BrightSphere Investment Group Inc. - Quarter Report: 2023 June (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-38979


						BRIGHTSPHERE Investment Group Inc.

(Exact name of registrant as specified in its charter)


Delaware		47-1121020
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

200 State Street, 13th Floor		02109
Boston,	Massachusetts
(Address of principal executive offices)		(Zip Code)

(617)-369-7300

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Ticker Symbol	Name of each exchange on which registered
Common stock, par value $0.001 per share	BSIG	New York Stock Exchange
4.800% Notes due 2026	BSIG 26	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ý

The number of shares of the registrant’s common stock, $0.001 per share, outstanding as of August 4, 2023 was 41,508,144.

Table of Contents

TABLE OF CONTENTS


		Page

Part I	Financial Information	3

Item 1.	Financial Statements	3

	Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022	3

	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2023 and 2022	4

	Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2023 and 2022	5

	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three months ended June 30, 2023 and 2022	6

	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the six months ended June 30, 2023 and 2022	7

	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022	8

	Notes to Condensed Consolidated Financial Statements	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	61

Item 4.	Controls and Procedures	63



Part II	Other Information	64

Item 1.	Legal Proceedings	64

Item 1A.	Risk Factors	64



Item 5.	Other Information	64

Item 6.	Exhibits	65

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

BrightSphere Investment Group Inc.

Condensed Consolidated Balance Sheets

(in millions, except for share and per share data, unaudited)


	June 30, 2023		December 31, 2022
Assets
Cash and cash equivalents	$	140.8	$	108.4

Investment advisory fees receivable	89.8		122.5
Income taxes receivable	6.2		2.0
Fixed assets, net	47.4		47.7
Right of use assets	60.3		59.9
Investments	47.4		48.4

Goodwill	20.3		20.3
Other assets	27.2		27.7
Deferred tax assets	67.2		64.7

Assets of consolidated Funds:
Cash and cash equivalents, restricted	12.1		12.8
Investments	9.3		1.9
Other assets	30.3		2.4

Total assets	$	558.3	$	518.7
Liabilities and stockholders’ equity
Accounts payable and accrued expenses	$	27.0	$	31.0
Accrued incentive compensation	45.0		92.5


Other compensation liabilities	62.2		59.3
Accrued income taxes	1.2		4.6
Operating lease liabilities	75.8		75.8
Other liabilities	0.8		1.1

Revolving credit facility	38.0		—
Third party borrowings	273.7		273.5

Liabilities of consolidated Funds:
Accounts payable and accrued expenses	24.9		0.3
Derivative liabilities at fair value	2.4		2.2
Securities sold, not yet purchased, at fair value	1.3		—

Total liabilities	552.3		540.3
Commitments and contingencies
Redeemable non-controlling interests in consolidated Funds	2.3		—
Equity:
Common stock (par value $0.001; 41,508,144 and 41,435,087 shares, respectively, issued)	—		—
Additional paid-in capital	1.5		1.5
Retained earnings (deficit)	10.1		(12.5)
Accumulated other comprehensive loss	(7.9)		(10.6)


Total equity (deficit) and redeemable non-controlling interests in consolidated Funds	6.0		(21.6)
Total liabilities and equity	$	558.3	$	518.7

See Notes to Condensed Consolidated Financial Statements

Table of Contents

BrightSphere Investment Group Inc.

Condensed Consolidated Statements of Operations

(in millions except for per share data, unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenue:
Management fees	$	92.8	$	93.5	$	183.4	$	195.7
Performance fees	2.2		2.0		2.7		12.0

Consolidated Funds’ revenue	1.3		—		2.0		—
Total revenue	96.3		95.5		188.1		207.7
Operating expenses:
Compensation and benefits	48.5		27.0		97.6		73.8
General and administrative expense	21.8		16.5		40.2		33.4

Depreciation and amortization	4.4		5.3		8.2		10.6
Consolidated Funds’ expense	1.2		—		1.9		—

Total operating expenses	75.9		48.8		147.9		117.8
Operating income	20.4		46.7		40.2		89.9
Non-operating income and (expense):
Investment income (loss)	0.2		(0.7)		0.5		(0.8)
Interest income	1.5		0.1		2.6		0.1
Interest expense	(5.4)		(4.8)		(10.3)		(11.3)
Loss on extinguishment of debt	—		—		—		(3.2)

Net consolidated Funds’ investment gains	0.3		—		1.1		—
Total non-operating loss	(3.4)		(5.4)		(6.1)		(15.2)
Income before income taxes	17.0		41.3		34.1		74.7
Income tax expense	5.5		12.7		10.6		22.3



Net income	11.5		28.6		23.5		52.4
Net income attributable to non-controlling interests in consolidated Funds	0.1		—		0.1		—
Net income attributable to controlling interests	$	11.4	$	28.6	$	23.4	$	52.4

Earnings per share (basic) attributable to controlling interests	$	0.27	$	0.69	$	0.56	$	1.23
Earnings per share (diluted) attributable to controlling interests	0.27		0.67		0.55		1.19


Weighted average common stock outstanding	41.5		41.4		41.5		42.7
Weighted average diluted common stock outstanding	42.6		42.5		42.7		43.9

See Notes to Condensed Consolidated Financial Statements

Table of Contents

BrightSphere Investment Group Inc.

Condensed Consolidated Statements of Comprehensive Income

(in millions, unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net income	$	11.5	$	28.6	$	23.5	$	52.4
Other comprehensive income (loss):
Amortization related to derivative securities, net of tax	0.6		0.6		1.2		2.2
Foreign currency translation adjustment	0.8		(2.4)		1.5		(3.1)
Total other comprehensive income (loss)	1.4		(1.8)		2.7		(0.9)
Comprehensive income attributable to non-controlling interests in consolidated Funds	0.1		—		0.1		—
Total comprehensive income attributable to controlling interests	$	12.8	$	26.8	$	26.1	$	51.5

See Notes to Condensed Consolidated Financial Statements

Table of Contents

BrightSphere Investment Group Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the three months ended June 30, 2023 and 2022

($ in millions except share data, unaudited)


	Common stock (millions)	Common stock, par value		Additional paid-in capital		Retained earnings (deficit)		Accumulated other comprehensive income (loss)		Total stockholders’ equity (deficit)		Redeemable non-controlling interests in consolidated Funds		Total equity (deficit) and redeemable non-controlling interests in consolidated Funds
March 31, 2022	41.4	$	—	$	—	$	(88.0)	$	(9.9)	$	(97.9)	$	—	$	(97.9)



Equity-based compensation	—	—		0.5		—		—		0.5		—		0.5
Foreign currency translation adjustment	—	—		—		—		(2.4)		(2.4)		—		(2.4)
Amortization related to derivatives securities, net of tax	—	—		—		—		0.6		0.6		—		0.6




Dividends ($0.01 per share)	—	—		—		(0.4)		—		(0.4)		—		(0.4)
Net income	—	—		—		28.6		—		28.6		—		28.6
June 30, 2022	41.4	$	—	$	0.5	$	(59.8)	$	(11.7)	$	(71.0)	$	—	$	(71.0)

March 31, 2023	41.5	$	—	$	1.4	$	(0.8)	$	(9.3)	$	(8.7)	$	0.4	$	(8.3)



Capital contributions	—	—		—		—		—		—		1.8		1.8
Equity-based compensation	—	—		0.5		—		—		0.5		—		0.5

Foreign currency translation adjustment	—	—		—		—		0.8		0.8		—		0.8
Amortization related to derivatives securities, net of tax	—	—		—		—		0.6		0.6		—		0.6

Withholding tax related to stock option exercise	—	—		(0.4)		—		—		(0.4)		—		(0.4)


Dividends ($0.01 per share)	—	—				(0.5)		—		(0.5)		—		(0.5)

Net income	—	—		—		11.4		—		11.4		0.1		11.5
June 30, 2023	41.5	$	—	$	1.5	$	10.1	$	(7.9)	$	3.7	2.3		$	6.0

See Notes to Condensed Consolidated Financial Statements

Table of Contents

BrightSphere Investment Group Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the six months ended June 30, 2023 and 2022

($ in millions except share data, unaudited)


	Common stock (millions)	Common stock, par value		Additional paid-in capital		Retained earnings (deficit)		Accumulated other comprehensive income (loss)		Total stockholders’ equity (deficit)		Redeemable non-controlling interests in consolidated Funds		Total equity (deficit) and redeemable non-controlling interests in consolidated Funds
December 31, 2021	45.4	$	—	$	—	$	(6.8)	$	(10.8)	$	(17.6)	$	—	$	(17.6)
Issuance of common stock	0.2	—		—		—		—		—		—		—

Repurchase of common stock	(4.2)	—		—		(103.2)		—		(103.2)		—		(103.2)

Equity-based compensation	—	—		1.4		—		—		1.4		—		1.4
Foreign currency translation adjustment	—	—		—		—		(3.1)		(3.1)		—		(3.1)
Amortization related to derivatives securities, net of tax	—	—		—		—		2.2		2.2		—		2.2
Withholding tax related to stock option exercise				(0.9)		(1.4)		—		(2.3)				(2.3)


Dividends ($0.02 per share)	—	—		—		(0.8)		—		(0.8)		—		(0.8)
Net income	—	—		—		52.4		—		52.4		—		52.4
June 30, 2022	41.4	$	—	$	0.5	$	(59.8)	$	(11.7)	$	(71.0)	$	—	$	(71.0)

December 31, 2022	41.4	$	—	$	1.5	$	(12.5)	$	(10.6)	$	(21.6)	$	—	$	(21.6)
Issuance of common stock	0.1	—		—		—		—		—		—		—


Capital contributions	—	—		—		—		—		—		2.2		2.2
Equity-based compensation	—	—		0.7		—		—		0.7		—		0.7
Foreign currency translation adjustment	—	—		—		—		1.5		1.5		—		1.5
Amortization related to derivative securities, net of tax	—	—		—		—		1.2		1.2		—		1.2
Withholding tax related to stock option exercise and restricted stock vesting	—	—		(0.7)		—		—		(0.7)		—		(0.7)


Dividends ($0.02 per share)	—	—		—		(0.8)		—		(0.8)		—		(0.8)
Net income	—	—		—		23.4		—		23.4		0.1		23.5
June 30, 2023	41.5	$	—	$	1.5	$	10.1	$	(7.9)	$	3.7	$	2.3	$	6.0

See Notes to Condensed Consolidated Financial Statements

Table of Contents


BrightSphere Investment Group Inc. Condensed Consolidated Statements of Cash Flows (in millions, unaudited)
	Six Months Ended June 30,
	2023	2022
Cash flows from operating activities:
Net income	23.5	52.4

Less: Net (income) loss attributable to redeemable non-controlling interests in consolidated Funds	(0.1)	—

Adjustments to reconcile net income to net cash flows from operating activities:




Loss on extinguishment of debt	—	3.2

Depreciation and other amortization	8.2	10.6
Amortization of debt-related costs	2.0	3.6

Amortization and revaluation of non-cash compensation awards	2.0	(20.5)






Deferred income taxes	(3.0)	7.0
(Gains) losses on other investments	(2.3)	3.6
Changes in operating assets and liabilities:
Decrease in investment advisory fees receivable	32.7	68.2
(Increase) decrease in other receivables, prepayments, deposits and other assets	2.1	(1.7)
Decrease in accrued incentive compensation, operating lease liabilities and other liabilities	(46.3)	(77.3)
Decrease in accounts payable, accrued expenses and accrued income taxes	(11.5)	(19.2)
Net cash flows from operating activities, excluding consolidated Funds	7.3	29.9
Net income attributable to redeemable non-controlling interests in consolidated Funds	0.1	—
Adjustments to reconcile net income (loss) attributable to redeemable non-controlling interests of consolidated Funds to net cash flows from operating activities of consolidated Funds:


Purchase of investments	(2.2)	—
Sale of investments	2.4	—


(Increase) decrease in receivables and other assets	(27.8)	—
Increase in accounts payable and other liabilities	24.6	—
Net cash flows from operating activities of consolidated Funds	(2.9)	—
Net cash flows from operating activities	4.4	29.9



Cash flows from investing activities:
Additions of fixed assets	(7.9)	(8.2)




Purchase of investment securities	(8.2)	(5.1)
Sale of investment securities	5.4	6.9









Net cash flows from investing activities	(10.7)	(6.4)

See Notes to Condensed Consolidated Financial Statements

Table of Contents


BrightSphere Investment Group Inc. Condensed Consolidated Statements of Cash Flows (in millions, unaudited)
	Six Months Ended June 30,
	2023		2022
Cash flows from financing activities:
Proceeds from revolving credit facility	100.0		175.0
Repayment of third party borrowings and revolving credit facility	(62.0)		(250.0)
Payment for debt issuance costs	—		(0.9)



Payment to OM plc for co-investment redemptions	(0.4)		(1.1)
Dividends paid to stockholders	(0.8)		(0.6)
Dividends paid to related parties	(0.4)		(0.3)

Repurchases of common stock	—		(103.2)
Withholding tax payments related to stock option exercise and restricted stock vesting	(0.7)		(2.3)

Cash flows from financing activities of consolidated Funds:


Redeemable non-controlling interest capital raised	2.2		—

Net cash flows from financing activities	37.9		(183.4)


Effect of foreign exchange rate changes on cash and cash equivalents	0.1		—
Net increase (decrease) in cash and cash equivalents	31.7		(159.9)
Cash and cash equivalents at beginning of period	$	121.2	$	252.1



Cash and cash equivalents at end of period (including cash at consolidated Funds classified as restricted)	$	152.9	$	92.2

Supplemental disclosure of cash flow information:
Interest paid (excluding consolidated Funds)	$	8.2	$	8.7
Income taxes paid	20.9		27.7

See Notes to Condensed Consolidated Financial Statements

Table of Contents

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1) Organization and Description of the Business

BrightSphere Investment Group Inc. (“BrightSphere”, “BSIG” or the “Company”), through its subsidiaries, is a global asset management company. The Company provides investment management services globally to predominantly institutional investors. The Company historically held interests in a diverse group of investment management firms (the “Affiliates”) individually headquartered in the United States. The Company completed the disposition of certain Affiliates and, beginning in 2021, has operated the business through one Affiliate, Acadian Asset Management LLC (“Acadian”). Acadian comprises the Company’s Quant & Solutions reportable segment:

•Quant & Solutions—comprised of versatile, often highly-tailored strategies that leverage data and technology in a computational, factor-based investment process across a range of asset classes in developed and emerging markets, including global, non-U.S. and small-cap equities, as well as managed volatility, multi-asset, equity alternatives, and long/short strategies.

Acadian is organized as a limited liability company. Fees for services are largely asset-based and, as a result, revenues fluctuate based on the performance of financial markets and investors’ asset flows in and out of Acadian’s products. The Company utilizes a profit-sharing model in structuring its compensation and ownership arrangements with Acadian. Variable compensation is based on the firm’s profitability. BSIG and Acadian key employees share in profits after variable compensation according to their respective ownership interests. The profit-sharing model results in the alignment of BSIG and Acadian key employee economic interests, which is critical to the Company’s talent management strategy and long-term growth of the business. The corporate head office is included within the Other category.

Prior to 2014, the Company was a wholly-owned subsidiary of Old Mutual plc (“OM plc”), an international long-term savings, protection, and investment group, listed on the London Stock Exchange. On October 15, 2014, the Company completed the initial public offering (the “Offering”) by OM plc pursuant to the Securities Act of 1933, as amended. As of June 30, 2023, Paulson & Co. Inc. (“Paulson”) held approximately 21.6% of the common stock of the Company.

For the six months ended June 30, 2022, the Company repurchased 4,147,450 shares of common stock at an average price of $24.09 per share, or approximately $100 million in total, including commissions.

All shares of common stock repurchased by the Company were retired.

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BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

2) Basis of Presentation and Significant Accounting Policies

The Company’s significant accounting policies are as follows:

Basis of presentation

These unaudited Condensed Consolidated Financial Statements reflect the historical balance sheets, statements of operations, statements of comprehensive income, statements of changes in stockholders’ equity and statements of cash flows of the Company. Within these Condensed Consolidated Financial Statements, Paulson and its related entities, as defined above, are referred to as “related parties.”

The Condensed Consolidated Financial Statements are prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). In the opinion of management, all normal and recurring adjustments considered necessary for a fair presentation of the Company’s Condensed Consolidated Financial Statements have been included. All dollar amounts, except per-share data in the text and tables herein, are stated in millions unless otherwise indicated. Transactions between the Company and its related parties are included in the Condensed Consolidated Financial Statements; however, material intercompany balances and transactions among the Company, its consolidated Affiliate and consolidated Funds are eliminated in consolidation.

Certain disclosures included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (annual report on Form 10-K) are not required to be included on an interim basis in the Company’s quarterly reports on Form 10-Q. The Company has condensed or omitted these disclosures. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and notes thereto for the year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”) on February 28, 2023. The Company’s significant accounting policies, which have been consistently applied, are summarized in those financial statements.

Use of estimates

The preparation of these Condensed Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from such estimates, and the differences may be material to the Condensed Consolidated Financial Statements.

New accounting standards not yet adopted

The Company has considered all newly issued accounting guidance that is applicable to the Company’s operations and the preparation of the unaudited Condensed Consolidated Financial Statements, including those that have not yet been adopted. The Company does not believe that any such guidance has or will have a material effect on its Condensed Consolidated Financial Statements and related disclosures.

