the current earnings run-rate for the company, the company put up a $0.49 core earnings quarter against a $0.40 regular dividend and a $0.42 dividend, including the special. And when you go look at that model, I think the company is positioned itself to be earning core income in line with those projections at a much lower leverage level. So when you look at the profit contribution back to Ares Management, I actually think we are in the enviable position where we are generating the incremental income without taking that corollary risk and that’s been a combination of increased underwriting and syndication fee income, increased commitment fee income, an unbelievable job repositioning the lower yielding ACAS assets and the harvesting of gains. So I think there is still considerable upside, but hopefully people appreciate we are already enjoying a new higher sustainable level of profit coming out of the BDC based on the fine work that they have done. Gerry O’Hara: That’s helpful. And maybe shifting gears to the insurance platform and I guess you kind of touched on the fact that we might be headed into a lower rate environment. Just kind of hoping you might be able to expand a little bit on the growth outlook within that insurance platform kind of balanced against the backdrop of potentially a lower rate environment?

Sure. As I said in my prepared remarks whether we are talking about insurance clients, pension clients or retail investors, persistently low interest rates pushes people to be much more active buyers of alternative fixed income product. And given the rate environment that we’ve been operating under for 10 years, we’ve come up with a very interesting broad-based suite of products not just for the insurance community but for the institutional and retail community at large. What’s interesting about insurance, and we’ve talked about this on past calls, we formed an insurance solutions business here at Ares 6 or 7 years ago with a recognition that based on the some of this interest rate-driven behavior but also some nuances around regulatory capital frameworks and how that’s driving investment, that the insurance market would be a very large growth area for Ares and folks like us. And as we’ve leaned in on that opportunity, we now find ourselves in a position where we manage well over $15 billion of assets on behalf of over 100 separate insurance companies. And we’ve done a number of very creative interesting things with our insurance company partners. We spent a lot of time in the ARCC side talking about the very strategic partnership that we’ve developed with AIG through Varagon and some other foreign insurers around our SDLP product. We’ve talked a lot about our very strategic partnerships with domestic insurers around our private ABS product and so on and so forth. So this has been a very big area of focus for us. And as I talked about on our last call, the one piece of the puzzle, if you will, that we did not have here that Aspida now brings is the ability to access the annuity in the retirement asset market as the owner of a life insurance platform, a reinsurance platform and having an internal distribution capability to originate new annuities. So this to me is really the next and maybe final piece of the puzzle to complete our capability set. This is a massive end market. I think telling people what they probably know, retirement assets are expected to grow to be about $25 trillion by the end of this year. It’s about $230 billion of annuities were written last year alone. And given the issues around the rate environment, having a permanent capital vehicle in the life space that we can use to grow organically or inorganically we think is very exciting. The current transaction on the table may seem small relative to our ambition but will require a significant amount of Ares capital and third-party capital as we execute on the strategy going forward. So I think this is something you’ll be hearing a lot about over the next coming quarters as we rollout the business plan. Gerry O’Hara: That’s great. Thank you.

Our next question will come from Michael Carrier with Bank of America Merrill Lynch. Please go ahead

Hi great. Thanks for taking the question. Mike, the outlook you provided for the FRE margin, it’s helpful. I think you said over the next 18 to 24 months, realize it’s tougher to predict, but given the realized performance fees were a bit lighter during the quarter, yet the net accrued balance continues to build. Maybe can you provide some context on either the portfolio or the outlook on how you guys are looking at realization activity given where, like the seasoning stands in the portfolio?

Sure. So Mike, why don’t we start with the debt accrued performance fees. The majority of that dollar amount is in funds that are past their respective investment periods. So they’re technically in realization mode. I think that’s important. As highlighted, we remain in an environment that we think is favorable to dispositions of assets. So the environment we operate I think it’s conducive for continued realizations. Obviously, for any given quarter, it’s hard to predict as things, the timing of when transactions occur is always a bit moving things can happen quicker or slower than you anticipate. So that’s why we emphasize on the call, on the prepared remarks that we really think you’ve got a lot at this over the longer horizon. We did flash and I’m not saying this is perfect science, but we mentioned, over the last 10 quarters, FRE represented on average 70% of realized income. This quarter, I think was illustrative of a light quarter of realizations with that number being 82%, albeit also reflecting strength – continued strength and growth of FRE. So I think over the coming quarters in the next year, we still think realizations are going to be attractive. Again, it’s hard to give you a dollar number. But as you know, that as that net accrued performance fees continues to grow and it’s up 20% from year end, what’s already baked into valuations and again, most of that in funds that are in harvesting mode, feels pretty good.

