Connecting Capital to Opportunity

Greg Campion: While markets continue to shift and evolve, the focus at Barings remains consistent, connecting capital to opportunity with a long- term partnership- first approach.

Mike Freno: We have capabilities. We have an ownership structure that allows us to do this. We have size and scale. We have a global presence. At the end of the day, it's people and it's making sure that those talented individuals all share a common vision in how we serve our clients. But for us, that's always going to be the utmost importance.

Greg Campion: That was Mike Freno, chairman and CEO of Barings, and this is Streaming Income, a podcast from Barings. I'm your host, Greg Campion. Coming up on the show: Who is Barings today? And how are long- term strategic partnerships shaping the opportunity for our clients across public and private credit, real assets, and capital solutions? Before we get into the conversation, remember you can follow Streaming Income on Apple Podcasts, Spotify, and if you'd like to watch the full video episodes, on YouTube as well. Remember also to follow Barings on LinkedIn to subscribe to our newsletter, Where Credit is Due. With that, please enjoy this conversation with Mike Freno.

Greg Campion: All right, Mike

Greg Campion: Freno. Welcome back to the Streaming Income podcast.

Mike Freno: And thanks for having me, Greg. I think it's been a while since I've been on, but I know you've been busy so I'm always glad to be here.

Greg Campion: Awesome. Thank you for being here. Always happy to have you in the hot seat, so to speak. So we're going to cover a lot of ground, I think, in this conversation. I really want to talk to you about some of the big trends out there that are shaping the asset management space today, I want to talk to you about where you and the team are seeing opportunities, and then maybe how you're thinking about positioning Barings to capture some of those opportunities. And actually, right now, I feel like, is a pretty opportune time to ask you about some of these topics. You've now been in the seat for five years, so congratulations.

Mike Freno: Thank you. I made it. Made it five years. That's a good accomplishment.

Greg Campion: Congratulations on that milestone.

Mike Freno: Thank you.

Greg Campion: I mean, so much change over that five years in the industry. I think broadly in the world, we're seeing geopolitical headlines every day, including as we sit here today. But I feel like Barings itself has changed and very intentionally, changed, grown, and evolved under your leadership. So I think it'd be great to talk to you a little bit about that, and maybe that's a great place to start, actually. I'd like to ask you, maybe for those who don't follow us as closely, how would you describe who Barings is today?

Mike Freno: Yeah. Well, look, hopefully there has been an intentionality to get us to where we are. And we've certainly come a long way from 2000 when we were first kind of spun out of MassMutual, and then even really since 2016 when the new Barings was brought together by four legacy brands. But if you think over the last five years when the leadership team and I have kind of taken over, we really, we think, positioned the company well for the future. And for those who don't know us as well, we're just over$ 480 billion now, about 2, 000 teammates spread across. We would say 90% of our assets fall within credit insurance, real assets, and capital solutions, things that people are now referring to broadly in the alternative space. And then the balance of that, which is roughly 10%, is really on an EM platform that covers both debt and equity. It's really trying to provide alpha through security selection, again, both on the debt and equity side. So it's certainly a different business than what I think folks would've thought of us about 10 years ago and we have a lot of the seeds planted for where I think the tailwinds are going in the future.

Greg Campion: Now based on that description, I think particularly around the alternatives piece, I guess, is there anything there that you think someone coming to see who Barings is today, who maybe hasn't looked at us in a while, is there anything in that description you just gave that you think would surprise people?

Mike Freno: Well, I think the scale and size of what the industry is now defining as alternatives. Again, we're over around$ 450 billion within those asset classes. And I think when you think about alternatives, really what folks are searching for is just how do you generate alpha? You can generate alpha through security selection, you can go through asset allocation, or you can do it through unique origination and finding areas where maybe there's less competition for assets and using that as an origination platform to generate good returns, and many folks are badging those as alternative assets. I think where we look back at our heritage of MassMutual and being invested in asset classes of 175 years ago, largely those investments were all done on the private side and there were a few markets that were out there that were maybe public securities. But if you go back to that period of time, insurance companies, which is a lot of where our heritages come to, have been in alternative asset classes, originated asset classes, private asset classes, whatever you want to call them, for some period of time. So` it's always been in our DNA and we've positioned the business to just capitalize on what our strengths are for the future.