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BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

3) Investments

Investments are comprised of the following as of the dates indicated (in millions):


	June 30, 2023		December 31, 2022
Investments of consolidated Funds held at fair value	$	9.3	$	1.9
Other investments	4.4		8.4
Investments related to long-term incentive compensation plans	43.0		40.0





Total investments per Condensed Consolidated Balance Sheets	$	56.7	$	50.3

4) Fair Value Measurements

The following table summarizes the Company’s assets that are measured at fair value on a recurring basis at June 30, 2023 (in millions):


	Quoted prices in active markets (Level I)		Significant other observable inputs (Level II)		Significant unobservable inputs (Level III)		Uncategorized		Total value, June 30, 2023
Assets of BSIG and consolidated Funds(1)
Common stock	$	6.5	$	—	$	—	$	—	$	6.5




Derivatives	0.4		2.4		—		—		2.8
Consolidated Funds total	6.9		2.4		—		—		9.3


Investments in separate accounts(2)	0.1		—		—		—		0.1
Investments related to long-term incentive compensation plans(3)	43.0		—		—		—		43.0
Investments in unconsolidated Funds(4)	—		—		—		4.3		4.3
BSIG total	43.1		—		—		4.3		47.4








Total fair value assets	$	50.0	$	2.4	$	—	$	4.3	$	56.7

Liabilities of consolidated Funds(1)
Derivatives	$	(0.2)	$	(2.2)	$	—	$	—	$	(2.4)
Common Stock	(1.3)		—		—		—		(1.3)
Consolidated Funds total	(1.5)		(2.2)		—		—		(3.7)
Total fair value liabilities	$	(1.5)	$	(2.2)	$	—	$	—	$	(3.7)

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BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

4) Fair Value Measurements (cont.)

The following table summarizes the Company’s assets that are measured at fair value on a recurring basis at December 31, 2022 (in millions):


	Quoted prices in active markets (Level I)		Significant other observable inputs (Level II)		Significant unobservable inputs (Level III)		Uncategorized		Total value December 31, 2022
Assets of BSIG and consolidated Funds(1)




Derivatives	$	0.3	$	1.6	$	—	$	—	$	1.9
Consolidated Funds total	$	0.3	$	1.6	$	—	$	—	$	1.9
Investments in separate accounts(2)	4.2		—		—		—		4.2
Investments related to long-term incentive compensation plans(3)	40.0		—		—		—		40.0
Investments in unconsolidated Funds(4)	—		—		—		4.2		4.2
BSIG total	$	44.2	$	—	$	—	$	4.2	$	48.4
Total fair value assets	$	44.5	$	1.6	$	—	$	4.2	$	50.3

Liabilities of consolidated Funds(1)

Derivatives	$	(0.2)	$	(2.0)	$	—	$	—	$	(2.2)
Consolidated Funds total	(0.2)		(2.0)		—		—		(2.2)
Total fair value liabilities	$	(0.2)	$	(2.0)	$	—	$	—	$	(2.2)

(1)Assets and liabilities measured at fair value are comprised of financial investments managed by the Company's Affiliate.

Equity securities and derivatives which are traded on a national securities exchange are stated at the last reported sales price on the day of valuation. To the extent these securities are actively traded and valuation adjustments are not applied, they are classified as Level I. The securities that trade in markets that are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs obtained by the Company from independent pricing services are classified as Level II.

The Company obtains prices from independent pricing services that may utilize broker quotes, but generally the independent pricing services will use various other pricing techniques which take into account appropriate factors such as yield, quality, coupon rate, maturity, type of issue, trading characteristics and other data. The Company has not made adjustments to the prices provided.

Table of Contents

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

4) Fair Value Measurements (cont.)

If the pricing services are only able to (a) obtain a single broker quote or (b) utilize a pricing model, such securities are classified as Level III. If the pricing services are unable to provide prices, the Company attempts to obtain one or more broker quotes directly from a dealer or values such securities at the last bid price obtained. In either case, such securities are classified as Level III. The Company performs due diligence procedures over third party pricing vendors to understand their methodology and controls to support their use in the valuation process to ensure compliance with required accounting disclosures.

(2)Investments in separate accounts of $0.1 million at June 30, 2023 consisted of 100% cash equivalents. Investments in separate accounts of $4.2 million at December 31, 2022 consist of approximately 100% of equity securities and other investments. The Company values these using the published price of the underlying securities (classified as Level I) or quoted price supported by observable inputs as of the measurement date (classified as Level II).

(3)Investments related to long-term incentive compensation plans of $43.0 million and $40.0 million at June 30, 2023 and December 31, 2022, respectively, were investments in publicly registered daily redeemable funds (some managed by Acadian), which the Company has classified as trading securities and valued using the published price as of the measurement dates. Accordingly, the Company has classified these investments as Level I.

(4)The uncategorized amounts of $4.3 million and $4.2 million at June 30, 2023 and December 31, 2022, respectively, relate to investments in unconsolidated Funds which consist primarily of investments in Funds and are valued using NAV which the Company relies on to determine their fair value as a practical expedient and has therefore not classified these investments in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to amounts presented in the Condensed Consolidated Balance Sheets. These unconsolidated Funds consist primarily of real estate investment Funds and other investment vehicles. The NAVs that have been provided by investees have been derived from the fair values of the underlying investments as of the measurement dates. Other investment vehicles are not subject to redemption restrictions.

The real estate investment Funds of $4.2 million and $4.1 million at June 30, 2023 and December 31, 2022, respectively, are subject to longer than quarterly redemption restrictions, and due to their nature, distributions are received only as cash flows are generated from underlying assets over the life of the Funds. The range of time over which the underlying assets are expected to be liquidated by the investees is approximately one to two years from June 30, 2023. The valuation process for the underlying real estate investments held by the real estate investment Funds begins with each property or loan being valued by the investment teams. The valuations are then reviewed and approved by the valuation committee, which consists of senior members of the portfolio management, finance, and research teams. For certain properties and loans, the valuation process may also include a valuation by independent appraisers. In connection with this process, changes in fair value measurements from period to period are evaluated for reasonableness, considering items such as market rents, capitalization and discount rates, and general economic and market conditions.

There were no significant transfers of financial assets or liabilities between Levels II or III during the three and six months ended June 30, 2023 and 2022, respectively.

Table of Contents

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

5) Variable Interest Entities

The Company, through its Affiliate, sponsors the formation of various entities considered to be variable interest entities (“VIEs”). These VIEs are primarily Funds managed by the Company’s Affiliate, and other partnership interests typically owned entirely by third-party investors. Certain Funds may be capitalized with seed capital investments from the Company and may be owned partially by Affiliate key employees and/or individuals that have ownership interests in the Affiliate.

The Company’s determination of whether it is the primary beneficiary of a Fund that is a VIE is based in part on an assessment of whether or not the Company and its related parties are exposed to absorb more than an insignificant amount of the risks and rewards of the entity. Typically, the Fund’s investors are entitled to substantially all of the economics of these VIEs with the exception of the management fees and performance fees, if any, earned by the Company or any investment the Company has made into the Funds. The Company generally is not the primary beneficiary of Fund VIEs created to manage assets for clients unless the Company’s ownership interest, including interests of related parties, is substantial.

The following table presents the assets and liabilities of Funds that are VIEs and consolidated by the Company (in millions):


	June 30, 2023		December 31, 2022
Assets
Investments at fair value	$	9.3	$	1.9

Other assets of consolidated Funds	42.4		$	15.2

Total Assets	$	51.7	$	17.1
Liabilities

Liabilities of consolidated Funds	$	28.6	$	2.5

Total Liabilities	$	28.6	$	2.5

“Investments at fair value” consist of investments in derivative securities. To the extent the Company also has consolidated Funds that are not VIEs, the assets and liabilities of those Funds are not included in the table above.

The assets of consolidated VIEs presented in the table above belong to the investors in those Funds, are available for use only by the Fund to which they belong, and are not available for use by the Company to the extent they are held by non-controlling interests. Any debt or liabilities held by consolidated Funds have no recourse to the Company’s general credit.

The Company’s involvement with Funds that are VIEs and not consolidated by the Company is generally limited to that of an investment manager and its investment in the unconsolidated VIE, if any. The Company’s investment in any unconsolidated VIE generally represents an insignificant interest of the Fund’s net assets and assets under management, such that the majority of the VIE’s results are attributable to third parties. The Company’s exposure to risk in these entities is generally limited to any capital contribution it has made or is required to make and any earned but uncollected management fees. The Company has not issued any investment performance guarantees to these VIEs or their investors.

Table of Contents

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

5) Variable Interest Entities (cont.)

The following information pertains to unconsolidated VIEs for which the Company holds a variable interest (in millions):


	June 30, 2023		December 31, 2022
Unconsolidated VIE assets	$	745.2	$	728.1
Unconsolidated VIE liabilities	$	313.1	$	303.6
Equity interests on the Condensed Consolidated Balance Sheets	$	4.2	$	4.1
Maximum risk of loss(1)	$	4.2	$	4.1

(1)Includes equity investments the Company has made or is required to make.

6) Borrowings and Debt

The Company’s borrowings and long-term debt was comprised of the following as of the dates indicated (in millions):


	June 30, 2023					December 31, 2022
(in millions)	Carrying Value		Fair Value		Fair Value Level	Carrying Value		Fair Value		Fair Value Level
Revolving credit facility:
$125 million revolving credit facility expiring March 7, 2025(1)	$	38.0	$	38.0	2	$	—	$	—
Total revolving credit facility	$	38.0	$	38.0		$	—	$	—
Third party borrowings:
$275 million 4.80% Senior Notes Due July 27, 2026(2)	$	273.7	$	257.3	2	$	273.5	$	249.7	2
$125 million 5.125% Senior Notes Due August 1, 2031(2)(3)	—		—			—		—




Total third party borrowings	$	273.7	$	257.3		$	273.5	$	249.7

(1)Fair value approximates carrying value because the credit facility has variable interest rates based on selected short term market rates.

(2)The difference between the principal amounts and the carrying values of the senior notes in the table above reflects the unamortized debt issuance costs and discounts.

(3)On January 18, 2022, the Company completed the full redemption of the $125 million aggregate principal amount outstanding of its 5.125% Senior Notes due August 1, 2031. As a result of this transaction, the Company recorded a $3.2 million loss on extinguishment of debt within the Condensed Consolidated Statements of Operations for the six months ended June 30, 2022.

Table of Contents

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements

(unaudited)

6) Borrowings and Debt (cont.)

Revolving Credit Facility

On March 7, 2022, Acadian, Royal Bank of Canada, BMO Harris Bank, N.A., Goldman Sachs Bank USA, Morgan Stanley Bank, N.A., Bank of America N.A., the Bank of New York Mellon and Citibank, N.A., as an issuing bank and administrative agent (collectively, the “Lenders”), entered into a new revolving credit facility agreement (the “Acadian Credit Agreement”), which replaced the Company’s revolving credit facility dated as of August 20, 2019 (as amended by an amendment dated September 3, 2020 and an assignment and assumption and amendment agreement dated February 23, 2021, the “Original Credit Agreement”). The maturity date of this Original Credit Agreement was August 22, 2022, and the maturity date of the Acadian Credit Agreement is March 7, 2025.

Borrowings under the Acadian Credit Agreement bear interest, at Acadian’s option, at the per annum rate equal to either (a) the greatest of (i) the prime rate, (ii) the federal funds effective rate plus 0.5% and (iii) the secured overnight financing rate for a one month period plus a credit spread adjustment of 0.10% (“Adjusted Term SOFR”) plus 1%, plus, in each case, an additional amount ranging from 0.5% to 1.0%, with such additional amount based on Acadian’s Leverage Ratio (as defined below) or (b) Adjusted Term SOFR plus an additional amount ranging from 1.5% to 2.0%, with such additional amount based on Acadian’s Leverage Ratio. In addition, Acadian is charged a commitment fee based on the average daily unused portion of the revolving credit facility under the Acadian Credit Agreement at a per annum rate ranging from 0.25% to 0.375%, with such amount based on Acadian’s Leverage Ratio.

7) Leases

The Company has operating leases for corporate offices, data centers and certain equipment. The operating leases have remaining lease terms of less than 1 year to 11 years, some of which include options to extend the leases for up to 5 years.

The following table summarizes information about the Company’s operating leases for the three and six months ended June 30 (in millions):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Operating lease cost	$	2.1	$	2.5	$	4.2	$	5.0
Variable lease cost	0.1		0.1		0.1		0.1
Sublease income	—		$	(0.2)	—		(0.3)
Total operating lease expense	$	2.2	$	2.4	$	4.3	$	4.8
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	2.2	$	2.2	$	4.5	$	4.4
Right of use assets obtained in exchange for new operating lease liabilities	0.1		1.8		2.9		1.8

Table of Contents

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

7) Leases (cont.)

In determining the incremental borrowing rate, the Company considered the interest rate yield for the specific interest rate environment and the Company’s credit spread at the inception of the lease. For the six months ended June 30, 2023 and 2022, the weighted average remaining lease term was 10.0 and 10.9 years, respectively, and the weighted average discount rate was 3.55% and 3.39%, respectively.

Maturities of operating lease liabilities were as follows (in millions):


	Operating Leases
Year Ending December 31,
2023 (excluding the six months ended June 30, 2023)	$	4.7
2024	9.3
2025	8.9
2026	8.8
2027	8.4
Thereafter	49.6
Total lease payments	$	89.7
Less imputed interest	(13.9)
Total	$	75.8

8) Commitments and Contingencies

Operational commitments

A number of our subsidiaries operate under regulatory authorities that require that they maintain minimum financial or capital requirements. Management is not aware of any violations of such financial requirements occurring during the period.

Guaranty

The Company entered into a guaranty for an office space security deposit in the amount of $2.5 million in January 2020. This represents the maximum potential amount of future (undiscounted) payments that the Company could be required to make under the guaranty in the event of default by the guaranteed parties. This guaranty expires in 2033. There are no liabilities recorded on the Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022 related to this guaranty.

Litigation

The Company is subject to claims, legal proceedings, and other contingencies in the ordinary course of its business activities. Each of these matters is subject to various uncertainties, and it is possible that some of these matters may be resolved in a manner unfavorable to the Company. The Company establishes accruals for matters for which the outcome is probable and can be reasonably estimated. As of June 30, 2023, there were no material accruals for claims and the Company does not believe any outstanding matters will have a material adverse effect on the Company.

Table of Contents

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

8) Commitments and Contingencies (cont.)

Indemnifications

In the normal course of business, such as through agreements to enter into business combinations and divestitures of Affiliates, the Company enters into contracts that contain a variety of representations and warranties and which provide general indemnifications. The Company’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that have not yet occurred.

Foreign tax contingency

The Company has clients in non-U.S. jurisdictions which require entities that are conducting certain business activities in such jurisdictions to collect and remit tax assessed on certain fees paid for goods and services provided. The Company does not believe this requirement is applicable based on its limited business activities in these jurisdictions. However, given the fact that uncertainty exists around the requirement, the Company has chosen to evaluate its potential exposure related to non-collection and remittance of these taxes. At June 30, 2023, management of the Company has estimated the potential maximum exposure and concluded that it is not material. No accrual for the potential exposure has been recorded as the probability of incurring any potential liability relating to this exposure is not probable at June 30, 2023.

Considerations of credit risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash, cash equivalents, restricted cash and investments. The Company maintains cash and cash equivalents and short term investments with various financial institutions. These financial institutions are typically located in cities in which the Company and its Affiliate operate. For the Company and its Affiliate, cash deposits at a financial institution may exceed Federal Deposit Insurance Corporation insurance limits. Additionally, the Company holds insurance policies which cover historical and future tax benefits relating to certain of its deferred tax assets. The insurers of the policies are considered a significant counterparty to the Company.

9) Earnings Per Share

Basic earnings per share is calculated by dividing net income attributable to controlling interests by the weighted-average number of shares of common stock outstanding. Diluted earnings per share is similar to basic earnings per share, but is adjusted for the effect of potentially issuable common stock, except when inclusion is antidilutive.

The calculation of basic and diluted earnings per share of common stock is as follows (dollars in millions, except per share data):

Table of Contents

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

9) Earnings Per Share (cont.)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Numerator:




Net income attributable to controlling interests	$	11.4	$	28.6	$	23.4	$	52.4
Denominator:
Weighted-average shares of common stock outstanding—basic	41,484,303		41,425,555		41,464,362		42,690,683
Potential shares of common stock:
Restricted stock units	1,695		6,935		4,617		8,523
Employee stock options	1,159,421		1,085,635		1,209,130		1,216,600
Weighted-average shares of common stock outstanding—diluted	42,645,419		42,518,125		42,678,109		43,915,806

Earnings per share of common stock attributable to controlling interests:



Basic	$	0.27	$	0.69	$	0.56	$	1.23



Diluted	$	0.27	$	0.67	$	0.55	$	1.19

10) Revenue

Management fees

The Company’s management fees are a function of the fee rates the Affiliate charges to its clients, which are typically expressed in basis points, and the levels of the Company’s assets under management. The most significant driver of increases or decreases in this average fee rate is changes in the mix of the Company’s assets under management caused by net inflows or outflows in certain asset classes or disproportionate market movements.

Performance fees

The Company’s products subject to performance fees earn these fees upon exceeding high-water mark performance thresholds or outperforming a hurdle rate. Performance fees are recorded in revenues when the contractual performance criteria have been met and when it is probable that a significant reversal of revenue recognized will not occur in future reporting periods.

Table of Contents

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

10) Revenue (cont.)

