Ladies and gentlemen, thank you for standing by. Welcome to KKR's third quarter 2021 earnings conference call. During today's presentation, all parties will be in listen-only mode. Following management's prepared remarks, the conference will be open for questions. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. Please note this conference is being recorded. I will now hand the call over to Craig Larson, Head of Investor Relations for KKR. Please go ahead.
Thank you, operator. Good morning, everyone. Welcome to our third quarter 2021 earnings call. I'm joined this morning by Scott Nuttall, our Co-CEO, and by Rob Lewin, our CFO. We would like to remind everyone that we'll refer to non-GAAP measures on the call, which are reconciled to GAAP figures in our press release, which is available on the investor center section at kkr.com. As a reminder, we report our segment numbers on an adjusted share basis. This call will contain forward-looking statements which do not guarantee future events or performance. Please refer to our SEC filings and our earnings release for cautionary factors related to these statements.
Now, turning to our results. We're pleased to be reporting another very strong quarter with fee-related earnings per share of $0.60 and after-tax distributable earnings of $1.05 per share.
Both of these figures are as high as we've ever reported. Building on the success we've had in fundraising, management fees increased 16% from just last quarter, and management fees are up over 50% since the third quarter of 2020 to $559 million. This growth is the key driver behind the 60% increase in our fee-related earnings per share that you see on a year-over-year basis. Book value per share for the quarter came in at $28.06, up 38% from one year ago. Now, turning to fundraising, we continue to have a great deal of momentum. The capital raised in the quarter totaled $28 billion organically, bringing the year-to-date figure to $102 billion. Last year, in 2020, for the full year, we raised $44 billion, and that was a record year for KKR.
Over the first nine months of 2021, we've raised over 2x what we raised for all of last year, and that's with an active pipeline of fundraising initiatives as we look forward. Focusing on the $28 billion raised in the third quarter, we'd highlight two things. First, in private markets, 40% of the capital raised in the quarter came from the real estate business. The final close of our Americas real estate fund, REPA III, is more than 2x larger than its predecessor. The total AUM across the real estate platform now totals $36 billion. Global Atlantic was particularly active, with block activity helping capture $14 billion of new capital, largely in public markets. Alongside all of this fundraising, we're finding interesting opportunities to invest.
We deployed a record $15 billion in private market strategies in the quarter, as well as $10 billion in public markets. This brings our total deployment for the quarter to a record $24 billion and on a year-to-date basis, $50 billion. One of the key drivers here is the continued scaling of our infrastructure and real estate platforms. Year to date, real assets deployment is a little more than half of total deployment to private markets. If we look back to 2020, real assets comprised 25% of private markets deployment. As real assets deployment is scaling, private markets deployment is increasing and is becoming more diversified. In the public markets, the scale of credit platform grew meaningfully before the Global Atlantic acquisition, and that growth has continued after GA.
Similarly, you're seeing a step up in deployment here with the increase driven by both direct corporate origination as well as an asset-based finance. To give you a sense, last year, total private and opportunistic credit deployment was a little over $10 billion. Through the first nine months of 2021, that has increased to $23 billion. Deployment has more than doubled, and we're only nine months into the year. Now I'll turn the call over to Rob to walk you through some additional details. Rob?
Thanks, Craig. Just as we continue to see strength on the fundraising and deployment front, our funds continue to generate really strong relative action performance. Our flagship private equity funds increased by 11% in the quarter and 79% over the LTM period. While the entire PE portfolio appreciated 9% and 52% respectively. In real assets, our opportunistic real estate funds increased by 14% in the quarter and 29% over the LTM. Infrastructure continues to perform really well, up 4% in the quarter and 19% over the last 12 months. On the public market side, our leveraged and alternative credit funds increased by 1% and 2% in the quarter, respectively, with continued performance over the LTM of 11% and 26%.
A combination of strong investment performance as well as the capital raising that Craig just went through has yielded a really robust acceleration of our AUM, which now totals $459 billion and our fee-paying AUM is $349 billion. That's up 7% and 9% respectively, versus this last quarter. When comparing our AUM and fee-paying AUM relative to this time last year, they're both up close to 100%. Importantly, much of this AUM is now either perpetual capital or in long-dated partnerships. Just nine months ago, this number was $55 billion. It's now $205 billion with our almost $460 billion of AUM. You can see this growth and the transformational change in the composition of our AUM on page 16 of the earnings release.
