What changed in this filing

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Item 1. Business

2023-05-26 compared with 2022-05-31 · 88 added, 76 removed, 443 unchanged (27% of the section changed)

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These portfolios utilize several types of synergistic investment strategies with third-party fund managers, including commitments to funds (“primaries”), acquiring stakes in existing funds on the secondary market (“secondaries”) and investing directly into companies (“co-investments”).

As of March 31, 2022, we oversaw $570 billion of private markets allocations, including $134 billion of AUM and $436 billion of AUA.

As of March 31, 2023, we were responsible for $621 billion of total capital, including $138 billion of AUM and $482 billion of AUA.

We were founded in 2007 to address the evolving needs of investors focused on private markets, reflecting a number of converging themes:

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Since our inception, we have focused on recruiting and retaining the best talent.

As of March 31, 2022, nearly 80 partners led the firm, with an average of nearly 20 years of investment or industry experience.

As of March 31, 2022, we had over 790 total employees, including over 280 investment professionals and more than 500 employees across our operating team and implementation teams dedicated to sourcing, executing, analyzing and monitoring private markets opportunities.

As of March 31, 2023, 95 partners led the firm, with an average of nearly 20 years of investment or industry experience.

As of March 31, 2023, we had 956 total employees, including 322 investment professionals and 634 employees across our operating team and implementation teams dedicated to sourcing, executing, analyzing and monitoring private markets opportunities.

We believe our scale and position in private markets provide us a distinct competitive advantage with our clients and fund managers.

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During the year ended March 31, 2023, we reviewed over 3,600 investment opportunities and conducted approximately 4,900 meetings with fund managers across multiple geographies and all four asset classes.

During the 12 months ended December 31, 2021, we allocated over $75 billion in capital to private markets on behalf of our clients, excluding legacy funds, feeder funds and research-only, non-advisory services.

During the 12 months ended December 31, 2022, we allocated approximately $80 billion in capital to private markets on behalf of our clients, excluding legacy funds, feeder funds and research-only, non-advisory services.

We have a flexible business model whereby many of our clients engage us for solutions across multiple asset classes and investment strategies.

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(iv) consulting on investment pacing, policies, strategic plans, and asset allocation to investment boards and committees;

(v) licensed access to SPI and our other proprietary tools;

(v) licensed access to our proprietary data and technology platforms, including SPI and our other proprietary tools;

and (vi) administrative services to unaffiliated investment advisors.

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Mandates for portfolio analytics and reporting services typically include licensed access to our proprietary performance monitoring software, Omni.

Omni tracked detailed information on over $805 billion of client commitments as of March 31, 2022, inclusive of our combined AUM/AUA, previously exited investments and investments of former clients.

Omni tracked detailed information on over $905 billion of client commitments as of March 31, 2023, inclusive of our total capital responsibility, previously exited investments and investments of former clients.

Our Competitive Strengths

Truly Global Scale with Local Teams

Since our founding, we have invested significant time and resources building a global platform that we believe is well positioned to benefit from the continued growth and globalization of the private markets.

Since our founding, we have invested and continue to invest significant time and resources building a global platform that we believe is well positioned to benefit from the continued growth and globalization of the private markets.

Today, we have investment and implementation professionals in 25 cities across 15 countries on five continents.

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We believe our focus on hiring local talent, supported by a deep bench of experienced investment professionals, has been critical in helping us attract a blue-chip, global client base.

During the year ended March 31, 2022, over 70% of our management and advisory fees came from clients based outside of the United States.

During the year ended March 31, 2023, nearly two-thirds of our management and advisory fees came from clients based outside of the United States.

Full-Service, Customized Approach to Delivering Solutions

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We believe our value proposition as a full-service firm also helps us strengthen and grow our client relationships.

As of March 31, 2022, 37% of our advisory clients also had an AUM relationship with us, and we advised or managed assets in more than one asset class for 35% of our clients, supporting our combined AUM/AUA growth.

As of March 31, 2023, 36% of our advisory clients also had an AUM relationship with us, and we advised or managed assets in more than one asset class for 34% of our clients, supporting our total capital responsibility growth.

Our focus on offering full-service, customized solutions to our clients is reflected in our business composition.

As of March 31, 2023, we had 279 bespoke SMAs and focused commingled funds (including high-net-worth programs).

