Good morning, and welcome to the TPG's First Quarter 2025 Earnings Conference Call. Currently, all callers have been placed in a listen-only mode and following management prepared remarks, the call will be open to your questions. [Operator Instructions]. Please be advised that, today's call is being recorded. Please go to the TPG's IR website to obtain the earnings materials. I will now turn the call over to Gary Stein, Head of Investor Relations at TPG. Thank you. You may begin.

Great. Thanks, operator, and welcome, everyone. Joining me this morning are Jon Winkelried, Chief Executive Officer; and Jack Weingart, Chief Financial Officer. In addition, our Executive Chairman and Co-Founder, Jim Coulter; and our President, Todd Sisitsky are also here and will be available for the Q&A portion of this morning's call. I'd like to remind you this call may include forward-looking statements that do not guarantee future events or performance. Please refer to TPG's earnings release and SEC filings for factors that could cause actual results to differ materially from these statements. TPG undertakes no obligation to revise or update any forward-looking statements, except as required by law. Within our discussion and earnings release, we're presenting GAAP and non-GAAP measures, and we believe certain non-GAAP measures that we discuss on this call are relevant in assessing the financial performance of the business. These non-GAAP measures are reconciled to the nearest GAAP figures in TPG's earnings release, which is available on our website. Please note that, nothing on this call constitutes an offer to sell or a solicitation of an offer to purchase and interest in any TPG fund. Looking briefly at our results for the first quarter, we reported GAAP net income attributable to TPG Inc. of $25 million and after tax distributable earnings of $187 million or $0.48 per share of Class A common stock. We declared a dividend of $0.41 per share of Class A common stock, which will be paid on June 2nd, 2025 to holders of record as of May, 19th, 2025. I'll now turn the call over to Jon.

Thanks, Gary. Good morning, everyone. Yesterday, we announced that TPG had agreed to acquire Peppertree Capital Management. Peppertree is a leading specialized digital infrastructure manager, with a focus on wireless communication towers. This acquisition leverages our deep sector expertise in communications and represents our further expansion into the digital infrastructure space. For our call today, Jack and I will first cover the current environment and our quarterly results, and then we'll provide some additional details on the Peppertree acquisition. We've witnessed a dramatic shift in the market environment over the last few months. Coming into 2025, there was broad-based strength across the economy and confidence levels were near record highs. The market was anticipating meaningful earnings growth, accelerated M&A activity and rising equity valuations. Several factors including tariffs and general policy uncertainty have upended the environment and created significant volatility. As a result, we're seeing unusual market correlations, renewed fears of inflation, and concerns around slowing economic growth. At TPG, we remain focused on executing our business and driving growth. Our leadership team has navigated through many cycles, and one of our core beliefs is that, staying engaged and highly connected is critical during times like these. In my conversations with leaders of some of our largest strategic partners globally, I'm observing several consistent themes. Clients are adjusting their expectations around performance and liquidity in their portfolios, and they're evaluating the geographic diversification of their investments. At the same time, our clients are looking to partner with us to take advantage of opportunities created by the current environment and to leverage our global franchise. With respect to our portfolio, we entered this period with significant momentum, including strong top-line and earnings growth. We've assessed the direct exposure across our investments to recent tariffs, and we see minimal first order risk.…

Thanks, John, and thank you all for joining us today. I'll begin with a discussion of our first quarter financial results and investment performance, and then I'll discuss our outlook for the year with a particular focus on our fundraising campaigns. Our fee-related revenues in the first quarter were $476 million, which included $413 million of management fees and $54 million of transaction fees. Over the past several years, we've invested in building our capital markets capabilities and integrating our broker dealer across all our platforms and strategies. We've generated a step function growth in our annual revenue opportunity, as our average quarterly capital markets revenue increased by over 30% in 2024 compared to 2023. While the second quarter will likely see a step-down in capital markets revenue, due to the timing of certain transaction closing activity, we believe that, our positive momentum in this business will continue in the back half of the year, and there's significant opportunity for further growth in the years ahead. We reported fee-related earnings of $182 million and an FRE margin of 38%, consistent with our previous guidance. As expected, cash comp and benefits expense was seasonally elevated this quarter, due to the annual vesting of our RSUs, which resulted in approximately $14 million of additional cost. Looking ahead, we continue to expect FRE margin expansion in the back half of the year, and we expect to exit the year with a margin in the mid-40s. Realized performance allocations totaled $40 million in the first quarter, primarily from the partial monetizations of our public positions. We continue to find opportunities to monetize assets, including the sale of two TPG growth portfolio companies that John mentioned. Our success driving liquidity and DPI across our portfolios continues to be a strong differentiator for us with our…

