Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg business Week inside from the reporters and editors who bring you America's most trusted business magazine, plus global business, finance and tech news. The Bloomberg Business Week Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.

Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg business Week inside from the reporters and editors who bring you America's most trusted business magazine, plus global business, finance and tech news. The Bloomberg Business Week Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.

Welcome back to our special.

Welcome back to our special.

Live covera up the Milk and Global LISTITITU conference in Beverly Hills, California, Arn Romaine Bostik alongside Carol Masser.

Live covera up the Milk and Global LISTITITU conference in Beverly Hills, California, Arn Romaine Bostik alongside Carol Masser.

A big focus today not just on the.

A big focus today not just on the.

Broader investment space, but really on direct lending, an alternative credit and one of the specialists in that space, Harry's Management. Still seeing opportunities out there out includes well even helping buy out shops throw up the companies they back against higher interest rates well at the same time providing cash back to fund investors without necessarily having to sell both underlying assets. Please to say that the head of Aria's credit group is joining us right now. Well, Tip to be are live here on the Milk and stage. Great to see you, Thanks, thanks for having me. Where do you finding opportunities right now?

Broader investment space, but really on direct lending, an alternative credit and one of the specialists in that space, Harry's Management. Still seeing opportunities out there out includes well even helping buy out shops throw up the companies they back against higher interest rates well at the same time providing cash back to fund investors without necessarily having to sell both underlying assets. Please to say that the head of Aria's credit group is joining us right now. Well, Tip to be are live here on the Milk and stage. Great to see you, Thanks, thanks for having me. Where do you finding opportunities right now?

So we're actually finding a pretty good constructive backdrop for everything that we do, just as a reminder, credit, real estate, private equity, secondaries, and we play in a host of different geographies. Obviously our largest business in the US, but we're in Europe and we're in Asia as well. So I think my quick takeaway is we're actually seeing the economy better than we might have expected at this point.

So we're actually finding a pretty good constructive backdrop for everything that we do, just as a reminder, credit, real estate, private equity, secondaries, and we play in a host of different geographies. Obviously our largest business in the US, but we're in Europe and we're in Asia as well. So I think my quick takeaway is we're actually seeing the economy better than we might have expected at this point.

US economy, US economy.

US economy, US economy.

Or everything.

Or everything.

I think the global economy is saved for a few but the US economy in particular, for sure. We've been questioning a little bit. Isn't transaction activity down a lot? And then when we go back and look at the deployment that we've had in our businesses, it would actually tell you that we're doing fine. To me, that means we're picking up market share and just continuing to be more and more relevant in all the businesses that we're in.

I think the global economy is saved for a few but the US economy in particular, for sure. We've been questioning a little bit. Isn't transaction activity down a lot? And then when we go back and look at the deployment that we've had in our businesses, it would actually tell you that we're doing fine. To me, that means we're picking up market share and just continuing to be more and more relevant in all the businesses that we're in.

With some of those transactions, I'm really talking about kind of mid mid tier, mid market type companies or something bigger.

With some of those transactions, I'm really talking about kind of mid mid tier, mid market type companies or something bigger.

Yeah.

Yeah.

I mean, we have a pretty broad credit business. So today it's about three hundred billion of assets in five different businesses. I mean it ranges from the lower middle market, which can be probably as small as twenty million of you bit dom, but increasingly we're able to finance these much much larger companies that you all are writing about it at Bloomberg. So you know multi billion dollar deals as well.

I mean, we have a pretty broad credit business. So today it's about three hundred billion of assets in five different businesses. I mean it ranges from the lower middle market, which can be probably as small as twenty million of you bit dom, but increasingly we're able to finance these much much larger companies that you all are writing about it at Bloomberg. So you know multi billion dollar deals as well.

What are those deals looking like?

What are those deals looking like?

And I'm curious in a higher rate environment, how that kind of impacts the financial structure a little bit?

And I'm curious in a higher rate environment, how that kind of impacts the financial structure a little bit?

So lout in here, can you say that again?

So lout in here, can you say that again?

What's kind of in terms of a higher rate environment? How is it impacting a little bit the financial.

What's kind of in terms of a higher rate environment? How is it impacting a little bit the financial.

Structure of the deals? It is really left?

Structure of the deals? It is really left?

You know, I mean, I think, look, the good news is a higher rate environment means that assets are worthless, and that's true real estate, corporates, et cetera. So you're starting to see a reduction i'd say, in purchase prices on corporate assets and certainly on real estate. And of course with higher rates that helps because you don't need to set these companies up with as much debt.

You know, I mean, I think, look, the good news is a higher rate environment means that assets are worthless, and that's true real estate, corporates, et cetera. So you're starting to see a reduction i'd say, in purchase prices on corporate assets and certainly on real estate. And of course with higher rates that helps because you don't need to set these companies up with as much debt.

What kind of deals are getting done in real estate in particular? I think we continue We've had a couple of conversations on the residential side of things, also on global properties in general and office as well.

What kind of deals are getting done in real estate in particular? I think we continue We've had a couple of conversations on the residential side of things, also on global properties in general and office as well.

So what kind of deals are happening?

So what kind of deals are happening?

Are you fine?

Are you fine?

My interest in my day.

My interest in my day.

Today is not frankly living in the real estate business. But I think if we surveyed everybody in real estated areas, it's really important that you don't take too broad a brush on real estate.

Today is not frankly living in the real estate business. But I think if we surveyed everybody in real estated areas, it's really important that you don't take too broad a brush on real estate.

Right.

Right.

So office is very, very different than we think industrial and multifamily or most of our portfolios are both on the lending side and on the equity side. I think office is tougher and it's a bit of a wool See. Although you know we're all in New York. You've probably read the articles. The AD properties in New York are fully leased up and the b properties are not. So I think it's just you really have to be a good asset selector and a good lender going in and doing the fundamental work, depending on the asset class and depending on.

So office is very, very different than we think industrial and multifamily or most of our portfolios are both on the lending side and on the equity side. I think office is tougher and it's a bit of a wool See. Although you know we're all in New York. You've probably read the articles. The AD properties in New York are fully leased up and the b properties are not. So I think it's just you really have to be a good asset selector and a good lender going in and doing the fundamental work, depending on the asset class and depending on.

Really know it.

Really know it.

Yeah, well, with some of the strength of the economy and more importantly some of the stability repolicy than the great environment, I mean, it's supposed beyond just real fate overall, is that helping facilitate more transactions.

Yeah, well, with some of the strength of the economy and more importantly some of the stability repolicy than the great environment, I mean, it's supposed beyond just real fate overall, is that helping facilitate more transactions.

There are all sorts of and we talked about this on our earnings call last week. There are all sorts of contributors that should lead to increased deal activity. So the we think plateauing you know, of rates or the black and continued rise of rates is one. We've talked about this a lot publicly that most investors are LPs are are really have significant appetite to get capital back, and there's a lot of money in the ground in leverage, finance base and in private equity, in and elsewhere that's going to need to compel transaction opportunities. The economic backdrop being good obviously is one of those as well.

