Ridgepost Capital, Inc. (RPC) Q4 2021 Earnings Report, Transcript and Summary

Hello and welcome to the P10 Fourth Quarter and Year-End 2021 Conference Call. My name is Charlie and I will be coordinating your call today. [Operator Instructions]. I will now hand you over to your host Mark Hood, Director of Investor Relations. Mark, please go ahead.

Good morning and welcome to the P10 fourth quarter and year end 2021 Conference Call. This is Mark Hood, Director of Investor Relations. Today we will be joined by Robert Alpert, Chairman and Co CEO. Clark Webb, Co CEO for Souder, Chief Operating Officer, and Amanda Coussens, Chief Financial Officer. Before we begin, I'd like to remind everyone that this conference call, as well as the presentation slides, may constitute forward looking statements within the meaning of section 27A of the Securities Act of 1933, section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995. Forward looking statements reflect management's current plans, estimates, and expectations, and are inherently uncertain. Actual results for future periods may differ materially from those expressed or implied by these forward looking statements due to a number of risks or other factors that are described in greater detail under risk factors of company's perspective dated October 20, 2021, filed with the U.S. securities and exchange commission on October 22, 2021, in our quarterly report on form 10-Q, filed with the SEC and our annual report on form 10-K to be filed with the SEC and in our subsequent reports filed from time to time with the SEC, the forward-looking statements included are made only as of the date hereof, we undertake no obligation to update or revise any forward-looking statement as a result of new information or future events, except as otherwise required by law. I will now turn the call over to Robert.

Good morning. I'm Robert Alpert, Chairman and Co-CEO. Today, we will reflect on 2021, the positive trends continuing in our business, discuss expansion opportunities, and review fourth quarter and year-end financial results. I'm pleased to report that we concluded 2021 with $17.3 billion in fee-paying AUM. That's a 36% increase from where we started the year. Of the $4.6 billion increase, only $952 million is attributable to acquisitions. That is a 29% annual organic growth rate. Other key operational metrics also highlight this transformational year. Revenue increased from $67.4 million in 2020 to $150.5 million in 2021, for a 123% increase. Adjusted EBITDA increased year-over-year from $34.8 million to $83.1 million, and adjusted net income or ANI increased year-over-year from $23.9 million to $62.8 million. ANI is an important operational metric, and we believe that is the best profit measure for our business and comparable to after-tax fee-related earnings for our peers. Besides record financial performance, 2021 is notable because we raised $240 million as part of our October Initial Public Offering on the New York Stock Exchange. Being an NYSE Company elevates our marketplace profile and provides us with the opportunity to attract a premier set of institutional investors who value our long-term vision for middle and lower-middle market leadership. And in December, we closed on a $250 million credit facility which allowed us to retire our old credit facility. Amanda will speak more about this in a few minutes. At its core, 2021 was all about strengthening our position as the premier specialized private market solution provider. We deepened our market presence by expanding product offerings and adding two leading investment strategies to our lineup, mad lending with Hark Capital and GP Stakes with Bonaccord Capital Partners. In a moment, Clark will provide an update on these acquisitions. We believe we have best-in-class solutions with sustainable, competitive advantage driven by long-term track records of superior fund performance. Trusted relationships, and a proven investment process. We are excited about the year ahead and well-positioned for continued growth. Fritz Souder, Chief Operating Officer, will now discuss some of the factors continuing to support the strength of our business.

