Mario Giannini Podcast

In today’s episode, Managing Partner Craig Emanuel sits down with Mario Giannini, Co-Chairman of Hamilton Lane. Established in 1991, Hamilton Lane is one of the World’s largest and most respected Private Markets managers, directly managing more than $ 1.3 trillion AUD in assets globally.

During this podcast, Craig holds an in-depth discussion with Mario about what attracted Mario to private markets from an early age, revisiting the bad old chainsaw and leverage days, the firm’s Investment committee process, the pressures in the current environment to deploy capital, through to some crystal ball gazing by Mario. 2024 may in fact prove to be one of the best vintages to invest in.

‍

Please see a copy of the trsnscrip below -

[00:00:00] Ryan Loehr: Welcome to the Exchange Podcast by EWL. As advisors to some of the most successful families in the country, Craig Emanuel, Tim Wybourne and I, Ryan Loehr, draw upon some of the best minds in the country. We believe that by exchanging ideas, we can deliver better advice and better outcomes for the families we work for.

[00:00:32] Ryan Loehr: Now, we're inviting you on this journey. In this podcast, We interview some of the country's best investment managers, business advisors, bankers, and founders to share their valuable insights. And our hope is that with better information comes better decisions, helping you to achieve more financially. 

[00:00:53] Craig Emmanuel: Hi, I'm Craig Emanuel, a managing partner for Emanuel, Whybourne , and Loehr.

[00:00:57] Craig Emmanuel: This morning I had an incredible opportunity [00:01:00] to sit down in our Sydney office boardroom, shake hands, and spend some time face to face with Mr. Mario Giannini, the CEO and founder of Hamilton Lane. Hamilton Lane is a world leading global investment manager, providing market solutions to a broad range of investors from the world's largest family offices, sovereign funds, and investment banks.

[00:01:22] Craig Emmanuel: Hamilton Lane currently manages more than 1. 3 trillion in assets, serving daily more than 2000 clients. Maria Giannini is the founder, CEO and co executive chairman of Hamilton Lane. Maria has been Hamilton Lane's CEO for more than 22 years and is also responsible for the firm's overall strategic direction.

[00:01:45] Craig Emmanuel: Management structure and investment committee process. Maya received a BA from California State University, Northridge, also an LLM from the University of Virginia, and a JD from Boston College. I'm sure you'll enjoy the [00:02:00] discussion with Mr. Mario Giannini. A very good morning and welcome to the latest podcast, The Exchange, by EW& L.

[00:02:08] Craig Emmanuel: This morning it is an absolute pleasure to welcome Mario Giannini. Founder and CEO of Hamilton Lane in person to our Sydney boardroom. I've been looking forward to this discussion this morning, Mario, as we have a huge amount of respect for both you personally and the business you found at Hamilton Lane.

[00:02:25] Craig Emmanuel: So I will discuss Mario's background, what drives him personally while discussing some current threats and opportunities we all face as investors in the current world, while drilling down into some of the unique strategies employed. Hamilton Lane globally. In the meeting, personally, with Fuzio Murry, our office in Brisbane, you talk through some quite sobering numbers at the time, and it was a bit of a lightbulb moment for me.

[00:02:49] Craig Emmanuel: I think you spoke about in the last two decades, a sheer decline in the number of public listed companies globally. They've almost halved in two decades. That really surprised me. [00:03:00] Second, there's also numbers, and the private market space or the backyard that you play in is less than one tenth of the size of the total public market valuation.

[00:03:09] Craig Emmanuel: Added to that, there is now more than four times the amount of unicorns, or in other words, in other words, 1 billion valuation companies, four times of the number of those held in private market funds. compared to public markets. So now there is a huge opportunity for investors to access these companies which are no longer viable maybe on public markets.

[00:03:32] Craig Emmanuel: Let's firstly touch on your personal background, Mario, and you are renowned as probably one of the most respected global pioneers in your industry. A little about yourself personally, and why you were attracted originally to work in private equity.

[00:03:45] Mario Giannini: Thank you for having me here. It's it's something, something interesting.

[00:03:48] Mario Giannini: And it's obviously it's a topic I love to talk about, the private markets. Me personally, it's there's probably not much to tell. I, I will tell you this though. I came to the private markets completely by [00:04:00] accident. I was a lawyer by background, which I, I tend not to admit being a lawyer that you're not anymore is kind of like being a reformed smoker.

[00:04:07] Mario Giannini: You always kind of are, are one of those things, but I, I was a bankruptcy workout lawyer. I had taken over a company, turned it around and I was on garden leave and someone I knew had started Hamilton Lane literally the month or two months earlier. And I went there. To find another company to buy, because I figured I didn't really know what private equity was.

[00:04:27] Mario Giannini: I sort of knew they had something to do with, with private companies, but that's about it. And I intended to go there, find a company and leave. And I just never left. I, I was a little bit like the bad penny that, that you can't get rid of. But more interestingly, I just found it to be a place where you had a growing market, you had people at that point, this is what the early nineties.

[00:04:48] Mario Giannini: Who didn't really know what these markets were all about and we're trying to figure out a way to navigate through them and companies like ours helped them do that. So it was really a very [00:05:00] odd circumstance of opportunity right place, right time and, and a great industry backdrop as the the entire industry grew over the next now 30 years.

[00:05:10] Craig Emmanuel: You were probably back then about the sort of the age of mid thirties. 

[00:05:12] Mario Giannini: Yeah. Yeah. 30, 40 years old. And so, you know, it's, it's one of those things really, that's always interesting to me in terms of people map their lives out. If you had talked to me when I was 30, there is no way in the world I would either been in private markets, a CEO, anything.

[00:05:30] Mario Giannini: The way I eventually spent a good part of my career and, and I always tell people, I think you just got to be open to opportunities and things that happen and move with them and see what, what's the worst that happens. It doesn't work and you go do something else. 

[00:05:44] Craig Emmanuel: Looking back at the infamous. Global financial crisis, the GFC, you all remember it very well, etched into our minds.

[00:05:50] Craig Emmanuel: I'd probably say since that period there's been a huge emergence of private credit, in other words, non bank lending now washing around the world. As a result, the capital stack has changed for [00:06:00] most companies, whether that's private or public companies. And I'd probably say as well, do you think there's been a bit of a blur between private equity?

[00:06:08] Craig Emmanuel: Private credit and private debt. You sort of see those private credit and all of those in one melting pot. Talk us through your view there. 

[00:06:16] Mario Giannini: The great financial crisis was, this will sound terrible because it was a horrible period, but it was a real watershed moment for private markets because what happened During that period was investors said, Wait a minute.