Disaggregation of management fee revenue

The geographic disaggregation of management fee revenue for the three and six months ended June 30 (in millions) are presented below:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Quant & Solutions
U.S.	$	69.3	$	71.2	$	137.3	$	148.2
Non-U.S.	23.5		22.3		46.1		47.5






Management fee revenue	$	92.8	$	93.5	$	183.4	$	195.7

11) Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive income (loss), net of tax, for the three months ended June 30, 2023 and 2022 are as follows (in millions):


	Foreign currency translation adjustment		Valuation and amortization of derivative securities		Total
Balance, as of March 31, 2023	$	2.4	$	(11.7)	$	(9.3)
Foreign currency translation adjustment	0.8		—		0.8
Amortization related to derivatives securities, before tax	—		0.8		0.8
Tax impact	—		(0.2)		(0.2)
Other comprehensive income	0.8		0.6		1.4

Balance, as of June 30, 2023	$	3.2	$	(11.1)	$	(7.9)


	Foreign currency translation adjustment		Valuation and amortization of derivative securities		Total
Balance, as of March 31, 2022	$	4.1	$	(14.0)	$	(9.9)
Foreign currency translation adjustment	(2.4)		—		(2.4)
Amortization related to derivatives securities, before tax	—		0.8		0.8
Tax impact	—		(0.2)		(0.2)
Other comprehensive income (loss)	(2.4)		0.6		(1.8)
Balance, as of June 30, 2022	$	1.7	$	(13.4)	$	(11.7)

Table of Contents

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

11) Accumulated Other Comprehensive Income (Loss) (cont.)

The components of accumulated other comprehensive income (loss), net of tax, for the six months ended June 30, 2023 and 2022 are as follows (in millions):


	Foreign currency translation adjustment		Valuation and amortization of derivative securities		Total
Balance, as of December 31, 2022	$	1.7	$	(12.3)	$	(10.6)
Foreign currency translation adjustment	1.5		—		1.5
Amortization related to derivatives securities, before tax	—		1.7		1.7
Tax impact	—		(0.5)		(0.5)
Other comprehensive income	1.5		1.2		2.7

Balance, as of June 30, 2023	$	3.2	$	(11.1)	$	(7.9)


	Foreign currency translation adjustment		Valuation and amortization of derivative securities		Total
Balance, as of December 31, 2021	$	4.8	$	(15.6)	$	(10.8)
Foreign currency translation adjustment	(3.1)		—		(3.1)
Amortization related to derivatives securities, before tax(1)	—		3.0		3.0
Tax impact	—		(0.8)		(0.8)
Other comprehensive income (loss)	(3.1)		2.2		(0.9)

Balance, as of June 30, 2022	$	1.7	$	(13.4)	$	(11.7)

(1)On January 18, 2022, the Company completed the full redemption of the $125 million aggregate principal amount outstanding of its 5.125% Senior Notes due August 1, 2031. As a result of this transaction, the Company recorded $1.3 million of amortization expense included in Amortization related to derivatives securities, before tax for the six months ended June 30, 2022.

12) Derivatives and Hedging

Cash flow hedge

In July 2015, the Company entered into a series of $300.0 million notional Treasury rate lock contracts which were designated and qualified as cash flow hedges. The Company documented its hedging strategy and risk management objective for this contract in anticipation of a future debt issuance. The Treasury rate lock contract eliminated the impact of fluctuations in the underlying benchmark interest rate for future forecasted debt issuances. The Company assessed the effectiveness of the hedging contract at inception and on a quarterly basis thereafter. The forecasted debt issuances occurred in July 2016 and the Treasury rate lock, which had an accumulated fair value of $(34.4) million, was settled.

Table of Contents

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

12) Derivatives and Hedging (cont.)

As of June 30, 2023, the balance recorded in accumulated other comprehensive income (loss) was $(11.1) million, net of tax. This balance will be reclassified to earnings through interest expense over the life of the issued debt. The Company reclassified $0.8 million for each of the three months ended June 30, 2023 and 2022. Amounts of $1.7 million and $3.0 million have been reclassified for the six months ended June 30, 2023 and 2022, respectively. During the next twelve months the Company expects to reclassify approximately $3.6 million to interest expense.

On January 18, 2022, the Company completed the full redemption of the $125 million aggregate principal amount outstanding of its 5.125% Senior Notes due August 1, 2031. As a result of this transaction, amortization expense of $1.3 million (of the $3.0 million interest expense reclassified to earnings for the six months ended June 30, 2022) was reclassified to earnings as interest expense.

13) Segments

The Company has the following reportable segment:

The corporate head office is included within the Other category. The corporate head office expenses are not allocated to the Company’s business segment, but the Chief Operating Decision Maker (“CODM”) does consider the cost structure of the corporate head office when evaluating the financial performance of the segment.

Performance Measure

The primary measure used by the CODM in measuring performance and allocating resources to the segments is Economic Net Income (“ENI”). The Company defines ENI for the segments as ENI revenue less (i) ENI operating expenses, (ii) variable compensation and (iii) key employee distributions. The ENI adjustments to U.S. GAAP include both reclassifications of U.S. GAAP revenue and expense items, as well as adjustments to U.S. GAAP results, primarily to exclude non-cash, non-economic expenses, or to reflect cash benefits not recognized under U.S. GAAP. This measure supplements and should be considered in addition to, and not in lieu of, the Condensed Consolidated Statements of Operations prepared in accordance with U.S. GAAP. The Company does not disclose total asset information for its reportable segment as the information is not reviewed by the CODM.

ENI revenue includes management fees, performance fees and other revenue under U.S. GAAP, adjusted to include management fees paid to the Company’s Affiliate by consolidated Funds and the Company’s share of earnings from equity-accounted Affiliate.

ENI operating expenses include compensation and benefits, general and administrative expense, and depreciation and amortization under U.S. GAAP, adjusted to exclude non-cash expenses representing changes in the value of Affiliate equity and profit interests held by Affiliate key employees, goodwill impairment and amortization of acquired intangible assets, capital transaction costs and restructuring costs. Additionally, variable compensation and Affiliate key employee distributions are segregated from ENI operating expenses.

Table of Contents

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

13) Segments (cont.)

ENI segment results are also adjusted to exclude the portion of consolidated Fund revenues, expenses and investment return recorded under U.S. GAAP.

Segment Presentation

The following tables set forth summarized operating results for the Company’s segment and related adjustments necessary to reconcile the segment economic net income to arrive at the Company’s consolidated U.S. GAAP net income (loss).

The following table presents the financial data for the Company’s segment for the three months ended June 30, 2023 (in millions):


	Three Months Ended June 30, 2023
	Quant & Solutions		Other		Reconciling Adjustments			Total U.S. GAAP(1)
ENI revenue	$	95.0	$	—	$	1.3		$	96.3

ENI operating expenses	47.3		3.9		0.8		(a)	52.0
Earnings before variable compensation	47.7		(3.9)		0.5			44.3
Variable compensation	22.0		0.7		—			22.7
ENI operating earnings (after variable comp)	25.7		(4.6)		0.5			21.6
Affiliate key employee distributions	1.2		—		—			1.2
Earnings after Affiliate key employee distributions	24.5		(4.6)		0.5			20.4
Net interest expense	—		(3.5)		(0.4)		(b)	(3.9)
Net investment income	—		—		0.5		(c)	0.5

Net income attributable to non-controlling interests in consolidated Funds	—		—		(0.1)		(c)	(0.1)
Income tax expense	—		(4.4)		(1.1)		(d)	(5.5)


Economic net income	$	24.5	$	(12.5)	$	(0.6)		$	11.4

Table of Contents

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

13) Segments (cont.)

The following table presents the financial data for the Company’s segments for the three months ended June 30, 2022 (in millions):


	Three Months Ended June 30, 2022
	Quant & Solutions		Other		Reconciling Adjustments			Total U.S. GAAP(1)
ENI revenue	$	95.5	$	—	$	—		$	95.5

ENI operating expenses	39.7		4.4		(18.5)		(a)	25.6
Earnings before variable compensation	55.8		(4.4)		18.5			69.9
Variable compensation	21.7		1.0		—			22.7
ENI operating earnings (after variable comp)	34.1		(5.4)		18.5			47.2
Affiliate key employee distributions	0.5		—		—			0.5
Earnings after Affiliate key employee distributions	33.6		(5.4)		18.5			46.7
Net interest expense	—		(4.6)		(0.1)		(b)	(4.7)
Net investment loss	—		—		(0.7)		(c)	(0.7)


Income tax expense	—		(6.3)		(6.4)		(d)	(12.7)


Economic net income	$	33.6	$	(16.3)	$	11.3		$	28.6

The following table presents the financial data for the Company’s segment for the six months ended June 30, 2023 (in millions):


	Six Months Ended June 30, 2023
	Quant & Solutions		Other		Reconciling Adjustments			Total U.S. GAAP(1)
ENI revenue	$	186.1	$	—	$	2.0		$	188.1

ENI operating expenses	90.9		7.4		1.3		(a)	99.6
Earnings before variable compensation	95.2		(7.4)		0.7			88.5
Variable compensation	44.5		1.4		—			45.9
ENI operating earnings (after variable comp)	50.7		(8.8)		0.7			42.6
Affiliate key employee distributions	2.4		—		—			2.4
Earnings after Affiliate key employee distributions	48.3		(8.8)		0.7			40.2
Net interest expense	—		(6.9)		(0.8)		(b)	(7.7)
Net investment income	—		—		1.6		(c)	1.6

Net income attributable to non-controlling interests in consolidated Funds	—		—		(0.1)		(c)	(0.1)

Income tax expense	—		(8.8)		(1.8)		(d)	(10.6)


Economic net income	$	48.3	$	(24.5)	$	(0.4)		$	23.4

Table of Contents

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

13) Segments (cont.)

The following table presents the financial data for the Company’s segment for the six months ended June 30, 2022 (in millions):


	Six Months Ended June 30, 2022
	Quant & Solutions		Other		Reconciling Adjustments			Total U.S. GAAP(1)
ENI revenue	$	207.7	$	—	$	—		$	207.7

ENI operating expenses	80.8		8.9		(24.9)		(a)	64.8
Earnings before variable compensation	126.9		(8.9)		24.9			142.9
Variable compensation	48.0		2.6		—			50.6
ENI operating earnings (after variable comp)	78.9		(11.5)		24.9			92.3
Affiliate key employee distributions	2.4		—		—			2.4
Earnings after Affiliate key employee distributions	76.5		(11.5)		24.9			89.9
Net interest expense	—		(9.2)		(2.0)		(b)	(11.2)
Net investment loss	—		—		(0.8)		(c)	(0.8)


Loss on extinguishment of debt	—		—		(3.2)		(c)	(3.2)
Income tax expense	—		(15.1)		(7.2)		(d)	(22.3)


Economic net income	$	76.5	$	(35.8)	$	11.7		$	52.4

(1)The most directly comparable U.S. GAAP measure of ENI revenue is U.S. GAAP revenue. The most directly comparable U.S. GAAP measure of ENI operating expenses is U.S. GAAP operating expenses, which is comprised of ENI operating expenses, variable compensation, and Affiliate key employee distributions above. The most directly comparable U.S. GAAP measure of earnings after Affiliate key employee distributions is U.S. GAAP operating income. The most directly comparable U.S. GAAP measure of ENI is U.S. GAAP net income attributable to controlling interests.

Reconciling Adjustments:

a.Adjusted to include non-cash expenses for key employee equity and profit interest revaluations and restructuring costs, each of which are included in U.S. GAAP operating expenses.

b.Adjusted to include the cost of seed financing and amortization of debt issuance costs, which is included in U.S. GAAP interest expense.

c.Adjusted to include net investment income (loss), the loss on extinguishment of debt, net income attributable to non-controlling interests in consolidated Funds, all of which are included in U.S. GAAP net income attributable to controlling interests.

d.Adjusted to include the impact of deferred tax attributable to the amortization of goodwill and acquired intangibles. Also adjusted to include the tax impact of certain ENI adjustments; exclude the tax expense or benefits relating to uncertain tax positions, and exclude the tax impact of other unusual items that are not related to current operating results for ENI purposes.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Unless we state otherwise or the context otherwise requires, references in this Quarterly Report on Form 10-Q to the “Company”, “BrightSphere” or “BSIG” refer to BrightSphere Investment Group Inc., and references to “we,” “our” and “us” refer to BSIG and its consolidated subsidiaries, excluding discontinued operations. References to the holding company or “Center” excluding the Affiliates refer to BrightSphere Inc., or “BSUS,” a Delaware corporation and wholly owned subsidiary of BSIG. Unless we state otherwise or the context otherwise requires, references in this Quarterly Report on Form 10-Q to “Affiliates” or an “Affiliate” refer to the asset management firms in which we have or had an ownership interest. References in this Quarterly Report on Form 10-Q to “OM plc” refer to Old Mutual plc, our former parent. None of the information in this Quarterly Report on Form 10-Q constitutes either an offer or a solicitation to buy or sell any of our Affiliate’s products or services, nor is any such information a recommendation for any of our Affiliate’s products or services.

The following discussion of our financial condition and results of operations should be read in conjunction with our Condensed Consolidated Financial Statements and related notes which appear elsewhere in this Quarterly Report on Form 10-Q.

This discussion contains forward-looking statements that involve risks and uncertainties. See “Forward-Looking Statements” at the end of this Item 2 for more information. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, is designed to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results.

Our MD&A is presented in five sections:

•Overview provides a brief description of our business. It includes information on our reporting segment and underlying Affiliate, a summary of The Economics of Our Business and an explanation of How We Measure Performance using a non-GAAP measure which we refer to as economic net income, or ENI. This section also provides a Summary Results of Operations and information regarding our Assets Under Management by strategy, client type and location, and net flows by segment, client type and client location.

•U.S. GAAP Results of Operations for the Three and Six Months Ended June 30, 2023 and 2022 includes an explanation of changes in our U.S. GAAP revenue, expense and other items for the three and six months ended June 30, 2023 and 2022, as well as key U.S. GAAP operating metrics.

•Non-GAAP Supplemental Performance Measure — Economic Net Income and Segment Analysis includes an explanation of the key differences between U.S. GAAP net income and ENI, the key measure management uses to evaluate our performance. This section also provides a reconciliation between U.S. GAAP net income attributable to controlling interests and ENI for the three and six months ended June 30, 2023 and 2022, as well as a reconciliation of key ENI operating items including ENI revenue and ENI operating expenses. This section also provides key non-GAAP operating metrics. In addition, this section provides segment analysis for our business segment.

•Capital Resources and Liquidity discusses our key balance sheet data. This section discusses Cash Flows from the business; Adjusted EBITDA; Future Capital Needs; Borrowings and Long-Term Debt. The discussion of Adjusted EBITDA includes an explanation of how we calculate Adjusted EBITDA and a reconciliation of U.S. GAAP net income attributable to controlling interests to Adjusted EBITDA.

•Critical Accounting Policies and Estimates provides a discussion of the key accounting policies and estimates that we believe are the most critical to an understanding of our results of operations and financial condition. These accounting policies and estimates require complex management judgment regarding matters that are highly uncertain at the time the policies were applied and estimates were made.

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Overview

We are a global asset management holding company headquartered in Boston, Massachusetts. We historically held interests in a group of investment management firms (the “Affiliates”) individually headquartered in the United States. We have completed the disposition of certain Affiliates and currently operate our business through the following segment:

•Quant & Solutions—comprised of versatile, often highly-tailored strategies that leverage data and technology in a computational, factor-based investment process across a range of asset classes in developed and emerging markets, including global, non-U.S. and small-cap equities, as well as managed volatility, ESG, multi-asset, equity alternatives, and long/short strategies. This segment is comprised of our interest in our sole Affiliate, Acadian Asset Management LLC (“Acadian”).

Through Acadian, we offer a diverse range of actively-managed investment strategies and products to institutional investors around the globe.

Under U.S. GAAP, Acadian is consolidated into our financial statements. We may also be required to consolidate Acadian’s sponsored investment entities, or Funds, due to the nature of our decision-making rights, our economic interests in these Funds or the rights of third party clients in those Funds.

The Economics of Our Business

Our profitability is affected by a variety of factors including the level and composition of our average assets under management, or AUM, fee rates charged on AUM and our expense structure. We earn management fees based on assets under management. Approximately 80% of our management fees for the three months ended June 30, 2023 were calculated based on average AUM (calculated on either a daily or monthly basis) with the remainder of our management fees calculated based on period-end AUM. Changes in the levels of our AUM are driven by market investment performance and net client cash flows. We may also earn performance fees, or adjust management fees, when certain accounts differ in relation to relevant benchmarks or exceed or fail to exceed required returns. Approximately $13 billion, or 13%, of our AUM are in accounts with incentive fee features in which we participate in the performance fee. The majority of these performance fees are calculated based on value added over the relevant benchmarks on a rolling one-year basis.

Our largest expense item is compensation and benefits paid to our employees, which consists of both fixed and variable components. Fixed compensation and benefits represents base salaries and wages, payroll taxes and the costs of our employee benefit programs. Variable compensation, calculated as described below, may be awarded in cash, equity, or profit interests.

The arrangements in place with Acadian result in the sharing of economics between BSUS and Acadian’s key management personnel using a profit-sharing model. Profit sharing affects two elements within our earnings: (i) the calculation of variable compensation and (ii) the level of equity or profit interests distribution to our employees.

Variable compensation is the portion of earnings that is contractually allocated to Acadian employees as a bonus pool, typically representing a fixed percentage of earnings before variable compensation, which is measured as revenues less fixed compensation and benefits and other operating and administrative expenses. Profits after variable compensation are shared between us and Acadian key employee equity holders according to our respective equity or profit interests ownership. The sharing of profits in this manner ensures that the economic interests of Acadian key employees and those of BSUS are aligned, both in terms of generating strong annual earnings as well as investing those earnings back into the business in order to generate growth over the long term. We view profit sharing as an attractive operating model, as it allows us to share in the benefits of operating leverage as the business grows, and ensures all equity and profit interests holders are incentivized to achieve that growth.