There are all sorts of and we talked about this on our earnings call last week. There are all sorts of contributors that should lead to increased deal activity. So the we think plateauing you know, of rates or the black and continued rise of rates is one. We've talked about this a lot publicly that most investors are LPs are are really have significant appetite to get capital back, and there's a lot of money in the ground in leverage, finance base and in private equity, in and elsewhere that's going to need to compel transaction opportunities. The economic backdrop being good obviously is one of those as well.

What does fundraising look like, parn you right now? Is that more difficult?

What does fundraising look like, parn you right now? Is that more difficult?

I shouldn't really talk about it in any specificity, but we mentioned.

I shouldn't really talk about it in any specificity, but we mentioned.

This on the earnings call last week.

This on the earnings call last week.

We raised seven billion of capital last quarter and areas in about fourteen billion of that was in credit. So the good news is a lot of the places where we live is it has not been any harder. I think there's a real change in the way that investors have approached their portfolios public versus private, liquid versus I liquid, et cetera, and that's continuing to create tailwinds for us.

We raised seven billion of capital last quarter and areas in about fourteen billion of that was in credit. So the good news is a lot of the places where we live is it has not been any harder. I think there's a real change in the way that investors have approached their portfolios public versus private, liquid versus I liquid, et cetera, and that's continuing to create tailwinds for us.

You know, kit fourteen billion on the credit side, that's a nice little bucket if you will, to put to work right, fourteen billion. How quickly do you think you put that to.

You know, kit fourteen billion on the credit side, that's a nice little bucket if you will, to put to work right, fourteen billion. How quickly do you think you put that to.

Work in this environment or how quickly do you want?

Work in this environment or how quickly do you want?

I mean, we try to be thoughtful obviously as we raise capital, and the way that we justify capital raises with our investors is certainly with our belief and we hope, we think their belief that we can obviously deploy along with what we've raised in terms of the capital. So I think if new deal activity really does pick up a bit, it'll be even easier.

I mean, we try to be thoughtful obviously as we raise capital, and the way that we justify capital raises with our investors is certainly with our belief and we hope, we think their belief that we can obviously deploy along with what we've raised in terms of the capital. So I think if new deal activity really does pick up a bit, it'll be even easier.

But we've been hitting our.

But we've been hitting our.

Deployment targets, as I mentioned earlier, regardless, So we wouldn't raising the capital if we didn't think that.

Deployment targets, as I mentioned earlier, regardless, So we wouldn't raising the capital if we didn't think that.

We can deploy it over a reasonable period of time.

We can deploy it over a reasonable period of time.

That being said, having dry powder is really nice as the markets are always transitioning.

That being said, having dry powder is really nice as the markets are always transitioning.

Yip, what are investor expectations? I talked a little bit about higher rate environment in an environment where you get a five percent out of tenure, you know, it's just like I think the rethink about expectations of what investors.

Yip, what are investor expectations? I talked a little bit about higher rate environment in an environment where you get a five percent out of tenure, you know, it's just like I think the rethink about expectations of what investors.

Want longer term.

Want longer term.

Oh look, I mean the reality is and a lot of the businesses that we're in, we're in a spread product, so we need to provide you know, attractive risk award relative to the risk free rate, and that's how we think about things, So there's no doubt. And base rates going up has helped because a lot of what we do is floating rate assets.

Oh look, I mean the reality is and a lot of the businesses that we're in, we're in a spread product, so we need to provide you know, attractive risk award relative to the risk free rate, and that's how we think about things, So there's no doubt. And base rates going up has helped because a lot of what we do is floating rate assets.

But the private markets in.

But the private markets in.

Particular have to shift with the risk free rate and with the public markets.

Particular have to shift with the risk free rate and with the public markets.

Oh, I want to talk about areas as a business.

Oh, I want to talk about areas as a business.

Do you guys have been expanding into as aw you have new private uh when you're wealth management offering here? First talk about Asia and the opportunities there is that where the most of the growth is going to be.

Do you guys have been expanding into as aw you have new private uh when you're wealth management offering here? First talk about Asia and the opportunities there is that where the most of the growth is going to be.

Do you think so well?

Do you think so well?

I mean, we have some really well established platforms in Asia and obviously represents a tremendously large market, but I'd say in our businesses it's probably less sophisticated and certainly what we have here in the US and also in Europe, so I just view it as earlier stage. There, we basically have a credit business that does performing credit and also special situations, and we recently acquired a private equity manager based in Singapore there that I think should provide growth. I think in Asia we're focused on other areas, whether it's real estate, infrastructure and real assets. As we try to grow into a larger footprint there.

I mean, we have some really well established platforms in Asia and obviously represents a tremendously large market, but I'd say in our businesses it's probably less sophisticated and certainly what we have here in the US and also in Europe, so I just view it as earlier stage. There, we basically have a credit business that does performing credit and also special situations, and we recently acquired a private equity manager based in Singapore there that I think should provide growth. I think in Asia we're focused on other areas, whether it's real estate, infrastructure and real assets. As we try to grow into a larger footprint there.

But you know, it's interesting if we bring up Asia, and you know, obviously you go back a few years and I feel like we always talked about China, but Japan as.

But you know, it's interesting if we bring up Asia, and you know, obviously you go back a few years and I feel like we always talked about China, but Japan as.

All of a sudden, especially.

All of a sudden, especially.

Here at milkn we're hearing many investors bring up the Japanese market the opportunity that it presents for you guys, specifically.

Here at milkn we're hearing many investors bring up the Japanese market the opportunity that it presents for you guys, specifically.

In the area credit.

In the area credit.

I mean, we think, look, the reality is, it's an enormous economy, yeah, with a very sophisticated business community that is massively under allocated relative to the rest.

I mean, we think, look, the reality is, it's an enormous economy, yeah, with a very sophisticated business community that is massively under allocated relative to the rest.

Of the world in terms of alternatives.

Of the world in terms of alternatives.

And the reason for that is obviously just the required rate of return that they need over there has historically been lower based on the way that their economy works. That's probably changing, but I think they're also getting more sophisticated and frankly more interested about wanting to really roll up their sleeves due to work and.

And the reason for that is obviously just the required rate of return that they need over there has historically been lower based on the way that their economy works. That's probably changing, but I think they're also getting more sophisticated and frankly more interested about wanting to really roll up their sleeves due to work and.

Get invested in alternatives.

Get invested in alternatives.

And when you talk about a one percent shift and the portfolios over there from traditional to alternatives, the numbers get very large, very quickly.

And when you talk about a one percent shift and the portfolios over there from traditional to alternatives, the numbers get very large, very quickly.

Yeah, what is what is the differential right now in terms of the allocations that you see alternatives in the US versus say in Asia, particularly Japan or Europe.

Yeah, what is what is the differential right now in terms of the allocations that you see alternatives in the US versus say in Asia, particularly Japan or Europe.