[00:06:30] Mario Giannini: I hate public equity because I didn't know it could go down 40, 50%. I hate real estate because it got killed. I hate hedge funds because they never return anything. But this private equity and private credit stuff has done relatively okay. And it, it shifted everyone's attitude in, in a very perverse way in the sense of you, you never want anything like that to happen, but it made private markets, private equity, private credit.

[00:06:56] Mario Giannini: Private infrastructure, legitimate parts of everyone's [00:07:00] portfolio. Everyone looked at it and said, I need some of that because everything else is going to hell. And yes, what you said is exactly right. Private credit really mushroomed because banks left the market. Regulators didn't want banks making loans.

[00:07:14] Mario Giannini: And all of a sudden you had private credit going. We're the only game in town. And in portfolios, I think two things have happened. One is everyone put private credit in with private equity. There was sort of this private alternatives allocation, and it became one big bucket. I think what you're seeing now is more of a movement towards saying private credit should be its own thing.

[00:07:36] Mario Giannini: Bucket in with public. I mean, yeah, public debt that it shouldn't be lumped in with private equity because the return risk. All the profiles are different and there's a huge movement. I would say the biggest thing over the last 5 years has been the the movement into private credit, both by general partners, the people investing and by limited partners who are investing their capital with the general partners.

[00:07:59] Mario Giannini: It, [00:08:00] it, it, it almost worries you a little because there's such unanimity that private credit is the place to be. But yeah, it's, it's really an outgrowth from the GFC. 

[00:08:07] Craig Emmanuel: I think there's a potential future growth from here, still an enormous scope for growth. Do you think in that, that industry itself? 

[00:08:13] Mario Giannini: My guess is there's still enormous growth because of the bank situation.

[00:08:17] Mario Giannini: So take the United States, for example, where probably it's the largest of the private credit markets. I still personally believe, and, and, and this isn't something unique that I believe, but. The, the regulators do not want regional banks. They just don't want them. They're, they're, they're large enough to be a problem, but not large enough that you want to regulate all of them.

[00:08:37] Mario Giannini: They're just too many. 

[00:08:38] Craig Emmanuel: Concentration risk, or what reason? 

[00:08:40] Mario Giannini: Well, I think they're just worried that, you know, these banks are big, but they're not big enough. You'd need a regulatory environment that's two, three times as big as what you have today. And they're just not going to dedicate the resources, frankly.

[00:08:52] Mario Giannini: And so I suspect that what you'll see is regional banks continue to leave the market over time, which again is a huge opportunity for private [00:09:00] credit. It's one of these things where as people become more comfortable with private credit as a way to finance transactions, finance whatever you want to do, the market share will grow.

[00:09:10] Mario Giannini: Will it have the kind of incredible growth it's had over the last 5, 6, 10 years. You know, that, that'll probably slow down a little bit, but I, I think there's still an enormous, enormous amount of of available space for private credit to grow.

[00:09:23] Craig Emmanuel: Completely agree. Let's touch on, if we can, portfolio construction for Hamilton Lane.

[00:09:27] Craig Emmanuel: Interesting to hear thoughts on how important is geographic diversity. We spoke earlier about the unfortunate current tensions in the Middle East and Gaza. And up to recently, that part of the world was probably the most important technology. venture raising part of the planet if you like. Added to that do you think globalization has peaked and is this sort of leading to a hindrance in capital flows particularly for Hamilton Lane your business?

[00:09:51] Mario Giannini: Yeah a lot of threads I think in that in that question. I think it is one of the more important questions that investors I'll start with portfolio [00:10:00] construction as kind of a macro thing. A curious part about private markets people is, you know, in the public markets, what, what they tell me, what I think is accepted wisdom is that 90 something percent of return is due to asset allocation.

[00:10:13] Mario Giannini: If you listen to private markets, people, you think it's zero. That it's all about the next great deal. The next great, you know, transaction you found our view is that that's not true. That 50 60 percent of return is portfolio construction. Some of the things you talked about. Should you be in Europe over the US?

[00:10:31] Mario Giannini: Should you be? You know, venture versus growth. Should you be buy out versus those things really matter. So as we look at the world today, the whole globalization theme is an important one. I don't think we are de globalizing. I don't think that, you know, we're about to go backwards from where we've gone over the last.

[00:10:53] Mario Giannini: 20, 30, 40 years, but I do believe that the globalization we are all accustomed to will [00:11:00] change. So, for example I saw a statistic last week that in the U. S. The largest trading partner for the U. S. used to be China. That's where we got, the U. S. got most of its imports. It's now Mexico. And I think that is what we will begin to see.

[00:11:12] Mario Giannini: We will begin to see the world More more closely aligned with I'll call them regional blocks where you have the US Europe block and Australia will be in that South Korea, Japan and the China, Russia block. The trading between those two blocks will be challenging. So for example, if you're a U. S.

[00:11:36] Mario Giannini: investor, investing in China is very difficult. Like you, you simply don't know the rules and you don't know what there'll be now, tomorrow. 

[00:11:43] Craig Emmanuel: More because of recent geopolitical tensions?

[00:11:45] Mario Giannini: Yeah, I think, I think in the U. S. right now and China believes the same thing. The biggest economic foe is ...

[00:11:55] Mario Giannini: They're each other's biggest economic foe, and they will define the industries [00:12:00] and areas in which they will not permit their, whatever they have influence over, to help the other bloc economically. And I don't think that's going to change anytime soon. In the U. S., it doesn't. I mean, Trump started it, but Biden is equally, the Democrats are equally as anti China as the Republicans.

[00:12:16] Mario Giannini: And so. As investors, you have to know that when I look at our client base, our U. S. investors and most of our European investors have no interest in investing in China, none are Australian, South Korean, Japanese investors are hesitant. Not really sure they'll, they will, if it's an incredible opportunity, whereas our Middle Eastern investors can't get enough China exposure.

[00:12:41] Mario Giannini: So I look at that and I say, it's not that we're de globalizing, we're just. Shifting trading structures into a column, allies and less than allies. And if you're unaffiliated, then you have some, I think, advantages in terms of investing in terms of where you want to invest. [00:13:00] But it's a, it's a very challenging world.

[00:13:01] Mario Giannini: And I was in China a couple of months ago, and I didn't realize this, but I was talking to Chinese investors who told me that in India now you cannot buy an Indian company if you're a Chinese investor. Wow. So, you know, you see that. All that that was certainly not the case 10, 15 years ago, they wanted as much China investment as it could get.

[00:13:20] Mario Giannini: So that to me is part of a reality as we all invest, whether in the public or the private sphere is what is going on in terms of the geopolitical environment. And it's not going to get better. I mean, honestly, it's just not going to get better. We're going to have, you know, you have a war in Ukraine. You have a war in the Middle East North Korea, God only knows what they're, I mean, it just feels like you're going to have continued tension around that.