Greg Campion: Well, speaking of insurance companies, I want to dig into that a little bit. I mentioned upfront that we want to talk about partnerships in this conversation. There is a real trend that we've seen in the last couple of years in the industry. We've seen the rise of partnerships across asset management, almost in every way you can think about, right? Distribution partnerships, origination partnerships, all kinds of strategic partnerships. And of course, Barings, I think we've already always operated with a partnership mindset with regards to our clients. I want to talk to you about some of those really important partnerships for the firm and I think probably the obvious place to start is with the partnership with our parent company, MassMutual. So it'd be great if you can talk just a little bit about how that partnership works, why it's so important to Barings, why it's important to MassMutual, and maybe how that's evolved in your five years as CEO.

Mike Freno: Yeah. And certainly, we can't talk about partnerships without talking about our relationship with MassMutual. It remains our largest client today. But largely speaking, I think MassMutual was, early on, really identifying the balance between insurance liabilities and assets that you invest to back those. And how can you generate more returns for your ultimate owners? And in the case of MassMutual, a mutual company, it's the policyholders, and so there is a symbiotic relationship between asset management and insurance. And I think more and more that's become in vogue, but this is something we saw two decades ago really when we spun the business out to say Barings doesn't only have to manage money or Babson, one of the legacy firms, doesn't only have to manage money for the insurance company. They can offer these capabilities to others. And the thesis was, if it's something that MassMutual would be interested investing in, we think others would be in that as well.

Greg Campion: Right.

Mike Freno: And so there's a natural alignment between those two. You generate good returns, risk- adjusted returns, it allows the insurance company to sell more liabilities, and it works as somewhat of a flywheel. I also say the structure from my perspective of being owned by a mutual allows us to take much, much longer term horizons on things. Whether we're building a business, whether we're making investments on things allows us to really take that longer term approach which coincidentally and conveniently aligns with a lot of our investors. A lot of the investors that we're seeing are also taking a very long- term approach and so we're not forced to do things for quarterly earnings or near- term outcomes. And we certainly watch that, but it is built for the long term. And then the other aspect that makes it unique is we're basically a principal investor as well. When we talk to clients, almost in all cases we are investing alongside them. So there's some comfort that we're putting our own capital next to theirs as we go out and invest. And I think that shows a really good alignment, which makes, in my opinion, if you've got strong alignment and trust, then you've got a better partnership.

Greg Campion: Yeah. That alignment of interest and that long- term focus seemed to be at the forefront, I think, for many of our clients. Speaking of kind of thinking over the long- term alignment, let's talk about MS& AD. So this was a transaction that was announced in November of 2025. Would love to hear a little bit more about that. They announced a deal for them to purchase an 18% stake in Barings from MassMutual. Tell me about that. Tell me about the strategic rationale, what you are so excited about when you think about MS& AD.

Mike Freno: Yeah, this is a really exciting thing. And if you look back in our history of things that we've done, I mean, this wasn't something that we took lightly. It was something we've talked about for a while and we'd worked with the board in saying that we would be interested in this. The only condition from their perspective was, " Let's make sure it's someone who's going to help us grow and execute on our strategy." This wasn't an instance of MassMutual looking to take risk off the table and from owning an asset manager. It was anything but that, but it was really around, " Let's bring another like- minded partner into the ownership structure to provide capital and to provide assets to allow Barings to grow." And so that comes with managing assets for a new owner as well, as we do for MassMutual, providing seed capital to help us launch funds alongside and new strategies alongside MassMutual. And then there is the capital that came in from the purchase price, which are our expectation and Mass's expectations that'll be redeployed in Barings over time. And so you've got now two very, very strong, like- minded owners in the ownership structure who are viewing Barings as a growth engine for them. And so we'll be seeding things, we'll be growing organically, but also very much still in the game of M& A and this just provides us another partner to help us make acquisitions and make purchases to keep the business growing. So they were a unique counterpart. There were others who were interested in taking a stake in Barings, but this was a group that we felt really aligned with where we were going and what we wanted to do, as well as our parent company.

Greg Campion: Awesome. All right, let's switch gears and talk a little bit about client partnerships. I mentioned that Barings has always taken a partnership approach to our client relationships. I think there's so much exciting stuff going on at the moment in terms of how we're partnering with clients and so I want to talk to you about a few different kind of channels. Let's start with Sovereign Wealth. And maybe a great place to start there would be with the relationship with Mubadala. I know this was another partnership, or I guess at least the most recent iteration of this partnership was announced late last year. We announced a$ 500 million partnership in real estate debt, but tell me just about that. I know that's a really great relationship for the firm overall, one that we really value, but it'd be really interesting just to hear your views on that generally.