Finally, as it relates to our capital base, we currently have $38 billion of committed capital that comes online and becomes fee-paying at a weighted average rate of over 100 basis points when the capital is either invested or enters its investment period. Now, turning to our quarterly P&L, our management fees increased over 50% this quarter versus the same time last year. As we signaled on last quarter's call, management fee growth was driven by a combination of new capital raised and various newer funds hitting their run rate. Net transaction and monitoring fees were primarily driven by our capital markets business. We saw continued strength this quarter and were up 24% versus the same quarter in 2020.
Over the last 12 months, our capital markets transaction fees have totaled $720 million, which is 42% higher than we averaged during the 2018 to 2020 time period. The growth in the platform is stemming from many of the expansion areas that we touched on at our April Investor Day, including our build up of real asset, core PE, and third-party co-investing, which have all generated meaningful market share gains. We remain really constructive around the future growth of this business. This all brings us to fee-related earnings of $530 million for the quarter, which is up 53% versus Q3 2020. On a per share basis, our FRE is $2.02 over the last 12 months. Moving on to realizations.
Realized performance income came in at $433 million for the quarter, driven by exits in Calsonic Kansei, Envision Pharma Group, R1 RCM, and Capital Safety. Realized investment income totaled $448 million for the quarter, driven by additional exits in Mr. Cooper and Flutter. Even with these very strong monetization figures, we have still seen healthy gains in both our unrealized carried interest and the embedded gains from our balance sheet investments. Gross unrealized carried interest increased to $8.5 billion, while our embedded gains on investments increased to $7.1 billion. That's almost $15 billion of embedded revenue, which has grown over 70% since the start of the year. That's all happened while we've been generating record levels of realizations.
Coming back to our P&L, our asset management operating earnings were a bit north of $1 billion for the quarter, which is up 80% from the same quarter last year. Our insurance segment operating earnings totaled $115 million, largely driven by strong core operating performance at Global Atlantic, together with the sale of two strategic investments that help bolster net investment income. In total, our after-tax distributable earnings per share came in at $1.05 for the quarter and $3.47 for the LTM period. Both numbers up 100% and 79%, respectively, versus the prior period. Turning to our balance sheet, book value per share came in at $28.06, which is up 38% year-over-year, driven primarily by strong investment performance.
It's worth noting that our results for this quarter include an 80-point increase to our deferred tax liability associated with the corporate reorganization that we announced last month and that we expect to close next year. In summary, we are really doing all the things that matter most for our business to perform at a high level and to ensure that we're set up well for the future. I've been coming back to these five things and really do believe we are optimizing for outcomes across the board. Number one, we are sourcing unique investment opportunities in which to put our capital to work. Our year-to-date deployment is up 2.5x. Our investment performance has been exceptionally strong, both on an absolute basis and relative to many of our peers.
Because of this performance, our monetization opportunities have been abundant, and we have delivered substantial distributions to our clients and record levels of monetization for our shareholders. These first three points all enable us to have the fundraising successes we've achieved. $100+ billion of year-to-date flows is the proof point, and this sets us up incredibly well for the future. Finally, we have conviction that our business model allows us to generate greater financial outcomes. I think you're clearly seeing that flow through our P&L. We have also talked on these calls and at Investor Day about inflection points. Our overall business has seen a fundamental shift, an inflection point in its operating model. Beyond our distributable earnings being up approximately 2x since this time last year, all of our forward indicators are in the best shape they've ever been in.
AUM is up 2x, year-to-date fundraising is up 3x, and the embedded gains on our balance sheet have increased by approximately 300% in just the last year. We really couldn't be any more excited about the future. With that, let me turn it over to Scott.
Thank you, Rob. Thank you everyone for joining our call today. Craig and Rob did a nice job walking through our numbers, which were strong again this quarter. I'm gonna spend my time on a few strategic areas of focus and give you our sense for how we're progressing. The first is perpetual and long-dated strategic capital. As you know, we are big believers in the power of compounding in all aspects of our business, including AUM. The more capital we can attract that is perpetual or recycled, the faster we expect our AUM will scale and compound over the long term. A year ago, perpetual and strategic capital was $49 billion, 21% of our total AUM. Today, that number is $205 billion or 45%. $49 billion to $205 billion in one year.
