Committed Capital

Taking Stock: Industry Leaders Discuss Private Equity’s Evolution and Future to Mark Dechert’s 40th Anniversary in PE

• Dechert LLP • Episode 25

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2024 marks the 40th anniversary of Dechert’s global private equity practice. In this special episode, Blackstone’s Christopher James, KKR’s John Park, and AB Private Credit Investors’ Jay Ramakrishnan join Ken Young, co-chair of Dechert's corporate and securities practice and co-head of the global private equity group, to reflect on the evolution of the PE industry, from its humble beginnings to its current scale and complexity.  Among other topics, they discuss the diversification of investment strategies from pure buyout shops to massive alternative asset managers, the evolution and the role of private credit in the private equity ecosystem, and the increasing ability for retail investors to access private markets strategies.

Key Takeaways 

  • Over the past 40 years, private equity has demonstrated resilience through various economic cycles, continually evolving to meet new challenges.
  • The private equity industry has grown tremendously in both scale and diversification of strategies.
  • Not just private equity, private credit has also emerged as a key asset class, benefiting from the rise in private equity while also supporting that growth.
  • Diversification has included the investor classes too, where outreach to retail investor is the next phase in the diversification of the private capital business.
  • What do the next 40 years hold for PE?  According to our guests, quite a lot.
Intro:

Welcome to Dechert's Committed Capital, where private equity leaders open their playbooks to discuss today's trends.

Ken Young:

Hi, everybody. I’m Ken Young, co-chair of Dechert's global corporate and securities practice and co-head of our private equity group. 2024 marks the 40th anniversary of Dechert's private equity practice, and we thought we'd get together three private equity leaders today to talk with us about 40 years of private equity in less than 40 minutes. So we're gonna try to condense that history down and

talk about:

what's this business about, how has it evolved, and where is it going? And I'm really, really excited that today we've got three people with us: Chris James, John Park, Jay Ramakrishnan, who are all with us to talk about really different parts of that private equity business. I think it's gonna be a really great conversation. I hope we're gonna cover the way private equity has evolved through diversifying strategies, the evolution of private credit, the evolution of retail. We'll see where this conversation goes otherwise. But, I thought we would just get everybody's voice in the room by doing some quick introductions. And Chris, want to start with you?

Chris James:

Yes, happy to be here. I am Chris James. I'm a partner at Blackstone. I've had a variety of roles at the firm, been here for 19 years, and I've had the good fortune to be part of some of our more significant investment and product development efforts, and I've had the ability to kind of see the growth and evolution of private markets, at least from Blackstone's perspective. So, from our IPO in 2007 to purchasing GSO, which anchored our credit business, buying SP, which is our secondaries business, the growth of our real estate Asia platform, I was involved in that. I launched our growth equity business. So I've had a variety of roles, but most recently, most dear and near my heart is our Tac Opps business, which I've been doing for the last 12 years. And now, currently, I am the chairperson of our private equity strategy for individual investors.

Ken Young:

John, you want to go?

John Park:

Thanks, Ken. Appreciate you having me. My name is John Park. I'm a partner at KKR based out in Menlo Park, California, and I lead tech investing in the Americas for the firm. Henry and George, first cousins, started the business together in 1976. So, we are in our 48th year of investing in private equity. You know, frankly, what started out as an idea on the back of a napkin with $100,000 evolved into a firm that manages over$600 billion of AUM today. And I sit in the flagship kind of America's private equity business, which is about $50 billion of AUM. And so, my role day to day is to manage a risk for tech investments in the Americas for a flagship $19 billion fund, our new $4.6 billion mid cap fund and our $14 billion core long-dated fund.

Ken Young:

That's awesome. And I love that you brought up already ascendant and core and the different things, because all that fits into where private equity is today. Jay, what part of the story do you want to tell us about?