Yeah, I mean, I think it depends depends who you are, whether you're you know, a pension versus a sovereign and an endowment which will typically have a much much longer range and then much longer, much higher allocation to new alternatives.

Yeah, I mean, I think it depends depends who you are, whether you're you know, a pension versus a sovereign and an endowment which will typically have a much much longer range and then much longer, much higher allocation to new alternatives.

The allocation in Japan today.

The allocation in Japan today.

Is virtually zero. What about how you're structuring deals right now?

Is virtually zero. What about how you're structuring deals right now?

There's been a lot of discussions about how alternative asset managers private credit funds are partnering with a lot of the bigger money center banks and more traditional banks to get deals done. I mean, they are basically calling you and not necessarily you going to them. Is this going to be kind of the structure of deals for the foreseeable future?

There's been a lot of discussions about how alternative asset managers private credit funds are partnering with a lot of the bigger money center banks and more traditional banks to get deals done. I mean, they are basically calling you and not necessarily you going to them. Is this going to be kind of the structure of deals for the foreseeable future?

I mean, I think because on the new transaction front, where a natural partner for banks. We obviously buy loans and buy high yield and syndicated transactions for banks in the regular way.

I mean, I think because on the new transaction front, where a natural partner for banks. We obviously buy loans and buy high yield and syndicated transactions for banks in the regular way.

We're also a good junior capital provider.

We're also a good junior capital provider.

Which is a business that they have had less and less interesting over the years. But I do think over the next couple of years, banks will keep rationalizing the types of businesses that they're in and we'll probably sell a portion of this business or that business, and we think.

Which is a business that they have had less and less interesting over the years. But I do think over the next couple of years, banks will keep rationalizing the types of businesses that they're in and we'll probably sell a portion of this business or that business, and we think.

We can be very good buyers with those.

We can be very good buyers with those.

Business as private credit.

Business as private credit.

Is it getting crowded at all?

Is it getting crowded at all?

It feels like everybody and in this week alone, like different tie ups and linkups if you will, between traditional finance.

It feels like everybody and in this week alone, like different tie ups and linkups if you will, between traditional finance.

And some of the part I mean, I've been doing this for twenty plus years, so the market has just grown substantially, right, So when we started, we talked about financing ten to fifty million dollars Eve Dove businesses. As I mentioned to you earlier, we can now talk to much much larger companies because of our capital base.

And some of the part I mean, I've been doing this for twenty plus years, so the market has just grown substantially, right, So when we started, we talked about financing ten to fifty million dollars Eve Dove businesses. As I mentioned to you earlier, we can now talk to much much larger companies because of our capital base.

We think it's a business that.

We think it's a business that.

Actually gets easier as you get larger. Are either real scale advantages? So is it more crowded? Is it more discussed?

Actually gets easier as you get larger. Are either real scale advantages? So is it more crowded? Is it more discussed?

It is?

It is?

But when you look at the risk reward and you look at the results that we're generating for investors are still pretty compelling.

But when you look at the risk reward and you look at the results that we're generating for investors are still pretty compelling.

What can you give us in terms of insight about returns to investors? Returns to investors?

What can you give us in terms of insight about returns to investors? Returns to investors?

Very little?

Very little?

Come on?

Come on?

Are they being more demanding though?

Are they being more demanding though?

I mean, we've we've heard a lot, We've talked to LP's ourselves, and they've talked about this idea of either wanted a quicker return of capital or wanted to see better returns than what was promised when the when they first entered into those days.

I mean, we've we've heard a lot, We've talked to LP's ourselves, and they've talked about this idea of either wanted a quicker return of capital or wanted to see better returns than what was promised when the when they first entered into those days.

I mean, I think and and I just got here last night, but apparently everyone's been talking about DPI, which is obviously how much capital you can return to your LPs.

I mean, I think and and I just got here last night, but apparently everyone's been talking about DPI, which is obviously how much capital you can return to your LPs.

I think what the LPs one first.

I think what the LPs one first.

And foremost today is more return of capital because they're mismatched in terms of how they want to be able to reallocate within their portfolios.

And foremost today is more return of capital because they're mismatched in terms of how they want to be able to reallocate within their portfolios.

I don't know.

I don't know.

Our LP's are always tough on us to generate good returns. If we don't generate good returns, still fire us, we will hire someone else.

Our LP's are always tough on us to generate good returns. If we don't generate good returns, still fire us, we will hire someone else.

Just guzee.

Just guzee.

That's about your existing portfolio there. I mean, I know you guys kind of ranked those you have that whole system.

That's about your existing portfolio there. I mean, I know you guys kind of ranked those you have that whole system.

I think it was like one to four or something.

I think it was like one to four or something.

But when you talk about the quality of what you already have, yeah, are you.

But when you talk about the quality of what you already have, yeah, are you.

Comfortable with it?

Comfortable with it?

Yeah?

Yeah?

We've said this over and over here and over the last couple of months.

We've said this over and over here and over the last couple of months.

Things from an economic perspective are better than we probably would have thought.

Things from an economic perspective are better than we probably would have thought.

Defaults in loan.

Defaults in loan.

And alternative credit portfolios are still materially below historical averages. I get the question a lot of do you expect they'll go up? Kind of rates remain higher for longer. The answer is probably yes, But we're not forecasting, you know, anything other than probably a traditional credit cycle, and that should lead to I think, just dispersion of results. We think the really high quality firms, the great origination and great risk management, will continue to succeed, and the smaller folks who haven't been in the business quite as long could have a harder time.

And alternative credit portfolios are still materially below historical averages. I get the question a lot of do you expect they'll go up? Kind of rates remain higher for longer. The answer is probably yes, But we're not forecasting, you know, anything other than probably a traditional credit cycle, and that should lead to I think, just dispersion of results. We think the really high quality firms, the great origination and great risk management, will continue to succeed, and the smaller folks who haven't been in the business quite as long could have a harder time.

All right, Kevi, you have to leave it there.

All right, Kevi, you have to leave it there.

We're gonna try to get you to bump you to the front of the line for Matgic Johnson here there over our area's credit group.

We're gonna try to get you to bump you to the front of the line for Matgic Johnson here there over our area's credit group.

You're listening to the Bloomberg Business Week podcast Can't Just Live weekday afternoons from two to five pm Eastern Listen on Apple car Play and and Broyt Auto with a Bloomberg Business Act or want us live on YouTube.

You're listening to the Bloomberg Business Week podcast Can't Just Live weekday afternoons from two to five pm Eastern Listen on Apple car Play and and Broyt Auto with a Bloomberg Business Act or want us live on YouTube.

Yesterday, I deal between PNC Financial Services Group and the TCWS Group. I'm partnering to develop to deliver excuse me, private credit solutions to middle market companies.

Yesterday, I deal between PNC Financial Services Group and the TCWS Group. I'm partnering to develop to deliver excuse me, private credit solutions to middle market companies.

Private credit. There is a lot going on.

Private credit. There is a lot going on.

Continues to be great to be talking again with Katie Katchi, CEO of the Global Asset Asset from TCW, which manages approximately two hundred billion in client assets.