Thank you, Robert. The momentum that drove last year's growth continues to support our go to market strategy. 3 factors are noteworthy, are concentrated focus on middle and lower middle market, outstanding investment fund returns and cross selling opportunities. First, we focused on the middle and lower middle market, where there are nearly 10 times as many opportunities when compared to our large company investment opportunities. Our targeted approach means we have the opportunity to find better deals, drive favorable pricing, and leverage our deal flow. We believe that no one has a better understanding of our marketplace than we do, and specialization contributes through outside fund performance. Our market space can also be an attractive environment for larger fund sponsors looking for platform expansions or acquisitions, as they sit on considerable undeployed capital. Secondly, our historically strong fund performance continued in the latest reporting period. Review our recent returns, and consider how this feeds a virtuous cycle for P10. As we deliver superior investment performance, our LPs trust us with more capital, which drives follow on funds and new strategies. Great performance also attracts new global capital searching for exposure to private markets, especially in our market. If capital inflows continue, we broaden our relationship with the GPs with whom we invest. They recognize us as a financially strong preferred partner who can scale up to co-invest, transact secondary interest, make loans to their portfolio companies, structure NAV loans, and even take a stake in the GP. We know that past performance is no guarantee of future results. But we have confidence in our investment teams, in their data driven time-tested process. Finally, in 2021, cross-selling helped us deliver meaningful incremental fee paying AUM across P10 affiliates. In Q4, we assigned three veteran RCP marketing professionals to focus on offering P10 products from a top-down approach. With an expanding portfolio of distinct products, we have an excellent opportunity to present large clients a holistic set of middle and lower middle market centric investment choices. With structural macro tailwinds, excellent track records, and ample cross-selling opportunities, we remain focused on expanding our marketplace leadership. Clark will now provide some thoughts on growth opportunities in 2022.

Thank you, Fritz. I'd like to provide a framework of how we think about capital raising in 2022 and 2023. Because P10 is a true solutions provider, providing diversified solutions across multiple asset classes, we consistently have many funds in the market. We're not overly reliant on any one fund. In 2021 for example, we raised capital across 19 different funds. We expect a similar number of funds to be in the market in 2022 with all of our verticals pursuing new capital. Because of the large number of funds, it is impossible to predict specific closings on specific funds. That being said, we expect to raise approximately $5 billion over the course of 2022 and 2023. The cadence of capital raising will likely be more back-end loaded in 2022 with momentum extending into 2023 as well. Part of our upcoming slate of offerings includes follow-on funds from our newest members P10 Family, Hark and Bonaccord. Since joining P10, both strategies have accelerated capital deployment. And as a result, are coming to market with follow-on funds sooner than anticipated. We believe both NAV lending and GP stakes fit perfectly within the P10 ecosystem of providing middle and lower market GP s with value-added products and services and both Hark and Bonaccord can attest that the virtuous cycle of raising and deploying capital has been accelerated since joining the P10 family. As our shareholders know, we believe we are a premier home for investment strategies with a great track record, defensive mode, and a team that wants to accelerate growth. At the same time, with nearly 2 dozen funds continually in the market raising capital across private equity, venture capital, private credit, and impact. We do not need M&A to achieve our long term goals of sustainable double digit growth alongside extraordinary returns on capital. As a result, where we're always engaged in dialogue with potential partners, we can afford to be patient, waiting for the perfect win transaction for all parties involved. With that let me turn it over to Amanda to walk through Q4 results.