Jay Ramakrishnan:

Thank you, Ken, for having me on today. So, I'm Jay Ramakrishnan. I'm a senior managing director and the head of originations and one of the founding team members at AllianceBernstein Private Credit Investors. We are a $20 billion core middle market direct lending platform. We started with $500 million 10 years ago, and we've scaled to $20 million today. And we're part of AllianceBernstein, large global asset manager with north of $750 billion in capital. My role here is I run our origination strategy in our group to oversee production and strategy for the group. In addition to that, I get involved in fundraising as well as some of the strategic initiatives related to our growth adjacencies. Our core business iscore market private equity business, largely backed by the private equity sponsors, and we play mostly lead and co-lead roles, but we do have a few adjacent businesses around that core, one of which is a recently launched NAV lending business, another is flexible credit solutions to late-stage growth tech companies, as well as small minority equity co-invest business. So, personally, been in the private credit space for over 20 years, originally at Goldman Sachs, then at Barclays, and now here, together with our founding team. So, we have seen it evolve materially, remain resilient as an asset class through some turbulent times, but also evolve and grow rapidly to become way more than direct lending today, and happy to talk about that.

Ken Young:

I love it. I think to have people from such esteemed firms in the history of this business - KKR and Blackstone on the private equity side - but AllianceBernstein from the idea that some of the most exciting stuff going on in this business is the more traditional asset managers, really moving into the alts business is a really big part of that story. So, I'm so appreciative of each of you taking time to come try to tell this story with us. And so thank you for doing it. As we start to try to put these strands of discussions together and figure out how we got here, and then try to talk a little bit about where we're going, I think one of the things that I was struck with when we were talking about this podcast, and even just listening to the introductions, is John, you made the point that Henry and George are two-legged humans who started this business themselves, and now your three firms alone - nevermind all the other big firms - have two and a half trillion dollars of assets under management. Can we start just by talking about scale? Like, how did private equity and then private credit get so big?

John Park:

Look, I'm biased here as a private equity guy, but you know, PE has been the best performing asset class, you know, through history. You know, when you look at the '01-'04 period after the tech bubble, the 2009-2011 period coming out of the GFC, 2020 and beyond coming out of COVID, in times of complexity private equity has proven to have superior returns, and I think it's because of what we do. You know, we own control positions. We have the ability to operationalize change management, and just, I think, the MO of what our business model is kind of begets our ability to deliver, you know, those returns. And if you think about the consistency of the industry in terms of delivering 2-3x, you know, money multiple returns as an industry, what that means is, you know, as you have a company and you have a successful exit, they're two or three times bigger, obviously, on an equity basis - so maybe levered, it's one and a half to two times bigger. So, every five years, you're doubling the size of these businesses and the opportunity set doubles. And so, following that, and following the superior returns, LPs have given more and more capital to the industry, so the funds have become bigger. When I started in the industry 20 years ago, funds there were $200, $500 million are now $15, $20 billion of capital. So, you know, as long as we continue to perform and deliver consistent, superior returns, I think there's going to be plenty of capital that are going to want to chase these levered equity returns. And so I think, you know, certainly the industry has evolved greatly over the last 45 to 50 years, and over the next 45 to 50 years, you could see almost equal growth happening in the industry, from my perspective.

Ken Young:

Chris, you want to jump in on that?

Chris James:

Sure. I was going to say I think John says that well. I mean, there is, like, a flywheel dynamic there, where the economy is growing, the world's growing, and with markets that are just bigger, you have private markets, particularly, coming to meet that demand. And you hear stats like over 90% of businesses, or maybe close to 90% of businesses with over $250million of revenues are private. And it kind of speaks to that point of, you know, water finding its level where you will have capital, particularly private capital, coming to meet the demand of these companies and these businesses in bigger, more sophisticated ways. And I think that trend, which is kind of exorable, is continuing. And so, it shouldn't surprise anyone, given that demand, that there is a growing supply of private capital and more sophisticated types of capital to meet that demand.