For the year ended March 31, 2022, approximately 46% of our management and advisory fees (excluding fund reimbursement revenues) were generated from SMAs, as compared to 39% from focused commingled funds and 15% from advisory, data and administrative services.

For the year ended March 31, 2023, approximately 46% of our management and advisory fees were generated from focused commingled funds, 42% from SMAs, 11% from advisory, data and administrative services and 1% from fund reimbursement revenues.

Scale Across Private Markets Asset Classes

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Net asset value (“NAV”) data for underlying investments is as of December 31, 2022, as reported by underlying managers up to 114 days following December 31, 2022.

When NAV data is not available by 115 days following December 31, 2021, such NAVs are adjusted for cash activity following the last available reported NAV.

When NAV data is not available 114 days following December 31, 2022, such NAVs are adjusted for cash activity following the last available reported NAV.

(1) Allocation of AUM by asset class is presented by underlying investment asset classification.

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In many instances, existing clients have increased allocations to additional asset classes and commercial structures and deployed capital across our asset management and advisory services businesses.

Our dedicated in-house business development and client relations teams, comprising nearly 100 professionals in offices across 11 countries, maintain an active and transparent dialogue with our diverse and global client base.

Our dedicated in-house business development, marketing and client relations teams, comprising approximately 130 professionals in offices across 12 countries, maintain an active and transparent dialogue with our diverse and global client base.

Consistent with our staffing model on the investment side, we ensure local clients are interfacing with business development professionals who have local expertise.

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• Omni monitors the performance of our clients’ investments and allows users, including our clients, to generate detailed analytics.

As of March 31, 2022, Omni tracked detailed information on over 8,000 investments across more than 65,000 underlying portfolio companies.

Omni is used extensively by our approximately 80 person StepStone Portfolio Analytics & Reporting (“SPAR”) team to provide customized portfolio analytics and reporting on the performance of our clients’ investments.

As of March 31, 2023, Omni tracked detailed information on nearly 9,000 investments across more than 85,000 underlying portfolio companies.

Omni is used extensively by our 105 person StepStone Portfolio Analytics & Reporting (“SPAR”) team to provide customized portfolio analytics and reporting on the performance of our clients’ investments.

We also have a number of additional proprietary tools that we use and license in service of our clients, including our Pacing tool that enables clients to forecast liquidity needs, our daily valuation engine that facilitates asset management solutions offering periodic subscription or liquidity (such as the mass affluent and defined contribution plan markets), ESG reporting dashboards that allow our clients to monitor their portfolio against these non-financial metrics, and a secondary pricing engine that drives operating leverage in our evaluation of larger and more complex transactions.

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Data science within private markets has historically been difficult due to the lack of standardization and the labor-intensive process of collecting and processing information.

We have a dedicated Data Science and Engineering team with over 40 members, which manages and continues to develop our SPI and Omni platforms (and our additional proprietary tools built on these platforms) and supports our efforts to be a market leader in an area that is essential to evaluating private markets.

We have a dedicated Data Science and Engineering team with approximately 30 members, which manages and continues to develop our SPI and Omni platforms (and our additional proprietary tools built on these platforms) and supports our efforts to be a market leader in an area that is essential to evaluating private markets.

Strong Investment Performance Track Record

Our track record is a key point of differentiation to our clients.

As shown below, we have outperformed the MSCI ACWI Index, calculated on a Direct Alpha Equivalent basis, the benchmark index used for comparison across all of our investment strategies on an inception-to-date basis as of December 31, 2021.

As shown below, we have outperformed the MSCI ACWI Index, the benchmark index used for comparison across all of our investment strategies on an inception-to-date basis as of December 31, 2022.

See “Part II, Item 7.

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(in billions except percentages and multiples)

Strategy Committed Capital Cumulative Invested Capital Realized Distributions NAV Total Multiple of Invested Capital Gross IRR Net IRR Gross IRR versus Benchmark

Strategy Committed Capital Cumulative Invested Capital Realized Distributions NAV Total Gross IRR Net IRR Net Multiple of Invested Capital Net IRR versus Benchmark

Primaries $ 273.8 $ 192.0 $ 122.9 $ 153.7 $ 276.6 12.8 % 12.5 % 1.4x 4.7 %

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Sustainable and recurring management and advisory fees

Our management and advisory fees grew from $141 million in fiscal 2018 to $380 million in fiscal 2022, representing a 28% compounded annual growth rate (or 24% excluding the Greenspring acquisition).