Mike Freno: Yeah, I think you said it well. The most recent iteration because we've been partners with Mubadala for several years now and this is actually the third strategy that we've done together with them. We have European middle market direct lending. We've had, as you mentioned, the new real estate debt. But even before that, we had a JV structure with them on the real estate equity side in Europe. Again, I think there's an alignment there that MassMutual can be investing alongside of them. That region of the world right now is really aligned with how we think about things. These are long- term liabilities, if you want to think of it that way, that they have. So they're taking long- term approaches, they're willing to spend time and look at new innovative ideas and understand. And so complexity is an area that they're willing to explore and they're really open- minded from a partnership standpoint. So how we can structure things, how we can be creative, not only with us managing assets on their behalf, but us investing alongside of them, us investing in the region, us building partnerships and JVs that way, I think it's a really exciting thing. And you're seeing more and more of the larger alternative asset managers really pursuing things like that and it's definitely an area that we're going to continue to lean into. More importantly, I think we've recognized that we can't do everything on our own. And so the willingness to open up and partner with investors, to partner sometimes with competitors, candidly, is really going to be a way to continue to grow. And so if we find like- minded partners, whether it's like- minded insurance companies, like- minded investors, like- minded competitors, however that may shake out, we are open certainly to finding ways to work together.

Greg Campion: Yeah. And that really stands out in terms of the consistency with the region in terms of the Baring/ MassMutual approach. Looking at things strategically and looking at things over very long time periods makes a ton of sense. And I know that Barings was recently involved in leading a private infrastructure investment in Saudi Arabia as well. Do you expect to see more investment into the region?

Mike Freno: Without question, yeah. And so we're operating in two cities now in the region. I suspect that over time that's going to expand further from that. And while you mentioned this was our first investment into the region, without a doubt that will be increasing. Certainly, we'll hopefully be partnering with those in the region to take some of our investment capabilities and working with them there, but also I think our parent companies will be seeing more opportunity in the region as it continues to grow. We've always taken a global mindset when it comes to finding good opportunities. And as this region continues to grow, I think the opportunities are going to become plentiful. So it's definitely going to be an area where we'll see further investment, both from us from a business standpoint and then us investing capital in the region.

Greg Campion: Yeah. Let's talk a little bit about the pension channel because I know there's been a lot of activity there. I'm probably a little bit biased just seeing a lot of the momentum here in the US so that's top of mind for me.

Mike Freno: Sure.

Greg Campion: But talk a little bit about what you're seeing there, how some of those partnerships in the pension space are evolving, and how you're thinking about those relationships.

Mike Freno: Yeah. Look, I think this is another area. We pride ourselves in having a very global business so we do look at all the regions, but the US is obviously the biggest capital markets region in the world and so we continue to have success there. We have a lot of upstate pensions and public pensions that have worked with us in the past. Most recently, had two really interesting transactions or partnerships, I should say, take place around unique transactions. The Virginia Retirement System is doing some things with us on infrastructure CLO, which is really a partnership with them and us to take the CLO technology, if you will, and put a different type of collateral behind that, not just your broad corporate, but really focusing more on infrastructure. And then the state of North Carolina, we've entered into a multi- strategy partnership around capital solutions, direct lending. So those are really exciting. There's a lot more to certainly come on those, but we are finding like- minded partners, again, in all regions of the world and in different risk spectrums. And certainly, these are more on the higher returning side of things. We look at a lot of our insurance clients who also dip down into that, but they're also really looking at kind of the higher quality, maybe high- grade type strategies if you want. And so we're making sure that when we find a good opportunity, irrespective of the risk profile, whether it's high yield equity or investment grade in the return profile, we have partners that we can show that opportunity to because I think we've said our aspirations over the long term is to be able at least have the opportunity to invest in every good asset that's out there. Now that's certainly a long- term vision, but we don't want to be constrained by not having investors who want to invest in certain parts of the capital structure, if you will.

Greg Campion: Yeah. One trend I've noticed with pension funds and across other channels is a new partnership forming around one asset class and then expanding across multiple asset classes and that seems very consistent with how you're describing the long- term nature of these relationships.

Mike Freno: Well, it's a great point. And that's why we built a business the way we did. I mean, we are of the size and scale where we have a portfolio of capabilities that we can evolve and grow with clients. If they want one particular asset class, we're certainly happy to start there. But throughout my career, the most successful relationships we've had have been where they start with one, people get comfortable and they begin to trust us more and more, and then we can have the dialogue of expanding that mandate to other asset classes that we're doing. And so those are the ones that we'll endure over the long period of time. If you're doing one asset class, we're certainly open to that, but we don't want things to be transactional. We're really looking to do things over a long term and I think having broader capabilities and having multiple things where we can touch benefits both parties on that side.