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Equity or profit interests owned by Acadian key employees are awarded as part of their variable compensation arrangements. Over time, key employee-owned equity or profit interests are recycled from one generation of employee-owners to the next, either by the next generation purchasing equity or profit interests directly from retiring principals, or by key employees forgoing cash bonuses in exchange for the equivalent value in Acadian equity or profit interests. The recycling of equity or profit interests is often facilitated by BSUS; see “—U.S. GAAP Results of Operations—U.S. GAAP Expenses—Compensation and Benefits Expense” for a further discussion.

How We Measure Performance

We manage our business based on one segment, reflecting how our management assesses the performance of our business.

In measuring and monitoring the key components of our earnings, our management uses a non-GAAP financial measure, ENI, to evaluate the financial performance of, and to make operational decisions for, our business. We also use ENI to make resource allocation decisions, determine appropriate levels of investment or dividend payout, manage balance sheet leverage, determine variable compensation and equity distributions, and incentivize management. It is an important measure in evaluating our financial performance because we believe it most accurately represents our operating performance and cash generation capability.

ENI differs from net income determined in accordance with U.S. GAAP as a result of both the reclassification of certain income statement items and the exclusion of certain non-cash or non-recurring income statement items. In particular, ENI excludes non-cash charges representing the changes in the value of Affiliate equity and profit interests held by Affiliate key employees, the results of discontinued operations which are no longer part of our business, restructuring costs, capital transaction costs, seed capital and co-investment gains, losses and related financing costs and that portion of consolidated Funds which are not attributable to our stockholders.

ENI revenue is primarily comprised of the fee revenues paid to us by our clients for our advisory services and earnings from our equity-accounted Affiliate. Revenue included within ENI differs from U.S. GAAP revenue in that it excludes amounts from consolidated Funds which are not attributable to our stockholders and it includes our share of earnings from our equity-accounted Affiliate.

ENI expenses are calculated to reflect all usual expenses from ongoing continuing operations attributable to our stockholders. Expenses included within ENI differ from U.S. GAAP expenses in that they exclude amounts from consolidated Funds which are not attributable to our stockholders, revaluations of Affiliate key employee owned equity and profit interests, amortization and impairment of acquired intangibles and other acquisition-related items, and certain other non-cash expenses.

“Non-controlling interests” is a concept under U.S. GAAP that identifies net components of revenues and expenses that are not attributable to our stockholders. For example, the portion of the net income (loss) of any consolidated Fund that is attributable to the outside investors or clients of the consolidated Fund is included in “Non-controlling interests” in our Condensed Consolidated Financial Statements. Conversely, “controlling interests” is the portion of revenue or expense that is attributable to our stockholders.

For a more detailed discussion of the differences between U.S. GAAP net income and economic net income, see “—Non-GAAP Supplemental Performance Measure — Economic Net Income and Segment Analysis.”

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Summary Results of Operations

The following table summarizes our unaudited results of operations for the three and six months ended June 30, 2023 and 2022:


($ in millions, unless otherwise noted)	Three Months Ended June 30,								Six Months Ended June 30,
	2023			2022			2023 vs. 2022		2023			2022			2023 vs. 2022
U.S. GAAP Basis
Revenue	$	96.3		$	95.5		$	0.8	$	188.1		$	207.7		$	(19.6)
Pre-tax income attributable to controlling interests	16.9			41.3			(24.4)		34.0			74.7			(40.7)
Net income attributable to controlling interests	11.4			28.6			(17.2)		23.4			52.4			(29.0)

U.S. GAAP operating margin(1)	21.2		%	48.9		%	(2772) bps		21.4		%	43.3		%	(2191) bps
Earnings per share, basic ($)	$	0.27		$	0.69		$	(0.42)	$	0.56		$	1.23		$	(0.67)
Earnings per share, diluted ($)	$	0.27		$	0.67		$	(0.40)	$	0.55		$	1.19		$	(0.64)
Basic shares outstanding (in millions)	41.5			41.4			0.1		41.5			42.7			(1.2)
Diluted shares outstanding (in millions)	42.6			42.5			0.1		42.7			43.9			(1.2)

Economic Net Income Basis(2)(3)
(Non-GAAP measure used by management)
ENI revenue(4)	$	95.0		$	95.5		$	(0.5)	$	186.1		$	207.7		$	(21.6)
Pre-tax economic net income(5)	16.4			23.6			(7.2)		32.6			55.8			(23.2)
Adjusted EBITDA	24.7			34.0			(9.3)		48.3			77.0			(28.7)
ENI operating margin(6)	22.2		%	30.1		%	(784) bps		22.5		%	32.5		%	(994) bps
Economic net income(7)	12.0			17.3			(5.3)		23.8			40.7			(16.9)
ENI diluted EPS ($)	$	0.28		$	0.41		$	(0.13)	$	0.56		$	0.93		$	(0.37)

Other Operational Information
Assets under management (AUM) at period end (in billions)	$	99.9		$	90.5		$	9.4	$	99.9		$	90.5		$	9.4
Net client cash flows (in billions)	0.1			(2.8)			2.9		0.2			(5.0)			5.2
Annualized revenue impact of net flows(8)	0.9			(7.4)			8.3		1.9			(8.5)			10.4

(1)U.S. GAAP operating margin equals operating income divided by total revenue.

(2)Economic net income is a non-GAAP measure we use to evaluate the performance of our business. For a reconciliation to U.S. GAAP financial information and a further discussion of economic net income refer to “—Non-GAAP Supplemental Performance Measure—Economic Net Income and Segment Analysis.”

(3)Excludes costs associated with the transfer of an insurance policy from our former parent of $0.2 million for the three months ended June 30, 2023. Excludes restructuring costs associated with the transfer of an insurance policy from our former parent of $0.3 million for the three months ended June 30, 2022. Excludes costs associated with the transfer of an insurance policy from our former Parent of $0.6 million for the six months ended June 30, 2023. Excludes restructuring costs at Acadian of $0.1 million and costs associated with the transfer of an insurance policy from our former Parent of $0.6 million for the six months ended June 30, 2022.

(4)ENI revenue is the ENI measure which corresponds to U.S. GAAP revenue.

(5)Pre-tax economic net income is the ENI measure which corresponds to U.S. GAAP pre-tax income attributable to controlling interests.

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(6)ENI operating margin is a non-GAAP efficiency measure, calculated based on ENI operating earnings divided by ENI revenue. ENI operating earnings is calculated as ENI revenue, less ENI operating expense, less ENI variable compensation. The ENI operating margin corresponds to our U.S. GAAP operating margin (excluding the effect of consolidated Funds).

(7)Economic net income is the ENI measure which is most directly comparable to U.S. GAAP net income attributable to controlling interests.

(8)Annualized revenue impact of net flows represents annualized management fees expected to be earned on new accounts and net assets contributed to existing accounts, less the annualized management fees lost on terminated accounts or net assets withdrawn from existing accounts, plus revenue impact from reinvested income and distribution. The annualized management fees are calculated by multiplying the annual gross fee rate for the relevant account by the net assets gained in the account in the event of a positive flow, excluding any current or future market appreciation or depreciation, or the net assets lost in the account in the event of an outflow, excluding any current or future market appreciation or depreciation. In addition, reinvested income and distribution for the segment is multiplied by average fee rate for the segment to compute the revenue impact. For a further discussion of the uses and limitations of the annualized revenue impact of net flows, see “Assets Under Management” herein.

Assets Under Management

The following table presents our assets under management as of each of the dates indicated:


($ in billions)	June 30, 2023		December 31, 2022
Acadian Asset Management	$	99.9	$	93.6

Our strategies include:

i.Developed Markets equity, which includes Quant & Solutions U.S., global and international equities; and

ii.Emerging Markets equity, which includes Quant & Solutions equity investments in the emerging and frontier markets.

The following table presents our assets under management by strategy as of each of the dates indicated:


($ in billions)	June 30, 2023		December 31, 2022
Developed Markets	$	77.8	$	73.2
Emerging Markets	22.1		20.4

Total assets under management	$	99.9	$	93.6

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The following table shows assets under management by client type as of each of the dates indicated:


($ in billions)	June 30, 2023				December 31, 2022
	AUM		% of total			AUM		% of total
Public/Government	$	42.3	42.3	%		$	39.3	42.0	%
Commingled Trust/UCITS	23.8		23.8	%		21.7		23.2	%
Corporate/Union	12.7		12.7	%		13.1		14.0	%
Sub-advisory	12.4		12.4	%		11.8		12.6	%
Endowment/Foundation	3.3		3.3	%		3.1		3.3	%

Mutual Fund	0.6		0.6	%		0.6		0.6	%
Other	4.8		4.9	%		4.0		4.3	%
Total assets under management	$	99.9				$	93.6

The following table shows assets under management by client location as of each of the dates indicated:


($ in billions)	June 30, 2023				December 31, 2022
	AUM		% of total		AUM		% of total
U.S.	$	66.9	67.0	%	$	62.7	67.0	%
Europe	17.4		17.4	%	16.3		17.4	%
Asia	4.1		4.1	%	3.2		3.4	%
Australia	5.8		5.8	%	5.6		6.0	%
Other	5.7		5.7	%	5.8		6.2	%
Total assets under management	$	99.9			$	93.6

AUM flows and the annualized revenue impact of net flows

Net client cash flows and revenue impact of net client cash flows for all periods include reinvested income and distributions. Reinvested income and distributions represent investment yield that is reinvested back into the portfolios as opposed to distributed as cash.

In the following table, we present our asset flows and market appreciation (depreciation) by segment. We also present a key metric used to better understand our asset flows, the annualized revenue impact of net client cash flows. Annualized revenue impact of net flows represents annualized management fees expected to be earned on new accounts and net assets contributed to existing accounts (inflows), less the annualized management fees lost on terminated accounts or net assets withdrawn from existing accounts (outflows), plus revenue impact from reinvested income and distributions. Annualized management fee for client flow is calculated by multiplying the annual gross fee rate for the relevant account with the inflow or the outflow. In addition, reinvested income and distributions is multiplied by the average fee rate to compute the revenue impact.

The annualized revenue impact of net flows metric is designed to provide investors with a better indication of the potential financial impact of net client cash flows, however it has certain limitations. For instance, it does not include assumptions for the next twelve months' market appreciation or depreciation and investment performance associated with the assets gained or lost. Nor does it account for factors such as future client terminations or additional contributions or withdrawals over the next twelve months. Additionally, the basis points reported are fee rates based on the asset levels at the time of the transactions and do not consider the fact that client fee rates may change over the next twelve months.

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The following table summarizes our asset flows and market appreciation (depreciation) by segment for each of the periods indicated:


	Three Months Ended June 30,				Six Months Ended June 30,
($ in billions, unless otherwise noted)	2023		2022		2023		2022
Quant & Solutions





































Beginning balance	$	97.5	$	110.2	$	93.6	$	117.2

Gross inflows	2.0		2.5		4.2		6.0
Gross outflows	(2.8)		(6.3)		(5.8)		(12.9)
Reinvested income and distributions	0.9		1.0		1.8		1.9
Net flows	0.1		(2.8)		0.2		(5.0)
Market appreciation (depreciation)	2.3		(16.9)		6.1		(21.7)

Ending balance	$	99.9	$	90.5	$	99.9	$	90.5


Average AUM	$	97.9	$	100.8	$	97.1	$	105.5


Annualized basis points: inflows	45.9		51.2		43.5		50.7
Annualized basis points: outflows	42.5		37.8		40.7		35.5
Annualized revenue impact of net flows ($ in millions)	$	0.9	$	(7.4)	$	1.9	$	(8.5)

We also analyze our asset flows by client type and client location. Our client types include:

i.Sub-advisory, which includes assets managed for underlying mutual fund and variable insurance products which are sponsored by insurance companies and mutual fund platforms, where the end client is typically retail;

ii.Institutional, which includes assets managed for public/government pension funds, including U.S. state and local government funds and non-U.S. sovereign wealth, local government and national pension funds; also includes corporate and union-sponsored pension plans; and

iii.Retail/other, which includes assets managed for mutual funds sponsored by our Affiliate, defined contribution plans and accounts managed for high net worth clients.

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The following table summarizes our asset flows by client type for each of the periods indicated:


($ in billions)	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Sub-advisory
Beginning balance	$	11.9	$	13.7	$	11.8	$	14.1

Gross inflows	0.5		0.3		0.9		0.8
Gross outflows	(0.3)		(0.5)		(1.0)		(0.9)
Reinvested income and distributions	0.1		0.1		0.2		0.2
Net flows	0.3		(0.1)		0.1		0.1
Market appreciation (depreciation)	0.2		(1.8)		0.5		(2.4)

Ending balance	$	12.4	$	11.8	$	12.4	$	11.8

Institutional
Beginning balance	$	80.8	$	91.3	$	77.2	$	97.8

Gross inflows	1.1		1.8		2.8		4.4
Gross outflows	(2.3)		(5.4)		(4.5)		(11.3)
Reinvested income and distributions	0.7		0.8		1.4		1.6
Net flows	(0.5)		(2.8)		(0.3)		(5.3)
Market appreciation (depreciation)	1.8		(14.2)		5.2		(18.2)

Ending balance	$	82.1	$	74.3	$	82.1	$	74.3

Retail/Other
Beginning balance	$	4.8	$	5.2	$	4.6	$	5.3

Gross inflows	0.4		0.4		0.5		0.8
Gross outflows	(0.2)		(0.4)		(0.3)		(0.7)
Reinvested income and distributions	0.1		0.1		0.2		0.1
Net flows	0.3		0.1		0.4		0.2
Market appreciation (depreciation)	0.3		(0.9)		0.4		(1.1)

Ending balance	$	5.4	$	4.4	$	5.4	$	4.4

Total
Beginning balance	$	97.5	$	110.2	$	93.6	$	117.2

Gross inflows	2.0		2.5		4.2		6.0
Gross outflows	(2.8)		(6.3)		(5.8)		(12.9)
Reinvested income and distributions	0.9		1.0		1.8		1.9
Net flows	0.1		(2.8)		0.2		(5.0)
Market appreciation (depreciation)	2.3		(16.9)		6.1		(21.7)

Ending balance	99.9		90.5		99.9		90.5

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Our categorization by client location includes:

i. U.S.-based clients, where the contracting client is based in the United States, and

ii. Non-U.S.-based clients, where the contracting client is based outside the United States.

The following table summarizes asset flows by client location for each of the periods indicated:


($ in billions)	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
U.S.
Beginning balance	$	65.0	$	74.9	$	62.7	$	77.1

Gross inflows	1.3		0.9		2.5		3.3
Gross outflows	(1.4)		(3.8)		(3.5)		(6.1)
Reinvested income and distributions	0.6		0.7		1.2		1.3
Net flows	0.5		(2.2)		0.2		(1.5)
Market appreciation (depreciation)	1.4		(11.8)		4.0		(14.7)

Ending balance	$	66.9	$	60.9	$	66.9	$	60.9

Non-U.S.
Beginning balance	$	32.5	$	35.3	$	30.9	$	40.1

Gross inflows	0.7		1.6		1.7		2.7
Gross outflows	(1.4)		(2.5)		(2.3)		(6.8)
Reinvested income and distributions	0.3		0.3		0.6		0.6
Net flows	(0.4)		(0.6)		—		(3.5)
Market appreciation (depreciation)	0.9		(5.1)		2.1		(7.0)

Ending balance	$	33.0	$	29.6	$	33.0	$	29.6

Total
Beginning balance	$	97.5	$	110.2	$	93.6	$	117.2

Gross inflows	2.0		2.5		4.2		6.0
Gross outflows	(2.8)		(6.3)		(5.8)		(12.9)
Reinvested income and distributions	0.9		1.0		1.8		1.9
Net flows	0.1		(2.8)		0.2		(5.0)
Market appreciation (depreciation)	2.3		(16.9)		6.1		(21.7)

Ending balance	$	99.9	$	90.5	$	99.9	$	90.5

At June 30, 2023, our total assets under management were $99.9 billion, an increase of $2.4 billion, or 2.5%, compared to $97.5 billion at March 31, 2023 and an increase of $9.4 billion, or 10.4%, compared to $90.5 billion at June 30, 2022. The increase in assets under management compared to June 30, 2022 is a result of equity market appreciation in 2023. The change in assets under management during the three months ended June 30, 2023 reflects net market appreciation of $2.3 billion, and net inflows of $0.1 billion. The change in assets under management during the six months ended June 30, 2023 reflects net market appreciation of $6.1 billion and net inflows of $0.2 billion. Market appreciation or depreciation reported in current and prior periods includes changes in equity prices, as well as the impact from exchange rate fluctuations on our foreign-denominated AUM. Given a substantial portion of our AUM is denominated in foreign currencies, foreign exchange rate movements during the period can impact AUM when the strength of the U.S. dollar changes relative to other currencies.

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For the three months ended June 30, 2023, our net flows were $0.1 billion compared to $(2.8) billion for the three months ended June 30, 2022. The change in net flows during the three months ended June 30, 2023 compared to the three months ended June 30, 2022 was primarily due to reduced sizable outflows in the three months ended June 30, 2023. Reinvested income and distributions of $0.9 billion and $1.0 billion are reflected in the net flows for the three months ended June 30, 2023 and June 30, 2022, respectively. For the three months ended June 30, 2023, the annualized revenue impact of the net flows was $0.9 million compared to $(7.4) million for the three months ended June 30, 2022. Gross inflows of $2.0 billion in the three months ended June 30, 2023 yielded approximately 46 bps compared to $2.5 billion yielding approximately 51 bps in the year-ago period. Gross outflows of $(2.8) billion yielded approximately 43 bps in the three months ended June 30, 2023 compared to $(6.3) billion yielding approximately 38 bps in the year-ago period.