Our management and advisory fees grew from $141 million in fiscal 2018 to $497 million in fiscal 2023, representing a 29% compounded annual growth rate.

For the year ended March 31, 2023, approximately 60% of our management fees were from SMAs and focused commingled funds with a remaining tenor of seven years or more.

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Highly predictable with strong visibility into near-term growth

Our SMAs and focused commingled funds typically have a 10 to 18-year maturity at inception, including extensions.

As of March 31, 2022, we had approximately $17 billion of committed but undeployed fee-earning capital, which we expect to generate management fees when deployed or activated.

As of March 31, 2022, we had over 330 revenue-generating asset management and advisory programs and therefore are not dependent upon or concentrated in any single investment vehicle or client.

Our SMAs and focused commingled funds typically have an eight to 18-year maturity at inception, including extensions.

As of March 31, 2023, we had $15.7 billion of committed but undeployed fee-earning capital, which we expect to generate management fees when deployed or activated.

As of March 31, 2023, we had nearly 400 revenue-generating asset management and advisory programs and therefore are not dependent upon or concentrated in any single investment vehicle or client.

For the year ended March 31, 2023, no single client contributed more than 6% of our total management and advisory fees, and our top 10 clients, which comprise over 50 separate mandates and commitments to commingled funds, contributed approximately 25% of our total management and advisory fees.

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We believe our biggest asset is our people, and therefore we focus on consistently recruiting the best people, all of whom are proven leaders in their areas of expertise.

As of March 31, 2022, nearly 80 partners led the firm, with an average of nearly 20 years of investment or industry experience.

As of March 31, 2022, over 480 of our employees have equity interests in us in the form of direct equity interests and/or restricted stock units under our 2020 Long-Term Incentive Plan (“LTIP”), and more than 190 employees are entitled to participate in our carried interest allocations in one or more of the asset classes.

As of March 31, 2023, 95 partners led the firm, with an average of nearly 20 years of investment or industry experience.

As of March 31, 2023, over half of our employees have equity interests in us in the form of direct equity interests and/or restricted stock units under our 2020 Long-Term Incentive Plan (“LTIP”), and more than 200 employees are entitled to participate in our carried interest allocations in one or more of the asset classes.

Strategic Priorities

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Deploy already raised committed capital .

As of March 31, 2022, we had approximately $17 billion of capital not yet deployed across our various investment vehicles, which we expect to generate management fees when invested or activated.

As of March 31, 2023, we had $15.7 billion of capital not yet deployed across our various investment vehicles, which we expect to generate management fees when invested or activated.

Add New Clients Globally

Over the past decade, we have invested in and grown both our in-house and third-party distribution networks.

As of March 31, 2022, we had nearly 100 professionals worldwide dedicated to business development and client relations.

As of March 31, 2023, we had approximately 130 professionals worldwide dedicated to business development, marketing and client relations.

Our local business development professionals lead conversations with potential local clients.

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Many high-net-worth and mass affluent individual investors continue to have difficulty accessing private markets investment opportunities because of a lack of products currently available that satisfy regulatory and structural requirements related to liquidity, transparency and administration.

We have developed an investment platform, Conversus, designed to expand access to the private markets for private wealth clients.

We have developed an investment platform, StepStone Private Wealth LLC (“SPW”) which was formerly known as Conversus, designed to expand access to the private markets for accredited investors.

Leverage Our Scale to Enhance Operating Margins

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We intend to remain highly disciplined in our development strategy to ensure that we are allocating management time and our capital in the most productive areas to fuel growth.

Our strategy will focus on opportunities that expand our scale in existing markets, add complementary capabilities, enhance distribution, or provide access to new markets.

For example, in September 2021, we acquired Greenspring, a venture capital platform, further enhancing our private equity offerings.

The acquisition has enhanced our capabilities as a private markets solution provider, helping us forge deeper relationships with clients, limited partners and general partners, and we believe has made us a clear market leader in venture capital and growth equity.

Our strategy will continue to focus on opportunities that expand our scale in existing markets, add complementary capabilities, enhance distribution, or provide access to new markets.

Investment Strategies

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We believe proprietary and advantaged deal flow has been a critical factor in our ability to purchase high quality assets at below market prices.