We've seen over a 4x increase in 12 months. We are nowhere near done. We have a lot of new ideas and efforts to generate even more potential capital going forward. The second big strategic focus area is insurance. As you know, Global Atlantic advanced us materially in this area. GA assets have grown from $75 billion a year ago to $120 billion at the end of Q3, a 60% increase. In addition, we have seen our AUM from third-party insurance clients increase from $32 billion a year ago to $48 billion today, a 45% increase. Putting GA and third-party together, our insurance AUM has grown from $108 billion pro forma for GA to $167 billion in a year or a 55% increase.
While we're pleased with the progress, keep in mind we only closed the GA deal in February of this year. You see a lot more opportunity for significant growth in insurance. My third area of focus is private wealth. As you know, individual investors have been 10%-20% of the capital we've raised the last few years. We believe that with the investments we're making, combined with our brand and performance, that number will ramp to 30%-50% of the capital we've raised over the next several years. We are investing in sales, marketing, data, and digital talent, and we are creating more democratized products that are relevant for a wide number of individual investors. This is a big opportunity for us and we think we're incredibly well-positioned.
Long story short, the Q3 numbers are strong and they tell only a small part of the story of what's happening at the firm. These initiatives and others give us confidence we can more than double that over the next five or so years, including our fee-related earnings, where we see a clear path from the $2 of FRE per share we've achieved over the last 12 months to in excess of $4 over that time frame. While recent growth has been exciting, we see a lot more ahead. With that, we're happy to take your questions.
Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question today, please press star one on your telephone keypad and a confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For assistance using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. That we may test questions for as many participants as possible, we ask that you limit yourself to one question and one follow-up. Additional questions may re-queue and time permitting those questions will be addressed. One moment please while we poll for questions. Thank you. Our first question comes from the line of Alex Blostein with Goldman Sachs. Please proceed with your question.
Great. Good morning, guys. Thanks for taking the question. So maybe we'll pick up, Scott, on where you left off with doubling the business again and growing FRE to north of $4 a share. As you go through the kind of key initiatives that you outlined, whether it's perpetual capital, insurance or private wealth, can we zone in on private wealth just maybe a little bit more? As you think about the ramp to 30%-50% of kind of flows from that channel, what are sort of the key products and the key distribution partnerships that you're considering? Obviously we have KREST out there, so we'd be happy to get an update on that. Ho w else are you thinking about tackling this part of the market?
Hey, Alex Blostein, it's Craig Larson. Thanks for asking about it. Ta king a step back, we think the opportunity within private wealth to introduce tailored democratized products really is massive. We think we're incredibly well-positioned. Now to review, we have three broad solutions that are on multiple platforms as well as bespoke solutions that are tailored for individual platforms. In total we've raised about $2 billion year to date. We're raising a couple of hundred million a month. We're pleased with our first steps here. We're just getting started, as you know, and we're focused on ramping. I thought maybe it made sense to touch on the democratized parts initially as it relates broadly to the ramping and the momentum that we have.
Scott or Rob, do you want to add on?
Yeah, just a couple of things I'd add, Alex. Appreciate the question. As Craig mentioned today, the products that we have, that we put in this democratized category focus on credit, real estate, private equity, and we have a number of others that we're working on across different asset classes. In addition to those that I'd put more into kind of the 40 Act for democratized zone, we also have a number of our funds that we actually sell through private wealth platforms, which is another big contributor. In the past, as I mentioned, it's been about 10%-20% of the total money we've raised has been from that individual investor channel, broadly defined. I think what Craig mentioned is really critical, though it is still early. We see a lot of upside here.
That's why we're guiding you that we think that 10%-20% number will move up to 30%-50% over time. I t's an area for us that's where we see a significant amount of growth ahead. In addition to building our own team, which we continue to expand and invest in, we are creating partnerships, to your point, with external managers. We'll have more to share with you on that front over time. We're creating partnerships with wealth platforms around the world in addition to building our own team.
Great. Thank you very much.
The next question comes from the line of Bill Katz with TD Cowen. Please proceed with your question.
Okay. Thank you very much. Taking questions. Congrats on Scott on the promotion. Just coming back to maybe your commentary, and I think you embedded it in part of Alex's question, but can you expand a little bit on a lot more to do yet on perpetual capital? Is that just retail or are there other opportunities out there to continue to grow that more emphasized business opportunity?