Thanks, Jack. We're excited to announce this important acquisition. With more than two decades of experience, Peppertree is the largest pure play wireless tower specialist in The United States. With over 8,800 towers in its portfolio, Peppertree has raised 10 funds to date and manages nearly $8 billion of total AUM. The management team is highly experienced and entrepreneurial, led by co-presidents Howard Mandel and Ryan Lapine. Howard and Ryan are supported by a long tenure team of investing and operating talent. The firm has an outstanding investment track record delivering a gross realized return of 23%, and a gross realized multiple of 2.4x invested capital since inception. As a result of its success, Peppertree has built a loyal and growing base of institutional clients, driving steady, fund-over-fund growth. We believe Peppertree is a compelling strategic fit for several reasons. First, Peppertree's strategy is highly complementary to TPG's existing leadership in the communication sector and will benefit from our scale, deep thematic expertise and long track record of successfully scaling high-quality businesses in the space. Second, the wireless communication sector benefits from strong secular growth, as global demand for data continues to accelerate. As an industry leader, Peppertree provides us immediate scale in the tower and network infrastructure development space. Looking ahead, we believe, there are significant opportunities to expand our investment capabilities across digital infrastructure. Third, Pepperidge's long-dated portfolio of un-correlated assets generates contractually recurring highly predictable cash flows and we believe these attributes will resonate with our client base. Fourth, we have spent a significant amount of time with Howard and Ryan and other members of the Peppertree team. It's clear from our close engagement over many months that, there's an excellent cultural fit between our two firms. The Peppertree team shares TPG's longstanding commitment to entrepreneurship, innovation and investment excellence, as well as our vision for the growth opportunities that are possible within our ecosystem. And finally, we believe there are several meaningful growth drivers created by the combination, including expanding into TPG's existing global client base, extending the duration of Peppertree's capital and leveraging our broker dealer capabilities to pursue capital markets opportunities. This acquisition will add an additional source of highly-attractive and predictable fee revenue. We expect this transaction to be immediately accretive to fee-related earnings and after tax distributive earnings per share upon closing. Peppertree underscores our continued focus on value-accretive acquisitions, where we have a natural competitive advantage. We look forward to welcoming the Peppertree team to TPG. I'll turn it back over to Jack to walk through the overview of the transaction and financial details.