Continues to be great to be talking again with Katie Katchi, CEO of the Global Asset Asset from TCW, which manages approximately two hundred billion in client assets.

You've been busy, Thanks for having.

You've been busy, Thanks for having.

Me on, Yessa, tell us about this deal with D and C.

Me on, Yessa, tell us about this deal with D and C.

Yeah, sure, we're just by background. You mentioned TCW as a two hundred billion dollar global asset manager. We were an early entrant to private credit that is led for us by the extraordinarily talented Rick Miller, our CIO of private Credit. A twenty three year track record in that asset class of conservative lending that's allowed us to outperform with a low loss ratio. And we're really proud to be partnering with PNC, which is the course one of the leading US financial institutions. They're ranked forth and middle market lending. They have an extraordinarily talented and tenured management team, a strong balance sheet, and great client relationships. And this has been a partnership. Just to answer a question how it came about, it's actually fifteen years in the making, so we've worked together closely for a long period of time. Over that period, we've done forty co financings, and it is also true that they are number one fun finance partner, which means that actually PMC had to underwrite TCW and our capabilities in order to provide leverage to our fund. So this is a very very strong partnership, and I wanted to just end Carol by saying that there are This is different than other partnerships that have been announced, and this strong relationship we have with each other has allowed us to create something really differentiated for three quick reasons. The first is that it's very middle market focused, so we're going to target loans to companies with about fifteen to seventy five billion at Evada. The second is that it's a shared investment approach, so we're both putting in investors to this partnership. We're going to work together on the underwriting and the origination. Of course, it will be shared by Rick, and that's because we have a shared credit culture of conservative lending that allows us to do to share the investment approach. And then finally it's shared economic We're targeting two and a half billion dollars of equity this year and it will be strong contributions both from PNC and from TCW and our affiliate, so that economic alignment aligns our interest with PNC and also of course with our clients.

Yeah, sure, we're just by background. You mentioned TCW as a two hundred billion dollar global asset manager. We were an early entrant to private credit that is led for us by the extraordinarily talented Rick Miller, our CIO of private Credit. A twenty three year track record in that asset class of conservative lending that's allowed us to outperform with a low loss ratio. And we're really proud to be partnering with PNC, which is the course one of the leading US financial institutions. They're ranked forth and middle market lending. They have an extraordinarily talented and tenured management team, a strong balance sheet, and great client relationships. And this has been a partnership. Just to answer a question how it came about, it's actually fifteen years in the making, so we've worked together closely for a long period of time. Over that period, we've done forty co financings, and it is also true that they are number one fun finance partner, which means that actually PMC had to underwrite TCW and our capabilities in order to provide leverage to our fund. So this is a very very strong partnership, and I wanted to just end Carol by saying that there are This is different than other partnerships that have been announced, and this strong relationship we have with each other has allowed us to create something really differentiated for three quick reasons. The first is that it's very middle market focused, so we're going to target loans to companies with about fifteen to seventy five billion at Evada. The second is that it's a shared investment approach, so we're both putting in investors to this partnership. We're going to work together on the underwriting and the origination. Of course, it will be shared by Rick, and that's because we have a shared credit culture of conservative lending that allows us to do to share the investment approach. And then finally it's shared economic We're targeting two and a half billion dollars of equity this year and it will be strong contributions both from PNC and from TCW and our affiliate, so that economic alignment aligns our interest with PNC and also of course with our clients.

So katy targeting two and a half billion, how big could this partnership.

So katy targeting two and a half billion, how big could this partnership.

Get those We think this partnership could expand significantly over time. And that's important because private credit managers and banks, we think those partnerships with US and others will continue because banks are under some regulatory pressure, and private credit managers they have the capital to allocate and to lend, and banks have great origination capabilities, and those two things are going to have to cooperate so we can continue to put credit out into the US market.

Get those We think this partnership could expand significantly over time. And that's important because private credit managers and banks, we think those partnerships with US and others will continue because banks are under some regulatory pressure, and private credit managers they have the capital to allocate and to lend, and banks have great origination capabilities, and those two things are going to have to cooperate so we can continue to put credit out into the US market.

What does significantly mean.

What does significantly mean.

I'm not going to give you the exact billions of.

I'm not going to give you the exact billions of.

Dollars, but I will say the double from the initial two and a half or many.

Dollars, but I will say the double from the initial two and a half or many.

Times actually for our credit alternative platform broadly, we've already doubled the AUM of that platform over the next couple of years, and we're expecting it to be many multiple over that. And this is going to play a very important role in the growth of TCW's alternative credit platforms.

Times actually for our credit alternative platform broadly, we've already doubled the AUM of that platform over the next couple of years, and we're expecting it to be many multiple over that. And this is going to play a very important role in the growth of TCW's alternative credit platforms.

Carol mentioned at the start that you've been busy.

Carol mentioned at the start that you've been busy.

Another I guess deal, if you will, was a conversion of two mutual.

Another I guess deal, if you will, was a conversion of two mutual.

Funds to ets.

Funds to ets.

Yes, in the AI space, talk a little bit about why you make sure well.

Yes, in the AI space, talk a little bit about why you make sure well.

First of all, mutual funds in general, we think that they have a place. We'll continue to have a place in the market. Very important part of our business, very big part of teas and will continue to be a relevant vehicle. It is also true that clients are looking at the exchange traded fund vehicle because of the liquidity, the tax efficiency, and the transparency and ease of trading of those vehicles. And so we are going to convert several funds and launch new ETS. We did want an AI. I do want to emphasize I am a believer in generative AI. We have been managing AI strategies for seven years. So this isn't something we just launched because chat GBT is cool. It's we saw that transformative technology almost a decade ago and launched a strategy on that. We're investing in the technology enablers of AI and also the companies that.

First of all, mutual funds in general, we think that they have a place. We'll continue to have a place in the market. Very important part of our business, very big part of teas and will continue to be a relevant vehicle. It is also true that clients are looking at the exchange traded fund vehicle because of the liquidity, the tax efficiency, and the transparency and ease of trading of those vehicles. And so we are going to convert several funds and launch new ETS. We did want an AI. I do want to emphasize I am a believer in generative AI. We have been managing AI strategies for seven years. So this isn't something we just launched because chat GBT is cool. It's we saw that transformative technology almost a decade ago and launched a strategy on that. We're investing in the technology enablers of AI and also the companies that.

Will do That's what I'm curious is what is a portfolio of AI SOX stakes?

Will do That's what I'm curious is what is a portfolio of AI SOX stakes?

Because if you ask someone else.

Because if you ask someone else.

That question, they would just say, well, in video, maybe Microsoft and that's in I assume.

That question, they would just say, well, in video, maybe Microsoft and that's in I assume.

This is part of that.

This is part of that.