Happy to. Appreciate the kind words. No, I think we see it across a number of different aspects of our business. There's the institutional channel. I think there's a lot of focus, maybe for good reason, on private wealth. We're continuing to invest in the build-out of our institutional capabilities as well. We've seen a 40% increase, just as an example there, in headcount focused on institutional fundraising. I think you're gonna see it institutionally, where we're continuing to talk to partners about long-dated partnerships, some with recycling. That's gonna be part of the answer to your question. Part, of course, will be what we just talked about in terms of private wealth and the individual investor. Part of it will be growing in insurance, where we see opportunities all around the world.
Then we're working on new structures and new designs where we could actually elongate the duration of our capital base even further to a variety of different channels. A bunch of different opportunities all across the world. I think you'll continue to hear us talk about this going forward. The $49 billion-$205 billion is great progress. We expect to continue to make real progress here going forward.
Thanks. Just a quick follow-up for Rob. So appreciate the sort of the broad guidance on pace to sort of double FRE over the next few years. But it seems like your management fees are pacing even more quickly than maybe the last set of guidance. Level set where we are in terms of pacing to the previous goal. Then how we you know, against ongoing capital raising how that might sort of fuel over to through 2022. Excuse me. Thank you.
Yeah, sure. Bill, thanks for the question. I think in retrospect, I think it's fair to say some of the historical guidance we gave over the last 6-12 months is on a conservative side. At the same time, if you look, our business has so much more momentum today than it did even 6-12 months ago. You can look at how we're performing our different fundraisers globally. All are pretty much well ahead of expectations. The assets we have from Global Atlantic are far ahead of where we expected them to be. The momentum in our capital markets business is as good as it's ever been. T he last piece is less on fees.
I think, also, really pertinent to the discussion of growth going forward is we now have $16 billion of unrealized revenue, or close to that, on our balance sheet. If you come back to your question around where growth can go from here, I think we should pause on $100 billion of capital that we've raised year to date. If you think about it, only a very small percentage of the revenue and economics that we expect from this capital has hit our P&L so far in 2021. The vast majority of it is gonna be in 2022 and beyond. The other key point on the $100 billion of AUM that we've raised is that 50% of it has come from strategies that we weren't even in five years ago.
The ability to scale from there on that piece of the capital base is very real as well. Maybe bringing that back full circle to where you were going and what we expect of ourselves, while our earnings base today is at a higher level than we expected six , 12 months ago, as Scott mentioned earlier, we still have every expectation that if we execute really well going forward, that we can more than double our FRE off of this higher base. Likewise, looking at the full picture of our P&L, even offset higher distributable earnings, remember the three, six year story that we've delivered over the LTM period. I also think we've got clear line of sight in that same period of time that strong execution will double the assets $10+.
Hopefully that gives you a broader picture for how we're thinking about growth across the platform.
Okay, thank you both.
Thank you.
Our next question is from the line of Glenn Schorr with Evercore ISI. Please proceed with your question.
Hi. Thank you. One quick one. T here's a transaction or two in the secondary space lately. It feels like a strategic need for as great as you're doing, you can do greater. Curious on what your plans are at this point for organic versus inorganic build in that area. Thank you.
Thanks for the question, Glenn. Nothing new to report today. We continue to assess whether there's someone that we could partner with or buy all or a meaningful portion of or whether we should build our own. As we've talked about in the past, the secondary and co-invest space is adjacent to a lot of what we do. Something we think we could be a value-added partner to somebody or build something truly distinctive. It's not a have to do, but it is something that we continue to spend time on. Nothing new to share with you today, however. We're continuing to spend time there.
Okay. Maybe we could follow up on. You teased us in the past with a comment about the Asia franchise at some point being as big as the Americas. Maybe you could break down a little bit more in terms of retail, institutional, and which asset classes what might we expect to see have more growth in the next couple of years as opposed to the someday? Thanks a lot.
[Hi, Glenn Schorr, Rob Lewin]. Clearly, we've got a first-rate private equity franchise in Asia with $15 billion of funds. You're probably somewhere around close to double the size of our next biggest competitor in the region. The growth opportunity from there continues to be in private equity. I think it's still very much an under-addressed, from a capital perspective, market. Really, it's the marriage between the best-in-class teams we have across eight offices in Asia, and what we're doing on the private equity side with the global capabilities that we're building out in areas like real estate, infrastructure, credit, growth equity, what we're doing in public markets.