Thank you, Clark. I will walk us through some of the key financial results for the fourth quarter and the full-year 2021. Fee-paying assets under management were $17.3 billion at year-end, a 36% increase on a year-over-year basis. Revenue in the fourth quarter was $45.6 million, an 85% increase over the fourth quarter of 2020. Year-over-year revenue increased from $67.4 million to $150.5 million for 123% increase. Average fee rates for the fourth quarter were 108 basis points, which is 8 points higher than our historical average, driven primarily by $3.2 million in catch-up fees earned during the quarter. As a reminder, catch-up fees are earned from investors that committed near the end of the fundraising period for funds originally launched in prior periods. And as such, the investors are required to pay a catch-up fee as if they had committed to the fund at the first closing. While catch-up fees are not a significant component of our overall revenue streams, they may result in a temporary increase in our revenues and the period in which they are recognized. That being said, when you look at across the cycle of four quarters, you should see our fee-paying AUM deliver approximately 100 basis points of revenue. And for 2021, revenue did in fact average 100 basis points of fee-paying AUMs compared to 99 basis points in 2020. As Clark mentioned earlier, we expect to have a similar number in 2022. Operating expenses in the fourth quarter were $33.3 million, 8.34% increase over the same period a year ago, primarily driven by an increase in compensation and benefits expense as a result of our acquisitions of Enhanced at the end of the fourth quarter of 2020 and a full quarter of expenses for Hark and Bonaccord in 2021. The remainder of the increase is largely due to additional amortization of intangibles also associated with our acquisitions. On a year-over-year basis, operating expenses were $110 million, an increase of 88%. GAAP net income in the fourth quarter was $1.5 million, a decrease when compared to $20.6 million in the same period a year ago. The difference is primarily attributable to non-cash expenses we incurred during the fourth quarter for our debt refinance, contingent consideration costs associated with our acquisitions of Hark and Bonaccord and additional intangible asset amortization expense from acquisition. During the fourth quarter, we incurred $15.3 million of expenses associated with the early retirement of our debt, which included the payoff of debt of our prior debt facility and notes payable to sellers associated with our acquisition. GAAP net income was lower on a year-over-year basis by $13 million due to additional costs during 2021 associated with the IPO, debt refinance and acquisition offset by a full year of operating income from our 2020 acquisition. Adjusted EBITDA in the fourth quarter was $26.4 million. A significant increase over the $12.3 million we reported in the fourth quarter of 2020. For the year, our adjusted EBITDA margin was 55%, in line with our target. We expect margins to vary during 2022 depending on the timing of fund closings and revenue associated with capital deployment on some of our impact products which are typically backed loaded. But we generally expect to maintain a 55% adjusted EBITDA margin for the full year. For the fourth quarter, Adjusted Net Income ANI was $21.9 million, a significant increase over the $8.5 million reported in the fourth quarter of 2020. For the year, ANI was $62.89 million, a 162% increase over the prior year. ANI is calculated by reducing Adjusted EBITDA for cash interest expense and cash income tax. Our efficient conversion of adjusted EBITDA to A&I was substantially increased by the refinancing of our debt, lowering interest rates from 7% to 210 basis points above [Indiscernible] or approximately 2.25% at the end of 2021 with an expected range of 2.25% to 2.5% in 2022, depending on the [Indiscernible] rate that is variable. We expect to use our substantial operating cash flow generated by our highest fee related earnings to invest in the business, pay down debt and fund acquisitions. As our leverage profile has materially improved in the last year, we may consider instituting a quarterly dividend or a stock buyback over time, given the strong returns of capital we achieve in our business. I also want to revisit our two tax assets. That first is a net operating loss that at year-end was $220 million. The second is $321 million in Tax Amortization. Tax Amortization is created when we acquire a company, usually an LLC, that has no basis and then has a full step-up in value. We amortize our tax Goodwill over a 15-year period. And the remaining federal taxable income is reduced by the remaining NOL balance. While we expect to utilize and exhaust the NOL over future years, we do expect tax Amortization to increase when we make additional acquisitions. As tax amortization increases from acquisition, and is utilized first to reduce taxable income, the NOL balance is then available to continue offsetting future period taxable income, effectively extending the period by which the NOL can be utilized. Turning to our Balance Sheet, as previously mentioned, we refinanced our debt at the end of the fourth quarter. On December 23rd, we closed and announced a $250 million credit facility with a syndicate of banks led by JPMorgan, Texas Capital Bank, and 12 other financial institutions, including a minority depository institution and a community development financial institution. The new credit facility has 2 parts, a $125 million term loan and a $125 million revolving commitments, each with a 4 year term. The interest rate is variable and based on what is known as sober or the secured overnight funding rate plus 210 basis points, which was approximately 2.5% at the end of 2021. Proceeds of the refinancing were used to pay off the prior credit facility, pay transaction related expenses, and payoff sellers notes related to the RCP acquisition. As of December 31, 2021 [Indiscernible] were down all of the $125 million term facility and $91 million of the revolver. At the end of the quarter, we had $213 million of net debt and $41 million in cash and cash equivalents. On February 24th, we made an additional $25 million debt payment, further reducing our debt balance and subsequently our interest expense. With our strong balance sheet via credit facility and anticipated operating cash flows, we are well positioned for continued growth in 2022.

Thank you, Amanda, P10 has terrific opportunity to expand our market leadership as we expand our product offerings with a wide range of funds in 2022. We're proud of what we've achieved in 2021 and appreciate the contributions of our talented team. Now let's turn the call over for a few questions.