Jay Ramakrishnan:

On my side, I was going to echo some of the comments and coming at it, maybe, from the private credit side of private capital. So, as the number of private equity firms grew, private credit and direct lending, where private credit market originally began, grew in tandem. A lot of private equity firms funding growth of businesses that are staying private longer with a need for financing to finance that growth. So, I do think private credit has been both an enabler of as well as a beneficiary of the growth in private equity. So, there's a flywheel effect there. I think, importantly, the growth of private credit, though, has been impacted by a separate factor, which is just the consolidation of the regional banks in the late '90s and increasing regulation on the banks post Dodd-Frank and took off materially post the GSC, but that materially limited banks availability to provide that financing to private equity, and that void was filled by private credit. And so, today, if you dial forward for core middle market businesses, private credit is the primary source of capital. Then that's the demand side. On the supply side, similar to John's point, you know, the asset class of private credit, after long periods of time on a risk-adjusted return basis, has delivered very consistent yields and performed. And so you see LP capital originally starting with institutions funding that space and willing to provide private alternative managers in private credit that capital to be able to provide it. So, it's been a little bit of a flywheel effect. You know, the scale of that 1.8 trillion today in private credit, not just direct lending, continuing to grow at this point in time.

Ken Young:

It's amazing. You know, Chris, I'm not sure we should disclose how old you and I are, but when you and I first came across each other in the early part of this century as summer associates together, I decided to stay in this career. You made this change and went over to Blackstone. If I had said to you, in 2006 when we were sitting down the hall from each other, "I think Blackstone is going to have a trillion dollars in AUM at some point."Do you think you would have said, "Yeah, totally. That makes total sense."

Chris James:

No, it's been bigger and faster than I would have even guessed, but it has been quite phenomenal how quickly these kind of private markets have grown. Which I guess, again, speaks to just these market dynamics and that there is such an unmet need of demand for, kind of, private capital solutions, whether ... across the spectrum from private credit all the way through private equity, and I'm sure we're going to get to that further. But there's now more and more and more sophisticated ways, strategies and specific products aimed at solving specific problems for these companies, specific capital solutions for these companies. But no, I would not have guessed of this kind of macro, massive, secular growth trend around alternatives, you know, 20 years ago.

Ken Young:

Yeah, it's crazy. And Jay your point about private credit, we'll get into that. And maybe, maybe, Chris, we'll go to that now. And we just talked about scale. And I think you've already all hit on the fact that scale allowed for sort of increased complexity and increased opportunity sets, right? It wasn't just the buyout business, John, as you noted, that KKR started. Tac Opps is a really interesting way to sort of double click into that part of the story, I feel like. You want to tell us a little bit, Chris about, like, what is Tac Opps? How did it come to be, and why did someone think that we needed a Tac Opps business next to a buyout business?

Chris James:

We formed Tac Opps soon after the financial crisis in 2011 and it was really aimed at kind of filling a supply of capital gap that we perceived in the market, and it was pretty real. I mean, the banks, and particularly these special sits desks at these banks, these bank balance sheets that could have previously bought a stream of credit card receivables or done a bespoke, structured capital solution in a corporate that needed some rescue financing or purchasing the rights to wireless spectrum. That would have previously been deals that, maybe, banks on these special sits would have done. Now, obviously, coming out of financial crisis, all these banks were in retreat. More constraints. We've talked earlier about the rise of private credit in some part, in large part due to that, and that was in large part where Tac Opps came from. And we as a firm at the time had had typical corporate private equity, real estate private equity, we had a mezzanine fund that was financing mid-market sponsors on their buyouts, and we had a hedge fund business. And none of those funds had a mandate to do some of these kind of atypical private investments. So we decided, "Let's create a pool of capital to capture those atypical, differentiated private opportunities." And we did that. And the take-up was actually way more than we thought, frankly. We had a couple SMAs, and then all of a sudden, there had some, you know, some smaller investors were like, "Hey, we want that too. That's kind of differentiated interesting." And all of a sudden, we had kind of a business. The strategy has kind of since evolved to essentially invest in that big spectrum in-between private equity and private credit, and that's largely structured transactions where there's a credit component and an equity component. So, you can think about, like, a preferred equity investment where there's a coupon and then some warrants for the equity component, for example. And we do a lot of financial and non-traditional real asset investments, like buying consumer loans or buying music royalties or insurance policies or, most recently, financed NVIDIA GPUs. So, that kind of atypical, differentiated-type financing is the heart of what Tac Opps is. And it was only, I think, possible in the context of, like, this, more macro growth in alternatives and, again, a recognition that there is a demand for that type of capital in the market that we could meet.