For the six months ended June 30, 2023, our net flows were $0.2 billion compared to $(5.0) billion for the six months ended June 30, 2022. The change in net flows during the six months ended June 30, 2023 compared to the six months ended June 30, 2022 was primarily driven by reduced sizable outflows in the six months ended June 30, 2023. Reinvested income and distributions of $1.8 billion and $1.9 billion are reflected in the net flows for the six months ended June 30, 2023 and June 30, 2022, respectively. For the six months ended June 30, 2023, the annualized revenue impact of the net flows was $1.9 million compared to $(8.5) million for the six months ended June 30, 2022. Gross inflows of $4.2 billion in the six months ended June 30, 2023 yielded approximately 44 bps compared to $6.0 billion yielding approximately 51 bps in the year-ago period. Gross outflows of $(5.8) billion yielded approximately 41 bps in the six months ended June 30, 2023 compared to $(12.9) billion yielding approximately 36 bps in the year-ago period.

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U.S. GAAP Results of Operations for the Three and Six Months Ended June 30, 2023 and 2022

Our U.S. GAAP results of operations were as follows for the three and six months ended June 30, 2023 and 2022:


	Three Months Ended June 30,								Six Months Ended June 30,
($ in millions, unless otherwise noted)	2023			2022			Increase (Decrease)		2023			2022			Increase (Decrease)
U.S. GAAP Statement of Operations
Management fees	$	92.8		$	93.5		$	(0.7)	$	183.4		$	195.7		$	(12.3)
Performance fees	2.2			2.0			0.2		2.7			12.0			(9.3)

Consolidated Funds’ revenue	1.3			—			1.3		2.0			—			2.0
Total revenue	96.3			95.5			0.8		188.1			207.7			(19.6)
Compensation and benefits	48.5			27.0			21.5		97.6			73.8			23.8
General and administrative expense	21.8			16.5			5.3		40.2			33.4			6.8


Depreciation and amortization	4.4			5.3			(0.9)		8.2			10.6			(2.4)
Consolidated Funds’ expense	1.2			—			1.2		1.9			—			1.9
Total operating expenses	75.9			48.8			27.1		147.9			117.8			30.1
Operating income	20.4			46.7			(26.3)		40.2			89.9			(49.7)
Investment income (loss)	0.2			(0.7)			0.9		0.5			(0.8)			1.3
Interest income	1.5			0.1			1.4		2.6			0.1			2.5
Interest expense	(5.4)			(4.8)			(0.6)		(10.3)			(11.3)			1.0
Loss on extinguishment of debt	—			—			—		—			(3.2)			3.2

Net consolidated Funds’ investment gains	0.3			—			0.3		1.1			—			1.1
Income before income taxes	17.0			41.3			(24.3)		34.1			74.7			(40.6)
Income tax expense	5.5			12.7			(7.2)		10.6			22.3			(11.7)



Net income	11.5			28.6			(17.1)		23.5			52.4			(28.9)
Net income attributable to non-controlling interests in consolidated Funds	0.1			—			0.1		0.1			—			0.1
Net income attributable to controlling interests	$	11.4		$	28.6		$	(17.2)	$	23.4		$	52.4		$	(29.0)

Basic earnings per share ($)	$	0.27		$	0.69		$	(0.42)	$	0.56		$	1.23		$	(0.67)
Diluted earnings per share ($)	0.27			0.67			(0.40)		0.55			1.19			(0.64)
Weighted average shares of common stock outstanding—basic	41.5			41.4			0.1		41.5			42.7			(1.2)
Weighted average shares of common stock outstanding—diluted	42.6			42.5			0.1		42.7			43.9			(1.2)

U.S. GAAP operating margin(1)	21.2		%	48.9		%			21.4		%	43.3		%

(1) The U.S. GAAP operating margin equals operating income divided by total revenue.

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The following table reconciles our net income attributable to controlling interests to our pre-tax income attributable to controlling interests:


($ in millions)	Three Months Ended June 30,				Six Months Ended June 30,
U.S. GAAP Statement of Operations	2023		2022		2023		2022
Net income attributable to controlling interests	$	11.4	$	28.6	$	23.4	$	52.4



Add: Income tax expense	5.5		12.7		10.6		22.3
Pre-tax income attributable to controlling interests	$	16.9	$	41.3	$	34.0	$	74.7

U.S. GAAP Revenues

Our U.S. GAAP revenues principally consist of:

i.management fees earned based on our overall weighted average fee rate charged to our clients and the level of assets under management;

ii.performance fees earned when our Affiliate’s investment performance over agreed time periods for certain clients has differed from pre-determined hurdles; and

iii.revenue from consolidated Funds, a portion of which is attributable to the holders of non-controlling interests in consolidated Funds.

Management Fees

Our management fees are a function of the fee rates charged to our clients, which are typically expressed in basis points, and the levels of our assets under management.

Average basis points earned on average assets under management were 38.1 bps and 38.1 bps for the three and six months ended June 30, 2023, respectively, and 37.2 bps and 37.1 bps for the three and six months ended June 30, 2022, respectively. The overall weighted average fee rate increase for the three and six months ended June 30, 2023 is the result of changes in the mix of assets under management caused by market movements and client flows.

Three months ended June 30, 2023 compared to three months ended June 30, 2022: Management fees decreased $(0.7) million, or (0.7)%, from $93.5 million for the three months ended June 30, 2022 to $92.8 million for the three months ended June 30, 2023. The decrease was due to lower levels of average assets under management. Average assets under management decreased (2.9)%, from $100.8 billion for the three months ended June 30, 2022 to $97.9 billion for the three months ended June 30, 2023, mainly due to the equity market decline in 2022.

Six months ended June 30, 2023 compared to six months ended June 30, 2022: Management fees decreased $(12.3) million, or (6.3)%, from $195.7 million for the six months ended June 30, 2022 to $183.4 million for the six months ended June 30, 2023. The decrease was due to lower levels of average assets under management. Average assets under management decreased (8.0)%, from $105.5 billion for the six months ended June 30, 2022 to $97.1 billion for the six months ended June 30, 2023, mainly due to the equity market decline in 2022.

Performance Fees

Approximately $13.2 billion, or 13% of our AUM, were in accounts with performance fee features in which we participate. Performance fees are typically shared with our Affiliate key employees through various contractual compensation and profit-sharing arrangements.

Three months ended June 30, 2023 compared to three months ended June 30, 2022: Performance fees increased $0.2 million, from $2.0 million for the three months ended June 30, 2022 to $2.2 million for the three months ended June 30, 2023. Performance fees can be variable and are contractually triggered based on investment performance results over agreed upon time periods.

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Six months ended June 30, 2023 compared to six months ended June 30, 2022: Performance fees decreased $(9.3) million, from $12.0 million for the six months ended June 30, 2022 to $2.7 million for the six months ended June 30, 2023, primarily due to the decline in performance fee eligible assets in the first quarter of 2023. Performance fees are variable and are contractually triggered based on investment performance results over agreed upon time periods.

U.S. GAAP Expenses

Our U.S. GAAP expenses principally consist of:

i.compensation paid to our investment professionals and other employees, including base salary, benefits, sales-based compensation, variable compensation, Affiliate distributions, and revaluation of key employee owned Affiliate equity and profit interests;

ii.general and administrative expenses;

iii.depreciation and amortization charges; and

iv.expenses of consolidated Funds, a portion of which is attributable to the holders of non-controlling interests in consolidated Funds.

Compensation and Benefits Expense

Our most significant category of expense is compensation and benefits awarded to our and our Affiliate’s employees. The following table presents the components of U.S. GAAP compensation expense for the three and six months ended June 30, 2023 and 2022:


	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022
Fixed compensation and benefits(1)	$	23.7	$	20.5	$	47.1	$	42.4
Sales-based compensation(2)	1.6		2.1		3.5		4.0

Variable compensation(3)	22.7		22.7		45.9		50.6
Affiliate key employee distributions(4)	1.2		0.5		2.4		2.4
Non-cash Affiliate key employee equity revaluations(5)	(0.7)		(18.8)		(1.3)		(25.6)

Total U.S. GAAP compensation and benefits expense	$	48.5	$	27.0	$	97.6	$	73.8

(1)Fixed compensation and benefits includes base salaries, payroll taxes and the cost of benefit programs provided.

(2)Sales-based compensation is paid to our Affiliate’s sales and distribution teams and represents compensation earned by our sales professionals, paid over a multi-year period, related to revenue earned on new sales. Its variability is based upon the structure of sales-based compensation due on inflows of assets under management and market-based movement in both current and prior periods.

(3)Variable compensation is contractually set and calculated individually for our Affiliate, plus Center bonuses. Variable compensation is awarded based on a contractual percentage of Affiliate ENI profits before variable compensation and may be paid in the form of cash or non-cash Affiliate equity or profit interests. With our Affiliate, we have a contractual split of performance fees between Affiliate employees and BSUS. The Affiliate’s share of performance fees, which ranges from 60%-75% of the total, is allocated entirely to variable compensation. The variable compensation earned on performance fees vests over three-years and compensation is recognized over that service period. Center variable compensation includes cash and our equity. Non-cash variable compensation awards typically vest over several years and are recognized as compensation expense over that service period.

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	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022
Cash variable compensation	$	21.4	$	20.3	$	43.0	$	45.6
Non-cash equity-based award amortization	1.3		2.4		2.9		5.0
Total variable compensation	$	22.7	$	22.7	$	45.9	$	50.6

(4)Affiliate key employee distributions represent the share of Affiliate profits after variable compensation that is attributable to Affiliate key employee equity and profit interests holders, according to their ownership interests. The Affiliate key employee distribution ratio at our Affiliate is calculated as Affiliate key employee distributions divided by ENI operating earnings at the Affiliate. Within our Affiliate we have a tiered equity structure, where BSUS and other classes of employee equity holders are entitled to an initial proportionate preference over profits after variable compensation, structured such that before a preference threshold is reached, there would be no required key employee distributions to the tiered equity holders, whereas for profits above the threshold, the key employee distribution amount to the tiered equity holders would be calculated based on the tiered key employee ownership percentages.

(5)Non-cash Affiliate key employee equity revaluations represent changes in the value of Affiliate equity and profit interests held by Affiliate key employees. These ownership interests may in certain circumstances be repurchased by BSUS at a value based on a pre-determined fixed multiple of twelve-month earnings and as such a liability is carried on our balance sheet based on the expected cash to be paid. However, any equity or profit interests repurchased by BSUS can be used to fund a portion of future variable compensation awards, resulting in savings in cash variable compensation that offset the negative cash effect of repurchasing the equity. Our Affiliate equity and profit interest plans have been designed to ensure BSUS is not required to repurchase more equity than we can reasonably recycle through variable compensation awards in any given twelve-month period.

Fluctuations in compensation and benefits expense for the periods presented are discussed below.

Three months ended June 30, 2023 compared to three months ended June 30, 2022: Compensation and benefits expense increased $21.5 million, or 79.6%, from $27.0 million for the three months ended June 30, 2022 to $48.5 million for the three months ended June 30, 2023. Fixed compensation and benefits increased $3.2 million, or 15.6%, from $20.5 million for the three months ended June 30, 2022 to $23.7 million for the three months ended June 30, 2023, primarily reflecting cost of living increases and the cost of new hires supporting our growth initiatives. Variable compensation remained at $22.7 million for the three months ended June 30, 2023 and 2022. Sales-based compensation decreased $(0.5) million, or (23.8)%, from $2.1 million for the three months ended June 30, 2022 to $1.6 million for the three months ended June 30, 2023, as a result of the structure of sales-based compensation programs, driven by the timing of asset inflows which trigger sales-based compensation in both current and prior periods. Affiliate key employee distributions increased $0.7 million, or 140.0%, from $0.5 million for the three months ended June 30, 2022 to $1.2 million for the three months ended June 30, 2023, as a result of changes in underlying operating earnings at our consolidated Affiliate and the leveraged nature of the distribution share. Revaluations of Affiliate equity changed by $18.1 million, reflecting fluctuations in the value of key employee ownership interests at our consolidated Affiliate, as the value of Affiliate equity decreased $(18.8) million for the three months ended June 30, 2022 and decreased $(0.7) million for the three months ended June 30, 2023.

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Six months ended June 30, 2023 compared to six months ended June 30, 2022: Compensation and benefits expense increased $23.8 million, or 32.2%, from $73.8 million for the six months ended June 30, 2022 to $97.6 million for the six months ended June 30, 2023. Fixed compensation and benefits increased $4.7 million, or 11.1%, from $42.4 million for the six months ended June 30, 2022 to $47.1 million for the six months ended June 30, 2023, primarily reflecting cost of living increases and the cost of new hires supporting our growth initiatives. Variable compensation decreased $(4.7) million, or (9.3)%, from $50.6 million for the six months ended June 30, 2022 to $45.9 million for the six months ended June 30, 2023. The decrease was primarily attributable to lower pre-variable compensation earnings. This decrease was partially offset by the inclusion of deferred compensation expense earned on prior year performance fee revenues, of which the Affiliate’s share is determined by a contractual split and recognized as compensation expense over a vesting period. Sales-based compensation decreased $(0.5) million or (12.5)% from $4.0 million for the six months ended June 30, 2022 to $3.5 million for the six months ended June 30, 2023, as a result of the structure of sales-based compensation programs, driven by the timing of asset inflows which trigger sales-based compensation in both current and prior periods. Affiliate key employee distributions remained unchanged at $2.4 million for each of the six months ended June 30, 2023 and 2022. Revaluations of Affiliate equity changed $24.3 million, reflecting fluctuations in the value of key employee ownership interests at our consolidated Affiliate, as the value of Affiliate equity decreased $(25.6) million for the six months ended June 30, 2022 and decreased $(1.3) million for the six months ended June 30, 2023.

General and Administrative Expense

Three months ended June 30, 2023 compared to three months ended June 30, 2022: General and administrative expense increased $5.3 million, or 32.1%, from $16.5 million for the three months ended June 30, 2022 to $21.8 million for the three months ended June 30, 2023. The increase in general and administrative expenses primarily reflects an increase in inflation, the impact of foreign currency changes, and our investment in growth initiatives and capabilities.

Six months ended June 30, 2023 compared to six months ended June 30, 2022: General and administrative expense increased $6.8 million, or 20.4%, from $33.4 million for the six months ended June 30, 2022 to $40.2 million for the six months ended June 30, 2023. The increase in general and administrative expenses primarily reflects an increase in inflation, the impact of foreign currency changes, and our investment in growth initiatives and capabilities.

Depreciation and Amortization Expense

Three months ended June 30, 2023 compared to three months ended June 30, 2022: Depreciation and amortization expense decreased $(0.9) million, or (17.0)%, from $5.3 million for the three months ended June 30, 2022 to $4.4 million for the three months ended June 30, 2023. The decrease was primarily attributable to the effect of certain assets becoming fully depreciated.

Six months ended June 30, 2023 compared to six months ended June 30, 2022: Depreciation and amortization expense decreased $(2.4) million, or (22.6)%, from $10.6 million for the six months ended June 30, 2022 to $8.2 million for the six months ended June 30, 2023. The decrease was primarily attributable to the effect of certain assets becoming fully depreciated.

U.S. GAAP Other Non-Operating Items of Income and Expense

Other non-operating items of income and expense consist of:

i.investment income;

ii.interest income;

iii.interest expense; and

iv.loss on extinguishment of debt.

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Investment Income

Three months ended June 30, 2023 compared to three months ended June 30, 2022: Investment income increased $0.9 million, from $(0.7) million for the three months ended June 30, 2022 to $0.2 million for the three months ended June 30, 2023, reflecting an increase in returns generated by seed capital investments due to market appreciation.

Six months ended June 30, 2023 compared to six months ended June 30, 2022: Investment income increased $1.3 million, from $(0.8) million for the six months ended June 30, 2022 to $0.5 million for the six months ended June 30, 2023, reflecting an increase in returns generated by seed capital investments due to market appreciation.

Interest Income

Three months ended June 30, 2023 compared to three months ended June 30, 2022: Interest income increased $1.4 million from $0.1 million for the three months ended June 30, 2022 compared to $1.5 million for the three months ended June 30, 2023. The increase was due to higher average cash balances and increases in short-term investment returns in the three months ended June 30, 2023.

Six months ended June 30, 2023 compared to six months ended June 30, 2022: Interest income increased $2.5 million, from $0.1 million for the six months ended June 30, 2022 compared to $2.6 million for the six months ended June 30, 2023. The increase was due to higher average cash balances and increases in short-term investment returns in the six months ended June 30, 2023.

Interest Expense

Three months ended June 30, 2023 compared to three months ended June 30, 2022: Interest expense increased $0.6 million, or 12.5%, from $4.8 million for the three months ended June 30, 2022 to $5.4 million for the three months ended June 30, 2023, reflecting an increase in interest rates on the revolving credit facility, slightly offset by a lower balance drawn on the revolving credit facility in 2023.

Six months ended June 30, 2023 compared to six months ended June 30, 2022: Interest expense decreased $(1.0) million, or (8.8)%, from $11.3 million for the six months ended June 30, 2022 to $10.3 million for the six months ended June 30, 2023, primarily due to the $1.3 million of additional interest expense incurred for the six months ended June 30, 2022 related to the amortization of the cash flow hedge associated with the $125 million aggregate principal amount outstanding of our 5.125% Senior Notes due August 1, 2031 that we redeemed in January 2022.

Loss on Extinguishment of Debt

Three months ended June 30, 2023 compared to three months ended June 30, 2022: There was no loss on extinguishment of debt in the three months ended June 30, 2022 or the three months ended June 30, 2023.

Six months ended June 30, 2023 compared to six months ended June 30, 2022: There was $(3.2) million loss on extinguishment of debt in the six months ended June 30, 2022 as a result of the full redemption of the $125 million aggregate principal amount outstanding of our 5.125% Senior Notes due August 1, 2031 that we redeemed in January 2022. There was no loss on extinguishment of debt incurred for the six months ended June 30, 2023.