If you would like to ask a question, [Operator Instructions]. Our first question comes from Ken Worthington of JPMorgan. Your line is open. Please go ahead.

Hi. Good morning. Thank you for taking the question. So I understand the nearly two dozen funds that were in market this year. But could you help us better understand in fourth quarter, what were the bigger funds or the bigger contributors to the $900 million of fee paying AUM raise this quarter? And then how much of that AUM or fee paying AUM were in funds versus, say, separate accounts? And then I'll throw the follow-up question here as well. How do we think about stepdowns and catch-up fees as we look at calendar 2022?

Yeah. Hey, Ken. Thanks for the question. If you look at Q4 in particular, it really wasn't three buckets. It was on our private equity vertical, our venture capital vertical, and our private credit vertical. I'd say it was all in funds, very little in SMA, and private credit. We really saw a nice benefit for Park, which was an acquisition we made in the third quarter. That's based on deployed capital, and they had a very nice quarter in deployed capital.

And what was the follow-up, Ken?

And the follow-up was, how should we think about catch-up fees? I know you guys guided to 100 basis point fee rate. But how do we think about catch-up fees and the stepdowns? The assets that sort of have fees that stepped down in calendar 2022.

Yes, Ken, when you think about stepdowns, there is a small amount of stepdowns. The nice thing about having a growing business when you raise capital with funds that have a 10-year life, is the funds that are rolling off. Our funds that were raised in the 2011, 2012 timeframe, those were smaller funds and they were fewer of them. So I do not expect a big impact from stepdowns. In terms of catch-up fees, we talked about -- while we don't give guidance properly, we do talk about gross AUM we think we can raise over a period of time. Depending on when that AUM comes in, that will dictate whether or not we have catch-up fees in the quarter. So we do think that we can raise $5 billion plus in terms of capital over the next two years. While we think it should be relatively ratable, starting really in the second half of 2022 to the extend it extends further than that, you would expect more catch-up fees if you raise it later in the fund period?

Okay. That sounds like less catch-up fees this year because the back-end loading of fund raising than what we would expect in 2023. Is that fair or is that -- okay.

Okay. Great.

Great. Thank you.

The next question comes from Chuma Nwankwo of Morgan Stanley. Your line is open. Please go ahead.

Hey, good morning. thanks for taking the question. Congrats on the quarter. Just wondering if I could turn to M&A very quickly, you've seen you excuse me a few deals successfully as you built the company. So I'm just wondering how you're thinking about the opportunity from here and what do you think you'd like to have what you think is out there and how do you think about getting it to the well.

Thanks for the question. M&A is episodic and opportunistic for us, one of the key things about our M&A strategy is, given that we're not buying carry and all our transactions have a large component of ownership in P10 for alignment, it really takes not only the right management team and investment team in terms of they've got to have a long term view. They want to stay in their business, they want to accelerate the growth of their business. They want the carry because we don't by the carry. So if somebody is just interested in getting the highest price and being left alone, they will go to a Bonaccord dial, peters Hill, or if they want to sell out and go to the beach and just have a whatever they are commensurate lock up is they will -- they'll sell to some large financial institution. So it takes a unique opportunity not only for the right -- we want to buy the best in class in terms of performance managers, but also they have to have the right attitude, so there's lots of folks out there. There's so -- but it is not a -- it is not a programmatic M&A operation where we're just out buying, just to buy.

Got it. That makes a lot of sense, but I looked at the business today, what do you think would be most beneficial to the business in terms of expanding the opportunities set for you? You've obviously now got NAV lending and the GP stakes in your quivers. As you look at the business, what do you think is missing?

Yeah, I mean, we're very fortunate in that when we look across the different strategies we offer, we don't have a hole in that offering. So it really does feel like we can go-to-market with these funds and grow organically for a long time to come. So this is not something we feel like we must do. If you think about how we approach M&A it's really in three buckets. The first bucket is infill strategies that sit within our existing platform, but we don't offer currently. That's if you think about Hark and Bonaccord, those were strategies that fit perfectly within our private equity and private credit verticals. But they are in North America that is it's more of a bolt-on, if you will. We see plenty of opportunity there. The next real bucket of M&A is taking what we do and then taking it internationally. So finding the RCP of Europe or the TrueBridge of Asia and moving internationally within our existing verticals. And then the last one is adding a new vertical. Obviously, there aren't that many that were not in. If you look at something like real estate or infrastructure, we are always looking to try to find the right partner. But I would not -- I wouldn't hold your breath. I feel like we want to find the right partner if we don't need to. We always have conversations, but there is nothing eminent.