Greg Campion: Now you were mentioning earlier the kind of history and heritage of managing money for MassMutual for decades. And so obviously, the kind of insurance asset management is really part of the DNA here at Barings. So I want to ask you about your views on the insurance space, generally speaking. It seems to me like that's been a space that's been extremely, I don't know if I would say in vogue, but I've definitely noticed that alternative managers have figured out many different ways to partner with insurance companies, right? So talk to me just generally about what you're seeing in that space, how you're thinking about that space, some of the things that Barings is doing there.

Mike Freno: Yeah. You mentioned in vogue. It's a relatively newly talked about thing, but insurance companies and asset managers have been, as we said before, working together for a long, long period of time.

Greg Campion: Right, right.

Mike Freno: There is the liability side of it, which the insurance company sells, but it works because you've got the asset side of the balance sheet working for you as well. So while we look and we see all the things that are going out there, we've recognized how this partnership is mutually beneficial to everyone for the long term, and so it's nothing new to us from that perspective. But to your point about what's going on right now, definitely you're seeing just about every asset manager who has capabilities that would be interesting to insurance companies or have aspirations of building those out are looking at ways to partner. It's a form of permanent capital depending on your liability. Some are more permanent than others. Short- dated annuities are not three, five, seven years, maybe not as permanent when you're looking at something like bulk annuities or pension risk transfer, which is going to be longer dated. Certainly in our case, having the base of a whole life policy, those are very long- dated, which allows you to help really build a business. But I think you're going to continue to see this until just about every insurance company of size and scale has either an ownership or a partnership structure with someone because the need and the competitiveness for assets to help back the liabilities and be competitive is probably as competitive as it's ever been. And so having those capabilities and finding good managers is going to be critical, I think, to folks going forward.

Greg Campion: Yeah. I mean, I've definitely noticed a huge amount of momentum just in terms of the new partnerships that Barings has brought on board. Even in the last year alone, I think the status is five new$ 1 billion + mandates.

Mike Freno: I think three of those are new clients actually. So we have inaudible, which is, to your earlier point, great to see us working with investors on new things, new mandates that are of size and scale to go along with what we've managed for them in the past. And I'd like to think the service that we give them, the product that we give them, the outcomes that we've given them have allowed us to pivot into additional and grow with those clients. But what's really exciting is three brand new clients that are north of$1 billion. One's been well publicized around principle and doing things on the portfolio finance side and that's really a partnership with them. That's working alongside them to help them on some things that they are building out as well. So again, we are open- minded and recognize that we can't do everything on our own, and so finding people who are willing to partner with us who have the same thought process is really, really exciting. I suspect insurance is going to continue to be a growth engine for us.

Greg Campion: Yeah, yeah.

Mike Freno: And it really is one that I think we've just scratched the surface. We're big in it, which has one of our fastest growing channels, but again I think we've only just begun to scratch the surface of what we can offer to potential partners.

Greg Campion: Yeah, yeah. Yeah, man, I think it's exciting to see that the biggest, most sophisticated insurance pools of capital in the world are continuously making the decision to work with Barings, whether it's across private IG or other classes of assets.

Mike Freno: Yeah. That spans to the early comment globally. It's not just domestic insurers that we're seeing this. It's certainly domestic and we've got a blue chip list of clients in the United States, but that extends certainly into Europe and the UK and definitely in Asia. And we've got a great team on the insurance solution side who understands insurance companies, different regulations in different regions. So it's definitely a more nuanced market. Because there's so much regulatory scrutiny around different parts of the region, you've got to make sure you understand a client's needs and you can help them formalize what they want to do from a strategic asset allocation. How do the things we do and we've done in the past help them solve their goals? So it's a really exciting opportunity for us and I think it's going to continue to be a growth engine for us.

Greg Campion: Yeah. I might just mention Martello Re before we move on from insurance because I think that's been a really interesting story to watch all the growth there. Can you just comment on that briefly and how you're thinking about that?