We think the marriage of those two things with our market-leading position will create a bunch of growth going forward for us in that part of the world where we've got a real, competitive advantage and think a real moat around, the business franchise that we've built so far. We're conscious that requires a lot of investment, so we feel really good about how we're situated, and we continue to believe that over time our Asia and APAC business can get as big as our U.S. business one day.
Thanks, Rob.
Our next question is from the line of Robert Lee with KBW. Please proceed.
Great. Good morning. Thanks for the questions. Scott Nuttall, also congrats on the promotion. Just really maybe a little bit of riff on Glenn Schorr's question, but obviously, as he mentioned, there's a lot of traction in the secondaries market, a lot of M&A, but you've talked about your CPS business as being a replacement for that. Can you maybe update us on that initiative and how you see that kind of progressing as maybe a replacement for a secondaries or fund-of-funds business?
Sure. Happy to take it, Rob, and thanks for the congrats. Yeah, CPS, and we haven't talked about it in a while, but it stands for Customized Portfolio Solutions. This is a team and a business that we built on the back of the observation that a number of institutional investors were trying to get exposure to private equity in particular, but did not have a big team to get after that and wanted to get an outsourced solution and partner to try to build a more diversified pool of private equity exposures. The team has built a business which has a combination of KKR funds and co-invest and third-party, we think best-in-class, private equity partners also investing in their funds and looking at their co-invest.
The business has continued to perform really quite nicely. It's now about $6 billion of AUM, and has been quietly a top quartile performer. We'll continue to scale that business, and we're getting more traction with investors around the world. It's an opportunity for upside and a real nice performer for us that we think will continue to get bigger over time, and we'll keep you posted.
Great. Let me just do a follow-up. G oing to the inevitable question I guess on capital management. I mean, you've got a huge amount of embedded gains on the balance sheet, from your own investments, through carry businesses growing at a high rate. I s there, if you think about, I'll call it a tipping point where, hey, we've got enough kind of cash generation that we can more than amply fulfill our capital needs and growth requirements and maybe start shifting towards some upgraded return of capital, whether it's a little bit higher dividend payout or share buyback or some things. Do you feel like that tipping point may be approaching in the next couple years?
Yeah. I'll start off, Rob, and I'm sure Scott will jump in as well. I think the most important thing to any capital allocation framework is to make sure that you're consistent. Our approach to capital allocation has always been very much ROE based. We're always gonna start that with what's an appropriate level of capital return to our shareholders and balancing that with invested back into KKR growth, assuming that it's likely to achieve compelling ROE. Let's take those in order. We've said that we will continue to evaluate our dividend policy on an annual basis. We'll do that in Q1 next year. What we've said is we'd like to grow that consistently over time. We want to continue to be a buyer of KKR stock.
We feel really good about our body of work here. Over the last five-six years, we've repurchased or retired close to 80 million shares. That's almost 10% of our outstanding shares today. It's 15% of our float. We look to continue to do that going forward. We're going to look to invest back into KKR for growth. I do think one of the areas of core competency that we do have is to be able to move capital around to the highest ROE opportunity. If we're not finding that inside of the KKR platform, then we certainly evaluate greater returns of capital to shareholders through one of the first two buckets. That's really how we're gonna approach it.
I think probably the most important point of any here is we do this in a really aligned way given KKR employees are as a group, the largest shareholder in KKR. As we think about how to allocate our capital base, so obviously the mindset there comes from a very aligned perspective.
Yeah. The only thing I would add is, the balance sheet, if you really step back and look at how we've used it, has allowed us to grow our fee-related earnings a lot faster. Whether it's seeding new businesses and as a reminder, 10 years ago we were in six investing businesses, and now we're in 28. That balance sheet has clearly accelerated the growth of what we're trying to do in terms of the organic build. Our capital markets business, as you know, we operate in a capital-light model, but we use the balance sheet to be able to scale the growth of capital markets in a meaningful way. Perhaps even more powerfully evident.
If you think about Marshall Wace and our partnership there, if you think about Global Atlantic, we've been able to use the balance sheet to really convert balance sheet earnings into fee-related earnings and TDE. We view it, Rob, as a strategic weapon. You'll continue to see us use it that way and think of it that way. To Rob's point, we'll continue to reassess the dividend level and buybacks and try to get the balances right. We can from the management point of being the largest shareholder.