Thank you very much for taking the questions.

The next question comes from Adam Beatty of UBS. Your line is open. Please go ahead.

Thank you and good morning. Just want to get some thoughts around operating leverage. Appreciate Amanda's commentary and our work around the margin for this year. And obviously, a couple of acquisitions towards the end of last year. There's some -- there would have been a noise in that. But longer term, just wanted to get your thoughts around potential for margin expansion. Not that there's anything wrong with the 55% margin, but just how you're thinking about it beyond 2022. Thank you.

Thank you for your question. I think we are still planning to navigate to a 55% Adjusted EBITDA margin for the year. We do expect expenses and a range to deliver the target over the 12-month period. So margins may fluctuate during the year, but in aggregate, we're still expecting about 55% as we continue to invest in the business.

Long term, when you're converting $1.00 of revenue into $0.55 of free cash flow, which is what we're doing, given our low interest expense and tax asset, we're very focused on accelerating the revenue growth. So we think it adds more value to add 7, 8, 9 years of additional revenue at that $0.55 of follow through margin, as opposed to trying to maximize margin in the short-term. We think over long term higher revenue is going to be helpful.

That's great context. Appreciate that. And then just turning to kind of the acquisitions in the broader platform where as you say, some of the gaps are filled and it's really a very nice, diverse offering at this point. What's been the reaction so far and some of them may not be in the market quite yet, but just anecdotally from your LPs in terms of the broader offering and maybe the outlook on how that helped might gain some wallet share among them? Thank you.

It's been terrific as we've come together, we brought on, as we mentioned in the opening statements, moves a number of P10, sorry, RCP reps up P10 to go out to the marketplace as a P10 offering. Whether it's going to large pension, sovereign wealth, or endowments that here to fore they needed to allocate a $100 million to $200 million allocations. And any one of the strategies was too small to accept that we now can offer a P10 offering to go down at to offer them down into the middle market and lower middle market and give them higher returns. And so that we begun those conversations, and as you know, it's never easy to raise money and there's a long sales cycle around it, but it's has been quite receptive, so we're excited about the opportunity.

Excellent. Thank you. Appreciate you're taking my questions this morning.

The next question comes from Robert Lee of KBW. Your line is open, please go ahead.

Great. Good morning. Thanks for taking my questions this morning. Maybe the first question would be on just capital -- on back to capital usage, maybe Amanda, if you could just update us on the tax shield. What is the current tax amortization benefit each quarter for trying to kind of think about the pattern of using the NOL the next couple of years? And then maybe also understanding that in the absence of transactions, maybe the first priorities to pay down debt, reinvest in the business. But since most of the fund commitments are funded by employees, can you -- I don't know if there's other kind of internal uses of cash were not being in -- thinking about or maybe there will be some capital commitments from the holding company. Just trying to get a sense of incremental use of cash next year or two.

The tax amortization that we expect is going to be about $50 million a year. And so I think that answers your question on the tax amortization. And for the second part of the question, in terms of uses of cash, we have multiple -- it will have some cash while continue debt pay down, as well as any M&A activity that comes up. And we've mentioned a potential dividend or stock buyback as well. In terms of --

In terms of Balance Sheet, we haven't, as you noted, Robert, all the team members fund the GP commitments. And so for the most part, that will continue. If we have the opportunity to launch a new fund or a new strategy within P10. We would consider using capital off the Balance Sheet, but that isn't a priority, if you will. So, you could see it, but it's not a high priority because we all want to invest in fund and the opportunities that were generating these great returns.