Ken Young:

The way I've kind of thought about it, was that this growth, as you say, Chris, allowed, sort of, this specialization. But I feel like it was the "We had a buyout business, and you look at 20 opportunities, but you only do two." But there's another capital solution for those companies, whether it's a pref, whether it's debt, whether it's whatever. And so having pools of capital so that you can solve a capital solution for an end user or corporate from one pool of capital or another, allowed you to expand the opportunity set.

Chris James:

Yeah, that's dead, right. I mean, it's - and John would know this - there's a bunch of companies he may talk to that don't want to be bought out on a control basis, and maybe they also don't want any debt for some reason that Jay could speak to, but they still need capital. And so, that is kind of the hallmark of where we sit, we can play in between that buyout and that private credit solution to ultimately offer a more bespoke solution for those companies. And you're dead right to kind of highlight that, that there is a spectrum in between your traditional private equity and debt financing.

John Park:

Yeah, because I think the industry has evolved into creating the best capital solutions that are necessary for the companies that are attractive to invest behind, and certainly firms like Blackstone and KKR - you know, we have, I think, almost $250 billion in private credit today - have come with debt debt and hybrid debt and hybrid equity solutions. And even on the equity side, we spent a lot of time on our classical buyout business with multi-billion dollar companies, looking at M&A targets, thinking in diligence around, you know, who the disruptors are going to be. And we were meeting all these small, highly growthful companies that we couldn't invest behind, you know, because the mandate for our classical private equity practice was not really fit for it. So, one of the first things we did in the equity business is to go raise growth equity. So, today we have a technology growth equity fund and a healthcare growth equity fund, and those funds are much earlier in the life cycle of a company - you know, highly growthful, minority, not for control - and we've grown a pretty nice business based on that. And then we took another look and said, "Wait, boy, you know, as our funds are getting bigger, we're trying to write, you know, billion dollar-plus checks, and we're seeing all these great companies that are much smaller, but we could buy and build great platforms." And so we just raised our first mid-cap fund. And we're writing$200 to $500 million checks in that fund, which, by the way, if you go back, I don't know, 15 years in time, that was what the main funds were writing, check size-wise, right? That was the business. And now, you know, the main funds are writing $1-$2 billion checks. And so there's this opportunity for the micro-cap businesses that are now mid cap to be invested behind a separate fund, which we've raised that capital for, and and so on and so forth. So I think, you know, again, over time, you know, I think CJ used the term specialization, like, I think we're going to be creating these specialized pools of capital that are solutions providers for the companies that need.

Ken Young:

Yeah, and obviously, Jay, you mentioned, just, the explosion in the number of funds, right? I mean, now we all know this, but people leave Blackstone, they leave KKR, they start their own funds, and then there's people starting funds all the time, so that there's still an enormous amount of capital in the buyout business, in that middle market that you see this movement of buyout from founders to smaller funds to bigger funds to IPOs. I mean, it's just a much more bespoke business. I want to talk about private credit as a business too, Jay, but I don't want to lose this sort of multiple sources of businesses. Before we get into private credit in and of itself, do you want to spend a minute, Jay, talking about some of the other ... like, you mentioned in the beginning, some of the other businesses you've had as sort of a capital solution, you know, things like now doing NAV financing. I feel like that's such an interesting of-the-moment solution for some buyout funds that are still holding assets, that still like those assets, but are looking for some liquidity. How have you thought about bespoke credit solutions, sort of sitting between John and Chris and then over to the credit side?