[00:13:43] Mario Giannini: And so as investors, I think you just have to realize that that's a reality of, of where you're going to invest.

[00:13:48] Craig Emmanuel: So the onshore and thematic just gathering momentum, you think? 

[00:13:52] Mario Giannini: Yes, that is a very real phenomenon. Now it has its limits. You can't. So again, take the United States. We don't have the manufacturing [00:14:00] base to in two years, take all of the production that's going on in China and move it into the U.

[00:14:05] Mario Giannini: S. But what you are seeing is some of it is moving to Mexico. Some of it is moving to the U. S. So it was going to the Philippines. Yes, there will be. And in certain industries, you saw the United States and semiconductor essentially saying to the world, we are going to have our own semiconductor industry.

[00:14:21] Mario Giannini: Period, we're not going to rely on Taiwan. We're not going to rely on China. And I suspect other blocks will do that. Europe will try to do that. And probably because they're Europe mess it up. They will try. I mean, it just. Yeah. You will see more of that. 

[00:14:34] Craig Emmanuel: The second question is still dwelling on portfolio construction, if we can clearly, obviously the reach of Hamilton Lane globally is enormous.

[00:14:40] Craig Emmanuel: So if you can touch sort of briefly on your governance structure, more importantly than your investment committee process, and with that, do you more, I guess, target long term secular. thematics to, to invest within or, or is it instead case by case basis? 

[00:14:56] Mario Giannini: It, it's a, it's a dual process, I would, or [00:15:00] parallel process, I would call it.

[00:15:01] Mario Giannini: The, the advantage disadvantage of the private markets is you can't change your mind. In essence you are making a longer term strategic Bet on where you think things will be, where you think they will move. And so I would say that from our investment perspective, and I think this is probably true of a large part of the private markets universe.

[00:15:24] Mario Giannini: People have what I'll call a core portfolio and it may depend on their risk return parameters. So if you're an endowment or a foundation, for example, you may lean toward, toward a much riskier portfolio profiles, more venture, more growth, because that's your. You kind of risk return profile generally for your assets, whereas other investors may have far less of that.

[00:15:46] Mario Giannini: So for us, what we try to do is build a portfolio depending on the client we're working for. If it's our own, what the goal of that portfolio is that has a core around what we think are [00:16:00] the 7 year period. And then maybe 20, 25 percent of that portfolio is a little more tactical in the sense of. We may think Europe over the next three years is more interesting than the U.

[00:16:11] Mario Giannini: S. or vice versa. We may think growth is more interesting than value. And then we will get very specific around tailoring the portfolio, whether with co investments, meaning deals alongside general partners that are in specific companies that are in those kinds of profiles we're looking for. You know, or however, we're, we're creating those, those portfolios and our investment process is, you know, we have, we have teams who are either they're doing partnership investing direct investing in companies, secondaries, buying interests of people that are selling their, their interests, credit infrastructure.

[00:16:46] Mario Giannini: And those teams look at each of the. The verticals, if you will that are in those associated areas. 

[00:16:53] Craig Emmanuel: Some deals, I guess, are they pretty, very slow burn? Can they act very quickly and nimbly? One of the biggest benefits in [00:17:00] private markets arguably is the governance benefits, but you find that quickly on a transaction here, how quick can you push out through your investment committee process?

[00:17:07] Mario Giannini: Well, I mean, we can, we can do it in a day. Okay. That quickly. Yeah. I mean, you, you, sure. One of the things. Again, for better or worse is, is our structure is such that if someone sends out usually an email that says, I need a decision in 24 hours, but that's, that is rare. I mean, I can't, I can't stress how rare that is.

[00:17:27] Mario Giannini: There are transactions that need a week or two, and there are some, like you said, that are months and months in the making. So I would say where you have a very quick decision structure is normally where it's 24 hours, 12 hours is where. You've been working on a deal for a while and the price changes at the last minute for some reason, you know, competitive pressure, whatever it is, then you might have to make a decision very quickly.

[00:17:53] Mario Giannini: But I, I'd be hard pressed to think of a deal that came in and we had 24 or 48 hours to do the deal from [00:18:00] beginning when we first heard about it to making a decision. And I would say, Frankly, if you saw that very often, you'd either, you'd say either there's something wrong with your investment process or the market's gone a little haywire where, where you're making, because again, it's not like you can change your mate to do the deal on Monday and on Friday, like you can in the public markets go, eh, change your mind.

[00:18:22] Mario Giannini: You're stuck. Like you own it. You pull the trigger. Yeah. You better, you better be proud and willing to own it for some time.

[00:18:28] Craig Emmanuel: Looking back in history to a degree. I remember studying corporate finance 101 at university and one of the very first books promoted by a lecturer back then was the classic.

[00:18:39] Craig Emmanuel: Book titled Barbarians of the Gate. The book by the KKR of their famous Nabisco Takeover. And back then there was a classic, more renowned chainsaw. He was otherwise known as Al Chainsaw Dunlap. He was renowned as walking to a company, slice and dice, slice costs, slice employees, dial up some debt.

[00:18:58] Craig Emmanuel: Obviously you get then the hockey stick on earnings [00:19:00] and sell out, so. Have you seen industry transform over that time, otherwise known as the bad old days? P's come a long way since then, so talk through the main transformation you've seen. 

[00:19:11] Mario Giannini: Yeah, it is it is the bad old days, but if you, the unfortunate part about the industry, I think, is that it has never outgrown those days.

[00:19:20] Mario Giannini: By outside venture capital world is still seen as these kind of plucky, daring, almost mythical figures who create these companies out of whole cloth. And, you know, they're wonderful people who are are looking out for mankind, which, well, the batman's are the citizens of that. Then you see Elon Musk and you go, well, that may not be it.

[00:19:39] Mario Giannini: But I, I do believe the industry simply never outgrown its reputation for slash and burn. And that's what it was at the beginning. I mean, you could, you could put 80 percent leverage, 90 percent leverage on a company. And so sure, all you really had to do was cut costs enough to create better earnings and then sell it.

[00:19:57] Mario Giannini: That was the name of the game. That's just not the [00:20:00] industry anymore. So if you look at last year the amount of debt on a company, Was less than half. So in other words, going from 80 percent so it's like a house. You used to, used to buy a house with, with 80 percent only 20 percent equity. You used to be able to buy a company with 20 percent equity.

[00:20:16] Mario Giannini: Now you'd have to put 50, 60 percent equity on a company.

[00:20:20] Craig Emmanuel: Is that a regulatory constraint? 

[00:20:21] Mario Giannini: No, no. It's just how the industry sort of grown. I would say it's more of the lenders. So whether public, whether banks or private credit have said, I know where we've had problems and it's when you're over levered.