We have some of those in there, so these companies that are driving the technology of AI, but then also the companies that are the beneficiary and what it's actively managed and it's relatively focused, and so what we're going to do is ship the shape of the portfolio as that narrative of AI changes over time. I do just want to say one thing, because I think it's important to be balanced on these issues. I do believe in the transformative potential of AI, but it is a story that's going to play out over the very long term, and so a vehicle like this is appropriate for people who can take that long horizon. And this is said a lot, but I think it's a very good reminder. The Internet was also an incredibly transformational technology, but that didn't happen in year one, in year two, and it took twenty years. But if you stuck with that narrative for a couple of decades, and many of our clients have that type of durability of capital, it was one of the greatest wealth creation opportunities in the US economy, and so we are excited about it, but balanced in telling people this is a great vehicle. Be active, be selective, which we are be with a manager that can evolve with the narrative, but also be long.

We have some of those in there, so these companies that are driving the technology of AI, but then also the companies that are the beneficiary and what it's actively managed and it's relatively focused, and so what we're going to do is ship the shape of the portfolio as that narrative of AI changes over time. I do just want to say one thing, because I think it's important to be balanced on these issues. I do believe in the transformative potential of AI, but it is a story that's going to play out over the very long term, and so a vehicle like this is appropriate for people who can take that long horizon. And this is said a lot, but I think it's a very good reminder. The Internet was also an incredibly transformational technology, but that didn't happen in year one, in year two, and it took twenty years. But if you stuck with that narrative for a couple of decades, and many of our clients have that type of durability of capital, it was one of the greatest wealth creation opportunities in the US economy, and so we are excited about it, but balanced in telling people this is a great vehicle. Be active, be selective, which we are be with a manager that can evolve with the narrative, but also be long.

Ais a time as you know of our investment narrative. Just generally speaking, take the big broad macro Katie, what are you seeing right now?

Ais a time as you know of our investment narrative. Just generally speaking, take the big broad macro Katie, what are you seeing right now?

How would you describe the environment?

How would you describe the environment?

I would say that we are long dispersion, the idea of dispersion across all of our portfolios. It's really hard to predict this in short increments. But what I would say to you, whether it's private credit or it's public credit, we think that the spreads and I'm going to talk about public because it's just a little easier to point to valuations which are at record tights in credit markets in their post global financial crisis history, at record heights. That valuation is inconsistent with some of the obvious challenges that we have in this economy. Regardless of whether or not we get a recession.

I would say that we are long dispersion, the idea of dispersion across all of our portfolios. It's really hard to predict this in short increments. But what I would say to you, whether it's private credit or it's public credit, we think that the spreads and I'm going to talk about public because it's just a little easier to point to valuations which are at record tights in credit markets in their post global financial crisis history, at record heights. That valuation is inconsistent with some of the obvious challenges that we have in this economy. Regardless of whether or not we get a recession.

Let's take the.

Let's take the.

Scenario where we muddle forward and have some type of soft landing, but rates we all believe will stay elevated because inflation is still pressure that could create a credit event. Right when rates are this high and these companies we're already starting to see stress in certain parts of the credit market not priced into credit spreads. So in our liquid portfolios where we do take macro views, which is in the core plus space. Remember that's people's retirement money, so we're managing that for their retirement assets over many decades. We're conservatively positioned. We're overweight agency mbs, which is carrying over the index, and we're being very patient and eventually this is going to break, and when it does, we'll lean into those specific credit opportunities. If, on the other hand, I just we do get the recession, then we're going to have a credit event anyway, in both public or private markets, and that will create dispersion.

Scenario where we muddle forward and have some type of soft landing, but rates we all believe will stay elevated because inflation is still pressure that could create a credit event. Right when rates are this high and these companies we're already starting to see stress in certain parts of the credit market not priced into credit spreads. So in our liquid portfolios where we do take macro views, which is in the core plus space. Remember that's people's retirement money, so we're managing that for their retirement assets over many decades. We're conservatively positioned. We're overweight agency mbs, which is carrying over the index, and we're being very patient and eventually this is going to break, and when it does, we'll lean into those specific credit opportunities. If, on the other hand, I just we do get the recession, then we're going to have a credit event anyway, in both public or private markets, and that will create dispersion.

Are you suspicious that the default rate is in something different than what it is today?

Are you suspicious that the default rate is in something different than what it is today?

So this is a good point. Default rates are actually where we would expect them to be in the traditional level loan market. They're low and actually went down in the first quarter in the private credit market. And I'm glad you asked that, because we think that's really masking some serious liquidity challenges in the private credit market. And what we and you so the auguest question is why why is this happening? Well, I would ask first, why is there stress. The reason that we think there's actual stress that's not showing in default rates yet is because from from twenty nineteen to twenty two, these capital structures were highly levered with the view that rates would stay zero forever, right, and that didn't happen, And now masks taken over and they're under pressure. Now, why haven't the defaults gone up? My answer to you on that is that if you look at last year, the amendments of these loans were three to four times normal, and we don't generally amend loans when things are going well, so this cannot be extended forever, and eventually those default rates will rise. I'm going to end with just bring it back to dispersion. If you look at the last fifteen years in the private credit world, the dispersion between the top and bottom quartile manager is about fifteen basis points. This is not high discersion. That number could ten x or more over the next couple of years as these default rates rise, and that's why you obviously want to be with a manager like TCW that does conservative lending diligence, very high levels of diligence, very significant underwriting, and we feel really great about how we're going to manage this environment for our clients.

So this is a good point. Default rates are actually where we would expect them to be in the traditional level loan market. They're low and actually went down in the first quarter in the private credit market. And I'm glad you asked that, because we think that's really masking some serious liquidity challenges in the private credit market. And what we and you so the auguest question is why why is this happening? Well, I would ask first, why is there stress. The reason that we think there's actual stress that's not showing in default rates yet is because from from twenty nineteen to twenty two, these capital structures were highly levered with the view that rates would stay zero forever, right, and that didn't happen, And now masks taken over and they're under pressure. Now, why haven't the defaults gone up? My answer to you on that is that if you look at last year, the amendments of these loans were three to four times normal, and we don't generally amend loans when things are going well, so this cannot be extended forever, and eventually those default rates will rise. I'm going to end with just bring it back to dispersion. If you look at the last fifteen years in the private credit world, the dispersion between the top and bottom quartile manager is about fifteen basis points. This is not high discersion. That number could ten x or more over the next couple of years as these default rates rise, and that's why you obviously want to be with a manager like TCW that does conservative lending diligence, very high levels of diligence, very significant underwriting, and we feel really great about how we're going to manage this environment for our clients.

All right, Katie, we have to leave it there. Great to talk.

All right, Katie, we have to leave it there. Great to talk.

Thank you so much HEREO.

Thank you so much HEREO.

Good time for us, Katie Kacha. Of course Elite's at TCW. I'll take a time to talk with us here on the Milk and Saints.

Good time for us, Katie Kacha. Of course Elite's at TCW. I'll take a time to talk with us here on the Milk and Saints.

You're listening to the Bloomberg Business Week Podcast. Listen live each weekday starting at two pm Eastern ont Apple car Play and Androyd Auto with the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station Just Say Alexa playing Bloomberg eleven thirty FRM.

