1. Investment Snapshot
2. Thesis
3. Valuation & Price Target
4. Business & Product Moat
5. People & Governance
6. Market & Macro
7. Financial Quality
8. Risk Register
9. Prediction Market
10. 𝕏 Posts
Discussion
1. Investment Snapshot
2. Thesis
3. Valuation & Price Target
4. Business & Product Moat
5. People & Governance
6. Market & Macro
7. Financial Quality
8. Risk Register
9. Prediction Market
10. 𝕏 Posts
Discussion
1. Investment Snapshot
2. Valuation
Discussion
Symbol
STEP
Event Date
2020-09-16
Sector
Financials
Subsector
Capital Markets
Offer Range
$18.00-$18.00
Shares Offered
17.5M
94.82M
$425.8M
18.5%
Implied Upside vs Midpoint
Description
We are a global private markets investment firm focused on providing customized investment solutions and advisory and data services to our clients. Our clients include some of the world’s largest public and private defined benefit and defined contribution pension funds, sovereign wealth funds and insurance companies, as well as prominent endowments, foundations, family offices and private wealth clients, which include high-net-worth and mass affluent individuals. We partner with our clients to develop and build private markets portfolios designed to meet their specific objectives across the private equity, infrastructure, private debt and real estate asset classes. These portfolios utilize several types of synergistic investment strategies with third-party fund managers, including commitments to funds (“primaries”), acquiring stakes in existing funds on the secondary market (“secondaries”) and investing directly into companies (“co-investments”). As of June 30, 2020, we oversaw $292 billion of private markets allocations, including $66 billion of assets under management (“AUM”) and $226 billion of assets under advisement (“AUA”), reflecting a compound annualized growth rate (“CAGR”) of 61% since 2007. Between fiscal 2018 and fiscal 2020, our total revenues increased 69% to $447 million, our net income increased 62% to $132 million, our adjusted revenues increased 63% to $286 million and our ANI increased 41% to $63 million. --- We believe our success and growth since inception in 2007 has been driven by our continued focus on providing a high level of service, tailored to our clients’ evolving needs through: • Our focus on customization. By leveraging our expertise across the private markets asset classes, investment strategies and commercial structures, we help our clients build customized portfolios that are designed to meet their specific objectives in a cost effective way. • Our global-and-localapproach. With offices in 19 cities across 13 countries in five continents, we have built a global operating platform, organically and via acquisition, with strong local teams that possess valuable regional insights and deep rooted relationships. This allows us to combine the advantages of having a knowledgeable on-the-ground presence with the benefits of operating as a global organization. • Our multi-asset class expertise. We operate at scale across the private markets asset classes—private equity, infrastructure, private debt and real estate. We believe this multi-asset class expertise positions us well to compete for, win and execute tailored and complex investment solutions. • Our proprietary data and technology. Our proprietary data and technology platforms, including StepStone Private Markets Intelligence (“SPI”), our private markets intelligence database, Omni, our performance monitoring software, and Pacing, our portfolio cash flow, investment allocation and liquidity forecasting tool, provide valuable information advantages, enhance our private markets insight, improve operational efficiency and facilitate portfolio monitoring and reporting functions. These benefits accrue to our clients and to us. • Our large and experienced team. Since our inception, we have focused on recruiting and retaining the best talent. The firm is led by over 50 partners, with an average of more than 20 years of investment or industry experience. As of June 30, 2020, we had 526 total employees, including more than 190 investment professionals and more than 330 employees across our operating team and implementation teams dedicated to sourcing, executing, analyzing and monitoring private markets opportunities. We believe our scale and position in private markets provide us a distinct competitive advantage with our clients and fund managers. As we grow our client relationships, we are able to allocate additional capital, which allows us to expand our fund manager relationships, resulting in access to additional investment opportunities and data. This, in turn, helps us make better investment decisions and generate better returns, thereby attracting new clients and investment opportunities. --- During the last twelve months ended June 30, 2020, we reviewed over 3,100 investment opportunities and conducted approximately 4,000 meetings with fund managers across multiple geographies and all four asset classes. During the twelve months ended December 31, 2019, we allocated over $40 billion in capital to private markets on behalf of our clients, excluding legacy funds, feeder funds and research-only, non-advisory services. We have a flexible business model whereby many of our clients engage us for solutions across multiple asset classes and investment strategies. Our solutions are typically offered in the following commercial structures: • Separately managed accounts. Owned by one client and managed according to their specific preferences, separately managed accounts (“SMAs”) integrate a combination of primaries, secondaries and co-investments across one or more asset classes. SMAs are meant to address clients’ specific portfolio objectives with respect to return, risk tolerance, diversification and liquidity. SMAs, including directly managed assets, comprised $51 billion of our AUM as of June 30, 2020. • Focused commingled funds. Owned by multiple clients, our focused commingled funds deploy capital in specific asset classes with defined investment strategies. Focused commingled funds comprised $12 billion of our AUM as of June 30, 2020. • Advisory and data services. These services include one or more of the following for our clients: (i) recurring support of portfolio construction and design; (ii) discrete or project-based due diligence, advice and investment recommendations; (iii) detailed review of existing private markets investments, including portfolio-level repositioning recommendations where appropriate; (iv) consulting on investment pacing, policies, strategic