[00:20:32] Mario Giannini: So we're not going to let you over lever. And what that means is when you think about what you have to do in order to create return with that kind of, of leverage, if you will, you have to do it by growth. And I believe that is where the industry has gone. I, we do, we have value creation models. And look at where did the return come from in transactions for, for every investment we make.

[00:20:56] Mario Giannini: And what you find is that finance, financial engineering [00:21:00] leverage is usually something like 10, 12, 13 percent of the total return. Most of the return over half of it comes from just fundamental EBITDA growth. And that's what the industry is today. It's just a, it's a different industry from From Dunlap and all of his, his kind of, of of style, but I don't think the perception of the industry has, has grown with it.

[00:21:25] Mario Giannini: I still think I hear it all the time. People always say to me, one of the biggest arguments about about private equity against it is well, it's just levered public equity or all your return is from leverage. And the reality is that that's not true, but it makes a great soundbite, won't we? I mean, it just sounds great.

[00:21:44] Craig Emmanuel: A very good point. Let's touch on how difficult it's been to raise funds the last couple of years both in the public and private market space. So there's obviously been, since the year 2021, that was the record year, if you like, for, for capital raising in both public and private markets. [00:22:00] And since a period of time you have seen correct me if I'm wrong, but a decline of about 65 percent of fresh capital raised in both private equity and in the venture world.

[00:22:11] Craig Emmanuel: Talk us through, I guess, the, the difficulties you're seeing in Hamilton Lane in, in, in that environment where there's been, it's been tough to raise capital. 

[00:22:19] Mario Giannini: We've been saying for a couple of years now that this is not a short term problem. This is a, this is a, a cyclical. 3, 5, 6 year issue that the industry will face.

[00:22:30] Mario Giannini: Mm-Hmm. . And, and it's facing it for a couple of reasons. The first is limited partners don't have as much capital as they did, and for a very good reason because their private markets portfolio hasn't gone down. It's gone up. And so as a percentage of their assets, it has not created that kind of room, put out as much capital as everyone wants them to.

[00:22:56] Mario Giannini: But I think that's a smaller part of the problem. I'll come back to that in a minute. But the bigger [00:23:00] part of the problem is the, the general partners, the people raising capital have proliferated. They're, they're like mushrooms gone nuts in the, in the forest. They just, and what really happened is. It's not so much that they raised ever bigger funds.

[00:23:14] Mario Giannini: They did, but the industry can deal with that. They raised so many different kinds of funds. If you were a manager, you had your big buyout fund. You had your smaller buyout fund. You had your smaller, smaller than that. But I mean, you just had. So many funds that I don't think the industry could have grown as fast as the demand from the general partner community for capital.

[00:23:37] Mario Giannini: And that's where we are today. And the issue in this industry is in most industries, when you have that kind of supply, demand and balance, the number of general partners shrinks, you know, instead of 100 of them, you have 80 of them and they all. Go live happily ever after. They're like vampires. You cannot kill them.

[00:23:55] Mario Giannini: You cannot get rid of them. There's no magic state that drives them out of business. They [00:24:00] continue because they have long term vehicles. And so the, the process of the industry right sizing, if you will, takes time. And we are going to go through a, I think a very, very. Difficult period of many general partners not reaching their targets, and I don't know what they do in that environment.

[00:24:17] Mario Giannini: Do they lay people off? Do they merge? I don't know, but this isn't something that is going to magically go away because the market goes up 10 percent or something like that happens and in today's market, what is making it worse is the lack of exits coming back to investors. And so if you're an investor, you're sitting there going.

[00:24:40] Mario Giannini: Well, wait a minute. I do want to invest more. I will invest more, but come on, people help me out. Give me some capital back. Like you can't leave me here. And you know, general partners are tone deaf. Well, my portfolio is doing great. Don't worry. And we say, well, we're not worried. We just like to see some money back.

[00:24:57] Mario Giannini: So I, I, I think we're in that, [00:25:00] that phase of the market. And I, I don't think it's going to go away anytime, anytime soon.

[00:25:05] Craig Emmanuel: Touching on- you're right. Capital raising is slow, but more importantly. Deal activity is probably slightly more so, so on both equity and the venture side. So do you see this argued as probably an overvaluation reason, not too many dealers are there which are worth throwing money at?

[00:25:21] Craig Emmanuel: Secondly I guess more, more of a limited choice reason, if you like. 

[00:25:25] Mario Giannini: Yeah, I'm not sure if it's an overvaluation issue. I think valuations are generally, I think in venture, they're probably still a little too high. And so I suspect part of the reason the venture activity is slow is that. No one, and they're too high because no one really knows when the company will need money and if they're going to be able to raise money at that point when they, when they go get it in the buyout world, I think valuations are generally okay.

[00:25:50] Mario Giannini: But the problem in that world is twofold right now. Maybe threefold one is if you're a buyer, you're [00:26:00] not sure what the economic outlook is. Like you've got people chirping in your ear and your right ear that the economies are going to go into a recession at the end of this year. And you got someone else chirping in your left ear that, Oh, hell no.

[00:26:13] Mario Giannini: Things are great. So you're not sure what to pay for a company. And you want a discount. You're going to tell the seller, I don't think these earnings are going to stay. The seller is going, what are you nuts? Like, look how good I'm, I'm really doing well here. Go away. And you have this lack of price discovery right now.

[00:26:34] Mario Giannini: And if you look at what is selling and what is being purchased, it is the highest quality assets at very high prices, because if I'm a buyer and I'm not saying it's the right thing to do, but if I'm a buyer, I believe that under any circumstance, this company will thrive. And if I'm a seller, I'm comfortable with the price.

[00:26:53] Mario Giannini: And so I'm going to sell if, if it's a company that's in a cyclical industry, if it's a company that has any kind of hiccups, [00:27:00] it's just very challenging for buyers and sellers to agree on a price. And my own view is. Is somebody will blink. I don't know if it's the buyer or the seller. My guess is it's the buyer.

[00:27:11] Mario Giannini: They will blink this year. You will begin to see more deal activity this year. Especially if the public markets stay kind of okay. 

[00:27:20] Craig Emmanuel: So you think probably the trough might have been seen in deal flow recently?

[00:27:24] Mario Giannini: Probably. Okay. Unless, unless, you know, all hell breaks loose economically. In which case everyone will freeze up.

[00:27:31] Mario Giannini: But I don't, I don't believe that's what's going to happen. But in that absence, I think we have seen the worst of the deal environment. 

[00:27:39] Craig Emmanuel: Touch briefly if we can on the secondaries market. I guess, for the sake of this is whereby ideally some successful founders are looking at selling out of some of their.