You're listening to the Bloomberg Business Week Podcast. Listen live each weekday starting at two pm Eastern ont Apple car Play and Androyd Auto with the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station Just Say Alexa playing Bloomberg eleven thirty FRM.

Continue our spectional the coverage year about the Beverly Hilton.

Continue our spectional the coverage year about the Beverly Hilton.

It is the items of private credit, y circle, the hallways here of the Beverly Hilton, the legends of private equity.

It is the items of private credit, y circle, the hallways here of the Beverly Hilton, the legends of private equity.

They want to remind you they haven't gone anywhere, and.

They want to remind you they haven't gone anywhere, and.

If anything, they've actually graduated Kerl Massler to the next phase of growth. At least that's the view of our next guest, who says pe has now evolved into a quote form of business versus just its origins as a form of finance and that actually lays a foundation potentially for better returns through building businesses and governance rather than just leverage and risks. Stephen Klinsky co founded at Goldman's original private.

If anything, they've actually graduated Kerl Massler to the next phase of growth. At least that's the view of our next guest, who says pe has now evolved into a quote form of business versus just its origins as a form of finance and that actually lays a foundation potentially for better returns through building businesses and governance rather than just leverage and risks. Stephen Klinsky co founded at Goldman's original private.

Equity group back in the eighties.

Equity group back in the eighties.

Before branching out on his own in the late nineteen nineties with New Mountain Capital. Please to say he joins us here. Definitely a legend in the business. Great to have you here, see it.

Before branching out on his own in the late nineteen nineties with New Mountain Capital. Please to say he joins us here. Definitely a legend in the business. Great to have you here, see it.

Thank you both for having me here.

Thank you both for having me here.

Let's talk about this idea of the evolution of pe and the idea of a form of business, because I hear this so much.

Let's talk about this idea of the evolution of pe and the idea of a form of business, because I hear this so much.

This isn't about cutting checks anymore. Maybe it never was, but it's.

This isn't about cutting checks anymore. Maybe it never was, but it's.

Much more now about the handholding, about the business building.

Much more now about the handholding, about the business building.

Yeah, you know, I'm one of the original private equity people around. As you said, I came in nineteen eighty one when the and your treasure was fifteen point eight percent. There was lots of inflation, and it was about leverage in those years. Forty years later, Uh, there used to be twenty private equity firms. Now there are five thousand private equity firms owning thirty thousand companies employing twelve million people.

Yeah, you know, I'm one of the original private equity people around. As you said, I came in nineteen eighty one when the and your treasure was fifteen point eight percent. There was lots of inflation, and it was about leverage in those years. Forty years later, Uh, there used to be twenty private equity firms. Now there are five thousand private equity firms owning thirty thousand companies employing twelve million people.

And the best private equity firms.

And the best private equity firms.

You have all the advantages of being like a family business where you're close to the ground to shareholders, but all the scale of the big organization. You're not under ninety day reporting. You can get the best managers and build the businesses. So you know, the real success is it's not where twenty interest rates twenty five basis points higher or lower. It's how you took a company from good to great. And that's what we try to do, and that's what I think other good firms try to do.

You have all the advantages of being like a family business where you're close to the ground to shareholders, but all the scale of the big organization. You're not under ninety day reporting. You can get the best managers and build the businesses. So you know, the real success is it's not where twenty interest rates twenty five basis points higher or lower. It's how you took a company from good to great. And that's what we try to do, and that's what I think other good firms try to do.

What does that take though, or let me rephrase that, what are the companies themselves asking for from someone like a new mountain or idy area for posing.

What does that take though, or let me rephrase that, what are the companies themselves asking for from someone like a new mountain or idy area for posing.

Yeah, you know we buy we have megafund strength, but we buy mid market companies. So let's say it's a five hundred million dollar value business. The founders retiring. He may never have done an acquisition, may never have gone global, may never have thought about AI, may never have thought about salesforce construction. So we take businesses that are already safe and sound, we've never had a bankruptcy or miss an interest payment, But the key is building them up to a much much higher head of bankruptcy. Have never had a bankruptcy, never missed an interest payment. And we have now a team of two hundred and fifty people at my firm and many many more affiliated with the firm, so we can put in large sets of operators to assist the management at the company.

Yeah, you know we buy we have megafund strength, but we buy mid market companies. So let's say it's a five hundred million dollar value business. The founders retiring. He may never have done an acquisition, may never have gone global, may never have thought about AI, may never have thought about salesforce construction. So we take businesses that are already safe and sound, we've never had a bankruptcy or miss an interest payment, But the key is building them up to a much much higher head of bankruptcy. Have never had a bankruptcy, never missed an interest payment. And we have now a team of two hundred and fifty people at my firm and many many more affiliated with the firm, so we can put in large sets of operators to assist the management at the company.

And that's what it's about.

And that's what it's about.

You don't want to be good just in one interest rate environment and bad in another, or good one year and bad another year.

You don't want to be good just in one interest rate environment and bad in another, or good one year and bad another year.

It's all weather business building.

It's all weather business building.

I love how you came out of the gate and started, because we keep saying, you know, oh my gosh, we got to go back to like zero.

I love how you came out of the gate and started, because we keep saying, you know, oh my gosh, we got to go back to like zero.

Interest rates environment. That's the abnormal part of it.

Interest rates environment. That's the abnormal part of it.

You can come out of the gate and say fifteen sixteen seventy percent, you know, talk to us about the constructive conversation. We all need to be happy about today's rate environment.

You can come out of the gate and say fifteen sixteen seventy percent, you know, talk to us about the constructive conversation. We all need to be happy about today's rate environment.

What it means for the investment landscape.

What it means for the investment landscape.

Yeah, you know, look, when rate at any given interest rate, private equity functions fine. As rates go up, things get cheaper, so it's easier to buy the new company, a little harder to sell what you bought before rates went up. So uh, but then it's stabilizes. So when you actually go back to the early eighties when interest rates were crazy high because of stagflation. That was the best time to buy companies because they were so cheap. And my firm actually had a very active year both buying and selling last year, and I think we got some of the best things you've ever bought in the last twelve months when some other people were out of the market. So it's, uh, you're always buying and selling as a mature private equity fund.

Yeah, you know, look, when rate at any given interest rate, private equity functions fine. As rates go up, things get cheaper, so it's easier to buy the new company, a little harder to sell what you bought before rates went up. So uh, but then it's stabilizes. So when you actually go back to the early eighties when interest rates were crazy high because of stagflation. That was the best time to buy companies because they were so cheap. And my firm actually had a very active year both buying and selling last year, and I think we got some of the best things you've ever bought in the last twelve months when some other people were out of the market. So it's, uh, you're always buying and selling as a mature private equity fund.

Well, tell us about what you are buying or what's of interest.

Well, tell us about what you are buying or what's of interest.

At this point I'm rode away that never you know, finally a bankruptcy.

At this point I'm rode away that never you know, finally a bankruptcy.