Mike Freno: Yeah. Look, it's been a great success story for us. I think we've grown with them alongside. Their assets are close to$ 40 billion now. We've got a number of cedents in there and that was a business that was started with a block of$ 15 billion of assets and liabilities really from MassMutual, but it's expanded to now a partnership with MetLife as well. And so we're really excited about how that's performed. We have great partners in Centerbridge and Brown Brothers Harriman, who have been great alongside us to really stand up a company, build it. But yeah, size and scale of it is$ 40 billion. It's grown relatively quickly and I think has met a lot of the expectations that we hope, but I still think the best years for Martello are coming. Size and scale is going to become more and more critical for that and I think Barings and MassMutual are open to partnerships, mergers, things of that nature, acquiring things that the Martello board and management team are similar. What is the best way to continue to grow the business for our clients, our cedents, and then also our owners. So I think anything's on the table as it relates to that from how we continue to grow it, whether it's through organic means, which has been very, very successful, or whether we need to think about inorganic type things of buying blocks of business or emerging with other ones. I think anything is on the table.

Greg Campion: Yeah, yeah. Another great story of innovation and partnership and kind of long- term thinking playing out in real time.

Mike Freno: You're still seeing folks interested in starting their own reinsurer. So I think there's opportunities for an established platform like Martello to talk to folks who are looking to do that and potentially become investors in our platform because it was never meant to be a sidecar for MassMutual. It was really meant to start with that and really expand to a broad breadth of cedents out there and we're really starting to do that. So we would welcome conversations with others who are thinking about investing in the space, investing in the equity, or even standing up their own. We would love to have conversations with them about that.

Greg Campion: Last channel I wanted to ask you about is the wealth channel. Now this is one that there's a ton of momentum, a ton of activity here within these walls of Barings. Very clear that it's a priority for you and the leadership team here. Let's talk a little bit about that because I know there's kind of different ways that we're likely to show up in the wealth market across different regions. Maybe talk about the US first. It'd be interesting to hear the approach there in terms of partnerships and going direct and just the idea of bringing our capabilities to a broader set of clients.

Mike Freno: Yeah. This is probably one of the most relevant as it relates to partnerships. As it relates to the US, I mean, we look at our capabilities specifically in the wealth and retail channel. We've got great manufacturing capabilities. We've got our parent company again. There's MassMutual financial advisors that we're working with there. I think we've acknowledged that that's a component of it. I'm really excited with what we're doing with Invesco. We've got the first product up and running very, very shortly. Our seed capital hopefully will be going into that. We'll have another product shortly behind that and so I think we all have pretty high expectations on how successful that can be. But I do think making sure that our manufacturing fits nicely into the packaging that the retail investors and the wealth investors want is going to be critical for us. And some of that, again, will come organically and some of it will come inorganically.

Greg Campion: Yeah, yeah. That's great.

Mike Freno: Yeah.

Greg Campion: You mentioned outside the US. Anything you want to mention in terms of things you're particularly excited about?

Mike Freno: Yeah, we've got probably more penetration, if you will, in some of the wealth platforms overseas. I mean, if you think about even the namesake, Barings, a lot of what was done in certainly the Asia- Pac region was through wealth and partnerships with banks. Again, these are partnerships. When we talk about retail, we're not direct to the underlying investors. We're still going through intermediaries, whether they be what we call wirehouses or large banks or whether they be RIAs. I'll make one note is we made an acquisition of a group called Griffin a few years ago really for their securitization and capabilities, but what came with that was a lot of knowledge into the Australian wealth channel. And so we were able to not only get the manufacturing capabilities that they had that complimented what we had in other parts of the region and gave us really a global securitization capability, but also their knowhow in their brand and recognition in the wealth channel. And since then, we've had their one product that was already there. We've launched another product with a strategy using those manufacturing capabilities, but we've also been able to get our BDCs through there. And so again, recognizing that some of this will come through organic build and then others will come through inorganic build, and maybe when we buy great manufacturing they'll come with that packaging and distribution component as well. So a lot of exciting things to do and again I think this whole alt into wealth, into retail is still very, very much in its infancy.

Greg Campion: Yeah, yeah.

Mike Freno: I think we want to approach it like we do everything on a global basis and make sure we're balanced globally. If you look at how our assets are split, when you take out our parent company, it's really 40% in the Americas, 30% in EMEA and 30% in Asia- Pac. I'd love to see our wealth platform look similar to that. I see no reason why we can't if it's built correctly.

Greg Campion: Yep, yep. Some great stuff happening there. Love to see the partnership with Standard Charter Bank just announced last week.

Mike Freno: Yes, that's a good point.

