StepStone Group (STEP, Financial) has successfully raised $705 million for its latest initiative, the StepStone Tactical Growth Fund IV. This marks the firm’s fourth fund dedicated to leveraging opportunities within the growth equity market.
The funding round saw robust participation from a diverse array of investors, including sovereign wealth funds, public pensions, superannuation funds, funds-of-funds, family offices, and private wealth platforms. This broad support underscores confidence in StepStone's strategy and market positioning.
StepStone’s Tactical Growth Fund IV (STGF IV) is designed to partner with leading growth equity sponsors particularly in the technology and healthcare sectors. The fund strategically targets founder-led businesses that operate outside the conventional venture capital framework. These companies typically demonstrate rapid revenue growth, robust margins, and effective capital management, all while maintaining minimal leverage.
The unique approach allows these businesses to complement both buyout and venture investments, offering potential returns without relying on a favorable IPO climate or major strategic mergers and acquisitions. The management of STGF IV falls under StepStone's specialized Venture Capital and Growth Equity Team, which continues to seek businesses capable of delivering liquidity through alternative means.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 7 analysts, the average target price for StepStone Group Inc (STEP, Financial) is $56.00 with a high estimate of $67.00 and a low estimate of $41.00. The average target implies an upside of 11.38% from the current price of $50.28. More detailed estimate data can be found on the StepStone Group Inc (STEP) Forecast page.
Based on the consensus recommendation from 7 brokerage firms, StepStone Group Inc's (STEP, Financial) average brokerage recommendation is currently 2.4, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for StepStone Group Inc (STEP, Financial) in one year is $59.75, suggesting a upside of 18.83% from the current price of $50.28. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the StepStone Group Inc (STEP) Summary page.
STEP Key Business Developments
Release Date: February 06, 2025
- GAAP Net Loss: $287 million, with a net loss attributable to StepStone Group Inc. of $192 million or $2.61 per share.
- Fee-Related Earnings (FRE): $74.1 million, up 46% from the prior year quarter.
- FRE Margin: 39% for the quarter.
- Adjusted Net Income: $52.7 million or $0.44 per share, up from $42.1 million or $0.37 per share in the prior year quarter.
- Fee-Earning Assets Under Management (AUM): Over $114 billion, up 28% from a year ago.
- Management and Advisory Fees: $192 million, up 26% year-over-year.
- Gross AUM Inflows: Over $27 billion in the last 12 months.
- Infrastructure Co-Investment Fund: Closed with a total fund size of approximately $1.2 billion.
- Private Wealth Platform: Grew to over $6 billion, with over $1 billion of new subscriptions.
- Net Accrued Carry: $744 million, up 6% from last quarter and 31% over the last 12 months.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- StepStone Group Inc (STEP, Financial) achieved its highest-ever fee-related earnings of $74 million, marking a 46% increase from the prior year.
- The company reported a significant increase in fee-earning assets under management, reaching over $114 billion, up 28% from the previous year.
- StepStone Group Inc successfully closed its inaugural infrastructure co-investment fund with a total fund size of approximately $1.2 billion.
- The private wealth platform experienced its best growth quarter ever, raising over $1 billion in new subscriptions and increasing the platform to over $7 billion.
- The company reported a strong FRE margin of 39% for the quarter, indicating efficient operations and profitability.
Negative Points
- StepStone Group Inc reported a GAAP net loss of $287 million, primarily due to changes in fair value related to potential future buy-ins.
- The company's GAAP net loss attributable to StepStone Group Inc was $192 million or $2.61 per share.
- There was a notable increase in noncontrolling interests, particularly in infrastructure, real estate, and private debt asset classes, impacting the bottom line.
- The company experienced variability in GAAP results due to accounting treatment of potential future buy-ins, which may continue until the put call is exercised.
- General and administrative expenses increased to $30 million, reflecting higher costs and upcoming events like the annual venture capital conference.