Thanks, John. I want to echo John's remarks on the strategic benefits of this transaction. We're establishing a leadership position in an attractive segment within digital infrastructure, leveraging our deep sector expertise and growing and diversifying our fee-related revenue. The acquisition is also compelling from a financial perspective. First, we're acquiring Peppertree at an attractive price. The transaction is valued at approximately $660 million, including $242 million in cash and up to $418 million in equity, based on TPG's closing price on May 2nd. This represents a multiple approximately 12x 2024 after tax FRE. It's important to note, this price also includes the purchase of performance related earnings for both historical and future funds. At year end, Peppertree had accrued but unrealized carry of approximately $449 million. So the 20% applicable to TPG operating group would have been approximately $90 million. Adjusting the purchase price only from the $90 million of book value and ignoring the value of the future FRE, the transaction multiple is approximately 10 times after tax FRE. Second, we expect this transaction to be immediately accretive to FRE and after tax PE per share. Peppertree has an attractive margin profile and we anticipate continued strong management fee growth in the coming years. Third, we have structured the transaction to ensure clear alignment of interest and strong incentive to drive growth in several ways. The principals of Peppertree, including Howard and Ryan, have agreed to reinvest their equity ownership over a five year period after closing. In addition, Peppertree's equity consideration will be subject to lock-up for the first full year post closing and a third of the equity consideration will be released from lock-up on each of the first, second and third year anniversaries of the closing. And finally, we've structured the earn out and earn out provision that's valued up to $300 million. This earn out is based on the satisfaction of certain fee-related revenue and fundraising targets over the next few years. If any of the earn-out is paid, we expect the purchase price multiple to decrease and the acquisition to become more accretive. In terms of funding the cash portion of the acquisition to close, we expect to use our current cash balance and to draw on our upsized revolver. Upon completion of the transaction, our leverage will remain conservative and we will continue to have ample liquidity and significant financial flexibility. The transaction is subject to customary closing conditions, and is expected to close in the third quarter of this year. Upon closing, Peppertree will join our Market Solutions platform and Howard and Ryan will continue to lead the strategy. Along with all of our colleagues at TPG, we look forward to working with the Peppertree team to build significant long-term value for our clients and for our shareholders. Now we'll open up the line for questions.

[Operator Instructions] And we'll take our first question from Craig Siegenthaler with Bank of America. Please go ahead.

Thank you. Good morning, John, Jack. Everyone's doing well.

Good morning, Craig.

So we had a follow-up on the private wealth channel. So on the product side, I'm curious, what is the expected flow contribution or trajectory from TPOP and TCAP over the next year? And it sounds like TPOP may actually start flowing pretty soon like inside of 2Q25. And then just a follow-up on the RA channel. John, I heard your comments around structuring innovative partnerships, but do you expect to launch an interval fund with third-party private credit managers, just given the unique requirement to that channel?

You want to start?

Yes, I'll start. Craig, thanks for the question. Look, I'll start and John covered a lot of this in his remarks, but increasing our Private Wealth business is one of our most important strategic priorities for the firm. I think it's safe to say the entire firm is focused on it. If you look back at the progress we've made so far, last year we raised $2,400,000,000 from the Private Wealth channel including the family office channel, which is more than double what we raised in 2023. In the first quarter, we raised about $525 million, so increasing the pace again. And I think, right now, we view this as an inflection point, as we expand our team and expand our product set. We've been materially increasing the size of our sales and marketing team. And to your point, we've been very focused on creating new products that are more attractive for the channel. The TPOP is the first of those. And as John said, we've got two very important strategic partners on the wire-house side that we're working actively with, toward an activation, in June, which is exactly what we've been saying. So we remain exactly on track for the launch of TPOP. It's hard to quantify expected inflows at this point until we start seeing those, which will occur in June. So we'll have a lot more to say on that in the next quarterly call. TCAP is the other is another product along with mortgage value partners, the two evergreen vehicles on the Angelo Gordon platform. And I would say, as we've been out talking to channel partners on, TPOP, it's increased the visibility of those two products, and we're seeing increased engagement in what's already been a good increase in the flow there. I don't know…

Thank you. Our next question will come from Ken Worthington with JPMorgan. Please go ahead.

Hi, good morning and thanks for taking the question. So going to transaction and other fees, clearly jumped a lot this quarter. You mentioned the build out of capital markets. I guess maybe, first, are those capabilities fully or largely built out and launched at this point? And, if not, how far along the ramping process are you? And then, maybe digging a little deeper into 1Q '25 specifically, why so strong? Like, deployment was down this quarter. What was it about either the type of transactions or the asset classes or the nuances in 1Q that contributed to the magnitude of the increase that we saw?