[00:27:48] Craig Emmanuel: In, in some cases successful, maybe not so successful shares to, to sec, to the secondary market. That's been arguably pretty, pretty dry as well recently and that does also provide quite a bit of [00:28:00] liquidity for, for private equity investors like yourself. For future foreign funding. So I think the secondaries markets also may be troughed as well on a transaction basis.

[00:28:10] Mario Giannini: Yeah, I do. I mean, I think in the secondary market you have two very distinct deal paths. One is what you described where, where a general partner may have a company that they want to sell some interest to get some money back to the limited partners, but they want to keep the company or the majority of the company.

[00:28:27] Mario Giannini: I think those deals. Are still a little challenged because of the price dynamics we talked about the other part of the market where you're buying secondary interest from other limited partners. So in other words, if I have, if I have if I've made a commitment to Blackstone and Apollo's last fund, but I want to get out of it because I want to raise capital to invest in other funds and I buy those interests.

[00:28:50] Mario Giannini: That market, I think, continues to be pretty good and, and will be an interesting market over the course of the next probably couple of years, just because of that dynamic I talked about [00:29:00] where many limited partners want to create liquidity in order to keep investing in the markets. And they'll do it by selling.

[00:29:06] Mario Giannini: So for example, we just had a seller come in and what they said is we've got the portfolio, I'll make these numbers up, of a billion Dollars and we want to create 100 to 200, 000, 000. We need 200, 000, 000 of capital to invest in the markets. We will sell a strip of these commitments. We have made into the secondary market.

[00:29:31] Mario Giannini: And so it's a, it's an interesting way again for us if we buy it to get at some discount. Some interesting assets and for the seller to create liquidity in their portfolio to go do other things that they want to do.

[00:29:44] Craig Emmanuel: Let's try to look forward a little if we can from today. A couple of very important topics for us to touch on.

[00:29:49] Craig Emmanuel: But firstly, starting with a very broad based question. The current view on the global economy. I think you already mentioned that you do think maybe the worst behind us. Great if we can [00:30:00] see that. Do you see, I guess, sort of, any underlying stress or cracks appearing, particularly corners of the world, or whether that be debt credit, whatever the case is.

[00:30:08] Craig Emmanuel: I guess in your case, what are the risks out there at the moment? The worst risk we see? 

[00:30:14] Mario Giannini: So I'll start with saying how Wrong. I was last year, so good for people to know. And so, yeah I feel like I got two out of three, right? But the big one was wrong. So, so, well, I thought inflation was coming down and I thought would come down dramatically and it did almost everywhere.

[00:30:33] Mario Giannini: And I thought rates were going to peak sometime mid year. And they did, but I thought that economies would roll over, particularly the US and Europe. I thought they would, I don't know if they were going to go into a recession, but I thought they would, they would really slow down the growth in those economies would, would markedly slow down and they didn't.

[00:30:52] Craig Emmanuel: Because of stress from the Russia/Ukraine?

[00:30:54] Mario Giannini: I thought the economies would go down in Europe because of the stress of a war in Europe. But [00:31:00] also because I thought high interest rates would, would significantly impact consumption. I just figured that's what happens. And that's what would happen this time.

[00:31:09] Mario Giannini: What I had not appreciated in the U S is, I mean, I've said this on occasion. Yeah, I'm an American. And, and I am taught to spend, like that's my goal in life. I will spend and I will spend until I have nothing left to spend. And I just hadn't appreciated how the amount of fiscal stimulus through both the pandemic and through some of the inflation reduction actings that the U.

[00:31:36] Mario Giannini: S. did put tons of money into the system. And that money is still in the system. And higher interest rates simply didn't affect most of the American consumers, particularly on the mortgage side, because they were locked in. And so they got higher rates with higher earnings on their savings and their costs were fixed on the other side.

[00:31:56] Mario Giannini: And so as I look at the environment today, I am [00:32:00] not in the camp that thinks that inflation is going to come roaring back and, and I don't think the Fed will raise rates, but I also don't think they're going to cut rates anytime soon. I think they lost so much credibility. Inflation was going up and they did nothing.

[00:32:13] Mario Giannini: So I still believe. That the US economy and the European economy are going to slow into as the year progresses. But I don't think we're going to have a severe recession. So my guess is the, the, the stock markets around the world have figured that out. And that's why they've already rallied into this, into this environment.

[00:32:32] Mario Giannini: The rally makes me a little nervous given how it's in the US, for example, it's focused on seven companies, essentially that that's a little, a little worrisome. 

[00:32:41] Craig Emmanuel: The valuation on Nvidia is incredible. Well. That's approaching three trillion dollars. So... 

[00:32:47] Mario Giannini: I always laugh about people say I'd rather be in the public markets because they're less risky.

[00:32:51] Mario Giannini: So two things in the Russell 2000, which is what private equity is always compared to 40 percent of those companies [00:33:00] lose money. 40%. If I came to you and said, I've got a portfolio of private equity companies, and don't worry, 40 percent of them are losing money, you'd say, get out of here. But then I got an even better pitch for you.

[00:33:12] Mario Giannini: Out of your private equity portfolios, all of the return over the last three years is driven by seven companies. And the average P. E. on those seven companies is 50. You win? God, no, you're out. You're saying, get out of here. I don't want anything to do with that portfolio yet. People say to us, well, no, private is much riskier than public.

[00:33:30] Mario Giannini: I, I, I don't, I don't think that's true. But with that said the public markets have done fine. And my base case, but, but the other thing I think we all have to worry about here is we've got a lot of elections around the world. One in particular in the U. S. could dramatically change, you know, if Trump wins in the United States, I think you're looking at a, and we can agree or disagree on, on him as a human being and his policies, which [00:34:00] I will parenthetically say are horrendous and he has no business running, but that said, I think the biggest danger is that the uncertainty around what What kind of a decision process are we going to go through for four years if he wins?

[00:34:14] Mario Giannini: And I think that will really impact the markets. It will impact economies. And in, in Europe, you've got a very big election in the UK. And I suspect from everything I read that it will flip from a conservative regime to a much, much more liberal regime. And what will that do to the business environment?

[00:34:31] Mario Giannini: So I think there are a lot of elections around the world. India has a huge one. And so I suspect that while the markets have done well, and I'm not at all. Suggesting they won't do well we have some elections that will have a real impact on how many economies are going to be governed that we all have to be watching pretty carefully, but right now I don't like credit.

[00:34:51] Mario Giannini: I don't see a lot of stresses. I don't see I just don't see any of the and you never do, I guess before a big shift, but I don't see [00:35:00] any warning signs where you go. Wow. We got to pay more attention to that other perhaps China and their debt market But I believe and I believe for quite a while that China has enough liquidity Enough resources to take care of it if they choose to.