Okay. That’s helpful. And then just a quick follow-up, on the deployment side, I think how would you guys compare maybe the competitive backdrop when you look at direct lending like in the U.S. versus Europe given the fund that you raised and just the competitive dynamics? And maybe, I don’t know if you want to say it, like the market is more niche, yet you guys have some of the infrastructure build out. Just how does that dynamic play out when you look at deployment in this environment?

Yes. So this is Kipp DeVeer, I can take that. Look, we think that the market in the U.S. is materially larger and further along in its development, both in terms of the scale of our U.S. direct lending business and our expectations around deployment. We think that will continue despite the probably more competitive market here in the U.S. than in Europe, deploy more capital in the U.S. direct lending business this year than we will in the UK and in Europe. The counterpoint on the UK and Europe is it’s of course, younger in its development. Both the market itself and our business, despite the fact that we’ve been there for 10 years, we continue to actually add a lot of people. We’ve opened two new offices, and we’ve got a lot of expectations for growth there as the market matures. But again, the scale of that business is not as significant yet. It offers a great growth opportunity and its deployment will be lesser than what we expect to deploy here in the U.S.

Yes, just one quick follow-on, Kipp, as As we mentioned in the script, that we’ve talked about in prior quarters, the value of the incumbent relationships that we develop as the business scales should not be undervalued. When you look at the U.S. direct lending deployment, I think this quarter, 60% of deployment or close to it was actually into existing borrowers. We’ve seen numbers in our European business approach 30% to 40%. I believe this quarter, it was still 25%. So it’s a good indication of the type of value that we’re creating just given the size of the business and longevity we have, and so for the – when you think about the relative markets, the U.S. being slightly more competitive, we have a much larger incumbency benefit that allows us to defend more so than we have in Europe just given the state of development. But obviously Europe’s quickly catching up.

Alright. Thanks a lot.

Our next question will come from Craig Siegenthaler with Credit Suisse.

Thanks. Good afternoon everyone. Just a follow-up first with the life business. Can you help us frame the organic growth potential of Pavonia Life, including both new business and reinsurance? And also I wanted to see if you could help share with us what the fee arrangement looks like between Ares and Aspida?

So as I mentioned, what’s interesting about this transaction is Aspida purchased two assets if you will. One is Pavonia Life, and two is the distribution and servicing company, so we’ve added about 175 folks in that capability at Aspida to manage the growth. We can’t tell for sure what the go forward organic growth will be. But as I mentioned in the prepared remarks, last year that distribution engine, if you will, originated $1.8 billion of new assets. And we would expect with continued investment that we can meet or exceed those types of targets. With regard to reinsurance, that’s a little bit harder to predict. Obviously, given our relationship with the insurance community, we think that that’s going to be a meaningful piece of the growth story here. The best thing I could do there, Craig, is really just have you look at the market, that transactions that are occurring in the market, what some of our peers have been able to accomplish here, to get a general sense. But I think over time, that’s a multi, multibillion dollar opportunity for the company as well.

Got it. And Mike, I guess, $2 billion of gross organic means something smaller now when you add that one, when you consider net due to runoff. But just for my second question here, given the current investment backdrop, when can we see Ares get back out there and raise a sixth global buyout fund?

As I mentioned, our expectation is, given where we have been on deployment in our Fund V that we are moving very quickly to the stage where we’re going to put Fund VI into the market. So as we talked about going into 2020, I think that that’s one of the flagship funds that people should expect.

Thanks Mike. Sorry if I missed that earlier.

Yes, no worries.

Our next question will come from Chris Harris with Wells Fargo. Please go ahead

Question for you, Mike, you sold a decent amount of Ares stock recently. So wanted to give you an opportunity to address perhaps why you did so? And then how you might answer somebody who thinks this could be a potential red flag?

Sure. I guess meaningful all relative. Just so that people appreciate, I believe I sold 1 million shares, which represents I believe close to 5% or 6% of my total holdings. I’ve been here building this business with my partners for over 15 years and have never sold a share of stock. I think as people know, I do not take any salary or bonus and the bulk of my compensation comes through distributions on the stock and obviously stock price appreciation. My net worth is heavily concentrated in Ares stock and Ares fund product. I am young but getting older. I have a family, and I am doing what I think most people do, which is move towards diversification and estate planning, and I think it should be read as nothing more than that, particularly when you think of it as a percentage of my net worth and concentration in Ares stock and Ares product.