Since the inception of our private equity secondaries strategy in 2008, we have sourced over 11,400 secondary transactions of which over 63% were limited or proprietary processes as calculated by deal size.

Co-investments

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Users also have the ability to edit, run and export various portfolio analytics, including analyzing various return and preference metrics commonly used in the investment industry, such as return J-Curve, cash flow activity over time, multi-period internal rates of return and time-weighted rate of return.

Risk Management

Investment Risk Management

We have an investment risk management function overseen by our Head of Research and Portfolio Management and our Head of Risk.

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We believe that full integration of ESG factors in both our investment process and internal operations will improve long-term, risk-adjusted returns for our clients.

We developed a responsible investment policy, became a signatory to the United Nations Principles for Responsible Investment (“UNPRI”) in 2013 and created a StepStone Responsible Investment Committee in 2017, and have since become a signatory to the Financial Stability Board Task Force on Climate-Related Financial Disclosures (“TCFD”) as well as a member of the GRESB and the Sustainability Accounting Standards Board (“SASB”).

We aim to continually improve and evolve, reviewing our policy annually, holding regular trainings and responsible investment education sessions for our investment teams, and looking for ways to enhance our systems and processes, and have incorporated GRESB data and benchmarks in our decision-making process where relevant.

As part of our responsible investment journey, we:

• Developed a responsible investment policy;

• Became a signatory to the United Nations Principles for Responsible Investment (“UNPRI”) in 2013;

• Created a StepStone Responsible Investment Committee in 2017;

• Became a signatory to the Financial Stability Board Task Force on Climate-Related Financial Disclosures (“TCFD”);

• Became a member of the GRESB and the Sustainability Accounting Standards Board (“SASB”);

• Implemented a stewardship policy reflecting an emphasis on stewardship practices in our investments;

• Developed bespoke responsible investing guidance materials for fund managers across our asset classes;

• Became a signatory to the UK Stewardship Code.

Responsible Investment in the Investment Process

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We are committed to incorporating ESG factors across our operational decision making and internal policies.

Diversity and Inclusion

Diversity, Equity and Inclusion

We value diversity among our staff and leadership, recognizing that through diversity, we gain a variety of perspectives, views, and ideas which strengthen our ability to strategize, communicate, and deliver on our mission.

In 2017, we developed a global Diversity, Equity & Inclusion Committee comprising senior and mid-level members of our firm across functions and asset classes, to evaluate our current diversity efforts, lead new initiatives to improve diversity, equity and inclusion at our firm, and to continuously improve upon our policies and culture.

In 2017, we developed a global Diversity, Equity & Inclusion Committee comprising senior and mid-level members of our firm across our asset classes and geographies, to evaluate and support our diversity efforts, lead new initiatives to improve diversity, equity and inclusion at our firm, and to continuously improve upon our policies and culture.

Our mission statement on why diversity, equity and inclusion matter states:

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Talent development and retention are also key components of our diversity, equity and inclusion efforts, including our focus on growing and developing strong mid-level talent into senior roles.

In addition to our mentorship program, we have a sponsorship program that includes high performing and high potential mid-career female and diverse professionals and provides them with rigorous developmental tools, 360-degree assessments, education and executive coaching opportunities alongside their sponsor.

We have also continuously reviewed and expanded our parental leave policies and related benefits.

In addition to our mentorship program, we have a sponsorship program for high performing and high potential mid-career professionals, with a focus on female and diverse team members, and provides them with rigorous developmental tools, 360-degree assessments, education and executive coaching opportunities alongside sponsorship by one of the firm’s partners.

Building awareness and engagement around the importance of diversity, equity and inclusion, both internally and externally, represents another core tenet of our efforts.

As an example, the StepStone Diversity, Equity and Inclusion Network provides networking and educational opportunities to all of our employees globally.

In addition, our employees launched our first two Employee Resource Groups (“ERGs”) focused on the LatinX community and the LGBTQ+ community and we expect additional ERGs to be formed in the future.

In addition, our employees have launched multiple Employee Resource Groups (“ERGs”) established with the intention of providing a supportive community for employees of certain affinity groups and their allies such as the LatinX community and the LGBTQ+ community.

In fiscal 2023, the number of our ERGs grew to five with the addition of a Pan-Asian, parental and environmental ERGs.

Finally, StepStone is a strong supporter of several organizations that advocate for further diversity in our industry.

