The StepStone Advantage

At StepStone we are intensely focused on developing private equity portfolios that fit the unique needs of our clients and will out-perform over the next fund cycle (four to six years). We believe the following strengths uniquely enable us to meet this challenge: Research Driven Investment Approach. StepStone believes that a research driven approach to the market (i) provides the analytical framework that drives superior investment returns and (ii) benefits StepStone clients by offering continuous insights into the evolution of market conditions. Not only does this approach allow StepStone to identify the managers that will out-perform in the next fund cycle, but also the sub-sectors that will provide superior returns. StepStone’s research begins with a consideration of the investment conditions that exist in each sub-sector and geography. This research allows StepStone to optimize sub-sector and geographic allocations and to identify those funds that are most likely to benefit from the market conditions that will prevail in the coming fund cycle.

Proven Investment Process and Philosophy. StepStone’s investment professionals have managed investment teams and processes that have consistently out-performed the market. This out-performance is driven by a combination of optimizing sub-sector allocations based on future market trends and identifying the managers that will generate superior returns. StepStone will utilize the research intensive investment process that they have previously deployed successfully in the areas of fund investments, co-investments and direct investments.

Superior Analytical and Investment Expertise. StepStone professionals have the mind-set of an investor, not a consultant. StepStone’s investment team has a high concentration of direct investment and other related transactional backgrounds – supplemented by extensive analytical training and experience. StepStone’s team has been constructed to consist of diverse and complementary backgrounds. It is our view that diverse perspectives lead to optimal investment decisions. In addition, StepStone can attract the top investment professionals because we provide superior compensation, professional development and empowerment to our professionals. An important element of the overall compensation that StepStone offers is material equity ownership and profit participation by all professionals.

Experience Working with Leading Private Equity Limited Partners. StepStone’s professionals have extensive experience managing the private equity portfolios of the leading limited partners in the asset class. For example, StepStone professionals have assisted seven of the top ten largest pension funds in the United States and some of the largest non-US institutions in the management of their portfolios. Innovative activities that the StepStone professionals have managed for these leading institutions include emerging managers programs, co-investment programs, direct investment programs, analysis of portfolio structuring and cash flow pacing, evaluation of portfolio liquidity options, geographic exposure optimization, LP commitments as fund sponsors that include GP interests, GP investments and work outs of troubled funds.

Superior Client Service. StepStone is experienced in managing an investment process that emphasizes client involvement and responsiveness and a customized portfolio development process. We believe that each institution has unique qualities that should be understood by their advisor in order for the advisor to develop the optimal portfolio for the limited partner. StepStone’s approach is to work closely with the client in a highly interactive way to develop the portfolio that meets the client’s goals.

Collegial and Supportive Culture. StepStone has a philosophical dedication to providing a crucial balance of empowerment, mentorship and discipline provides the framework through which the Founders intend to build a durable, stable investment platform. Some of the management strategies that the StepStone team has utilized successfully in the past that will be part of StepStone’s management approach include: (i) comprehensive 360 degree performance reviews for all employees, (ii) a formal mentoring program to provide professional development direction, (iii) a decision-making process that empowers professionals and ensures that they feel they are an integral part of the organization, (iv) an organizational structure emphasizing specialization so that senior professionals can be entrepreneurial and build their practice area as if it were a business, (v) an emphasis on corporate values of integrity, fairness, respect for all employees (regardless of level) and community service and (vi) a compensation and promotion philosophy emphasizing performance (based on objective, non-political measures).

Equitable Governance and Ownership Structure. StepStone believes that in a people intensive business such as ours, a critical driver of long-term outperformance is ensuring that firm equity and economics are owned by the people responsible for investment activities. 80% of StepStone’s equity is owned by, and 90% of the firm’s profits are shared by, our professionals. In addition, StepStone has a governance structure that empowers a broad group of employees and makes them part of the decision-making process - both from a strategic and operational perspective. StepStone is confident that this combination will allow the firm to benefit from (i) a stable, motivated group of employees, (ii) superior decision-making, and (iii) the ability to attract and retain the top talent in the private equity industry.