Thank you so much.
Thank you.
Our next question is from the line of Brian Bedell with Deutsche Bank. Please proceed with your question.
Great. Thanks. Good morning, folks. Congrats, Scott. Just back to the fundraising, obviously, you know, way ahead of schedule here with your Investor Day. Just get a sense of for 2022 as we move into that year, is it even possible for that to be as successful on a fundraising standpoint versus 2021 if we ignore insurance blocks? What would be some of the drivers between, you've raised your flagships already.
Brian, it's Craig. Why don't I start? Thanks for the question. We don't have any updated fundraising guidance for 2022, but let me try and help frame things. I think really what you're seeing in this quarter is kind of interesting in this way. What you're seeing is the continued scaling of businesses and the increased diversification across the firm. S even or eight years ago, if we reported one of the strongest fundraising quarters in our history, it would have meant we had a big fundraising event in private equity. Today we're reporting an excellent new capital raise figure. N ew capital raise in Q3 is the second highest quarterly figure we've reported in our history. Over 90% of that is coming from strategies outside of traditional private equity.
In private markets, half the capital was raised in infrastructure and real estate, as we talked about it. We have all these new initiatives. As Rob had mentioned, 50% of the capital year to date being raised from areas didn't even exist within the framework of the firm five years ago. In Global Atlantic, as you mentioned, again, AUM meaningfully above where we would have ever expected would have been at the time of announcement. When you think of huge addressable market opportunities, like we've touched on, with these two marketized products, that's all on the come. We don't have an updated figure for next year, but it just continues to feel like there's real momentum and we're really well positioned, which is exciting.
Yeah. The only thing I'd add, Brian, is look, as Craig says, we got lots of tailwinds now the firm's really scaling and supplying. Last time I counted up what we have coming to market in the next 12-18 months, it's something like 27 different line items. There's lots of different products in the market, and that's aside from Global Atlantic.
Yeah. It's incredibly powerful. But obviously as you set out to march towards $4 with that trajectory, if you could comment on a couple areas in addition to your traditional ones, and that being on the retail side, the movement to 30%-50%. Do you see that as an incrementally positive growth driver to that over and above what your traditional plan is in the institutional channels? Then I guess sort of same question on capital markets business. I mean, that's had. It moves up and down, of course, but had some spectacular growth. Does that call for a substantial commitment to that $4?
I don't know if it's any more substantial than it would be today on the second question. On the first question, look, I think the opportunities we see in private wealth gives us that much more confidence, that it's in excess of $4 in five or so years. I think the in excess of is something you should focus on, and we'll try and make $4. I think retail and that whole private wealth opportunity gives us even more confidence we have an opportunity to continue to outperform expectations.
Great. Thank you.
Our next question is from the line of Jerry O'Hara with Jefferies. Please proceed with your question.
Great, thanks. Seeing obviously the three block transactions in the quarter is encouraging. P erhaps you could give us just a little bit of sense on what the kind of competitive dynamics are within that insurance and annuity business from your end?
Thanks Jerry, Scott. Look, it is a competitive environment. We see competition across everything that we do. We have a lot of smart competitors. They tend to be responsible, smart competitors. We've been able to pick our spots and lean in on the opportunities where we think we have a clear competitive advantage. We've been really pleased with the progress we've been able to make. As I mentioned in the past, one of the key reasons that we wanted to create the partnership with Global Atlantic is the strength of the management team. Th ey have really built nice relationships all around the world, with different counterparties, and that's allowed us to lean into these blocks. Yeah, there's been a significant flow of block activity.
We expect it will continue, we expect it'll be competitive, and we expect we'll continue to win our share.
Fair enough. Perhaps one for Rob. I know we're still kind of early days here in the fourth quarter, but if you might be able to give us any sort of update or line of sight into some key monetization activity, that would, as always, be appreciated. Thank you.
Yeah. No problem, Jerry. You're right. We're early in the quarter, but we already have really good visibility into Q4 and into record levels, I think, of monetization activity and global franchise revenue. Now, to date, that figure is north of $1 billion. So that's collectively across both our performance and investment income. As a reminder, this is gonna be from deals that are either already closed today or have been signed but that we expect to close in Q4. Also note that in this quarter for Q4, you can consider it also includes revenue from incentive fees that have already been booked through our hedge fund partnerships.