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As such the following efforts have been undertaken:

• Engaged a consultant to conduct a comprehensive carbon footprint measurement and analysis and have funded several sustainable development projects and purchased carbon offsets to offset carbon emissions to achieve status as a carbon neutral company since 2019.

• Implemented tailored carbon reduction initiatives across our global offices and as part of our vendor due diligence process, by adding specific climate-related queries to help us understand and evaluate vendor environmental efforts such as collecting information on any targets and initiatives in place to minimize or offset emissions and reduce waste.

• Introduced a range of initiatives focused on reducing energy, waste and water usage across the firm, including recycling, transitioning to electronic tablets during client and other business meetings and generally encouraging a “paperless” approach where practicable.

• Prioritizing selection of highly rated Leadership in Energy and Environmental Design (LEED) or comparable standard in leasing office space.

• Engaging a consultant to conduct a comprehensive carbon footprint measurement and analysis and funding several sustainable development projects and purchased carbon offsets to offset carbon emissions to achieve status as a carbon neutral company since 2019.

• Implementing tailored carbon reduction initiatives across our global offices and as part of our vendor due diligence process, by adding specific climate-related queries to help us understand and evaluate vendor environmental efforts such as collecting information on any targets and initiatives in place to minimize or offset emissions and reduce waste.

• Introducing a range of initiatives focused on reducing energy, waste and water usage across the firm, including recycling, transitioning to electronic tablets during client and other business meetings and generally encouraging a “paperless” approach where practicable.

• Prioritizing selection of highly rated Leadership in Energy and Environmental Design (LEED) or comparable standard in leasing office space, and attaining certification as carbon neutral and receiving a five-star energy rating for one of our global offices.

Community Engagement

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We have also established a formalized charitable giving program with an employee matching component.

Recently, our Community Engagement Committee has encouraged employee contributions and volunteer efforts toward Ukraine’s relief and recovery efforts.

In fiscal 2023, we donated to GiveWell’s Top Charities Fund which allocates donations to organizations and causes that have been determined to have the greatest ability to make a meaningful difference.

We also made a donation to the International Rescue Committee, a well established humanitarian organization with a global presence that is dedicated to providing lifesaving aid to people in communities devastated by conflict and disaster.

We believe the value proposition we offer across our asset management, advisory, data, portfolio monitoring and reporting services has resulted in strong relationships with our clients.

Our client base includes some of the world’s largest public and private pension funds, sovereign wealth funds and insurance companies, as well as prominent endowments, foundations, family offices and private wealth clients, which include high-net-worth and mass affluent individuals globally.

During the year ended March 31, 2022, over 70% of our management and advisory fees came from clients based outside of the United States, reflecting the strength and breadth of our relationships within the global investor community.

During the year ended March 31, 2023, nearly two-thirds of our management and advisory fees came from clients based outside of the United States, reflecting the strength and breadth of our relationships within the global investor community.

We believe the stability of our client base, reflecting in part the longer tenor of our SMAs and focused commingled funds, reflects the strength of the long-term client relationships we have developed.

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• global distribution of our institutional funds to family office investors and high-net-worth investors.

In October 2020, Conversus, our investment platform designed to expand access to the private markets for high-net-worth and accredited investors, held the first closing for its inaugural fund Conversus StepStone Private Markets (“CPRIM”), a fund that offers, through a single investment, access to major private markets asset classes in a proportion dynamically allocated by us.

As of May 1, 2022, CPRIM surpassed $550 million of AUM and has generated a total return per share of 76.6% through April 30, 2022 since inception in October 2020.

We believe CPRIM offers the following areas of differentiation to potential investors:

• Broad diversification in private markets .

Through a single investment in CPRIM, investors gain exposure to four major asset classes within the private markets:

In October 2020, SPW held the first closing for its inaugural fund, StepStone Private Markets (“SPRIM”), which was formerly known as Conversus StepStone Private Markets or CPRIM, a fund that offers, through a single investment, access to major private markets asset classes in a proportion dynamically allocated by us.

In fiscal 2023, SPW subsequently launched its StepStone Private Venture and Growth fund (“SPRING”), and expanded its distribution outside the United States to include Europe and Australia.

As of May 1, 2023, the total retail platform assets surpassed $1.6 billion of AUM, and SPRIM and SPRING have generated annualized returns of approximately 30% and 20%, respectively, since the inception of each fund.