Robert, I think you bring up a great point, which is our business model to-date. The free cash flow is truly free cash flow. So not only is it relatively infinite returns on capital, but that free cash is not being reinvested in the business to help it grow organically. We have a lot of investment professionals that analyze investments for a living. They love backstopping the GP commit. We think that's great alignment with our team. As Robert said, to the extent we come across a new type of fund that may require more of a GP commit, that's certainly an option. But to date, what you've seen is 100% of our free cash flow has gone into deleveraging and doing M&A. And we're now at the point with our debt where we are potentially under-levered, and so we do have more uses of free cash flow going forward than perhaps we had historically.

And if I can maybe do a quick follow up on the dividend. Is there a certain run rate of EBITDA you have in mind that you'd want to be at where you can do all those other things and still fund the dividend. What is the [Indiscernible]?

Robert, you are looking for guidance on this? I think we're going to --

Of course.

We're going to do what's best for the business as large insight owners. We're of course focused on driving value to all shareholders. And so but I wouldn't want to put us in a box in terms of giving guidance on when we pay a dividend and at what level. It really will depend on what the market opportunities are presented in front of us. For instance, if we had a large acquisition come along, we would probably lever up, take on some more leverage and use the free cash to pay down debt and not have it allocated to a dividend, but I understand where you're going. We do not have -- obviously with a $25 million pay down in February, we did not have an acquisition shot at hand now, it was part of the revolver and we could -- we can expand that according that back up, so we haven't reduced any flexibility at all. And I know I keep saying there's one more question, but just a real quick one, was -- you have your fee paying AUM included some capital deployment. Was there -- could you maybe update us on kind of the dry powder you may have that's not yet been drawn down, earning fees and if there was some incremental capital raising that may have supported that in the quarter as well that's not in the fee paying AUM number.

Yeah, Robert, it's a great question. We do -- as you know, we don't specifically break that number up, because we think it may be misleading. It is a very small piece of our business. The funds that are actually paid on deployed capital, as opposed to committed capital. One of those businesses is Hark and they just happen to have a very busy Q4. We'd like to think that's synergies with P10, but time will tell. It's not something we're going to break out, only because it's such a small number, we think it's misleading. That being said, episodically, we may have quarters where one or two of our funds that are paid on deployed capital have a good quarter and we're thrilled when a recent acquisition comes in and they come in sprinting.

Great, thanks for taking my questions.

The next question comes from Chris Kotowski of Oppenheimer. Your line is open. Please go ahead.

Good morning and thanks for taking my question. I wanted to come back to my very favorite charts on pages 8 and 9, the -- what I always think of the money table. And it seems to me like this is kind of the key to understanding your fee paying AUM. I just kind of wanted to get a sense of the cadence going or how we should look at it. So I'm comparing this table to last quarters. And I see, for example, RCP 16 going from $52 million to $187. And I see SOF4 going from 0 to 281. Is that what -- that's -- if I have a big spreadsheet going, that's how I can judge where your increase in AUM is coming from. And going from your prior comments, it sounds like that's all going straight into fee-paying AUM as opposed to just non fee-paying AUM. Is that all right?

Yes. That is all correct. There are some -- when we do raise the separate account that is not going to show up on the money table, as you say, but that will go into fee-paying AUM. So there are some additional dollars that we raise where we're not showing up in that table. This table is our core funds series. And then you'll also show that -- I think on some of our tables, it's a question of when the fund actually gets put on the table. But this is the best way to track our core funds, which encompass the vast majority of our fee paying AUM. So, I think what you're doing is the right way to do it.

Okay. And then but you mentioned in your comments that venture and TrueBridge was one of the sources of the growth in this quarter. But there when I look at the fund tables, I didn't see a jump in the AUM. So does that mean that that was off all in separately managed accounts? Or is that a fund we take -- a fund we don't yet see or?

Yes. So that's what I was trying to correct. You were leading the witness. But now, that's what I was referencing. There is a question of when the fund goes on the table in Venture because these are 15-year live funds. There are -- that fund seven, which we had a final close in December. That fund will go on the table. It's going to be with standard practice what they've done for years. We can check with the team and get back to you when that becomes posted. But again, that is a 15-year fund. And so while it did contribute to fee paying AUM, it's going to be a few years before that performance becomes meaningful.

And when you said in December, you mean December '22?