Greg Campion: Yeah. So just so much momentum there. All right, let's switch gears because I want to make sure we talk a little bit about your thoughts on some of the asset classes that Barings is involved in, some of the opportunities you see ahead. So let's hit a couple of those key areas. Let's start with real estate. This is probably a good time to ask you this question because we're coming up on the one- year anniversary of Barings' acquisition of Artemis Real Estate Partners, so I'd be interested to hear about that business, kind of your thoughts generally, and how you think that that ultimately benefits our clients in the long run.

Mike Freno: Well, that has exceeded expectations and we had high expectations going into it. I mean, we knew we were partnering with a great, talented group of people. I think the way they have partnered with us and started the integration process has exceeded all expectations again. And it's the character of the people and the culture of the people that you get because this all's going to come down to that. You can have assets under management. You can have track records. You can have all that. But if you don't share a common vision of where you're going, then I think you'll stumble. And the team at Artemis has lived up to all those expectations a year in. I think we're ahead of where we thought we would be and so really excited about getting their next fund up and running and out in the market. So this is just another example of us being open to, " Look, we've got capabilities. How do we augment those? How do we compliment those? Do we do it organically by building? Do we go out and make acquisitions?" Artemis was the third acquisition we've made really in the last three years. We'll continue to be open- minded in doing that. But they really brought a level of expertise and scale in something that we had done, but didn't have the scale and didn't have the breadth, and they gave us an instant credibility in the market. The team that both Deb and Alex have built has been great and I look forward to that growing not only just in their existing strategies, but that expanding out to new strategies over time.

Greg Campion: Yeah. Their reputation and capabilities in that US real estate equity space are really impressive. How about as you think about the broader real estate portfolio? Obviously, a very global asset class. Talk to me about how you're thinking about that.

Mike Freno: Yeah, so we badge it under a broader real asset strategy, so we're including infrastructure and debt and equity in that as well. But as I think about the real estate in particular, for the first time I can look across and say we've now got a global capability both on the debt and the equity side. Prior to really the last recent years, we haven't been able to say that. We mentioned Artemis. I talked about Griffin. But the Altis acquisition that we did a few years ago, it's just finally closed, equally exceeded the expectations of what we had. The leadership team there has really embraced Barings, has been very active in building out capabilities in Japan. We've got a team in Japan who's making investments there now. We didn't have that. Probably couldn't have built that without really having a beachhead out in the region. So really, now I look at the real estate equity and debt platform and say it is truly global now. Are there regions and countries that we'll look to expand into? Absolutely. But if I look at the main broad regions, the Americas, EMEA, and Asia- Pac, we are there. We are investing dollars. We have boots on the ground, both on the debt and equity side, which really makes it pretty exciting about where we could go. We're large in real estate, but I think this is an asset class undoubtedly that's going to be one of the growth engines for us.

Greg Campion: Yeah. Yeah, you think about those long- term client partnerships that we were talking about earlier and I think when you can show up with a truly global platform that you can identify relative value across the globe, across the capital stack, it puts you in a great position to serve your clients.

Mike Freno: Yeah, absolutely. And it speaks to what we commented before is there are times when different investors will want different regions of the world. They'll like dynamics and we may like dynamics in different regions. Maybe we like core in one region. We may like value add in one region. We may like development in another region. We may like the debt in certain region. But in being able to offer that and, equally important to your point, being able to provide a perspective on that because we're investing dollars, not just reading about it, but we're actually on the ground, we're seeing that we're able to make that assessment, and we're investing on behalf of our parent company in a lot of that, I think gives us an element of credibility. And again, it is going to be a growth engine.

Greg Campion: Yeah. Another growth engine is our direct lending business so let's talk about that asset class. I feel like that is the media's favorite asset class to hate right now if you judge by the number of negative headlines coming through. But talk a little bit about that, talk a little bit about your views kind of on the overall health of the market, and then where you see Barings and the team going in the years ahead.

Mike Freno: Well, when we talk about middle market direct lending, we'll talk about below- investment grade, middle market companies is kind of what we were just thinking about. It starts with anything you're doing as the credit underwrite.

Greg Campion: Sure.

Mike Freno: That's the first and foremost thing. And while the asset class has grown significantly, I think the growth in the asset class has been healthy. I'm not seeing a lot of issues where a lot of wholesale companies aren't doing well. The economic situation remains to be good. What's happened is pricing is tightened, which you would expect as more and more folks move into the asset class, and so that's a debate that folks can have whether the relative value you're getting for giving up liquidity for something that's illiquid is that premium appropriate. But as general creditworthiness, I'm not seeing a lot of cracks in there and our companies would suggest that there aren't a lot of cracks. You certainly had a few headlines that came out a few months ago about things that didn't work out well. I believe those are idiosyncratic. I don't think that's systemic that's in the market. And you have that from time to time. I mean, this is an asset class where you're getting paid a risk- free rate plus 500 or more. And so there is some inherent risk to that. And I think as long as the underwriting standards remain, structures will change, pricing will change. But as long as you're investing with teams who have experience through this, aren't rushed to put capital to work, I think it's a great asset class to be in, and we're not seeing any cracks that would suggest the broader corporate credit spectrum is really in bad shape.