[00:35:13] Craig Emmanuel: Correct you're right. I think I remember reading recently Mario that it's More than 80 percent of the world's population are going to vote by the end of the year, which is an incredible year. Yeah And obviously, whether we will see a classic scenario of perhaps, say, selling on the rumor buying the fact.

[00:35:29] Craig Emmanuel: I remember very well the, I shouldn't say recent, but when Trump got over the line with Hillary Clinton there was crying in the streets of New York. But I'm sure that after that, the U. S. market went on a tear. Trump would argue it's because of him, but I think it was a classic analogy of buying on the fact.

[00:35:45] Mario Giannini: But I think you're right. I think that's why from, from our perspective, as we look at. What this year will look like it will be much more volatile than we expect, because as each of these elections takes hold as everyone makes predictions [00:36:00] about it, you're going to have very bumpy things and you're right.

[00:36:04] Mario Giannini: We won't really know till 25, but people will assume that they know and we're going to have some, i, I just suspect some ups and downs that we don't expect.

[00:36:13] Craig Emmanuel: I might touch on a particularly very important topic, and the emergence of artificial intelligence. And my, my view would probably say it could be the most traumatic.

[00:36:22] Craig Emmanuel: technology advancement we must see in our lifetimes. I remember back in the late 90s, a lot of technology companies pre the 2000 tech boom and tech wreck. Back then the, the, the holy grail I feel like was voice recognition. Then it became facial recognition, and more recently then the emergence of data and cloud.

[00:36:41] Craig Emmanuel: So, and the emergence of AI will literally inhale. Data globally your view, if, if I could on AI, if you can touch on that, the large language model and how it could transform your industry and how you can access that sort of opportunity to in private markets. 

[00:36:57] Mario Giannini: This one's a tricky one in the sense that I agree with you that, that [00:37:00] AI will revolutionize almost everything that we do where I'm not as convinced yet.

[00:37:07] Mario Giannini: So the venture industry should have really. Collapsed almost given given the dynamics around it two years ago and has largely held itself together through the promise of AI with the idea that that is where you are going to Make money is in private, private venture looking at AI. I'm a little skeptical on that one.

[00:37:31] Mario Giannini: I think instead you talked about NVIDIA, Microsoft. I believe that the initial opportunity around pure AI, just if you want to be an AI is going to be more on some of these giant technology companies. I believe what the private markets will do and are doing is they are going to revolutionize underlying industries through the application of AI.

[00:37:57] Mario Giannini: So as we look at companies, we're [00:38:00] investing in, as we talk to general partners who are investing in companies, what they're doing is figuring out, I'm making this up, but just to take an industry, how will we transform? The industry that delivers medicine that delivers X, Y, Z through the application of AI, that is where I think on the private side, you will have enormous winners and losers more than I'm going to find the next chap GPT and invest in that I'm very leery of that.

[00:38:31] Mario Giannini: I, I just don't think that that's going to happen. I think where the private markets will thrive. Is again, as I said, the application of AI and the ancillary things that AI needs in order to succeed. So those kinds of companies will do exceptionally well on the private side. I, but, but, you know, I, I think right now, if I was betting on the AI technology as a technology, it's hard to bet against Microsoft or [00:39:00] Google or Amazon.

[00:39:00] Mario Giannini: It really is. The resources required to do this right now are enormous. But again, the second, third layer applications will be a huge part of where private markets are going.

[00:39:14] Craig Emmanuel: I remember reading a research report from Goldman Sachs last week and there's currently 140, 000 drive thru McDonald's around the world and they're expecting within 12 months that your drive thru Mac has no longer talk to a human.

[00:39:26] Craig Emmanuel: Within 12 months, talk to a bot. They benefits error. They never like to work their turn up. They can interpret different languages, won't make mistakes, and obviously from McDonald's point of view, great margin expansion, so, interesting your thoughts, will IO be a net win or a net loss for the broader population globally, i. e. big job displacement do you think it'll be great for companies, but for the broader employment industry? 

[00:39:52] Mario Giannini: This is a broader sociological question than it is an investment question, although it is an investment question in many ways, [00:40:00] but the trend of the haves and have nots, AI will exacerbate that trend, and if governments Don't figure out how to rapidly retrain reallocate resources and they won't, I mean, that, you know, they won't, they've not shown any ability to do it to date.

[00:40:18] Mario Giannini: I believe for quite some time that the biggest threat to our entire investing Outlook our entire investment world as we know, it is this issue of haves versus have nots. So in many parts of the world, the U. K. The U. S. When you look at the survey of younger people and their view towards capitalism is very negative.

[00:40:39] Mario Giannini: And I think it's largely driven by this have versus have not, and I will not make that better. If you take that example, if it's. Microsoft and McDonald's together figuring out these bots, they're going to benefit. They're the ones that make the money. And the thousands of workers that are laid off, I mean, where do they go?

[00:40:59] Mario Giannini: [00:41:00] So this is something that I, I, I don't believe AI net, net, sure, 20 years, we'll all benefit, but. My lord, that's not the short term outlook.

[00:41:12] Craig Emmanuel: It is surprising really how far behind the 8 ball US Congress is compared to, say, European regulators. Obviously, Europe's introduced their, their UAI policy, but US Congress.

[00:41:24] Mario Giannini: But here's the flip side of that. So I have heard a number of investors say the problem with what Europe is doing is that they're going to isolate themselves from AI and its benefits. Now, Europe may say that's great because we're not going to have the social upheaval. But. If the U. S. and China, as the two largest economies that are trying to apply AI, don't go along with what Europe is doing, Europe runs the real risk of finding itself way behind on the application of AI and its companies [00:42:00] and its industries themselves then behind.

[00:42:04] Mario Giannini: It's a, it's a very, very challenging set of of issues that, that they face. 

[00:42:08] Craig Emmanuel: Touching again on I guess how difficult it was to raise capital recently, if we can, just circling back on that topic. Capital has been very scarce, but arguably as well the amount of, I guess, positive deals have even been more scarce.

[00:42:20] Craig Emmanuel: So, talk us through arguably, probably seeing, without question, a bit of pressure from LPs and investors to deploy capital. How do you manage pressure from your investor base to say, look, Mario, get out there, pull up, pull the trigger and put the money to work. Is that difficult in this environment? 

[00:42:36] Mario Giannini: This is an age old question, I think for, for all investors, which is, and people have different points of view on this.

[00:42:43] Mario Giannini: What do you expect from. A Hamilton Lane, a Blackstone, a TPG, do you expect that their job is to deploy capital consistently, no matter what the markets are doing? Or do you expect that they will [00:43:00] only deploy in times when the opportunities are really good and they will not deploy at other times? And I think the answer is very different among investors.

[00:43:11] Mario Giannini: And so firms like us for every, every firm has very competing pressures. In their investor base as to what is their mandate and it's a, it's a tough question because you, our own view is that we are not paid to invest. No matter what that we are paid to make relative judgments on what makes sense. And at times.