In terms of how that breaks down from a split perspective, so you can think about flow through to profitability, I'd say it's probably slightly weighted towards carried interest right now relative to both investment income as well as the performance income that comes from our hedge fund partnerships. If you recall, the latter has the same 10%-20% comp load as our investment income. Hopefully that gives you a flavor of what's ahead in Q4. Again, another strong monetization quarter for us.
Great. Thanks for taking my questions.
Thank you.
The next question is coming from the line of Devin Ryan with Citizens JMP Securities. Please proceed with your questions.
Hi, thanks. This is Brian McKenna for Devin. Just to follow up on realization activity. You have about $5 billion of net unrealized carried interest and $7 billion of embedded gain on the balance sheet. Assuming capital markets remain open and business trends continue to be healthy, how quickly do you think you can work through this pipeline of realizations over time?
Yeah. Hi, Brian. It's a good question, obviously, and we're gonna be balanced. What you've seen so far in 2021 is while we've had record levels year to date, I believe our monetizations and our revenue for monetizations are better than any year we've had for a full year. Even through that period of time, we've booked on our embedded gains and unrealized gains in our balance sheet. I think that comes from investment performance. If we can continue to generate strong investment performance in the future, which we feel good about, especially given the portfolio construction that we have in place, we think we'll continue to be able to generate healthy levels of monetizations and keep the pipeline for future years in place.
Obviously a lot comes down to execution and it's really hard to forecast from here. I think you look back at our 2020, even a volatile period of time in 2021, you see a consistent level of monetizations even as our unrealized gains and embedded gains in our balance sheet have grown.
Yeah. The only thing I would add, Brian, is you heard Rob reference before that in addition to kind of having confidence, we can at least double fee-related earnings the next five or so years. We think we can do the same with distributable earnings per share. Obviously adding the line of sight that we do in terms of the embedded value in both carry and balance sheet gains is part of the reason you have that confidence. To Rob's point, we'll continue to monetize and hopefully we'll continue to replenish with other unrealized gains as other investments perform.
Great. Thanks. J ust on the FRE margin, that stepped up nicely in the quarter to about 65% from 62% in the first half of 2021. How should we think about the FRE margin moving forward? Is that 65% a good place to be?
What we've talked about historically is probably a low 60s FRE margin. We were 61% last year to date. Even with a solid Q3, we're about 63%. Kind of in line where we'd probably be. We've also flagged as we intend to continue to invest across technology and distribution and marketing. You could see our OpEx line ticking up a bit. The goal going forward over the next several years is to be in a place where we're sustainably generating the mid-60s% type of FRE margins. I think the guidance going forward will continue to be in that low 60% range. Hopefully there'll be periods of time where that can go up.
Ultimately be in a place where we're more sustainably generating those types of margins that are in the mid-60s%.
Got it. Thanks, Rob.
Thank you.
Thank you. Our next question comes from the line of Michael Cyprys from Morgan Stanley. Please proceed with your question.
Hey, it's Michael Cyprys from Morgan Stanley. Thanks for taking the question. Just wanted to follow up on the private wealth opportunity. I was just hoping you could elaborate a little bit on the investments you're making in sales, marketing, distribution, different distribution. If you could elaborate a little bit on that. How large is the sales team today? Where do you expect to be over the next couple of years? How do you think about buy versus build versus rent?
Thanks, Michael. Scott, I'll take that. In terms of the investments that we're making, first investment we're making is in tech. The team kind of, like 18+ months ago was probably around 10 people. It's now pushing 40. I would expect that number will likely triple or so again from here, over the relatively near term. We'll continue to build the focused private wealth team out, including marketing. That's kind of investment one. Investment two will be in all things tech and operations around making sure that we're able to service the private wealth client in a best-in-class way. We're continuing to make investments there. You heard Rob reference some investments we're gonna continue to make in technology. Some of that will be around this space.
Those are the two predominant in addition to what I talked about before, which was product development. In terms of buy versus build versus rent, you know, we are clearly building and we're doing some renting as we sit here today. We are, as part of our corporate development efforts, assessing whether there's anything that could make sense to buy. Right now it is build and rent and create partnerships.
We'll let you know if we find anything that we think is interesting enough to move into the buy category.
Mike, just one quick thing to add on. If you think about headcount growth in that space or really across the firm, it's important to note that we would expect to be able to operate within our stated comp range on fees in the 20%-25% range. Even with any new heads, I wouldn't expect that to impact our margins.