Thanks for that, Mike. Now just want to squeeze in a follow-up question on the insurance initiative. Can you guys talk a little bit about the team at Ares that is focused on building this out and growing it?

Sure. So the team is led by a gentleman named Dave Reilly who has been a partner at Ares now for over 10 years, comes to the platform with a lot of insurance expertise and is supported by a dedicated team here of, call it, 8 to 10 people depending on how we calculate the FTEs. As we continue to build out the insurance solutions business, it’s really broken down into asset management, capital solutions and capital allocation as well as what I would call strategy and M&A in terms of how the teams are spending their time and allocating the time. Now as we continue to build out the life co, I think you’ll see us adding resources, first on the investment management side as we try to broaden out our capabilities to be more relevant to Aspida and other insurance clients as the market grows. And then probably secondarily in the solutions business, as we continue to try to be a good consultative partner for our insurance partners so that the Ares Insurance Solutions Group will grow. And then as I mentioned, Aspida Financial has over 170 employees. And as the company continues to grow, I think that number will expand as well.

Our next question will come from Robert Lee with KBW.

Good afternoon already. Thanks for taking my question. I guess the first question to have is, you talked a lot about European expansion, been there for a while. But a lot of peers – or in addition to Europe, have clearly put Asia as a priority. Could you maybe just update us on your thoughts there in terms of opportunities or intermediate-term investments you’re making, Asia broadly?

Sure. So I think, as you’ve mentioned, Rob, we have a very – we’ve had a very good experience building our European franchise organically and inorganically, and we learned a lot in terms of the ingredients for success, things around hiring local talent with what I would call Western investment capabilities and experiences, funding those businesses locally, building strong partnerships in the region. We’ve learned a lot about organizational design to kind of manage the span of control issues that will inevitably come up when managing far-away geographies. And so, we’re applying that to our organic build in Asia, which up until now has been largely focused in and around our growth in private equity capabilities with dollar-denominated and R&D-denominated growth equity funds. As we talked about on the last two calls I believe, growth in Asia is one of our most significant strategic priorities for many, many years. For a whole most of reasons, I think Asia has been not as investable as other geographies. We’re beginning to see that shift. And so, through a combination of organic and potentially inorganic growth, I think you’ll continue to see us driving scale into that region.

Great. And maybe just a follow-up on the flagship fund raising, I mean, is there any reason to think from where you sit today as you look ahead that you wouldn’t experience your kind of, what has been kind of the traditional 25%, 30% upsizing on the successor funds at this point?

No, again it’s interesting because on the some of the larger funds, we’ve actually been seeing closer to 40% sequential growth. As I mentioned, when you look at where the new capital is getting raised, it’s been 70% plus from existing investors with very high re-up rates on sequential flagship funds. So, one of the reasons we always have such high conviction around that 20% plus growth rate on flagship funds is we’re seeing 70% to 80% re-up with incremental increases in capital commitment. So almost by definition we’re going into a lot of these fundraises at the prior fund size before we allow new investors into the product. So, I would expect that to continue for the foreseeable future.

Great. Thanks for taking my questions.

Thank you.

Our next question will come from Michael Cypress with Morgan Stanley. Please go ahead.

Hi good morning thanks for taking the question. I just wanted to follow up on the insurance initiatives. I was just hoping you could talk a little bit about how you see your approach with the insurance initiative as being how is it differentiated versus others in the peer set. And as you look out over the next, say 3 to 5 years, how will it look like? I guess what’s success to you? If it is successful, what does that look like and what metrics will you be looking at to assess that?

