Who is StepStone Group?
Headquarters location is not stated in the source report and is included for reader context.
StepStone Group is a global asset manager valued at roughly $5 billion on the fees it charges for managing assets. The firm went public in 2020 and helped popularize the "retailization" of private markets, packaging stakes in private companies and private funds into public products sold to retail investors through stockbrokers. Its fastest-growing business is its retail arm, StepStone Private Wealth, which has grown from about $3 billion in managed assets in 2024 to around $18 billion today.
Business Model
StepStone earns management and performance fees on the assets it oversees. Its retail arm, StepStone Private Wealth (SPW), bundles private investments into "evergreen" funds such as its flagship SPRING fund and sells them to well-off individuals through stockbrokers. The report notes StepStone charges a 15% performance fee, booked each time it marks a holding higher, meaning fees are collected on paper gains that have not been realized. Those funds are tightly gated: investors can redeem only a sliver of their money each quarter, and management retains the right to freeze withdrawals entirely during a market panic.
The Bear Cave and Hunterbrook's Key Allegations
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StepStone faces an estimated $2.3 billion obligation to buy out profits interests in its retail arm held by CH Equity Partners LLC, an entity affiliated with the executives who run that business. The put right became exercisable April 1, while StepStone's corporate balance sheet holds just $213 million in cash. The report argues the firm will likely need to raise billions in stock and debt, with management guidance implying dilution of existing shareholders by about a fifth.
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The buyout formula is pegged to fees generated by StepStone's own paper markups. The report estimates the firm is paying roughly 43 times the trailing recurring fee-related earnings it is acquiring, about triple StepStone's own 13x trading multiple and richer than top firms like Blackstone and Apollo. The stake generated $53 million in recurring fee-related earnings last year, under 3% of the price. StepStone calls this math "fundamentally flawed," saying the price accounts for continued growth.
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The report alleges StepStone did not disclose the original 2019 contract granting CH Equity Partners an option to buy the retail arm back when it filed its IPO prospectus in 2020. That arrangement was renegotiated in 2022 into the buyout terms that now threaten the balance sheet, and the recorded liability has already pushed book value below zero.
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The gains underpinning the fees are mostly paper and largely unverifiable. In SPW's key retail fund, net unrealized gains were $1.87 billion last fiscal year against just $3 million in realized gains, per Wall Street Journal reporting cited in the report. Hunterbrook's analysis found over 70% of that fund's portfolio sits in vehicles whose holdings are opaque. StepStone says the marks are set under fund valuation policies and reviewed by external auditors, an independent board, and a third-party valuation agent.
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SpaceX illustrates the machine: the SPRING fund paid roughly $270 million for a direct stake that StepStone's internal valuation committee marked up to about $587 million by the end of March, a $317 million gain without selling a share. SpaceX is now around a fifth of the entire portfolio, and the report estimates tens of millions in performance fees were charged on the markup while gated retail investors cannot freely exit, even though SpaceX now trades publicly.
Key Charts
The liability is remeasured to fair value each period and grows as StepStone marks its funds higher. A minimum of 25% of the payout is owed in cash, with the remainder in StepStone stock.
The report contends performance fees were charged on unrealized markups. StepStone has said gains may be unrealized but "that does not make it unreal."
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