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U.S. GAAP Income Tax Expense (Benefit)

Our effective tax rate has been impacted by state and local tax obligations, changes in liabilities for uncertain tax positions, tax effects of stock-based compensation, limitations on executive compensation, and the mix of income earned in the United States versus foreign jurisdictions. Our effective tax rate could be impacted in the future by these items as well as further changes in tax laws and regulations in jurisdictions in which we operate.

Three months ended June 30, 2023 compared to three months ended June 30, 2022: Income tax expense decreased $(7.2) million, from $12.7 million for the three months ended June 30, 2022 to $5.5 million for the three months ended June 30, 2023. The decrease in income tax expense primarily relates to a decrease in income before income taxes in the three months ended June 30, 2023.

Six months ended June 30, 2023 compared to six months ended June 30, 2022: Income tax expense decreased $(11.7) million, from $22.3 million for the six months ended June 30, 2022 to $10.6 million for the six months ended June 30, 2023. The decrease in income tax expense primarily relates to a decrease in income before income taxes during the six months ended June 30, 2023.

U.S. GAAP Consolidated Funds

The net income or loss of all consolidated Funds, excluding any income or loss attributable to seed capital or co-investments we make in the Funds, is included in non-controlling interests in our Consolidated Financial Statements and is not included in net income attributable to controlling interests or in management fees.

Three months ended June 30, 2023 compared to three months ended June 30, 2022: There were no consolidated Funds for the three months ended June 30, 2022. Consolidated Funds’ revenue was $1.3 million for the three months ended June 30, 2023. Consolidated Funds’ expense was $1.2 million for the three months ended June 30, 2023.

Six months ended June 30, 2023 compared to six months ended June 30, 2022: There were no consolidated Funds for the six months ended June 30, 2022. Consolidated Funds’ revenue was $2.0 million for the six months ended June 30, 2023. Consolidated Funds’ expense was $1.9 million for the six months ended June 30, 2023.

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Key U.S. GAAP Operating Metrics

The following table shows our key U.S. GAAP operating metrics for the three and six months ended June 30, 2023 and 2022.


	Three Months Ended June 30,						Six Months Ended June 30,
($ in millions)	2023			2022			2023			2022
Numerator: Operating income	$	20.4		$	46.7		$	40.2		$	89.9
Denominator: Total revenue	$	96.3		$	95.5		$	188.1		$	207.7
U.S. GAAP operating margin(1)	21.2		%	48.9		%	21.4		%	43.3		%

Numerator: Total operating expenses(2)	$	74.7		$	48.8		$	146.0		$	117.8
Denominator: Management fee revenue	$	92.8		$	93.5		$	183.4		$	195.7
U.S. GAAP operating expense / management fee revenue(3)	80.5		%	52.2		%	79.6		%	60.2		%

Numerator: Variable compensation	$	22.7		$	22.7		$	45.9		$	50.6
Denominator: Operating income before variable compensation and Affiliate key employee distributions(2)(4)(5)	$	44.2		$	69.9		$	88.4		$	142.9
U.S. GAAP variable compensation ratio(3)	51.4		%	32.5		%	51.9		%	35.4		%

Numerator: Affiliate key employee distributions	$	1.2		$	0.5		$	2.4		$	2.4
Denominator: Operating income before Affiliate key employee distributions(2)(4)(5)	$	21.5		$	47.2		$	42.5		$	92.3
U.S. GAAP Affiliate key employee distributions ratio(3)	5.6		%	1.1		%	5.6		%	2.6		%

(1)Excluding the effect of Funds’ consolidation in the applicable periods, the U.S. GAAP operating margin is 21.4% for the three months ended June 30, 2023, 48.9% for the three months ended June 30, 2022, 21.5% for the six months ended June 30, 2023, and 43.3% for the six months ended June 30, 2022.

(2)Excludes consolidated Funds’ expense of $1.2 million and $1.9 million for the three and six months ended June 30, 2023, respectively. We did not consolidate results from operations of any Funds in the three and six months ended June 30, 2022.

(3)Excludes the effect of Funds consolidation for the three and six months ended June 30, 2023. We did not consolidate results from operations of any Funds in the three and six months ended June 30, 2022.

(4)Excludes consolidated Funds’ revenue of $1.3 million and $2.0 million for the three and six months ended June 30, 2023, respectively. We did not consolidate results from operations of any Funds in the three and six months ended June 30, 2022.

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(5)The following table identifies the components of operating income before variable compensation and Affiliate key employee distributions, as well as operating income before Affiliate key employee distributions:


	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022
Operating income	$	20.4	$	46.7	$	40.2	$	89.9
Affiliate key employee distributions	1.2		0.5		2.4		2.4
Operating (income) loss of consolidated Funds	(0.1)		—		(0.1)		—
Operating income before Affiliate key employee distributions	21.5		47.2		42.5		92.3
Variable compensation	22.7		22.7		45.9		50.6
Operating income before variable compensation and Affiliate key employee distributions	$	44.2	$	69.9	$	88.4	$	142.9

Non-GAAP Supplemental Performance Measure — Economic Net Income and Segment Analysis

As supplemental information, we provide a non-GAAP performance measure that we refer to as economic net income, or ENI, which represents our management’s view of the underlying economic earnings generated by us. We define economic net income as ENI revenue less (i) ENI operating expenses, (ii) variable compensation, (iii) key employee distributions, (iv) net interest and (v) taxes, each as further discussed in this section. ENI adjustments to U.S. GAAP include both reclassifications of U.S. GAAP revenue and expense items, as well as adjustments to U.S. GAAP results, primarily to exclude non-cash, non-economic expenses, or to reflect cash benefits not recognized under U.S. GAAP.

ENI is an important measure to investors because it is used by us to make resource allocation decisions, determine appropriate levels of investment or dividend payout, manage balance sheet leverage, determine Affiliate variable compensation and equity distributions, and incentivize management. It is also an important measure because it assists management in evaluating our operating performance and is presented in a way that most closely reflects the key elements of our profit share operating model with our Affiliate. For a further discussion of how we use ENI and why ENI is useful to investors, see “—Overview—How We Measure Performance.”

To calculate economic net income, we re-categorize certain line items on our Condensed Consolidated Statements of Operations to reflect the following:

•We exclude the effect of Funds consolidation by removing the portion of Fund revenues, expenses and investment return which were not attributable to our stockholders.

•We include within management fee revenue any fees paid to Affiliate by consolidated Funds, which are viewed as investment income under U.S. GAAP.

•We include our share of earnings from our equity-accounted Affiliate within other income in ENI revenue, rather than investment income.

•We treat sales-based compensation as a general and administrative expense, rather than part of fixed compensation and benefits.

•We identify separately from operating expenses variable compensation and Affiliate key employee distributions, which represent Affiliate earnings shared with Affiliate key employees.

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We also make the following adjustments to U.S. GAAP results to more closely reflect our economic results:

i.We exclude non-cash expenses representing changes in the value of Affiliate equity and profit interests held by Affiliate key employees. These ownership interests may in certain circumstances be repurchased by BSUS at a value based on a pre-determined fixed multiple of trailing earnings and as such this value is carried on our balance sheet as a liability. Non-cash movements in the value of this liability are treated as compensation expense under U.S. GAAP. However, any equity or profit interests repurchased by BSUS can be used to fund a portion of future variable compensation awards, resulting in savings in cash variable compensation that offset the negative cash effect of repurchasing the equity. Our Affiliate equity and profit interest plans have been designed to ensure BSUS is never required to repurchase more equity than we can reasonably recycle through variable compensation awards in any given twelve-month period.

ii.We exclude non-cash amortization or impairment expenses related to acquired goodwill and other intangibles as these are non-cash charges that do not result in an outflow of tangible economic benefits from the business.

iii.We exclude capital transaction costs, including the costs of raising debt or equity, gains or losses realized as a result of redeeming debt or equity and direct incremental costs associated with acquisitions of businesses or assets.

iv.We exclude seed capital and co-investment gains, losses, and related financing costs. The net returns on these investments are considered and presented separately from ENI because ENI is primarily a measure of our earnings from managing client assets, which therefore differs from earnings generated by our investments in Affiliate products, which can be variable from period to period.

v.We include cash tax benefits associated with deductions allowed for acquired intangibles and goodwill that may not be recognized or have timing differences compared to U.S. GAAP.

vi.We exclude the results of discontinued operations attributable to controlling interests since they are not part of our ongoing business and restructuring costs incurred in continuing operations.

vii.We exclude deferred tax resulting from changes in tax law and expiration of statutes, adjustments for uncertain tax positions, deferred tax attributable to intangible assets and other unusual items not related to current operating results to reflect ENI tax normalization.

We also adjust our income tax expense to reflect any tax impact of our ENI adjustments.

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Reconciliation of U.S. GAAP Net Income to Economic Net Income for the Three and Six Months Ended June 30, 2023 and 2022

The following table reconciles net income attributable to controlling interests to economic net income for the three and six months ended June 30, 2023 and 2022:


		Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)		2023		2022		2023		2022
U.S. GAAP net income attributable to controlling interests		$	11.4	$	28.6	$	23.4	$	52.4
Adjustments to reflect the economic earnings of the Company:
i.	Non-cash key employee-owned equity and profit interest revaluations	(0.7)		(18.8)		(1.3)		(25.6)
ii.	Amortization of acquired intangible assets	—		—		—		—
iii.	Capital transaction costs	0.1		—		0.2		5.0
iv.	Seed/Co-investment (gains) losses and financings(1)	(0.1)		0.8		(0.9)		1.0
v.	Tax benefit of goodwill and acquired intangibles deductions	0.3		0.4		0.7		0.7
vi.	Discontinued operations attributable to controlling interests and restructuring(2)	0.2		0.3		0.6		0.7
vii.	ENI tax normalization	0.6		1.1		0.7		1.3
Tax effect of above adjustments, as applicable(3)		0.2		4.9		0.4		5.2
Economic net income		$	12.0	$	17.3	$	23.8	$	40.7

(1)The net return on seed/co-investment (gains) losses and financings for the three and six months ended June 30, 2023 and 2022 is shown in the following table:


	Three Months Ended June 30,						Six Months Ended June 30,
($ in millions)	2023			2022			2023			2022
Seed/Co-investment (gains) losses	$	(0.5)		$	0.7		$	(1.6)		$	0.8
Financing costs:
Seed/Co-investment average balance	19.4			4.2			19.2			4.3
Blended interest rate*	6.5		%	6.5		%	6.5		%	6.4		%
Financing costs	0.4			0.1			0.7			0.2
Net seed/co-investment (gains) losses and financing	$	(0.1)		$	0.8		$	(0.9)		$	1.0

* The blended rate is based on the weighted average rate of the long-term debt.

(2)The three months ended June 30, 2023 includes costs associated with the transfer of an insurance policy from our former parent of $0.2 million. The three months ended June 30, 2022 includes costs associated with the transfer of an insurance policy from our former parent of $0.3 million. The six months ended June 30, 2023 includes costs associated with the transfer of an insurance policy from our former parent of $0.6 million. The six months ended June 30, 2022 includes restructuring costs at the Affiliate of $0.1 million and costs associated with the transfer of an insurance policy from our former parent of $0.6 million.

(3)Reflects the sum of lines (i), (ii), (iii), (iv) and the restructuring component of line (vi) multiplied by the 27.3% U.S. statutory tax rate (including state tax).

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Limitations of Economic Net Income

Economic net income is the key measure our management uses to evaluate the financial performance of, and make operational decisions for, our business. Economic net income is not audited and is not a substitute for net income or other performance measures that are derived in accordance with U.S. GAAP. Furthermore, our calculation of economic net income may differ from similarly titled measures provided by other companies.

Because the calculation of economic net income excludes certain ongoing expenses, including amortization expense and certain compensation costs, it has certain material limitations and should not be viewed in isolation or as a substitute for U.S. GAAP measures of earnings.

ENI Revenues

The following table reconciles U.S. GAAP revenue to ENI revenue for the three and six months ended June 30, 2023 and 2022:


	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022
U.S. GAAP revenue	$	96.3	$	95.5	$	188.1	$	207.7

Exclude revenue from consolidated Funds attributable to non-controlling interests	(1.3)		—		(2.0)		—

ENI revenue	$	95.0	$	95.5	$	186.1	$	207.7

The following table identifies the components of ENI revenue:


	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022
Management fees(1)	$	92.8	$	93.5	$	183.4	$	195.7
Performance fees(2)	2.2		2.0		2.7		12.0

ENI revenue	$	95.0	$	95.5	$	186.1	$	207.7

(1)ENI management fees correspond to U.S. GAAP management fees.

(2)ENI performance fees correspond to U.S. GAAP performance fees.

ENI Operating Expenses

The largest difference between U.S. GAAP operating expense and ENI operating expense relates to compensation. As shown in the following reconciliation, we exclude the impact of key employee equity revaluations. Variable compensation and Affiliate key employee distributions are also segregated out of U.S. GAAP operating expense in order to align with the manner in which these items are contractually calculated at the Affiliate level.

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The following table reconciles U.S. GAAP operating expense to ENI operating expense for the three and six months ended June 30, 2023 and 2022.


	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022
U.S. GAAP operating expense	$	75.9	$	48.8	$	147.9	$	117.8
Less: items excluded from economic net income

Non-cash key employee equity and profit interest revaluations	0.7		18.8		1.3		25.6


Restructuring costs(1)	(0.3)		(0.3)		(0.7)		(0.7)

Funds’ operating expense	(1.2)		—		(1.9)		—
Less: items segregated out of U.S. GAAP operating expense
Variable compensation	(22.7)		(22.7)		(45.9)		(50.6)
Affiliate key employee distributions	(1.2)		(0.5)		(2.4)		(2.4)
ENI operating expense	$	51.2	$	44.1	$	98.3	$	89.7

(1)The three months ended June 30, 2023 includes $0.2 million costs associated with the transfer of an insurance policy from our former parent. The three months ended June 30, 2022 includes $0.3 million costs associated with the transfer of an insurance policy from our former parent. The six months ended June 30, 2023 includes $0.6 million of costs associated with the transfer of an insurance policy from our former parent. The six months ended June 30, 2022 includes $0.1 million of restructuring costs at the Affiliate and $0.6 million costs associated with the transfer of an insurance policy from our former parent.

The following table identifies the components of ENI operating expense:


	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022
Fixed compensation & benefits(1)	$	23.7	$	20.5	$	47.1	$	42.4
General and administrative expenses(2)	23.1		18.3		43.0		36.7
Depreciation and amortization	4.4		5.3		8.2		10.6
ENI operating expense	$	51.2	$	44.1	$	98.3	$	89.7

(1)Fixed compensation and benefits include base salaries, payroll taxes and the cost of benefit programs provided. The following table reconciles U.S. GAAP compensation and benefits expense for the three and six months ended June 30, 2023 and 2022 to ENI fixed compensation and benefits expense:


	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022
Total U.S. GAAP compensation and benefits expense	$	48.5	$	27.0	$	97.6	$	73.8

Non-cash key employee equity and profit interest revaluations excluded from ENI	0.7		18.8		1.3		25.6
Sales-based compensation reclassified to ENI general & administrative expenses	(1.6)		(2.1)		(3.5)		(4.0)
Affiliate key employee distributions	(1.2)		(0.5)		(2.4)		(2.4)

Variable compensation	(22.7)		(22.7)		(45.9)		(50.6)

ENI fixed compensation and benefits	$	23.7	$	20.5	$	47.1	$	42.4

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(2)The following table reconciles U.S. GAAP general and administrative expense to ENI general and administrative expense:


	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022
U.S. GAAP general and administrative expense	$	21.8	$	16.5	$	40.2	$	33.4
Sales-based compensation	1.6		2.1		3.5		4.0

Restructuring costs	(0.3)		(0.3)		(0.7)		(0.7)
ENI general and administrative expense	$	23.1	$	18.3	$	43.0	$	36.7

Key Non-GAAP Operating Metrics

The following table shows our key non-GAAP operating metrics for the three and six months ended June 30, 2023 and 2022. We present these metrics because they are the measures our management uses to evaluate the profitability of our business and are useful to investors because they represent the key drivers and measures of economic performance within our business model. Please see the footnotes below for an explanation of each ratio, its usefulness in measuring the economics and operating performance of our business, and a reference to the most closely related U.S. GAAP measure:


	Three Months Ended June 30,						Six Months Ended June 30,
($ in millions)	2023			2022			2023			2022
Numerator: ENI operating earnings(1)	$	21.1		$	28.7		$	41.9		$	67.4
Denominator: ENI revenue	$	95.0		$	95.5		$	186.1		$	207.7
ENI operating margin(2)	22.2		%	30.1		%	22.5		%	32.5		%

Numerator: ENI operating expense	$	51.2		$	44.1		$	98.3		$	89.7
Denominator: ENI management fee revenue(3)	$	92.8		$	93.5		$	183.4		$	195.7
ENI operating expense ratio(4)	55.2		%	47.2		%	53.6		%	45.8		%

Numerator: ENI variable compensation	$	22.7		$	22.7		$	45.9		$	50.6
Denominator: ENI earnings before variable compensation(1)(5)	$	43.8		$	51.4		$	87.8		$	118.0
ENI variable compensation ratio(6)	51.8		%	44.2		%	52.3		%	42.9		%

Numerator: Affiliate key employee distributions	$	1.2		$	0.5		$	2.4		$	2.4
Denominator: ENI operating earnings(1)	$	21.1		$	28.7		$	41.9		$	67.4
ENI Affiliate key employee distributions ratio(7)	5.7		%	1.7		%	5.7		%	3.6		%

(1)ENI operating earnings represents ENI earnings before Affiliate key employee distributions and is calculated as ENI revenue, less ENI operating expense, less ENI variable compensation. It differs from economic net income because it does not include the effects of Affiliate key employee distributions, net interest expense or income tax expense.