Jay Ramakrishnan:

Yeah. I mean, look. The way we thought about it, so we recently launched that with an initial base of capital, and we hired a dedicated team. Now, with the way we thought about that, though, it's a very natural extension for us of our core direct lending business. So, what we're trying to be is leveraging our core competencies as solutions provider to our private equity clients. And this is very natural to us. So we have direct lending, minority equity co-invest, some flexible credit solutions to late-stage growth tech, and then we've got NAV financing. So, we cover over 300 sponsors today. And so, this is a natural cross-sell, we have core corporate sector credit underwriting experience, and we have a team in capital, and I think we saw the market opportunity. There's clear tailwinds. It is less penetrated than the direct lending market today, and there's room for growth. It's growing in the double digits, and we do think, for investors, it provides very good risk-adjusted return and attracting from different pools of capital, both investment grade, insurance-type capital as well as more risk oriented, so to speak. But again, going back to NAV, I mean, it's not for everyone, and I know there's some different patter about uptake and so on and so forth, but there's quite a few use cases for NAV, and we see that growing and developing. And so, we're excited about that opportunity.

Ken Young:

My sense, when I talk to people in the private credit business is when the firms first started doing private credit, you would go to the institutional investors, and they had finally developed a private equity person who covered private equity, but they didn't know what to do with private credit. They would send you to fixed income, and you're like, "No, I'm doing a different business. And from there, which is not that long ago, by the way, I mean, 15 years ago. At one point, you said, I think,$1.2, $1.6 trillion business. And John, I want to get your perspective on, like, the sheer size of buyouts that private credit is now doing. Like, can we spend a minute just, Jay, how did that happen? Like, you were at Barclays, and then you decided to found this business, like, how did private credit get so big so fast?

Jay Ramakrishnan:

It's two things that I originally touched on, which is just the growth of private equity plus the disintermediation that we benefited from, right? Those two were starting factors in that evolution to core middle market direct lending and providing that primarily backed by sponsors, which is where the industry grew from. But I do think the reason it got to that scale was, you know, that's great. Private credit has structuring flexibility, right? These are not regulated entities, and therefore you can structure to the need, right? So that was a beneficial impact on the borrowing community that we were able to deliver those solutions. But over time, people on the supply side of the capital were seeing that the asset class remained resilient. It was performing even through the great financial crisis, through some turbulent COVID times, recently, in the macro volatility backdrop that we've had, it's been generally resilient and continues to grow. So, as more and more capital started to see that, and you're absolutely right that 10 years ago, they didn't know where to put it. They didn't know there was a bucket for it. Now, most large institutions have a separate demarcated bucket for private credit, which is a great development, and so that has moved on from there. Now you see, obviously, private credit being done in many different channels, which we'll talk about. But I think it's a

combination of the two things:

the performance of the asset class, people wanting to have it as a core part of their portfolio, the industry starting to scale and mature, and capital coming in, and the growth of private equity to use that capital, right? So it's a kind of a flywheel effect where it got to this point that answers your question. It's about 1.8 trillion today, expected to continue to rise in double digits for the possible future.

John Park:

Yeah, and it's interesting from my seat where, 10 years ago, private credit was a term used for some esoteric, mid-cappy thing, and if you were a big company you went to Goldman Sachs and Morgan Stanley and the big balance sheet banks for a syndicated solution. But today, you know, private credit has been probably the best partner to private equity. It's created a very streamlined way of financing businesses that you could go to trusted parties that understand the business and also the fact that you've got, you know, a couple billion dollars of equity underneath the capital structure, and that solution has created the opportunities to preempt processes, to shorten the timeline to delivery of a deal to the sellers. It's been a symbiotic relationship as, kind of, equity and credit have grown up together.

Ken Young:

It's just fascinating to reflect on this. We're doing this in such a short time. And it's like, yeah, this all happened really, really quickly, and it's amazing to watch. Chris, you mentioned retail. Two-legged investors didn't invest in private equity even five years ago. And two-legged investors, we didn't know where to put private credit. Jay, you just said it. And now, it's become mass affluent wire houses, this idea of private markets going retail has been another enormous part of what's going on in the business. Chris, you've been really kind of at the center of it. You want to tell us what you think about it?