So what is kind of the.

So what is kind of the.

Secret special sauce if you will, in terms of what you look for in a company and what you are you know, committing to.

Secret special sauce if you will, in terms of what you look for in a company and what you are you know, committing to.

Yeah, So what we do is we pick sectors roactively that are non cyclical growth sectors like life science supplies, healthcare it So, for example, years ago, we had a business called Avon Tour that started a two ninety million it's now worth about twenty billion. It's second biggest to Thermo Fisher and Life science supplies. So a year ago we did a big carve out from Perkin Elmer where we bought all of their life science supplies businesses. Their legacy Crown Jules and Spectromedy and chromatography and very complicated carve out. They wanted certainty in a bad market, and I think we can add a lot of value to that company. Or we just we have a lot of good success with a company called citren Cooperman and Accounting. We're in the process of buying Grant Thornton, which is one of the seven largest accounting firms.

Yeah, So what we do is we pick sectors roactively that are non cyclical growth sectors like life science supplies, healthcare it So, for example, years ago, we had a business called Avon Tour that started a two ninety million it's now worth about twenty billion. It's second biggest to Thermo Fisher and Life science supplies. So a year ago we did a big carve out from Perkin Elmer where we bought all of their life science supplies businesses. Their legacy Crown Jules and Spectromedy and chromatography and very complicated carve out. They wanted certainty in a bad market, and I think we can add a lot of value to that company. Or we just we have a lot of good success with a company called citren Cooperman and Accounting. We're in the process of buying Grant Thornton, which is one of the seven largest accounting firms.

Wonderful firm.

Wonderful firm.

We just bought BMI, which represents one point four million songwriters from Taylor, Swift and everyone else. It's a business service that collects their royalties and we think we can add a lot of technology and growth to improve it.

We just bought BMI, which represents one point four million songwriters from Taylor, Swift and everyone else. It's a business service that collects their royalties and we think we can add a lot of technology and growth to improve it.

So we're in these industries we have.

So we're in these industries we have.

My firm's now been around for about twenty four years, so we've gotten stronger and stronger in these spaces, and we don't depend on debt, so we could just get some good byes.

My firm's now been around for about twenty four years, so we've gotten stronger and stronger in these spaces, and we don't depend on debt, so we could just get some good byes.

Well.

Well.

Common bread with a lot of those companies you mentioned, is kind of the acycle or non cyclical nature totally businesses.

Common bread with a lot of those companies you mentioned, is kind of the acycle or non cyclical nature totally businesses.

So that is the core strategy.

So that is the core strategy.

It changes as the decades go on, but what sector can grow non syncnically high free cash high barrier to entry for the next five to ten years.

It changes as the decades go on, but what sector can grow non syncnically high free cash high barrier to entry for the next five to ten years.

That's where we focus. We have teams working.

That's where we focus. We have teams working.

In these sectors and then when we find a nice, safe company, we then spend years building it to get their return.

In these sectors and then when we find a nice, safe company, we then spend years building it to get their return.

So and that's what we do, all right, Seebat to leave it.

So and that's what we do, all right, Seebat to leave it.

They're great to talk to you and great to have his perspective here. Really are one of the titans in private equity of Stephen Klinsky of New Amountain Capital.

They're great to talk to you and great to have his perspective here. Really are one of the titans in private equity of Stephen Klinsky of New Amountain Capital.

You're listening to the Bloomberg Business Week podcast. Catch us Live weekday afternoons from two to five pm Eastern. Listen on Apple car Play and Androut Auto with a Bloomberg Business at just Live on YouTube.

You're listening to the Bloomberg Business Week podcast. Catch us Live weekday afternoons from two to five pm Eastern. Listen on Apple car Play and Androut Auto with a Bloomberg Business at just Live on YouTube.

Well, City cee of Jane Frazier was here at Milkin. She expects the equity rally to continue. That was among her comments at Milcote yesterday, appearing on a panel a wide discussion on the market environment. Another member of her team also at Milkin with us, as Andy Saig. He is head of wealth management over at City Group and we're delighted to have him join us.

Well, City cee of Jane Frazier was here at Milkin. She expects the equity rally to continue. That was among her comments at Milcote yesterday, appearing on a panel a wide discussion on the market environment. Another member of her team also at Milkin with us, as Andy Saig. He is head of wealth management over at City Group and we're delighted to have him join us.

Help.

Help.

Hey, I'm great, terrific to be here. As you said, there's a bullish sentiment here at the conference.

Hey, I'm great, terrific to be here. As you said, there's a bullish sentiment here at the conference.

So it's great to hear you see that among your wealth management clients.

So it's great to hear you see that among your wealth management clients.

Give us an idea of the commenty you are.

Give us an idea of the commenty you are.

We see we see people very front footage in terms of looking for opportunities in the markets. Obviously, you know what's been happening in the US and market has attention around the world.

We see we see people very front footage in terms of looking for opportunities in the markets. Obviously, you know what's been happening in the US and market has attention around the world.

Our business is very global.

Our business is very global.

We see a lot of discussion, of course about the US election, but honestly, I don't think it's really driving investor decision making. They're looking through that too, just the underlying fundamental strength in the US economy and value they see in our equity markets. Even after this run.

We see a lot of discussion, of course about the US election, but honestly, I don't think it's really driving investor decision making. They're looking through that too, just the underlying fundamental strength in the US economy and value they see in our equity markets. Even after this run.

Andy get into some of this visit investments at the wealth management area, clients really are interested in. You know, we talk about private credit. Here's another year of BILK and we talk a lot about private credit. AI is once again dominating the investment themes. I'm curious what those clients are asking for.

Andy get into some of this visit investments at the wealth management area, clients really are interested in. You know, we talk about private credit. Here's another year of BILK and we talk a lot about private credit. AI is once again dominating the investment themes. I'm curious what those clients are asking for.

Well, I mean, well, you put your finger on it. I mean, the probably the number one topic.

Well, I mean, well, you put your finger on it. I mean, the probably the number one topic.

And our clients in the private bank around the world are they're real change makers in the world.

And our clients in the private bank around the world are they're real change makers in the world.

They're very high at worth.

They're very high at worth.

Individuals, they've got a they're investors with great acumens, so the focus on alternative investments is at the top of their list. We happen to have one of the strongest alternative investment teams in the market, and so a lot of firms here at the conference are ones that we work with with clients in the US equity market. Healthcare is a topic that investors are very focused.

Individuals, they've got a they're investors with great acumens, so the focus on alternative investments is at the top of their list. We happen to have one of the strongest alternative investment teams in the market, and so a lot of firms here at the conference are ones that we work with with clients in the US equity market. Healthcare is a topic that investors are very focused.

On, specifically in healthcare.

On, specifically in healthcare.

So it's very broad based because when you think about where AI and so many other technology trends are going to have their secondary and tertiary impact, it's going to be in an area like healthcare. So I think we're entering an era of innovation in healthcare which is going to be mind blowing, and investors see that, they understand it. We think it's a very durable trend and a place people are putting capital to work against.