Sure. So again, I don’t know what other people are doing. I have a general sense, and I think everybody is seeing the same opportunity in insurance, whether that is effectively delivering alternative product to a retail end-user through annuities or continuing to create product for insurance company clients in the below investment-grade or high-grade fixed income space. So over time, I would expect that we and the other large alternative managers will continue to gravitate towards similar business models. I think we are somewhat uniquely positioned when you look at our product set. And if you go and look at the slide deck that we put out upon announcement of the transaction, so much of what we’re building here from a product and capability set is really geared around this alternative fixed income product and a lot of that is in response to the growing demand coming through the insurance channel. I would define success really, first and foremost by, are we delivering good value to our annuity buyers and are we delivering best-in-class investment solutions and returns to our insurance company partners. And if we’re doing that, similar to everything we’ve done elsewhere in the platform, if we perform well, we’ll grow. So, we’re going to be primarily focused on performance, and I think with that, we’ll get growth. In terms of the base case as I said, I think that we would be disappointed if under our ownership and leadership that we could not see organic growth on the annuity side of the business consistent with this platform’s past levels, which in and of itself, would create a substantial capital relationship that could be very exciting for us. And then on the reinsurance side, again, I think that’s going to be a little lumpier in terms of how that grows inorganically and the types of partnerships that we can develop with our insurance company clients. But when you look at some of the peer companies and the scale of what they’ve been able to accomplish with their annuities platforms and reinsurance companies, I think there’s just a ton of white space that’s available to us.

And just a quick follow-up, it’s a different topic, just on real estate. I was just hoping you could talk a little bit about how you’re thinking about accelerating growth in the real estate franchise? And as you look across the business today, I guess what sort of gaps do you see and do you need any sort of an acquisition to help further accelerate that and make it a much meaningful portion of the Ares platform?

Sure. So real estate is performing very, very well. And if you look at the public information that we make available, you’ll actually see that from a fund performance standpoint, our real estate private equity funds are performing extremely well and are, frankly leading the charge right now across the platform in terms of their fund level performance. Building off of what I’ve just said, it’s very easy to scale a business with that kind of performance. And suffice to say, we’re leveraging that into newer funds and larger funds. And I would expect to continue to see that grow. So if you look at what we’re doing organically in that business, similar to what we’re seeing in the rest of the platform, we’re growing that business 15% to 20% a year organically with very good margin growth, albeit the margins are still lower than some of the more mature scale businesses but they’re well on their way quarter-over-quarter. In terms of the businesses that we were not in, where I think where we could have meaningful growth opportunity, are real estate lending business. While it is substantial and growing, we’re creating new product in that business, specifically around some open-ended fund products that are showing significant growth promise. I think we have a meaningful opportunity to grow our real estate lending business in Europe on the backs of what we think is the best-in-class franchise in that market for real estate PE. We continue to build off of our opportunistic track record to create broader development capabilities, and I wouldn’t be surprised to see us getting into the development to core business or the core business itself over time. A lot of those capabilities already reside here at Ares. So, the question of acquisition versus organic growth I think is going to be less about are there capabilities that we want to acquire versus do we believe that getting scaled in any one of these particular markets or products is important enough that we’re going to acquire that scale through acquisition. And that’s just that’s an ongoing discussion here and it’s the same conversation we have in every business, but we couldn’t be happier with the state of the real estate business in terms of the fundamental fund performance but also the growth trajectory there.

Correct. Thank you.

Our next question will come from Kenneth Lee with RBC Capital Markets. Please go ahead.

Hi thanks for taking my question. Just one on Aspida financial, the insurance platform, how would you anticipate would you anticipate the capital that could be available to do inorganic acquisitions through reinsurance transactions to come mainly from third-party sources? And if so, would that be likely be structured?

Yes, so as we’ve already publicly announced, the initial platform acquisition will require somewhere between $75 million and $100 million of capital and that will be coming from Ares Management as we control the platform and organize it the way we’d like it to be organized. Going forward, the need for capital here will be pretty significant, both to support and capitalize the organic growth as well as the inorganic growth. Ares Management will continue to support the growth with its own capital but we’ll also be looking to some of its meaningful strategic LPs to help support the business as well.

Got it. And then just one other question, in terms of the prepared remarks, you mentioned there is 1 to 2 expected portfolio realizations in the second half. Wonder if you could just disclose which, either which areas or any other further details as you can about those realizations?

Yes, it’s hard. We don’t really talk about specific realizations. So, I unfortunately am not going to give you the specific names. We have made some public announcements about some significant exits in our private equity portfolio, which I think are available to folks, and I’d encourage you to track that down, but I would just reiterate what Mike McFerran said, which is when you look at where we are from a harvesting and positioning standpoint, 90% of that available performance fee is actually in funds now that are past their investment period. So, as we’re moving into this next phase of flagship fundraising, I think you should start to see the realizations accelerate over the next couple of quarters.