Chris James:

Yeah, listen, we've, as a firm, taken a view that individuals were kind of underserved in private markets. So, as long as you know, 12-13, years ago, we were seeking to, kind of, develop product or otherwise enable individuals - high net worth individuals, particularly - to kind of access private funds alternatives. And we've been on this journey where we, I think, consistently over time, have been able to kind of refine and refine and refine product to enable that. You know, most alts historically have been drawdown products, which is really cumbersome for individuals, right? Administratively, you know, you make a commitment and that money is drawn down over time on a basis that you don't really know, it's hard to kind of plan for it, like, you don't have sophisticated cash management means to, like, manage that cash so it could deliver us a return vs. sitting in a checking account. And then, on the flipside, once that investment is realized, that money's sent back. And so, many of these drawdown products, they're organized and managed to IRR, which is something that institutional investors really care about and focus on and measure on, vs. just absolute profit dollars. You know that saying, that individuals don't eat IRR, right? They eat profit dollars. And so, I think the trend in the industry is a recognition of that. And I think across all three of our firms, we've sought to enable better access for individuals to deliver what they want and they need, which is, ultimately, hey, a means to invest immediately, a means to, in the instance of private equity, compound over time and not have those dollars sent back, and ultimately manage that product for profit dollars versus IRR. I mean, many individuals will tell you that they'll trade at 18% IRR, 1.8 times their money fund for a 12% IRR and three times their money fund on the same, kind of, 10-year experience. And again, I think we saw that. KKR saw that. We've all kind of seen that, and hence there's this massive, kind of, move to develop that product and ultimately solve that particular need which, again, flows into the bigger kind of play of the growth of alternatives and the growth of private markets. And I think the individual investor market is, you know, a big, big, big part of that. Very underpenetrated. And we have sought to create product for that, most recently a private equity product that harnesses the strength and the breadth and the scale and the experience of what we have at Blackstone, particularly for those individuals, and it's been resonating well.I mean, I think all of our firms can speak to, like, there's been a massive demand, massive uptake from individuals into these private funds that are set up to speak to their needs, you know, in terms of being semi-liquid and evergreen. So, I think it is a trend you will continue to see with more product for those individuals, and ultimately more investment by those individuals in private markets.

John Park:

Yeah, and if you think about private equity delivering superior returns, these larger firms having the infrastructure to manage the complexity, and the fact that, I think the stat is there's a trillion dollars in, like, sovereign wealth funds invested in private equity today, and there's $2 trillion available in the retail market to invest behind the same asset. So, it will be a large growth vector to continue this kind of growth trajectory that the industry's been on. And, certainly, we'd love to give more of the, you know, private net worth business more exposure to private markets.

Jay Ramakrishnan:

Yeah, I would add to it from a credit perspective, as to how we came to that journey of perpetual to more permanent capital. Actually, we can add it from a slightly different perspective, from the credit side where, you know, if you step back, two of the common pitfalls in credit investing are you get overconcentrated on a single name or you have asset liability duration mismatch, right? So, one of the things that we were focused on was to set up our business to avoid that, right? And we actually started on the journey to perpetual funds back in 2015, so I'd consider us one of the early innovators in that space. So, we have what we call hybrid perpetual funds, which, without going into detail, combines for the best features of a typical drawdown fund, as well as perpetual funds. And so, we start on that journey. It was all private wealth, so sold through AB's private wealth channel to individual investors, and we have thousands of investors into those pools, and capital keeps being reinvested, and you can build that diversity in a structure like that, right? Whereas a typical closed-end farm doesn't give you that same diversity in terms of the composition of the portfolio. That being said, that is sold to a specific investor base. We're more qualified investors. We have two BDCs. One is a private BDC. Similarly, it has a drawdown feature. It can expand to accredited investors. But, you know, liquidity is really through an event like an IPO, etc. And then we're launching now our public non-traded, which is our equivalent of the ones that are in the market today. That, clearly, is immediate deployment, to the point Chris made, people that value liquidity that, for some reason, cannot manage a capital core structure. So, it meets that investor need, clearly available to much more of the mass affluent, as well as even institutional for anyone that values that and cannot take the capitalcore structure. So, I think the point being, when we step back, we came at the journey through perpetual to come into different retail or accredited investor needs, to meet the client's needs and solve product for that. But we came at the perpetual from the standpoint of diversity, and then worked down to all of these different vehicles, if that makes sense.