Greg Campion: Yeah. And when you're talking about real estate, you're talking about the importance of having a global perspective. Talk about that as it relates to direct lending.

Mike Freno: Similar. It is a common theme and it probably sounds overly redundant for folks, but we wanted to build all of our capabilities that we have. If we like it in a region, we should love it across the globe. And just like real estate, we've got capabilities across the globe which give us a unique perspective of that. Not just a big team in Europe, not just a big team in the US, but also teams in Australia and Asia- Pac. And so we're able to see that lens from a global standpoint. And I think what's becoming more and more clear to me is the health of the overall market. I think as more things that were traditionally maybe only done by banks are now being spread across investors everywhere, it's probably building more stable capital markets across the globe.

Greg Campion: Risks kind of diffused across ...

Mike Freno: You diffused risks. And while no one wants to see losses over time, losses in small sizes spread across a lot of investors is much easier to work through than big losses concentrated in banks that are providing liquidity for the system. I know there's a lot of concern about where it's moving and maybe there's a level of opaqueness to it, but my view is the majority of the managers and the investors going into these asset classes are sophisticated. They understand the risk and they've got great teams and process in place to make good investments and walk away from bad investments. And I think the next question will be is when we do come into a cycle, and I don't know when it will be, again we're not seeing any things that suggest that's happening now, what type of staffing experience do people have to work through this? Because mostly what happens with this, most of these are good companies and sometimes they just have capital structures that won't work because of a slowdown in their particular market, whatever it may be. How do you work through that process? Are you partnering well with the sponsors? Is there an issue where a sponsor's willing to walk away? And what do you, as a lender, do with that? Are you prepared to work through those things? And so I think that's really going to be telling over the next several years is when we do hit a credit situation, how is the market prepared to work through that?

Greg Campion: Yeah, yeah, yeah.

Mike Freno: And we've seen it before. It's just been a long time since we've seen it.

Greg Campion: And obviously, you've been through enough of these cycles...

Mike Freno: Unfortunately.

Greg Campion: To know that sometimes there's a healthy kind of washing out in some of these asset classes and you can kind of figure out who has been a tourist, so to speak, in the asset class. All right, let's talk about one more area. We were talking about things that are in vogue earlier. ABF has been an in vogue term over the last year, asset- based finance, very fast- growing business in the market, fast- growing business, and one that Barings has been investing in for many years. Obviously, it's just becoming grouped differently or talked about differently in the market these days, but talk about that broad category for me and how you're thinking about asset- based finance.

Mike Freno: Yeah. Well, when folks refer to the market being trillions of dollars, they're talking about the ABF, the structured finance, the originated private side of that, as well as private placements, infrastructure, and real estate. So this is a very, very large world. It traditionally had been done through the securitization market where it could potentially be CUSIP type things. And the large part of the market has always been really mortgages and cards and cars, right? You've got auto loans that are packaged this way, you've got credit cards that were packaged this way, mortgages both on the residential and commercial side, but it's really expanded to other types of unique and interesting lending things. We've got an equipment and leasing business that's kind of an origination engine for us that we can either own the whole leases and we like the returns of that. Or at times if we want to structure those, whether they be in a securitization form or they want to be in a note type form, you can tranche those out and find opportunities for clients in that regard. But this is the big asset class and this will require a lot of partnerships. I think we talked about partnerships. Who are you partnering with from this perspective? Because this is going to be owning some origination engines and we own a few of those that go out and originate loans that we can either, again, own in whole loan form or we can package, if you will, into securitization or, again, lend against those. It's also going to be taking stakes in those. You can take small stakes in origination engines. People have taken stakes and minority stakes in mortgage originators and things of that nature. Making sure that you understand the underwriting upfront because your investment's only going to be as good as that collateral, if you will, and making sure that your partners are underwriting it the correct way. There's asset owners, people who own assets, who are looking to move out of those because they don't find for whatever reason... Their needs are changed. And then with banks, people have always talked about... Well, with the emergence of the asset managers moving into a more origination, you're crowding out the banks. The reality is certainly an asset manager of our size and I don't think many of any size can replicate what the banks have from an origination capability. They just have the size and scale to do something that we can't replicate. And so partnering with them in areas and asset classes that we find attractive... And that's in the ABF side. That's also on the corporate side as well. So this is where the ecosystem really works together and I don't think any one player or even one vertical, if you will, can do it alone. And this is where partnerships are really going to become very, very important.