plans, and asset allocation to investment boards and committees; and (v) licensed access to SPI and Pacing. Advisory relationships comprised $226 billion of our AUA and $3 billion of our AUM as of June 30, 2020. • Portfolio analytics and reporting. We provide clients with tailored reporting packages, including customized performance benchmarks as well as associated compliance, administrative and tax capabilities. Mandates for portfolio analytics and reporting services typically include licensed access to Omni. Through Omni, we provided portfolio analytics and reporting on approximately $520 billion of client commitments as of June 30, 2020, inclusive of our combined AUM/AUA, previously exited investments and investments of former clients. We are a global firm and believe that local knowledge, business relationships and presence are all critical to securing a competitive edge in the private markets. We deploy a local staffing model, operating from 19 offices across 13 countries in five continents. Our offices are staffed by investment professionals who bring valuable regional insights and language proficiency to enhance existing client relationships and build new client relationships. Since our inception, we have invested heavily in our platforms to drive growth and expand our investment solutions capabilities and service offerings, including through opportunistic transactions that have helped accelerate the growth of our team and capabilities. As of June 30, 2020, we had 526 total employees, including more than 190 investment professionals and more than 330 employees across our operating team and implementation teams dedicated to sourcing, executing, analyzing and monitoring private markets opportunities. Over 60 of our employees have equity interests in us, collectively owning nearly 70% of the Company on a fully-diluted basis prior to this offering. We have developed our footprint across the Americas, Europe and Asia-Pacific over many years, which we believe provides us with a significant competitive advantage. During the last twelve months ended June 30, 2020, over 65% of our management and advisory fees came from clients based outside of the United States. In addition, approximately 40% of our employees were located outside of the United States as of June 30, 2020. --- We have established a research-driven culture and have developed highly specialized data and technology platforms focused on the private markets, which we believe serve as some of our greatest competitive advantages. By developing our own proprietary data and technology platforms, we are able to achieve better outcomes for our clients, while providing them greater transparency. For example, SPI, our proprietary private markets intelligence database, serves as a powerful investment decision-making tool. As of June 30, 2020, SPI contained information on over 57,000 companies, $16 trillion of AUM across over 35,000 funds and nearly 14,000 fund managers showing fund-level performance for over 12,000 funds. SPI initially served to augment our own due diligence, investment and portfolio construction processes. In response to growing industry demand for private markets intelligence, we subsequently developed an interface for direct client access. Through SPI, our clients can access detailed, regularly updated information on managers through an intuitive, web-based user interface. Our research professionals utilize this technology to collect and develop qualitative and quantitative perspectives on fund managers. In response to our clients’ need for customized solutions, we developed Omni, our proprietary performance monitoring software used extensively by our approximately 70 person StepStone Portfolio Analytics & Reporting (“SPAR”) team, to provide portfolio analytics and reporting on the performance of our clients’ investments. Through Omni, clients have secure online access to all of their performance and investment data via a fast and intuitive web-based user interface. As of June 30, 2020, Omni tracked detailed information on over 4,500 investments comprising more than 46,000 underlying portfolio companies. We also recently made Pacing available to clients. Pacing is our web-based tool that empowers clients to forecast portfolio cash flows and exposures using customized assumptions in determining future investment allocations and forecasting liquidity needs. Responsible investing is a core tenet of our operating and investment philosophies. Responsible investing includes considering environmental, social and governance (“ESG”) factors in investment decisions, as well as impact investing strategies, which incorporates non-financial investment objectives alongside financial objectives. We believe that integrating ESG factors into our investment processes will improve long-term, risk-adjusted returns for our clients. This includes pre-investment screening and diligence of all material ESG risks and opportunities as well as post-investment active monitoring and engagement. We developed a responsible investment policy, became a signatory to the United Nations Principles for Responsible Investment (“UNPRI”) and created a StepStone Responsible Investment Committee in 2017, and have since become a signatory to The Task Force on Climate-related Financial Disclosure (“TCFD”) as well as a member of the Global Real Estate Sustainability Benchmark (“GRESB”) and the Sustainable Accounting Standards Board (“SASB”). --- StepStone Group Inc. was incorporated in Delaware on November 20, 2019 as a wholly-owned subsidiary of the Partnership. It has had no business operations prior to this offering. In connection with the consummation of this offering, StepStone Group Inc. will become the sole managing member of StepStone Group Holdings LLC, which is the general partner of the Partnership, pursuant to the Reorganization. Our principal executive offices are located at 450 Lexington Avenue, 31st Floor, New York, NY 10017, and our phone number is (212) 351-6100. Our website is www.stepstonegroup.com.
StepStone Group Inc. annual income statement and balance sheet, FY 2022 to FY 2026, as reported in SEC filings.
| Metric | FY 2022 | FY 2024 | FY 2025 | FY 2026 |
|---|---|---|---|---|
| Revenue | $1.4B | $712M | $1.2B | $2.0B |
| Net income | $194M | $58.1M | ($180M) | ($536M) |
| Metric | FY 2022 | FY 2024 | FY 2025 | FY 2026 |
|---|---|---|---|---|
| Total assets | $4.2B | — | $4.6B | $6.8B |
| Total liabilities | $2.4B | — | $2.8B | $5.9B |
| Total equity | $1.8B | $1.7B | $1.4B | $691M |
| Cash & equivalents | $116M | $182M | $290M | $1.1B |