Ken Young:

Makes total sense. I love how it's, like, the flipside of the diversification conversation we were having for meeting the needs of capital sources of companies is here we were talking about meeting the needs of different investors by finding different pools of capital for different needs of investors to go to and that going to humans. So, to try to wrap it up, thank you all so much. This has been such a fun and interesting conversation. How about we end by looking forward? Chris, we'll start with you. To close us out here, what does private equity look like in 2064?

Chris James:

Right, let's be really specific on that date. So,

Ken Young:

It's 40 years from now.

Chris James:

I think the march of the private equity market and, more generally, private markets, is inexorable, will continue to grow and will ultimately continue to swamp public markets, or traditional public markets. But I also think as part of that, you will see increasingly more liquidity in, you know, what people historically thought as private markets. I think the technology, data, some of the innovation we've done, you know, already on these evergreen, semi-liquid products, speak to a continued blurring between what's public markets and what's private markets, and it'll be on a spectrum. So I think you'll continue to see that, and I also continue to think these new technology, John can probably speak to this better than I can, but these generative AI tools, etc, will inform a way more sophisticated, specialized kind of private market. I'm not saying there'll be thousands of different strategies, and the salami is going to get sliced that thin, but I do kind of tend to think you will be able to not necessarily have, like, a fund that does a whole bunch of things, but particularly, like, strategies that can harness capital solutions on a real individual, bespoke basis, on a very efficient time scale. And I think that's where just, again, the technology will enable us to kind of underwrite and execute on a way faster basis. So, I think it is all positive, though, and I think we have a lot to kind of look forward to for this market.

John Park:

You know, to contextualize what CD just said, I think, you know, 48 years ago, KKR started one geo, one product. It's kind of a one-by-one cube. Maybe we're at a three-by-three cube now, with the different geos and different vehicles and and sizes of what we're trying to do on a three dimensional cube. My nephew plays with a 21-by-21 cube. He's a a Cuber. Speed Cuber. I'm not sure we'll quite get there in the next 40 years, but certainly, there's a lot of space between where we are today and where we think we'll end up. That or none of us will be relevant, because GPT 17 will have taken all of our jobs.

Ken Young:

Do it for us.

Jay Ramakrishnan:

That's right.

Ken Young:

And Jay?

Jay Ramakrishnan:

Yeah, just look. I mean, I think on the progress standpoint, starting off with the core knitting, so to speak, I still think there's a lot of room in just the core business of direct line. And whether you're in the lower, the core, the upper, the jumbos, there's room there. So, I do think that will continue to grow. I mean, there's geographies of the world where it's hardly penetrated. So, even if you look outside the U.S., significant and even within the US, the core market is constantly growing, is what we experience, right? Beyond that, I do agree with my colleagues that I expect to see more specialization, more of a mosaic, and so you'll have some really niche killer strategies that focus on a particular area, or saying more of those will evolve, as you're seeing it in ABL lending, right now, right? It's a new growth area, for example. And I think more of those will evolve. So, I think the prognosis by that time, I don't know. Technology completely negates the need for some of the deal flow here, right? Maybe it does. AI is growing very fast. I'm no crystal baller here, but I do think it will have an impact on the efficiencies and maybe the margins of the industry long term. So ... but people will find new ways to create new sources of value prop.

Ken Young:

We will find out. And thank you all for doing this with me. This was a really fun way to look back on the 40 years of our private equity business practice, and think about how the business has grown. And you, know you've all been a really important part of that story that's been played - yourselves and your firms. And so, awesome to have your perspective here, and thank you for doing it.

Chris James:

Loved it.

John Park:

Thank you for having us.

Jay Ramakrishnan:

Thanks for having us.

Intro:

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