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The following table reconciles U.S. GAAP operating income to ENI operating earnings:


	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022
U.S. GAAP operating income	$	20.4	$	46.7	$	40.2	$	89.9

Exclude the impact of:
Affiliate key employee-owned equity and profit interest revaluations	(0.7)		(18.8)		(1.3)		(25.6)


Restructuring costs(a)	0.3		0.3		0.7		0.7

Affiliate key employee distributions	1.2		0.5		2.4		2.4
Variable compensation	22.7		22.7		45.9		50.6
Funds’ operating (income) loss	(0.1)		—		(0.1)		—
ENI earnings before variable compensation	43.8		51.4		87.8		118.0
Less: ENI variable compensation	(22.7)		(22.7)		(45.9)		(50.6)
ENI operating earnings	21.1		28.7		41.9		67.4
Less: ENI Affiliate key employee distributions	(1.2)		(0.5)		(2.4)		(2.4)
ENI earnings after Affiliate key employee distributions	$	19.9	$	28.2	$	39.5	$	65.0

(a)The three months ended June 30, 2023 includes $0.2 million costs associated with the transfer of an insurance policy from our former parent. The three months ended June 30, 2022 includes $0.3 million of costs associated with the transfer of an insurance policy from our former parent. The six months ended June 30, 2023 includes $0.6 million of costs associated with the transfer of an insurance policy from our former parent. The six months ended June 30, 2022 includes $0.1 million of restructuring costs at our Affiliate and $0.6 million of costs associated with the transfer of an insurance policy from our former parent.

(2)The ENI operating margin, which is calculated before Affiliate key employee distributions, is used by management and is useful to investors to evaluate the overall operating margin of the business. The ENI operating margin is most comparable to our U.S. GAAP operating margin. Our U.S. GAAP operating margin, excluding the effect of consolidated Funds, is 21.4% for the three months ended June 30, 2023, 48.9% for the three months ended June 30, 2022, 21.5% for the six months ended June 30, 2023, and 43.3% for the six months ended June 30, 2022.

The ENI operating margin is important because it gives investors an understanding of the profitability of the total business relative to revenue, irrespective of the ownership position which we have in our Affiliate. Management and investors use this ratio when comparing our profitability relative to our peer group and evaluating our ability to manage the cost structure and profitability of our business under different operating environments.

(3)ENI management fee revenue corresponds to U.S. GAAP management fee revenue.

(4)The ENI operating expense ratio is used by management and is useful to investors to evaluate the level of operating expense as measured against our recurring management fee revenue. We have provided this ratio since many operating expenses, including fixed compensation and benefits and general and administrative expense, are generally linked to the overall size of the business. We track this ratio as a key measure of scale economies because in our profit-sharing economic model, scale benefits both the Affiliate employees and our stockholders. The ENI operating expense ratio is most comparable to the U.S. GAAP operating expense / management fee revenue ratio.

(5)ENI earnings before variable compensation is calculated as ENI revenue, less ENI operating expense.

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(6)The ENI variable compensation ratio is used by management and is useful to investors to evaluate consolidated variable compensation as measured against our ENI earnings before variable compensation. Variable compensation is contractually set and calculated individually at our Affiliate, plus Center bonuses. Variable compensation is usually awarded based on a contractual percentage of our Affiliate’s ENI earnings before variable compensation and may be paid in the form of cash or non-cash Affiliate equity or profit interests. Center variable compensation includes cash and our equity. Non-cash variable compensation awards typically vest over several years and are recognized as compensation expense over that service period. The variable compensation ratio at our Affiliate is calculated as variable compensation divided by ENI earnings before variable compensation. The ENI variable compensation ratio is most comparable to the U.S. GAAP variable compensation ratio.

(7)The ENI Affiliate key employee distribution ratio is used by management and is useful to investors to evaluate Affiliate key employee distributions as measured against our ENI operating earnings. Affiliate key employee distributions represent the share of Affiliate profits after variable compensation that is attributable to Affiliate key employee equity and profit interests holders, according to their ownership interests. The Affiliate key employee distribution ratio at our Affiliate is calculated as Affiliate key employee distributions divided by ENI operating earnings at that Affiliate. Within our Affiliate, we have a tiered equity structure, where BSUS and other classes of employee equity holders are entitled to an initial proportionate preference over profits after variable compensation, structured such that before a preference threshold is reached, there would be no required key employee distributions to the tiered equity holders, whereas for profits above the threshold the key employee distribution amount to the tiered equity holders would be calculated based on the tiered key employee ownership percentages. The ENI Affiliate key employee distributions ratio is most comparable to the U.S. GAAP Affiliate key employee distributions ratio.

Tax on Economic Net Income

The following table reconciles the United States statutory tax to tax on economic net income:


	Three Months Ended June 30,						Six Months Ended June 30,
($ in millions)	2023			2022			2023			2022
Pre-tax economic net income(1)	$	16.4		$	23.6		$	32.6		$	55.8



Taxes at the U.S. federal and state statutory rates(2)	(4.5)			(6.4)			(8.9)			(15.2)
Other reconciling tax adjustments	0.1			0.1			0.1			0.1
Tax on economic net income	(4.4)			(6.3)			(8.8)			(15.1)

Economic net income	$	12.0		$	17.3		$	23.8		$	40.7
Economic net income effective tax rate(3)	26.8		%	26.7		%	27.0		%	27.1		%

(1)Includes interest income and third-party ENI interest expense, as shown in the following table:


	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022
U.S. GAAP interest income	$	1.5	$	0.1	$	2.6	$	0.1
U.S. GAAP interest expense	(5.4)		(4.8)		(10.3)		(11.3)
U.S. GAAP net interest expense	(3.9)		(4.7)		(7.7)		(11.2)
Other ENI interest expense exclusions(a)	0.4		0.1		0.8		2.0
ENI net interest expense	(3.5)		(4.6)		(6.9)		(9.2)
ENI earnings after Affiliate key employee distributions(b)	19.9		28.2		39.5		65.0
Pre-tax economic net income	$	16.4	$	23.6	$	32.6	$	55.8

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(a)Other ENI interest expense exclusions represent cost of financing on seed capital and co-investments and amortization of debt issuance costs.

(b)ENI earnings after Affiliate key employee distributions is calculated as ENI operating income (ENI revenue, less ENI operating expense, less ENI variable compensation), less Affiliate key employee distributions. Refer to “—Key Non-GAAP Operating Metrics” for a reconciliation from U.S. GAAP operating income (loss) to ENI earnings after Affiliate key employee distributions.

(2)Taxed at U.S. Federal and State statutory rate of 27.3%.

(3)The economic net income effective tax rate is calculated by dividing the tax on economic net income by pre-tax economic net income.

Investments

The value of our seed capital investments was $25.0 million as of June 30, 2023 and $22.9 million as of December 31, 2022, including direct investments in consolidated Funds. Total seed capital investments represents our seed capital invested within our Affiliate’s investment products. The following table reconciles the investments balance per our Condensed Consolidated Balance Sheets to the total value of our seed capital investments as of each of the dates indicated:


($ in millions)	June 30, 2023		December 31, 2022
Investments per Consolidated Balance Sheets	$	47.4	$	48.4
Seed capital investment in consolidated Funds	20.6		14.5
Investments related to long-term incentive compensation plans	(43.0)		(40.0)





Total seed capital investments	$	25.0	$	22.9

Segment Analysis

We operate our business through the following reportable segment:

The corporate head office is included within the Other category. The corporate head office expenses are not allocated to the Company’s business segment but the CODM does consider the cost structure of the corporate head office when evaluating the financial performance of our segment.

The primary measure used by the CODM in measuring performance and allocating resources to the segments is ENI. We define economic net income for the segments as ENI revenue less (i) ENI operating expenses, (ii) variable compensation and (iii) key employee distributions. The ENI adjustments to U.S. GAAP include both reclassifications of U.S. GAAP revenue and expense items, as well as adjustments to U.S. GAAP results, primarily to exclude non-cash, non-economic expenses, or to reflect cash benefits not recognized under U.S. GAAP.

ENI revenue includes management fees, performance fees and other revenue under U.S. GAAP, adjusted to include management fees paid to our Affiliate by consolidated Funds and our share of earnings from our equity-accounted Affiliate.

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ENI operating expenses include compensation and benefits, general and administrative expense, and depreciation and amortization under U.S. GAAP, adjusted to exclude non-cash expenses representing changes in the value of Affiliate equity and profit interests held by Affiliate key employees and impairment of goodwill. Additionally, variable compensation and Affiliate key employee distributions are segregated from ENI operating expenses.

ENI segment results are also adjusted to exclude the portion of consolidated Funds’ revenues, expenses and investment return recorded under U.S. GAAP.

Refer to the reconciliations of U.S. GAAP revenue to ENI revenue, U.S. GAAP Operating expense to ENI Operating expense, variable compensation and Affiliate key employee distributions disclosed previously within this section.

Segment ENI Revenue

The following table identifies the components of segment ENI revenue for the three months ended June 30, 2023 and 2022:


	Three Months Ended June 30,
($ in millions)	2023		2022
	Quant & Solutions			Total		Quant & Solutions		Total
Management fees	$	92.8		$	92.8	$	93.5	$	93.5
Performance fees	2.2			2.2		2.0		2.0
Other income, including equity-accounted affiliate	—			—		—		—
ENI revenue	$	95.0		$	95.0	$	95.5	$	95.5

The following table identifies the components of segment ENI revenue for the six months ended June 30, 2023 and 2022:


	Six Months Ended June 30,
($ in millions)	2023		2022
	Quant & Solutions			Total		Quant & Solutions		Total
Management fees	$	183.4		$	183.4	$	195.7	$	195.7
Performance fees	2.7			2.7		12.0		12.0

ENI revenue	$	186.1		$	186.1	$	207.7	$	207.7

Quant & Solutions Segment ENI Revenue

Three months ended June 30, 2023 compared to three months ended June 30, 2022: Quant & Solutions ENI revenue decreased $(0.5) million, or (0.5)%, from $95.5 million for the three months ended June 30, 2022 to $95.0 million for the three months ended June 30, 2023. The decrease was mainly attributable to (0.7)% lower management fees driven by lower average AUM resulting from equity market decline in 2022.

Six months ended June 30, 2023 compared to six months ended June 30, 2022: Quant & Solutions ENI revenue decreased $(21.6) million, or (10.4)%, from $207.7 million for the six months ended June 30, 2022 to $186.1 million for the six months ended June 30, 2023. The decrease was attributable to (6.3)% lower management fees, driven by lower average AUM and lower performance fees that are variable and are contractually triggered based on investment performance results over agreed upon time periods.

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Segment ENI Expense

The following table identifies the components of segment ENI expense for the three months ended June 30, 2023 and 2022:


	Three Months Ended June 30,
($ in millions)	2023		2022
	Quant & Solutions		Other		Total		Quant & Solutions		Other		Total
Fixed compensation & benefits	$	22.0	$	1.7	$	23.7	$	18.6	$	1.9	$	20.5
General and administrative expense	20.9		2.2		23.1		15.9		2.4		18.3
Depreciation and amortization	4.4		—		4.4		5.2		0.1		5.3
Total ENI Operating Expenses	$	47.3	$	3.9	$	51.2	$	39.7	$	4.4	$	44.1
Variable compensation	22.0		0.7		22.7		21.7		1.0		22.7
Affiliate key employee distributions	1.2		—		1.2		0.5		—		0.5
Total Expenses	$	70.5	$	4.6	$	75.1	$	61.9	$	5.4	$	67.3

The following table identifies the components of segment ENI expense for the six months ended June 30, 2023 and 2022:


	Six Months Ended June 30,
($ in millions)	2023		2022
	Quant & Solutions		Other		Total		Quant & Solutions		Other		Total
Fixed compensation & benefits	$	43.6	$	3.5	$	47.1	$	38.4	$	4.0	$	42.4
General and administrative expense	39.1		3.9		43.0		32.0		4.7		36.7
Depreciation and amortization	8.2		—		8.2		10.4		0.2		10.6
Total ENI operating expenses	$	90.9	$	7.4	$	98.3	$	80.8	$	8.9	$	89.7
Variable compensation	44.5		1.4		45.9		48.0		2.6		50.6
Affiliate key employee distributions	2.4		—		2.4		2.4		—		2.4
Total expenses	$	137.8	$	8.8	$	146.6	$	131.2	$	11.5	$	142.7

Quant & Solutions Segment ENI Expense

Three months ended June 30, 2023 compared to three months ended June 30, 2022: Quant & Solutions ENI operating expense increased $7.6 million, or 19.1%, from $39.7 million for the three months ended June 30, 2022 to $47.3 million for the three months ended June 30, 2023. The increase was driven by 31.4% higher ENI general and administrative expense resulting from increased consultant and portfolio costs driven by inflation, including the impact of changes in foreign currency. Quant & Solutions ENI fixed compensation and benefits expense increased 18.3% due to higher salaries and new hires, and the investment in Acadian’s growth initiatives. Quant & Solutions ENI variable compensation expense is based on contractual percentage of earnings before variable compensation, and also includes a formulaic split of performance fee revenue that gets deferred and recognized as variable compensation expense over a three-year vesting period. Quant & Solutions ENI variable compensation expense increased 1.4% as a result of the inclusion of deferred compensation expense earned on prior year performance fee revenues. Affiliate key employee distributions attributable to Quant & Solutions increased 140.0%, impacted by the leveraged nature of the distribution share.

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Six months ended June 30, 2023 compared to six months ended June 30, 2022: Quant & Solutions ENI operating expense increased $10.1 million, or 12.5%, from $80.8 million for the six months ended June 30, 2022 to $90.9 million for the six months ended June 30, 2023. The increase was driven by 22.2% higher ENI general and administrative expense primarily due to higher systems, consultant and portfolio costs driven by inflation, including the impact of changes in foreign currency. ENI fixed compensation and benefits expense increased 13.5%, driven by cost of living increases and the cost of new hires supporting Acadian’s growth initiatives. Quant & Solutions ENI variable compensation expense is based on contractual percentage of earnings before variable compensation, and also includes a formulaic split of performance fee revenue that gets deferred and recognized as variable compensation expense over a three-year vesting period. Quant & Solutions ENI variable compensation expense decreased (7.3)% as a result of lower earnings before variable compensation, partially offset by the inclusion of deferred compensation expense earned on prior year performance fee revenues. Affiliate key employee distributions attributable to Quant & Solutions remained unchanged at $2.4 million.

Other ENI Expense

Three months ended June 30, 2023 compared to three months ended June 30, 2022: Other ENI operating expense decreased $(0.5) million, or (11.4)%, from $4.4 million for the three months ended June 30, 2022 to $3.9 million for the three months ended June 30, 2023. The decrease was driven by (10.5)% lower fixed compensation and benefit expense, and (8.3)% lower general and administrative expense resulting from cost-saving initiatives. Other ENI variable compensation expense decreased (30.0)% due to lower non-cash equity compensation amortization at the corporate head office.

Six months ended June 30, 2023 compared to six months ended June 30, 2022: Other ENI operating expense decreased $(1.5) million, or (16.9)%, from $8.9 million for the six months ended June 30, 2022 to $7.4 million for the six months ended June 30, 2023. The decrease was driven by (12.5)% lower fixed compensation and benefit expense due to lower payroll taxes and lower headcount at the corporate head office and (17.0)% lower general and administrative expense resulting from cost-saving initiatives. Other ENI variable compensation expense decreased (46.2)% due to lower non-cash equity compensation amortization at the corporate head office.

Capital Resources and Liquidity

Cash Flows

The following table summarizes certain key financial data relating to cash flows. All amounts presented exclude consolidated Funds:


	Six Months Ended June 30,
($ in millions)	2023		2022
Cash provided by (used in)(1)
Operating activities	$	7.3	$	29.9
Investing activities	(10.7)		(6.4)
Financing activities	35.7		(183.4)

(1)Excludes consolidated Funds.

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Comparison for the six months ended June 30, 2023 and 2022

Net cash from operating activities decreased $(22.6) million, from net cash provided of $29.9 million for the six months ended June 30, 2022 to net cash provided of $7.3 million for the six months ended June 30, 2023, driven by changes in net income offset by changes in operating assets and liabilities period-over-period. In the six months ended June 30, 2023, net cash from investing activities decreased $(4.3) million, from $(6.4) million used in the six months ended June 30, 2022 to $(10.7) million used in the six months ended June 30, 2023, driven by higher net purchases of investment securities in the six months ended June 30, 2023. Net cash from financing activities increased $219.1 million, from $(183.4) million used in the six months ended June 30, 2022 to $35.7 million provided in the six months ended June 30, 2023, primarily due to the repayment of third party borrowings and higher share repurchases in the six months ended June 30, 2022.

Supplemental Liquidity Measure — Adjusted EBITDA

As supplemental information, we provide information regarding Adjusted EBITDA, which we define as economic net income before net interest, income taxes, depreciation, and amortization. Adjusted EBITDA is a non-GAAP liquidity measure that we provide in addition to, but not as a substitute for, cash flows from operating activities. It should be noted that our calculation of Adjusted EBITDA may not be consistent with Adjusted EBITDA as calculated by other companies. We believe Adjusted EBITDA is a useful liquidity metric because it indicates our ability to make further investments in our business, service debt and meet working capital requirements.

The following table reconciles our U.S. GAAP net income attributable to controlling interests to EBITDA to Adjusted EBITDA to economic net income for the three and six months ended June 30, 2023 and 2022.