We believe SPRIM offers broad diversification in private markets.

Through a single investment in SPRIM, investors gain exposure to four major asset classes within the private markets:

private equity, infrastructure, private debt and real estate.

We believe SPRING offers diversified exposure across the innovation economy by providing global access to top-tier venture and growth managers.

In addition, our Private Wealth funds offer the following areas of differentiation to potential investors:

• Favorable structure .

CPRIM is structured to provide 1099 tax reporting instead of K-1s, a single investment instead of recurring capital calls, and potential liquidity in the form of regular, current income.

SPRIM and SPRING are structured to provide 1099 tax reporting instead of K-1s, a single investment instead of recurring capital calls, and potential liquidity in the form of regular, current income.

• Attractive track record and deep knowledge and expertise in private markets .

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The Investment Advisers Act imposes substantive regulation on virtually every aspect of our business and our client relationships.

Applicable requirements relate to, among other things, fiduciary duties to clients, engaging in transactions with clients, maintaining an effective compliance program, performance fees, solicitation arrangements, allocation of investments, conflicts of interest, marketing, recordkeeping, reporting and disclosure requirements.

The Investment Advisers Act also regulates the assignment of advisory contracts by the investment adviser.

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Failure to comply with the requirements of the Investment Advisers Act or the rules and regulations promulgated by the SEC could have a material adverse effect on our business.

Our SMAs and focused commingled funds generally are not registered under the Investment Company Act because we only form SMAs for, and offer interests in our focused commingled funds to, persons who we reasonably believe to be “qualified purchasers” as defined in the Investment Company Act.

However, we expect that the funds we manage on our private wealth platform will be registered investment companies under the Investment Company Act.

The Investment Company Act and the rules thereunder contain detailed parameters for the organization and operation of investment companies.

Among other things, the Investment Company Act and the rules thereunder limit or prohibit transactions with affiliates, impose limitations on the issuance of debt and equity securities, generally prohibit the issuance of options and impose stringent governance and board independence requirements.

Our SMAs and the majority of our focused commingled funds are not registered under the Investment Company Act because we only form SMAs for, and offer interests in our focused commingled funds to, persons who we reasonably believe to be “qualified purchasers” as defined in the Investment Company Act.

However, certain U.S.

funds we manage on our private wealth platform are registered investment companies or business development companies under the Investment Company Act.

The Investment Company Act and the rules thereunder contain detailed parameters for the organization and operation of investment companies and business development companies.

Among other things, the Investment Company Act imposes significant requirements and limitations on investment companies and business development companies, including with respect to their capital structure, investments and transactions.

While we exercise broad discretion over the day-to-day management of our investment companies and business development companies, each of our investment companies and business development companies is also subject to oversight and management by a board of directors, a majority of whom are not “interested persons” as defined under the Investment Company Act.

The responsibilities of each board include, among other things, approving our advisory contract with our investment company or business development company, approving certain service providers and monitoring transactions involving affiliates, and approving certain co-investment transactions.

Additionally, each quarter, the applicable investment adviser, as the valuation designee, will provide the audit committee of each of our investment companies and business development companies with a summary or description of material fair value matters that occurred in the prior quarter and on an annual basis, as well as a written assessment of the adequacy and effectiveness of its fair value process.

The audit committee of each of our investment companies and business development companies oversees the valuation designee and reports to the respective investment company or business development company’s board of directors on any valuation matters requiring such board’s attention.

The advisory contracts with each of our investment companies and business development companies may be terminated by the stockholders or directors of such investment companies and business development companies on not more than 60 days’ notice, and are subject to annual renewal by each respective entity’s board of directors after an initial two-year term.

ERISA-Related Regulation

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Failure to maintain compliance with applicable laws and regulations could result in regulatory intervention, adversely affect our business or ability to provide services to our clients and harm our reputation.

The European Union Markets in Financial Instruments Directive II (“MiFID II”), which became effective on January 3, 2018, requires, among other things, all MiFID II investment firms to comply with more prescriptive disclosure, transparency, reporting and recordkeeping obligations and enhanced obligations in relation to the receipt of investment research, best execution, product governance and marketing communications.

The European Union Markets in Financial Instruments Directive II (“MiFID II”) requires, among other things, all MiFID II investment firms to comply with more prescriptive disclosure, transparency, reporting and recordkeeping obligations and enhanced obligations in relation to the receipt of investment research, best execution, product governance and marketing communications.