I'll start on that answer. Thanks for the question, Ken. First of all, I would say, on your first question, we really have invested in building out the team. We're not done yet, but I'd say, we're three quarters of the way done with adding resources to the team to facilitate the penetration of all of our businesses and the active revenue generation across all of our businesses. And I'd say, the first quarter, while a strong quarter, really only partially represents the further expansion of that business. As I alluded to in my comments, we see a lot more upside to continue growing that revenue line in the coming quarters and years as we continue to integrate it with other businesses. I think it's going to be much more diversified next year. The credit opportunity, I think we're in the second inning of that opportunity, with a lot more growth ahead of us. In the first quarter, it really was nothing new beyond that further integration into our platforms. There were no particularly strong one-time events. It was really a broad-based use of our capital markets team, across all of our transaction closings and across refinancing activity in the portfolio.

Yes. And the only thing I would add is, I think that as we built this capability, we've obviously built markets perspective in terms of bringing people into the firm. As you know, when we talk about our different businesses and our different funds, if you looked around the organization now, what you would see is, capital markets capability essentially embedded into each one of those businesses. So, there is kind of go-to expertise, that's sitting with and working consistently with the deal teams in all these different businesses. So it's much more present, and it's much more connected to the deal process. And the growth that Jack referred to, if you look at the execution of that, a lot of it depends on the adoption and understanding of where we add value from a capital markets perspective among our deal teams. With the addition of Angelo Gordon, and our businesses there, particularly when you look at the Credit Solutions opportunity and the Twinbrook opportunity, and as we source opportunities and think about really extending the capabilities of our broker dealer, both in some cases for syndication of risk, in other cases for participating in other opportunities as a result of bilateral relationships with other originators. There's just a lot of opportunity there. So, we're going to continue to build it out, but we feel like, we've gotten really good traction and momentum within the business. And my guess is that, the sort of the base load, if you will, of revenue as a result of the expansion and continued growth of our franchise will follow suit.

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

Thank you and good morning everybody. My question is around private equity. Obviously, this continues to be an area of probably most concern, given the change in backdrop we've seen over the last month, month-and-a-half here. I was very encouraged by your comments around fundraising and the way you're thinking about both capital. And I was hoping you could expand on that a little bit and maybe what gives you confidence on being sort of able to get these done this year or get I guess the first closes done this year. How is LP makeup shaping up maybe relative to your existing base and are there any sort of discounts or incentives that you feel like you have to put into place to get these campaigns off the ground? So effectively just kind of hoping to go through some of these details a little bit more. Thanks.

Yes. Thanks, Alex. Maybe I'll make a couple of comments and maybe Todd will also follow on and make some comments because we're sort of all on the front lines out there talking to our clients constantly. First of all, I think that, one of the most important things to keep in mind is that, not everybody in this market is created equal. And if you look at -- and I think that's really important. I think that, there's obviously, the private equity market is tight and there have been -- there's clearly a dynamic where there has not been enough capital returned and clients are nearly fully allocated or over allocated. And there's various reasons for that as kind of we all know, it's well written, it's well documented. The dialogue that we're having with our clients is really sort of predicated on the fact that, I think that, our franchise across all of our strategies is probably performing better than it's ever had in our history just in terms of consistency and performance. And then also in terms of return of capital, I mean, I think that, we've talked about the consistency with which we have been focused on not only investing well, but also monetizing and returning capital. And I think we've been a leader in that and our clients recognize it and understand it. And also our clients feel like, they're in a better position to return capital to us as a result of that. Just out of interest, I had some numbers run that look at our ratio of realized returns to invested capital. And if you look at our numbers, it's pretty interesting, but basically starting in 2020, in 2020, we returned -- the rate that ratio was 1.1x. So we've actually returned more…