Got it. Thank you.

Our next question will come from Alex Blostein with Goldman Sachs. Please go ahead.

Hi good afternoon. This is Daniel Jacoby filling in for Alex. Thanks for taking my questions. Just circling back to the FRE margin, I appreciate the guidance. I guess if we just take a step back and think about this kind of bigger picture, management fees are tracking up about 20% year-over-year. And if I look at the margins, they’ve only expanded about 20 basis points. I guess while we recognize that there’s significant investment in the business and there is ramping of new products, are there structural reasons why the margins can’t converge a little bit closer to sector averages, closer to something in the 40% range over the next few years and maybe just a little bit of color, helping us bridge that gap from kind of the management fee growth versus the more modest margin expansion would be helpful. Thank you.

Sure. So, I mean I think if you look just, I mean we talk about the 20 bps, margins have been expanding more than that. If you look a couple of years ago, we had a 28% margin that had grown to a 30%. This quarter, I think from last quarter sequentially it was up 50 basis points if I round out. I so when we talk, we voiced in our prepared remarks we think this will hit 32% this year. And over the next 18, 24 months, continue if I was just to kind of project out how you a path to the mid-30s from where we are, that kind of feels like something along the, a path of around 50 basis points of margin expansion per quarter. So I think what’s happening is as we’ve one thing we’ve talked a lot about in the past is we invest heavily in capabilities to raise, invest, support the capital we have and such a significant amount of that capital pays us off in vested assets, which is why the AUM not yet earning fees is such a large number and continues to grow meaningfully. And expenses right in front of it. So when you look at how much capital we raised over the couple of years, the strong pace of deployment we’ve had over the last couple of years, the expansion in new strategies and extended capabilities, all that’s consistent with continuing to put expense on those businesses where we’re now having the benefit of great visibility on the fruits of our labor coming to bear for the next couple of years with those management fees falling as the capital is put to work, and that’s why you see management fees taking off at north of 20%. And look, I think the margin continuing to elevate is going to be a function of deploying the capital and the revenue starting to match up to the expenses that came in front of them. As far as the peers go and the margins you referenced, I think you have to look at things more on an apples-to-apples basis by business. Some of our peers have a decent amount of their income coming from transactional-oriented fees or other advisory-type businesses or capital markets businesses. Our core earnings are driven by management fees. We can get in a lot of specifics, but we believe our model for us is the right one, which can get us the right alignment of interest with our private fund investors, and we think we have, very stable and as we continue to demonstrate, growing core earnings. But the margins, again, we have it’s why we’re comfortable putting out there are a little more clarity around the time line of how to get to a price that we think would be really good, which is over the next few years.

Okay. Got it. That’s very helpful color. And then just one other kind of modeling cleanup question just on the share count, we’ve seen that creep higher for several quarters now. Any color as to what’s driving that creep? And I guess within the context of I think in the past, you guys have pointed to a share count-neutral strategy. So, is there any updated thinking around kind of the share count strategy and the path from here?

The share count has ticked up from investing of sorry, divesting of employee awards primarily. So that’s what you see them being happening during the course of the year. That doesn’t happen as different awards have different dates associated with them. It doesn’t all happen on the same date. Our IPO was no more than 5 years ago, so sort of lockups expired around that. The share repurchase program, as you’ll see disclosed in our 10-Q, we did actually have our inaugural share repurchases during the quarter. We repurchased 400,000 shares at the average price of $26.12. So, we’ve begun that. It is our objective to pursue a share count-neutrality strategy from employee awards again as an objective versus a black and white, we’re definitely going to do it. But it’s how we one of the intended uses of the earnings we retained from performance fees was to pursue that strategy.

Alright. Thank you for all the color.

At this time, we are showing no more questions in question queue. I would like to turn it back to Mike Arougheti for any closing remarks.

Great. Well, thanks, everybody, for spending so much time with us today. We appreciate the continued support and all the great questions and look forward to speaking to everybody next quarter and enjoy the rest of the summer. Thank you.

Ladies and gentlemen, this concludes our conference call for today. If you missed any part of today’s call, an archived replay of this conference call will be available throughout August 31, 2019, by dialing (877) 344-7529 and to international callers by dialing 1 (412) 317-0088. For all replays, please reference conference #10131886. An archived replay will also be available on a webcast link located on the homepage of the Investor Resources section of our website. Thank you.