As we operate firms which are subject to MiFID II (including MiFID II as applicable in the UK), we implemented revised policies and procedures to comply with MiFID II where relevant, including where certain rules have an extraterritorial impact on us.

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Outside the UK and the EEA, the regulations to which we are subject relate primarily to registration and reporting obligations.

It is expected that additional laws and regulations will come into force in the UK, the EEA, the EU, and other countries in which we operate over the coming years.

It is expected that additional laws and regulations will come into force in the UK, the EEA, the EU, and other countries in which we operate.

Regulation (EU) 2019/2033 on the prudential requirements for investment firms (“IFR”) and Directive (EU) 2019/2034 on the prudential supervision of investment firms (“IFD”) entered into force on December 25, 2019.

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Different and extended internal governance, disclosure, reporting, liquidity, and group “prudential” consolidation requirements (among other things) could also have a material impact on our EU-based operations.

The UK is also proposing to introduce a new prudential regime for investment firms that are subject to MiFID II (as implemented in the United Kingdom), to take effect on January 1, 2022.

Whilst this regime has not yet been finalized, it is highly likely to introduce (amongst other things) increased regulatory capital requirements, new remuneration requirements and increased reporting requirements.

In addition, there may be changes to the AIFMD and UCITS regimes and also further regulation adopted which may impact those parts of our business operating within the EU.

For instance, key requirements under Directive (EU) 2019/1160 and Regulation (EU) 2019/1156 on the cross-border distribution of collective investment undertakings will come into effect in EU member states from August 2, 2021.

The UK introduced a new prudential regime for investment firms that are subject to MiFID II (as implemented in the UK), that entered into force on January 1, 2022.

This new regime introduced (amongst other things) increased regulatory capital requirements, new remuneration requirements and increased reporting requirements.

In addition, there may be future changes to the AIFMD and UCITS regimes and also further regulation adopted which may impact those parts of our business operating within the EU.

For instance, key requirements under Directive (EU) 2019/1160 and Regulation (EU) 2019/1156 on the cross-border distribution of collective investment undertakings have come into effect in EU member states from August 2, 2021.

Among other things, this legislation introduces rules regarding the pre-marketing of funds.

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With the expiration of the Brexit transition period on December 31, 2020, UK regulated entities lost the right to passport their services to EEA countries, and EEA entities lost the right to reciprocal passporting into the UK (subject to a transitional regime).

As noted above, in response to this, as planned, we have engaged our affiliate entity, StepStone Group Europe Alternative Investments Limited (“SGEAIL”), formerly known as Swiss Capital Invest Holding (Dublin) Limited, which is based in the EU, to allow the group to continue to engage in regulated activities within the EU.

As noted above, we engaged our affiliate, StepStone Group Europe Alternative Investments Limited (“SGEAIL”), which is based in the EU, to allow the group to continue to engage in regulated activities within the EU.

SGEAIL is authorized by the Central Bank of Ireland pursuant to AIFMD and UCITS and authorized to provide certain MiFID II services.

We also may establish offices in various EU jurisdictions to employ and supervise operations in such jurisdictions, including the establishment of branches in SGEAIL.

While we believe that taking these steps will help to ensure that we are able to continue to conduct business in the UK and the EU after Brexit, there remains some uncertainty as to the full extent to which our business could be adversely affected.

Further, as described above, the UK’s departure from the EU and the potential resulting divergence between the UK and EU regulatory frameworks may result in additional complexity and costs in complying with regulations across both the UK and EU.

We have established offices in various EU jurisdictions to employ and supervise operations in such jurisdictions, including the establishment of branches of SGEAIL.

Human Capital

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These values are embraced by StepStone’s team and lead to high satisfaction for employees.

We measure employee satisfaction and engagement through a variety of surveys throughout the year.

As of March 31, 2022, we had over 790 employees globally, including more than 280 investment professionals and more than 500 employees across our operating team and implementation teams dedicated to sourcing, executing, analyzing and monitoring private markets opportunities.

We measure employee satisfaction and engagement through a variety of surveys.

As of March 31, 2023, we had 956 employees globally, including 322 investment professionals and 634 employees across our operating team and implementation teams dedicated to sourcing, executing, analyzing and monitoring private markets opportunities.