Absolutely. And I agree with John. I think the DPI piece, the return of capital is a big part of it. But here's the here's sort of my quick take. Like John, Jim, Jack, and a number of our senior, partners, we we've all been on the road. I've been in The Middle East. We in Milken Conference. I've been particularly involved in the capital fundraising, as I remain very involved in that business. And I think there's a couple of key components to our approach that has resonated well with our partners. One is just the portfolio construction. So, if you look at, since you mentioned TPG Capital and the health care partners two fund, I'll mention that. I'll focus on that in particular for a moment. Over two-thirds of that portfolio is some combination of structured relationships with corporates or carve-outs. So really differentiated deal stories, some of which have some meaningful elements of downside protection, all in thematic areas. Really, I think, a portfolio that you don't see in other private, any of our competitors portfolio. So folks appreciate that differentiation. The results of the portfolio and the performance of the portfolio in private equities remain very strong. I think Jack mentioned this, but 18% plus revenue growth with margin expansion over the LTM period. And, that's both by a virtue of focusing on secularly growing areas and in situations in which we can influx the growth further through our engagement. The DPI, which John mentioned, we're very intentional about that going back now many years, and I think that has become an increasingly positive differentiator for us. And I think, in general, just a lot of comments that we do what we say we're going to do in terms of the sectors, the themes, the type of investments, a lot of continuity on the team and just a general, high level of engagement with our partners. So, we're very sensitive to the macro environment. We take nothing for granted. We're engaged day-to-day, and always anxious around with coming around the corner. But, at this moment, the business, it feels very strong, you know, strong as I can remember it. And I think our clients appreciate that, and as John said, are increasingly making differentiated decisions around where they're going to concentrate their capital and where they might be less lean in. I think we're feeling like we're on the right side of that.

I guess one more comment, Alex, to be responsive to your question, with respect to fees and arrangements with clients. We're really doing what you would expect us to do, which is, our clients are concentrating their focus in terms of the number of managers, who they want to be invested with. So, we're obviously taking advantage of that, by virtue of creating strategic relationships and holistic relationships, where they get the benefit of doing that across multiple products, multiple asset classes. The strategic partnership that I mentioned in my opening comments, that gives us access to up to $4 billion of additional capital is with obviously a long time partner of ours, but that strategic partnership is structured intentionally across PE, Credit, Real Estate and Infrastructure. And there's obviously -- and the mindset around that in terms of how to structure it is that, there are benefits over the long-term that accrue to the relationship by participating with us also in a series of funds, not just one fund. So, it's a series of funds. So, what these relationships are also doing is it's creating more duration to the capital flow that we see and more stickiness and connectivity. And you have to have the performance to do that, but you also have to have the relationships to do it.

Thank you. Our next question will come from Glenn Schorr with Evercore. Please go ahead.

Thank you.

Hi, Glenn.

Hello. So I heard all the comments about the broadening in general across TPG, which I think we all like to see if we could drill down a little bit more on credit and to see where you think you need to broaden and deepen your scale across credit. Obviously, Angelo and Gordon was a great addition. But what you need to add on to be like more I don't know, if full service is the right word, but that's what I'm thinking about? And then, within that context, we've seen cyclical pressures on insurance-related spread earnings across the industry. And I know that's an area you've been thinking about a lot. So I'm just curious, if any of the market-related pressures that we've seen lately change how you go about thinking about broadening in insurance as well? Thanks. Sorry for the two part.

That's all right. You squeeze that in there. I think first of all, on the credit side, it's a good question. I think that, let's talk about sort of the growth drivers and sort of the add-ons to our strategies. I think just starting with our existing business, one of the things that we identified when we did Angelo Gordon is, we felt like we had a lot of opportunity to grow the existing strategies and the platforms. Let me just use Twinbrook, which is the lower middle-market lending platform as an example. We had a view, we had a thesis that we could grow that platform, because it was out originating its capital base, introduce Twinbrook to a lot of our historical relationships. And as I mentioned in my prepared comments, we really see that, flowing through now and we're starting to see that happen. We've owned the platform now for less than two years. And I think that, as you guys have learned about how you raise capital, particularly in the institutional world, it's not a one meeting cycle. So creating new introductions to large pools of capital that haven't either participated before. It takes multiple cycles and a lot of focus and effort. And we're doing that, and we've done that. And we're now seeing it inflect and pay off, as I mentioned in my opening comments. And when you look at Twinbrook as an example, with respect to its strategy, and Jack mentioned this specifically in his comments, which is, we are seeing as a result of the growth in private credit and direct lending, what we're seeing is, institutions and allocators still allocating to it and increasing allocations, but looking for more diversification within the space. And the lower middle-market space is different than the…

Thank you. Our next question will come from Brian Bedell with Deutsche Bank. Please go ahead.