Greg Campion: Partnerships, relationships. We were talking earlier about the MassMutual partnership, MS& AD, partnerships like Mubadala. It's this massive ecosystem of partnerships. And I think as you just pointed out, these originations can come from so many different places, right? It seems like it's getting more and more important to properly service your clients and offer them the unique, differentiated assets to have this really strong network of relationships around the world to be able to provide those.

Mike Freno: And look, anything that's in the public market could actually go to the private market and vice versa. As we've built the business, we want to make sure that for our client's sake, they're seeing all those opportunities. If it becomes more attractive in liquid markets, well, let's pivot to the liquid side. If it's more attractive on the private side, let's pivot to the private, but equally for our borrowers. We want to be able to provide a solution for them. If you start out lending, and I'll use a corporate example, to someone when they're$ 25 million of EBITDA, you grow with them along the way to when they're$ 50 million, when they're$ 75 million, when they're $100 million, hopefully when they're$ 500 million. You're able to provide them capital to help grow their business irrespective of the size and scale and the form they want.

Greg Campion: That's what we see, that kind of blurring of lines, I guess, between public and private markets as well.

Mike Freno: Absolutely.

Greg Campion: One other area I just wanted to ask you about that kind of falls under this ABF umbrella is portfolio finance. It's been a real growth story here at Barings over the last year- plus. What are your thoughts generally speaking there?

Mike Freno: Again, another exciting business that we have that's really been part of Barings for a little over two years now, but has seen a lot of momentum. I think from a third- party standpoint, we've now got inaudible of$ 8 billion. The team has done a really good job of continuing to be disciplined in where they originate things and providing our clients with excess returns. But this is one that we're going to continue to expand and probably have some adjacent type strategies that go along with this. This falls into a broader ABF. It's really a unique area of doing it. And our team does an exceptional job of providing really bespoke financing solutions. This isn't something that fits within a box and we're just high volume on that. We have the ability to do a lot of scale and size and several billion dollar transactions, but our sweet spot is working with our borrower and making sure that we're solving a solution for them. That can provide an attractive return for our clients because there's extra work involved in that, but then also for the borrower because it gives them flexibility to do what they need. For some, if off- the- shelf works and they just need scale, that's not really where we're competing. Again, we want to be viewed as a real solutions provider.

Greg Campion: Yeah. Absolutely. All right, last question to finish up here: one thing that sets Barings apart.

Mike Freno: We have capabilities. We have an ownership structure that allows us to do this. We have size and scale. We have a global presence. At the end of the day, it's people. And it's making sure that those talented individuals all share a common vision in how we serve our clients, but it all comes back to that. Without the people, the vision, and the alignment of that, and how we serve our clients and how we respect the trust that our clients have put into that, that's it. And I think that's it for all industries and certainly all competitors, but for us that's always going to be the utmost importance.

Greg Campion: I mean, I think it's very clear when you work here that that's true and that it's a very team- oriented culture. And I think that starts from the top so I think I would thank you for the leadership that you've provided for the firm over the last five years and, again, congratulate you on that milestone and...

Mike Freno: Appreciate it. Hopefully, there's more to come. It's not the end.

Greg Campion: And I hope we can...

Mike Freno: Invite me back, Greg. I mean, it's been a year.

Greg Campion: Well, I want to do the five- year follow- up on you.

Mike Freno: So now, I'm not back for five years.

Greg Campion: Well, annually, but also the five- year because...

Mike Freno: It's your show. You get to pick the guests.

Greg Campion: It would be amazing to see how a lot of these trends kind of develop over that time. But Mike, this has been great. Thank you so much for joining me.

Mike Freno: I appreciate it. Thank you.

Greg Campion: Thanks for listening to or watching this episode of Streaming Income. If you'd like to stay up to date on our latest insights across asset classes from high- yield and private credit to real estate debt and equity, follow the show and leave us a review on your favorite podcast platform. We're on Apple Podcasts, Spotify, YouTube, and more. And don't forget to follow Barings on LinkedIn and subscribe to Where Credit Is Due for our latest updates.

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