We consider our relationship with our employees to be good and have not experienced interruptions of operations due to labor disagreements.

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We aspire to have candidates progress within the hiring process with a positive impression of the firm.

StepStone’s retention strategy encompasses the entire life cycle of the employee, including our strategic hiring and co mprehensive onboarding processes, ongoing professional development, mentoring and sponsorship programs, our learning and inclusive culture and conducting exit interviews to gain further insights on retention.

StepStone’s retention strategy encompasses the entire life cycle of the employee, including our strategic hiring and co mprehensive onboarding processes, ongoing professional development, mentoring and sponsorship programs, our learning and inclusive culture and conduct of exit interviews to gain further insights on retention.

Total Rewards

We continuously strive to provide a competitive and above-market total rewards package.

We continuously strive to provide a competitive total rewards package.

Our compensation approach is performance based and determined by considering a combination of firm and individual performance.

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As a public company, we are able to diversify our employee ownership by providing equity grants to employees.

In connection with our IPO, we granted restricted stock units (“RSUs”) pursuant to our LTIP to over 500 of our approximately 560 employees at the time of the offering.

Our LTIP provides us the ability to offer a variety of equity-based awards in the future to further incentivize our employees.

In February 2022, we granted restricted stock units to approximately 250 of our employees.

In addition, we award annually a portion of carried interest allocations earned by us to certain employees.

We also believe we offer an engaging culture and opportunities for ongoing professional development.

We believe we offer an engaging culture and opportunities for ongoing professional development.

We believe that a strong, performance-oriented culture is the foundation for a stable organization that will attract and retain industry-leading talent.

We offer our team members the benefit of a collegial, intellectually challenging environment where they are empowered to exercise their creativity.

Diversity & Inclusion

Diversity, Equity and Inclusion

We believe that a diverse team and an inclusive environment bring tremendous value to us and our clients and are fundamental to our success.

Bringing together individuals with diverse backgrounds, experiences, and perspectives allows us to better serve our clients and investors, and is integral to retaining an engaged and dedicated workforce.

We have established various initiatives and programs to promote and foster diversity and inclusion within StepStone and the broader financial services community, including:

• StepStone Diversity, Equity & Inclusion Committee – The committee was established to promote, monitor and implement our diversity and inclusion strategy, and comprises employees from different asset classes, functions, seniority, geographies, gender and race, ethnicity and national origin.

We have established various initiatives and programs to promote and foster diversity, equity and inclusion within StepStone and the broader financial services community, including:

• StepStone Diversity, Equity & Inclusion Committee – The committee was established to promote, monitor and implement our diversity, equity and inclusion strategy, and comprises employees from different asset classes, functions, seniority, geographies, gender and race, ethnicity and national origin.

The committee also supports the firm’s various employee-led ERGs.

• StepStone Diversity, Equity & Inclusion Network – The network provides opportunities for our employees to learn about various diversity, equity and inclusion matters and initiatives and to meet and talk to experts who are championing these causes.

• Mentorship and Sponsorship Programs – The mentorship program provides interested employees with structured access to one of their more senior colleagues who provide guidance and career advice.

The sponsorship program pairs promising mid-level employees, including female and diverse professionals, with one of the firm’s partners as well as an executive coach and is intended to support participants in advancing their professional development and leadership skills.

The sponsorship program pairs promising mid-level employees, including female and diverse professionals, with one of the firm’s partners, who serves as a sponsor, as well as an executive coach, and is intended to support participants in advancing their professional development and leadership skills.

• Partnerships and Outreach – In addition to promoting diversity and inclusion through our own events, such as hosting events encouraging undergraduate female students to pursue careers in finance, we sponsor and partner with several organizations dedicated to making financial services more diverse and inclusive.

• Expanded Benefits – We provide benefits such as paid parental leave, parental leave coaching for managers and employees, paying for travel for newborns and caretakers when the employee has business required travel, paid shipping of breast milk, wellness rooms for new parents at our offices and paid volunteer time off.

• Parental Leave and Benefits – We provide benefits such as paid parental leave, parental leave coaching for managers and employees, paying for travel for newborns and caretakers when the employee has business required travel, paid shipping of breast milk, wellness rooms for new parents at our offices and paid volunteer time off.

We periodically review and seek to improve our parental leave policies and related benefits.

Available Information

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business