Stepstone Group Inc. · NASDAQ:STEP
Stepstone — Investor Presentation (May 2025)
22 slides from Stepstone's investor presentation, May 2025
Slide 1: StepStone Academy: Secondaries
StepStone Academy Secondaries For Educational Purposes Only
Slide 2: Notes
NOTES This document is for informational purposes and is meant only to provide a broad overview for discussion purposes. Prospective investors should inform themselves and take appropriate advice as to any applicable legal requirements This document does not constitute an offer to sell, a solicitati
Slide 3: What are Secondaries
What are Secondaries
Slide 4: Secondary transaction types
Secondary transaction types Secondary market is characterized by two distinct types of secondary deal, LP interest and GP-led deals. Limited Partner interests General Partner-led Represent secondary investments involving the purchase of Represent the sale of an asset(s) from an existing portfolio in
Slide 5: Limited Partner interest secondary transaction overview
Limited Partner interest secondary transaction overview Investor 2 achieves Secondary fund cash exit replaces Investor 2 Investor 1 Investor 2 $ Secondary fund Fund / GP Company 1 Company 2 Company 3 For illustrative purposes only. STEPSTONE GROUP | CONFIDENTIAL 6
Slide 6: Key considerations in LP interest transactions
Key considerations in LP interest transactions Why do LPs sell their interests in private Potential benefits of LP sales for GPs equity funds? Achieve liquidity Manage LP base Active portfolio management Attain new commitments Administrative ease Affirm confidence in portfolio STEPSTONE GROUP | CONF
Slide 7: General Partner-led secondary transaction overview
General Partner-led secondary transaction overview Purchase Price Selling LPs Rolling LPs Secondary Buyers Funds A/B/C Continuation Fund Transfer of assets Asset 2 Asset 2 Asset 1 Asset 1 Asset 3 Asset 3 Asset 4 Asset 5 New Unfunded Asset 6 Asset 7 For illustrative purposes only. STEPSTONE GROUP | C
Slide 8: Key considerations in GP-led transactions
Key considerations in GP-led transactions GP-led market opportunity GP-leds provide an attractive solution Rapidly expanding market Access to trophy assets and strong GP alignment Growing market with undercapitalized buyers. Seek differentiated partners Provides exit optionality Attractive risk / re
Slide 9: Secondary process overview
Secondary process overview Secondary transactions are often intermediated by brokers (including Lazard, Evercore, PJT, Campbell Lutyens and Greenhill), which aim to run a competitive process structured over two rounds Round One Round Two Closing Secondary Process Overview Week 1 Week 2 Week 3 Week 4
Slide 10: The Evolution of Secondaries
The Evolution of Secondaries
Slide 11: Secondary market then vs. now
Secondary market then vs. now Secondary market in 2010 Secondary market today GP Financing Multi-Asset Traditional Continuation Infra LP stake Traditional Credit LP stake Vehicles purchases (90%+) purchases LP Occasional (~50%) Tender Fund-Level GP Spin-Out Pref Equity or Fund Restructuring Single A
Slide 12: Secondary market growth over time
Secondary market growth over time Secondary market volume $140 ($ in billions) $132 $120 $108 $112 $100 $64 $88 $80 $74 $56 $60 $58 $60 $60 $63 $42 $40 $40 $37 $57 $33 $25 $25 $28 $45 $68 $22 $33 $52 $52 $32 $29 $20 $24 $25 $24 $25 $27 $22 $17 $9 $8 $8 $13 $0 $4 2010 2011 2012 2013 2014 2015 2016 20
Slide 13: Challenges
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Slide 14: Key diligence considerations
Key diligence considerations Team Makeup Primary Capital Market Position Team continuity and What does their primary Sourcing method experience business look like? Type of transactions the Capacity to effectively cover fund will pursue traditional broad manager universe / What information do they LP
Slide 15: Key diligence considerations
Key diligence considerations Leverage Track Record Fees Use of a credit facility for Strong returns across Market terms are 1-1.25% both short- and long-term multiple funds management fee and 10-15% leverage carry Low loss ratio Alignment of interest with GP: Use of other inherent forms Benchmark to
Slide 16: Why Invest in Secondaries?
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Slide 17: The secondary market opportunity
The secondary market opportunity Accelerate capital Mitigate Access to Immediate Attractive buyout-like deployment J-curve quality managers diversification returns with lower losses & volatility For illustrative purposes only. STEPSTONE GROUP | CONFIDENTIAL 18
Slide 18: Attractive relative returns with lower units of risk
Attractive relative returns with lower units of risk Private Equity Secondaries generally provide some of the most attractive risk-weighted return characteristics in the private markets, with lower risk spectrum than other private equity sectors (due to the elimination of blind pool risk) Historical
Slide 19: Lower loss ratios
Lower loss ratios Secondaries can offer strong cross-cycle downside protection. 70.0% Strategy Average Loss Rate PE Secondaries 2% Infra/ Real Assets 9% 60.0% Global LBO 11% Large LBO 11% 50.0% Middle LBO 11% Small LBO 12% Venture Capital 18% 40.0% 30.0% 20.0% Venture Capital: 18% Small LBO: 12% Mid
Slide 20: Secondaries can be beneficial to portfolio returns
Secondaries can be beneficial to portfolio returns 1. Help minimize blind-pool risks - 2. Can smooth the J-curve effect - acquire 3. Diversification - by investment invest in mature, substantially positions in mature, highly funded portfolios strategy, geography, industry sector, invested portfolios
Slide 21: Risks and other considerations
RISKS AND OTHER CONSIDERATIONS Risks Associated with Investments. Identifying attractive investment opportunities and the right underlying fund Allocation of Investment Opportunities. StepStone currently makes investments, and in the future will make managers is difficult and involves a high degree
Slide 22: stepstonegroup.com
stepstonegroup.com