Yes, December '22. Absolutely, they had a close on fund 7. They raised a fund 7. It was at the hard cap, and that will show up on the table going forward. The question is, what quarter it drops in because the table is meant to show performance. And on a 15-year fund, in venture especially, the early years are not very meaningful with respect to performance.

Yes. Okay. If I can just say though, it would be helpful then though to even have the fund size without the -- even if the performance isn't there?

No, that's great. Listen, that makes sense. With our second earnings call, we're taking good notes and we'll get back to you on that.

Okay. Great. And then lastly, on page 18 on the P&L, the roughly $5 million of nonrecurring expense, that was all related to Hark and Bonaccord and the IPO, or what were those non-recurring items?

Yes, that's correct. About $3.5 million of the asset side is related to the contingent consideration, adjustment for Hark and Bonaccord, as well as IPO, and additional acquisition costs.

Okay. Great. Thank you. That's it for me.

Just final question comes from John Campbell of Stephens, Inc. Your line is open. Please go ahead.

Hey, guys. Good morning and congrats on the quarter. This is James Holly stepping on for John Campbell. So first question here on the cross sell opportunities, you have more than 2, 400 clients working with P10. Can you kind of walk through the boots on the ground strategy there that you're deploying to meet those existing clients and any additional products there. And then if you can also size up that opportunity, what you think it could be over time. That would be really helpful.

Yes, so when you think about cross-selling, I would think about it in two different buckets. Obviously in the investment management business, it's raising capital and deploying capital. Those are the two drivers of the business. On the raising capital side, you're right, we've got 24 -- 2,500 LPs from around the world. And as one of the questioners asked earlier about our performance, the great news is, the vast majority of our LPs are allocators to alternatives, more than just the strategy they're allocating to today, and we believe that we are introducing when we bring these new strategies to market, we're introducing not only great performance over 20 years, but also asset classes that are in both. There are not many pension funds not talking about impact, for example. Same thing in venture capital. So on the front-end in terms of sales reps, it really is introducing new funds, new strategies to our existing LP base and asking them what problems we can solve for them. If they want to be in venture capital, we believe we have all of the best solutions. If they want to be an impact, we think we have the right solutions, etc. Robert mentioned that we did move some people from RCP over to P10 in the fourth quarter to really spearhead the cross-sell. I think we referenced in the script. It has been material so far in terms of bringing in cross-selling on the LP front. And we expect with this new slate of fund offerings, that's only going to accelerate. So the -- I would say so far so good. And we think there's a long runway there. On the capital deployment side what our business, especially in Private Equity and venture capital, we're surrounding the GP with every product and service that they may need. And so if Europe Private Equity GP in the lower middle market, you have long look to RCP for your primary Capital, your secondary transactions, your co-invest capital, and your data. When we then introduce something like NAV lending from Hark, that is an additional tool that we can offer to the GP to help solve their problems. And so it really is not a pushed cross-sell. The GP is welcoming this additional tool. Because just like LPs out there, GPs are trying to consolidate the number of relationships that they have. And so we think in both cases, we are adding value on the cross-sell side.

Yeah. Thanks, Clark. That's really helpful. And then, maybe one more just kind of quick one here. P10 has unique advantage of being in the lower middle markets with less eyeballs on the space. Is there any notable call-outs around its performance as a whole and through a rising rate environment versus the higher-end of the market? Anything to call out there?

Actually not, James, not actually sure what you're asking there. Our managers have 20-year track records and have been performing through great markets and very tough markets and continue to deliver excellent results throughout. We don't get to invest in the markets we want, we get to invest in the markets that are in front of us. And so in a rising rate environment or an inflationary environment, they've continued to do well. So I don't know -- I don't know that I'd call out any one in particular to say, oh, this is going to shine or this is going to fall apart. They all have done exceptional over the years.

Okay. No, that's helpful. I appreciate the time, guys. Thank you.

Hey John. This is Mark. I've got one more thing for you. I want to share with you at 2:28, we had 35,391,739 Class A shares, 35,391,739. And the B shares, as of 2:28 was 81,801,008. So just to give you an update on where we're at.

There are no further questions at this time. This therefore concludes today's call. Thank you for joining. You may now disconnect your lines.

Thank you.