[00:43:36] Mario Giannini: So, for example, in, in late 21, we didn't do any growth investments. Okay. And not because. Okay. Not, we're smart, but not because we're, we're geniuses, but because the prices were, they just make sense to us. So it wasn't a real macro call. And so in this environment, it's the same thing. I think if, if you have, we're fortunate, we have a broad enough platform.

[00:43:57] Mario Giannini: We have a broad enough set of deal flow. [00:44:00] In all the different areas where you don't have to, you don't have to do a deal and there's enough interesting deals to meet what we think is a prudent deployment schedule. But no, I, I think that some investors really are pounding the door of their, of their managers going, why am I paying you?

[00:44:19] Mario Giannini: You need to put the money out faster. But I'll also tell you that those same investors, if those deals go bad, we'll say, what the hell were you thinking? What are you doing that for? What'd you do that deal for? So, but you know what, my answer to a lot of that is, that's what we're, that's what we're paid for.

[00:44:34] Mario Giannini: I mean, that, that, that is what we are paid to be second guessed and to, to know what we're doing in terms of, of making the right choices in markets that are like this, that are, that are more challenging to instead be very 

[00:44:47] Craig Emmanuel: patient custodian in capital. 

[00:44:49] Mario Giannini: At the end of the day, you know, people want return and I get that at times they get frustrated and, you know, they want you to be putting the money out faster, but you also have to be [00:45:00] true to who you are philosophically and culturally, internally.

[00:45:04] Mario Giannini: And I think doing deals because somebody said, well, we have the money, we got to put it out. It would just feel weird. 

[00:45:11] Craig Emmanuel: Touching on the potential growth for your sector if we can I think I recently watched an interview by from the the CEO of the world's largest sovereign fund, the Norwegian Sovereign Fund.

[00:45:21] Craig Emmanuel: And for listeners out there, it's the Norwegian Sovereign Fund is a behemoth fund globally. Manages around US 3 trillion in assets. And I was surprised to hear that the CEO, Nikolaj Tangen, when he was interviewed said that they can't currently invest in private markets. I've been pushing for some time to get formal Norwegian government approval, still waiting for that to happen.

[00:45:43] Craig Emmanuel: And obviously when that time comes, you certainly see the floodgates open if you like, but talk us through really the scope, scope for more growth in your private market industry as a whole globally.

[00:45:55] Mario Giannini: I think, you know, you've seen some of the McKinsey studies Bain, I think has done some studies that, that [00:46:00] says this market over the next 10 years will grow.

[00:46:03] Mario Giannini: I think they said 14%, 50, something like that, something like that. And I think that's probably notionally correct. Largely because when we say private markets, so I think private equity will continue to grow, but it is the it is very large already in the sense of it has grown. And I suspect that will be the smallest growing if you will, of the private markets fields.

[00:46:25] Mario Giannini: But even with that growth, it will be 10 to 15 percent driven by private equity. The Norwegians, if they come into the market, there are all sorts of new investors that don't have any allocation. And I think people will continue to allocate more and more into private equity for the reasons you said at the beginning, public markets just don't have that many companies and returns have been better.

[00:46:45] Mario Giannini: But the other private markets are going to grow also infrastructure credit we talked about. So when you think about, Illiquids as a part of portfolios. I've said this and I believe it in 10 years when you and I have this conversation in 10 years, [00:47:00] most investors, whether high net worth or institutional will have half or more of their portfolios in illiquids and not just private equity.

[00:47:10] Mario Giannini: So credit all the things I've talked about. Because first, the return is better and I don't see structurally that that's going to change over the next five or 10 years. And so that, that will, will drive a lot of it. And second, I think people will recognize that liquidity is just an overrated thing in portfolios.

[00:47:27] Mario Giannini: I mean, people want liquidity to make mistakes. That's why they want it. I want liquidity so I can sell when I shouldn't, and I want liquidity to buy when I don't. So I, I, I suspect that over time we'll all understand that. And go, I don't need that much liquidity. That's just my view of, of where the industry is going.

[00:47:46] Mario Giannini: Will there be ups and downs? Probably. But the trend, there's just nothing structurally that will change that trend until I look, I don't think this is a great thing on the equity side, because I do think you need. a strong [00:48:00] thriving public market. You just do for, for all sorts of capital formation reasons, but regulations have made being a public company way too challenging and that makes private much more attractive.

[00:48:13] Mario Giannini: And as you said at the beginning, private companies can at any size get capital, which is always why you want to be public because you couldn't get capital. Otherwise you can now in any setting. So unless the regulators change what it means to be public, which I don't think they will, or they change what it means to be private, which they might, that would be the risk for private equity where they say, we're going to, we're going to, we're going to govern you the way we govern public companies.

[00:48:38] Mario Giannini: And that will change some of those dynamics then.

[00:48:40] Craig Emmanuel: I'd also say probably one of the most important topics that we speak to clients about the importance of private markets really is alignment of interests. Public companies, shareholders don't run the company. They're run by A board CHM and they've paid a big salary and walk away.

[00:48:55] Craig Emmanuel: Well in your case, there is clear alignment and clear skin of the game. You are in essence the [00:49:00] shareholders helping to run the company. 

[00:49:01] Mario Giannini: I've always thought that private equity outperforms public equity. Same with credit any of the illiquids. Not because of leverage, not because, you know, general partners are geniuses.

[00:49:13] Mario Giannini: Private equity people aren't any smarter than anyone else. It's the alignment, as you talked about. Everyone is on the same page, and that just doesn't exist in the public markets, unfortunately. 

[00:49:24] Craig Emmanuel: Bit of a shame you weren't in town last week, Mario. We had a private dinner by Al Gore. Ah! Yeah. You've probably no doubt spent some time in your past life, but I hear you're also coincidentally quite a vocal non believer in ESG, so that's the right way to put it.

[00:49:43] Craig Emmanuel: Talk us through this, because I'm probably in your camp as well with the reasons there are, there's no clear measurement. Is it a political football? Talk us through your thinking on ESG, if you have time for that. 

[00:49:53] Mario Giannini: Look, what I am, I am known as a skeptic on ESG. What I want to make clear is I'm [00:50:00] not a climate denier.

[00:50:01] Mario Giannini: So, anyone from the U S that isn't ESG is, is, is thought to be a climate denier and a rabid Republican, which I'm neither. My issue with ESG as, as an investment construct is that it's just happy talk. Is that what What I think is going on is people it sounds great to say I am ESG conscious, but as you pointed out, what does it mean?