Great, great. Thanks. Good morning. Thanks for taking my question. Maybe just shift to the impact platform. I think you talked about the elongated sales cycles. I guess the question is, are you seeing a big difference in The U.S. versus outside The U.S. in terms of the perception around policy uncertainties? In other words, is it slowing down in The U.S.? I guess for both deployment prospects on the impact platform as well as fundraising? And I guess are you seeing more opportunity outside The U.S.? And I know you mentioned the Global South deployment. So maybe just some color around those two dynamics going forward?

Jim?

Brian, I'll take that one. It's Jim Coulter. There is so much going on in the ground in so many sectors right now, but that's certainly true in climate. And I think it's really important as you suggest to take a global perspective and separate some of the signal from the noise. Just stepping back for a moment, Todd and I were talking about this the other day. On the ground, it feels very much like 2010 in healthcare, where a bunch of discussions about U.S. policy sort of created a lot of noise that eventually got worked out in the next five years were extraordinary for healthcare. And some of that feel is playing through in the climate area. Taking you down into the ground, and talking globally, last year, clean energy spending was over $2 trillion, which was twice fossil fuel spending. And around the world, north of 90% of the energy addition was happening through clean energy. And just business aside, The U.S. was only 10% of energy addition. So, 90% of the action is outside of The U.S. And interestingly enough, they seem sort of unbothered by the discussion that is going on about U.S. policy and the markets are continuing a pace and if anything accelerating. As John said earlier, we just signed a deal for wind turbine manufacturing in India, where clean energy has doubled in the last five years and it's going to double in the next five years. We just signed another deal in Europe in adaptation. So, the rest of the world, which is over 50% of where we're targeting our capital and over 70% where our capital comes from is kind of moving a pace. To your question, The U.S., there's two things happening in The U.S. First of all,…

Thank you. Our next question will come from Brian McKenna with Citizens. Please go ahead.

Great. Thanks. So a couple of questions on the Peppertree acquisition. Where does fee-earning AUM stand today? And what's the average fee rate for the business? And then Peppertree has grown its underlying flagship funds by about $500 million over the last few vintages. So how should we think about the size of these flagship funds over time once formally integrated into TPG? And then, it looks like the flagship fund is in the market every two years. So should we expect Fund XI to commence fundraising this year?

I'll just start real quick and then turn it over to Jack. But, as it relates to sort of the progression of funds, I think you're right about, how they have done this in terms of being fairly consistent in terms of being able to grow the capacity, just as their relationships around the country have grown and developed and deepened, and the flow of essentially tower development and lease up has grown. They've been able to grow the opportunity. One of the things that we have spent a lot of time talking to them about is that, these cash flows and these returns are really interesting in a number of respects. And one of the things that Ryan and Howard have been focused on is that, many of their LPs want to own these cash flows, on a longer duration basis. So one of the things that we're going to work on with Peppertree is essentially also moving to an evergreen style fund structure. So we're going to work on that. That'll lengthen the duration of the capital and create another flow of capital that they can take advantage of. And so, that's interesting and attractive to us. The other thing about the Peppertree return structure that we like a lot is that, when we think about across a range of different other pools of capital, there's opportunities that flow off of these types of assets with the consistency and the return that can be useful to us as a source of assets into insurance, and particularly the financing for all of this activity, all of this acquisition activity. And then secondly, with respect to what Jack was mentioning before, as we think about the broader flow of product and return opportunity into private wealth, there's a very attractive return stream as well. So that's how we're thinking about sort of the next jumping off point in terms of the growth of this platform. And then I'll turn it back turn it to Jack.