	Three Months Ended June 30,				Six Months Ended June 30,
($ in millions)	2023		2022		2023		2022
Net income attributable to controlling interests	$	11.4	$	28.6	$	23.4	$	52.4
Net interest expense to third parties	3.9		4.7		7.7		11.2
Income tax expense	5.5		12.7		10.6		22.3
Depreciation and amortization (including intangible assets)	4.4		5.2		8.2		10.6
EBITDA	$	25.2	$	51.2	$	49.9	$	96.5
Non-cash compensation costs, including revaluation of Affiliate key employee-owned equity and profit interests	(0.2)		(18.3)		(0.6)		(24.2)



(Gain) loss on seed and co-investments	(0.5)		0.7		(1.6)		0.8
Restructuring expenses(1)	0.2		0.4		0.6		0.7
Capital transaction costs	—		—		—		3.2

Adjusted EBITDA	$	24.7	$	34.0	$	48.3	$	77.0
ENI net interest expense to third parties	(3.5)		(4.6)		(6.9)		(9.2)
Depreciation and amortization(2)	(4.8)		(5.8)		(8.8)		(12.0)
Tax on economic net income	(4.4)		(6.3)		(8.8)		(15.1)
Economic net income	$	12.0	$	17.3	$	23.8	$	40.7

(1)The three months ended June 30, 2023 includes $0.2 million of costs associated with the transfer of an insurance policy from our former parent. The three months ended June 30, 2022 includes $0.3 million of costs associated with the transfer of an insurance policy from our former parent. The six months ended June 30, 2023 includes $0.6 million of costs associated with the transfer of an insurance policy from our former parent. The six months ended June 30, 2022 includes $0.1 million of restructuring costs at our Affiliate and costs associated with the transfer of an insurance policy from our former parent of $0.6 million.

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(2)Includes non-cash equity-based award amortization expense.

Limitations of Adjusted EBITDA

As a non-GAAP, unaudited liquidity measure and derivation of EBITDA, Adjusted EBITDA has certain material limitations. It does not include cash costs associated with capital transactions and excludes certain U.S. GAAP expenses that fall outside the definition of EBITDA. Each of these categories of expense represents costs to us of doing business, and therefore any measure that excludes any or all of these categories of expense has material limitations.

Future Capital Needs

We believe that our available cash and cash equivalents to be generated from operations, supplemented by short-term and long-term financing, as necessary, will be sufficient to fund current operations and capital requirements for at least the next twelve months, as well as our day-to-day operations and future investment requirements. Our ability to secure short-term and long-term financing in the future will depend on several factors, including our future profitability, our relative levels of debt and equity and the overall condition of the credit markets.

Borrowings and Long-Term Debt

The following table summarizes our financing arrangements as of the dates indicated:


($ in millions)	June 30, 2023		December 31, 2022		Interest rate	Maturity
Revolving credit facility:
$125 million revolving credit facility	$	38.0	$	—	Variable rate	March 7, 2025
Total revolving credit facility	$	38.0	$	—
Third party borrowings:
4.80% Senior Notes Due 2026	$	273.7	$	273.5	4.80%	July 27, 2026
5.125% Senior Notes Due 2031(1)	—		—		5.125%	August 1, 2031
Total third party borrowings	$	273.7	$	273.5

(1)On January 18, 2022, the Company completed the full redemption of the $125 million aggregate principal amount outstanding of its 5.125% Senior Notes due August 1, 2031. As a result of this transaction, the Company recorded $3.2 million of loss on extinguishment of debt within the Condensed Consolidated Statements of Operations for the six months ended June 30, 2022.

Revolving Credit Facility

On March 7, 2022, Acadian, Royal Bank of Canada, BMO Harris Bank, N.A., Goldman Sachs Bank USA, Morgan Stanley Bank, N.A., Bank of America N.A., the Bank of New York Mellon and Citibank, N.A., as an issuing bank and administrative agent (collectively, the “Lenders”), entered into a new revolving credit facility agreement (“Acadian Credit Agreement”), which replaced our revolving credit facility dated as of August 20, 2019 (as amended by an amendment dated September 3, 2020 and an assignment and assumption and amendment agreement dated February 23, 2021, the “Original Credit Agreement”). The maturity date of the Original Credit Agreement was August 22, 2022, and the maturity date of the Acadian Credit Agreement is March 7, 2025.

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Borrowings under the Acadian Credit Agreement bear interest, at Acadian’s option, at the per annum rate equal to either (a) the greatest of (i) the prime rate, (ii) the federal funds effective rate plus 0.5% and (iii) the secured overnight financing rate for a one month period plus a credit spread adjustment of 0.10% (“Adjusted Term SOFR”) plus 1%, plus, in each case an additional amount ranging from 0.5% to 1.0%, with such additional amount based on Acadian’s Leverage Ratio (as defined below) or (b) Adjusted Term SOFR plus an additional amount ranging from 1.5% to 2.0%, with such additional amount based on Acadian’s Leverage Ratio. In addition, Acadian is charged a commitment fee based on the average daily unused portion of the revolving credit facility under the Acadian Credit Agreement at a per annum rate ranging from 0.25% to 0.375%, with such amount based on Acadian’s Leverage Ratio.

Under the Acadian Credit Agreement, the ratio of Acadian’s third-party borrowings to Acadian’s trailing twelve months Adjusted EBITDA, as defined by the Acadian Credit Agreement (the “Leverage Ratio”), cannot exceed 2.5x and the ratio of Acadian’s trailing twelve months Adjusted EBITDA to Acadian’s interest expense (the “Interest Coverage Ratio”) must be not less than 4.0x. At June 30, 2023, Acadian’s Leverage Ratio was 0.3x and Acadian’s Interest Coverage Ratio was 53.0x.

Other Compensation Liabilities

Other compensation liabilities principally consist of cash-settled Affiliate equity and profit interests liabilities held by certain Affiliate key employees, and voluntary deferred compensation plans. The following table summarizes our other long-term liabilities as of each of the dates indicated:


	June 30, 2023		December 31, 2022
($ in millions)
Share-based payments liability	$	19.4	$	19.4
Affiliate profit interests liability	—		—
Employee equity	19.4		19.4
Voluntary deferral plan liability	42.8		39.9
Total	$	62.2	$	59.3

Share-based payments liability represents the value of Affiliate key employee-owned equity that may under certain circumstances be repurchased by us that is considered an equity award under U.S. GAAP based on the terms and conditions attached to these interests. Affiliate profit interests liability represents the value of Affiliate key employee-owned equity that may under certain circumstances be repurchased by us that is not considered an equity award under U.S. GAAP, but rather a form of compensation arrangement, based on the terms and conditions attached to these interests. Our obligation in any given period in respect of funding these potential repurchases of Affiliate equity is limited to only that portion that may be put to us by Affiliate key employees, which is typically capped annually under the terms of these arrangements such that we are not required to repurchase more than we can reasonably recycle by re-granting the interests in lieu of cash variable compensation owed to Affiliate key employees.

Certain of our and our Affiliate’s key employees are eligible to participate in our voluntary deferral plan, or VDP, which provides our senior personnel the opportunity to voluntarily defer a portion of their compensation. There is a voluntary deferral plan investment balance included in investments on the Condensed Consolidated Balance Sheets that corresponds to this deferral liability.

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Additionally, we have recorded accrued incentive compensation of $45.0 million and $92.5 million on the Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022, respectively. Included within the accrued incentive compensation balance is the vested portion of Acadian’s deferred compensation pool. Acadian’s deferred compensation pool is based on a contractual percentage of Acadian performance fee revenues and post-bonus profits, and is subject to a three-year vesting period. Compensation expense is recognized over the requisite service period. Unamortized compensation expense related to the unvested portion of the deferred compensation pool of $11.6 million, $11.3 million and $0.6 million is expected to be recognized in the years ending December 31, 2023, 2024 and 2025, respectively.

Critical Accounting Policies and Estimates

There have been no significant changes to the critical accounting policies and estimates disclosed in our most recent Form 10-K for the year ended December 31, 2022. Critical accounting policies and estimates are those that require management’s most difficult, subjective or complex judgments and would therefore be deemed the most critical to an understanding of our results of operations and financial condition.

Recent Accounting Developments

See discussion of Recent Accounting Developments in Note 2 of the accompanying Condensed Consolidated Financial Statements.

Forward Looking Statements

This Quarterly Report on Form 10-Q includes forward-looking statements, which may include, from time to time, anticipated revenues, margins, cash flows or earnings, anticipated future performance of our business, our expected future net cash flows, our anticipated expense levels, capital management, financial condition, results of operations and cash flows, and/or expectations regarding market conditions. The words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “can be,” “may be,” “aim to,” “may affect,” “may depend,” “intends,” “expects,” “believes,” “estimate,” “plan,” “project,” and other similar expressions are intended to identify such forward-looking statements. Such statements are subject to various known and unknown risks and uncertainties and we caution readers that any forward-looking information provided by or on behalf of us is not a guarantee of future performance.

Actual results may differ materially from those in forward-looking information as a result of various factors, some of which are beyond our control, including but not limited to those discussed above and elsewhere in this Quarterly Report on Form 10-Q, in our most recent Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 28, 2023, and subsequent SEC filings. Due to such risks and uncertainties and other factors, we caution each person receiving such forward-looking information not to place undue reliance on such statements. Further, such forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and we undertake no obligations to update any forward looking statement to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect the occurrence of unanticipated events.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Market Risk

Our exposure to market risk is directly related to our role as an asset manager. Substantially all of our investment management revenues are derived from our agreements with our clients. Under these agreements, the revenues we receive are based on the value of our assets under management or the investment performance on client accounts for which we earn performance fees. Accordingly, our revenues and net income may decline as a result of our assets under management decreasing due to depreciation of our investment portfolios. In addition, such depreciation could cause our clients to withdraw their funds in favor of investments offering higher returns or lower risk, which would cause our revenues and net income to decline further.

Our model for assessing the impact of market risk on our results uses June 30, 2023 ending AUM and management fee rates as the basis for management fee revenue calculations. With respect to performance fee revenue, we assume that relative investment performance is the same as in the past four quarters ended June 30, 2023. Therefore, market-driven changes in performance fees, which are typically based on relative performance versus market indices, reflect changes in the underlying AUM used in the calculation rather than differences in relative performance as a result of a changed market environment. The impact that market changes have on performance fee eligible accounts varies due to high-water marks and other measurement hurdles which are not factored in this analysis. Changes in performance fees revenues could be significant in each period. The basis for the analysis is performance fees earned for the twelve months ended June 30, 2023.

Our profit sharing economic structure results in a sharing of market risk between us and our employees. Approximately 35% of our ENI cost structure is variable, representing variable compensation and Acadian key employee distributions. These variable expenses generally are linked in a formulaic manner to the profitability of the business after covering operating expenses, which include base compensation and benefits, general and administrative expenses, and depreciation and amortization. In modeling the impact of market risk, we assume that these operating expenses remain unchanged, but the resulting impact on profit driven by increases or decreases in revenue will change variable compensation and Affiliate key employee distributions in line with their formulaic calculations. Any change in pre-tax profit is tax-affected at our statutory combined state and federal rate of approximately 27.3% to calculate profit after tax.

The value of our assets under management was $99.9 billion as of June 30, 2023. A 10% increase or decrease in the value of our assets under management, if proportionally distributed over all of our investment strategies, asset classes and client relationships, would cause an annualized increase or decrease in our gross management fee revenues of approximately $38.0 million based on our current weighted average fee rate of approximately 38 basis points. Approximately $13.2 billion, or 13%, of our AUM, are in accounts subject to performance fees. Of these assets, the majority are in accounts for which performance fees, or management fee adjustments, are calculated based on investment return that differs from the relative benchmark returns. Assuming the market change does not impact our relative performance, a 10% increase or decrease in AUM would have a $4.0 million impact to our gross performance fees based on our trailing twelve-month performance fees of $40.1 million from Quant & Solutions segment as of June 30, 2023. The combined impact on our management fees and performance fees would have a direct impact on our earnings and result in an annual change of approximately $19.2 million in our post-tax economic net income, given our current cost structure and operating model.

Equity market risk, interest rate risk, and foreign currency risk are the market risks that could have the greatest impact on our management fees, performance fees and our business profitability. Impacts on our management and performance fees can be calculated based on the percentage of AUM constituting equity investments or foreign currency denominated investments, respectively, multiplied by the relevant weighted average management fee and performance fee attributable to that asset class.

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•Our equity markets-based AUM includes U.S. equities (including small cap through large cap securities and substantially value or blended investment styles) and global/non-U.S. equities (including global, non-U.S. and emerging markets securities). A 10% increase or decrease in equity markets would cause our $97.4 billion of equity assets under management to increase or decrease by $9.7 billion, resulting in a change in annualized management fee revenue of $37.1 million and an annual change in post-tax economic net income of approximately $17.7 million, given our current cost structure, operating model, and weighted average fee rate of 38 basis points at the mix of strategies as of June 30, 2023. Approximately $12.9 billion, or 13%, of our equity markets-based AUM are in accounts subject to performance fees. Of these assets, the majority are in accounts for which performance fees are calculated based on investment return in excess of the relative benchmark returns. Assuming the market change does not impact our relative performance, a 10% change in equity markets would have an approximate incremental $1.0 million impact from performance fees on our post-tax economic net income, given our current cost structure and operating model.

•Foreign currency AUM includes equity and alternative assets denominated in foreign currencies. A 10% increase or decrease in foreign exchange rates against the U.S. dollar would cause our $79.1 billion of foreign currency denominated AUM to increase or decrease by $7.9 billion, resulting in a change in annualized management fee revenue of $31.9 million and an annual change in post-tax economic net income of $15.2 million, based on weighted average fees earned on our foreign currency denominated AUM of 40 basis points at the mix of strategies as of June 30, 2023. Approximately $11.0 billion, or 14%, of our foreign currency denominated AUM are in accounts subject to performance fees. Of these assets, the majority are in accounts for which performance fees, or management fee adjustments, are calculated based on investment return that differs from the relative benchmark returns. Assuming the market change does not impact our relative performance, a 10% change in foreign currency exchange rates would have an approximate incremental $0.5 million impact from performance fees on our post-tax economic net income, given our current cost structure and operating model.

While the analysis above assumes that market changes occur in a uniform manner across the relevant portfolio, because of our declining fee rates for larger relationships and differences in our fee rates across asset classes, a change in the composition of our assets under management, in particular an increase in the proportion of our total assets under management attributable to strategies, clients or relationships with lower effective fee rates, could have a material negative impact on our overall weighted average fee rate.

As is customary in the asset management industry, clients invest in particular strategies to gain exposure to certain asset classes, which exposes their investment to the benefits and risks of such asset classes. We have not adopted a corporate-level risk management policy regarding client assets, nor have we attempted to hedge at the corporate level or within individual strategies the market risks that would affect the value of our overall assets under management and related revenues. Any reduction in the value of our assets under management would result in a reduction in our revenues.

Interest Rate Risk

We are exposed to interest rate risks primarily through borrowings under Acadian’s revolving credit facility. Interest on borrowings under the revolving credit facility is based upon variable interest rates. Borrowings under the credit facility were $38.0 million as of June 30, 2023. We currently do not hedge against interest rate risk. As of June 30, 2023, a hypothetical 10% change in interest rates would have resulted in an immaterial change to our interest expense during the six months ended June 30, 2023.

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Item 4. Controls and Procedures.

Controls and Procedures

Our management, including our principal executive officer and our principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) at June 30, 2023. Based on this evaluation, our principal executive officer and our principal financial officer have concluded that our disclosure controls and procedures are effective.

Internal Control over Financial Reporting

There have been no changes in internal control over financial reporting during the quarter ended June 30, 2023 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we and our Affiliate may be parties to various claims, suits, and complaints in the ordinary course of our business. Although the amount of liability that may result from these matters cannot be ascertained, we do not currently believe that, in the aggregate, they will result in liabilities material to our consolidated financial condition, future results of operations or cash flow.

Item 1A. Risk Factors.

There have been no material changes in the risk factors described in the Company's Annual Report on Form 10-K for the year ended December 31, 2022.

Item 5. Other Information.

During our fiscal quarter ended June 30, 2023, none of our directors or officers (as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934, as amended) entered into, modified (as to amount, price or timing of trades) or terminated (i) contracts, instructions or written plans for the purchase or sale of our securities that are intended to satisfy the conditions specified in Rule 10b5-1(c) under the Exchange Act for an affirmative defense against liability for trading in securities on the basis of material nonpublic information or (ii) non-Rule 10b5-1 trading arrangements (as defined in Item 408(c) of Regulation S-K).

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Item 6. Exhibits.


Exhibit No.						Description
3.1						Amended and Restated Certificate of Incorporation of BrightSphere Investment Group Inc., adopted as of July 12, 2019, incorporated herein by reference to Exhibit 3.1 to the Current Report on Form 8-K12B filed on July 15, 2019.

3.2						Amended and Restated Bylaws of BrightSphere Investment Group Inc., adopted as of February 27, 2023, incorporated herein by reference to Exhibit 3.2 to the Annual Report on Form 10-K filed on February 28, 2023.

31.1*						Certification of the Company’s principal executive officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*						Certification of the Company’s principal financial officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**						Certification of the Company’s principal executive officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**						Certification of the Company’s principal financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101*						Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022, (ii) the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2023 and 2022, (iii) the Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2023 and 2022, (iv) the Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and six months ended June 30, 2023 and 2022, (v) the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022, and (vi) the Notes to Financial Statements.

104*						The cover page of this Quarterly Report on Form 10-Q, formatted in Inline eXtensible Business Reporting Language

* Filed herewith

** Furnished herewith

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		BrightSphere Investment Group Inc.

Dated:	August 8, 2023

		By:	/s/ Suren Rana
			Suren Rana President and Chief Executive Officer (principal executive officer)

			/s/ Christina Wiater
			Christina Wiater Senior Vice President and Principal Financial Officer (principal financial officer and principal accounting officer)