Great. Thanks for that. Just a follow-up, if I could, just around capital deployment. Clearly a very strong quarter, $8 billion deployed, across infrastructure and real estate. In particular, I thought stood out that $24 billion or so annualized pace there. Just can you talk a little bit about the actions that you're taking to increase deployment capacity within your real assets business in terms of the actions you've taken to get to this level? As you look out over the next couple of years, where would you like to see that deployment pace and capacity be in, say, three or five years? What are the actions you need to take in order for that to be materially higher from where it is today?
Hey, Mike, it's Craig. Why don't I start just giving some facts around deployment? I expect Scott will add on as it relates to investments for tomorrow. I'm glad you asked about it. Honestly, we probably haven't talked about deployment in as much detail as we should. As you note, we've continued to be really active. Year to date or in the quarter, $15 billion. Year to date, we're approaching $30 billion. When you look at that deployment figure through nine months, that's already meaningfully above where we were in 2020, and that was a record year for us. Deployment's been really healthy. I think a couple of thoughts on that first relates back to that thought of diversification.
As you noted again, the strength we've seen in real assets, with that amount in the quarter being pretty equally split between our real estate business and infrastructure. If you contrast that with 2019 and 2020, again, this quarter, those businesses were about 60% of deployment in private markets. C ombined, they were about 25% in 2019- 2020. As those businesses have scaled, as we've entered new asset classes like core, and again, it's interesting when you think of core real estate, core infrastructure, those end markets are larger in size and opportunistic. Again, that addressable market for us has been increasing. You're seeing that in deployment.
Core PE, that is actually most active deployment quarter for us in the year. All these businesses are growing and scaling. You're seeing that in terms of deployment. I think one other point that's just interesting as it relates to Private Equity, we're being disciplined. The level of activity is exceptionally high. There's a ton of flow. Really what you've seen in the numbers is we're being disciplined, and we're drawing lines and really looking to pick our spots. Despite the overall healthy amount of deployment, year to date, Private Equity deployment is actually on pace to be below that in 2020. In public markets, again, the credit platform was growing materially before GA and continues to scale post GA. That's driving a real step-up in deployment.
That's both in terms of corporate origination, as well as in asset-based finance.
Yeah, no, it's a great question, Mike. I think we do see a real opportunity to meaningfully expand these real estate and infrastructure platforms. As you know, both of those were more or less created over the course of the last 10-12 years. These are very large end markets, and there's a significant amount of client interest. In all things real assets, if you have yield and inflation protection, which these asset classes do, you've got a real significant investor appetite right now. There's probably five things I'd point to. One is we're just, in a regular way, scaling of the more opportunistic strategies. So if you think about it wasn't that long ago we were in Infrastructure I, how that platform has scaled materially from $1 billion to in the teens per fund.
Big opportunity as we continue to scale the opportunistic platform. The same thing is true in real estate. If you see REPA I through REPA III, but we also are in a European real estate opportunistic strategy. Same thing in Asia. Real opportunity to keep scaling those platforms regular way on the back of performance. Second would be what we're doing in Core. W e have raised meaningful capital this year for Core infrastructure and for Core Plus real estate. Again, very large end markets. Those are performing well and scaling. Third is going global. A lot of what we've done started in the U.S. We're now expanding to Europe and Asia, so you're gonna see us have a Europe and Asia Core Plus real estate strategy.
That's something that we'll continue to add to our suite of products as we continue to take these efforts global in real assets. Fourth would be selling to individuals. We talk about KREST a lot, but there's various other products that we're in the process of creating and other versions of real assets democratized for the individual investor. To Craig's good point, it's not just equity. It's also a big opportunity to continue to scale what we're doing in real estate credit. Global Atlantic has allowed us to meaningfully scale that business, and we see more opportunities around the world, including in Europe, where we're going to start building a real estate credit platform there. Long way of saying we agree with you. There's a lot of growth opportunity.
Great. Thanks so much.
Thank you.
Thank you. We've currently reached the end of the question and answer session. I'm going to turn back to management for closing remarks.
Rob, thank you for your help. Everybody, thank you for joining us. Please follow up with us directly with any follow-ups. Otherwise, we look forward to speaking with you next quarter. Thanks again.
This concludes today's conference. You may disconnect your lines at this time. We thank you for your participation.