Yes. I was going to say the same thing on the private wealth applicability, and the real asset kind of the fit with other real assets with long-term stable cash flow characteristics. On your question about fee rates, first of all, on AUM and on FAUM, on AUM versus FAUM, there's really no non fee paying capital in the complex for Peppertree. The difference between AUM and FAUM is simply performance. The performance as you've seen has been very strong. So as assets have gone up, you get a gap between FAU between invested capital and current AUM at market value. The FAUM, I'd say, is in the $4.5 billion to $5 billion range. And average fee rates are very consistent with what you would think of as kind of our average fee rates for comparably-sized, private-equity oriented funds, which is to say kind of 1.5% to 2% range would be an average fee rate for the business. Last question you asked, try to track them all, was the pace of deployment and the expectation for the next fund, at this point, the most recent fund, Fund X, is about 40% called, with good investment pace. You're right about the average pacing of their new fundraising activity. So, at this point, I would expect, we'll be back in the market with their next fund at some point next year.

Thank you. Our next question will come from Michael Cyprys with Morgan Stanley. Please go ahead.

Good morning. Thanks for squeezing me in here. Maybe just circling back to some of the commentary you had alluded to earlier in your prepared remarks around hearing about clients evaluating geographic diversification. I was just hoping, if you could elaborate a bit on that just given policy changes here in The U.S. and around the world. Just curious how you're thinking about positioning for that, given you guys run more of a global fund structure. What's the opportunity set as you think about it from a product standpoint for maybe more regional specific or country specific funds? And then maybe you could just remind us on your exposure to China from an investment portfolio and LP capital base? Thank you.

Yes, sure, Mike. Look, I think in the dialogue that we're having, I think, I mentioned in my open right in my opening comments that one of the things that we have all doubled down on here is making sure that, we are connected to our clients and talking to our clients, because there's just a lot of uncertainty in the world right now, and there's certainly a lot of uncertainty around U.S. policy. And there have been things that have happened that I think have been maybe a surprise with respect to market relationships in terms of how equity markets, bond markets, currency markets have moved. So I think it's not surprising to see large sophisticated institutional clients take a step back and think about, okay, where am I deploying capital? Where are my exposures? And obviously because of The U.S. market being what it is, most big large institutional clients are heavily exposed to The U.S. So in thinking about what's going on here, I think there's a lot of different reactions, to be honest with you. I mean, I think, last two days, a group of us were out at Milken meeting with clients there. We've been traveling around the world. I met with the CEO of a couple of our largest, longest-standing clients over the last couple of weeks and talking about things like their dollar-denominated exposure, should they be thinking about how that exposure looks, hedging that exposure, et cetera. But the conversation quickly turns to where the opportunities are, quickly turns to the opportunities and whether or not there are ways of doing some more interesting things in other markets. And so, just as an example, I think we had one client talk to us about whether or not, are there ways to partner,…

Thank you. And we'll take our last question from Mike Brown with Wells Fargo Securities. Please go ahead.

Great. Thanks for squeezing me in. So I just wanted to ask on the FRE margin. So if some of the fundraising, the elongation there causes some of your fundraising to slip quarter, does lower catch-up fees kind of impact your FRE margin in 4Q? And then, is it fair to assume that Peppertree is accretive to your margins, and is that included in your 4Q FRE margin comment?

Hi, Mike. It's Jack. Obviously, to the extent we do see material slippage of fundraising that would flow through to margin. I would tell you that's already built into our model, those assumptions. So it would take further slippage than what we're already forecasting from just basic elongation of campaigns. On Peppertree, we don't have that built into our models at this point, and that as I mentioned in my comments, it is accretive, but it's not very large compared to our base. So we're not assuming significant accretion from Peppertree, behind my comment that we still expect to be in the mid-40s by year end.

Thank you. This concludes the Q&A portion of today's call. I would now like to turn the call back over to Gary Stein for closing remarks.

Great. Thanks, operator, and thanks everyone for joining us today. If you have any additional questions, please feel free to follow-up with the IR team directly.

This concludes today's TPG's first quarter 2025 earnings call and webcast. You may disconnect your line at this time, and have a wonderful day.