So it's very broad based because when you think about where AI and so many other technology trends are going to have their secondary and tertiary impact, it's going to be in an area like healthcare. So I think we're entering an era of innovation in healthcare which is going to be mind blowing, and investors see that, they understand it. We think it's a very durable trend and a place people are putting capital to work against.

Later coming up talking about we do'll be talking exactly about that.

Later coming up talking about we do'll be talking exactly about that.

I do want to ask you, though I've heard you.

I do want to ask you, though I've heard you.

Talk in the past about getting sort of a larger sort of wallets share if you will, out of existing clients.

Talk in the past about getting sort of a larger sort of wallets share if you will, out of existing clients.

What gets you there?

What gets you there?

Well, I mean, hey, with our clients, as you said, Cities business today, it's an outstanding business, but we've got a tremendous opportunity with our clients to do more with them, and so some of that is getting to know them more deeply, trying to connect the dots in situations where we're a corporate banker or an investment banker with a family office or otherwise a wealthy family, and introduce the investment capabilities of city. This is a powerful and broad based investments business. It's not just alternatives, and we were talking about earlier. We have some of the industry's most sophisticated capital market solutions. We work with that managers across the traditional space, and so a lot of this, honestly, is just ensuring that our dialogue is as broad based as possible. We've got many kinds who know us for our banking strength and our sophistication is a lender, and we're reintroducing them to what we can do with the investment.

Well, I mean, hey, with our clients, as you said, Cities business today, it's an outstanding business, but we've got a tremendous opportunity with our clients to do more with them, and so some of that is getting to know them more deeply, trying to connect the dots in situations where we're a corporate banker or an investment banker with a family office or otherwise a wealthy family, and introduce the investment capabilities of city. This is a powerful and broad based investments business. It's not just alternatives, and we were talking about earlier. We have some of the industry's most sophisticated capital market solutions. We work with that managers across the traditional space, and so a lot of this, honestly, is just ensuring that our dialogue is as broad based as possible. We've got many kinds who know us for our banking strength and our sophistication is a lender, and we're reintroducing them to what we can do with the investment.

But with regards to the wealth business, I mean, how do you sort of improve the performance. I mean, the last couple of quarters have disappointed to a certain extent, and I know that's just kind of the short term, but as you look long term here, what gives investors a more consistent returnment.

But with regards to the wealth business, I mean, how do you sort of improve the performance. I mean, the last couple of quarters have disappointed to a certain extent, and I know that's just kind of the short term, but as you look long term here, what gives investors a more consistent returnment.

Well, I mean.

Well, I mean.

From a shareholder perspective, I mean this business. We've got a very strong focus on what the business model should be on Wealth Manager. This should be a business with pretext margins approaching thirty percent, returns in the twenties, and strong organic growth, and so we're setting out in a very disciplined way to deliver that. First up, this business has to be more fit. We're taking a lot of topics that honestly are hobbies and we're sun setting those. We're readjusting the expense base in the business, and that's something investors are going to see you.

From a shareholder perspective, I mean this business. We've got a very strong focus on what the business model should be on Wealth Manager. This should be a business with pretext margins approaching thirty percent, returns in the twenties, and strong organic growth, and so we're setting out in a very disciplined way to deliver that. First up, this business has to be more fit. We're taking a lot of topics that honestly are hobbies and we're sun setting those. We're readjusting the expense base in the business, and that's something investors are going to see you.

In this quarter.

In this quarter.

We're shifting the focus of the businesses to your earlier question around the investment solutions and investment advice we can offer it to clients. We can't just be our client's lender or their banker. We need to be their investment advisor. And we're elevating the quality of the experience that we offer clients around the world. Heavy investments in our digital platforms, focus on the training of our people in personnel, more discipline in terms of and intensity around how we cover clients, and I think that all adds up to a powerful proposition, and you're going to see us unify this business around the world in a way that ensures that regardless of where you're touching City, you have access to the best in class capabilities that this firm represents.

We're shifting the focus of the businesses to your earlier question around the investment solutions and investment advice we can offer it to clients. We can't just be our client's lender or their banker. We need to be their investment advisor. And we're elevating the quality of the experience that we offer clients around the world. Heavy investments in our digital platforms, focus on the training of our people in personnel, more discipline in terms of and intensity around how we cover clients, and I think that all adds up to a powerful proposition, and you're going to see us unify this business around the world in a way that ensures that regardless of where you're touching City, you have access to the best in class capabilities that this firm represents.

That was a lot going on in Wealth Manage, a lot of competition to out there, that's for sure.

That was a lot going on in Wealth Manage, a lot of competition to out there, that's for sure.

It is well.

It is well.

That's why the power of this brand and the strength of the client franchise.

That's why the power of this brand and the strength of the client franchise.

You know, our challenge is different than most.

You know, our challenge is different than most.

We're not out trying to acquire clients first, and foremot for trying to do more with our existing clients makes sense.

We're not out trying to acquire clients first, and foremot for trying to do more with our existing clients makes sense.

Andy, thank you so much. Any Jaeger, of course of City Group.

Andy, thank you so much. Any Jaeger, of course of City Group.

You're listening to the Bloomberg Business Week podcast. Listen live each weekday. He's starting a two pm Eastern on applecar Play and Android Auto with the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station, Just Say Alexa. Playing Bloomberg eleven thirty put.

You're listening to the Bloomberg Business Week podcast. Listen live each weekday. He's starting a two pm Eastern on applecar Play and Android Auto with the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station, Just Say Alexa. Playing Bloomberg eleven thirty put.

The focus on investment banks, which have been signaling upswings in two business lines that don't usually take off at the same time, the busing ambitious companies on expansions well, helping others still drowning in debt. Now, those simultaneous ways of deal making infrastructurings, they've been the talk of Ernie's conference calls at firms like evercoor like Molis as well as Lazard. Ray maguire knows more about this space than anyone. Have you run City Group's investment banking business for more than a decade before that, helped run M and A over at Morgan Stanley as well as other banking roles at First Boston Wasser Team Pirella, and for the past year he served as the president of those are the world's largest independent investment bank.

The focus on investment banks, which have been signaling upswings in two business lines that don't usually take off at the same time, the busing ambitious companies on expansions well, helping others still drowning in debt. Now, those simultaneous ways of deal making infrastructurings, they've been the talk of Ernie's conference calls at firms like evercoor like Molis as well as Lazard. Ray maguire knows more about this space than anyone. Have you run City Group's investment banking business for more than a decade before that, helped run M and A over at Morgan Stanley as well as other banking roles at First Boston Wasser Team Pirella, and for the past year he served as the president of those are the world's largest independent investment bank.

Ray maguire joins us here on the milk and stage. What to have you here? You have a pretty long resident.

Ray maguire joins us here on the milk and stage. What to have you here? You have a pretty long resident.

I'm with you, guys. This is a big time.

I'm with you, guys. This is a big time.

Is business good right now in the investment banking world?