[00:50:24] Mario Giannini: What are you measuring? How are you measuring it? And what are you doing about the measurements? And my objection here is, and we talked to a lot of, of limited partners investors, they all mean something different. They, every one of them, they don't have any agreement on what they're, they're solving for, and they don't have any agreed upon measuring capability.

[00:50:50] Mario Giannini: And so for me to say, Oh, I'm really focused on E. What are you focused on? What? What does that mean? And I have been in too many [00:51:00] situations where you say, Okay, you're measuring something. Let's say you've even gotten that far. What are you doing about it? Like, what are you doing about it? Are you really selling that investment on the private side because it doesn't meet your ESG criteria, whatever they are?

[00:51:15] Mario Giannini: Hell no. To me, it just feels like we are still in that stage where we're Where we're all talking about it and at least outside the U. S. We all have to say we believe in it. And it's part of our investment guideline. Whereas in the U. S. Obviously, it's it's split where some people if you even say you're conscious, you're out, you're thrown out of the meeting.

[00:51:38] Mario Giannini: I was in a meeting with one of our clients who was the pension fund of a very red state and I was walking to the meeting to give, I forget some presentation. And the CIO came out and said to me, I know Mario, you will say anything, anywhere, you will not mention the word ESG in any context, even if you think you're trying to help us, don't even bring it up.

[00:51:58] Mario Giannini: And I thought. [00:52:00] What a crazy world we live in where you cannot even bring it up without fear of derailing the entire meeting and the entire discussion on whatever it was. So that's, I mean, that's obviously the extreme, although there are a lot of states in the U. S. where that's the case. But I think the industry, particularly on the limited partner investor side, needs to get its act together here and decide what are you trying to achieve?

[00:52:25] Mario Giannini: And I think it needs to probably decide on a smaller, more measurable set of characteristics. It's looking to solve for decide on what those measurements are. And then what are you doing about it? And I just don't I see it all over the place. And I understand Australia is probably. One of the more, I'll call it advanced in terms of very, very focused on it.

[00:52:47] Mario Giannini: But is it all that different even here? There'd be a lot of popper string pulling. So, look, it will change. I, I will say from an investor perspective, when, when we look at investments, the ESG issue [00:53:00] This is why it is part of every investment decision because you have to make a decision since you're owning a company for three, five, seven years, what will the world look like?

[00:53:11] Mario Giannini: So we did an investment where one of its, its main outputs essentially was, were plastic straws, very profitable company did really well. We didn't do the investment, not because, you know, ESG says you can't do anything with plastic straws, but because we thought when we go to sell this company in five years.

[00:53:29] Mario Giannini: What will that industry even look like? And so how do you make a decision? Because social pressures, regulatory, so ESG comes into it, but not in the context of saying, well, no, I can only, I can only have this many credits for plastic in my portfolio. It comes into it because you've got to make a decision of what the hell is going to happen to this company in five years.

[00:53:50] Mario Giannini: And we just couldn't get comfortable that it was going to be thriving. 

[00:53:54] Craig Emmanuel: Onto a classic term, otherwise called vintages. Now, from a firm level, we are. We're very active and [00:54:00] very passionate investors in everything from venture to startup and also private equity. Back to your point, we have very recently made a decision on a firm law that probably allocate up to 30 to 40 percent of our client exposure to the right private market managers.

[00:54:15] Craig Emmanuel: So a big shift for us. Do you think this year 2024, if we look back in the next few years, could turn into be maybe one of the best vintages to invest in private markets? If we have seen the trough, do you think it could be one of the best years to invest? 

[00:54:29] Mario Giannini: Yeah, I think it will probably be one of the, it'll be on the better side given the dynamics, the way things are shaking out right now.

[00:54:36] Mario Giannini: It will certainly be better than, you know, I mean, 21 will probably be a challenged vintage. 22 maybe 23. I can't really tell you. But sure, I think 24 when when you look at these dynamics, particularly if the public markets stall out around here, I think the big risk for private markets in this environment is that the public markets just keep screaming ahead 15 20%.[00:55:00] 

[00:55:01] Mario Giannini: Because then I think valuations just get way out of whack. I don't see that happening. And so in that environment, I think the buyers and sellers really do reach some kind of, you have a better price discovery. So our view is that 24 is likely to be a, in, in the good category of vintage years.

[00:55:17] Craig Emmanuel: Now in, in wrapping up, I think when we first sat in this room about an hour or so ago, Mario, we jokingly said that there are two.

[00:55:24] Craig Emmanuel: Iconic American superstars in Australia currently. There's Murray Giannini and there's Taylor Swift. Amazing you're both here at the same time, but tell us about yourself in final parting thoughts. Something about yourself, a characteristic or a personal trait of yours which your colleagues might not necessarily know about you.

[00:55:41] Mario Giannini: I'll give you one because I was coincidentally, and by the way, my guess is that Taylor Swift's audience is going to be a little bigger than mine while I'm here in Australia, but it's just because she has a better marketing machine than we do. Here's something. So I think that people would say that at [00:56:00] Hamilton Lane and even outside that, that I'm a generally.

[00:56:03] Mario Giannini: More outgoing chatty, talkative person. When in reality, I am probably one of the most introverted human beings. Yeah, that one of the things I had to learn when I first became CEO, so this was 20 something years ago, when I feel any stress or have any issues, my preference is to. Go sit in a corner and just work it through in my head.

[00:56:27] Mario Giannini: And what I learned is I can't do that. Like you have to get out there. You have to talk to people for a number of reasons. One, it makes, helps you make better decisions. But second, if you're, if you're shying away, if you're kind of burrowed off, everyone goes, there's a problem, something's wrong. And, and the other thing is I found, like, I really enjoy stuff like this.

[00:56:47] Mario Giannini: I enjoy. having conversations with people and learning. That's how I learn what's going on in the markets, what's, what's happening in the world. But no, I, I would, I've, I've always been surprised sometimes when, when people go, well, it's easy for you [00:57:00] because you're outgoing. Yeah, sure. 

[00:57:03] Craig Emmanuel: Yeah. So do you have your own little sort of man cave with your pool table at home, or how do you unwind if you need to?

[00:57:08] Craig Emmanuel: Press pause and reset.

[00:57:09] Mario Giannini: I, I, I grab my guitar and just sit in a corner and strum. Yeah, that's great. Yeah, pretty much. 

[00:57:14] Craig Emmanuel: We'll call it a wrap. Thanks Mario. So finally, a very huge thank you for taking the time to talk to us this morning. I'm sure our listeners will agree it's been an incredible benefit and thank you very much for your amazing insight.

[00:57:25] Craig Emmanuel: So big thank you. 

[00:57:26] Mario Giannini: Thank you for, for asking me to do this. I, I've enjoyed it and, and very good questions. It's an interesting time. 

[00:57:32] Craig Emmanuel: Sure is. Thanks again.

‍