XML 27 R10.htm IDEA: XBRL DOCUMENT
v3.22.4

Equity Method Investments in Affiliates | 12 Months Ended
--- | ---
Dec. 31, 2022
Equity Method Investments and Joint Ventures [Abstract] |
Equity Method Investments in Affiliates | Equity Method Investments in Affiliates In the first and fourth quarters of 2022, the Company completed an additional investment in Systematica Investments, an innovative technology-driven systematic manager, and completed a minority investment in Peppertree Capital Management, Inc. (“Peppertree”), a private markets firm specializing in communications infrastructure, respectively. The majority of the consideration paid for Peppertree will be deductible for U.S. tax purposes over a 15-year life. The Company’s purchase price allocation for each investment was measured using discounted cash flow analyses that included assumptions of expected market performance, net client cash flows, and discount rates. The financial results of certain Affiliates accounted for under the equity method are recognized in the Consolidated Financial Statements one quarter in arrears. Equity method investments in Affiliates (net) consisted of the following:
|  | December 31,
|  | 2021 |  | 2022
Goodwill |  | $ | 1,264.4 |  |  | $ | 1,262.4 |
Definite-lived acquired client relationships (net) |  | 470.1 |  |  | 479.4 |
Indefinite-lived acquired client relationships (net) |  | 174.4 |  |  | 119.0 |
Undistributed earnings and tangible capital |  | 225.5 |  |  | 278.7 |
Equity method investments in Affiliates (net) |  | $ | 2,134.4 |  |  | $ | 2,139.5 |
The following table presents the change in Equity method investments in Affiliates (net):
|  | Equity Method Investments in Affiliates (Net)
|  | 2021 |  | 2022
Balance, beginning of period |  | $ | 2,074.8 |  |  | $ | 2,134.4 |
Investments in Affiliates |  | 147.3 |  |  | 326.1 |
BPEA(1) |  | — |  |  | (150.6) |
Earnings |  | 417.5 |  |  | 497.2 |
Intangible amortization and impairments |  | (175.0) |  |  | (159.1) |
Distributions of earnings |  | (337.5) |  |  | (394.7) |
Return of capital |  | (4.4) |  |  | (0.8) |
Foreign currency translation |  | 12.5 |  |  | (68.5) |
Other |  | (0.8) |  |  | (44.5) |
Balance, end of period |  | $ | 2,134.4 |  |  | $ | 2,139.5 |
__________________________ (1)Represents the Company’s equity method investment in Baring Private Equity Asia (“BPEA”) as of the BPEA Transaction closing date. Definite-lived acquired client relationships at the Company’s Affiliates accounted for under the equity method are amortized over their expected period of economic benefit. The Company recorded amortization expense for these relationships of $147.0 million, $123.0 million, and $109.1 million for the years ended December 31, 2020, 2021, and 2022, respectively. Based on relationships existing as of December 31, 2022, the Company estimates the amortization expense attributable to its Affiliates will be approximately $85 million in 2023, approximately $55 million in 2024, approximately $50 million in 2025, and approximately $45 million in each of 2026 and 2027. For the year ended 2021, the Company recorded a $52.0 million expense to reduce the carrying value of an Affiliate to fair value. The decline in the fair value was a result of a decline in assets under management and a reduction in projected growth, which decreased the forecasted revenue associated with the investment. The fair value of the investment was determined using a probability-weighted discounted cash flow analysis, a level 3 fair value measurement that included a projected compounded growth in assets under management over the first five years of 0.3%, long-term growth rate of 5%, discount rates of 11% and 20% for asset- and performance-based fees, respectively, and a market participant tax rate of 25%. Based on the discounted cash flow analysis, the Company concluded that the fair value of its investment had declined below its carrying value and that the decline was other-than-temporary. For the year ended 2022, the Company recorded a $50.0 million expense to reduce the carrying value of an Affiliate to fair value. The decline in the fair value was a result of a decline in assets under management and a reduction in projected margin, which decreased the forecasted income associated with the investment. The fair value of the investment was determined using a probability-weighted discounted cash flow analysis, a level 3 fair value measurement that included a projected compounded growth in assets under management over the first five years of 2%, long-term growth rate of 5%, discount rates of 11% and 20% for asset- and performance-based fees, respectively, and a market participant tax rate of 25%. Based on the discounted cash flow analysis, the Company concluded that the fair value of its investment had declined below its carrying value and that the decline was other-than-temporary. For the year ended December 31, 2022, the Company completed its annual assessme nt of its investments in Affiliates accounted for under the equity method and no other impairments were indicated. The Company had liabilities for deferred and contingent payment obligations related to certain of its investments in Affiliates accounted for under the equity method. See Note 8. The Company had 21 and 20 Affiliates accounted for under the equity method as of December 31, 2021 and 2022, respectively. The majority of these Affiliates are partnerships with structured interests that define how the Company will participate in Affiliate earnings, typically based upon a fixed percentage of revenue reduced by, in some cases, certain agreed-upon expenses. The partnership agreements do not define a fixed percentage for the Company’s ownership of the equity of the Affiliate. These percentages would be subject to a separate future negotiation if an Affiliate were to be sold or liquidated. The following table presents summarized financial information for Affiliates accounted for under the equity method:
|  | For the Years Ended December 31,
|  | 2020 |  | 2021 |  | 2022
Revenue(1) |  | $ | 2,659.7 |  |  | $ | 3,228.1 |  |  | $ | 3,239.5 |
Net income(1) |  | 1,061.8 |  |  | 1,656.6 |  |  | 1,358.7 |
|  | December 31,
|  | 2021 |  | 2022
Assets |  | $ | 3,607.7 |  |  | $ | 2,816.7 |
Liabilities and Non-controlling interests |  | 1,422.7 |  |  | 1,221.4 |
__________________________ (1)Revenue and net income include asset- and performance-based fees, the impact of consolidated sponsored investment products and new Affiliate investments for the full-year, regardless of the date of the Company’s investment. BPEA Transaction Gain In the fourth quarter of 2022, the Company completed the previously announced sale of its equity interest in BPEA, an Affiliate accounted for by the Company under the equity method, to EQT (the “BPEA Transaction”) in connection with the strategic combination of BPEA and EQT. Pursuant to the terms of the Securities Purchase and Merger Agreement with EQT, under which the Company and each of the other owners agreed to sell their respective equity interests in BPEA, the Company received $223.6 million in cash, net of transaction costs, and 28.68 million EQT ordinary shares (25% of which are subject to a six-month lock-up, which expires in April 2023), and other investments. BPEA is included in the Company’s results through the closing date and the Company’s gain on the transaction was $641.9 million. The transaction was taxable at closing. During the fourth quarter of 2022 and through February 15, 2023, the Company has sold 17.4 million EQT ordinary shares.

X
- References No definition available. + Details
Name: | us-gaap_EquityMethodInvestmentsAndJointVenturesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -URI https://asc.fasb.org/topic&trid=2196965 + Details
Name: | us-gaap_EquityMethodInvestmentsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration