10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q 

(Mark One)

☒      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the quarterly period ended September 30, 2020

OR

☐         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from          to

Commission File Number: 001-38979

BRIGHTSPHERE
Investment Group Inc.

(Exact name of registrant as specified in its charter) 

Delaware		47-1121020
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
200 Clarendon Street, 53rd Floor		02116
Boston,	Massachusetts
(Address of principal executive offices)		(Zip Code)

(617)-369-7300

(Registrant’s telephone number, including area code) 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Ticker Symbol	Name of each exchange on which registered
Common stock, par value $0.001 per share	BSIG	New York Stock Exchange
4.800% Notes due 2026	BSIG 26	New York Stock Exchange
5.125% Notes due 2031	BSA	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No o 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ý 

The number of shares of the registrant’s common stock, $0.001 per share, outstanding as of November 4, 2020 was 79,885,287.

TABLE OF CONTENTS

		Page
	Explanatory Note	3
Part I	Financial Information	4
Item 1.	Financial Statements	4
	Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019	4
	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2020 and 2019	5
	Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2020 and 2019	6
	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three months ended September 30, 2020 and 2019	7
	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the nine months ended September 30, 2020 and 2019	8
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019	9
	Notes to Condensed Consolidated Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	39
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	88
Item 4.	Controls and Procedures	90
Part II	Other Information	91
Item 1.	Legal Proceedings	91
Item 1A.	Risk Factors	91
Item 6.	Exhibits	91

2

EXPLANATORY NOTE

On July 12, 2019, the BrightSphere corporate group, which consisted of BrightSphere Investment Group plc, a public company limited by shares incorporated under the laws of England and Wales and its operating subsidiaries (such operating subsidiaries and the holding company collectively, the “BrightSphere Group”), completed a redomestication, resulting in BrightSphere Investment Group Inc., a Delaware corporation, becoming the publicly traded parent company of the BrightSphere Group (the “Redomestication”). As part of the Redomestication, which was approved by the shareholders of BrightSphere Investment Group plc, existing shares of BrightSphere Investment Group plc were exchanged on a one-for-one basis for newly issued shares of common stock of BrightSphere Investment Group Inc. immediately prior to the effective time of the Redomestication. As a result, all outstanding shareholders of BrightSphere Investment Group plc became common stockholders of BrightSphere Investment Group Inc. Throughout this Form 10-Q, references to “BrightSphere,” “the Company,” “we” and “us” (i) for periods until the completion of the Redomestication, refer to BrightSphere Investment Group plc and (ii) for periods after the completion of the Redomestication, refer to BrightSphere Investment Group Inc. Also throughout this Form 10-Q, we refer to our equity securities (i) for periods until the completion of the Redomestication, as ordinary shares and (ii) for periods after the completion of the Redomestication, as shares of common stock.

3

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

BrightSphere Investment Group Inc.

Condensed Consolidated Balance Sheets

(in millions, except for share and per share data, unaudited)

	September 30, 2020		December 31, 2019
Assets
Cash and cash equivalents	$	129.8	$	111.3
Investment advisory fees receivable	101.1		151.9
Income taxes receivable	24.7		26.2
Fixed assets, net	71.8		65.8
Right of use assets	93.7		37.7
Investments (includes balances reported at fair value of $114.7 and $184.3)	116.5		186.3
Acquired intangibles, net	60.0		65.1
Goodwill	182.1		274.6
Other assets	56.5		52.0
Deferred tax assets	212.7		243.6
Assets held for sale:
Affiliate assets held for sale	151.0		—
Assets of consolidated Funds:
Cash and cash equivalents, restricted	1.1		9.7
Investments (includes balances reported at fair value of $0.0 and $119.5)	101.9		190.6
Other assets	—		4.9
Consolidated Funds’ assets held for sale	114.3		—
Total assets	$	1,417.2	$	1,419.7
Liabilities and stockholders’ equity
Accounts payable and accrued expenses	$	27.2	$	41.5
Accrued incentive compensation	120.7		137.8
Due to OM plc	3.4		3.7
Other compensation liabilities	313.5		404.9
Accrued income taxes	13.0		12.8
Operating lease liabilities	110.0		42.5
Other liabilities	3.3		3.1
Debt:
Non-recourse borrowings	—		35.0
Third party borrowings	474.2		533.8
Liabilities held for sale:
Affiliate liabilities held for sale	80.4		—
Liabilities of consolidated Funds:
Accounts payable and accrued expenses	—		5.2
Securities sold, not yet purchased, at fair value	—		0.9
Other liabilities	—		0.1
Consolidated Funds’ liabilities held for sale	0.1		—
Total liabilities	1,145.8		1,221.3
Commitments and contingencies
Redeemable non-controlling interests in consolidated Funds	85.6		83.9
Equity:
Common stock (par value $0.001; 80,117,415 and 85,886,371 shares, respectively, issued)	0.1		0.1
Additional paid-in capital	501.2		534.3
Retained deficit	(373.7)		(452.5)
Accumulated other comprehensive loss	(16.2)		(17.5)
Non-controlling interests	1.4		1.3
Non-controlling interests in consolidated Funds	73.0		48.8
Total equity and redeemable non-controlling interests in consolidated Funds	271.4		198.4
Total liabilities and equity	$	1,417.2	$	1,419.7

See Notes to Condensed Consolidated Financial Statements

4

BrightSphere Investment Group Inc.

Condensed Consolidated Statements of Operations

(in millions except for per share data, unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Revenue:
Management fees	$	178.2	$	196.4	$	527.4	$	609.8
Performance fees	1.2		(1.9)		2.5		(6.9)
Other revenue	1.6		1.4		5.2		4.3
Consolidated Funds’ revenue	1.4		1.9		4.6		4.9
Total revenue	182.4		197.8		539.7		612.1
Operating expenses:
Compensation and benefits	109.7		108.0		284.0		332.8
General and administrative expense	25.4		31.7		77.6		95.3
Impairment of goodwill	—		—		16.4		—
Amortization of acquired intangibles	1.6		1.6		5.1		4.9
Depreciation and amortization	5.2		4.4		15.6		12.2
Consolidated Funds’ expense	—		0.2		0.2		0.4
Total operating expenses	141.9		145.9		398.9		445.6
Operating income	40.5		51.9		140.8		166.5
Non-operating income and (expense):
Investment income (loss)	3.9		2.3		(3.2)		11.4
Interest income	—		0.4		0.5		1.8
Interest expense	(6.9)		(8.3)		(22.1)		(24.1)
Gain on sale of Affiliate	7.2		—		7.2		—
Net consolidated Funds’ investment gains	2.1		4.7		20.5		13.8
Total non-operating income (loss)	6.3		(0.9)		2.9		2.9
Income from continuing operations before taxes	46.8		51.0		143.7		169.4
Income tax expense (benefit)	12.8		(32.0)		33.7		3.7
Income from continuing operations	34.0		83.0		110.0		165.7
Gain (loss) on disposal of discontinued operations, net of tax	—		—		—		—
Net income	34.0		83.0		110.0		165.7
Net income (loss) attributable to non-controlling interests in consolidated Funds	(3.2)		7.6		21.3		9.6
Net income attributable to controlling interests	$	37.2	$	75.4	$	88.7	$	156.1
Earnings per share (basic) attributable to controlling interests	$	0.46	$	0.84	$	1.08	$	1.68
Earnings per share (diluted) attributable to controlling interests	0.46		0.84		1.08		1.68
Continuing operations earnings per share (basic) attributable to controlling interests	0.46		0.84		1.08		1.68
Continuing operations earnings per share (diluted) attributable to controlling interests	0.46		0.84		1.08		1.68
Weighted average common stock outstanding	80.0		90.0		81.8		93.0
Weighted average diluted common stock outstanding	80.9		90.0		82.1		93.1

See Notes to Condensed Consolidated Financial Statements

5

BrightSphere Investment Group Inc.

Condensed Consolidated Statements of Comprehensive Income

(in millions, unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Net income	$	34.0	$	83.0	$	110.0	$	165.7
Other comprehensive income (loss):
Amortization related to derivative securities, net of tax	0.6		0.6		1.7		1.8
Foreign currency translation adjustment	1.4		(0.8)		(0.4)		(0.9)
Total other comprehensive income (loss)	2.0		(0.2)		1.3		0.9
Comprehensive income (loss) attributable to non-controlling interests in consolidated Funds	(3.2)		7.6		21.3		9.6
Total comprehensive income attributable to controlling interests	$	39.2	$	75.2	$	90.0	$	157.0

See Notes to Condensed Consolidated Financial Statements

6

BrightSphere Investment Group Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the three months ended September 30, 2020 and 2019

($ in millions except share data, unaudited)

	Common stock (millions)	Common stock,  par value		Additional paid-in capital		Retained earnings (deficit)		Accumulated other comprehensive income (loss)		Total stockholders’ equity		Non- controlling interests		Non-controlling interests in consolidated Funds		Total  equity		Redeemable non-controlling interests in consolidated  Funds		Total equity and redeemable non-controlling interests in consolidated Funds
June 30, 2019	91.6	$	0.1	$	585.2	$	(578.2)	$	(19.8)	(12.7)		$	1.8	$	32.7	$	21.8	$	81.8	$	103.6
Repurchase of common stock	(2.8)	—		(25.5)		—		—		(25.5)		—		—		(25.5)		—		(25.5)
Capital contributions (redemptions)	—	—		—		—		—		—		—		0.9		0.9		(1.0)		(0.1)
Equity-based compensation	—	—		0.7		—		—		0.7		—		—		0.7		—		0.7
Foreign currency translation adjustment	—	—		—		—		(0.8)		(0.8)		—		—		(0.8)		—		(0.8)
Amortization related to derivatives securities, net of tax	—	—		—		—		0.6		0.6		—		—		0.6		—		0.6
Other changes in non-controlling interests	—	—		—		—		—		—		0.1		—		0.1		—		0.1
Dividends ($0.10 per share)	—	—		—		(8.9)		—		(8.9)		—		—		(8.9)		—		(8.9)
Net income	—	—		—		75.4		—		75.4		—		6.5		81.9		1.1		83.0
September 30, 2019	88.8	$	0.1	$	560.4	$	(511.7)	$	(20.0)	$	28.8	$	1.9	$	40.1	$	70.8	$	81.9	$	152.7
June 30, 2020	80.1	$	0.1	$	500.6	$	(410.1)	$	(18.2)	$	72.4	$	1.4	$	78.8	$	152.6	$	79.9	$	232.5
Issuance of common stock	—	—		0.2		—		—		0.2		—		—		0.2		—		0.2
Repurchase of common stock	—	—		—		—		—		—		—		—		—		—		—
Capital contributions	—	—		—		—		—		—		—		0.3		0.3		129.7		130.0
Equity-based compensation	—	—		0.4		—		—		0.4		—		—		0.4		—		0.4
Foreign currency translation adjustment	—	—		—		—		1.4		1.4		—		—		1.4		—		1.4
Amortization related to derivative securities, net of tax	—	—		—		—		0.6		0.6		—		—		0.6		—		0.6
Other changes in non-controlling interests	—	—		—		—		—		—		—		—		—		—		—
Net de-consolidation of Funds	—	—				—		—		—		—		—		—		(126.8)		(126.8)
Dividends ($0.01 per share)	—	—		—		(0.8)		—		(0.8)		—		—		(0.8)		—		(0.8)
Net income	—	—		—		37.2		—		37.2		—		(6.1)		31.1		2.8		33.9
September 30, 2020	80.1	$	0.1	$	501.2	$	(373.7)	$	(16.2)	$	111.4	$	1.4	$	73.0	$	185.8	$	85.6	$	271.4

See Notes to Condensed Consolidated Financial Statements

7

BrightSphere Investment Group Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the nine months ended September 30, 2020 and 2019

($ in millions except share data, unaudited)

	Common stock (millions)	Common stock,  par value		Additional paid-in capital		Retained earnings (deficit)		Accumulated other comprehensive income (loss)		Total stockholders’ equity		Non- controlling interests		Non-controlling interests in consolidated Funds		Total  equity		Redeemable non-controlling interests in consolidated  Funds		Total equity and redeemable non-controlling interests in consolidated Funds
December 31, 2018	105.2	$	0.1	$	764.6	$	(640.5)	$	(20.9)	103.3		$	1.6	$	29.3	$	134.2	$	41.9	$	176.1
Issuance of common stock	0.2	—		—		—		—		—		—		—		—		—		—
Repurchase of common stock	(16.6)	—		(209.3)		—		—		(209.3)		—		—		(209.3)		—		(209.3)
Capital contributions	—	—		—		—		—		—		—		4.9		4.9		36.3		41.2
Equity-based compensation	—	—		5.1		—		—		5.1		—		—		5.1		—		5.1
Foreign currency translation adjustment	—	—		—		—		(0.9)		(0.9)		—		—		(0.9)		—		(0.9)
Amortization related to derivatives securities, net of tax	—	—		—		—		1.8		1.8		—		—		1.8		—		1.8
Other changes in non-controlling interests	—	—		—		—		—		—		0.3		—		0.3		—		0.3
Dividends ($0.30 per share)	—	—		—		(27.3)		—		(27.3)		—		—		(27.3)		—		(27.3)
Net income	—	—		—		156.1		—		156.1		—		5.9		162.0		3.7		165.7
September 30, 2019	88.8	$	0.1	$	560.4	$	(511.7)	$	(20.0)	$	28.8	$	1.9	$	40.1	$	70.8	$	81.9	$	152.7
December 31, 2019	85.9	$	0.1	$	534.3	$	(452.5)	$	(17.5)	$	64.4	$	1.3	$	48.8	$	114.5	$	83.9	$	198.4
Issuance of common stock	0.1	—		0.2		—		—		0.2		—		—		0.2		—		0.2
Retirement of common stock	(0.2)	—		—		—		—		—		—		—		—		—		—
Repurchase of common stock	(5.7)	—		(35.3)		—		—		(35.3)		—		—		(35.3)		—		(35.3)
Capital contributions	—	—		—		—		—		—		—		1.4		1.4		130.1		131.5
Equity-based compensation	—	—		2.0		—		—		2.0		—		—		2.0		—		2.0
Foreign currency translation adjustment	—	—		—		—		(0.4)		(0.4)		—		—		(0.4)		—		(0.4)
Amortization related to derivative securities, net of tax	—	—		—		—		1.7		1.7		—		—		1.7		—		1.7
Other changes in non-controlling interests	—	—		—		—		—		—		0.1		—		0.1		—		0.1
Net de-consolidation of Funds	—	—		—		—		—		—		—		—		—		(126.8)		(126.8)
Dividends ($0.12 per share)	—	—		—		(9.9)		—		(9.9)		—		—		(9.9)		—		(9.9)
Net income (loss)	—	—		—		88.7		—		88.7		—		22.8		111.5		(1.6)		109.9
September 30, 2020	80.1	$	0.1	$	501.2	$	(373.7)	$	(16.2)	$	111.4	$	1.4	$	73.0	$	185.8	$	85.6	$	271.4

See Notes to Condensed Consolidated Financial Statements

8

BrightSphere Investment Group Inc. Condensed Consolidated Statements of Cash Flows (in millions, unaudited)
	Nine Months Ended September 30,
	2020		2019
Cash flows from operating activities:
Net income	$	110.0	$	165.7
Less: Net income attributable to non-controlling interests in consolidated Funds	(21.3)		(9.6)
Adjustments to reconcile net income to net cash flows from operating activities from continuing operations:
Impairment of goodwill	16.4		—
Amortization of acquired intangibles	5.1		4.9
(Gain) on sale of Affiliate	(7.2)		—
Depreciation and other amortization	15.6		12.2
Amortization of debt-related costs	3.2		2.6
Amortization and revaluation of non-cash compensation awards	(17.4)		6.3
Net earnings from Affiliate accounted for using the equity method	(2.2)		(2.1)
Distributions received from equity method Affiliate	2.2		2.3
Deferred income taxes	30.1		7.6
(Gains) losses on other investments	1.7		(26.3)
Changes in operating assets and liabilities (excluding discontinued operations):
Decrease in investment advisory fees receivable	26.2		12.2
Increase in other receivables, prepayments, deposits and other assets	(2.6)		(8.8)
Decrease in accrued incentive compensation, operating lease liabilities and other liabilities	(5.9)		(262.8)
Decrease in accounts payable, accrued expenses and accrued income taxes	(9.2)		(54.1)
Net cash flows from operating activities of continuing operations, excluding consolidated Funds	144.7		(149.9)
Net income attributable to non-controlling interests in consolidated Funds	21.3		9.6
Adjustments to reconcile net income (loss) attributable to non-controlling interests in consolidated Funds to net cash flows from operating activities from continuing operations of consolidated Funds:
Losses on other investments	11.3		6.1
Purchase of investments	(98.2)		(161.1)
Sale of investments	66.7		122.1
Earnings from equity method investees	(28.1)		(11.2)
(Increase) decrease in receivables and other assets	(28.7)		4.8
Increase (decrease) in accounts payable and other liabilities	3.0		(4.0)
Net cash flows from operating activities of continuing operations of consolidated Funds	(52.7)		(33.7)
Net cash flows from operating activities of continuing operations	92.0		(183.6)
Net cash flows from operating activities of discontinued operations	—		—
Total net cash flows from operating activities	92.0		(183.6)
Cash flows from investing activities:
Additions of fixed assets	(22.5)		(26.7)
Purchase of investment securities	(13.9)		(18.0)
Sale of investment securities	62.9		40.1
Cash flows from investing activities of consolidated Funds
Contributions in equity method investees	(1.9)		(8.0)
Distributions received from equity method investees	1.3		3.8
Deconsolidation of Funds	(86.0)		—
Net cash flows from investing activities of continuing operations	(60.1)		(8.8)
Net cash flows from investing activities of discontinued operations	—		—
Total net cash flows from investing activities	(60.1)		(8.8)

See Notes to Condensed Consolidated Financial Statements

9

BrightSphere Investment Group Inc. Condensed Consolidated Statements of Cash Flows (in millions, unaudited)
	Nine Months Ended September 30,
	2020		2019
Cash flows from financing activities:
Proceeds from third party and non-recourse borrowings	80.0		485.0
Repayment of third party and non-recourse borrowings	(175.0)		(275.0)
Payment for debt issuance costs	—		(1.8)
Payment to OM plc for DTA Deed	—		(32.7)
Payment to OM plc for co-investment redemptions	(0.3)		(5.1)
Dividends paid to stockholders	(6.7)		(18.8)
Dividends paid to related parties	(3.3)		(8.6)
Repurchases of common stock	(35.3)		(212.6)
Cash flows from financing activities of consolidated Funds
Non-controlling interest capital raised	1.9		8.0
Non-controlling interest capital redeemed	(0.4)		(3.1)
Redeemable non-controlling interest capital raised	131.2		38.0
Redeemable non-controlling interest capital redeemed	(1.1)		(1.7)
Net cash flows from financing activities of continuing operations	(9.0)		(28.4)
Net cash flows from financing activities of discontinued operations	—		—
Total net cash flows from financing activities	(9.0)		(28.4)
Effect of foreign exchange rate changes on cash and cash equivalents	—		—
Net increase (decrease) in cash and cash equivalents, including cash classified within assets held for sale	22.9		(220.8)
Less: net (increase) in cash classified within Affiliate assets held for sale	(12.2)		—
Less: net (increase) in cash classified within Consolidated funds' assets held for sale	(0.8)		—
Net increase (decrease) in cash and cash equivalents	9.9		(220.8)
Cash and cash equivalents at beginning of period	121.0		345.5
Cash and cash equivalents at end of period (including cash at consolidated Funds classified as restricted)	$	130.9	$	124.7
Supplemental disclosure of cash flow information:
Interest paid (excluding consolidated Funds)	$	22.3	$	24.8
Income taxes paid	4.1		41.6
Supplemental disclosure of non-cash investing and financing transactions:
Payable for securities purchased by a consolidated Fund	$	—	$	7.4

See Notes to Condensed Consolidated Financial Statements

10

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1) Organization and Description of the Business

BrightSphere Investment Group Inc. (“BrightSphere”, “BSIG” or the “Company”), through its subsidiaries, is a global asset management company with interests in a diverse group of investment management firms (the “Affiliates”) individually headquartered in the United States. The Company provides investment management services globally to predominantly institutional investors, in asset classes that include U.S. and global equities, fixed income, alternative assets, forestry and secondary strategies focused in real estate and private equity. Fees for services are largely asset-based and, as a result, the Company’s revenue fluctuates based on the performance of financial markets and investors’ asset flows in and out of the Company’s products.

The Company’s Affiliates are organized as limited liability companies. The Company generally utilizes a profit-sharing model in structuring its compensation and ownership arrangements with its Affiliates. The Affiliates’ variable compensation is generally based on each firm’s profitability. BSIG and Affiliate key employees share in profits after variable compensation according to their respective ownership interests. The profit-sharing model results in the alignment of BSIG and Affiliate key employee economic interests, which is critical to the Company’s talent management strategy and long-term growth of the business. The Company conducts its operations through the following three reportable segments:

•Quant & Solutions—comprised of versatile, often highly-tailored strategies that leverage data and technology in a computational, factor based investment process across a range of asset classes and geographies, including Global, non-U.S., emerging markets and managed volatility equities, as well as multi-asset products.

•Alternatives—comprised of illiquid and differentiated liquid investment strategies that include private equity, real estate and real assets, including forestry, as well as a growing suite of liquid alternative capabilities in areas such as long/short, market neutral and absolute return.

•Liquid Alpha(1)—comprised of specialized investment strategies with a focus on alpha-generation across market cycles in long-only small-, mid-, and large-cap U.S., global, non-U.S. and emerging markets equities, as well as fixed income.

(1)In July 2020, the Company completed the sale of Copper Rock Capital Partners LLC (“Copper Rock”) and announced the divestiture of Barrow, Hanley, Mewhinney & Strauss, LLC (“Barrow Hanley”). See Note 3, Divestitures and Assets and Liabilities Held for Sale for further discussion of divestitures and Affiliate assets and liabilities held for sale.

Prior to 2014, the Company was a wholly-owned subsidiary of Old Mutual plc (“OM plc”), an international long-term savings, protection and investment group, listed on the London Stock Exchange. On October 15, 2014, the Company completed the initial public offering (the “Offering”) by OM plc pursuant to the Securities Act of 1933, as amended. Additionally, between the Offering and February 25, 2019, the Company, OM plc and/or HNA Capital U.S. (“HNA”) completed a series of transactions in the Company’s shares, including a two-step transaction announced on March 25, 2017 for a sale by OM plc of a 24.95% shareholding in the Company to HNA and a two-step transaction announced on November 19, 2018 for a sale of the substantial majority of the ordinary shares held by HNA of the Company to Paulson & Co. (“Paulson”). On February 25, 2019, this transaction was completed and Paulson held approximately 21.7% of the ordinary shares of the Company. The remaining shares held by HNA were bought back by the Company in the first quarter of 2019.

11

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1) Organization and Description of the Business (cont.)

On July 12, 2019, the BrightSphere corporate group, which consisted of BrightSphere Investment Group plc, a public company limited by shares incorporated under the laws of England and Wales and its operating subsidiaries (such operating subsidiaries and the holding company collectively, the “BrightSphere Group”), completed a redomestication, resulting in BrightSphere Investment Group Inc., a Delaware corporation, becoming the publicly traded parent company of BrightSphere Group (the “Redomestication”). The scheme of arrangement pursuant to which the Redomestication was effected was approved by the Company’s shareholders and the High Court of Justice of England and Wales. Effective as of the close of business on July 12, 2019, all issued ordinary shares of BrightSphere Investment Group plc were exchanged on a one-for-one basis for newly issued shares of common stock of BrightSphere Investment Group Inc. As a result, all outstanding shareholders of BrightSphere Investment Group plc became common stockholders of BrightSphere Investment Group Inc. The common stock of BrightSphere Investment Group Inc. began trading on July 15, 2019, and the Company’s trading symbol on the NYSE remained unchanged as “BSIG.”

For the three months ended September 30, 2020, the Company did not repurchase any shares of common stock. For the nine months ended September 30, 2020, the Company repurchased 5,667,962 shares of common stock at an average price of $6.20 per share, or approximately $35.3 million in total, including commissions.

2) Basis of Presentation and Significant Accounting Policies

The Company’s significant accounting policies are as follows:

Basis of presentation

These unaudited Condensed Consolidated Financial Statements reflect the historical balance sheets, statements of operations and of comprehensive income, statements of changes in stockholders’ equity and statements of cash flows of the Company. Within these Condensed Consolidated Financial Statements, OM plc, HNA, Paulson and their related entities, as defined above, are referred to as “related parties.”

The Condensed Consolidated Financial Statements are prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). In the opinion of management, all normal and recurring adjustments considered necessary for a fair presentation of the Company’s Condensed Consolidated Financial Statements have been included. All dollar amounts, except per-share data in the text and tables herein, are stated in millions unless otherwise indicated. Transactions between the Company and its related parties are included in the Condensed Consolidated Financial Statements, however, material intercompany balances and transactions among the Company, its consolidated Affiliates and consolidated Funds are eliminated in consolidation.

As a result of the Redomestication on July 12, 2019, discussed in Note 1, the Company revised its equity accounts to reflect a U.S. domiciled company presentation on the Condensed Consolidated Statements of Changes in Stockholders’ equity and the Condensed Consolidated Balance Sheets for all periods presented. The previously issued ordinary shares of BrightSphere Investment Group plc were exchanged on a one-for-one basis for newly issued shares of common stock of BrightSphere Investment Group Inc. The Redomestication and related internal reorganization was accounted for consistent with a reorganization of entities under common control in accordance with ASC 805 Business Combinations. Accordingly, the transfer of the assets and liabilities and exchange of shares was recorded in the new entity (BrightSphere Investment Group Inc.) at their carrying amounts from the transferring entity (BrightSphere Investment Group plc) at the date of transfer.

12

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

2) Basis of Presentation and Significant Accounting Policies (cont.)

On July 26, 2020, the Company and Barrow, Hanley, Mewhinney & Strauss, LLC (“Barrow Hanley”) entered into a purchase and sale agreement with Perpetual U.S. Holdings Company Inc. (“Perpetual”), pursuant to which Perpetual agreed to purchase all of the Company’s interests in Barrow Hanley in exchange for $319 million of cash consideration, on a cash-free, debt-free basis, subject to certain customary closing and post-closing adjustments. The assets and liabilities of Barrow Hanley have been classified as held for sale as the criteria for held for sale accounting treatment was met and are presented separately in the Company’s Condensed Consolidated Balance Sheet as of September 30, 2020. See Note 3, Divestitures and Assets and Liabilities Held for Sale, in these Notes for additional information.

Certain disclosures included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (annual report on Form 10-K) are not required to be included on an interim basis in the Company’s quarterly reports on Form 10-Q. The Company has condensed or omitted these disclosures. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and notes thereto for the year ended December 31, 2019 included in the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”) on March 2, 2020. The Company’s significant accounting policies, which have been consistently applied, are summarized in those financial statements.

Use of estimates

The preparation of these Condensed Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. The three and nine months ended September 30, 2020 were characterized by heightened uncertainty due to the COVID-19 pandemic which could impact estimates and assumptions made by management. Actual results could differ from such estimates, and the differences may be material to the Condensed Consolidated Financial Statements.

Recently adopted accounting standards

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820). This standard modifies the disclosure requirements on fair value measurements and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company adopted the standard on January 1, 2020. Notably, this guidance removes the disclosure requirements for the valuation processes for Level III fair value measurements. This guidance also adds new disclosure requirements for the range and weighted average of significant unobservable inputs used to develop fair value measurements categorized within Level III of the fair value hierarchy. The Company has determined that the adoption of this standard did not have a material impact on its Condensed Consolidated Financial Statements and related disclosures.

New accounting standards not yet adopted

The Company has considered all other newly issued accounting guidance that is applicable to the Company’s operations and the preparation of the unaudited Condensed Consolidated Financial Statements, including those that have not yet been adopted. The Company does not believe that any such guidance has or will have a material effect on its Condensed Consolidated Financial Statements and related disclosures.

13

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

3) Divestitures and Assets and Liabilities Held for Sale

Divestiture

Copper Rock Capital Partners LLC

On July 24, 2020 BrightSphere completed the sale of all of its equity interests in Copper Rock to Spouting Rock Asset Management LLC. The Company recognized a pre-tax gain of $7.2 million during the three and nine months ended September 30, 2020, respectively.

Assets and Liabilities Held for Sale

Barrow Hanley

On July 26, 2020, the Company and Barrow Hanley entered into a purchase and sale agreement with Perpetual, pursuant to which Perpetual agreed to purchase all of the Company’s interests in Barrow Hanley in exchange for $319 million of cash consideration, on a cash-free, debt-free basis, subject to certain customary closing and post-closing adjustments. The assets and liabilities of Barrow Hanley have been classified as held for sale as the criteria for held for sale accounting treatment was met and are presented separately in the Company’s Condensed Consolidated Balance Sheet. As of September 30, 2020, the Company had assets of $151.0 million and liabilities of $80.4 million of Barrow Hanley classified as held for sale. The transaction is expected to close in the fourth quarter of 2020. Operational information for Barrow Hanley is included in the Company’s Liquid Alpha segment for the three and nine months ended September 30, 2020 and 2019, respectively. Barrow Hanley’s income from continuing operations before taxes was $9.6 million and $20.4 million for the three months ended September 30, 2020 and 2019, respectively. Barrow Hanley’s income from continuing operations before taxes was $33.1 million and $60.5 million for the nine months ended September 30, 2020 and 2019, respectively. The Company also holds seed investments of $17.1 million in Barrow Hanley’s investment products as of September 30, 2020 which will be redeemed upon consummation of the sale.

The major classes of assets and liabilities comprising the Affiliate classified as held for sale are as follows at September 30, 2020 (in millions):

14

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

3) Divestitures and Assets Held for Sale (cont.)

	September 30, 2020
Cash and cash equivalents	$	12.2
Investment advisory fees receivable	21.5
Investments, at fair value	27.0
Goodwill	76.1
Right of use assets	12.4
Other Assets	1.8
Affiliate assets held for sale	$	151.0
Accounts payable and accrued expenses	$	3.0
Accrued incentive compensation	8.3
Other compensation liabilities	56.4
Operating lease liabilities	12.7
Affiliate liabilities held for sale	$	80.4

Consolidated Funds

The Barrow Hanley purchase and sale agreement provides for the redemption of all of the Company’s seed investments with Barrow Hanley. The redemption will result in the deconsolidation of consolidated Funds considered to be VIEs. The assets and liabilities of the consolidated Funds have been classified as held for sale as the criteria for held for sale accounting treatment was met and are presented separately in the Company’s Condensed Consolidated Balance Sheet. As of September 30, 2020, the Company had assets of $114.3 million and liabilities of $0.1 million for consolidated Funds classified as held for sale. The transaction is expected to close in the fourth quarter of 2020. The consolidated Funds’ operational information is included in the Company’s Statement of Operations for the three and nine months ended September 30, 2020 and 2019. The consolidated Funds’ income from continuing operations was $4.7 million and $1.0 million for the three months ended September 30, 2020 and 2019, respectively. The consolidated Funds’ income from continuing operations was $(2.0) million and $5.4 million for the nine months ended September 30, 2020 and 2019, respectively.

The major classes of assets and liabilities comprising the consolidated Funds classified as held for sale are as follows at September 30, 2020 (in millions):

	September 30, 2020
Cash and cash equivalents	$	0.8
Investments, at fair value	112.9
Other Assets	0.6
Consolidated Funds’ assets held for sale	$	114.3
Accounts payable and accrued expenses	$	0.1
Consolidated Funds’ liabilities held for sale	$	0.1

15

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

4) Investments

Investments are comprised of the following as of the dates indicated (in millions):

	September 30, 2020		December 31, 2019
Investments of consolidated Funds held at fair value	$	—	$	119.5
Other investments held at fair value	48.6		95.5
Investments related to long-term incentive compensation plans held at fair value	66.1		88.8
Total investments held at fair value	114.7		303.8
Equity-accounted investments in Affiliates and consolidated Funds(1)	103.7		73.1
Total investments per Condensed Consolidated Balance Sheets	218.4		376.9
Investments related to long-term incentive compensation plans of an Affiliate held for sale held at fair value (Note 3)	27.0		—
Investments of consolidated Funds held for sale held at fair value (Note 3)	112.9		—
Total investments held for sale	139.9		—
Total investments and investments held for sale per Condensed Consolidated Balance Sheets	$	358.3	$	376.9

(1)Equity-accounted investments in consolidated Funds is comprised of Investments in partnership interests where a portion of return includes carried interest. These investments are accounted for within the scope of ASC 323, Investments - Equity Method and Joint Ventures because the Company has determined it has significant influence.

Investment income is comprised of the following for the three and nine months ended September 30 (in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Realized and unrealized gains (losses) on other investments held at fair value	$	2.9	$	1.5	$	(5.4)	$	9.3
Earnings from equity-accounted investments in Affiliates	1.0		0.8		2.2		2.1
Total investment income (loss) per Condensed Consolidated Statements of Operations	$	3.9	$	2.3	$	(3.2)	$	11.4

Investment gains (losses) on net consolidated funds is comprised of the following for the three and nine months ended September 30 (in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Realized and unrealized gains (losses) on consolidated Funds held at fair value	$	2.9	$	(0.4)	$	(7.6)	$	2.6
Earnings from equity-accounted investments	(0.8)		5.1		28.1		11.2
Total net consolidated Funds’ investment gains per Condensed Consolidated Statements of Operations	$	2.1	$	4.7	$	20.5	$	13.8

16

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

5) Fair Value Measurements

The following table summarizes the Company’s assets and liabilities that are measured at fair value on a recurring basis at September 30, 2020 (in millions):

	Quoted prices in active markets (Level I)		Significant other observable inputs (Level II)		Significant unobservable inputs (Level III)		Uncategorized		Total value, September 30, 2020
Assets of BSIG, consolidated Funds and assets held for sale(1)
Investments in separate accounts(2)	16.5		13.0		—		—		29.5
Investments related to long-term incentive compensation plans(3)	66.1		—		—		—		66.1
Investments in unconsolidated Funds(4)	—		—		2.7		16.4		19.1
BSIG total	82.6		13.0		2.7		16.4		114.7
Investments related to long-term incentive compensation plans(5)	27.0		—		—		—		27.0
Investments of Affiliate held for sale total (Note 3)	27.0		—		—		—		27.0
Common and preferred stock	5.9		—		—		—		5.9
Short-term investment funds	0.5		—		—		—		0.5
Bank loans	—		106.5		—		—		106.5
Investments of consolidated Funds held for sale total (Note 3)	6.4		106.5		—		—		112.9
Total fair value assets	$	116.0	$	119.5	$	2.7	$	16.4	$	254.6

17

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

5) Fair Value Measurements (cont.)

The following table summarizes the Company’s assets and liabilities that are measured at fair value on a recurring basis at December 31, 2019 (in millions): 

	Quoted prices in active markets (Level I)		Significant other observable inputs (Level II)		Significant unobservable inputs (Level III)		Uncategorized		Total value December 31, 2019
Assets of BSIG and consolidated Funds(1)
Common and preferred stock	$	9.8	$	—	$	—	$	—	$	9.8
Short-term investment funds	0.1		—		—		—		0.1
Bank loans	—		109.0		—		—		109.0
Derivatives	0.5		0.1		—		—		0.6
Consolidated Funds total	10.4		109.1		—		—		119.5
Investments in separate accounts(2)	33.2		11.1		—		—		44.3
Investments related to long-term incentive compensation plans(3)	88.8		—		—		—		88.8
Investments in unconsolidated Funds(4)	—		—		3.0		48.2		51.2
BSIG total	122.0		11.1		3.0		48.2		184.3
Total fair value assets	$	132.4	$	120.2	$	3.0	$	48.2	$	303.8
Liabilities of consolidated Funds(1)
Common stock	$	(0.5)	$	—	$	—	$	—	$	(0.5)
Derivatives	(0.1)		(0.3)		—		—		(0.4)
Consolidated Funds total	(0.6)		(0.3)		—		—		(0.9)
Total fair value liabilities	$	(0.6)	$	(0.3)	$	—	$	—	$	(0.9)

(1)Assets and liabilities measured at fair value are comprised of financial investments managed by the Company's Affiliates.

Equity securities, including common and preferred stock, short-term investment funds, other investments and derivatives which are traded on a national securities exchange are stated at the last reported sales price on the day of valuation. To the extent these securities are actively traded and valuation adjustments are not applied, they are classified as Level I. The securities that trade in markets that are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs obtained by the Company from independent pricing services are classified as Level II. 

The Company obtains prices from independent pricing services that may utilize broker quotes, but generally the independent pricing services will use various other pricing techniques which take into account appropriate factors such as yield, quality, coupon rate, maturity, type of issue, trading characteristics and other data. The Company has not made adjustments to the prices provided. Assets of consolidated Funds also include investments in bank loans. Interests in senior floating-rate loans for which reliable market participant quotations are readily available are valued at the average mid-point of bid and ask quotations obtained from a third party pricing service. These assets are classified as Level II.    

18

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

5) Fair Value Measurements (cont.)

If the pricing services are only able to (a) obtain a single broker quote or (b) utilize a pricing model, such securities are classified as Level III. If the pricing services are unable to provide prices, the Company attempts to obtain one or more broker quotes directly from a dealer or values such securities at the last bid price obtained. In either case, such securities are classified as Level III. The Company performs due diligence procedures over third party pricing vendors to understand their methodology and controls to support their use in the valuation process to ensure compliance with required accounting disclosures.

(2)Investments in separate accounts of $29.5 million at September 30, 2020 consist of approximately 2% of cash equivalents and 98% of equity securities, fixed income securities, and other investments. Investments in separate accounts of $44.3 million at December 31, 2019 consist of approximately 3% of cash equivalents and 97% of equity securities, fixed income securities, and other investments. The Company values these using the published price of the underlying securities (classified as Level I) or quoted price supported by observable inputs as of the measurement date (classified as Level II).

(3)Investments related to long-term incentive compensation plans of $66.1 million and $88.8 million at September 30, 2020 and December 31, 2019, respectively, were investments in publicly registered daily redeemable funds (some managed by Affiliates), which the Company has classified as trading securities and valued using the published price as of the measurement dates. Accordingly, the Company has classified these investments as Level I.

(4)The uncategorized amounts of $16.4 million and $48.2 million at September 30, 2020 and December 31, 2019, respectively, relate to investments in unconsolidated Funds which consist primarily of investments in Funds advised by Affiliates and are valued using NAV which the Company relies on to determine their fair value as a practical expedient and has therefore not classified these investments in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to amounts presented in the Condensed Consolidated Balance Sheets. These unconsolidated Funds consist primarily of real estate investment Funds, UCITS and other investment vehicles. The NAVs that have been provided by investees have been derived from the fair values of the underlying investments as of the measurement dates. UCITS and other investment vehicles are not subject to redemption restrictions.

The real estate investment Funds of $5.9 million and $6.4 million at September 30, 2020 and December 31, 2019, respectively, are subject to longer than quarterly redemption restrictions, and due to their nature, distributions are received only as cash flows are generated from underlying assets over the life of the Funds. The range of time over which the underlying assets are expected to be liquidated by the investees is approximately one year to eleven years from September 30, 2020. The valuation process for the underlying real estate investments held by the real estate investment Funds begins with each property or loan being valued by the investment teams. The valuations are then reviewed and approved by the valuation committee, which consists of senior members of the portfolio management, acquisitions, and research teams. For certain properties and loans, the valuation process may also include a valuation by independent appraisers. In connection with this process, changes in fair value measurements from period to period are evaluated for reasonableness, considering items such as market rents, capitalization and discount rates, and general economic and market conditions. 

Investments in unconsolidated Funds categorized as Level III of $2.7 million and $3.0 million at September 30, 2020 and December 31, 2019, respectively, related to investments in Forestry Funds advised by Affiliates and are valued by the general partner of those Funds. Determination of estimated fair value involves subjective judgment because the actual fair value can be determined only through negotiation between parties in a sale transaction, and amounts ultimately realized may vary significantly from the fair value presented.

19

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

5) Fair Value Measurements (cont.)

(5)Affiliate investments held for sale is comprised of Investments related to long-term incentive compensation plans of $27.0 million at September 30, 2020. These were investments in publicly registered daily redeemable funds, which the Company has classified as trading securities and valued using the published price as of the measurement dates. Accordingly, the Company has classified these investments as Level I.

The following table reconciles the opening balances of Level III financial assets to closing balances at the end of the period (in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
Investments in unconsolidated Funds	2020		2019		2020		2019
Level III financial assets
At beginning of the period	$	3.0	$	3.0	$	3.0	$	3.0
Additions (redemptions)	(0.3)		0.1		(0.3)		0.1
Transfers in (out) of Level III	—		—		—		—
Total net fair value gains/losses recognized in net income	—		(0.1)		—		(0.1)
Total Level III financial assets	$	2.7	$	3.0	$	2.7	$	3.0

There were no significant transfers of financial assets or liabilities between Levels II or III during the three and nine months ended September 30, 2020.

20

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

6) Variable Interest Entities

The Company, through its Affiliates, sponsors the formation of various entities considered to be variable interest entities (“VIEs”). These VIEs are primarily Funds managed by Affiliates and other partnership interests typically owned entirely by third party investors. Certain Funds may be capitalized with seed capital investments from the Company and may be owned partially by Affiliate key employees and/or individuals that own non-controlling interests in an Affiliate.

The Company’s determination of whether it is the primary beneficiary of a Fund that is a VIE is based in part on an assessment of whether or not the Company and its related parties are exposed to absorb more than an insignificant amount of the risks and rewards of the entity. Typically, the Fund’s investors are entitled to substantially all of the economics of these VIEs with the exception of the management fees and performance fees, if any, earned by the Company or any investment the Company has made into the Funds. The Company generally is not the primary beneficiary of Fund VIEs created to manage assets for clients unless the Company’s ownership interest, including interests of related parties, is substantial.

The following table presents the assets and liabilities of Funds that are VIEs and consolidated by the Company (in millions):

	September 30, 2020		December 31, 2019
Assets
Investments at fair value	$	—	$	119.5
Other assets of consolidated Funds	103.0		85.7
Assets of consolidated Funds held for sale (Note 3)	114.3		—
Total Assets	$	217.3	$	205.2
Liabilities
Liabilities of consolidated Funds	$	—	$	6.2
Liabilities of consolidated Funds held for sale (Note 3)	0.1		—
Total Liabilities	$	0.1	$	6.2

“Investments at fair value” consist of investments in bank loans, common and preferred stock, and other securities as of December 31, 2019. These investments are included in the “assets of consolidated Funds held for sale” as of September 30, 2020. To the extent the Company also has consolidated Funds that are not VIEs, the assets and liabilities of those Funds are not included in the table above.

The assets of consolidated VIEs presented in the table above belong to the investors in those Funds, are available for use only by the Fund to which they belong, and are not available for use by the Company to the extent they are held by non-controlling interests. Any debt or liabilities held by consolidated Funds have no recourse to the Company's general credit.

The Company’s involvement with Funds that are VIEs and not consolidated by the Company is generally limited to that of an investment manager and its investment in the unconsolidated VIE, if any. The Company’s investment in any unconsolidated VIE generally represents an insignificant interest of the Fund’s net assets and assets under management, such that the majority of the VIEs results are attributable to third parties. The Company’s exposure to risk in these entities is generally limited to any capital contribution it has made or is required to make and any earned but uncollected management fees. The Company has not issued any investment performance guarantees to these VIEs or their investors.

21

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

6) Variable Interest Entities (cont.)

The following information pertains to unconsolidated VIEs for which the Company holds a variable interest (in millions):

	September 30, 2020		December 31, 2019
Unconsolidated VIE assets	$	6,393.4	$	6,625.5
Unconsolidated VIE liabilities	$	4,260.1	$	4,320.6
Equity interests on the Condensed Consolidated Balance Sheets	$	12.8	$	17.5
Maximum risk of loss(1)	$	18.3	$	23.9

(1)Includes equity investments the Company has made or is required to make and any earned but uncollected management and incentive fees. The Company does not record performance or incentive allocations until the respective measurement period has ended.

22

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

7) Borrowings and Debt

The Company’s borrowings and long-term debt was comprised of the following as of the dates indicated (in millions):

	September 30, 2020					December 31, 2019
(in millions)	Carrying Value		Fair Value		Fair Value Level	Carrying Value		Fair Value		Fair Value Level
Third party borrowings:
$450 million revolving credit facility expiring August 22, 2022(1)(2)	$	80.0	$	80.0	2	$	140.0	$	140.0	2
$275 million 4.80% Senior Notes Due July 27, 2026(3)	272.7		294.4		2	272.4		287.2		2
$125 million 5.125% Senior Notes Due August 1, 2031(3)	121.5		128.3		2	121.4		126.4		2
Total third party borrowings	$	474.2	$	502.7		$	533.8	$	553.6
Non-recourse borrowings:
Non-recourse seed capital facility(1)(4)	$	—	$	—		$	35.0	$	35.0	2
Total non-recourse borrowing	$	—	$	—		$	35.0	$	35.0
Total borrowings	$	474.2	$	502.7		$	568.8	$	588.6

(1)Fair value approximates carrying value because the credit facilities have variable interest rates based on selected short term market rates.

(2)An amendment to the revolving credit facility was entered into on September 3, 2020 to reduce the revolving credit facility to $150 million upon the consummation of the sale of the Company’s equity interests in Barrow Hanley.

(3)The difference between the principal amounts and the carrying values of the senior notes in the table above reflects the unamortized debt issuance costs and discounts.

(4)Non-recourse seed capital facility set to expire on January 15, 2021 was paid down in the third quarter and terminated.

Revolving Credit Facility

On September 3, 2020, the Company, Royal Bank of Canada, BMO Harris Bank, N.A., Bank of China, New York Branch, Wells Fargo Bank, National Association, Barclays Bank PLC, Morgan Stanley Bank, N.A., Bank of America N.A., the Bank of New York Mellon and Citibank, N.A., as an issuing bank and administrative agent (collectively, the “Lenders”), entered into an amendment (the “Amendment") to the Revolving Credit Agreement dated as of August 20, 2019 (the “Credit Agreement”). The Amendment includes changes to the Credit Agreement to permit the sale of the Company's equity interests in Barrow Hanley (the “Barrow Hanley Sale”). Under the Credit Agreement, the Barrow Hanley Sale required consent of the Lenders given that Barrow Hanley accounted for more than 10% of the Company's consolidated Adjusted EBITDA. The Amendment provides that, effective immediately upon the consummation of the Barrow Hanley Sale, the Lenders commitments under the Credit Agreement shall be $150 million.

23

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

8) Leases

The Company has operating leases for corporate offices, data centers, vehicles and certain equipment. The operating leases have remaining lease terms of 1 year to 13 years, some of which include options to extend the leases for up to 5 years, and some of which include options to terminate the leases within 1 year.

The following table summarizes information about the Company’s operating leases for the three and nine months ended September 30, (in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Operating lease cost	$	4.0	$	3.4	$	11.9	$	10.3
Variable lease cost	0.1		0.1		0.2		0.2
Sublease income	(0.1)		—		(0.1)		—
Total operating lease expense	4.0		3.5		12.0		10.5
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	3.6		3.7		11.1		11
Right of use assets obtained in exchange for new operating lease liabilities	0.2		0.1		77.3		5.5

In determining the incremental borrowing rate, the Company considered the interest rate yield for the specific interest rate environment and the Company’s credit spread at the inception of the lease. For the nine months ended September 30, 2020 and 2019, the weighted average remaining lease term was 11.7 years and 4.5 years, respectively, and the weighted average discount rate was 3.47% and 4.13%, respectively.

In connection with the pending divestiture of Barrow Hanley, the Company reclassified $12.4 million of Right of use assets and $12.7 million of Operating lease liabilities as of September 30, 2020 on the Condensed Consolidated Balance Sheet to Affiliate assets and liabilities held for sale, respectively. See Note 3, Divestitures and Assets and Liabilities Held for Sale, in these Notes for additional information.

Maturities of operating lease liabilities were as follows (in millions):

	Operating Leases
Year Ending December 31,
2020 (excluding the nine months ended September 30, 2020)	$	3.3
2021	13.2
2022	9.2
2023	11.2
2024	10.4
Thereafter	87.8
Total lease payments	135.1
Less imputed interest	(25.1)
Total	$	110.0

24

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

9) Goodwill and Intangible Assets

The following table presents the changes in goodwill for the nine months ended September 30, 2020 and 2019 (in millions):

	Quant & Solutions		Alternatives		Liquid Alpha		Total
Goodwill	$	22.1	$	153.1	$	133.3	$	308.5
Accumulated impairment	(1.8)		(5.0)		(27.1)		(33.9)
December 31, 2019	$	20.3	$	148.1	$	106.2	$	274.6
Additions	—		—		—		—
Impairments	—		—		(16.4)		(16.4)
Disposals	—		—		—		—
Decrease from reclassification to assets held   for sale(1)	—		—		(76.1)		(76.1)
Goodwill	22.1		153.1		57.2		232.4
Accumulated impairment	(1.8)		(5.0)		(43.5)		(50.3)
September 30, 2020	$	20.3	$	148.1	$	13.7	$	182.1

(1) In connection with the pending divestiture of Barrow Hanley, the Company assigned $76.1 million of goodwill to “Affiliate Assets held for sale” in the Condensed Consolidated Balance Sheet as of September 30, 2020. See Note 3, Divestitures and Assets and Liabilities Held for Sale, in these Notes for additional information.

	Quant & Solutions		Alternatives		Liquid Alpha		Total
Goodwill	$	22.1	$	153.1	$	133.3	$	308.5
Accumulated impairment	(1.8)		(5.0)		(27.1)		(33.9)
December 31, 2018	$	20.3	$	148.1	$	106.2	$	274.6
Additions	—		—		—		—
Impairments	—		—		—		—
Disposals	—		—		—		—
Goodwill	22.1		153.1		133.3		308.5
Accumulated impairment	(1.8)		(5.0)		(27.1)		(33.9)
September 30, 2019	$	20.3	$	148.1	$	106.2	$	274.6

The 2019 annual impairment assessment determined that no impairment existed at the annual assessment date. Due to the decline in the Company’s assets under management for the three months ended March 31, 2020, management determined that an interim impairment assessment was necessary as of March 31, 2020.

In the first quarter of 2020, the Company performed a quantitative impairment test for Copper Rock reporting unit which was included within the Liquid Alpha segment prior to its disposition. The quantitative impairment test concluded that the fair value of the reporting unit did not exceed its carrying value. Accordingly, the Company recognized a goodwill impairment charge of $16.4 million for the three months ended March 31, 2020. No goodwill

25

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

9) Goodwill and Intangible Assets (cont.)

impairment charges were recognized for the three months ended September 30, 2020 and the Company recognized a goodwill impairment charge of $16.4 million for the nine months ended September 30, 2020.

The fair value of the reporting unit was estimated using the income approach, which calculates the fair value based on the present value of estimated future cash flows. Cash flow projections are based on management’s estimates of Assets Under Management (“AUM”) growth rates, product mix and effective fee rates, taking into consideration industry and market conditions. The discount rates used are based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics. The Company’s quantitative impairment analysis at March 31, 2020 incorporated revised forecasts that took into account the market disruptions during the quarter and its impact on the results in future periods. Given the significant level of uncertainty that currently exists, management also considered alternative scenarios for market and reporting unit performance over the next several years. If the Company’s assets under management are further impacted by the global economic conditions caused by COVID-19, such as adverse and significant declines in the value of global financial markets, additional impairments of goodwill or intangible assets are possible in future periods.

The following table presents the change in definite-lived acquired intangible assets comprised of client relationships for the nine months ended September 30, 2020 and 2019 (in millions):

	Gross Book Value		Accumulated Amortization & Impairment		Net Book Value
December 31, 2019	$	108.3	$	(44.2)	$	64.1
Additions	—		—		—
Amortization	—		(5.1)		(5.1)
Disposals	—		—		—
September 30, 2020	$	108.3	$	(49.3)	$	59.0

	Gross Book Value		Accumulated Amortization & Impairment		Net Book Value
December 31, 2018	$	108.3	$	(37.6)	$	70.7
Additions	—		—		—
Amortization	—		(4.9)		(4.9)
Disposals	—		—		—
September 30, 2019	$	108.3	$	(42.5)	$	65.8

The Company’s definite-lived acquired intangibles are amortized over their expected useful lives. As of September 30, 2020, these assets were being amortized over remaining useful lives of three to nine years. The Company recorded amortization expense of $1.6 million and $1.6 million for the three months ended September 30, 2020 and 2019, respectively. The Company recorded amortization expense of $5.1 million and $4.9 million for the nine months ended months ended September 30, 2020 and 2019, respectively.

26

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

9) Goodwill and Intangible Assets (cont.)

The Company also acquired a $1.0 million indefinite-lived intangible trade name in the acquisition of Landmark, included in acquired intangibles, net, on the Condensed Consolidated Balance Sheets at September 30, 2020 and 2019.

The 2019 annual impairment assessment of definite and indefinite-lived intangible assets determined that no impairment existed. Due to the decline in the Company’s assets under management in the three months ended March 31, 2020, the Company assessed definite and indefinite-lived intangible assets for possible impairment. For indefinite-lived intangible assets, the Company performed a qualitative assessment and determined that it was more likely than not that the indefinite-lived intangible asset was not impaired. For definite-lived intangible assets, no events or changes in circumstances indicated that the carrying amount of these assets may not be recoverable. As such, no impairment charges were determined for both the definite and indefinite-lived intangible assets. No impairment charges were determined for the definite and indefinite-lived intangible assets for the three months ended September 30, 2020.

The Company estimates that its consolidated annual amortization expense, assuming no useful life changes or additional investments in new or existing Affiliates, for each of the next five fiscal years is as follows (in millions):

Year Ending December 31,
2020 (excluding the nine months ended September 30, 2020)	$	1.6
2021	6.4
2022	6.5
2023	6.4
2024	6.4
Thereafter	31.7
Total	$	59.0

27

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

10) Commitments and Contingencies

Operational commitments

The Company had unfunded commitments to invest up to approximately $37 million in co-investments as of September 30, 2020. These commitments will be funded as required through the end of the respective investment periods ranging through fiscal 2022.

Certain Affiliates operate under regulatory authorities that require that they maintain minimum financial or capital requirements. Management is not aware of any violations of such financial requirements occurring during the period.

Guaranty

The Company entered into a guaranty for an office space security deposit on behalf of an Affiliate in the amount of $2.5 million in January 2020. This represents the maximum potential amount of future (undiscounted) payments that the Company could be required to make under the guaranty in the event of default by the guaranteed parties. This guaranty expires in 2022. There are no liabilities recorded on the Condensed Consolidated Balance Sheet as of September 30, 2020 related to this guaranty.

Litigation

The Company and its Affiliates are subject to claims, legal proceedings and other contingencies in the ordinary course of their business activities. Each of these matters is subject to various uncertainties, and it is possible that some of these matters may be resolved in a manner unfavorable to the Company or its Affiliates. The Company and its Affiliates establish accruals for matters for which the outcome is probable and can be reasonably estimated. If an insurance claim or other indemnification for a litigation accrual is available to the Company, the associated gain will not be recognized until all contingencies related to the gain have been resolved. As of September 30, 2020, there were no material accruals for claims, legal proceedings or other contingencies.

Indemnifications

In the normal course of business, such as through agreements to enter into business combinations and divestitures of Affiliates, the Company enters into contracts that contain a variety of representations and warranties and which provide general indemnifications. The Company’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that have not yet occurred.

Foreign tax contingency

The Company has clients in non-U.S. jurisdictions which require entities that are conducting certain business activities in such jurisdictions to collect and remit tax assessed on certain fees paid for goods and services provided. The Company does not believe this requirement is applicable based on its limited business activities in these jurisdictions. However, given the fact that uncertainty exists around the requirement, the Company has chosen to evaluate its potential exposure related to non-collection and remittance of these taxes. At September 30, 2020, management of the Company has estimated the potential maximum exposure and concluded that it is not material. No accrual for the potential exposure has been recorded as the probability of incurring any potential liability relating to this exposure is not probable at September 30, 2020.

28

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

10) Commitments and Contingencies (cont.)

Considerations of credit risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and investments. The Company maintains cash and cash equivalents and short term investments with various financial institutions. These financial institutions are typically located in cities in which the Company and its Affiliates operate. For the Company and certain Affiliates, cash deposits at a financial institution may exceed Federal Deposit Insurance Corporation insurance limits. Additionally, the Company holds insurance policies which cover historical and future tax benefits relating to certain of its deferred tax assets. The insurers of the policies are considered a significant counterparty to the Company.

11) Earnings Per Share

Basic earnings per share is calculated by dividing net income attributable to controlling interests by the weighted-average number of shares of common stock outstanding. Diluted earnings per share is similar to basic earnings per share, but is adjusted for the effect of potentially issuable common stock, except when inclusion is antidilutive. 

The calculation of basic and diluted earnings per share of common stock is as follows (dollars in millions, except per share data):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Numerator:
Net income attributable to controlling interests	$	37.2	$	75.4	$	88.7	$	156.1
Less: Total income available to participating unvested securities(1)	—		—		—		(0.1)
Total net income attributable to common stock	$	37.2	$	75.4	$	88.7	$	156.0
Denominator:
Weighted-average shares of common stock outstanding—basic	80,001,360		89,970,871		81,832,607		92,996,289
Potential shares of common stock:
Restricted stock units	115,155		1,429		48,915		79,775
Employee stock options	735,023		—		245,008		—
Weighted-average shares of common stock outstanding—diluted	80,851,538		89,972,300		82,126,530		93,076,064
Earnings per share of common stock attributable to controlling interests:
Basic	$	0.46	$	0.84	$	1.08	$	1.68
Diluted	$	0.46	$	0.84	$	1.08	$	1.68

(1)Income available to participating unvested securities includes dividends paid on unvested restricted shares and their proportionate share of undistributed earnings.

29

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

11) Earnings Per Share (cont.)

Employee options to purchase 8,970,000 shares were not included in the computation of diluted EPS for the three and nine months ended September 30, 2019 because the assumed proceeds from exercising such options exceed the average price of the shares of common stock for the period and, therefore, the options are deemed antidilutive.

12) Revenue

Management fees

The Company’s management fees are a function of the fee rates the Affiliates charge to their clients, which are typically expressed in basis points, and the levels of the Company’s assets under management. The most significant driver of increases or decreases in this average fee rate is changes in the mix of the Company’s assets under management caused by net inflows or outflows in certain asset classes or disproportionate market movements. For certain of the Company’s Alternative funds, management fee revenue is calculated based on a percentage of assets under management or total capital commitments. These Alternative funds can also include “catch-up” provisions such that the Company records revenue for payments of fund management fees back to the initial closing date for funds with multiple closings, less placement fees paid to third parties related to these funds.

    Performance fees

The Company’s products subject to performance fees earn these fees upon exceeding high-water mark performance thresholds or outperforming a hurdle rate. Conversely, the separate accounts / other products, which primarily earn management fees, are potentially subject to performance adjustments up or down based on investment performance versus benchmarks (i.e. fulcrum fees).     

    Other revenue

Included in other revenue are certain payroll and benefits costs and expenses paid on behalf of Funds by the Company’s Affiliates. In instances where a customer reimburses the Company for a cost paid on the customer’s behalf, the Company is acting as a principal and the reimbursement is accrued on a gross basis at cost as the corresponding reimbursable expenses are incurred. Revenue from expense reimbursement amounted to $1.1 million and $0.9 million for the three months ended September 30, 2020 and 2019, respectively. Revenues from expense reimbursement amounted to $3.3 million and $3.2 million for the nine months ended September 30, 2020 and 2019, respectively, are recorded in other revenue in the Company’s Condensed Consolidated Statements of Operations. Other revenue may also consist of other miscellaneous revenue, consisting primarily of administration and consulting services.

Disaggregation of management fee revenue

The Company classifies its revenue (including only consolidated Affiliates that are included in management fee revenue) among the following asset classes:

i.U.S. equity, which includes small cap through large cap securities and substantially value or blended investment styles;

ii.Global / non-U.S. equity, which includes global and international equities including emerging markets;

30

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

12) Revenue (cont.)

iii.Fixed income, which includes government bonds, corporate bonds and other fixed income investments in the United States; and

iv.Alternatives, which is comprised of illiquid and differentiated liquid investment strategies that include private equity, real estate and real assets, including forestry, as well as a growing suite of liquid alternative capabilities in areas such as long/short, market neutral and absolute return.

Management fee revenue by segment and asset class is comprised of the following for the three and nine months ended September 30 (in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Quant & Solutions
Global / non-U.S. equity	$	87.9	$	92.7	$	255.3	$	276.8
Alternatives
Alternatives	43.2		37.2		126.4		124.5
Liquid Alpha(1)
Global / non-U.S. equity	17.8		21.9		56.5		70.6
Fixed income	6.1		6.6		18.5		19.5
U.S. equity	23.2		38.0		70.7		118.4
Management fee revenue	$	178.2	$	196.4	$	527.4	$	609.8

(1)In July 2020, the Company completed the sale of Copper Rock and announced the divestiture of Barrow Hanley. See Note 3, Divestitures and Assets and Liabilities Held for Sale for further discussion of divestitures. The financial results of Barrow Hanley are included in the Liquid Alpha segment for the three and nine months ended September 30, 2020. The financial results of Copper Rock are included in the Liquid Alpha segment until July 24, 2020, the completion of the sale.

31

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

13) Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive income (loss), net of tax, for the three months ended September 30, 2020 and 2019 are as follows (in millions):

	Foreign currency translation adjustment		Valuation and amortization of derivative securities		Total
Balance, as of June 30, 2020	$	1.0	$	(19.2)	$	(18.2)
Foreign currency translation adjustment	1.4		—		1.4
Amortization related to derivatives securities, before tax	—		0.8		0.8
Tax impact	—		(0.2)		(0.2)
Other comprehensive income	1.4		0.6		2.0
Balance, as of September 30, 2020	$	2.4	$	(18.6)	$	(16.2)

	Foreign currency translation adjustment		Valuation and amortization of derivative securities		Total
Balance, as of June 30, 2019	$	1.7	$	(21.5)	$	(19.8)
Foreign currency translation adjustment	(0.8)		—		(0.8)
Amortization related to derivatives securities, before tax	—		0.7		0.7
Tax impact	—		(0.1)		(0.1)
Other comprehensive income (loss)	(0.8)		0.6		(0.2)
Balance, as of September 30, 2019	$	0.9	$	(20.9)	$	(20.0)

For the three months ended September 30, 2020 and 2019, the Company reclassified $0.8 million and $0.7 million, respectively, from accumulated other comprehensive income (loss) to interest expense on the Condensed Consolidated Statements of Operations.

The components of accumulated other comprehensive income (loss), net of tax, for the nine months ended September 30, 2020 and 2019 were as follows (in millions):

	Foreign currency translation adjustment		Valuation and amortization of derivative securities		Total
Balance, as of December 31, 2019	$	2.8	$	(20.3)	$	(17.5)
Foreign currency translation adjustment	(0.4)		—		(0.4)
Amortization related to derivatives securities, before tax	—		2.3		2.3
Tax impact	—		(0.6)		(0.6)
Other comprehensive income (loss)	(0.4)		1.7		1.3
Balance, as of September 30, 2020	$	2.4	$	(18.6)	$	(16.2)

32

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

13) Accumulated Other Comprehensive Income (Loss) (cont.)

	Foreign currency translation adjustment		Valuation and amortization of derivative securities		Total
Balance, as of December 31, 2018	$	1.8	$	(22.7)	$	(20.9)
Foreign currency translation adjustment	(0.9)		—		(0.9)
Amortization related to derivatives securities, before tax	—		2.2		2.2
Tax impact	—		(0.4)		(0.4)
Other comprehensive income (loss)	(0.9)		1.8		0.9
Balance, as of September 30, 2019	$	0.9	$	(20.9)	$	(20.0)

For the nine months ended September 30, 2020 and 2019, the Company reclassified $2.3 million and $2.2 million, respectively, from accumulated other comprehensive income (loss) to interest expense on the Condensed Consolidated Statements of Operations.

14) Derivatives and Hedging

Cash flow hedge

In July 2015, the Company entered into a series of $300.0 million notional Treasury rate lock contracts which were designated and qualified as cash flow hedges. The Company documented its hedging strategy and risk management objective for this contract in anticipation of a future debt issuance. The Treasury rate lock contract eliminated the impact of fluctuations in the underlying benchmark interest rate for future forecasted debt issuances. The Company assessed the effectiveness of the hedging contract at inception and on a quarterly basis thereafter. The forecasted debt issuances occurred in July 2016 and the Treasury rate lock, which had an accumulated fair value of $(34.4) million, was settled. Refer to Note 7, Borrowings and Debt, for additional information on the debt issuances.

As of September 30, 2020, the balance recorded in accumulated other comprehensive income (loss) was $(18.6) million, net of tax. This balance will be reclassified to earnings through interest expense over the life of the issued debt. Amounts of $0.8 million and $0.7 million have been reclassified for each of the three months ended September 30, 2020 and 2019, respectively. Amounts of $2.3 million and $2.2 million have been reclassified for the nine months ended September 30, 2020 and 2019, respectively. During the next twelve months the Company expects to reclassify approximately $3.3 million to interest expense.

Derivatives of consolidated Funds

In the normal course of business, the Company’s consolidated Funds may enter into transactions involving derivative financial instruments in connection with Funds’ investing activities. Derivative instruments may be used as substitutes for securities in which the Funds can invest, to hedge portfolio investments or to generate income or gain to the Funds. The Funds may also use derivatives to manage duration; sector and yield curve exposures and credit and spread volatility. Derivative financial instruments base their value upon an underlying asset, index or reference rate. These instruments are subject to various risks, including leverage, market, credit, liquidity and operational risks. The Funds manage the risks associated with derivatives on an aggregate basis, along with the risks associated with its trading and as part of its overall risk management policies.

33

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

15) Segments

The Company has the following business segments:

•Quant & Solutions—comprised of versatile, often highly-tailored strategies that leverage data and technology in a computational, factor based investment process across a range of asset classes and geographies, including Global, non-U.S., emerging markets and managed volatility equities, as well as multi-asset products.

•Alternatives—comprised of illiquid and differentiated liquid investment strategies that include private equity, real estate and real assets, including forestry, as well as a growing suite of liquid alternative capabilities in areas such as long/short, market neutral and absolute return.

•Liquid Alpha(1)—comprised of specialized investment strategies with a focus on alpha-generation across market cycles in long-only small-, mid-, and large-cap U.S., global, non-U.S. and emerging markets equities, as well as fixed income.

(1)In July 2020, the Company completed the sale of Copper Rock and announced the divestiture of Barrow Hanley. See Note 3, Divestitures and Assets and Liabilities Held for Sale, for further discussion of divestitures. The financial results of Copper Rock are included in the Liquid Alpha segment until July 24, 2020, the completion of the sale. The financial results of Barrow Hanley are included in the Liquid Alpha segment for the three and nine months ended September 30, 2020.

The Company has a corporate head office that is included in “Other”. The corporate head office supports the segments by providing infrastructure and administrative support in the areas of accounting/finance, information technology, legal, compliance and human resources. The corporate head office expenses are not allocated to the Company’s three business segments but the Chief Operating Decision Maker (“CODM”) does consider the cost structure of the corporate head office when evaluating the financial performance of the segments.

Performance Measure

The primary measure used by the CODM in measuring performance and allocating resources to the segments is Economic Net Income ("ENI"). The Company defines ENI for the segments as ENI revenue less (i) ENI operating expenses, (ii) variable compensation and (iii) key employee distributions. The ENI adjustments to U.S. GAAP include both reclassifications of U.S. GAAP revenue and expense items, as well as adjustments to U.S. GAAP results, primarily to exclude non-cash, non-economic expenses, or to reflect cash benefits not recognized under U.S. GAAP. This measure supplements and should be considered in addition to, and not in lieu of, the Condensed Consolidated Statements of Operations prepared in accordance with U.S. GAAP. The Company does not disclose total asset information for its reportable segments as the information is not reviewed by the CODM.

ENI revenue includes management fees, performance fees and other revenue under U.S. GAAP, adjusted to include management fees paid to Affiliates by consolidated Funds and the Company’s share of earnings from equity-accounted Affiliates. ENI revenue is also adjusted to exclude the separate revenues recorded under U.S. GAAP for certain Fund expenses reimbursed to our Affiliates.

34

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

15) Segments (cont.)

ENI operating expenses include compensation and benefits, general and administrative expense, and depreciation and amortization under U.S. GAAP, adjusted to exclude non-cash expenses representing changes in the value of Affiliate equity and profit interests held by Affiliate key employees, non-cash amortization of employee equity owned pre-acquisition that occurred as a result of Landmark transaction, goodwill impairment and amortization of acquired intangible assets, capital transaction costs, restructuring costs, the impact of a one-time compensation arrangement entered into that includes advances against future compensation payments, and the separate expenses recorded under U.S. GAAP for certain Fund expenses reimbursed to Affiliates. Additionally, variable compensation and Affiliate key employee distributions are segregated from ENI operating expenses.

ENI segment results are also adjusted to exclude the portion of consolidated Fund revenues, expenses and investment return recorded under U.S. GAAP.

Segment Presentation

The following tables set forth summarized operating results for the Company's three segments and related adjustments necessary to reconcile the segment economic net income to arrive at the Company's consolidated U.S. GAAP net income (loss):

The following table presents the financial data for the Company’s three segments for the three months ended September 30, 2020 (in millions):

	Three Months Ended September 30, 2020
	Quant & Solutions		Alter-natives		Liquid Alpha		Other		Reconciling Adjustments			Total U.S. GAAP(1)
ENI revenue	$	89.0	$	43.8	$	47.9	$	0.1	$	1.6	(a)	$	182.4
ENI operating expenses	37.2		15.3		15.5		5.8		12.6		(b)	86.4
Earnings before variable compensation	51.8		28.5		32.4		(5.7)		(11.0)			96.0
Variable compensation	18.0		10.1		12.3		0.8		3.3		(c)	44.5
ENI operating earnings (after variable comp)	33.8		18.4		20.1		(6.5)		(14.3)			51.5
Affiliate key employee distributions	0.8		7.3		2.9		—		—			11.0
Earnings after Affiliate key employee distributions	33.0		11.1		17.2		(6.5)		(14.3)			40.5
Net interest expense	—		—		—		(5.3)		(1.6)		(d)	(6.9)
Net investment income	—		—		—		—		6.0		(e)	6.0
Gain on sale of Affiliate	—		—		—		—		7.2		(e)	7.2
Net income attributable to non-controlling interests in consolidated Funds	—		—		—		—		3.2		(e)	3.2
Income tax expense	—		—		—		(11.8)		(1.0)		(f)	(12.8)
Economic net income	$	33.0	$	11.1	$	17.2	$	(23.6)	$	(0.5)		$	37.2

35

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

15) Segments (cont.)

The following table presents the financial data for the Company’s three segments for the three months ended September 30, 2019 (in millions):

	Three Months Ended September 30, 2019
	Quant & Solutions		Alter-natives		Liquid Alpha		Other		Reconciling Adjustments			Total U.S. GAAP(1)
ENI revenue	$	93.1	$	37.4	$	65.2	$	0.1	$	2.0	(a)	$	197.8
ENI operating expenses	40.8		16.1		18.5		8.3		5.5		(b)	89.2
Earnings before variable compensation	52.3		21.3		46.7		(8.2)		(3.5)			108.6
Variable compensation	18.8		7.8		15.6		1.9		—		(c)	44.1
ENI operating earnings (after variable comp)	33.5		13.5		31.1		(10.1)		(3.5)			64.5
Affiliate key employee distributions	1.5		5.0		6.1		—		—			12.6
Earnings after Affiliate key employee distributions	32.0		8.5		25.0		(10.1)		(3.5)			51.9
Net interest expense	—		—		—		(5.7)		(2.2)		(d)	(7.9)
Net investment loss	—		—		—		—		7.0		(e)	7.0
Net income attributable to non-controlling interests in consolidated Funds	—		—		—		—		(7.6)		(e)	(7.6)
Income tax (expense) benefit	—		—		—		(12.3)		44.3		(f)	32.0
Economic net income	$	32.0	$	8.5	$	25.0	$	(28.1)	$	38.0		$	75.4

The following table presents the financial data for the Company’s three segments for the nine months ended September 30, 2020 (in millions):

	Nine Months Ended September 30, 2020
	Quant & Solutions		Alter-natives		Liquid Alpha		Other		Reconciling Adjustments			Total U.S. GAAP(1)
ENI revenue	$	257.9	$	128.2	$	147.5	$	0.3	$	5.8	(a)	$	539.7
ENI operating expenses	109.3		47.6		52.7		19.4		0.4		(b)	229.4
Earnings before variable compensation	148.6		80.6		94.8		(19.1)		5.4			310.3
Variable compensation	52.7		29.0		36.0		2.6		17.4		(c)	137.7
ENI operating earnings (after variable comp)	95.9		51.6		58.8		(21.7)		(12.0)			172.6
Affiliate key employee distributions	2.9		20.0		8.9		—		—			31.8
Earnings after Affiliate key employee distributions	93.0		31.6		49.9		(21.7)		(12.0)			140.8
Net interest expense	—		—		—		(16.5)		(5.1)		(d)	(21.6)
Net investment income	—		—		—		—		17.3		(e)	17.3
Gain on sale of Affiliate	—		—		—		—		7.2		(e)	7.2
Net income attributable to non-controlling interests in consolidated Funds	—		—		—		—		(21.3)		(e)	(21.3)
Income tax expense	—		—		—		(31.4)		(2.3)		(f)	(33.7)
Economic net income	$	93.0	$	31.6	$	49.9	$	(69.6)	$	(16.2)		$	88.7

36

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

15) Segments (cont.)

The following table presents the financial data for the Company’s three segments for the nine months ended September 30, 2019 (in millions):

	Nine Months Ended September 30, 2019
	Quant & Solutions		Alter-natives		Liquid Alpha		Other		Reconciling Adjustments			Total U.S. GAAP(1)
ENI revenue	$	277.3	$	125.7	$	202.8	$	0.3	$	6.0	(a)	$	612.1
ENI operating expenses	120.4		49.4		60.0		25.4		4.8		(b)	260.0
Earnings before variable compensation	156.9		76.3		142.8		(25.1)		1.2			352.1
Variable compensation	57.6		28.0		48.1		7.5		4.6		(c)	145.8
ENI operating earnings (after variable comp)	99.3		48.3		94.7		(32.6)		(3.4)			206.3
Affiliate key employee distributions	4.1		17.1		18.6		—		—			39.8
Earnings after Affiliate key employee distributions	95.2		31.2		76.1		(32.6)		(3.4)			166.5
Net interest expense	—		—		—		(15.4)		(6.9)		(d)	(22.3)
Net investment income	—		—		—		—		25.2		(e)	25.2
Net income attributable to non-controlling interests in consolidated Funds	—		—		—		—		(9.6)		(e)	(9.6)
Income tax (expense) benefit	—		—		—		(36.9)		33.2		(f)	(3.7)
Economic net income	$	95.2	$	31.2	$	76.1	$	(84.9)	$	38.5		$	156.1

(1) The most directly comparable U.S. GAAP measure of ENI revenue is U.S. GAAP revenue. The most directly comparable U.S. GAAP measure of ENI operating expenses is U.S. GAAP operating expenses, which is comprised of ENI operating expenses, variable compensation and Affiliate key employee distributions above. The most directly comparable U.S. GAAP measure of earnings after Affiliate key employee distributions is U.S. GAAP operating income. The most directly comparable U.S. GAAP measure of ENI is U.S. GAAP net income attributable to controlling interests.

Reconciling Adjustments:

(a)Adjusted to exclude earnings from equity-accounted Affiliate, which are included in U.S. GAAP investment income, and to include consolidated Funds revenues and the separate revenues recorded for certain Fund expenses reimbursed by customers, which are included in U.S. GAAP revenue.

(b)Adjusted to include non-cash amortization expense for pre-acquisition employee equity, non-cash expenses for key employee equity and profit interest revaluations, capital transaction costs, goodwill impairment and amortization of acquired intangible assets, restructuring costs, consolidated Funds’ operating expenses and the Fund expenses reimbursed by customers, each of which are included in U.S. GAAP operating expenses.

(c)Adjusted to include restructuring costs and the impact of a one-time compensation arrangement entered into during the first quarter of 2020 that includes advances against future compensation payments, which are included in U.S. GAAP compensation expense.

(d)Adjusted to include the cost of seed financing, which is included in U.S. GAAP interest expense.

37

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

15) Segments (cont.)

(e)Adjusted to include net investment income (loss), net income (loss) attributable to non-controlling interests in consolidated Funds, and the gain on sale of Affiliate, all of which are included in U.S. GAAP net income attributable to controlling interests.

(f)Adjusted to include the impact of deferred tax attributable to the amortization of goodwill and acquired intangibles. Also adjusted to include tax expense or benefits relating to uncertain tax positions, the tax impact of certain ENI adjustments and other unusual items that are not included in current operating results for ENI purposes.

Management fee revenue by principal geographic area is comprised of the following for the three and nine months ended September 30 (in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
U.S.	$	134.1	$	148.2	$	395.9	$	459.4
Non-U.S.	44.1		48.2		131.5		150.4
Management fee revenue	$	178.2	$	196.4	$	527.4	$	609.8

16) Related Party Transactions

Certain Affiliates have provided loans to Affiliate employees. At September 30, 2020 and December 31, 2019, the balance of the loans to Affiliate employees was $11.9 million and $16.1 million, respectively. These loans will be repaid by 2022.

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Unless we state otherwise or the context otherwise requires, references in this Quarterly Report on Form 10-Q to “BrightSphere” or “BSIG” refer to BrightSphere Investment Group Inc., references to the “Company” refer to BSIG, and references to “we,” “our” and “us” refer to BSIG and its consolidated subsidiaries and equity-accounted Affiliates, excluding discontinued operations. References to the holding company or “Center” excluding the Affiliates refer to BrightSphere Inc., or “BSUS,” a Delaware corporation and wholly owned subsidiary of BSIG. Unless we state otherwise or the context otherwise requires, references in this Quarterly Report on Form 10-Q to “Affiliates” or an “Affiliate” refer to the asset management firms in which we have an ownership interest. References in this Quarterly Report on Form 10-Q to “OM plc” refer to Old Mutual plc, our former parent. None of the information in this Quarterly Report on Form 10-Q constitutes either an offer or a solicitation to buy or sell any of our Affiliates’ products or services, nor is any such information a recommendation for any of our Affiliates’ products or services.

The following discussion of our financial condition and results of operations should be read in conjunction with our Condensed Consolidated Financial Statements and related notes which appear elsewhere in this Quarterly Report on Form 10-Q.

This discussion contains forward-looking statements that involve risks and uncertainties. See “Forward-Looking Statements” at the end of this Item 2 for more information. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, is designed to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results.

Our MD&A is presented in five sections:

•Overview provides a brief description of our segments and underlying Affiliates, a summary of The Economics of Our Business and an explanation of How We Measure Performance using a non-GAAP measure which we refer to as economic net income, or ENI. This section also provides a Summary Results of Operations and information regarding our Assets Under Management by Affiliate, strategy, client type and location, and net flows by segment, client type and client location.

•U.S. GAAP Results of Operations for the Three and Nine Months Ended September 30, 2020 and 2019 includes an explanation of changes in our U.S. GAAP revenue, expense and other items for the three and nine months ended September 30, 2020 and 2019, as well as key U.S. GAAP operating metrics.

•Non-GAAP Supplemental Performance Measure — Economic Net Income and Segment Analysis includes an explanation of the key differences between U.S. GAAP net income and ENI, the key measure management uses to evaluate our performance. This section also provides a reconciliation between U.S. GAAP net income attributable to controlling interests and ENI for the three and nine months ended September 30, 2020 and 2019 as well as a reconciliation of key ENI operating items including ENI revenue and ENI operating expenses. This section also provides key non-GAAP operating metrics and a calculation of tax on economic net income. In addition, this section provides segment analysis for each of our business segments.

•Capital Resources and Liquidity discusses our key balance sheet data. This section discusses Cash Flows from the business; Adjusted EBITDA; Future Capital Needs; Borrowings and Long-Term Debt. The discussion of Adjusted EBITDA includes an explanation of how we calculate Adjusted EBITDA and a reconciliation of U.S. GAAP net income attributable to controlling interests to Adjusted EBITDA. 

•Critical Accounting Policies and Estimates provides a discussion of the key accounting policies and estimates that we believe are the most critical to an understanding of our results of operations and financial condition. These accounting policies and estimates require complex management judgment regarding matters that are highly uncertain at the time the policies were applied and estimates were made.

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Overview

We are a diversified, global asset management company headquartered in Boston, Massachusetts. We operate our business through three business segments:

•Quant & Solutions—comprised of versatile, often highly-tailored strategies that leverage data and technology in a computational, factor-based investment process across a range of asset classes and geographies, including Global, non-U.S., emerging markets and managed volatility equities, as well as multi-asset products.

•Alternatives—comprised of illiquid and differentiated liquid investment strategies that include private equity, real estate and real assets, including forestry, as well as a growing suite of liquid alternative capabilities in areas such as long/short, market neutral and absolute return.

•Liquid Alpha(1)—comprised of specialized investment strategies with a focus on alpha-generation across market cycles in long-only small-, mid-, and large-cap U.S., global, non-U.S. and emerging markets equities, as well as fixed income.

(1)In July 2020, we completed the sale of Copper Rock Capital Partners LLC (“Copper Rock”) and announced the divestiture of Barrow Hanley Mewhinney & Strauss, LLC (“Barrow Hanley”), which is expected to close in the fourth quarter of 2020, see "Recent Developments" herein.

Within our three segments, we have five(1) affiliate firms to whom we refer in this Quarterly Report as our Affiliates. Through our Affiliates, we offer a diverse range of actively-managed investment strategies and products to institutional investors around the globe. While our Affiliates maintain autonomy in the investment process and the day-to-day management of their businesses, our strategy is to work with them to accelerate the growth and profitability of their firms.

Under U.S. GAAP, our Affiliates may be consolidated into our operations or may be accounted for under the equity method of accounting. We may also be required to consolidate certain of our Affiliates’ sponsored investment entities, or Funds, due to the nature of our decision-making rights, our economic interests in these Funds or the rights of third party clients in those Funds.

(1)In July 2020, we completed the sale of Copper Rock and announced divestiture of Barrow Hanley, which is expected to close in the fourth quarter of 2020. This number gives effect to these divestitures. See "Recent Developments" herein.

40

Our Affiliates within each business segment and their principal strategies include:

Quant & Solutions

•Acadian Asset Management LLC (“Acadian”)(1)—a leading quantitatively-oriented manager of active global and international equity, and alternative strategies.

Alternatives

◦Landmark Partners, LLC (“Landmark”)—a leading global secondary private equity, real estate and real asset investment firm.

◦Campbell Global, LLC (“Campbell Global”)—a leading sustainable forestry and natural resource investment manager that seeks to deliver superior investment performance by focusing on unique acquisition opportunities, client objectives and disciplined management.

Liquid Alpha

◦Barrow, Hanley, Mewhinney & Strauss, LLC (“Barrow Hanley”)(2)—a widely recognized value-oriented investment manager of U.S., international and global equities, fixed income and a range of balanced investment management strategies.

◦Thompson, Siegel & Walmsley LLC (“TSW”)(1)—a value-oriented investment manager focused on small- and mid-cap U.S. equity, international equity and fixed income strategies.

◦Investment Counselors of Maryland, LLC (“ICM”)(3)—a value-driven domestic equity manager with product offerings focused on small- and mid-cap companies.

(1)Certain smaller Acadian strategies are included in Alternatives and certain TSW strategies are included in Quant & Solutions where the classification is more appropriate.

(2)In July 2020, we announced the divestiture of Barrow Hanley. See "Recent Developments" herein. We have presented operational information (including AUM and flow data) including Barrow Hanley for all periods. Under U.S. GAAP, financial results continue to include Barrow Hanley until the transaction closes, which is expected to be in the fourth quarter of 2020.

(3)Accounted for under the equity method of accounting.

    Recent Developments

Divestiture of Barrow Hanley and Copper Rock

On July 24, 2020, we sold all of our equity interests in Copper Rock, a former Affiliate, to Spouting Rock Asset Management LLC. The transaction resulted in a $7.2 million gain which is reflected on our Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2020.

On July 26, 2020, we entered into a purchase and sale agreement with Perpetual U.S. Holdings Company Inc. to sell all our interests in Barrow Hanley in exchange for $319 million of cash consideration, on a cash-free, debt-free basis, subject to certain customary closing and post-closing adjustments. The transaction is expected to close in the fourth quarter of 2020.

COVID-19 Impact

Beginning in the first quarter of 2020, the outbreak of COVID-19 had a significant impact on the global economy and the financial and securities markets, which will likely to continue for months to come. The overall extent and duration of COVID-19 on businesses and economic activity generally remains unclear. We continue to monitor the economic uncertainty and market volatility related to COVID-19, which has impacted the investment management industry in which we and our Affiliates operate. The extent of the impact on our business operations and financial results will depend on a number of factors and future developments, which are uncertain and cannot be predicted.

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See Item 1A to our Quarterly Report on Form 10-Q filed with the Securities Exchange Commission on May 11, 2020.

    The Economics of Our Business

Our profitability is affected by a variety of factors including the level and composition of our average assets under management, or AUM, fee rates charged on AUM and our expense structure. Our Affiliates earn management fees based on assets under management. Approximately 70% of our management fees for the three months ended September 30, 2020 are calculated based on average AUM (calculated on either a daily or monthly basis) with the remainder of our management fees calculated based on period-end AUM or other measuring methods. Changes in the levels of our AUM are driven by our investment performance and net client cash flows. Our Affiliates may also earn performance fees, or adjust management fees, when certain accounts differ in relation to relevant benchmarks or exceed or fail to exceed required returns. Approximately $18.0 billion, or 10% of our AUM in consolidated Affiliates, are in accounts with incentive fee or carried interest features in which we participate in the performance fee. The majority of these incentive fees are calculated based on value added over the relevant benchmarks on a rolling three-year basis. Carried interests are features of private equity funds, which are calculated based on long-term cumulative returns.

Our largest expense item is compensation and benefits paid to our and our Affiliates’ employees, which consists of both fixed and variable components. Fixed compensation and benefits represents base salaries and wages, payroll taxes and the costs of our employee benefit programs. Variable compensation, calculated as described below, may be awarded in cash, equity or profit interests.

The arrangements in place with our Affiliates result in the sharing of economics between BSUS and each Affiliate’s key management personnel using a profit-sharing model, except for ICM, which uses a revenue share model as a result of a legacy economic arrangement that has not been restructured. Profit sharing affects two elements within our earnings: (i) the calculation of variable compensation and (ii) the level of each Affiliate’s equity or profit interests distribution to its employees. Variable compensation is the portion of earnings that is contractually allocated to Affiliate employees as a bonus pool, typically representing a fixed percentage of earnings before variable compensation, which is measured as revenues less fixed compensation and benefits and other operating and administrative expenses. Profits after variable compensation are shared between us and Affiliate key employee equity holders according to our respective equity or profit interests ownership. The sharing of profits in this manner ensures that the economic interests of Affiliate key employees and those of BSUS are aligned, both in terms of generating strong annual earnings as well as investing those earnings back into the business in order to generate growth over the long term. We view profit sharing as an attractive operating model, as it allows us to share in the benefits of operating leverage as the business grows, and ensures all equity and profit interests holders are incentivized to achieve that growth.

Equity or profit interests owned by Affiliate key employees are either awarded as part of their variable compensation arrangements, or alternatively, may have originally resulted from BSUS acquiring less than 100% of the Affiliate. Over time, Affiliate key employee-owned equity or profit interests are recycled from one generation of employee-owners to the next, either by the next generation purchasing equity or profit interests directly from retiring principals, or by Affiliate key employees forgoing cash bonuses in exchange for the equivalent value in Affiliate equity or profit interests. The recycling of equity or profit interests is often facilitated by BSUS; see "—U.S. GAAP Results of Operations—U.S. GAAP Expenses—Compensation and Benefits Expense" for a further discussion.

42

How We Measure Performance

We manage our business based on three business segments, reflecting how our management assesses the performance of our business.

In measuring and monitoring the key components of our earnings, our management uses a non-GAAP financial measure, ENI, to evaluate the financial performance of, and to make operational decisions for, our business. We also use ENI to make resource allocation decisions, determine appropriate levels of investment or dividend payout, manage balance sheet leverage, determine Affiliate variable compensation and equity distributions, and incentivize management. It is an important measure in evaluating our financial performance because we believe it most accurately represents our operating performance and cash generation capability.

ENI differs from net income determined in accordance with U.S. GAAP as a result of both the reclassification of certain income statement items and the exclusion of certain non-cash or non-recurring income statement items. In particular, ENI excludes non-cash charges representing the changes in the value of Affiliate equity and profit interests held by Affiliate key employees, the impact of a one-time compensation arrangement entered into that includes advances against future compensation payments, the results of discontinued operations which are no longer part of our business, restructuring costs, capital transaction costs, seed capital and co-investment gains, losses and related financing costs and that portion of consolidated Funds which are not attributable to our stockholders. ENI is also adjusted for amortization of acquisition-related contingent consideration and pre-acquisition retained equity with service components.

ENI revenue is primarily comprised of the fee revenues paid to us by our clients for our advisory services and earnings from our equity-accounted Affiliate. Revenue included within ENI differs from U.S. GAAP revenue in that it excludes amounts from consolidated Funds which are not attributable to our stockholders, it excludes reimbursement of certain costs we paid on behalf of our customers and includes our share of earnings from our equity-accounted Affiliate.

ENI expenses are calculated to reflect all usual expenses from ongoing continuing operations attributable to our stockholders. Expenses included within ENI differ from U.S. GAAP expenses in that they exclude amounts from consolidated Funds which are not attributable to our stockholders, revaluations of Affiliate key employee owned equity and profit interests, amortization and impairment of acquired intangibles and other acquisition-related items, the impact of a one-time compensation arrangement entered into that includes advances against future compensation payments, costs we paid on behalf of our customers which were subsequently reimbursed and certain other non-cash expenses.

“Non-controlling interests” is a concept under U.S. GAAP that identifies net components of revenues and expenses that are not attributable to our stockholders. For example, the portion of the net income (loss) of any consolidated Fund that is attributable to the outside investors or clients of the consolidated Fund is included in “Non-controlling interests” in our Condensed Consolidated Financial Statements. Conversely, “controlling interests” is the portion of revenue or expense that is attributable to our stockholders.

For a more detailed discussion of the differences between U.S. GAAP net income and economic net income, see "—Non-GAAP Supplemental Performance Measure — Economic Net Income and Segment Analysis."

43

Summary Results of Operations

The following table summarizes our unaudited results of operations for the three and nine months ended September 30, 2020 and 2019: 

($ in millions, unless otherwise noted)	Three Months Ended September 30,								Nine Months Ended September 30,
	2020			2019			2020 vs. 2019		2020			2019			2020 vs. 2019
U.S. GAAP Basis
Revenue	$	182.4		$	197.8		$	(15.4)	$	539.7		$	612.1		$	(72.4)
Pre-tax income from continuing operations attributable to controlling interests	50.0			43.4			6.6		122.4			159.8			(37.4)
Net income from continuing operations attributable to controlling interests	37.2			75.4			(38.2)		88.7			156.1			(67.4)
Net income attributable to controlling interests	37.2			75.4			(38.2)		88.7			156.1			(67.4)
U.S. GAAP operating margin(1)	22.2		%	26.2		%	(403) bps		26.1		%	27.2		%	(111) bps
Earnings per share, basic ($)	$	0.46		$	0.84		$	(0.38)	$	1.08		$	1.68		$	(0.60)
Earnings per share, diluted ($)	$	0.46		$	0.84		$	(0.38)	$	1.08		$	1.68		$	(0.60)
Basic shares outstanding (in millions)	80.0			90.0			(10.0)		81.8			93.0			(11.2)
Diluted shares outstanding (in millions)	80.9			90.0			(9.1)		82.1			93.1			(11.0)
Economic Net Income Basis(2)(3)
(Non-GAAP measure used by management)
ENI revenue(4)	$	180.8		$	195.8		$	(15.0)	$	533.9		$	606.1		$	(72.2)
Pre-tax economic net income(5)	49.5			49.7			(0.2)		136.3			154.5			(18.2)
Adjusted EBITDA	60.5			59.8			0.7		170.6			182.1			(11.5)
ENI operating margin(6)	36.4		%	34.7		%	166 bps		34.6		%	34.6		%	(2) bps
Economic net income(7)	37.7			37.4			0.3		104.9			117.6			(12.7)
ENI diluted EPS ($)	$	0.47		$	0.42		$	0.05	$	1.28		$	1.26		$	0.02
Other Operational Information
Assets under management (AUM) at period end (in billions)	$	184.8		$	216.8		$	(32.0)	$	184.8		$	216.8		$	(32.0)
Net client cash flows (in billions)	(1.5)			(6.2)			4.7		(2.2)			(7.6)			5.4
Annualized revenue impact of net flows (8)	(0.5)			(16.2)			15.7		(14.1)			(24.4)			10.3

(1)U.S. GAAP operating margin equals operating income from continuing operations divided by total revenue.

(2)Economic net income is a non-GAAP measure we use to evaluate the performance of our business. For a reconciliation to U.S. GAAP financial information and a further discussion of economic net income refer to “—Non-GAAP Supplemental Performance Measure—Economic Net Income and Segment Analysis.”

(3)Excludes restructuring costs at the Center and Affiliates of $1.4 million and $4.8 million, costs associated with the transfer of an insurance policy from our former Parent of $0.4 million and $1.0 million, costs relating to the impact of a one-time compensation arrangement entered into that includes advances against future compensation payments of $3.2 million and $13.9 million, and the gain on sale of Copper Rock of $7.2 million and $7.2 million for the three and nine ended September 30, 2020, respectively. Excludes restructuring costs at the Center of $0.1 million and $4.6 million and costs associated with the redomicile to the U.S. of $0.9 million and $2.0 million for the three and nine months ended September 30, 2019, respectively.

(4)ENI revenue is the ENI measure which corresponds to U.S. GAAP revenue.

(5)Pre-tax economic net income is the ENI measure which corresponds to U.S. GAAP pre-tax income from continuing operations attributable to controlling interests.

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(6)ENI operating margin is a non-GAAP efficiency measure, calculated based on ENI operating earnings divided by ENI revenue. ENI operating earnings is calculated as ENI revenue, less ENI operating expense, less ENI variable compensation. The ENI operating margin corresponds to our U.S. GAAP operating margin, excluding the effect of consolidated Funds.

(7)Economic net income is the ENI measure which is most directly comparable to U.S. GAAP net income from continuing operations attributable to controlling interests.

(8)Annualized revenue impact of net flows represents annualized management fees expected to be earned on new accounts and net assets contributed to existing accounts (inflows), less the annualized management fees lost on terminated accounts or net assets withdrawn from existing accounts (outflows), plus revenue impact from reinvested income and distribution. Annualized management fee for client flow is calculated by multiplying the annual gross fee rate for the relevant account with the inflow or the outflow, including equity-accounted Affiliate. In addition, reinvested income and distribution for each segment is multiplied by average fee rate for the respective segment to compute the revenue impact. For a further discussion of the uses and limitations of the annualized revenue impact of net flows, see "Assets Under Management" herein.

Assets Under Management

On July 24, 2020, we completed the sale of all of our equity interests in Copper Rock, a former Affiliate, to Spouting Rock. Unless specifically noted, flow information from Copper Rock is included up to June 30, 2020, but excluded thereafter, and AUM data at September 30, 2020 excludes the Copper Rock AUM.

On July 26, 2020, we entered into a purchase and sale agreement to sell our interests in Barrow Hanley to Perpetual in exchange for $319 million of cash consideration, on a cash-free, debt-free basis, subject to certain customary closing and post-closing adjustments. The transaction is expected to close in the fourth quarter of 2020. Barrow Hanley will continue to contribute to our financial results until the transaction closes. Unless specifically noted, flow information includes flows from Barrow Hanley, and AUM data at September 30, 2020 includes the Barrow Hanley AUM.

The following table presents our assets under management by Affiliate as of each of the dates indicated: 

($ in billions)	September 30, 2020		December 31, 2019
Acadian Asset Management	$	95.9	$	102.2
Barrow, Hanley, Mewhinney & Strauss	44.6		51.7
Campbell Global	4.9		4.8
Copper Rock Capital Partners(1)	—		3.9
Investment Counselors of Maryland	2.3		2.4
Landmark Partners	18.1		18.3
Thompson, Siegel & Walmsley	19.0		21.1
Total assets under management	$	184.8	$	204.4

(1)On July 24, 2020, we completed the sale of all of our equity interests in Copper Rock to Spouting Rock.

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Our strategies include:

i.U.S. equity, which includes small cap through large cap securities and substantially value or blended investment styles;

ii.Global / non-U.S. equity, which includes global and international equities including emerging markets;

iii.Fixed income, which includes government bonds, corporate bonds and other fixed income investments in the United States; and

iv.Alternatives, which consist of illiquid and differentiated liquid investment strategies that include private equity, real estate and real assets, including forestry, as well as a growing suite of liquid alternative capabilities in areas such as long/short, market neutral and absolute return.

The following table presents our assets under management by strategy as of each of the dates indicated: 

($ in billions)	September 30, 2020		December 31, 2019
U.S. equity, small/smid cap value	$	5.2	$	6.0
U.S. equity, mid cap value	4.0		5.3
U.S. equity, large cap value	24.5		30.2
U.S. equity, core/blend	1.9		1.9
Total U.S. equity	35.6		43.4
Global equity	34.6		40.3
International equity	54.2		54.9
Emerging markets equity	23.8		28.7
Total global / non-U.S. equity	112.6		123.9
Fixed income	12.7		13.3
Alternatives	23.9		23.8
Total assets under management	$	184.8	$	204.4

The following table shows assets under management by client type as of each of the dates indicated:

($ in billions)	September 30, 2020				December 31, 2019
	AUM		% of total		AUM		% of total
Sub-advisory	$	36.3	19.6	%	$	40.5	19.8	%
Corporate/Union	33.6		18.2	%	38.6		18.9	%
Public/Government	70.7		38.3	%	75.2		36.8	%
Endowment/Foundation	4.0		2.2	%	5.3		2.6	%
OM plc Group	1.8		1.0	%	2.1		1.0	%
Commingled Trust/UCITS	27.5		14.9	%	30.8		15.1	%
Mutual Fund	2.1		1.1	%	2.2		1.1	%
Other	8.8		4.8	%	9.7		4.7	%
Total assets under management	$	184.8			$	204.4

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The following table shows assets under management by client location as of each of the dates indicated:

($ in billions)	September 30, 2020				December 31, 2019
	AUM		% of total		AUM		% of total
U.S.	$	136.8	74.0	%	$	148.4	72.6	%
Europe	17.0		9.2	%	20.1		9.8	%
Asia	10.1		5.5	%	12.4		6.1	%
Australia	8.2		4.4	%	9.4		4.6	%
Other	12.7		6.9	%	14.1		6.9	%
Total assets under management	$	184.8			$	204.4

AUM flows and the annualized revenue impact of net flows

Net client cash flows and revenue impact of net client cash flows for all periods include reinvested income and distributions, and exclude realizations. Reinvested income and distributions represent investment yield that is reinvested back into the portfolios as opposed to distributed as cash. Realizations include distributions related to the sale of alternative assets, which represent a return on investment.

In the following table, we present our asset flows and market appreciation (depreciation) by segment. We also present a key metric used to better understand our asset flows, the annualized revenue impact of net client cash flows. Annualized revenue impact of net flows represents annualized management fees expected to be earned on new accounts and net assets contributed to existing accounts (inflows), less the annualized management fees lost on terminated accounts or net assets withdrawn from existing accounts (outflows), plus revenue impact from reinvested income and distributions. Annualized management fee for client flow is calculated by multiplying the annual gross fee rate for the relevant account with the inflow or the outflow, including equity-accounted Affiliate. In addition, reinvested income and distributions for each segment is multiplied by average fee rate for the respective segment to compute the revenue impact.

The annualized revenue impact of net flows metric is designed to provide investors with a better indication of the potential financial impact of net client cash flows, however it has certain limitations. For instance, it does not include assumptions for the next twelve months' market appreciation or depreciation and investment performance associated with the assets gained or lost. Nor does it account for factors such as future client terminations or additional contributions or withdrawals over the next twelve months. Additionally, the basis points reported are fee rates based on the asset levels at the time of the transactions and do not consider the fact that client fee rates may change over the next twelve months.

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The following table summarizes our asset flows and market appreciation (depreciation) by segment for each of the periods indicated:

	Three Months Ended September 30,				Nine Months Ended September 30,
($ in billions, unless otherwise noted)	2020		2019		2020		2019
Quant & Solutions
Beginning balance	$	92.0	$	97.6	$	101.9	$	85.2
Gross inflows	2.8		3.0		9.8		10.6
Gross outflows	(5.7)		(3.6)		(12.5)		(9.1)
Reinvested income and distributions	0.6		0.7		2.2		2.1
Net flows	(2.3)		0.1		(0.5)		3.6
Market appreciation (depreciation)	5.7		(2.2)		(6.0)		6.7
Ending balance	$	95.4	$	95.5	$	95.4	$	95.5
Average AUM(1)	$	95.7	$	96.0	$	93.1	$	94.1
Alternatives
Beginning balance	$	24.1	$	23.5	$	23.8	$	23.8
Gross inflows	0.8		0.6		1.6		1.3
Gross outflows	(0.1)		(0.1)		(0.3)		(0.7)
Net flows	0.7		0.5		1.3		0.6
Market depreciation	(0.2)		—		(0.2)		(0.1)
Realizations and other(2)	(0.7)		(0.8)		(1.0)		(1.1)
Ending balance	$	23.9	$	23.2	$	23.9	$	23.2
Average AUM(1)	$	23.9	$	23.2	$	24.0	$	23.6
Liquid Alpha(3)
Beginning balance	$	64.9	$	103.9	$	78.7	$	97.3
Sale of Affiliate	(1.7)		—		(1.7)		—
Gross inflows	2.8		1.0		8.0		4.7
Gross outflows	(3.1)		(8.4)		(12.3)		(18.7)
Reinvested income and distributions	0.4		0.6		1.3		2.2
Net flows	0.1		(6.8)		(3.0)		(11.8)
Market appreciation (depreciation)	2.2		1.0		(8.5)		12.6
Ending balance	$	65.5	$	98.1	$	65.5	$	98.1
Average AUM	$	65.2	$	99.8	$	67.5	$	101.2
Average AUM of consolidated Affiliates	$	63.0	$	97.6	$	65.4	$	99.1
Total(4)
Beginning balance	$	181.0	$	225.0	$	204.4	$	206.3
Sale of Affiliate	(1.7)		—		(1.7)		—
Gross inflows	6.4		4.6		19.4		16.6
Gross outflows	(8.9)		(12.1)		(25.1)		(28.5)
Reinvested income and distributions	1.0		1.3		3.5		4.3
Net flows	(1.5)		(6.2)		(2.2)		(7.6)
Market appreciation (depreciation)	7.7		(1.2)		(14.7)		19.2
Realizations and other(2)	(0.7)		(0.8)		(1.0)		(1.1)
Ending balance	$	184.8	$	216.8	$	184.8	$	216.8
Average AUM	$	184.8	$	219.0	$	184.6	$	218.9
Average AUM of consolidated Affiliates	$	182.6	$	216.8	$	182.5	$	216.8
Annualized basis points: inflows	41.8		33.7		37.4		34.8
Annualized basis points: outflows	34.5		30.1		39.4		34.0
Annualized revenue impact of net flows ($ in millions)	$	(0.5)	$	(16.2)	$	(14.1)	$	(24.4)

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(1)Average AUM equals average AUM of consolidated Affiliates.

(2)Realizations include distributions related to the sale of alternative assets, and represent a return on investments. Other activity primarily relates to the decline in billable AUM as a legacy alternative fund transitioned from billing based on committed AUM to net asset value.

(3)The following table summarizes our asset flows and market appreciation (depreciation) for the Liquid Alpha segment excluding Barrow Hanley and Copper Rock for the periods indicated:

	Three Months Ended September 30,				Nine Months Ended September 30,
($ in billions)	2020		2019		2020		2019
Liquid Alpha
Beginning balance	$	19.1	$	22.8	$	23.1	$	21.3
Net flows	1.1		(0.6)		0.5		(1.3)
Market appreciation (depreciation)	0.7		—		(2.7)		2.2
Ending balance	$	20.9	$	22.2	$	20.9	$	22.2
Average AUM of consolidated Affiliates	$	18.0	$	20.1	$	17.9	$	20.6

(4)The following table summarizes our total asset flows and market appreciation (depreciation) excluding Barrow Hanley and Copper Rock:

	Three Months Ended September 30,				Nine Months Ended September 30,
($ in billions)	2020		2019		2020		2019
Total
Beginning balance	$	135.2	$	143.9	$	148.8	$	130.3
Net flows	(0.5)		—		1.4		2.9
Market appreciation (depreciation)	6.2		(2.2)		(9.0)		8.8
Realizations and other	(0.7)		(0.8)		(1.0)		(1.1)
Ending balance	$	140.2	$	140.9	$	140.2	$	140.9
Average AUM of consolidated Affiliates	$	137.6	$	139.3	$	135.1	$	138.3

We also analyze our asset flows by client type and client location. Our client types include:

i.Sub-advisory, which includes assets managed for underlying mutual fund and variable insurance products which are sponsored by insurance companies and mutual fund platforms, where the end client is typically retail;

ii.Institutional, which includes assets managed for public/government pension funds, including U.S. state and local government funds and non-U.S. sovereign wealth, local government and national pension funds; also includes corporate and union-sponsored pension plans; and

iii.Retail/other, which includes assets managed for mutual funds sponsored by our Affiliates, defined contribution plans and accounts managed for high net worth clients.

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The following table summarizes our asset flows by client type for each of the periods indicated: 

($ in billions)	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Sub-advisory
Beginning balance	$	34.5	$	64.3	$	40.5	$	61.3
Sale of Affiliate	(0.2)		—		(0.2)		—
Gross inflows	1.5		0.9		5.3		3.4
Gross outflows	(1.4)		(5.7)		(5.9)		(13.5)
Reinvested income and distributions(1)	0.2		0.4		0.7		1.3
Net flows	0.3		(4.4)		0.1		(8.8)
Market appreciation (depreciation)	1.7		0.3		(4.1)		7.7
Ending balance	$	36.3	$	60.2	$	36.3	$	60.2
Institutional
Beginning balance	$	136.3	$	149.3	$	152.0	$	135.1
Sale of Affiliate	(1.4)		—		(1.4)		—
Gross inflows	4.3		3.3		12.1		11.5
Gross outflows	(7.3)		(6.0)		(17.5)		(13.7)
Reinvested income and distributions(1)	0.7		0.8		2.6		2.8
Net flows	(2.3)		(1.9)		(2.8)		0.6
Market appreciation (depreciation)	5.7		(1.4)		(9.2)		10.6
Realizations and other(2)	(0.7)		(0.8)		(1.0)		(1.1)
Ending balance	$	137.6	$	145.2	$	137.6	$	145.2
Retail/Other
Beginning balance	$	10.2	$	11.4	$	11.9	$	9.9
Sale of Affiliate	(0.1)		—		(0.1)		—
Gross inflows	0.6		0.4		2.0		1.7
Gross outflows	(0.2)		(0.4)		(1.7)		(1.3)
Reinvested income and distributions(1)	0.1		0.1		0.2		0.2
Net flows	0.5		0.1		0.5		0.6
Market appreciation (depreciation)	0.3		(0.1)		(1.4)		0.9
Ending balance	$	10.9	$	11.4	$	10.9	$	11.4
Total
Beginning balance	$	181.0	$	225.0	$	204.4	$	206.3
Sale of Affiliate	(1.7)		—		(1.7)		—
Gross inflows	6.4		4.6		19.4		16.6
Gross outflows	(8.9)		(12.1)		(25.1)		(28.5)
Reinvested income and distributions(1)	1.0		1.3		3.5		4.3
Net flows	(1.5)		(6.2)		(2.2)		(7.6)
Market appreciation (depreciation)	7.7		(1.2)		(14.7)		19.2
Realizations and other(2)	(0.7)		(0.8)		(1.0)		(1.1)
Ending balance	$	184.8	$	216.8	$	184.8	$	216.8

(1) Reinvested income and distributions is allocated based on consolidated total distribution rate multiplied by the beginning of period AUM of each client type.

(2)Realizations include distributions related to the sale of alternative assets, and represent a return on investments. Other activity primarily relates to the decline in billable AUM as a legacy alternative fund transitioned from billing based on committed AUM to net asset value.

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It is a strategic objective to increase our percentage of assets under management sourced from non-U.S. clients. Our categorization by client location includes:

i. U.S.-based clients, where the contracting client is based in the United States, and

ii. Non-U.S.-based clients, where the contracting client is based outside the United States.

The following table summarizes asset flows by client location for each of the periods indicated:

($ in billions)	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
U.S.
Beginning balance	$	132.1	$	169.9	$	148.4	$	156.8
Sale of Affiliate	(0.5)		—		(0.5)		—
Gross inflows	4.5		2.9		14.1		10.5
Gross outflows	(5.1)		(8.8)		(16.4)		(21.0)
Reinvested income and distributions(1)	0.7		1.0		2.5		3.3
Net flows	0.1		(4.9)		0.2		(7.2)
Market appreciation (depreciation)	5.8		(0.6)		(10.4)		15.0
Realizations and other(2)	(0.7)		(0.7)		(0.9)		(0.9)
Ending balance	$	136.8	$	163.7	$	136.8	$	163.7
Non-U.S.
Beginning balance	$	48.9	$	55.1	$	56.0	$	49.5
Sale of Affiliate	(1.2)		—		(1.2)		—
Gross inflows	1.9		1.7		5.3		6.1
Gross outflows	(3.8)		(3.3)		(8.7)		(7.5)
Reinvested income and distributions(1)	0.3		0.3		1.0		1.0
Net flows	(1.6)		(1.3)		(2.4)		(0.4)
Market appreciation (depreciation)	1.9		(0.6)		(4.3)		4.2
Realizations and other(2)	—		(0.1)		(0.1)		(0.2)
Ending balance	$	48.0	$	53.1	$	48.0	$	53.1
Total
Beginning balance	$	181.0	$	225.0	$	204.4	$	206.3
Sale of Affiliate	(1.7)		—		(1.7)		—
Gross inflows	6.4		4.6		19.4		16.6
Gross outflows	(8.9)		(12.1)		(25.1)		(28.5)
Reinvested income and distributions(1)	1.0		1.3		3.5		4.3
Net flows	(1.5)		(6.2)		(2.2)		(7.6)
Market appreciation (depreciation)	7.7		(1.2)		(14.7)		19.2
Realizations and other(2)	(0.7)		(0.8)		(1.0)		(1.1)
Ending balance	$	184.8	$	216.8	$	184.8	$	216.8

(1)Reinvested income and distributions is allocated based on consolidated distribution total rate multiplied by the beginning of period AUM of each client location.

(2)Realizations include distributions related to the sale of alternative assets, and represent a return on investments. Other activity primarily relates to the decline in billable AUM as a legacy alternative fund transitioned from billing based on committed AUM to net asset value.

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At September 30, 2020, our total assets under management were $184.8 billion, an increase of $3.8 billion, or 2.1%, compared to $181.0 billion at June 30, 2020 and a decrease of $(32.0) billion, or (14.8)%, compared to $216.8 billion at September 30, 2019. The change in assets under management during the three months ended September 30, 2020 reflects net market appreciation of $7.7 billion from continued market recovery, partially offset by net flows of $(1.5) billion and the sale of Copper Rock of $(1.7) billion. The change in assets under management during the nine months ended September 30, 2020 reflects net market depreciation of $(14.7) billion, driven by the COVID-19 pandemic that caused significant market disruption in the first quarter of 2020, realizations and other of $(1.0) billion, net flows of $(2.2) billion including reinvested income and distributions of $3.5 billion, and the sale of Copper Rock of $(1.7) billion.

For the three months ended September 30, 2020, our net flows were $(1.5) billion compared to $(1.7) billion for the three months ended June 30, 2020 and $(6.2) billion for the three months ended September 30, 2019. Net flows for the three months ended September 30, 2020 included $(1.0) billion related to Barrow Hanley and Copper Rock. Reinvested income and distributions of $1.0 billion, $1.2 billion and $1.3 billion are reflected in the net flows for the three months ended September 30, 2020, June 30, 2020 and September 30, 2019, respectively. For the three months ended September 30, 2020, the annualized revenue impact of the net flows was $(0.5) million. This is compared to the annualized revenue impact of net flows of $(13.4) million for the three months ended June 30, 2020 and $(16.2) million for the three months ended September 30, 2019. Gross inflows of $6.4 billion during the three-month period yielded approximately 42 bps, and gross outflows in the same period of $(8.9) billion yielded approximately 34 bps. 

For the nine months ended September 30, 2020, our net flows were $(2.2) billion compared to $(7.6) billion for the nine months ended September 30, 2019. The improvement in net flows during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 was primarily due to improvement of the Liquid Alpha segment. Net flows during the nine months ended September 30, 2020 included $(3.6) billion related to Barrow Hanley and Copper Rock. Reinvested income and distributions of $3.5 billion, and $4.3 billion are reflected in the net flows for the nine months ended September 30, 2020 and September 30, 2019, respectively. For the nine months ended September 30, 2020, the annualized revenue impact of the net flows was $(14.1) million compared to $(24.4) million for the nine months ended September 30, 2019 due to lower net outflows in 2020. Gross inflows of $19.4 billion in the nine months ended September 30, 2020 yielded approximately 37 bps compared to $16.6 billion yielding approximately 35 bps in the year-ago period. Gross outflows of $(25.1) billion yielded approximately 39 bps in the nine months ended September 30, 2020 compared to $(28.5) billion yielding approximately 34 bps in the year-ago period.

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U.S. GAAP Results of Operations for the Three and Nine Months Ended September 30, 2020 and 2019

Our U.S. GAAP results of operations were as follows for the three and nine months ended September 30, 2020 and 2019: 

	Three Months Ended September 30,								Nine Months Ended September 30,
($ in millions, unless otherwise noted)	2020			2019			Increase (Decrease)		2020			2019			Increase (Decrease)
U.S. GAAP Statement of Operations
Management fees	$	178.2		$	196.4		$	(18.2)	$	527.4		$	609.8		$	(82.4)
Performance fees	1.2			(1.9)			3.1		2.5			(6.9)			9.4
Other revenue	1.6			1.4			0.2		5.2			4.3			0.9
Consolidated Funds’ revenue	1.4			1.9			(0.5)		4.6			4.9			(0.3)
Total revenue	182.4			197.8			(15.4)		539.7			612.1			(72.4)
Compensation and benefits	109.7			108.0			1.7		284.0			332.8			(48.8)
General and administrative expense	25.4			31.7			(6.3)		77.6			95.3			(17.7)
Impairment of goodwill	—			—			—		16.4			—			16.4
Amortization of acquired intangibles	1.6			1.6			—		5.1			4.9			0.2
Depreciation and amortization	5.2			4.4			0.8		15.6			12.2			3.4
Consolidated Funds’ expense	—			0.2			(0.2)		0.2			0.4			(0.2)
Total operating expenses	141.9			145.9			(4.0)		398.9			445.6			(46.7)
Operating income	40.5			51.9			(11.4)		140.8			166.5			(25.7)
Investment income (loss)	3.9			2.3			1.6		(3.2)			11.4			(14.6)
Interest income	—			0.4			(0.4)		0.5			1.8			(1.3)
Interest expense	(6.9)			(8.3)			1.4		(22.1)			(24.1)			2.0
Gain on sale of Affiliate	7.2			—			7.2		7.2			—			7.2
Net consolidated Funds’ investment gains	2.1			4.7			(2.6)		20.5			13.8			6.7
Income from continuing operations before taxes	46.8			51.0			(4.2)		143.7			169.4			(25.7)
Income tax expense (benefit)	12.8			(32.0)			44.8		33.7			3.7			30.0
Income from continuing operations	34.0			83.0			(49.0)		110.0			165.7			(55.7)
Gain (loss) on disposal of discontinued operations, net of tax	—			—			—		—			—			—
Net income	34.0			83.0			(49.0)		110.0			165.7			(55.7)
Net income attributable to non-controlling interests in consolidated Funds	(3.2)			7.6			(10.8)		21.3			9.6			11.7
Net income attributable to controlling interests	$	37.2		$	75.4		$	(38.2)	$	88.7		$	156.1		$	(67.4)
Basic earnings per share ($)	$	0.46		$	0.84		$	(0.38)	$	1.08		$	1.68		$	(0.60)
Diluted earnings per share ($)	0.46			0.84			(0.38)		1.08			1.68			(0.60)
Weighted average shares of common stock outstanding—basic	80.0			90.0			(10.0)		81.8			93.0			(11.2)
Weighted average shares of common stock outstanding—diluted	80.9			90.0			(9.1)		82.1			93.1			(11.0)
U.S. GAAP operating margin(1)	22.2		%	26.2		%			26.1		%	27.2		%

(1) The U.S. GAAP operating margin equals operating income from continuing operations divided by total revenue.

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The following table reconciles our net income attributable to controlling interests to our pre-tax income from continuing operations attributable to controlling interests: 

($ in millions)	Three Months Ended September 30,				Nine Months Ended September 30,
U.S. GAAP Statement of Operations	2020		2019		2020		2019
Net income attributable to controlling interests	$	37.2	$	75.4	$	88.7	$	156.1
Exclude: (Gain) loss on disposal of discontinued operations, net of tax	—		—		—		—
Net income from continuing operations attributable to controlling interests	37.2		75.4		88.7		156.1
Add: Income tax expense	12.8		(32.0)		33.7		3.7
Pre-tax income from continuing operations attributable to controlling interests	$	50.0	$	43.4	$	122.4	$	159.8

U.S. GAAP Revenues

Our U.S. GAAP revenues principally consist of:

i.management fees earned based on our overall weighted average fee rate charged to our clients and the level of assets under management;

ii.performance fees earned or management fee adjustments when our Affiliates’ investment performance over agreed time periods for certain clients has differed from pre-determined hurdles;

iii.other revenue, consisting primarily of consulting services as well as reimbursement of certain Fund expenses our Affiliates paid on behalf of our Funds; and

iv.revenue from consolidated Funds, a portion of which is attributable to the holders of non-controlling interests in consolidated Funds.

Management Fees

Our management fees are a function of the fee rates our Affiliates charge to their clients, which are typically expressed in basis points, and the levels of our assets under management.

Excluding assets managed by our equity-accounted Affiliate, average basis points earned on average assets under management were 38.8 bps and 38.6 bps for the three and nine months ended September 30, 2020, respectively, and 35.9 bps and 37.6 bps for the three and nine months ended September 30, 2019, respectively. The most significant driver of increases or decreases in this average fee rate is changes in the mix of our assets under management caused by net inflows or outflows in certain segments, net catch-up fees, or disproportionate market movements.

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Our average basis points by segment (including only consolidated Affiliates that are included in management fee revenue, unless indicated) over each of the periods indicated were:

($ in millions,  except AUM data in billions)	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
	Revenue		Basis Pts	Revenue		Basis Pts	Revenue		Basis Pts	Revenue		Basis Pts
Quant & Solutions	87.9		37	92.7		38	$	255.3	37	$	276.8	39
Alternatives	$	43.2	72	$	37.2	64	126.4		70	124.5		71
Liquid Alpha	47.1		30	66.5		27	145.7		30	208.5		28
U.S. GAAP management fee revenue & weighted average fee rate on average AUM of consolidated Affiliates(1)	$	178.2	38.8	$	196.4	35.9	$	527.4	38.6	$	609.8	37.6
Average AUM excluding equity-accounted Affiliates	$	182.6		$	216.8		$	182.5		$	216.8
Average AUM including equity-accounted Affiliates & weighted average fee rate	$	184.8	39.0	$	219.0	36.2	$	184.6	38.8	$	218.9	37.8

(1)Amounts shown are equivalent to ENI management fee revenue. (See “ENI Revenues”)

Three months ended September 30, 2020 compared to three months ended September 30, 2019: Management fees decreased $(18.2) million, or (9.3)%, from $196.4 million for the three months ended September 30, 2019 to $178.2 million for the three months ended September 30, 2020. The decrease was primarily due to lower levels of average assets under management, which is attributable to outflows in the last twelve months and market decline in the first quarter of 2020. Average assets under management excluding our equity-accounted Affiliate decreased (15.8)%, from $216.8 billion for the three months ended September 30, 2019 to $182.6 billion for the three months ended September 30, 2020, mainly due to the equity market decline during the first quarter of 2020 driven by the COVID-19 pandemic and the impact of the $(22.8) billion reallocation of several Vanguard subadvisory strategies in the fourth quarter of 2019.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019: Management fees decreased $(82.4) million, or (13.5)%, from $609.8 million for the nine months ended September 30, 2019 to $527.4 million for the nine months ended September 30, 2020. The decrease was primarily attributable to a decrease in average assets under management. Average assets under management excluding equity-accounted Affiliate decreased (15.8)%, from $216.8 billion for the nine months ended September 30, 2019 to $182.5 billion for the nine months ended September 30, 2020, mainly due to the equity market decline during the nine months ended September 30, 2020 driven by the COVID-19 pandemic and the impact of the $(22.8) billion reallocation of several Vanguard subadvisory strategies in the fourth quarter of 2019.

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Performance Fees

Approximately $18.0 billion, or 10% of our AUM in consolidated Affiliates, were in accounts with incentive fee or carried interest features in which we participate. Performance fees are typically shared with our Affiliate key employees through various contractual compensation and profit-sharing arrangements.

Three months ended September 30, 2020 compared to three months ended September 30, 2019: Performance fees improved $3.1 million, from $(1.9) million for the three months ended September 30, 2019 to $1.2 million for the three months ended September 30, 2020. A performance fee penalty in 2019 was attributable to sub-advisory assets no longer with the Affiliates. Performance fees can be variable and are contractually triggered based on investment performance results over agreed upon time periods.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019: Performance fees improved $9.4 million, from $(6.9) million for the nine months ended September 30, 2019 to $2.5 million for the nine months ended September 30, 2020. A performance fee penalty in 2019 was attributable to sub-advisory assets no longer with the Affiliates. Performance fees are variable and are contractually triggered based on investment performance results over agreed upon time periods.

The liquidation of an alternative product may result in the recognition of a performance fee. With respect to liquidations likely to occur in the near term, we do not expect to receive any net performance fees that would be material to our operating results. These projections are based on market conditions and investment performance as of September 30, 2020.

Other Revenue

Three months ended September 30, 2020 compared to three months ended September 30, 2019: Other revenue increased $0.2 million, from $1.4 million for the three months ended September 30, 2019 to $1.6 million for the three months ended September 30, 2020. The increase was primarily attributable to an increase in consulting performed by an Affiliate for three months ended September 30, 2020.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019: Other revenue increased $0.9 million, from $4.3 million for the nine months ended September 30, 2019 to $5.2 million for the nine months ended September 30, 2020. The increase was primarily attributable to an increase in consulting performed by an Affiliate for the nine months ended September 30, 2020.

U.S. GAAP Expenses

Our U.S. GAAP expenses principally consist of:

i.compensation paid to our investment professionals and other employees, including base salary, benefits, sales-based compensation, variable compensation, Affiliate distributions, revaluation of key employee owned Affiliate equity and profit interests, and the amortization of pre-acquisition employee equity;

ii.general and administrative expenses;

iii.impairment of goodwill;

iv.amortization of acquired intangible assets;

v.depreciation and amortization charges; and

vi.expenses of consolidated Funds, a portion of which is attributable to the holders of non-controlling interests in consolidated Funds.

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Compensation and Benefits Expense

Our most significant category of expense is compensation and benefits awarded to our and our Affiliates’ employees. The following table presents the components of U.S. GAAP compensation expense for the three and nine months ended September 30, 2020 and 2019:

	Three Months Ended September 30,				Nine Months Ended September 30,
($ in millions)	2020		2019		2020		2019
Fixed compensation and benefits(1)	$	44.0	$	47.7	$	135.5	$	146.9
Sales-based compensation(2)	2.0		2.7		6.2		8.5
Variable compensation(3)	44.5		44.1		137.7		145.8
Affiliate key employee distributions(4)	11.0		12.6		31.8		39.8
Non-cash Affiliate key employee equity revaluations(5)	6.6		(14.7)		(31.8)		(27.7)
Amortization of pre-acquisition employee equity(6)	1.6		15.6		4.6		19.5
Total U.S. GAAP compensation and benefits expense	$	109.7	$	108.0	$	284.0	$	332.8

(1)Fixed compensation and benefits include base salaries, payroll taxes and the cost of benefit programs provided. For the three and nine months ended September 30, 2020, $42.8 million and $132.2 million, respectively, of fixed compensation and benefits (of the $44.0 million and $135.5 million above) are included within economic net income, which excludes Fund expenses initially paid by our Affiliates on the Fund’s behalf and subsequently reimbursed. For the three and nine months ended September 30, 2019, $46.7 million and $143.7 million, respectively, of fixed compensation and benefits (of the $47.7 million and $146.9 million above) are included within economic net income, which excludes Fund expenses initially paid by our Affiliates on the Fund’s behalf and subsequently reimbursed.

(2)Sales-based compensation is paid to our and our Affiliates’ sales and distribution teams and represents compensation earned by our sales professionals, paid over a multi-year period, related to revenue earned on new sales. Its variability is based upon the structure of sales-based compensation due on inflows of assets under management and market-based movement in both current and prior periods.

(3)Variable compensation is contractually set and calculated individually at each Affiliate, plus Center bonuses and compensation paid by our Affiliates on behalf of their Funds that are subsequently reimbursed. Variable compensation is usually awarded based on a contractual percentage of each Affiliate’s ENI profits before variable compensation and may be paid in the form of cash or non-cash Affiliate equity or profit interests. In Affiliates with an agreed split of performance fees between Affiliate employees and BSUS, the Affiliates’ share of performance fees is allocated entirely to variable compensation. Center variable compensation includes cash and our equity. Non-cash variable compensation awards typically vest over several years and are recognized as compensation expense over that service period. The variable compensation ratio at each Affiliate, calculated as variable compensation divided by ENI earnings before variable compensation, will typically be between 25% and 35%.

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	Three Months Ended September 30,				Nine Months Ended September 30,
($ in millions)	2020		2019		2020		2019
Cash variable compensation	$	40.8	$	39.9	$	125.7	$	131.3
Non-cash equity-based award amortization	3.7		4.2		12.0		14.5
Total variable compensation(a)	$	44.5	$	44.1	$	137.7	$	145.8

(a)For the three and nine months ended September 30, 2020, $41.2 million and $120.3 million, respectively, of variable compensation expense (of the $44.5 million and $137.7 million above) are included within economic net income, which excludes $0.1 million and $3.5 million of variable compensation associated with restructuring at the Center and Affiliates and $3.2 million and $13.9 million of a one-time compensation arrangement entered into that includes advances against future compensation payments. For the three and nine months ended September 30, 2019, $44.1 million and $141.2 million, respectively, of variable compensation expense (of the $44.1 million and $145.8 million above) are included within economic net income, which excludes $0.1 million and $4.6 million, respectively, of variable compensation associated with restructuring at the Center.

(4)Affiliate key employee distributions represent the share of Affiliate profits after variable compensation that is attributable to Affiliate key employee equity and profit interests holders, according to their ownership interests. The Affiliate key employee distribution ratio at each Affiliate is calculated as Affiliate key employee distributions divided by ENI operating earnings at that Affiliate. At certain Affiliates with tiered equity structures, BSUS and other classes of employee equity holders are entitled to an initial proportionate preference over profits after variable compensation, structured such that before a preference threshold is reached, there would be no required key employee distributions to the tiered equity holders, whereas for profits above the threshold, the key employee distribution amount to the tiered equity holders would be calculated based on the tiered key employee ownership percentages. Based on current economic arrangements, employee distributions range from approximately 20% to 40% of marginal ENI operating earnings at each of our consolidated Affiliates.

(5)Non-cash Affiliate key employee equity revaluations represent changes in the value of Affiliate equity and profit interests held by Affiliate key employees. These ownership interests may in certain circumstances be repurchased by BSUS at a value based on a pre-determined fixed multiple of twelve-month earnings and as such a liability is carried on our balance sheet based on the expected cash to be paid. However, any equity or profit interests repurchased by BSUS can be used to fund a portion of future variable compensation awards, resulting in savings in cash variable compensation that offset the negative cash effect of repurchasing the equity. Our Affiliate equity and profit interest plans have been designed to ensure BSUS is not required to repurchase more equity than we can reasonably recycle through variable compensation awards in any given twelve month period.

(6)Amortization of pre-acquisition employee equity represents amortization of the value of employee equity owned prior to the acquisition of Landmark. This is included in U.S. GAAP compensation expense as a result of ongoing service requirements for employee recipients.

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Fluctuations in compensation and benefits expense for the periods presented are discussed below.

Three months ended September 30, 2020 compared to three months ended September 30, 2019: Compensation and benefits expense increased $1.7 million, or 1.6%, from $108.0 million for the three months ended September 30, 2019 to $109.7 million for the three months ended September 30, 2020. Fixed compensation and benefits decreased $(3.7) million, or (7.8)%, from $47.7 million for the three months ended September 30, 2019 to $44.0 million for the three months ended September 30, 2020, primarily reflecting cost savings from the restructuring at the Center and the Affiliates. Variable compensation increased $0.4 million, or 0.9%, from $44.1 million for the three months ended September 30, 2019 to $44.5 million for the three months ended September 30, 2020. The increase was attributable to the impact of a one-time compensation arrangement entered into that includes advances against future compensation payments, offset by lower pre-variable compensation earnings during the current period. Sales-based compensation decreased $(0.7) million, or (25.9)%, from $2.7 million for the three months ended September 30, 2019 to $2.0 million for the three months ended September 30, 2020, as a result of the structure of sales-based compensation programs, driven by the timing of asset inflows which trigger sales-based compensation in both current and prior periods. Affiliate key employee distributions decreased $(1.6) million, or (12.7)%, from $12.6 million for the three months ended September 30, 2019 to $11.0 million for the three months ended September 30, 2020 as a result of lower underlying operating earnings at the consolidated Affiliates. Revaluations of Affiliate equity increased by $21.3 million reflecting revaluations of key employee ownership interests at our consolidated Affiliates as the value of Affiliate equity decreased $(14.7) million for the three months ended September 30, 2019 and increased $6.6 million for the three months ended September 30, 2020. Amortization of pre-acquisition equity decreased by $(14.0) million from $15.6 million for the three months ended September 30, 2019 to $1.6 million for the three months ended September 30, 2020 as a result of vesting of the employee equity in the prior year period.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019: Compensation and benefits expense decreased $(48.8) million, or (14.7)%, from $332.8 million for the nine months ended September 30, 2019 to $284.0 million for the nine months ended September 30, 2020. Fixed compensation and benefits decreased $(11.4) million, or (7.8)%, from $146.9 million for the nine months ended September 30, 2019 to $135.5 million for the nine months ended September 30, 2020, primarily reflecting cost savings from the restructuring at the Center and Affiliates. Variable compensation decreased $(8.1) million, or (5.6)%, from $145.8 million for the nine months ended September 30, 2019 to $137.7 million for the nine months ended September 30, 2020. The decrease was attributable to lower pre-variable compensation earnings, which in turn was primarily attributable to the decrease in management fee revenue, as well as a lower cost structure at the Center and Affiliates. Sales-based compensation decreased $(2.3) million, or (27.1)%, from $8.5 million for the nine months ended September 30, 2019 to $6.2 million for the nine months ended September 30, 2020, as a result of the structure of sales-based compensation programs, driven by the timing of asset inflows which trigger sales-based compensation in both current and prior periods. Affiliate key employee distributions decreased $(8.0) million, or (20.1)%, from $39.8 million for the nine months ended September 30, 2019 to $31.8 million for the nine months ended September 30, 2020, primarily as a result of lower earnings before Affiliate key employee distributions at the consolidated Affiliates. Revaluations of Affiliate equity decreased by $(4.1) million, reflecting revaluations of key employee ownership interests at our consolidated Affiliates, as the value of Affiliate equity decreased $(27.7) million for the nine months ended September 30, 2019 and decreased $(31.8) million for the nine months ended September 30, 2020. Amortization of pre-acquisition equity decreased $(14.9) million, or (76.4)% from $19.5 million for the nine months ended September 30, 2019 to $4.6 million for the nine months ended September 30, 2020, as a result of vesting of the employee equity in the prior year period.

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General and Administrative Expense

Three months ended September 30, 2020 compared to three months ended September 30, 2019: General and administrative expense decreased $(6.3) million, or (19.9)%, from $31.7 million for the three months ended September 30, 2019 to $25.4 million for the three months ended September 30, 2020. The decrease was primarily due to cost saving initiatives at the Center and Affiliates.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019: General and administrative expense decreased $(17.7) million, or (18.6)%, from $95.3 million for the nine months ended September 30, 2019 to $77.6 million for the nine months ended September 30, 2020. The decrease was primarily due to cost saving initiatives at the Center and Affiliates.

Impairment of Goodwill

Three months ended September 30, 2020 compared to three months ended September 30, 2019: No goodwill impairment charge was recorded in either the three months ended September 30, 2019 or 2020.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019: No goodwill impairment charge was recorded in the nine months ended September 30, 2019. Impairment of goodwill was $16.4 million for the nine months ended September 30, 2020. The increase was the result of an impairment charge recorded for the Copper Rock reporting unit which was included within the Liquid Alpha segment prior to its disposition in the nine months ended September 30, 2020. In the first half of 2020, we performed a quantitative impairment test of Copper Rock due to the decline in assets under management and the fair value of the Copper Rock reporting unit did not exceed its carrying value. Accordingly, we recognized a goodwill impairment charge of $16.4 million for the nine months ended September 30, 2020. In July 2020, we completed the sale of our equity interests in Copper Rock to Spouting Rock. See "Recent Developments" herein.

Amortization of Acquired Intangibles Expense

Three months ended September 30, 2020 compared to three months ended September 30, 2019: Amortization of acquired intangibles expense was unchanged, at $1.6 million for the three months ended September 30, 2019 and $1.6 million for the three months ended September 30, 2020. This account primarily reflects the amortization of intangible assets acquired in the Landmark transaction.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019: Amortization of acquired intangibles expense increased $0.2 million, or 4.1%, from $4.9 million for the nine months ended September 30, 2019 to $5.1 million for the nine months ended September 30, 2020. This account primarily reflects the amortization of intangible assets acquired in the Copper Rock and Landmark transactions.

Depreciation and Amortization Expense

Three months ended September 30, 2020 compared to three months ended September 30, 2019: Depreciation and amortization expense increased $0.8 million, or 18.2%, from $4.4 million for the three months ended September 30, 2019 to $5.2 million for the three months ended September 30, 2020. The increase was primarily due to additional software and technology investments in the business.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019: Depreciation and amortization expense increased $3.4 million, or 27.9%, from $12.2 million for the nine months ended September 30, 2019 to $15.6 million for the nine months ended September 30, 2020. The increase was primarily due to additional software and technology investments in the business.

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U.S. GAAP Other Non-Operating Items of Income and Expense

Other non-operating items of income and expense consist of:

i.investment income;

ii.interest income; and

iii.interest expense.

Investment Income

Three months ended September 30, 2020 compared to three months ended September 30, 2019: Investment income increased $1.6 million, from $2.3 million for the three months ended September 30, 2019 to $3.9 million for the three months ended September 30, 2020, reflecting an increase in returns in the current period generated by seed capital investments as the market recovered from declines in the first quarter of 2020.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019: Investment income decreased $(14.6) million, from $11.4 million for the nine months ended September 30, 2019 to $(3.2) million for the nine months ended September 30, 2020. The decrease is primarily due to unrealized losses on seed investments driven by the market decline in the first quarter of 2020, which was partially offset by unrealized gains in the second and third quarters of 2020 as the market recovered.

Interest Income

Three months ended September 30, 2020 compared to three months ended September 30, 2019: Interest income decreased $(0.4) million, from $0.4 million for the three months ended September 30, 2019 to $0.0 million for the three months ended September 30, 2020. The decrease was due to decreases in short-term investment returns in the quarter.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019: Interest income decreased $(1.3) million, from $1.8 million for the nine months ended September 30, 2019 to $0.5 million for the nine months ended September 30, 2020. The decrease was due to lower average cash balances and decreases in short-term investment returns in 2020.

Interest Expense

Three months ended September 30, 2020 compared to three months ended September 30, 2019: Interest expense decreased $(1.4) million, or (16.9)%, from $8.3 million for the three months ended September 30, 2019 to $6.9 million for the three months ended September 30, 2020, reflecting a lower quarterly average balance in 2020 on our revolving credit and non-recourse seed capital facilities. We repaid the balance on our non-recourse seed capital facility, and paid down a portion of the balance on our revolving credit facility in the three months ended September 30, 2020.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019: Interest expense decreased $(2.0) million, or (8.3)%, from $24.1 million for the nine months ended September 30, 2019 to $22.1 million for the nine months ended September 30, 2020, primarily reflecting a lower balance drawn on the non-recourse seed capital and revolving credit facilities in the current year. We repaid the balance on our non-recourse seed capital facility, and paid down a portion of the balance on our revolving credit facility in the nine months ended September 30, 2020.

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U.S. GAAP Income Tax Expense (Benefit)

Our effective tax rate has been impacted by changes in liabilities for uncertain tax positions, tax effects of stock-based compensation, limitations on executive compensation, the mix of income earned in the United States versus lower-taxed foreign jurisdictions and benefits from intercompany financing arrangements. Our effective tax rate could be impacted in the future by these items as well as further changes in tax laws and regulations in jurisdictions in which we operate.

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) contains numerous income tax provisions including some that are effective retroactively. Our Condensed Consolidated Balance Sheet reflects the benefit of a provision that increased the business interest limitation under IRC Section 163(j) from 30% to 50% for tax years 2019 and 2020. This provision will allow us to utilize more of the deferred tax asset related to IRC Section 163(j). We have assessed the CARES Act and at this time do not expect any other provisions of the CARES Act to have a material impact to our financial statements.

Three months ended September 30, 2020 compared to three months ended September 30, 2019: Income tax expense (benefit) increased $44.8 million, from a benefit of $(32.0) million for the three months ended September 30, 2019 to an expense of $12.8 million for the three months ended September 30, 2020. The increase in income tax expense relates to the reductions to liabilities for uncertain tax positions and the revaluation of certain deferred tax assets in connection with the Redomestication in the three months ended September 30, 2019 that did not occur in the three months ended September 30, 2020, In addition, the gain from the disposition of Copper Rock also contributed to the increase in income tax expense in the three months ended September 30, 2020.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019: Income tax expense increased $30.0 million, from $3.7 million for the nine months ended September 30, 2019 to $33.7 million for the nine months ended September 30, 2020. The increase in income tax expense relates to the reductions to liabilities for uncertain tax positions and the revaluation of certain deferred tax assets in connection with the Redomestication in the nine months ended September 30, 2019 that did not occur in the nine months ended September 30, 2020. This increase is partially offset by a decrease in income from continuing operations as of September 30, 2020 as compared to September 30, 2019.

Gain on Sale of Affiliate

Three months ended September 30, 2020 compared to three months ended September 30, 2019: No gain on sale of Affiliate was recorded in the three months ended September 30, 2019. Gain on sale of Affiliate was $7.2 million for the three months ended September 30, 2020, representing our gain on the sale of our equity interests in Copper Rock.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019: No gain on sale of an Affiliate was recorded in the nine months ended September 30, 2019. Gain on sale of Affiliate was $7.2 million for the nine months ended September 30, 2020, representing our gain on the sale of our equity interests in Copper Rock.

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U.S. GAAP Consolidated Funds

Three months ended September 30, 2020 compared to three months ended September 30, 2019: Consolidated Funds’ revenue decreased $(0.5) million, from $1.9 million for the three months ended September 30, 2019 to $1.4 million for the three months ended September 30, 2020. Consolidated Funds’ expense decreased $(0.2) million for the three months ended September 30, 2020 compared to the three months ended September 30, 2019. Net consolidated Funds’ investment gain (loss) decreased $(2.6) million, from $4.7 million for the three months ended September 30, 2019 to $2.1 million for the three months ended September 30, 2020. The net income or loss of all consolidated Funds, excluding any income or loss attributable to seed capital or co-investments we make in the Funds, is included in non-controlling interests in our Condensed Consolidated Financial Statements and is not included in net income attributable to controlling interests or in management fees.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019: Consolidated Funds’ revenue decreased $(0.3) million, from $4.9 million for the nine months ended September 30, 2019 to $4.6 million for the nine months ended September 30, 2020. Consolidated Funds’ expense decreased $(0.2) million, from $0.4 million for the nine months ended September 30, 2019 to $0.2 million for the nine months ended September 30, 2020. Net consolidated Funds’ investment gain (loss) increased $6.7 million, from $13.8 million for the nine months ended September 30, 2019 to $20.5 million for the nine months ended September 30, 2020. The net income or loss of all consolidated Funds, excluding any income or loss attributable to seed capital or co-investments we make in the Funds, is included in non-controlling interests in our Condensed Consolidated Financial Statements and is not included in net income attributable to controlling interests or in management fees.

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Key U.S. GAAP Operating Metrics

The following table shows our key U.S. GAAP operating metrics for the three and nine months ended September 30, 2020 and 2019. The second, third and fourth metrics below have each been adjusted to eliminate the effect of consolidated Funds to more accurately reflect the economics of our Company.

	Three Months Ended September 30,						Nine Months Ended September 30,
($ in millions)	2020			2019			2020			2019
Numerator: Operating income	$	40.5		$	51.9		$	140.8		$	166.5
Denominator: Total revenue	$	182.4		$	197.8		$	539.7		$	612.1
U.S. GAAP operating margin(1)	22.2		%	26.2		%	26.1		%	27.2		%
Numerator: Total operating expenses(2)	$	141.9		$	145.7		$	398.7		$	445.2
Denominator: Management fee revenue	$	178.2		$	196.4		$	527.4		$	609.8
U.S. GAAP operating expense / management fee revenue(3)	79.6		%	74.2		%	75.6		%	73.0		%
Numerator: Variable compensation	$	44.5		$	44.1		$	137.7		$	145.8
Denominator: Operating income before variable compensation and Affiliate key employee distributions(2)(4)(5)	$	94.6		$	106.9		$	305.9		$	347.6
U.S. GAAP variable compensation ratio(3)	47.0		%	41.3		%	45.0		%	41.9		%
Numerator: Affiliate key employee distributions	$	11.0		$	12.6		$	31.8		$	39.8
Denominator: Operating income before Affiliate key employee distributions(2)(4)(5)	$	50.1		$	62.8		$	168.2		$	201.8
U.S. GAAP Affiliate key employee distributions ratio(3)	22.0		%	20.1		%	18.9		%	19.7		%

(1)Excluding the effect of Funds consolidation in the applicable periods, the U.S. GAAP operating margin is 21.6% for the three months ended September 30, 2020, 25.6% for the three months ended September 30, 2019, 25.5% for the nine months ended September 30, 2020, and 26.7% for the nine months ended September 30, 2019.

(2)Excludes consolidated Funds expense of $0.0 million for the three months ended September 30, 2020, $0.2 million for the three months ended September 30, 2019, $0.2 million for the nine months ended September 30, 2020 and $0.4 million for the nine months ended September 30, 2019.

(3)Excludes the effect of Funds consolidation for the three and nine months ended September 30, 2020 and 2019.

(4)Excludes consolidated Funds revenue of $1.4 million for the three months ended September 30, 2020, $1.9 million for the three months ended September 30, 2019, $4.6 million for the nine months ended September 30, 2020 and $4.9 million for the nine months ended September 30, 2019.

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(5)The following table identifies the components of operating income before variable compensation and Affiliate key employee distributions, as well as operating income before Affiliate key employee distributions:

	Three Months Ended September 30,				Nine Months Ended September 30,
($ in millions)	2020		2019		2020		2019
Operating income	$	40.5	$	51.9	$	140.8	$	166.5
Affiliate key employee distributions	11.0		12.6		31.8		39.8
Operating income of consolidated Funds	(1.4)		(1.7)		(4.4)		(4.5)
Operating income before Affiliate key employee distributions	50.1		62.8		168.2		201.8
Variable compensation	44.5		44.1		137.7		145.8
Operating income before variable compensation and Affiliate key employee distributions	$	94.6	$	106.9	$	305.9	$	347.6

Effects of Inflation

For the three and nine months ended September 30, 2020 and 2019, inflation did not have a material effect on our consolidated results of operations.

Non-GAAP Supplemental Performance Measure — Economic Net Income and Segment Analysis

As supplemental information, we provide a non-GAAP performance measure that we refer to as economic net income, or ENI, which represents our management’s view of the underlying economic earnings generated by us. We define economic net income as ENI revenue less (i) ENI operating expenses, (ii) variable compensation, (iii) key employee distributions, (iv) net interest and (v) taxes, each as further discussed in this section. ENI adjustments to U.S. GAAP include both reclassifications of U.S. GAAP revenue and expense items, as well as adjustments to U.S. GAAP results, primarily to exclude non-cash, non-economic expenses, or to reflect cash benefits not recognized under U.S. GAAP.

ENI is an important measure to investors because it is used by us to make resource allocation decisions, determine appropriate levels of investment or dividend payout, manage balance sheet leverage, determine Affiliate variable compensation and equity distributions, and incentivize management. It is also an important measure because it assists management in evaluating our operating performance and is presented in a way that most closely reflects the key elements of our profit share operating model with our Affiliates. For a further discussion of how we use ENI and why ENI is useful to investors, see “—Overview—How We Measure Performance.”

In the first quarter of 2020, we refined our definition of economic net income in light of a one-time compensation arrangement entered into that includes advance against future contractual compensation payments.

To calculate economic net income, we re-categorize certain line items on our Condensed Consolidated Statements of Operations to reflect the following:

•We exclude the effect of Funds consolidation by removing the portion of Fund revenues, expenses and investment return which were not attributable to our stockholders.

•We include within management fee revenue any fees paid to Affiliates by consolidated Funds, which are viewed as investment income under U.S. GAAP.

•We include our share of earnings from our equity-accounted Affiliate within other income in ENI revenue, rather than investment income.

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•We treat sales-based compensation as a general and administrative expense, rather than part of fixed compensation and benefits.

•We identify separately from operating expenses variable compensation and Affiliate key employee distributions, which represent Affiliate earnings shared with Affiliate key employees.

•We net the separate revenues and expenses under U.S. GAAP for certain Fund expenses initially paid by our Affiliates on the Funds’ behalf and subsequently reimbursed, to better reflect the economics of our business.

We also make the following adjustments to U.S. GAAP results to more closely reflect our economic results:

i.We exclude non-cash expenses representing changes in the value of Affiliate equity and profit interests held by Affiliate key employees. These ownership interests may in certain circumstances be repurchased by BSUS at a value based on a pre-determined fixed multiple of trailing earnings and as such this value is carried on our balance sheet as a liability. Non-cash movements in the value of this liability are treated as compensation expense under U.S. GAAP. However, any equity or profit interests repurchased by BSUS can be used to fund a portion of future variable compensation awards, resulting in savings in cash variable compensation that offset the negative cash effect of repurchasing the equity. Our Affiliate equity and profit interest plans have been designed to ensure BSUS is never required to repurchase more equity than we can reasonably recycle through variable compensation awards in any given twelve-month period.

ii.We exclude non-cash amortization or impairment expenses related to acquired goodwill and other intangibles as these are non-cash charges that do not result in an outflow of tangible economic benefits from the business. We also exclude the amortization of acquisition-related contingent consideration, as well as the value of employee equity owned pre-acquisition, as occurred as a result of the Landmark transaction, where such items have been included in compensation expense as a result of ongoing service requirements for certain employees. Please note that the revaluations related to these acquisition-related items are included in (i) above.

iii.We exclude capital transaction costs, including the costs of raising debt or equity, gains or losses realized as a result of redeeming debt or equity and direct incremental costs associated with acquisitions of businesses or assets.

iv.We exclude seed capital and co-investment gains, losses and related financing costs. The net returns on these investments are considered and presented separately from ENI because ENI is primarily a measure of our earnings from managing client assets, which therefore differs from earnings generated by our investments in Affiliate products, which can be variable from period to period.

v.We include cash tax benefits associated with deductions allowed for acquired intangibles and goodwill that may not be recognized or have timing differences compared to U.S. GAAP.

vi.We exclude the results of discontinued operations attributable to controlling interests since they are not part of our ongoing business, restructuring costs incurred in continuing operations, and the impact of a one-time compensation arrangement entered into that includes advances against future contractual compensation payments.

vii.We exclude deferred tax resulting from changes in tax law and expiration of statutes, adjustments for uncertain tax positions, deferred tax attributable to intangible assets and other unusual items not related to current operating results to reflect ENI tax normalization.

We also adjust our income tax expense to reflect any tax impact of our ENI adjustments.

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Reconciliation of U.S. GAAP Net Income to Economic Net Income for the Three and Nine Months Ended September 30, 2020 and 2019

The following table reconciles net income attributable to controlling interests to economic net income for the three and nine months ended September 30, 2020 and 2019: 

		Three Months Ended September 30,				Nine Months Ended September 30,
($ in millions)		2020		2019		2020		2019
U.S. GAAP net income attributable to controlling interests		$	37.2	$	75.4	$	88.7	$	156.1
Adjustments to reflect the economic earnings of the Company:
i.	Non-cash key employee-owned equity and profit interest revaluations	6.6		(14.7)		(31.8)		(27.7)
ii.	Goodwill impairment and amortization of acquired intangible assets and pre-acquisition employee equity	3.2		17.2		26.1		24.4
iii.	Capital transaction costs	0.1		0.9		0.6		2.5
iv.	Seed/Co-investment (gains) losses and financings(1)	(8.2)		1.9		6.4		(11.1)
v.	Tax benefit of goodwill and acquired intangibles deductions	2.2		2.4		6.8		7.1
vi.	Discontinued operations, restructuring and the impact of a one-time compensation arrangement that includes advances against future compensation payments(2)	(2.2)		1.0		12.6		6.6
vii.	ENI tax normalization	(1.3)		(44.9)		(0.7)		(41.7)
Tax effect of above adjustments, as applicable(3)		0.1		(1.8)		(3.8)		1.4
Economic net income		$	37.7	$	37.4	$	104.9	$	117.6

(1)The net return on seed/co-investment (gains) losses and financings for the three and nine months ended September 30, 2020 and 2019 is shown in the following table:

	Three Months Ended September 30,						Nine Months Ended September 30,
($ in millions)	2020			2019			2020			2019
Seed/Co-investment (gains) losses	$	(9.7)		$	(0.3)		$	1.7		$	(18.0)
Financing costs:
Seed/Co-investment average balance	93.3			141.9			107.4			144.9
Blended interest rate*	6.0		%	6.2		%	5.8		%	6.3		%
Financing costs	1.5			2.2			4.7			6.9
Net seed/co-investment (gains) losses and financing	$	(8.2)		$	1.9		$	6.4		$	(11.1)

* The blended rate is based first on the interest rate paid on our non-recourse seed capital facility up to the average amount drawn, and thereafter on the weighted average rate of the long-term debt.

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(2)The three months ended September 30, 2020 includes $1.4 million of restructuring costs at the Center and Affiliates, $0.4 million costs associated with the transfer of an insurance policy from our former Parent, $3.2 million costs relating to the impact of a one-time compensation arrangement entered into that includes advances against future compensation payments, and the gain on sale of Copper Rock of $7.2 million. The nine months ended September 30, 2020 includes $4.8 million of restructuring costs at the Center and Affiliates, $1.0 million costs associated with the transfer of an insurance policy from our former Parent, $13.9 million costs relating to the impact of a one-time compensation arrangement entered into that includes advances against future compensation payment, and the gain on sale of Copper Rock of $7.2 million. The three months ended September 30, 2019 includes $0.1 million of restructuring costs at the Center and $0.9 million associated with the redomicile to the U.S. The nine months ended September 30, 2019 includes $4.6 million of restructuring costs at the Center and $2.0 million associated with the redomicile to the U.S.

(3)Reflects the sum of lines (i), (ii), (iii), (iv) and the restructuring component of line (vi) multiplied by the 27.3% U.S. statutory tax rate (including state tax).

Limitations of Economic Net Income

Economic net income is the key measure our management uses to evaluate the financial performance of, and make operational decisions for, our business. Economic net income is not audited and is not a substitute for net income or other performance measures that are derived in accordance with U.S. GAAP. Furthermore, our calculation of economic net income may differ from similarly titled measures provided by other companies.

Because the calculation of economic net income excludes certain ongoing expenses, including amortization expense and certain compensation costs, it has certain material limitations and should not be viewed in isolation or as a substitute for U.S. GAAP measures of earnings.

    ENI Revenues

The following table reconciles U.S. GAAP revenue to ENI revenue for the three and nine months ended September 30, 2020 and 2019: 

	Three Months Ended September 30,				Nine Months Ended September 30,
($ in millions)	2020		2019		2020		2019
U.S. GAAP revenue	$	182.4	$	197.8	$	539.7	$	612.1
Include investment return on equity-accounted Affiliate	0.9		0.8		2.1		2.1
Exclude revenue from consolidated Funds attributable to non-controlling interests	(1.4)		(1.9)		(4.6)		(4.9)
Exclude Fund expenses reimbursed by customers	(1.1)		(0.9)		(3.3)		(3.2)
ENI revenue	$	180.8	$	195.8	$	533.9	$	606.1

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The following table identifies the components of ENI revenue:

	Three Months Ended September 30,				Nine Months Ended September 30,
($ in millions)	2020		2019		2020		2019
Management fees(1)	$	178.2	$	196.4	$	527.4	$	609.8
Performance fees(2)	1.2		(1.9)		2.5		(6.9)
Other income, including equity-accounted Affiliate(3)	1.4		1.3		4.0		3.2
ENI revenue	$	180.8	$	195.8	$	533.9	$	606.1

(1)ENI management fees correspond to U.S. GAAP management fees.

(2)ENI performance fees correspond to U.S. GAAP performance fees.

(3)ENI other income is comprised primarily of other revenue under U.S. GAAP, plus our earnings from our equity-accounted Affiliate of $0.9 million and $0.8 million for the three months ended September 30, 2020 and September 30, 2019, respectively. For the nine months ended September 30, 2020 and September 30, 2019, our earnings from our equity-accounted Affiliate were $2.1 million and $2.1 million, respectively. As further described in “—Non-GAAP Supplemental Performance Measure—Economic Net Income and Segment Analysis,” ENI other income also excludes certain Fund expenses initially paid by our Affiliates on the Funds’ behalf and subsequently reimbursed.

	Three Months Ended September 30,				Nine Months Ended September 30,
($ in millions)	2020		2019		2020		2019
U.S. GAAP other revenue	$	1.6	$	1.4	$	5.2	$	4.3
Earnings from equity-accounted Affiliate	0.9		0.8		2.1		2.1
Exclude Fund expenses reimbursed by customers	(1.1)		(0.9)		(3.3)		(3.2)
ENI other income	$	1.4	$	1.3	$	4.0	$	3.2

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    ENI Operating Expenses

The largest difference between U.S. GAAP operating expense and ENI operating expense relates to compensation. As shown in the following reconciliation, we exclude the impact of key employee equity revaluations. We also exclude the amortization of pre-acquisition equity owned by employees, with a service requirement, associated with the Landmark acquisition. Variable compensation and Affiliate key employee distributions are also segregated out of U.S. GAAP operating expense in order to align with the manner in which these items are contractually calculated at the Affiliate level.

The following table reconciles U.S. GAAP operating expense to ENI operating expense for the three and nine months ended September 30, 2020 and 2019.

	Three Months Ended September 30,				Nine Months Ended September 30,
($ in millions)	2020		2019		2020		2019
U.S. GAAP operating expense	$	141.9	$	145.9	$	398.9	$	445.6
Less: items excluded from economic net income
Amortization of pre-acquisition employee equity	(1.6)		(15.6)		(4.6)		(19.5)
Non-cash key employee equity and profit interest revaluations	(6.6)		14.7		31.8		27.7
Goodwill impairment and amortization of acquired intangible assets	(1.6)		(1.6)		(21.5)		(4.9)
Capital transaction costs	—		(0.9)		(0.2)		(2.5)
Restructuring costs and the impact of a one-time compensation arrangement that includes advances against future compensation payments(1)	(5.0)		(1.0)		(19.8)		(6.6)
Fund expenses reimbursed by customers	(1.1)		(0.9)		(3.3)		(3.2)
Funds’ operating expense	—		(0.2)		(0.2)		(0.4)
Less: items segregated out of U.S. GAAP operating expense
Variable compensation	(41.2)		(44.1)		(120.3)		(141.2)
Affiliate key employee distributions	(11.0)		(12.6)		(31.8)		(39.8)
ENI operating expense	$	73.8	$	83.7	$	229.0	$	255.2

(1)The three months ended September 30, 2020 includes $1.4 million of restructuring costs at the Center and Affiliates, $0.4 million costs associated with the transfer of an insurance policy from our former Parent, and $3.2 million costs relating to the impact of a one-time compensation arrangement entered into that includes advances against future compensation payments. The nine months ended September 30, 2020 includes $4.8 million of restructuring costs at the Center and Affiliates, $1.0 million costs associated with the transfer of an insurance policy from our former Parent, and $13.9 million costs relating to the impact of a one-time compensation arrangement entered into that includes advances against future compensation payments. The three months ended September 30, 2019 includes $0.1 million of restructuring costs at the Center and $0.9 million costs associated with the redomicile to the U.S. The nine months ended September 30, 2019 includes $4.6 million of restructuring costs at the Center and $2.0 million associated with the redomicile to the U.S.

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The following table identifies the components of ENI operating expense:

	Three Months Ended September 30,				Nine Months Ended September 30,
($ in millions)	2020		2019		2020		2019
Fixed compensation & benefits(1)	$	42.8	$	46.7	$	132.2	$	143.7
General and administrative expenses(2)	25.8		32.6		81.2		99.3
Depreciation and amortization	5.2		4.4		15.6		12.2
ENI operating expense	$	73.8	$	83.7	$	229.0	$	255.2

(1)Fixed compensation and benefits include base salaries, payroll taxes and the cost of benefit programs provided. The following table reconciles U.S. GAAP compensation and benefits expense for the three and nine months ended September 30, 2020 and 2019 to ENI fixed compensation and benefits expense:

	Three Months Ended September 30,				Nine Months Ended September 30,
($ in millions)	2020		2019		2020		2019
Total U.S. GAAP compensation and benefits expense	$	109.7	$	108.0	$	284.0	$	332.8
Amortization of pre-acquisition employee equity	(1.6)		(15.6)		(4.6)		(19.5)
Non-cash key employee equity and profit interest revaluations excluded from ENI	(6.6)		14.7		31.8		27.7
Sales-based compensation reclassified to ENI general & administrative expenses	(2.0)		(2.7)		(6.2)		(8.5)
Affiliate key employee distributions	(11.0)		(12.6)		(31.8)		(39.8)
Compensation related to restructuring expenses and the impact of a one-time arrangement that includes advances against future compensation payments(a)	(3.4)		(0.1)		(17.4)		(4.6)
Variable compensation	(41.2)		(44.1)		(120.3)		(141.2)
Fund expenses reimbursed by customers	(1.1)		(0.9)		(3.3)		(3.2)
ENI fixed compensation and benefits	$	42.8	$	46.7	$	132.2	$	143.7

(a)The three months ended September 30, 2020 includes $0.2 million of restructuring costs at the Center and $3.2 million costs relating to the impact of a one-time compensation arrangement entered into that includes advances against future compensation payments. The nine months ended September 30, 2020 includes $3.5 million of restructuring costs at the Center and Affiliates and $13.9 million costs relating to the impact of a one-time compensation arrangement entered into that includes advances against future compensation payments. The three months ended September 30, 2019 includes $0.1 million of restructuring costs at the Center. The nine months ended September 30, 2019 includes $4.6 million of restructuring costs at the Center.

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(2)The following table reconciles U.S. GAAP general and administrative expense to ENI general and administrative expense:

	Three Months Ended September 30,				Nine Months Ended September 30,
($ in millions)	2020		2019		2020		2019
U.S. GAAP general and administrative expense	$	25.4	$	31.7	$	77.6	$	95.3
Sales-based compensation	2.0		2.7		6.2		8.5
Capital transaction costs	—		(0.9)		(0.2)		(2.5)
Restructuring costs	(1.6)		(0.9)		(2.4)		(2.0)
ENI general and administrative expense	$	25.8	$	32.6	$	81.2	$	99.3

Key Non-GAAP Operating Metrics

The following table shows our key non-GAAP operating metrics for the three and nine months ended September 30, 2020 and 2019. We present these metrics because they are the measures our management uses to evaluate the profitability of our business and are useful to investors because they represent the key drivers and measures of economic performance within our business model. Please see the footnotes below for an explanation of each ratio, its usefulness in measuring the economics and operating performance of our business, and a reference to the most closely related U.S. GAAP measure:

	Three Months Ended September 30,						Nine Months Ended September 30,
($ in millions)	2020			2019			2020			2019
Numerator: ENI operating earnings(1)	$	65.8		$	68.0		$	184.6		$	209.7
Denominator: ENI revenue	$	180.8		$	195.8		$	533.9		$	606.1
ENI operating margin(2)	36.4		%	34.7		%	34.6		%	34.6		%
Numerator: ENI operating expense	$	73.8		$	83.7		$	229.0		$	255.2
Denominator: ENI management fee revenue(3)	$	178.2		$	196.4		$	527.4		$	609.8
ENI operating expense ratio(4)	41.4		%	42.6		%	43.4		%	41.8		%
Numerator: ENI variable compensation	$	41.2		$	44.1		$	120.3		$	141.2
Denominator: ENI earnings before variable compensation(1)(5)	$	107.0		$	112.1		$	304.9		$	350.9
ENI variable compensation ratio(6)	38.5		%	39.3		%	39.5		%	40.2		%
Numerator: Affiliate key employee distributions	$	11.0		$	12.6		$	31.8		$	39.8
Denominator: ENI operating earnings(1)	$	65.8		$	68.0		$	184.6		$	209.7
ENI Affiliate key employee distributions ratio(7)	16.7		%	18.5		%	17.2		%	19.0		%

(1)ENI operating earnings represents ENI earnings before Affiliate key employee distributions and is calculated as ENI revenue, less ENI operating expense, less ENI variable compensation. It differs from economic net income because it does not include the effects of Affiliate key employee distributions, net interest expense or income tax expense.

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The following table reconciles U.S. GAAP operating income to ENI operating earnings:

	Three Months Ended September 30,				Nine Months Ended September 30,
($ in millions)	2020		2019		2020		2019
U.S. GAAP operating income	$	40.5	$	51.9	$	140.8	$	166.5
Include earnings from equity-accounted Affiliate	0.9		0.8		2.1		2.1
Exclude the impact of:
Affiliate key employee-owned equity and profit interest revaluations	6.6		(14.7)		(31.8)		(27.7)
Goodwill impairment and amortization of acquired intangible assets and pre-acquisition employee equity	3.2		17.2		26.1		24.4
Capital transaction costs	—		0.9		0.2		2.5
Restructuring costs and the impact of a one-time compensation arrangement that includes advances against future compensation payments(a)	5.0		1.0		19.8		6.6
Affiliate key employee distributions	11.0		12.6		31.8		39.8
Variable compensation	41.2		44.1		120.3		141.2
Funds’ operating income	(1.4)		(1.7)		(4.4)		(4.5)
ENI earnings before variable compensation	107.0		112.1		304.9		350.9
Less: ENI variable compensation	(41.2)		(44.1)		(120.3)		(141.2)
ENI operating earnings	65.8		68.0		184.6		209.7
Less: ENI Affiliate key employee distributions	(11.0)		(12.6)		(31.8)		(39.8)
ENI earnings after Affiliate key employee distributions	$	54.8	$	55.4	$	152.8	$	169.9

(a)The three months ended September 30, 2020 includes $1.4 million of restructuring costs at the Center and Affiliates, $0.4 million costs associated with the transfer of an insurance policy from our former Parent, and $3.2 million costs relating to the impact of a one-time compensation arrangement entered into that includes advances against future compensation payments. The nine months ended September 30, 2020 includes $4.8 million of restructuring costs at the Center and Affiliates, $1.0 million costs associated with the transfer of an insurance policy from our former Parent, and $13.9 million costs relating to the impact of a one-time compensation arrangement entered into that includes advances against future compensation payments. The three months ended September 30, 2019 includes $0.1 million of restructuring costs at the Center and $0.9 million associated with the redomicile to the U.S. The nine months ended September 30, 2019 includes $4.6 million of restructuring costs at the Center and $2.0 million associated with the redomicile to the U.S.

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(2)The ENI operating margin, which is calculated before Affiliate key employee distributions, is used by management and is useful to investors to evaluate the overall operating margin of the business without regard to our various ownership levels at each of the Affiliates. The ENI operating margin is most comparable to our U.S. GAAP operating margin. Our U.S. GAAP operating margin, excluding the effect of consolidated Funds, is 21.6% for the three months ended September 30, 2020, 25.6% for the three months ended September 30, 2019, 25.5% for the nine months ended September 30, 2020, and 26.7% for the nine months ended September 30, 2019.

The ENI operating margin is important because it gives investors an understanding of the profitability of the total business relative to revenue, irrespective of the ownership position which we have in each of our Affiliates. Management and investors use this ratio when comparing our profitability relative to our peer group and evaluating our ability to manage the cost structure and profitability of our business under different operating environments.

(3)ENI management fee revenue corresponds to U.S. GAAP management fee revenue.

(4)The ENI operating expense ratio is used by management and is useful to investors to evaluate the level of operating expense as measured against our recurring management fee revenue. We have provided this ratio since many operating expenses, including fixed compensation and benefits and general and administrative expense, are generally linked to the overall size of the business. We track this ratio as a key measure of scale economies because in our profit sharing economic model, scale benefits both the Affiliate employees and our stockholders. The ENI operating expense ratio is most comparable to the U.S. GAAP operating expense / management fee revenue ratio.

(5)ENI earnings before variable compensation is calculated as ENI revenue, less ENI operating expense.

(6)The ENI variable compensation ratio is used by management and is useful to investors to evaluate consolidated variable compensation as measured against our ENI earnings before variable compensation. Variable compensation is contractually set and calculated individually at each Affiliate, plus Center bonuses. Variable compensation is usually awarded based on a contractual percentage of each Affiliate’s ENI earnings before variable compensation and may be paid in the form of cash or non-cash Affiliate equity or profit interests. Center variable compensation includes cash and our equity. Non-cash variable compensation awards typically vest over several years and are recognized as compensation expense over that service period. The variable compensation ratio at each Affiliate, calculated as variable compensation divided by ENI earnings before variable compensation, will typically be between 25% and 35%. The ENI variable compensation ratio is most comparable to the U.S. GAAP variable compensation ratio.

(7)The ENI Affiliate key employee distribution ratio is used by management and is useful to investors to evaluate Affiliate key employee distributions as measured against our ENI operating earnings. Affiliate key employee distributions represent the share of Affiliate profits after variable compensation that is attributable to Affiliate key employee equity and profit interests holders, according to their ownership interests. The Affiliate key employee distribution ratio at each Affiliate is calculated as Affiliate key employee distributions divided by ENI operating earnings at that Affiliate. At certain Affiliates, with tiered equity structures, BSUS and other classes of employee equity holders are entitled to an initial proportionate preference over profits after variable compensation, structured such that before a preference threshold is reached, there would be no required key employee distributions to the tiered equity holders, whereas for profits above the threshold the key employee distribution amount to the tiered equity holders would be calculated based on the tiered key employee ownership percentages. Based on current economic arrangements, employee distributions range from approximately 20% to 40% of marginal ENI operating earnings at each of our consolidated Affiliates. The ENI Affiliate key employee distributions ratio is most comparable to the U.S. GAAP Affiliate key employee distributions ratio.

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Tax on Economic Net Income

The following table reconciles the United States statutory tax to tax on economic net income:

	Three Months Ended September 30,						Nine Months Ended September 30,
($ in millions)	2020			2019			2020			2019
Pre-tax economic net income(1)	$	49.5		$	49.7		$	136.3		$	154.5
Intercompany interest expense deductible for U.S. tax purposes	—			(2.2)			—			(35.4)
Taxable economic net income	49.5			47.5			136.3			119.1
Taxes at the U.S. federal and state statutory rates(2)	(13.5)			(13.0)			(37.2)			(32.6)
Other reconciling tax adjustments	1.7			0.7			5.8			(4.3)
Tax on economic net income	(11.8)			(12.3)			(31.4)			(36.9)
Add back intercompany interest expense previously excluded	—			2.2			—			35.4
Economic net income	$	37.7		$	37.4		$	104.9		$	117.6
Economic net income effective tax rate(3)	23.8		%	24.7		%	23.0		%	23.9		%

(1)Includes interest income and third party ENI interest expense, as shown in the following table:

	Three Months Ended September 30,				Nine Months Ended September 30,
($ in millions)	2020		2019		2020		2019
U.S. GAAP interest income	$	—	$	0.4	$	0.5	$	1.8
U.S. GAAP interest expense	(6.9)		(8.3)		(22.1)		(24.1)
U.S. GAAP net interest expense	(6.9)		(7.9)		(21.6)		(22.3)
Other ENI interest expense exclusions(a)	1.6		2.2		5.1		6.9
ENI net interest expense	(5.3)		(5.7)		(16.5)		(15.4)
ENI earnings after Affiliate key employee distributions(b)	54.8		55.4		152.8		169.9
Pre-tax economic net income	$	49.5	$	49.7	$	136.3	$	154.5

(a)Other ENI interest expense exclusions represent cost of financing on seed capital and co-investments and amortization of debt issuance costs.

(b)ENI earnings after Affiliate key employee distributions is calculated as ENI operating income (ENI revenue, less ENI operating expense, less ENI variable compensation), less Affiliate key employee distributions. Refer to “—Key Non-GAAP Operating Metrics” for a reconciliation from U.S. GAAP operating income (loss) to ENI earnings after Affiliate key employee distributions.

(2)Taxed at U.S. Federal and State statutory rate of 27.3%.

(3)The economic net income effective tax rate is calculated by dividing the tax on economic net income by pre-tax economic net income.

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    Segment Analysis

We conduct our operations through three business segments:

•Quant & Solutions—comprised of versatile, often highly-tailored strategies that leverage data and technology in a computational, factor based investment process across a range of asset classes and geographies, including Global, non-U.S., emerging markets and managed volatility equities, as well as multi-asset products.

•Alternatives—comprised of illiquid and differentiated liquid investment strategies that include private equity, real estate and real assets, including forestry, as well as a growing suite of liquid alternative capabilities in areas such as long/short, market neutral and absolute return.

•Liquid Alpha(1)—comprised of specialized investment strategies with a focus on alpha-generation across market cycles in long-only small-, mid-, and large-cap U.S., global, non-U.S. and emerging markets equities, as well as fixed income.

(1)In July 2020, we completed the sale of Copper Rock and announced the divestiture of Barrow Hanley, expected to close in the fourth quarter of 2020. See "Recent Developments" herein.

We have a corporate head office that is included in “Other”. The corporate head office supports the segments by providing infrastructure and administrative support in the areas of accounting/finance, operations, information technology, strategy and relationship management, legal, compliance and human resources. The corporate head office expenses are not allocated to our three reportable segments but the CODM does consider the cost structure of the corporate head office when evaluating the financial performance of the segments.

The primary measure used by the CODM in measuring performance and allocating resources to the segments is Economic Net Income ("ENI"). We define economic net income for the segments as ENI revenue less (i) ENI operating expenses, (ii) variable compensation and (iii) key employee distributions. The ENI adjustments to U.S. GAAP include both reclassifications of U.S. GAAP revenue and expense items, as well as adjustments to U.S. GAAP results, primarily to exclude non-cash, non-economic expenses, or to reflect cash benefits not recognized under U.S. GAAP.

ENI revenue includes management fees, performance fees and other revenue under U.S. GAAP, adjusted to include management fees paid to Affiliates by consolidated Funds and our share of earnings from our equity-accounted Affiliate. ENI revenue is also adjusted to exclude the separate revenues recorded under U.S. GAAP for certain Fund expenses reimbursed to our Affiliates.

ENI operating expenses include compensation and benefits, general and administrative expense, and depreciation and amortization under U.S. GAAP, adjusted to exclude non-cash expenses representing changes in the value of Affiliate equity and profit interests held by Affiliate key employees, non-cash amortization of the value of employee equity owned pre-acquisition that occurred as a result of the Landmark transaction, impairment of goodwill, the impact of a one-time compensation arrangement entered into that includes advances against future compensation payments, and the separate expenses recorded under U.S. GAAP for certain Fund expenses reimbursed to our Affiliates. Additionally, variable compensation and Affiliate key employee distributions are segregated from ENI operating expenses.

ENI segment results are also adjusted to exclude the portion of consolidated Fund revenues, expenses and investment return recorded under U.S. GAAP.

Refer to the reconciliations of U.S. GAAP revenue to ENI revenue, U.S. GAAP Operating expense to ENI Operating expense, variable compensation and Affiliate key employee distributions disclosed previously within this section.

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    Segment ENI Revenue

The following table identifies the components of segment ENI revenue for the three months ended September 30, 2020 and 2019:

	Three Months Ended September 30,
($ in millions)	2020										2019
	Quant & Solutions		Alter-natives		Liquid Alpha		Other		Total		Quant & Solutions		Alter-natives		Liquid Alpha		Other		Total
Management fees	$	87.9	$	43.2	$	47.1	$	—	$	178.2	$	92.7	$	37.2	$	66.5	$	—	$	196.4
Performance fees	1.2		—		—		—		1.2		0.4		(0.2)		(2.1)		—		(1.9)
Other income, including equity-accounted subsidiaries	(0.1)		0.6		0.8		0.1		1.4		—		0.4		0.8		0.1		1.3
ENI revenue	$	89.0	$	43.8	$	47.9	$	0.1	$	180.8	$	93.1	$	37.4	$	65.2	$	0.1	$	195.8

The following table identifies the components of segment ENI revenue for the nine months ended September 30, 2020 and 2019:

	Nine Months Ended September 30,
($ in millions)	2020										2019
	Quant & Solutions		Alter-natives		Liquid Alpha		Other		Total		Quant & Solutions		Alter-natives		Liquid Alpha		Other		Total
Management fees	$	255.3	$	126.4	$	145.7	$	—	$	527.4	$	276.8	$	124.5	$	208.5	$	—	$	609.8
Performance fees	2.7		—		(0.2)		—		2.5		0.5		0.4		(7.8)		—		(6.9)
Other income, including equity-accounted subsidiaries	(0.1)		1.8		2.0		0.3		4.0		—		0.8		2.1		0.3		3.2
ENI revenue	$	257.9	$	128.2	$	147.5	$	0.3	$	533.9	$	277.3	$	125.7	$	202.8	$	0.3	$	606.1

Quant & Solutions Segment ENI Revenue

Three months ended September 30, 2020 compared to three months ended September 30, 2019: Quant & Solutions ENI revenue decreased $(4.1) million, or (4.4)%, from $93.1 million for three months ended September 30, 2019 to $89.0 million for the three months ended September 30, 2020. The decrease was attributable to (5.2)% lower management fees driven by lower average AUM primarily resulting from the equity market decline in the first quarter of 2020.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019: Quant & Solutions ENI revenue decreased $(19.4) million, or (7.0)%, from $277.3 million for the nine months ended September 30, 2019 to $257.9 million for the nine months ended September 30, 2020. The decrease was attributable to (7.8)% lower management fees, driven by lower average AUM primarily resulting from the equity market decline in the current year.

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Alternatives Segment ENI Revenue

Three months ended September 30, 2020 compared to three months ended September 30, 2019: Alternatives ENI revenue increased $6.4 million, or 17.1%, from $37.4 million for three months ended September 30, 2019 to $43.8 million for the three months ended September 30, 2020. The increase was attributable to 16.1% higher management fees resulting from inflows and change in net catch-up fees.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019: Alternatives ENI revenue increased $2.5 million, or 2.0%, from $125.7 million for the nine months ended September 30, 2019 to $128.2 million for the nine months ended September 30, 2020. The increase was attributable to inflows and change in net catch-up fees.

Liquid Alpha Segment ENI Revenue

Three months ended September 30, 2020 compared to three months ended September 30, 2019: Liquid Alpha ENI revenue decreased $(17.3) million, or (26.5)%, from $65.2 million for three months ended September 30, 2019 to $47.9 million for the three months ended September 30, 2020. The decrease was attributable to (29.2)% lower management fees driven by lower average AUM resulting from the equity market decline and net outflows over the last twelve months, as well as the Vanguard reallocation in the fourth quarter of 2019. The change in performance fees was primarily due to fulcrum fees recorded in the three months ended September 30, 2019 that did not repeat in the three months ended September 30, 2020.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019: Liquid Alpha ENI revenue decreased $(55.3) million, or (27.3)%, from $202.8 million for the nine months ended September 30, 2019 to $147.5 million for the nine months ended September 30, 2020. The decrease was attributable to (30.1)% lower management fees, driven by lower average AUM resulting from the equity market decline and net outflows over the last twelve months, as well as the Vanguard reallocation in the fourth quarter of 2019. The change in performance fees was primarily due to fulcrum fees recorded in nine months ended September 30, 2019 that did not repeat in the nine months ended September 30, 2020.

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    Segment ENI Expense

The following table identifies the components of segment ENI expense for the three months ended September 30, 2020 and 2019:

	Three Months Ended September 30,
($ in millions)	2020										2019
	Quant & Solutions		Alter-natives		Liquid Alpha		Other		Total		Quant & Solutions		Alter-natives		Liquid Alpha		Other		Total
Fixed compensation & benefits	$	18.5	$	10.9	$	10.9	$	2.5	$	42.8	$	20.4	$	10.8	$	11.9	$	3.6	$	46.7
G&A	14.3		3.9		4.5		3.1		25.8		16.5		5.0		6.5		4.6		32.6
Depreciation and amortization	4.4		0.5		0.1		0.2		5.2		3.9		0.3		0.1		0.1		4.4
Total ENI Operating Expenses	$	37.2	$	15.3	$	15.5	$	5.8	$	73.8	$	40.8	$	16.1	$	18.5	$	8.3	$	83.7
Variable compensation	18.0		10.1		12.3		0.8		41.2		18.8		7.8		15.6		1.9		44.1
Affiliate key employee distributions	0.8		7.3		2.9		—		11.0		1.5		5.0		6.1		—		12.6
Total Expenses	$	56.0	$	32.7	$	30.7	$	6.6	$	126.0	$	61.1	$	28.9	$	40.2	$	10.2	$	140.4

The following table identifies the components of segment ENI expense for the nine months ended September 30, 2020 and 2019:

	Nine Months Ended September 30,
($ in millions)	2020										2019
	Quant & Solutions		Alter-natives		Liquid Alpha		Other		Total		Quant & Solutions		Alter-natives		Liquid Alpha		Other		Total
Fixed compensation & benefits	$	54.1	$	33.6	$	35.9	$	8.6	$	132.2	$	60.3	$	33.2	$	38.5	$	11.7	$	143.7
G&A	41.5		12.8		16.5		10.4		81.2		49.3		15.5		21.1		13.4		99.3
Depreciation and amortization	13.7		1.2		0.3		0.4		15.6		10.8		0.7		0.4		0.3		12.2
Total ENI Operating Expenses	$	109.3	$	47.6	$	52.7	$	19.4	$	229.0	$	120.4	$	49.4	$	60.0	$	25.4	$	255.2
Variable compensation	52.7		29.0		36.0		2.6		120.3		57.6		28.0		48.1		7.5		141.2
Affiliate key employee distributions	2.9		20.0		8.9		—		31.8		4.1		17.1		18.6		—		39.8
Total Expenses	$	164.9	$	96.6	$	97.6	$	22.0	$	381.1	$	182.1	$	94.5	$	126.7	$	32.9	$	436.2

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Quant & Solutions Segment ENI Expense

Three months ended September 30, 2020 compared to three months ended September 30, 2019: Quant & Solutions ENI operating expense decreased $(3.6) million, or (8.8)%, from $40.8 million for the three months ended September 30, 2019 to $37.2 million for the three months ended September 30, 2020. The decrease was driven by (9.3)% lower ENI fixed compensation and benefits expense resulting from headcount reduction, and (13.3)% lower ENI general and administrative expense resulting from cost saving initiatives. Quant & Solutions ENI variable compensation expense, which is based on contractual arrangements, decreased (4.3)%, as a result of change in the mix of cash and non-cash variable compensation. Affiliate key employee distributions attributable to Quant & Solutions decreased (46.7)%, primarily due to the leveraged nature of the profit-sharing agreement.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019: Quant & Solutions ENI operating expense decreased $(11.1) million, or (9.2)%, from $120.4 million for the nine months ended September 30, 2019 to $109.3 million for the nine months ended September 30, 2020. The decrease was driven by (10.3)% lower ENI fixed compensation and benefits expense resulting from headcount reduction, and (15.8)% lower ENI general and administrative expense resulting from cost saving initiatives. Quant & Solutions ENI variable compensation expense, which is based on contractual arrangements, decreased (8.5)%, as a result of lower earnings before variable compensation. Affiliate key employee distributions attributable to Quant & Solutions decreased (29.3)%, primarily due to lower Quant & Solutions ENI earnings after variable compensation.

Alternatives Segment ENI Expense

Three months ended September 30, 2020 compared to three months ended September 30, 2019: Alternatives ENI operating expense decreased $(0.8) million, or (5.0)%, from $16.1 million for three months ended September 30, 2019 to $15.3 million for the three months ended September 30, 2020. The decrease was driven by (22.0)% lower ENI general and administrative related to outside services, partially offset by 0.9% higher ENI fixed compensation and benefits expense. Alternatives ENI variable compensation expense, which is based on contractual arrangements, increased 29.5%, as a result of higher earnings before variable compensation. Affiliate key employee distributions attributable to Alternatives increased 46.0%, primarily driven by higher Alternatives ENI earnings after variable compensation.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019: Alternatives ENI operating expense decreased $(1.8) million, or (3.6)%, from $49.4 million for the nine months ended September 30, 2019 to $47.6 million for the nine months ended September 30, 2020. The decrease was driven by (17.4)% lower ENI general and administrative expense resulting from lower consulting costs. Alternatives ENI variable compensation expense, which is based on contractual arrangements, increased 3.6%, as a result of higher earnings before variable compensation. Affiliate key employee distributions attributable to Alternatives increased 17.0%, primarily driven by higher Alternatives ENI earnings after variable compensation.

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Liquid Alpha Segment ENI Expense

Three months ended September 30, 2020 compared to three months ended September 30, 2019: Liquid Alpha ENI operating expense decreased $(3.0) million, or (16.2)%, from $18.5 million for the three months ended September 30, 2019 to $15.5 million for the three months ended September 30, 2020. The decrease was driven by (8.4)% lower ENI fixed compensation and benefits expense resulting from headcount reduction and (30.8)% lower ENI general and administrative expense resulting from cost-saving initiatives. Liquid Alpha ENI variable compensation expense, which is based on contractual arrangements, decreased (21.2)%, as a result of lower pre-variable compensation earnings. Affiliate key employee distributions attributable to Liquid Alpha decreased (52.5)%, primarily driven by lower Liquid Alpha ENI earnings after variable compensation.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019: Liquid Alpha ENI operating expense decreased $(7.3) million, or (12.2)%, from $60.0 million for the nine months ended September 30, 2019 to $52.7 million for the nine months ended September 30, 2020. The decrease was driven by (6.8)% lower ENI fixed compensation and benefits expense resulting from headcount reduction and (21.8)% lower ENI general and administrative expense resulting from cost-saving initiatives. Liquid Alpha ENI variable compensation expense, which is based on contractual arrangements, decreased (25.2)%, as a result of lower pre-variable compensation earnings. Affiliate key employee distributions attributable to Liquid Alpha decreased (52.2)%, primarily driven by lower Liquid Alpha ENI earnings after variable compensation.

Other ENI Expense

Three months ended September 30, 2020 compared to three months ended September 30, 2019: Other ENI operating expense decreased $(2.5) million or (30.1)%, from $8.3 million for the three months ended September 30, 2019 to $5.8 million for the three months ended September 30, 2020. The decrease was driven by (30.6)% lower fixed compensation and benefit expense resulting from a reduction in headcount, and (32.6)% lower general and administrative expense resulting from cost-saving initiatives. Other ENI variable compensation expense decreased (57.9)% which was driven by a reduction in headcount.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019: Other ENI operating expense decreased $(6.0) million, or (23.6)%, from $25.4 million for the nine months ended September 30, 2019 to $19.4 million for the nine months ended September 30, 2020. The decrease was driven by (26.5)% lower fixed compensation and benefit expense resulting from a reduction in headcount, and (22.4)% lower general and administrative expense resulting from cost-saving initiatives. Other ENI variable compensation expense decreased (65.3)% due to a reduction in headcount.

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Capital Resources and Liquidity

    Cash Flows

The following table summarizes certain key financial data relating to cash flows. All amounts presented exclude consolidated Funds: 

	Nine Months Ended September 30,
($ in millions)	2020		2019
Cash provided by (used in)(1)(2)
Operating activities	$	144.7	$	(149.9)
Investing activities	26.5		(4.6)
Financing activities	(140.6)		(69.6)

(1)Excludes consolidated Funds.

(2)Cash flow data shown only includes cash flows from continuing operations.

Comparison for the nine months ended September 30, 2020 and 2019

Net cash provided by operating activities from continuing operations increased $294.6 million, from net cash used of $149.9 million for the nine months ended September 30, 2019 to net cash provided of $144.7 million for the nine months ended September 30, 2020, driven by the change in operating liabilities as a result of the Landmark earnout that was settled in the nine months ended September 30, 2019. In the nine months ended September 30, 2020, net cash provided by investing activities of continuing operations increased $31.1 million, from $4.6 million used in the nine months ended September 30, 2019 to $26.5 million provided in the nine months ended September 30, 2020, driven primarily by increased sales of investment securities in the nine months ended September 30, 2020. Net cash used in financing activities of continuing operations increased $71.0 million, from $69.6 million used in the nine months ended September 30, 2019 to $140.6 million used in the nine months ended September 30, 2020, primarily due to a lower drawdown on the revolving credit facility, the pay down and termination of the non-recourse seed facility and decreased share repurchases in the nine months ended September 30, 2020 compared to 2019.

    Supplemental Liquidity Measure — Adjusted EBITDA

As supplemental information, we provide information regarding Adjusted EBITDA, which we define as economic net income before net interest, income taxes, depreciation and amortization. Adjusted EBITDA is a non-GAAP liquidity measure that we provide in addition to, but not as a substitute for, cash flows from operating activities. It should be noted that our calculation of Adjusted EBITDA may not be consistent with Adjusted EBITDA as calculated by other companies. We believe Adjusted EBITDA is a useful liquidity metric because it indicates our ability to make further investments in our business, service debt and meet working capital requirements. It is also encapsulated in our line of credit as part of our liquidity covenants.

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The following table reconciles our U.S. GAAP net income attributable to controlling interests to EBITDA to Adjusted EBITDA to economic net income for the three and nine months ended September 30, 2020 and 2019.

	Three Months Ended September 30,				Nine Months Ended September 30,
($ in millions)	2020		2019		2020		2019
Net income attributable to controlling interests	$	37.2	$	75.4	$	88.7	$	156.1
Net interest expense to third parties	6.9		7.9		21.6		22.3
Income tax expense (including tax expenses related to discontinued operations)	12.8		(32.0)		33.7		3.7
Depreciation and amortization (including intangible assets) and goodwill impairment	6.8		6.0		37.1		17.1
EBITDA	$	63.7	$	57.3	$	181.1	$	199.2
Non-cash compensation costs, including revaluation of Affiliate key employee-owned equity and profit interests	7.1		(14.7)		(29.6)		(27.7)
Amortization of pre-acquisition employee equity	1.6		15.6		4.6		19.5
(Gain) loss on seed and co-investments	(9.7)		(0.3)		1.7		(18.0)
Restructuring and the impact of a one-time compensation arrangement that includes advances against future compensation payments(1)	(2.2)		1.0		12.6		6.6
Capital transaction costs	—		0.9		0.2		2.5
Adjusted EBITDA	$	60.5	$	59.8	$	170.6	$	182.1
ENI net interest expense to third parties	(5.3)		(5.7)		(16.5)		(15.4)
Depreciation and amortization(2)	(5.7)		(4.4)		(17.8)		(12.2)
Tax on economic net income	(11.8)		(12.3)		(31.4)		(36.9)
Economic net income	$	37.7	$	37.4	$	104.9	$	117.6

(1)The three months ended September 30, 2020 includes $1.4 million of restructuring costs at the Center and Affiliates, $0.4 million costs associated with the transfer of an insurance policy from our former Parent, $3.2 million costs relating to the impact of a one-time compensation arrangement entered into that includes advances against future compensation payments, and the gain on sale of Copper Rock of $7.2 million. The nine months ended September 30, 2020 includes $4.8 million of restructuring costs at the Center and Affiliates, $1.0 million costs associated with the transfer of an insurance policy from our former Parent, $13.9 million costs relating to the impact of a one-time compensation arrangement entered into that includes advances against future compensation payments, and the gain on sale of Copper Rock of $7.2 million. The three months ended September 30, 2019 includes $0.1 million of restructuring costs at the Center and $0.9 million associated with the redomicile to the U.S. The nine months ended September 30, 2019 includes $4.6 million of restructuring costs at the Center and $2.0 million associated with the redomicile to the U.S.

(2)The three and nine months ended September 30, 2020 includes non-cash equity-based award amortization expense.

Limitations of Adjusted EBITDA

As a non-GAAP, unaudited liquidity measure and derivation of EBITDA, Adjusted EBITDA has certain material limitations. It does not include cash costs associated with capital transactions and excludes certain U.S. GAAP expenses that fall outside the definition of EBITDA. Each of these categories of expense represents costs to us of doing business, and therefore any measure that excludes any or all of these categories of expense has material limitations.

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    Future Capital Needs

We believe that our available cash and cash equivalents to be generated from operations, supplemented by short-term and long-term financing, as necessary, will be sufficient to fund current operations and capital requirements for at least the next twelve months, as well as our day-to-day operations and future investment requirements. We also expect to realize future proceeds from the sale of our equity interest in Barrow Hanley during the fourth quarter of 2020. Our ability to secure short-term and long-term financing in the future will depend on several factors, including our future profitability, our relative levels of debt and equity and the overall condition of the credit markets.

    Borrowings and Long-Term Debt

The following table summarizes our financing arrangements as of the dates indicated: 

($ in millions)	September 30, 2020		December 31, 2019		Interest rate	Maturity
Third party borrowings:
Revolving credit facility(1)	$	80.0	$	140.0	LIBOR + 1.50% plus 0.20% commitment fee	August 22, 2022
4.80% Senior Notes Due 2026	272.7		272.4		4.80%	July 27, 2026
5.125% Senior Notes Due 2031	121.5		121.4		5.125%	August 1, 2031
Total third party borrowings	$	474.2	$	533.8
Non-recourse borrowing:
Non-recourse seed capital facility(2)	—		35.0		LIBOR + 1.55% plus 0.95% commitment fee	N/A
Total non-recourse borrowing	$	—	$	35.0
Total borrowings	$	474.2	$	568.8

(1)We entered into an amendment on September 3, 2020 to the revolving credit facility to reduce the revolving credit facility to $150 million upon the consummation of sale of our equity interests in Barrow Hanley.

(2)We paid down and terminated the non-recourse seed capital facility set to expire on January 15, 2021 in the third quarter.

Revolving Credit Facility

On August 20, 2019, we entered into a $450.0 million senior unsecured revolving credit facility with Citibank, as administrative agent and issuing bank, and RBC Capital Markets and BMO Capital Markets Corp. as joint lead arrangers and joint book runners (the “Credit Facility”). Subject to certain conditions, we may borrow up to an additional $150.0 million under the Credit Facility. The Credit Facility has a maturity date of August 22, 2022. The previous revolving credit facility with Citibank with maturity date of October 15, 2019 was terminated. Borrowings under the Credit Facility bear interest, at our option, at either the per annum rate equal to (a) the greatest of (i) the prime rate, (ii) the federal funds effective rate plus 0.5% and (iii) the one month Adjusted LIBO Rate plus 1.0%, plus, in each case an additional amount based on our credit rating or (b) the London interbank offered rate for a period, at our election, equal to one, two, three or six months plus an additional amount ranging from 1.125% to 2.00%, with such additional amount based on our credit rating. In addition, we are charged a commitment fee based on the average daily unused portion of the Credit Facility at a per annum rate ranging from 0.125% to 0.45%, with such amount based on our credit rating.

On September 3, 2020, we along with the Royal Bank of Canada, BMO Harris Bank, N.A., Bank of China, New York Branch, Wells Fargo Bank, National Association, Barclays Bank PLC, Morgan Stanley Bank, N.A., Bank of America N.A., the Bank of New York Mellon and Citibank, N.A., as an issuing bank and administrative agent (collectively, the “Lenders”), entered into an amendment (the “Amendment”) to the Revolving Credit Agreement dated as of August 20, 2019 (the “Credit Agreement”). The Amendment includes changes to the Credit Agreement to permit the sale of the Company's equity interests in Barrow Hanley (the “Barrow Hanley Sale”). Under the Credit Agreement, the Barrow Hanley Sale required consent of the Lenders given that Barrow Hanley accounted for more

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than 10% of our consolidated Adjusted EBITDA. The Amendment provides that, effective immediately upon the consummation of the Barrow Hanley Sale, the Lenders commitments under the Credit Agreement shall be $150 million.

Under the Credit Facility, the ratio of third party borrowings to trailing twelve months Adjusted EBITDA cannot exceed 3.0x, and the interest coverage ratio must not be less than 4.0x. At September 30, 2020, our ratio of third party borrowings to trailing twelve months Adjusted EBITDA was 2.0x and our interest coverage ratio was 8.1x.

At September 30, 2020, our ratio of third party borrowings net of total cash and cash equivalents to trailing twelve months Adjusted EBITDA was 1.5x.

Moody’s Investor Service, Inc. and Standard & Poor’s have each assigned an investment-grade rating to our senior, unsecured long-term indebtedness. As a result of the assignment of the credit ratings, our interest rate on outstanding borrowings was set at LIBOR + 1.50% and the commitment fee on the unused portion of the revolving credit facility was set at 0.20%.

Non-recourse seed capital facility

In July 2017, we entered into a non-recourse seed capital facility collateralized by our seed capital holdings and can borrow up to $65.0 million, so long as the borrowing does not represent more than 50% of the value of the seed capital collateral. At September 30, 2020, amounts outstanding under this non-recourse seed capital facility amounted to $0.0 million. During the three months ended September 30, 2020, we paid down and terminated the non-recourse seed capital facility that was set to expire on January 15, 2021. Since this facility is non-recourse to us beyond the seed investments themselves, drawdowns under this facility are excluded from our third party debt levels for purposes of calculating our credit ratio covenants under the Credit Facility.

As of September 30, 2020, we were in compliance with the required covenants related to borrowings and debt facilities.

Other Compensation Liabilities

Other compensation liabilities principally consist of cash-settled Affiliate equity and profit interests liabilities held by certain Affiliate key employees, and voluntary deferred compensation plans. The following table summarizes our other long-term liabilities:

	September 30, 2020		December 31, 2019
($ in millions)
Share-based payments liability	$	207.6	$	221.8
Affiliate profit interests liability	40.1		94.8
Employee equity	247.7		316.6
Voluntary deferral plan liability	65.8		88.3
Total(1)	$	313.5	$	404.9

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(1)Total other compensation liabilities excludes balance of Affiliate other compensation liabilities classified as held for sale on the Condensed Consolidated Balance Sheet. See discussion of Divestitures and Held for Sale in Note 3 of the accompanying Condensed Consolidated Financial Statements.

Share-based payments liability represents the value of Affiliate key employee-owned equity that may under certain circumstances be repurchased by us that is considered an equity award under U.S. GAAP based on the terms and conditions attached to these interests. Affiliate profit interests liability represents the value of Affiliate key employee-owned equity that may under certain circumstances be repurchased by us that is not considered an equity award under U.S. GAAP, but rather a form of compensation arrangement, based on the terms and conditions attached to these interests. Our obligation in any given period in respect of funding these potential repurchases of Affiliate equity is limited to only that portion that may be put to us by Affiliate key employees, which is typically capped annually under the terms of these arrangements such that we are not required to repurchase more than we can reasonably recycle by re-granting the interests in lieu of cash variable compensation owed to Affiliate key employees.

Certain of our and our Affiliates’ key employees are eligible to participate in our voluntary deferral plan, or VDP, which provides our senior personnel the opportunity to voluntarily defer a portion of their compensation. There is a voluntary deferral plan investment balance included in investments on the Consolidated Balance Sheets that corresponds to this deferral liability.

Critical Accounting Policies and Estimates

There have been no significant changes to the critical accounting policies and estimates disclosed in our most recent Form 10-K for the year ended December 31, 2019. Critical accounting policies and estimates are those that require management’s most difficult, subjective or complex judgments and would therefore be deemed the most critical to an understanding of our results of operations and financial condition.

    Recent Accounting Developments

See discussion of Recent Accounting Developments in Note 2 of the accompanying Condensed Consolidated Financial Statements.

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Forward Looking Statements

This Quarterly Report on Form 10-Q includes forward-looking statements, including information relating to our pending divestiture of Barrow Hanley, including the expected timing for the closing of the divestiture, anticipated revenues, margins, cash flows or earnings, anticipated future performance of our business and our Affiliates or particular segments, our expected future net cash flows, our anticipated expense levels, capital management, expected impact of the COVID-19 pandemic on our business, financial condition, results of operations and cash flows,and/or expectations regarding market conditions. The words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “can be,” “may be,” “aim to,” “may affect,” “may depend,” “intends,” “expects,” “believes,” “estimate,” “project,” and other similar expressions are intended to identify such forward-looking statements. Such statements are subject to various known and unknown risks and uncertainties and we caution readers that any forward-looking information provided by or on behalf of us is not a guarantee of future performance.

Actual results may differ materially from those in forward-looking information as a result of various factors, some of which are beyond our control, including but not limited to those discussed above and elsewhere in this Quarterly Report on Form 10-Q, in our most recent Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 2, 2020, in our Quarterly Report on Form 10-Q, filed with the Securities Exchange Commission on May 11, 2020 and subsequent SEC filings. Due to such risks and uncertainties and other factors, we caution each person receiving such forward-looking information not to place undue reliance on such statements. Further, such forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and we undertake no obligations to update any forward looking statement to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect the occurrence of unanticipated events.

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Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

Market Risk

Our exposure to market risk is directly related to the role of our Affiliates as asset managers. Substantially all of our investment management revenues are derived from our Affiliates’ agreements with their clients. Under these agreements, the revenues we receive are based on the value of our assets under management or the investment performance on client accounts for which we earn performance fees. Accordingly, our revenues and net income may decline as a result of our assets under management decreasing due to depreciation of our investment portfolios. In addition, such depreciation could cause our clients to withdraw their funds in favor of investments offering higher returns or lower risk, which would cause our revenues and net income to decline further.

Our model for assessing the impact of market risk on our results uses September 30, 2020 ending AUM and management fee rates as the basis for management fee revenue calculations. On July 24 2020, we completed the sale of all of our equity interests in Copper Rock to Spouting Rock. Accordingly, Copper Rock is not included in AUM as of September 30, 2020. On July 26, 2020, we entered into a purchase and sale agreement to sell our interests in Barrow Hanley to Perpetual. The transaction is expected to close in the fourth quarter of 2020. Barrow Hanley will be included in our AUM until the transaction closes.With respect to performance fee revenue, we assume that relative investment performance is the same as in the past four quarters ended September 30, 2020. Therefore, market-driven changes in performance fees, which are typically based on relative performance versus market indices, reflect changes in the underlying AUM used in the calculation rather than differences in relative performance as a result of a changed market environment. The basis for the analysis is performance fees earned for the twelve months ended September 30, 2020.

Our profit sharing economic structure results in a sharing of market risk between us and our employees. Approximately 50% of our ENI cost structure is variable, representing variable compensation and key employee distributions for the Affiliates. These variable expenses generally are linked in a formulaic manner to the profitability of the business after covering operating expenses, which include base compensation and benefits, general and administrative expenses, and depreciation and amortization. In modeling the impact of market risk, we assume that these operating expenses remain unchanged, but the resulting impact on profit driven by increases or decreases in revenue will change variable compensation and Affiliate key employee distributions in line with their formulaic calculations. Any change in pre-tax profit is tax-affected at our statutory combined state and federal rate of approximately 27% to calculate profit after tax.

The value of our assets under management was $184.8 billion as of September 30, 2020. A 10% increase or decrease in the value of our assets under management, if proportionally distributed over all of our investment strategies, asset classes and client relationships, would cause an annualized increase or decrease in our gross management fee revenues of approximately $72.1 million based on our current weighted average fee rate of approximately 39.0 basis points, including our equity-accounted Affiliate. Approximately $18.5 billion, or 10%, of our AUM, including our equity-accounted Affiliate, are in accounts subject to performance fees. Of these assets, approximately 70% are in accounts for which performance fees, or management fee adjustments, are calculated based on investment return that differs from the relative benchmark returns. Assuming the market change does not impact our relative performance, a 10% increase or decrease in AUM would have a $0.9 million impact to our gross performance fees based on our trailing twelve month performance fees of $9.3 million as of September 30, 2020. The combined impact on our management fees and performance fees would have a direct impact on our earnings and result in an annual change of approximately $26.6 million in our post-tax economic net income, given our current cost structure and operating model.

Equity market risk, interest rate risk, and foreign currency risk are the market risks that could have the greatest impact on our management fees, performance fees and our business profitability. Impacts on our management and performance fees can be calculated based on the percentage of AUM constituting equity investments, fixed income investments, or foreign currency denominated investments, respectively, multiplied by the relevant weighted average management fee and performance fee attributable to that asset class.

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•Our equity markets-based AUM includes U.S. equities (including small cap through large cap securities and substantially value or blended investment styles) and global/non-U.S. equities (including global, non-U.S. and emerging markets securities). A 10% increase or decrease in equity markets would cause our $148.2 billion of equity assets under management to increase or decrease by $14.8 billion, resulting in a change in annualized management fee revenue of $52.3 million and an annual change in post-tax economic net income of approximately $19.9 million, given our current cost structure, operating model, and weighted average fee rate of 35 basis points at the mix of strategies as of September 30, 2020. Approximately $12.5 billion, or 8%, of our equity markets-based AUM are in accounts subject to performance fees. Of these assets, approximately 99% are in accounts for which performance fees, or management fee adjustments, are calculated based on investment return that differs from the relative benchmark returns. Assuming the market change does not impact our relative performance, a 10% change in equity markets would not have a material impact from performance fees on our post-tax economic net income, given our current cost structure and operating model.

•Foreign currency AUM includes equity and alternative assets denominated in foreign currencies. A 10% increase or decrease in foreign exchange rates against the U.S. dollar would cause our $91.2 billion of foreign currency denominated AUM to increase or decrease by $9.1 billion, resulting in a change in annualized management fee revenue of $35.8 million and an annual change in post-tax economic net income of $13.9 million, based on weighted average fees earned on our foreign currency denominated AUM of 39 basis points at the mix of strategies as of September 30, 2020. Approximately $11.5 billion, or 13%, of our foreign currency denominated AUM are in accounts subject to performance fees. Of these assets, approximately 85% are in accounts for which performance fees, or management fee adjustments, are calculated based on investment return that differs from the relative benchmark returns. Assuming the market change does not impact our relative performance, a 10% change in foreign currency exchange rates would not have a material impact from performance fees on our post-tax economic net income, given our current cost structure and operating model.

•Fixed income AUM includes instruments in government bonds, corporate bonds and other fixed income investments in the United States. A change in interest rates, resulting in a 10% increase or decrease in the value of our total fixed income AUM of $12.7 billion, would cause AUM to rise or fall by approximately $1.3 billion. Based on our fixed income weighted average fee rates of 19 basis points, annualized management fees would change by $2.4 million and post-tax economic net income would change by $0.9 million annually. There are currently no material fixed income assets earning performance fees as of September 30, 2020.

While the analysis above assumes that market changes occur in a uniform manner across the relevant portfolio, because of our declining fee rates for larger relationships and differences in our fee rates across asset classes, a change in the composition of our assets under management, in particular an increase in the proportion of our total assets under management attributable to strategies, clients or relationships with lower effective fee rates, could have a material negative impact on our overall weighted average fee rate.

As is customary in the asset management industry, clients invest in particular strategies to gain exposure to certain asset classes, which exposes their investment to the benefits and risks of such asset classes. We have not adopted a corporate-level risk management policy regarding client assets, nor have we attempted to hedge at the corporate level or within individual strategies the market risks that would affect the value of our overall assets under management and related revenues. Any reduction in the value of our assets under management would result in a reduction in our revenues.

Interest Rate Risk

We are exposed to interest rate risks primarily through borrowings under our Credit Facility. Interest on borrowings under the Credit Facility is based upon variable interest rates. Borrowings under our Credit Facility were $80.0 million as of September 30, 2020. We currently do not hedge against interest rate risk. As of September 30, 2020, a hypothetical 10% change in interest rates would have resulted in a $0.3 million change to our interest expense during the nine months ended September 30, 2020.

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Item 4.  Controls and Procedures.

Controls and Procedures

Our management, including our principal executive officer and our principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) at September 30, 2020. Based on this evaluation, our principal executive officer and our principal financial officer have concluded that our disclosure controls and procedures are effective.

Internal Control over Financial Reporting

There have been no changes in internal control over financial reporting during the quarter ended September 30, 2020 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1.         Legal Proceedings.

From time to time, we and our Affiliates may be parties to various claims, suits and complaints in the ordinary course of our business. Although the amount of liability that may result from these matters cannot be ascertained, we do not currently believe that, in the aggregate, they will result in liabilities material to our consolidated financial condition, future results of operations or cash flow.

Item 1A.  Risk Factors

Except as disclosed in Item 1A in the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020, there have been no material changes in the risk factors described in the Company's Annual Report on Form 10-K for the year ended December 31, 2019.

Item 6.         Exhibits.

Exhibit No.	Description
2.1	Equity Purchase Agreement, dated as of July 26, 2020, by and among BrightSphere Intermediary (BHMS) LLC, BHMS Investment GP LLC, BHMS Investment Holdings LP, Barrow, Hanley, Mewhinney & Strauss, LLC., Perpetual US Holding Company, Inc., and, solely with respect to Section 11.16 thereof, Perpetual Limited, incorporated herein by reference to Exhibit 2.1 to the Current Report on Form 8-K filed on July 27, 2020.
3.1	Amended and Restated Certificate of Incorporation of BrightSphere Investment Group Inc., adopted as of July 12, 2019, incorporated herein by reference to Exhibit 3.1 to the Current Report on Form 8-K12B filed on July 15, 2019.
3.2	Amended and Restated Bylaws of BrightSphere Investment Group Inc., adopted as of July 12, 2019, incorporated herein by reference to Exhibit 3.2 to the Current Report on Form 8-K12B filed on July 15, 2019.
10.1	Amendment No. 1, dated September 3, 2020, to the Revolving Credit Agreement dated August 20, 2019, among BrightSphere Investment Group Inc., the lenders from time to time party thereto and Citibank, N.A., as administrative agent, incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on September 4, 2020.
31.1*	Certification of the Company’s principal executive officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of the Company’s principal financial officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**	Certification of the Company’s principal executive officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**	Certification of the Company’s principal financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

91

Exhibit No.	Description
101*	Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019, (ii) the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2020 and 2019, (iii) the Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2020 and 2019, (iv) the Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2020 and 2019, (v) the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019, and (vi) the Notes to Financial Statements.
104*	The cover page of this Quarterly Report on Form 10-Q, formatted in Inline eXtensible Business Reporting Language

* Filed herewith

** Furnished herewith

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		BrightSphere Investment Group Inc.
Dated:	November 6, 2020
		By:	/s/ Suren Rana
			Suren Rana President and Chief Executive Officer (principal executive officer)
			/s/ Christina Wiater
			Christina Wiater Senior Vice President and Principal Financial Officer (principal financial officer and principal accounting officer)

93

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Suren Rana, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of BrightSphere Investment Group Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 6, 2020  

/s/ Suren Rana

Suren Rana

President and Chief Executive Officer

(principal executive officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Christina Wiater, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of BrightSphere Investment Group Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 6, 2020  

/s/ Christina Wiater

Christina Waiter

Senior Vice President and Principal Financial Officer

(principal financial officer and principal accounting officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Suren Rana, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge, the Quarterly Report on Form 10-Q of BrightSphere Investment Group Inc. for the quarterly period ended September 30, 2020 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such Report fairly presents in all material respects the financial condition and results of operations of BrightSphere Investment Group Inc. for the periods covered by the Report. The foregoing certification is being furnished to the Securities and Exchange Commission as part of the Report. A signed original of this statement has been provided to BrightSphere Investment Group Inc. and will be retained by BrightSphere Investment Group Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

Date:	November 6, 2020	/s/ Suren Rana
		Name: Suren Rana
		Title: President and Chief Executive Officer
		(principal executive officer)

EX-32.2

Exhibit 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Christina Wiater, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge, the Quarterly Report on Form 10-Q of BrightSphere Investment Group Inc. for the quarterly period ended September 30, 2020 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such Report fairly presents in all material respects the financial condition and results of operations of BrightSphere Investment Group Inc. for the periods covered by the Report. The foregoing certification is being furnished to the Securities and Exchange Commission as part of the Report. A signed original of this statement has been provided to BrightSphere Investment Group Inc. and will be retained by BrightSphere Investment Group Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

Date:	November 6, 2020	/s/ Christina Wiater
		Name: Christina Wiater
		Title: Senior Vice President and Principal Financial Officer
		(principal financial officer and principal accounting officer)

XML

Cover Page - shares	9 Months Ended
	Sep. 30, 2020	Nov. 04, 2020
Entity Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2020
Document Transition Report	false
Entity File Number	001-38979
Entity Registrant Name	BRIGHTSPHEREInvestment Group Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	47-1121020
Entity Address, Address Line One	200 Clarendon Street, 53rd Floor
Entity Address, City or Town	Boston,
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	02116
City Area Code	617
Local Phone Number	369-7300
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (in shares)		79,885,287
Entity Central Index Key	0001748824
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q3
Amendment Flag	false
Common Stock
Entity Information [Line Items]
Title of 12(b) Security	Common stock, par value $0.001 per share
Trading Symbol	BSIG
Security Exchange Name	NYSE
4.800% Notes due 2026
Entity Information [Line Items]
Title of 12(b) Security	4.800% Notes due 2026
Trading Symbol	BSIG 26
Security Exchange Name	NYSE
5.125% Notes Due 2031
Entity Information [Line Items]
Title of 12(b) Security	5.125% Notes due 2031
Trading Symbol	BSA
Security Exchange Name	NYSE

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Millions	Sep. 30, 2020	Dec. 31, 2019
Assets
Right of use assets	$ 93.7	$ 37.7
Investments (includes balances reported at fair value)	218.4	376.9
Goodwill	182.1	274.6
Assets held for sale:
Total assets	1,417.2	1,419.7
Liabilities and stockholders’ equity
Operating lease liabilities	110.0	42.5
Liabilities held for sale:
Total liabilities	1,145.8	1,221.3
Commitments and contingencies
Equity:
Total equity and redeemable non-controlling interests in consolidated Funds	271.4	198.4
Total liabilities and equity	1,417.2	1,419.7
Consolidated Entity Excluding Consolidated Funds
Assets
Cash and cash equivalents	129.8	111.3
Investment advisory fees receivable	101.1	151.9
Income taxes receivable	24.7	26.2
Fixed assets, net	71.8	65.8
Investments (includes balances reported at fair value)	116.5	186.3
Acquired intangibles, net	60.0	65.1
Goodwill	182.1	274.6
Other assets	56.5	52.0
Deferred tax assets	212.7	243.6
Assets held for sale:
Assets held for sale	151.0	0.0
Liabilities and stockholders’ equity
Accounts payable and accrued expenses	27.2	41.5
Accrued incentive compensation	120.7	137.8
Due to OM plc	3.4	3.7
Other compensation liabilities	313.5	404.9
Accrued income taxes	13.0	12.8
Other liabilities	3.3	3.1
Non-recourse borrowings	0.0	35.0
Third party borrowings	474.2	533.8
Liabilities held for sale:
Liabilities held for sale	80.4	0.0
Equity:
Common stock (par value $0.001; 80,117,415 and 85,886,371 shares, respectively, issued)	0.1	0.1
Additional paid-in capital	501.2	534.3
Retained deficit	(373.7)	(452.5)
Accumulated other comprehensive loss	(16.2)	(17.5)
Non-controlling interests	1.4	1.3
Consolidated Funds
Assets
Investments (includes balances reported at fair value)	101.9	190.6
Other assets	0.0	4.9
Assets held for sale:
Assets held for sale	114.3	0.0
Cash and cash equivalents, restricted	1.1	9.7
Liabilities and stockholders’ equity
Accounts payable and accrued expenses	0.0	5.2
Other liabilities	0.0	0.1
Liabilities held for sale:
Liabilities held for sale	0.1	0.0
Securities sold, not yet purchased, at fair value	0.0	0.9
Redeemable non-controlling interests in consolidated Funds	85.6	83.9
Equity:
Non-controlling interests	$ 73.0	$ 48.8

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Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions	Sep. 30, 2020	Dec. 31, 2019
Investments at fair value	$ 114.7	$ 303.8
Consolidated Entity Excluding Consolidated Funds
Investments at fair value	$ 114.7	$ 184.3
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, issued (in shares)	80,117,415	85,886,371
Consolidated Funds
Investments at fair value	$ 0.0	$ 119.5

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Condensed Consolidated Statements of Operations - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Revenue:
Revenue	$ 178,200,000	$ 196,400,000	$ 527,400,000	$ 609,800,000
Total revenue	182,400,000	197,800,000	539,700,000	612,100,000
Operating expenses:
Impairment of goodwill	0	0	16,400,000	0
Amortization of acquired intangibles	1,600,000	1,600,000	5,100,000	4,900,000
Total operating expenses	141,900,000	145,900,000	398,900,000	445,600,000
Operating income	40,500,000	51,900,000	140,800,000	166,500,000
Non-operating income and (expense):
Gain on sale of Affiliate	7,200,000		7,200,000
Net consolidated Funds’ investment gains	6,000,000.0	7,000,000.0	17,300,000	25,200,000
Total non-operating income (loss)	6,300,000	(900,000)	2,900,000	2,900,000
Income from continuing operations before taxes	46,800,000	51,000,000.0	143,700,000	169,400,000
Income tax expense (benefit)	12,800,000	(32,000,000.0)	33,700,000	3,700,000
Income from continuing operations	34,000,000.0	83,000,000.0	110,000,000.0	165,700,000
Gain (loss) on disposal of discontinued operations, net of tax	0	0	0	0
Net income	34,000,000.0	83,000,000.0	110,000,000.0	165,700,000
Net income (loss) attributable to non-controlling interests in consolidated Funds	(3,200,000)	7,600,000	21,300,000	9,600,000
Net income attributable to controlling interests	$ 37,200,000	$ 75,400,000	$ 88,700,000	$ 156,100,000
Earnings per share (basic) attributable to controlling interests (in dollars per share)	$ 0.46	$ 0.84	$ 1.08	$ 1.68
Earnings per share (diluted) attributable to controlling interests (in dollars per share)	0.46	0.84	1.08	1.68
Continuing operations earnings per share (basic) attributable to controlling interests (in dollars per share)	0.46	0.84	1.08	1.68
Continuing operations earnings per share (diluted) attributable to controlling interests (in dollars per share)	$ 0.46	$ 0.84	$ 1.08	$ 1.68
Weighted average common stock outstanding (in shares)	80,001,360	89,970,871	81,832,607	92,996,289
Weighted average diluted common stock outstanding (in shares)	80,851,538	89,972,300	82,126,530	93,076,064
Consolidated Entity Excluding Consolidated Funds
Revenue:
Other revenue	$ 1,600,000	$ 1,400,000	$ 5,200,000	$ 4,300,000
Operating expenses:
Compensation and benefits	109,700,000	108,000,000.0	284,000,000.0	332,800,000
General and administrative expense	25,400,000	31,700,000	77,600,000	95,300,000
Impairment of goodwill			16,400,000	0
Amortization of acquired intangibles	1,600,000	1,600,000	5,100,000	4,900,000
Depreciation and other amortization	5,200,000	4,400,000	15,600,000	12,200,000
Non-operating income and (expense):
Investment income (loss)	3,900,000	2,300,000	(3,200,000)	11,400,000
Interest income	0	400,000	500,000	1,800,000
Interest expense	(6,900,000)	(8,300,000)	(22,100,000)	(24,100,000)
Gain on sale of Affiliate	7,200,000	0	7,200,000	0
Consolidated Funds
Revenue:
Total revenue	1,400,000	1,900,000	4,600,000	4,900,000
Operating expenses:
Total operating expenses	0	200,000	200,000	400,000
Non-operating income and (expense):
Net consolidated Funds’ investment gains	2,100,000	4,700,000	20,500,000	13,800,000
Net income (loss) attributable to non-controlling interests in consolidated Funds	(3,200,000)	7,600,000	21,300,000	9,600,000
Management fees
Revenue:
Revenue	178,200,000	196,400,000	527,400,000	609,800,000
Management fees | Consolidated Entity Excluding Consolidated Funds
Revenue:
Revenue	178,200,000	196,400,000	527,400,000	609,800,000
Performance fees | Consolidated Entity Excluding Consolidated Funds
Revenue:
Revenue	$ 1,200,000	$ (1,900,000)	$ 2,500,000	$ (6,900,000)

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Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Net income	$ 34.0	$ 83.0	$ 110.0	$ 165.7
Other comprehensive income (loss):
Amortization related to derivative securities, net of tax	0.6	0.6	1.7	1.8
Foreign currency translation adjustment	1.4	(0.8)	(0.4)	(0.9)
Total other comprehensive income (loss)	2.0	(0.2)	1.3	0.9
Total comprehensive income attributable to controlling interests	39.2	75.2	90.0	157.0
Consolidated Funds
Other comprehensive income (loss):
Comprehensive income (loss) attributable to non-controlling interests in consolidated Funds	$ (3.2)	$ 7.6	$ 21.3	$ 9.6

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Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($) shares in Millions, $ in Millions	Total	Consolidated Funds	Common Stock Consolidated Entity Excluding Consolidated Funds	Additional paid-in capital	Additional paid-in capital Consolidated Entity Excluding Consolidated Funds	Retained earnings (deficit) Consolidated Entity Excluding Consolidated Funds	Accumulated other comprehensive income (loss) Consolidated Entity Excluding Consolidated Funds	Total stockholders’ equity	Total stockholders’ equity Consolidated Entity Excluding Consolidated Funds	Non- controlling interests Consolidated Entity Excluding Consolidated Funds	Non- controlling interests Consolidated Funds
Beginning balance (in shares) at Dec. 31, 2018			105.2
Beginning balance at Dec. 31, 2018	$ 134.2		$ 0.1		$ 764.6	$ (640.5)	$ (20.9)		$ 103.3	$ 1.6	$ 29.3
Increase (Decrease) in Stockholders' Equity
Issuance of common stock (in shares)			0.2
Repurchase of common stock (in shares)			(16.6)
Repurchase of common stock	(209.3)				(209.3)				(209.3)
Capital contributions (redemptions)	4.9	$ 36.3									4.9
Equity-based compensation	5.1				5.1				5.1
Foreign currency translation adjustment	(0.9)						(0.9)		(0.9)
Amortization related to derivative securities, net of tax	1.8						1.8		1.8
Other changes in non-controlling interests	0.3									0.3
Dividends	(27.3)					(27.3)			(27.3)
Net income attributable to controlling interests	156.1
Net income (loss)	162.0					156.1			156.1		5.9
Ending balance (in shares) at Sep. 30, 2019			88.8
Ending balance at Sep. 30, 2019	70.8		$ 0.1		560.4	(511.7)	(20.0)		28.8	1.9	40.1
Beginning balance at Dec. 31, 2018		41.9
Increase (Decrease) in redeemable non-controlling interest in consolidated Funds
Capital contributions (redemptions)	4.9	36.3									4.9
Net income (loss)		3.7
Ending balance at Sep. 30, 2019		81.9
Beginning balance at Dec. 31, 2018	176.1
Increase (Decrease) in total equity and redeemable non-controlling interest in consolidated Funds
Issuance of common stock	0.0
Repurchase of common stock	(209.3)
Capital contributions (redemptions)	41.2
Equity-based compensation	5.1
Foreign currency translation adjustment	(0.9)
Amortization related to derivative securities, net of tax	1.8
Other changes in non-controlling interests	0.3									0.3
Dividends	(27.3)
Net income (loss)	165.7
Ending balance at Sep. 30, 2019	152.7
Beginning balance (in shares) at Jun. 30, 2019			91.6
Beginning balance at Jun. 30, 2019	21.8		$ 0.1		585.2	(578.2)	(19.8)		(12.7)	1.8	32.7
Increase (Decrease) in Stockholders' Equity
Repurchase of common stock (in shares)			(2.8)
Repurchase of common stock	(25.5)				(25.5)				(25.5)
Capital contributions (redemptions)	0.9	(1.0)									0.9
Equity-based compensation	0.7				0.7				0.7
Foreign currency translation adjustment	(0.8)						(0.8)		(0.8)
Amortization related to derivative securities, net of tax	0.6						0.6		0.6
Other changes in non-controlling interests	0.1									0.1
Dividends	(8.9)					(8.9)			(8.9)
Net income attributable to controlling interests	75.4
Net income (loss)	81.9					75.4			75.4		6.5
Ending balance (in shares) at Sep. 30, 2019			88.8
Ending balance at Sep. 30, 2019	70.8		$ 0.1		560.4	(511.7)	(20.0)		28.8	1.9	40.1
Beginning balance at Jun. 30, 2019		81.8
Increase (Decrease) in redeemable non-controlling interest in consolidated Funds
Capital contributions (redemptions)	0.9	(1.0)									0.9
Net income (loss)		1.1
Ending balance at Sep. 30, 2019		81.9
Beginning balance at Jun. 30, 2019	103.6
Increase (Decrease) in total equity and redeemable non-controlling interest in consolidated Funds
Repurchase of common stock	(25.5)
Capital contributions (redemptions)	(0.1)
Equity-based compensation	0.7
Foreign currency translation adjustment	(0.8)
Amortization related to derivative securities, net of tax	0.6
Other changes in non-controlling interests	0.1									0.1
Dividends	(8.9)
Net income (loss)	83.0
Ending balance at Sep. 30, 2019	152.7
Beginning balance (in shares) at Dec. 31, 2019			85.9
Beginning balance at Dec. 31, 2019	114.5		$ 0.1		534.3	(452.5)	(17.5)		64.4	1.3	48.8
Increase (Decrease) in Stockholders' Equity
Issuance of common stock (in shares)			0.1
Issuance of common stock	0.2			$ 0.2				$ 0.2
Retirement of common stock (in shares)			(0.2)
Repurchase of common stock (in shares)			(5.7)
Repurchase of common stock	(35.3)				(35.3)				(35.3)
Capital contributions (redemptions)	1.4	130.1									1.4
Equity-based compensation	2.0				2.0				2.0
Foreign currency translation adjustment	(0.4)						(0.4)		(0.4)
Amortization related to derivative securities, net of tax	1.7						1.7		1.7
Other changes in non-controlling interests	0.1									0.1
Dividends	(9.9)					(9.9)			(9.9)
Net income attributable to controlling interests	88.7
Net income (loss)	111.5					88.7			88.7		22.8
Ending balance (in shares) at Sep. 30, 2020			80.1
Ending balance at Sep. 30, 2020	185.8		$ 0.1		501.2	(373.7)	(16.2)		111.4	1.4	73.0
Beginning balance at Dec. 31, 2019		83.9
Increase (Decrease) in redeemable non-controlling interest in consolidated Funds
Capital contributions (redemptions)	1.4	130.1									1.4
Net de-consolidation of Funds		(126.8)
Net income (loss)		(1.6)
Ending balance at Sep. 30, 2020		85.6
Beginning balance at Dec. 31, 2019	198.4
Increase (Decrease) in total equity and redeemable non-controlling interest in consolidated Funds
Issuance of common stock	0.2
Repurchase of common stock	(35.3)
Capital contributions (redemptions)	131.5
Equity-based compensation	2.0
Foreign currency translation adjustment	(0.4)
Amortization related to derivative securities, net of tax	1.7
Other changes in non-controlling interests	0.1									0.1
Net de-consolidation of Funds	(126.8)
Dividends	(9.9)
Net income (loss)	109.9
Ending balance at Sep. 30, 2020	271.4
Beginning balance (in shares) at Jun. 30, 2020			80.1
Beginning balance at Jun. 30, 2020	152.6		$ 0.1		500.6	(410.1)	(18.2)		72.4	1.4	78.8
Increase (Decrease) in Stockholders' Equity
Issuance of common stock	0.2			$ 0.2				$ 0.2
Capital contributions (redemptions)	0.3	129.7									0.3
Equity-based compensation	0.4				0.4				0.4
Foreign currency translation adjustment	1.4						1.4		1.4
Amortization related to derivative securities, net of tax	0.6						0.6		0.6
Other changes in non-controlling interests	0.0									0.0
Dividends	(0.8)					(0.8)			(0.8)
Net income attributable to controlling interests	37.2
Net income (loss)	31.1					37.2			37.2		(6.1)
Ending balance (in shares) at Sep. 30, 2020			80.1
Ending balance at Sep. 30, 2020	185.8		$ 0.1		$ 501.2	$ (373.7)	$ (16.2)		$ 111.4	1.4	73.0
Beginning balance at Jun. 30, 2020		79.9
Increase (Decrease) in redeemable non-controlling interest in consolidated Funds
Capital contributions (redemptions)	0.3	129.7									$ 0.3
Net de-consolidation of Funds		(126.8)
Net income (loss)		2.8
Ending balance at Sep. 30, 2020		$ 85.6
Beginning balance at Jun. 30, 2020	232.5
Increase (Decrease) in total equity and redeemable non-controlling interest in consolidated Funds
Issuance of common stock	0.2
Repurchase of common stock	0.0
Capital contributions (redemptions)	130.0
Equity-based compensation	0.4
Foreign currency translation adjustment	1.4
Amortization related to derivative securities, net of tax	0.6
Other changes in non-controlling interests	0.0									$ 0.0
Net de-consolidation of Funds	(126.8)
Dividends	(0.8)
Net income (loss)	33.9
Ending balance at Sep. 30, 2020	$ 271.4

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Condensed Consolidated Statements of Changes in Shareholders’ Equity (Parenthetical) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Statement of Stockholders' Equity [Abstract]
Dividends (in dollars per share)	$ 0.01	$ 0.10	$ 0.12	$ 0.30

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Condensed Consolidated Statements of Cash Flows - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Cash flows from operating activities:
Net income	$ 34,000,000.0	$ 83,000,000.0	$ 110,000,000.0	$ 165,700,000
Less: Net income attributable to non-controlling interests in consolidated Funds	3,200,000	(7,600,000)	(21,300,000)	(9,600,000)
Adjustments to reconcile net income to net cash flows from operating activities from continuing operations:
Impairment of goodwill	0	0	16,400,000	0	$ 0
Amortization of acquired intangibles	1,600,000	1,600,000	5,100,000	4,900,000
(Gain) on sale of Affiliate	(7,200,000)		(7,200,000)
Changes in operating assets and liabilities (excluding discontinued operations):
Net cash flows from operating activities of continuing operations			92,000,000.0	(183,600,000)
Net cash flows from operating activities of discontinued operations			0	0
Total net cash flows from operating activities			92,000,000.0	(183,600,000)
Cash flows from investing activities:
Net cash flows from investing activities of continuing operations			(60,100,000)	(8,800,000)
Net cash flows from investing activities of discontinued operations			0	0
Total net cash flows from investing activities			(60,100,000)	(8,800,000)
Cash flows from financing activities:
Net cash flows from financing activities of continuing operations			(9,000,000.0)	(28,400,000)
Net cash flows from financing activities of discontinued operations			0	0
Total net cash flows from financing activities			(9,000,000.0)	(28,400,000)
Effect of foreign exchange rate changes on cash and cash equivalents			0	0
Net increase (decrease) in cash and cash equivalents, including cash classified within assets held for sale			22,900,000	(220,800,000)
Net increase (decrease) in cash and cash equivalents			9,900,000	(220,800,000)
Cash and cash equivalents at beginning of period			121,000,000.0	345,500,000	345,500,000
Cash and cash equivalents at end of period (including cash at consolidated Funds classified as restricted)	130,900,000	124,700,000	130,900,000	124,700,000	$ 121,000,000.0
Supplemental disclosure of cash flow information:
Interest paid (excluding consolidated Funds)			22,300,000	24,800,000
Income taxes paid			4,100,000	41,600,000
Consolidated Entity Excluding Consolidated Funds
Adjustments to reconcile net income to net cash flows from operating activities from continuing operations:
Impairment of goodwill			16,400,000	0
Amortization of acquired intangibles	1,600,000	1,600,000	5,100,000	4,900,000
(Gain) on sale of Affiliate	(7,200,000)	0	(7,200,000)	0
Depreciation and other amortization	5,200,000	4,400,000	15,600,000	12,200,000
Amortization of debt-related costs			3,200,000	2,600,000
Amortization and revaluation of non-cash compensation awards			(17,400,000)	6,300,000
Net earnings from Affiliate accounted for using the equity method			(2,200,000)	(2,100,000)
Distributions received from equity method Affiliate			2,200,000	2,300,000
Deferred income taxes			30,100,000	7,600,000
(Gains) losses on other investments			1,700,000	(26,300,000)
Changes in operating assets and liabilities (excluding discontinued operations):
Decrease in investment advisory fees receivable			26,200,000	12,200,000
Increase in other receivables, prepayments, deposits and other assets			(2,600,000)	(8,800,000)
Decrease in accrued incentive compensation, operating lease liabilities and other liabilities			(5,900,000)	(262,800,000)
Decrease in accounts payable, accrued expenses and accrued income taxes			(9,200,000)	(54,100,000)
Net cash flows from operating activities of continuing operations			144,700,000	(149,900,000)
Purchase of investments			(13,900,000)	(18,000,000.0)
Earnings from equity method investees			(2,200,000)	(2,100,000)
Cash flows from investing activities:
Additions of fixed assets			(22,500,000)	(26,700,000)
Sale of investments			62,900,000	40,100,000
Cash flows from financing activities:
Proceeds from third party and non-recourse borrowings			80,000,000.0	485,000,000.0
Repayment of third party and non-recourse borrowings			(175,000,000.0)	(275,000,000.0)
Payment for debt issuance costs			0	(1,800,000)
Payment to OM plc for DTA Deed			0	(32,700,000)
Payment to OM plc for co-investment redemptions			(300,000)	(5,100,000)
Dividends paid to stockholders			(6,700,000)	(18,800,000)
Dividends paid to related parties			(3,300,000)	(8,600,000)
Repurchases of common stock			(35,300,000)	(212,600,000)
Less: net (increase) in cash classified within Affiliate and Consolidated funds' assets held for sale			(12,200,000)	0
Consolidated Funds
Cash flows from operating activities:
Less: Net income attributable to non-controlling interests in consolidated Funds	$ 3,200,000	$ (7,600,000)	(21,300,000)	(9,600,000)
Adjustments to reconcile net income to net cash flows from operating activities from continuing operations:
Net earnings from Affiliate accounted for using the equity method			(28,100,000)	(11,200,000)
(Gains) losses on other investments			11,300,000	6,100,000
Changes in operating assets and liabilities (excluding discontinued operations):
Net cash flows from operating activities of continuing operations			(52,700,000)	(33,700,000)
Purchase of investments			(98,200,000)	(161,100,000)
Sale of investments			66,700,000	122,100,000
Earnings from equity method investees			(28,100,000)	(11,200,000)
(Increase) decrease in receivables and other assets			(28,700,000)	4,800,000
Increase (decrease) in accounts payable and other liabilities			3,000,000.0	(4,000,000.0)
Cash flows from investing activities:
Contributions in equity method investees			(1,900,000)	(8,000,000.0)
Distributions received from equity method investees			1,300,000	3,800,000
Deconsolidation of Funds			(86,000,000.0)	0
Cash flows from financing activities:
Non-controlling interest capital raised			1,900,000	8,000,000.0
Non-controlling interest capital redeemed			(400,000)	(3,100,000)
Redeemable non-controlling interest capital raised			131,200,000	38,000,000.0
Redeemable non-controlling interest capital redeemed			(1,100,000)	(1,700,000)
Less: net (increase) in cash classified within Affiliate and Consolidated funds' assets held for sale			(800,000)	0
Supplemental disclosure of non-cash investing and financing transactions:
Payable for securities purchased by a consolidated Fund			$ 0	$ 7,400,000

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Organization and Description of the Business

9 Months Ended

Sep. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Description of the Business

Organization and Description of the Business

BrightSphere Investment Group Inc. (“BrightSphere”, “BSIG” or the “Company”), through its subsidiaries, is a global asset management company with interests in a diverse group of investment management firms (the “Affiliates”) individually headquartered in the United States. The Company provides investment management services globally to predominantly institutional investors, in asset classes that include U.S. and global equities, fixed income, alternative assets, forestry and secondary strategies focused in real estate and private equity. Fees for services are largely asset-based and, as a result, the Company’s revenue fluctuates based on the performance of financial markets and investors’ asset flows in and out of the Company’s products.

The Company’s Affiliates are organized as limited liability companies. The Company generally utilizes a profit-sharing model in structuring its compensation and ownership arrangements with its Affiliates. The Affiliates’ variable compensation is generally based on each firm’s profitability. BSIG and Affiliate key employees share in profits after variable compensation according to their respective ownership interests. The profit-sharing model results in the alignment of BSIG and Affiliate key employee economic interests, which is critical to the Company’s talent management strategy and long-term growth of the business. The Company conducts its operations through the following three reportable segments:

•Quant & Solutions—comprised of versatile, often highly-tailored strategies that leverage data and technology in a computational, factor based investment process across a range of asset classes and geographies, including Global, non-U.S., emerging markets and managed volatility equities, as well as multi-asset products.

•Alternatives—comprised of illiquid and differentiated liquid investment strategies that include private equity, real estate and real assets, including forestry, as well as a growing suite of liquid alternative capabilities in areas such as long/short, market neutral and absolute return.

•Liquid Alpha(1)—comprised of specialized investment strategies with a focus on alpha-generation across market cycles in long-only small-, mid-, and large-cap U.S., global, non-U.S. and emerging markets equities, as well as fixed income.

(1)In July 2020, the Company completed the sale of Copper Rock Capital Partners LLC (“Copper Rock”) and announced the divestiture of Barrow, Hanley, Mewhinney & Strauss, LLC (“Barrow Hanley”). See Note 3, Divestitures and Assets and Liabilities Held for Sale for further discussion of divestitures and Affiliate assets and liabilities held for sale.

Prior to 2014, the Company was a wholly-owned subsidiary of Old Mutual plc (“OM plc”), an international long-term savings, protection and investment group, listed on the London Stock Exchange. On October 15, 2014, the Company completed the initial public offering (the “Offering”) by OM plc pursuant to the Securities Act of 1933, as amended. Additionally, between the Offering and February 25, 2019, the Company, OM plc and/or HNA Capital U.S. (“HNA”) completed a series of transactions in the Company’s shares, including a two-step transaction announced on March 25, 2017 for a sale by OM plc of a 24.95% shareholding in the Company to HNA and a two-step transaction announced on November 19, 2018 for a sale of the substantial majority of the ordinary shares held by HNA of the Company to Paulson & Co. (“Paulson”). On February 25, 2019, this transaction was completed and Paulson held approximately 21.7% of the ordinary shares of the Company. The remaining shares held by HNA were bought back by the Company in the first quarter of 2019.

On July 12, 2019, the BrightSphere corporate group, which consisted of BrightSphere Investment Group plc, a public company limited by shares incorporated under the laws of England and Wales and its operating subsidiaries (such operating subsidiaries and the holding company collectively, the “BrightSphere Group”), completed a redomestication, resulting in BrightSphere Investment Group Inc., a Delaware corporation, becoming the publicly traded parent company of BrightSphere Group (the “Redomestication”). The scheme of arrangement pursuant to which the Redomestication was effected was approved by the Company’s shareholders and the High Court of Justice of England and Wales. Effective as of the close of business on July 12, 2019, all issued ordinary shares of BrightSphere Investment Group plc were exchanged on a one-for-one basis for newly issued shares of common stock of BrightSphere Investment Group Inc. As a result, all outstanding shareholders of BrightSphere Investment Group plc became common stockholders of BrightSphere Investment Group Inc. The common stock of BrightSphere Investment Group Inc. began trading on July 15, 2019, and the Company’s trading symbol on the NYSE remained unchanged as “BSIG.” For the three months ended September 30, 2020, the Company did not repurchase any shares of common stock. For the nine months ended September 30, 2020, the Company repurchased 5,667,962 shares of common stock at an average price of $6.20 per share, or approximately $35.3 million in total, including commissions.

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Basis of Presentation and Significant Accounting Policies

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

Basis of Presentation and Significant Accounting Policies

Basis of Presentation and Significant Accounting Policies

The Company’s significant accounting policies are as follows:

Basis of presentation

These unaudited Condensed Consolidated Financial Statements reflect the historical balance sheets, statements of operations and of comprehensive income, statements of changes in stockholders’ equity and statements of cash flows of the Company. Within these Condensed Consolidated Financial Statements, OM plc, HNA, Paulson and their related entities, as defined above, are referred to as “related parties.”

The Condensed Consolidated Financial Statements are prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). In the opinion of management, all normal and recurring adjustments considered necessary for a fair presentation of the Company’s Condensed Consolidated Financial Statements have been included. All dollar amounts, except per-share data in the text and tables herein, are stated in millions unless otherwise indicated. Transactions between the Company and its related parties are included in the Condensed Consolidated Financial Statements, however, material intercompany balances and transactions among the Company, its consolidated Affiliates and consolidated Funds are eliminated in consolidation.

As a result of the Redomestication on July 12, 2019, discussed in Note 1, the Company revised its equity accounts to reflect a U.S. domiciled company presentation on the Condensed Consolidated Statements of Changes in Stockholders’ equity and the Condensed Consolidated Balance Sheets for all periods presented. The previously issued ordinary shares of BrightSphere Investment Group plc were exchanged on a one-for-one basis for newly issued shares of common stock of BrightSphere Investment Group Inc. The Redomestication and related internal reorganization was accounted for consistent with a reorganization of entities under common control in accordance with ASC 805 Business Combinations. Accordingly, the transfer of the assets and liabilities and exchange of shares was recorded in the new entity (BrightSphere Investment Group Inc.) at their carrying amounts from the transferring entity (BrightSphere Investment Group plc) at the date of transfer.

On July 26, 2020, the Company and Barrow, Hanley, Mewhinney & Strauss, LLC (“Barrow Hanley”) entered into a purchase and sale agreement with Perpetual U.S. Holdings Company Inc. (“Perpetual”), pursuant to which Perpetual agreed to purchase all of the Company’s interests in Barrow Hanley in exchange for $319 million of cash consideration, on a cash-free, debt-free basis, subject to certain customary closing and post-closing adjustments. The assets and liabilities of Barrow Hanley have been classified as held for sale as the criteria for held for sale accounting treatment was met and are presented separately in the Company’s Condensed Consolidated Balance Sheet as of September 30, 2020. See Note 3, Divestitures and Assets and Liabilities Held for Sale, in these Notes for additional information.

Certain disclosures included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (annual report on Form 10-K) are not required to be included on an interim basis in the Company’s quarterly reports on Form 10-Q. The Company has condensed or omitted these disclosures. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and notes thereto for the year ended December 31, 2019 included in the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”) on March 2, 2020. The Company’s significant accounting policies, which have been consistently applied, are summarized in those financial statements.

Use of estimates

The preparation of these Condensed Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. The three and nine months ended September 30, 2020 were characterized by heightened uncertainty due to the COVID-19 pandemic which could impact estimates and assumptions made by management. Actual results could differ from such estimates, and the differences may be material to the Condensed Consolidated Financial Statements.

Recently adopted accounting standards

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820). This standard modifies the disclosure requirements on fair value measurements and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company adopted the standard on January 1, 2020. Notably, this guidance removes the disclosure requirements for the valuation processes for Level III fair value measurements. This guidance also adds new disclosure requirements for the range and weighted average of significant unobservable inputs used to develop fair value measurements categorized within Level III of the fair value hierarchy. The Company has determined that the adoption of this standard did not have a material impact on its Condensed Consolidated Financial Statements and related disclosures.

New accounting standards not yet adopted

The Company has considered all other newly issued accounting guidance that is applicable to the Company’s operations and the preparation of the unaudited Condensed Consolidated Financial Statements, including those that have not yet been adopted. The Company does not believe that any such guidance has or will have a material effect on its Condensed Consolidated Financial Statements and related disclosures.

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Divestitures and Assets Held for Sale

9 Months Ended

Sep. 30, 2020

Discontinued Operations and Disposal Groups [Abstract]

Divestitures and Assets Held for Sale

Divestitures and Assets and Liabilities Held for Sale

Divestiture

Copper Rock Capital Partners LLC

On July 24, 2020 BrightSphere completed the sale of all of its equity interests in Copper Rock to Spouting Rock Asset Management LLC. The Company recognized a pre-tax gain of $7.2 million during the three and nine months ended September 30, 2020, respectively.

Assets and Liabilities Held for Sale

Barrow Hanley

On July 26, 2020, the Company and Barrow Hanley entered into a purchase and sale agreement with Perpetual, pursuant to which Perpetual agreed to purchase all of the Company’s interests in Barrow Hanley in exchange for $319 million of cash consideration, on a cash-free, debt-free basis, subject to certain customary closing and post-closing adjustments. The assets and liabilities of Barrow Hanley have been classified as held for sale as the criteria for held for sale accounting treatment was met and are presented separately in the Company’s Condensed Consolidated Balance Sheet. As of September 30, 2020, the Company had assets of $151.0 million and liabilities of $80.4 million of Barrow Hanley classified as held for sale. The transaction is expected to close in the fourth quarter of 2020. Operational information for Barrow Hanley is included in the Company’s Liquid Alpha segment for the three and nine months ended September 30, 2020 and 2019, respectively. Barrow Hanley’s income from continuing operations before taxes was $9.6 million and $20.4 million for the three months ended September 30, 2020 and 2019, respectively. Barrow Hanley’s income from continuing operations before taxes was $33.1 million and $60.5 million for the nine months ended September 30, 2020 and 2019, respectively. The Company also holds seed investments of $17.1 million in Barrow Hanley’s investment products as of September 30, 2020 which will be redeemed upon consummation of the sale.

The major classes of assets and liabilities comprising the Affiliate classified as held for sale are as follows at September 30, 2020 (in millions):

	September 30, 2020
Cash and cash equivalents	$	12.2
Investment advisory fees receivable	21.5
Investments, at fair value	27.0
Goodwill	76.1
Right of use assets	12.4
Other Assets	1.8
Affiliate assets held for sale	$	151.0
Accounts payable and accrued expenses	$	3.0
Accrued incentive compensation	8.3
Other compensation liabilities	56.4
Operating lease liabilities	12.7
Affiliate liabilities held for sale	$	80.4

Consolidated Funds

The Barrow Hanley purchase and sale agreement provides for the redemption of all of the Company’s seed investments with Barrow Hanley. The redemption will result in the deconsolidation of consolidated Funds considered to be VIEs. The assets and liabilities of the consolidated Funds have been classified as held for sale as the criteria for held for sale accounting treatment was met and are presented separately in the Company’s Condensed Consolidated Balance Sheet. As of September 30, 2020, the Company had assets of $114.3 million and liabilities of $0.1 million for consolidated Funds classified as held for sale. The transaction is expected to close in the fourth quarter of 2020. The consolidated Funds’ operational information is included in the Company’s Statement of Operations for the three and nine months ended September 30, 2020 and 2019. The consolidated Funds’ income from continuing operations was $4.7 million and $1.0 million for the three months ended September 30, 2020 and 2019, respectively. The consolidated Funds’ income from continuing operations was $(2.0) million and $5.4 million for the nine months ended September 30, 2020 and 2019, respectively.

The major classes of assets and liabilities comprising the consolidated Funds classified as held for sale are as follows at September 30, 2020 (in millions):

	September 30, 2020
Cash and cash equivalents	$	0.8
Investments, at fair value	112.9
Other Assets	0.6
Consolidated Funds’ assets held for sale	$	114.3
Accounts payable and accrued expenses	$	0.1
Consolidated Funds’ liabilities held for sale	$	0.1

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Investments

9 Months Ended

Sep. 30, 2020

Investments [Abstract]

Investments

Investments

Investments are comprised of the following as of the dates indicated (in millions):

	September 30, 2020		December 31, 2019
Investments of consolidated Funds held at fair value	$	—	$	119.5
Other investments held at fair value	48.6		95.5
Investments related to long-term incentive compensation plans held at fair value	66.1		88.8
Total investments held at fair value	114.7		303.8
Equity-accounted investments in Affiliates and consolidated Funds(1)	103.7		73.1
Total investments per Condensed Consolidated Balance Sheets	218.4		376.9
Investments related to long-term incentive compensation plans of an Affiliate held for sale held at fair value (Note 3)	27.0		—
Investments of consolidated Funds held for sale held at fair value (Note 3)	112.9		—
Total investments held for sale	139.9		—
Total investments and investments held for sale per Condensed Consolidated Balance Sheets	$	358.3	$	376.9

(1)Equity-accounted investments in consolidated Funds is comprised of Investments in partnership interests where a portion of return includes carried interest. These investments are accounted for within the scope of ASC 323, Investments - Equity Method and Joint Ventures because the Company has determined it has significant influence.

Investment income is comprised of the following for the three and nine months ended September 30 (in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Realized and unrealized gains (losses) on other investments held at fair value	$	2.9	$	1.5	$	(5.4)	$	9.3
Earnings from equity-accounted investments in Affiliates	1.0		0.8		2.2		2.1
Total investment income (loss) per Condensed Consolidated Statements of Operations	$	3.9	$	2.3	$	(3.2)	$	11.4

Investment gains (losses) on net consolidated funds is comprised of the following for the three and nine months ended September 30 (in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Realized and unrealized gains (losses) on consolidated Funds held at fair value	$	2.9	$	(0.4)	$	(7.6)	$	2.6
Earnings from equity-accounted investments	(0.8)		5.1		28.1		11.2
Total net consolidated Funds’ investment gains per Condensed Consolidated Statements of Operations	$	2.1	$	4.7	$	20.5	$	13.8

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Fair Value Measurements

9 Months Ended

Sep. 30, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

The following table summarizes the Company’s assets and liabilities that are measured at fair value on a recurring basis at September 30, 2020 (in millions):

	Quoted prices in active markets (Level I)		Significant other observable inputs (Level II)		Significant unobservable inputs (Level III)		Uncategorized		Total value, September 30, 2020
Assets of BSIG, consolidated Funds and assets held for sale(1)
Investments in separate accounts(2)	16.5		13.0		—		—		29.5
Investments related to long-term incentive compensation plans(3)	66.1		—		—		—		66.1
Investments in unconsolidated Funds(4)	—		—		2.7		16.4		19.1
BSIG total	82.6		13.0		2.7		16.4		114.7
Investments related to long-term incentive compensation plans(5)	27.0		—		—		—		27.0
Investments of Affiliate held for sale total (Note 3)	27.0		—		—		—		27.0
Common and preferred stock	5.9		—		—		—		5.9
Short-term investment funds	0.5		—		—		—		0.5
Bank loans	—		106.5		—		—		106.5
Investments of consolidated Funds held for sale total (Note 3)	6.4		106.5		—		—		112.9
Total fair value assets	$	116.0	$	119.5	$	2.7	$	16.4	$	254.6

The following table summarizes the Company’s assets and liabilities that are measured at fair value on a recurring basis at December 31, 2019 (in millions): 

	Quoted prices in active markets (Level I)		Significant other observable inputs (Level II)		Significant unobservable inputs (Level III)		Uncategorized		Total value December 31, 2019
Assets of BSIG and consolidated Funds(1)
Common and preferred stock	$	9.8	$	—	$	—	$	—	$	9.8
Short-term investment funds	0.1		—		—		—		0.1
Bank loans	—		109.0		—		—		109.0
Derivatives	0.5		0.1		—		—		0.6
Consolidated Funds total	10.4		109.1		—		—		119.5
Investments in separate accounts(2)	33.2		11.1		—		—		44.3
Investments related to long-term incentive compensation plans(3)	88.8		—		—		—		88.8
Investments in unconsolidated Funds(4)	—		—		3.0		48.2		51.2
BSIG total	122.0		11.1		3.0		48.2		184.3
Total fair value assets	$	132.4	$	120.2	$	3.0	$	48.2	$	303.8
Liabilities of consolidated Funds(1)
Common stock	$	(0.5)	$	—	$	—	$	—	$	(0.5)
Derivatives	(0.1)		(0.3)		—		—		(0.4)
Consolidated Funds total	(0.6)		(0.3)		—		—		(0.9)
Total fair value liabilities	$	(0.6)	$	(0.3)	$	—	$	—	$	(0.9)

(1)Assets and liabilities measured at fair value are comprised of financial investments managed by the Company's Affiliates.

Equity securities, including common and preferred stock, short-term investment funds, other investments and derivatives which are traded on a national securities exchange are stated at the last reported sales price on the day of valuation. To the extent these securities are actively traded and valuation adjustments are not applied, they are classified as Level I. The securities that trade in markets that are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs obtained by the Company from independent pricing services are classified as Level II. 

The Company obtains prices from independent pricing services that may utilize broker quotes, but generally the independent pricing services will use various other pricing techniques which take into account appropriate factors such as yield, quality, coupon rate, maturity, type of issue, trading characteristics and other data. The Company has not made adjustments to the prices provided. Assets of consolidated Funds also include investments in bank loans. Interests in senior floating-rate loans for which reliable market participant quotations are readily available are valued at the average mid-point of bid and ask quotations obtained from a third party pricing service. These assets are classified as Level II.    

If the pricing services are only able to (a) obtain a single broker quote or (b) utilize a pricing model, such securities are classified as Level III. If the pricing services are unable to provide prices, the Company attempts to obtain one or more broker quotes directly from a dealer or values such securities at the last bid price obtained. In either case, such securities are classified as Level III. The Company performs due diligence procedures over third party pricing vendors to understand their methodology and controls to support their use in the valuation process to ensure compliance with required accounting disclosures.

(2)Investments in separate accounts of $29.5 million at September 30, 2020 consist of approximately 2% of cash equivalents and 98% of equity securities, fixed income securities, and other investments. Investments in separate accounts of $44.3 million at December 31, 2019 consist of approximately 3% of cash equivalents and 97% of equity securities, fixed income securities, and other investments. The Company values these using the published price of the underlying securities (classified as Level I) or quoted price supported by observable inputs as of the measurement date (classified as Level II).

(3)Investments related to long-term incentive compensation plans of $66.1 million and $88.8 million at September 30, 2020 and December 31, 2019, respectively, were investments in publicly registered daily redeemable funds (some managed by Affiliates), which the Company has classified as trading securities and valued using the published price as of the measurement dates. Accordingly, the Company has classified these investments as Level I.

(4)The uncategorized amounts of $16.4 million and $48.2 million at September 30, 2020 and December 31, 2019, respectively, relate to investments in unconsolidated Funds which consist primarily of investments in Funds advised by Affiliates and are valued using NAV which the Company relies on to determine their fair value as a practical expedient and has therefore not classified these investments in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to amounts presented in the Condensed Consolidated Balance Sheets. These unconsolidated Funds consist primarily of real estate investment Funds, UCITS and other investment vehicles. The NAVs that have been provided by investees have been derived from the fair values of the underlying investments as of the measurement dates. UCITS and other investment vehicles are not subject to redemption restrictions.

The real estate investment Funds of $5.9 million and $6.4 million at September 30, 2020 and December 31, 2019, respectively, are subject to longer than quarterly redemption restrictions, and due to their nature, distributions are received only as cash flows are generated from underlying assets over the life of the Funds. The range of time over which the underlying assets are expected to be liquidated by the investees is approximately one year to eleven years from September 30, 2020. The valuation process for the underlying real estate investments held by the real estate investment Funds begins with each property or loan being valued by the investment teams. The valuations are then reviewed and approved by the valuation committee, which consists of senior members of the portfolio management, acquisitions, and research teams. For certain properties and loans, the valuation process may also include a valuation by independent appraisers. In connection with this process, changes in fair value measurements from period to period are evaluated for reasonableness, considering items such as market rents, capitalization and discount rates, and general economic and market conditions. 

Investments in unconsolidated Funds categorized as Level III of $2.7 million and $3.0 million at September 30, 2020 and December 31, 2019, respectively, related to investments in Forestry Funds advised by Affiliates and are valued by the general partner of those Funds. Determination of estimated fair value involves subjective judgment because the actual fair value can be determined only through negotiation between parties in a sale transaction, and amounts ultimately realized may vary significantly from the fair value presented.

(5)Affiliate investments held for sale is comprised of Investments related to long-term incentive compensation plans of $27.0 million at September 30, 2020. These were investments in publicly registered daily redeemable funds, which the Company has classified as trading securities and valued using the published price as of the measurement dates. Accordingly, the Company has classified these investments as Level I.

The following table reconciles the opening balances of Level III financial assets to closing balances at the end of the period (in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
Investments in unconsolidated Funds	2020		2019		2020		2019
Level III financial assets
At beginning of the period	$	3.0	$	3.0	$	3.0	$	3.0
Additions (redemptions)	(0.3)		0.1		(0.3)		0.1
Transfers in (out) of Level III	—		—		—		—
Total net fair value gains/losses recognized in net income	—		(0.1)		—		(0.1)
Total Level III financial assets	$	2.7	$	3.0	$	2.7	$	3.0

There were no significant transfers of financial assets or liabilities between Levels II or III during the three and nine months ended September 30, 2020.

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Variable Interest Entities

9 Months Ended

Sep. 30, 2020

Variable Interest Entities

Variable Interest Entities

Variable Interest Entities

The Company, through its Affiliates, sponsors the formation of various entities considered to be variable interest entities (“VIEs”). These VIEs are primarily Funds managed by Affiliates and other partnership interests typically owned entirely by third party investors. Certain Funds may be capitalized with seed capital investments from the Company and may be owned partially by Affiliate key employees and/or individuals that own non-controlling interests in an Affiliate.

The Company’s determination of whether it is the primary beneficiary of a Fund that is a VIE is based in part on an assessment of whether or not the Company and its related parties are exposed to absorb more than an insignificant amount of the risks and rewards of the entity. Typically, the Fund’s investors are entitled to substantially all of the economics of these VIEs with the exception of the management fees and performance fees, if any, earned by the Company or any investment the Company has made into the Funds. The Company generally is not the primary beneficiary of Fund VIEs created to manage assets for clients unless the Company’s ownership interest, including interests of related parties, is substantial.

The following table presents the assets and liabilities of Funds that are VIEs and consolidated by the Company (in millions):

	September 30, 2020		December 31, 2019
Assets
Investments at fair value	$	—	$	119.5
Other assets of consolidated Funds	103.0		85.7
Assets of consolidated Funds held for sale (Note 3)	114.3		—
Total Assets	$	217.3	$	205.2
Liabilities
Liabilities of consolidated Funds	$	—	$	6.2
Liabilities of consolidated Funds held for sale (Note 3)	0.1		—
Total Liabilities	$	0.1	$	6.2

“Investments at fair value” consist of investments in bank loans, common and preferred stock, and other securities as of December 31, 2019. These investments are included in the “assets of consolidated Funds held for sale” as of September 30, 2020. To the extent the Company also has consolidated Funds that are not VIEs, the assets and liabilities of those Funds are not included in the table above.

The assets of consolidated VIEs presented in the table above belong to the investors in those Funds, are available for use only by the Fund to which they belong, and are not available for use by the Company to the extent they are held by non-controlling interests. Any debt or liabilities held by consolidated Funds have no recourse to the Company's general credit.

The Company’s involvement with Funds that are VIEs and not consolidated by the Company is generally limited to that of an investment manager and its investment in the unconsolidated VIE, if any. The Company’s investment in any unconsolidated VIE generally represents an insignificant interest of the Fund’s net assets and assets under management, such that the majority of the VIEs results are attributable to third parties. The Company’s exposure to risk in these entities is generally limited to any capital contribution it has made or is required to make and any earned but uncollected management fees. The Company has not issued any investment performance guarantees to these VIEs or their investors.

The following information pertains to unconsolidated VIEs for which the Company holds a variable interest (in millions):

	September 30, 2020		December 31, 2019
Unconsolidated VIE assets	$	6,393.4	$	6,625.5
Unconsolidated VIE liabilities	$	4,260.1	$	4,320.6
Equity interests on the Condensed Consolidated Balance Sheets	$	12.8	$	17.5
Maximum risk of loss(1)	$	18.3	$	23.9

(1)Includes equity investments the Company has made or is required to make and any earned but uncollected management and incentive fees. The Company does not record performance or incentive allocations until the respective measurement period has ended.

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Borrowings and Debt

9 Months Ended

Sep. 30, 2020

Debt Disclosure [Abstract]

Borrowings and Debt

Borrowings and Debt

The Company’s borrowings and long-term debt was comprised of the following as of the dates indicated (in millions):

	September 30, 2020					December 31, 2019
(in millions)	Carrying Value		Fair Value		Fair Value Level	Carrying Value		Fair Value		Fair Value Level
Third party borrowings:
$450 million revolving credit facility expiring August 22, 2022(1)(2)	$	80.0	$	80.0	2	$	140.0	$	140.0	2
$275 million 4.80% Senior Notes Due July 27, 2026(3)	272.7		294.4		2	272.4		287.2		2
$125 million 5.125% Senior Notes Due August 1, 2031(3)	121.5		128.3		2	121.4		126.4		2
Total third party borrowings	$	474.2	$	502.7		$	533.8	$	553.6
Non-recourse borrowings:
Non-recourse seed capital facility(1)(4)	$	—	$	—		$	35.0	$	35.0	2
Total non-recourse borrowing	$	—	$	—		$	35.0	$	35.0
Total borrowings	$	474.2	$	502.7		$	568.8	$	588.6

(1)Fair value approximates carrying value because the credit facilities have variable interest rates based on selected short term market rates.

(2)An amendment to the revolving credit facility was entered into on September 3, 2020 to reduce the revolving credit facility to $150 million upon the consummation of the sale of the Company’s equity interests in Barrow Hanley.

(3)The difference between the principal amounts and the carrying values of the senior notes in the table above reflects the unamortized debt issuance costs and discounts.

(4)Non-recourse seed capital facility set to expire on January 15, 2021 was paid down in the third quarter and terminated.

Revolving Credit Facility

On September 3, 2020, the Company, Royal Bank of Canada, BMO Harris Bank, N.A., Bank of China, New York Branch, Wells Fargo Bank, National Association, Barclays Bank PLC, Morgan Stanley Bank, N.A., Bank of America N.A., the Bank of New York Mellon and Citibank, N.A., as an issuing bank and administrative agent (collectively, the “Lenders”), entered into an amendment (the “Amendment") to the Revolving Credit Agreement dated as of August 20, 2019 (the “Credit Agreement”). The Amendment includes changes to the Credit Agreement to permit the sale of the Company's equity interests in Barrow Hanley (the “Barrow Hanley Sale”). Under the Credit Agreement, the Barrow Hanley Sale required consent of the Lenders given that Barrow Hanley accounted for more than 10% of the Company's consolidated Adjusted EBITDA. The Amendment provides that, effective immediately upon the consummation of the Barrow Hanley Sale, the Lenders commitments under the Credit Agreement shall be $150 million.

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Leases

9 Months Ended

Sep. 30, 2020

Leases [Abstract]

Leases

Leases

The Company has operating leases for corporate offices, data centers, vehicles and certain equipment. The operating leases have remaining lease terms of 1 year to 13 years, some of which include options to extend the leases for up to 5 years, and some of which include options to terminate the leases within 1 year.

The following table summarizes information about the Company’s operating leases for the three and nine months ended September 30, (in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Operating lease cost	$	4.0	$	3.4	$	11.9	$	10.3
Variable lease cost	0.1		0.1		0.2		0.2
Sublease income	(0.1)		—		(0.1)		—
Total operating lease expense	4.0		3.5		12.0		10.5
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	3.6		3.7		11.1		11
Right of use assets obtained in exchange for new operating lease liabilities	0.2		0.1		77.3		5.5

In determining the incremental borrowing rate, the Company considered the interest rate yield for the specific interest rate environment and the Company’s credit spread at the inception of the lease. For the nine months ended September 30, 2020 and 2019, the weighted average remaining lease term was 11.7 years and 4.5 years, respectively, and the weighted average discount rate was 3.47% and 4.13%, respectively.

In connection with the pending divestiture of Barrow Hanley, the Company reclassified $12.4 million of Right of use assets and $12.7 million of Operating lease liabilities as of September 30, 2020 on the Condensed Consolidated Balance Sheet to Affiliate assets and liabilities held for sale, respectively. See Note 3, Divestitures and Assets and Liabilities Held for Sale, in these Notes for additional information.

Maturities of operating lease liabilities were as follows (in millions):

	Operating Leases
Year Ending December 31,
2020 (excluding the nine months ended September 30, 2020)	$	3.3
2021	13.2
2022	9.2
2023	11.2
2024	10.4
Thereafter	87.8
Total lease payments	135.1
Less imputed interest	(25.1)
Total	$	110.0

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Goodwill and Intangible Assets

9 Months Ended

Sep. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill and Intangible Assets

The following table presents the changes in goodwill for the nine months ended September 30, 2020 and 2019 (in millions):

	Quant & Solutions		Alternatives		Liquid Alpha		Total
Goodwill	$	22.1	$	153.1	$	133.3	$	308.5
Accumulated impairment	(1.8)		(5.0)		(27.1)		(33.9)
December 31, 2019	$	20.3	$	148.1	$	106.2	$	274.6
Additions	—		—		—		—
Impairments	—		—		(16.4)		(16.4)
Disposals	—		—		—		—
Decrease from reclassification to assets held   for sale(1)	—		—		(76.1)		(76.1)
Goodwill	22.1		153.1		57.2		232.4
Accumulated impairment	(1.8)		(5.0)		(43.5)		(50.3)
September 30, 2020	$	20.3	$	148.1	$	13.7	$	182.1

(1) In connection with the pending divestiture of Barrow Hanley, the Company assigned $76.1 million of goodwill to “Affiliate Assets held for sale” in the Condensed Consolidated Balance Sheet as of September 30, 2020. See Note 3, Divestitures and Assets and Liabilities Held for Sale, in these Notes for additional information.

	Quant & Solutions		Alternatives		Liquid Alpha		Total
Goodwill	$	22.1	$	153.1	$	133.3	$	308.5
Accumulated impairment	(1.8)		(5.0)		(27.1)		(33.9)
December 31, 2018	$	20.3	$	148.1	$	106.2	$	274.6
Additions	—		—		—		—
Impairments	—		—		—		—
Disposals	—		—		—		—
Goodwill	22.1		153.1		133.3		308.5
Accumulated impairment	(1.8)		(5.0)		(27.1)		(33.9)
September 30, 2019	$	20.3	$	148.1	$	106.2	$	274.6

The 2019 annual impairment assessment determined that no impairment existed at the annual assessment date. Due to the decline in the Company’s assets under management for the three months ended March 31, 2020, management determined that an interim impairment assessment was necessary as of March 31, 2020.

In the first quarter of 2020, the Company performed a quantitative impairment test for Copper Rock reporting unit which was included within the Liquid Alpha segment prior to its disposition. The quantitative impairment test concluded that the fair value of the reporting unit did not exceed its carrying value. Accordingly, the Company recognized a goodwill impairment charge of $16.4 million for the three months ended March 31, 2020. No goodwill

impairment charges were recognized for the three months ended September 30, 2020 and the Company recognized a goodwill impairment charge of $16.4 million for the nine months ended September 30, 2020.

The fair value of the reporting unit was estimated using the income approach, which calculates the fair value based on the present value of estimated future cash flows. Cash flow projections are based on management’s estimates of Assets Under Management (“AUM”) growth rates, product mix and effective fee rates, taking into consideration industry and market conditions. The discount rates used are based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics. The Company’s quantitative impairment analysis at March 31, 2020 incorporated revised forecasts that took into account the market disruptions during the quarter and its impact on the results in future periods. Given the significant level of uncertainty that currently exists, management also considered alternative scenarios for market and reporting unit performance over the next several years. If the Company’s assets under management are further impacted by the global economic conditions caused by COVID-19, such as adverse and significant declines in the value of global financial markets, additional impairments of goodwill or intangible assets are possible in future periods.

The following table presents the change in definite-lived acquired intangible assets comprised of client relationships for the nine months ended September 30, 2020 and 2019 (in millions):

	Gross Book Value		Accumulated Amortization & Impairment		Net Book Value
December 31, 2019	$	108.3	$	(44.2)	$	64.1
Additions	—		—		—
Amortization	—		(5.1)		(5.1)
Disposals	—		—		—
September 30, 2020	$	108.3	$	(49.3)	$	59.0

	Gross Book Value		Accumulated Amortization & Impairment		Net Book Value
December 31, 2018	$	108.3	$	(37.6)	$	70.7
Additions	—		—		—
Amortization	—		(4.9)		(4.9)
Disposals	—		—		—
September 30, 2019	$	108.3	$	(42.5)	$	65.8

The Company’s definite-lived acquired intangibles are amortized over their expected useful lives. As of September 30, 2020, these assets were being amortized over remaining useful lives of three to nine years. The Company recorded amortization expense of $1.6 million and $1.6 million for the three months ended September 30, 2020 and 2019, respectively. The Company recorded amortization expense of $5.1 million and $4.9 million for the nine months ended months ended September 30, 2020 and 2019, respectively.

The Company also acquired a $1.0 million indefinite-lived intangible trade name in the acquisition of Landmark, included in acquired intangibles, net, on the Condensed Consolidated Balance Sheets at September 30, 2020 and 2019.

The 2019 annual impairment assessment of definite and indefinite-lived intangible assets determined that no impairment existed. Due to the decline in the Company’s assets under management in the three months ended March 31, 2020, the Company assessed definite and indefinite-lived intangible assets for possible impairment. For indefinite-lived intangible assets, the Company performed a qualitative assessment and determined that it was more likely than not that the indefinite-lived intangible asset was not impaired. For definite-lived intangible assets, no events or changes in circumstances indicated that the carrying amount of these assets may not be recoverable. As such, no impairment charges were determined for both the definite and indefinite-lived intangible assets. No impairment charges were determined for the definite and indefinite-lived intangible assets for the three months ended September 30, 2020.

The Company estimates that its consolidated annual amortization expense, assuming no useful life changes or additional investments in new or existing Affiliates, for each of the next five fiscal years is as follows (in millions):

Year Ending December 31,
2020 (excluding the nine months ended September 30, 2020)	$	1.6
2021	6.4
2022	6.5
2023	6.4
2024	6.4
Thereafter	31.7
Total	$	59.0

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Operational commitments

The Company had unfunded commitments to invest up to approximately $37 million in co-investments as of September 30, 2020. These commitments will be funded as required through the end of the respective investment periods ranging through fiscal 2022.

Certain Affiliates operate under regulatory authorities that require that they maintain minimum financial or capital requirements. Management is not aware of any violations of such financial requirements occurring during the period.

Guaranty

The Company entered into a guaranty for an office space security deposit on behalf of an Affiliate in the amount of $2.5 million in January 2020. This represents the maximum potential amount of future (undiscounted) payments that the Company could be required to make under the guaranty in the event of default by the guaranteed parties. This guaranty expires in 2022. There are no liabilities recorded on the Condensed Consolidated Balance Sheet as of September 30, 2020 related to this guaranty.

Litigation

The Company and its Affiliates are subject to claims, legal proceedings and other contingencies in the ordinary course of their business activities. Each of these matters is subject to various uncertainties, and it is possible that some of these matters may be resolved in a manner unfavorable to the Company or its Affiliates. The Company and its Affiliates establish accruals for matters for which the outcome is probable and can be reasonably estimated. If an insurance claim or other indemnification for a litigation accrual is available to the Company, the associated gain will not be recognized until all contingencies related to the gain have been resolved. As of September 30, 2020, there were no material accruals for claims, legal proceedings or other contingencies.

Indemnifications

In the normal course of business, such as through agreements to enter into business combinations and divestitures of Affiliates, the Company enters into contracts that contain a variety of representations and warranties and which provide general indemnifications. The Company’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that have not yet occurred.

Foreign tax contingency

The Company has clients in non-U.S. jurisdictions which require entities that are conducting certain business activities in such jurisdictions to collect and remit tax assessed on certain fees paid for goods and services provided. The Company does not believe this requirement is applicable based on its limited business activities in these jurisdictions. However, given the fact that uncertainty exists around the requirement, the Company has chosen to evaluate its potential exposure related to non-collection and remittance of these taxes. At September 30, 2020, management of the Company has estimated the potential maximum exposure and concluded that it is not material. No accrual for the potential exposure has been recorded as the probability of incurring any potential liability relating to this exposure is not probable at September 30, 2020.

Considerations of credit risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and investments. The Company maintains cash and cash equivalents and short term investments with various financial institutions. These financial institutions are typically located in cities in which the Company and its Affiliates operate. For the Company and certain Affiliates, cash deposits at a financial institution may exceed Federal Deposit Insurance Corporation insurance limits. Additionally, the Company holds insurance policies which cover historical and future tax benefits relating to certain of its deferred tax assets. The insurers of the policies are considered a significant counterparty to the Company.

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Earnings Per Share

9 Months Ended

Sep. 30, 2020

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

Basic earnings per share is calculated by dividing net income attributable to controlling interests by the weighted-average number of shares of common stock outstanding. Diluted earnings per share is similar to basic earnings per share, but is adjusted for the effect of potentially issuable common stock, except when inclusion is antidilutive. 

The calculation of basic and diluted earnings per share of common stock is as follows (dollars in millions, except per share data):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Numerator:
Net income attributable to controlling interests	$	37.2	$	75.4	$	88.7	$	156.1
Less: Total income available to participating unvested securities(1)	—		—		—		(0.1)
Total net income attributable to common stock	$	37.2	$	75.4	$	88.7	$	156.0
Denominator:
Weighted-average shares of common stock outstanding—basic	80,001,360		89,970,871		81,832,607		92,996,289
Potential shares of common stock:
Restricted stock units	115,155		1,429		48,915		79,775
Employee stock options	735,023		—		245,008		—
Weighted-average shares of common stock outstanding—diluted	80,851,538		89,972,300		82,126,530		93,076,064
Earnings per share of common stock attributable to controlling interests:
Basic	$	0.46	$	0.84	$	1.08	$	1.68
Diluted	$	0.46	$	0.84	$	1.08	$	1.68

(1)Income available to participating unvested securities includes dividends paid on unvested restricted shares and their proportionate share of undistributed earnings.

Employee options to purchase 8,970,000 shares were not included in the computation of diluted EPS for the three and nine months ended September 30, 2019 because the assumed proceeds from exercising such options exceed the average price of the shares of common stock for the period and, therefore, the options are deemed antidilutive.

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Revenue

9 Months Ended

Sep. 30, 2020

Revenue from Contract with Customer [Abstract]

Revenue

Revenue

Management fees

The Company’s management fees are a function of the fee rates the Affiliates charge to their clients, which are typically expressed in basis points, and the levels of the Company’s assets under management. The most significant driver of increases or decreases in this average fee rate is changes in the mix of the Company’s assets under management caused by net inflows or outflows in certain asset classes or disproportionate market movements. For certain of the Company’s Alternative funds, management fee revenue is calculated based on a percentage of assets under management or total capital commitments. These Alternative funds can also include “catch-up” provisions such that the Company records revenue for payments of fund management fees back to the initial closing date for funds with multiple closings, less placement fees paid to third parties related to these funds.

    Performance fees

The Company’s products subject to performance fees earn these fees upon exceeding high-water mark performance thresholds or outperforming a hurdle rate. Conversely, the separate accounts / other products, which primarily earn management fees, are potentially subject to performance adjustments up or down based on investment performance versus benchmarks (i.e. fulcrum fees).     

    Other revenue

Included in other revenue are certain payroll and benefits costs and expenses paid on behalf of Funds by the Company’s Affiliates. In instances where a customer reimburses the Company for a cost paid on the customer’s behalf, the Company is acting as a principal and the reimbursement is accrued on a gross basis at cost as the corresponding reimbursable expenses are incurred. Revenue from expense reimbursement amounted to $1.1 million and $0.9 million for the three months ended September 30, 2020 and 2019, respectively. Revenues from expense reimbursement amounted to $3.3 million and $3.2 million for the nine months ended September 30, 2020 and 2019, respectively, are recorded in other revenue in the Company’s Condensed Consolidated Statements of Operations. Other revenue may also consist of other miscellaneous revenue, consisting primarily of administration and consulting services.

Disaggregation of management fee revenue

The Company classifies its revenue (including only consolidated Affiliates that are included in management fee revenue) among the following asset classes:

i.U.S. equity, which includes small cap through large cap securities and substantially value or blended investment styles;

ii.Global / non-U.S. equity, which includes global and international equities including emerging markets;

iii.Fixed income, which includes government bonds, corporate bonds and other fixed income investments in the United States; and

iv.Alternatives, which is comprised of illiquid and differentiated liquid investment strategies that include private equity, real estate and real assets, including forestry, as well as a growing suite of liquid alternative capabilities in areas such as long/short, market neutral and absolute return.

Management fee revenue by segment and asset class is comprised of the following for the three and nine months ended September 30 (in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Quant & Solutions
Global / non-U.S. equity	$	87.9	$	92.7	$	255.3	$	276.8
Alternatives
Alternatives	43.2		37.2		126.4		124.5
Liquid Alpha(1)
Global / non-U.S. equity	17.8		21.9		56.5		70.6
Fixed income	6.1		6.6		18.5		19.5
U.S. equity	23.2		38.0		70.7		118.4
Management fee revenue	$	178.2	$	196.4	$	527.4	$	609.8

(1)In July 2020, the Company completed the sale of Copper Rock and announced the divestiture of Barrow Hanley. See Note 3, Divestitures and Assets and Liabilities Held for Sale for further discussion of divestitures. The financial results of Barrow Hanley are included in the Liquid Alpha segment for the three and nine months ended September 30, 2020. The financial results of Copper Rock are included in the Liquid Alpha segment until July 24, 2020, the completion of the sale.

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Accumulated Other Comprehensive Income (Loss)

9 Months Ended

Sep. 30, 2020

Equity [Abstract]

Accumulated Other Comprehensive Income (Loss)

Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive income (loss), net of tax, for the three months ended September 30, 2020 and 2019 are as follows (in millions):

	Foreign currency translation adjustment		Valuation and amortization of derivative securities		Total
Balance, as of June 30, 2020	$	1.0	$	(19.2)	$	(18.2)
Foreign currency translation adjustment	1.4		—		1.4
Amortization related to derivatives securities, before tax	—		0.8		0.8
Tax impact	—		(0.2)		(0.2)
Other comprehensive income	1.4		0.6		2.0
Balance, as of September 30, 2020	$	2.4	$	(18.6)	$	(16.2)

	Foreign currency translation adjustment		Valuation and amortization of derivative securities		Total
Balance, as of June 30, 2019	$	1.7	$	(21.5)	$	(19.8)
Foreign currency translation adjustment	(0.8)		—		(0.8)
Amortization related to derivatives securities, before tax	—		0.7		0.7
Tax impact	—		(0.1)		(0.1)
Other comprehensive income (loss)	(0.8)		0.6		(0.2)
Balance, as of September 30, 2019	$	0.9	$	(20.9)	$	(20.0)

For the three months ended September 30, 2020 and 2019, the Company reclassified $0.8 million and $0.7 million, respectively, from accumulated other comprehensive income (loss) to interest expense on the Condensed Consolidated Statements of Operations.

The components of accumulated other comprehensive income (loss), net of tax, for the nine months ended September 30, 2020 and 2019 were as follows (in millions):

	Foreign currency translation adjustment		Valuation and amortization of derivative securities		Total
Balance, as of December 31, 2019	$	2.8	$	(20.3)	$	(17.5)
Foreign currency translation adjustment	(0.4)		—		(0.4)
Amortization related to derivatives securities, before tax	—		2.3		2.3
Tax impact	—		(0.6)		(0.6)
Other comprehensive income (loss)	(0.4)		1.7		1.3
Balance, as of September 30, 2020	$	2.4	$	(18.6)	$	(16.2)

	Foreign currency translation adjustment		Valuation and amortization of derivative securities		Total
Balance, as of December 31, 2018	$	1.8	$	(22.7)	$	(20.9)
Foreign currency translation adjustment	(0.9)		—		(0.9)
Amortization related to derivatives securities, before tax	—		2.2		2.2
Tax impact	—		(0.4)		(0.4)
Other comprehensive income (loss)	(0.9)		1.8		0.9
Balance, as of September 30, 2019	$	0.9	$	(20.9)	$	(20.0)

For the nine months ended September 30, 2020 and 2019, the Company reclassified $2.3 million and $2.2 million, respectively, from accumulated other comprehensive income (loss) to interest expense on the Condensed Consolidated Statements of Operations.

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Derivatives and Hedging

9 Months Ended

Sep. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives and Hedging

Derivatives and Hedging

Cash flow hedge

In July 2015, the Company entered into a series of $300.0 million notional Treasury rate lock contracts which were designated and qualified as cash flow hedges. The Company documented its hedging strategy and risk management objective for this contract in anticipation of a future debt issuance. The Treasury rate lock contract eliminated the impact of fluctuations in the underlying benchmark interest rate for future forecasted debt issuances. The Company assessed the effectiveness of the hedging contract at inception and on a quarterly basis thereafter. The forecasted debt issuances occurred in July 2016 and the Treasury rate lock, which had an accumulated fair value of $(34.4) million, was settled. Refer to Note 7, Borrowings and Debt, for additional information on the debt issuances.

As of September 30, 2020, the balance recorded in accumulated other comprehensive income (loss) was $(18.6) million, net of tax. This balance will be reclassified to earnings through interest expense over the life of the issued debt. Amounts of $0.8 million and $0.7 million have been reclassified for each of the three months ended September 30, 2020 and 2019, respectively. Amounts of $2.3 million and $2.2 million have been reclassified for the nine months ended September 30, 2020 and 2019, respectively. During the next twelve months the Company expects to reclassify approximately $3.3 million to interest expense.

Derivatives of consolidated Funds

In the normal course of business, the Company’s consolidated Funds may enter into transactions involving derivative financial instruments in connection with Funds’ investing activities. Derivative instruments may be used as substitutes for securities in which the Funds can invest, to hedge portfolio investments or to generate income or gain to the Funds. The Funds may also use derivatives to manage duration; sector and yield curve exposures and credit and spread volatility. Derivative financial instruments base their value upon an underlying asset, index or reference rate. These instruments are subject to various risks, including leverage, market, credit, liquidity and operational risks. The Funds manage the risks associated with derivatives on an aggregate basis, along with the risks associated with its trading and as part of its overall risk management policies.

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Segments

9 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

Segments

Segments

The Company has the following business segments:

•Quant & Solutions—comprised of versatile, often highly-tailored strategies that leverage data and technology in a computational, factor based investment process across a range of asset classes and geographies, including Global, non-U.S., emerging markets and managed volatility equities, as well as multi-asset products.

•Alternatives—comprised of illiquid and differentiated liquid investment strategies that include private equity, real estate and real assets, including forestry, as well as a growing suite of liquid alternative capabilities in areas such as long/short, market neutral and absolute return.

•Liquid Alpha(1)—comprised of specialized investment strategies with a focus on alpha-generation across market cycles in long-only small-, mid-, and large-cap U.S., global, non-U.S. and emerging markets equities, as well as fixed income.

(1)In July 2020, the Company completed the sale of Copper Rock and announced the divestiture of Barrow Hanley. See Note 3, Divestitures and Assets and Liabilities Held for Sale, for further discussion of divestitures. The financial results of Copper Rock are included in the Liquid Alpha segment until July 24, 2020, the completion of the sale. The financial results of Barrow Hanley are included in the Liquid Alpha segment for the three and nine months ended September 30, 2020.

The Company has a corporate head office that is included in “Other”. The corporate head office supports the segments by providing infrastructure and administrative support in the areas of accounting/finance, information technology, legal, compliance and human resources. The corporate head office expenses are not allocated to the Company’s three business segments but the Chief Operating Decision Maker (“CODM”) does consider the cost structure of the corporate head office when evaluating the financial performance of the segments.

Performance Measure

The primary measure used by the CODM in measuring performance and allocating resources to the segments is Economic Net Income ("ENI"). The Company defines ENI for the segments as ENI revenue less (i) ENI operating expenses, (ii) variable compensation and (iii) key employee distributions. The ENI adjustments to U.S. GAAP include both reclassifications of U.S. GAAP revenue and expense items, as well as adjustments to U.S. GAAP results, primarily to exclude non-cash, non-economic expenses, or to reflect cash benefits not recognized under U.S. GAAP. This measure supplements and should be considered in addition to, and not in lieu of, the Condensed Consolidated Statements of Operations prepared in accordance with U.S. GAAP. The Company does not disclose total asset information for its reportable segments as the information is not reviewed by the CODM.

ENI revenue includes management fees, performance fees and other revenue under U.S. GAAP, adjusted to include management fees paid to Affiliates by consolidated Funds and the Company’s share of earnings from equity-accounted Affiliates. ENI revenue is also adjusted to exclude the separate revenues recorded under U.S. GAAP for certain Fund expenses reimbursed to our Affiliates.

ENI operating expenses include compensation and benefits, general and administrative expense, and depreciation and amortization under U.S. GAAP, adjusted to exclude non-cash expenses representing changes in the value of Affiliate equity and profit interests held by Affiliate key employees, non-cash amortization of employee equity owned pre-acquisition that occurred as a result of Landmark transaction, goodwill impairment and amortization of acquired intangible assets, capital transaction costs, restructuring costs, the impact of a one-time compensation arrangement entered into that includes advances against future compensation payments, and the separate expenses recorded under U.S. GAAP for certain Fund expenses reimbursed to Affiliates. Additionally, variable compensation and Affiliate key employee distributions are segregated from ENI operating expenses.

ENI segment results are also adjusted to exclude the portion of consolidated Fund revenues, expenses and investment return recorded under U.S. GAAP.

Segment Presentation

The following tables set forth summarized operating results for the Company's three segments and related adjustments necessary to reconcile the segment economic net income to arrive at the Company's consolidated U.S. GAAP net income (loss):

The following table presents the financial data for the Company’s three segments for the three months ended September 30, 2020 (in millions):

	Three Months Ended September 30, 2020
	Quant & Solutions		Alter-natives		Liquid Alpha		Other		Reconciling Adjustments			Total U.S. GAAP(1)
ENI revenue	$	89.0	$	43.8	$	47.9	$	0.1	$	1.6	(a)	$	182.4
ENI operating expenses	37.2		15.3		15.5		5.8		12.6		(b)	86.4
Earnings before variable compensation	51.8		28.5		32.4		(5.7)		(11.0)			96.0
Variable compensation	18.0		10.1		12.3		0.8		3.3		(c)	44.5
ENI operating earnings (after variable comp)	33.8		18.4		20.1		(6.5)		(14.3)			51.5
Affiliate key employee distributions	0.8		7.3		2.9		—		—			11.0
Earnings after Affiliate key employee distributions	33.0		11.1		17.2		(6.5)		(14.3)			40.5
Net interest expense	—		—		—		(5.3)		(1.6)		(d)	(6.9)
Net investment income	—		—		—		—		6.0		(e)	6.0
Gain on sale of Affiliate	—		—		—		—		7.2		(e)	7.2
Net income attributable to non-controlling interests in consolidated Funds	—		—		—		—		3.2		(e)	3.2
Income tax expense	—		—		—		(11.8)		(1.0)		(f)	(12.8)
Economic net income	$	33.0	$	11.1	$	17.2	$	(23.6)	$	(0.5)		$	37.2

The following table presents the financial data for the Company’s three segments for the three months ended September 30, 2019 (in millions):

	Three Months Ended September 30, 2019
	Quant & Solutions		Alter-natives		Liquid Alpha		Other		Reconciling Adjustments			Total U.S. GAAP(1)
ENI revenue	$	93.1	$	37.4	$	65.2	$	0.1	$	2.0	(a)	$	197.8
ENI operating expenses	40.8		16.1		18.5		8.3		5.5		(b)	89.2
Earnings before variable compensation	52.3		21.3		46.7		(8.2)		(3.5)			108.6
Variable compensation	18.8		7.8		15.6		1.9		—		(c)	44.1
ENI operating earnings (after variable comp)	33.5		13.5		31.1		(10.1)		(3.5)			64.5
Affiliate key employee distributions	1.5		5.0		6.1		—		—			12.6
Earnings after Affiliate key employee distributions	32.0		8.5		25.0		(10.1)		(3.5)			51.9
Net interest expense	—		—		—		(5.7)		(2.2)		(d)	(7.9)
Net investment loss	—		—		—		—		7.0		(e)	7.0
Net income attributable to non-controlling interests in consolidated Funds	—		—		—		—		(7.6)		(e)	(7.6)
Income tax (expense) benefit	—		—		—		(12.3)		44.3		(f)	32.0
Economic net income	$	32.0	$	8.5	$	25.0	$	(28.1)	$	38.0		$	75.4

The following table presents the financial data for the Company’s three segments for the nine months ended September 30, 2020 (in millions):

	Nine Months Ended September 30, 2020
	Quant & Solutions		Alter-natives		Liquid Alpha		Other		Reconciling Adjustments			Total U.S. GAAP(1)
ENI revenue	$	257.9	$	128.2	$	147.5	$	0.3	$	5.8	(a)	$	539.7
ENI operating expenses	109.3		47.6		52.7		19.4		0.4		(b)	229.4
Earnings before variable compensation	148.6		80.6		94.8		(19.1)		5.4			310.3
Variable compensation	52.7		29.0		36.0		2.6		17.4		(c)	137.7
ENI operating earnings (after variable comp)	95.9		51.6		58.8		(21.7)		(12.0)			172.6
Affiliate key employee distributions	2.9		20.0		8.9		—		—			31.8
Earnings after Affiliate key employee distributions	93.0		31.6		49.9		(21.7)		(12.0)			140.8
Net interest expense	—		—		—		(16.5)		(5.1)		(d)	(21.6)
Net investment income	—		—		—		—		17.3		(e)	17.3
Gain on sale of Affiliate	—		—		—		—		7.2		(e)	7.2
Net income attributable to non-controlling interests in consolidated Funds	—		—		—		—		(21.3)		(e)	(21.3)
Income tax expense	—		—		—		(31.4)		(2.3)		(f)	(33.7)
Economic net income	$	93.0	$	31.6	$	49.9	$	(69.6)	$	(16.2)		$	88.7

The following table presents the financial data for the Company’s three segments for the nine months ended September 30, 2019 (in millions):

	Nine Months Ended September 30, 2019
	Quant & Solutions		Alter-natives		Liquid Alpha		Other		Reconciling Adjustments			Total U.S. GAAP(1)
ENI revenue	$	277.3	$	125.7	$	202.8	$	0.3	$	6.0	(a)	$	612.1
ENI operating expenses	120.4		49.4		60.0		25.4		4.8		(b)	260.0
Earnings before variable compensation	156.9		76.3		142.8		(25.1)		1.2			352.1
Variable compensation	57.6		28.0		48.1		7.5		4.6		(c)	145.8
ENI operating earnings (after variable comp)	99.3		48.3		94.7		(32.6)		(3.4)			206.3
Affiliate key employee distributions	4.1		17.1		18.6		—		—			39.8
Earnings after Affiliate key employee distributions	95.2		31.2		76.1		(32.6)		(3.4)			166.5
Net interest expense	—		—		—		(15.4)		(6.9)		(d)	(22.3)
Net investment income	—		—		—		—		25.2		(e)	25.2
Net income attributable to non-controlling interests in consolidated Funds	—		—		—		—		(9.6)		(e)	(9.6)
Income tax (expense) benefit	—		—		—		(36.9)		33.2		(f)	(3.7)
Economic net income	$	95.2	$	31.2	$	76.1	$	(84.9)	$	38.5		$	156.1

(1) The most directly comparable U.S. GAAP measure of ENI revenue is U.S. GAAP revenue. The most directly comparable U.S. GAAP measure of ENI operating expenses is U.S. GAAP operating expenses, which is comprised of ENI operating expenses, variable compensation and Affiliate key employee distributions above. The most directly comparable U.S. GAAP measure of earnings after Affiliate key employee distributions is U.S. GAAP operating income. The most directly comparable U.S. GAAP measure of ENI is U.S. GAAP net income attributable to controlling interests.

Reconciling Adjustments:

(a)Adjusted to exclude earnings from equity-accounted Affiliate, which are included in U.S. GAAP investment income, and to include consolidated Funds revenues and the separate revenues recorded for certain Fund expenses reimbursed by customers, which are included in U.S. GAAP revenue.

(b)Adjusted to include non-cash amortization expense for pre-acquisition employee equity, non-cash expenses for key employee equity and profit interest revaluations, capital transaction costs, goodwill impairment and amortization of acquired intangible assets, restructuring costs, consolidated Funds’ operating expenses and the Fund expenses reimbursed by customers, each of which are included in U.S. GAAP operating expenses.

(c)Adjusted to include restructuring costs and the impact of a one-time compensation arrangement entered into during the first quarter of 2020 that includes advances against future compensation payments, which are included in U.S. GAAP compensation expense.

(d)Adjusted to include the cost of seed financing, which is included in U.S. GAAP interest expense.

(e)Adjusted to include net investment income (loss), net income (loss) attributable to non-controlling interests in consolidated Funds, and the gain on sale of Affiliate, all of which are included in U.S. GAAP net income attributable to controlling interests.

(f)Adjusted to include the impact of deferred tax attributable to the amortization of goodwill and acquired intangibles. Also adjusted to include tax expense or benefits relating to uncertain tax positions, the tax impact of certain ENI adjustments and other unusual items that are not included in current operating results for ENI purposes.

Management fee revenue by principal geographic area is comprised of the following for the three and nine months ended September 30 (in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
U.S.	$	134.1	$	148.2	$	395.9	$	459.4
Non-U.S.	44.1		48.2		131.5		150.4
Management fee revenue	$	178.2	$	196.4	$	527.4	$	609.8

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Related Party Transactions	9 Months Ended
	Sep. 30, 2020
Related Party Transactions [Abstract]
Related Party Transactions	Related Party TransactionsCertain Affiliates have provided loans to Affiliate employees. At September 30, 2020 and December 31, 2019, the balance of the loans to Affiliate employees was $11.9 million and $16.1 million, respectively. These loans will be repaid by 2022.

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Basis of Presentation and Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

Basis of presentation

Basis of presentation

These unaudited Condensed Consolidated Financial Statements reflect the historical balance sheets, statements of operations and of comprehensive income, statements of changes in stockholders’ equity and statements of cash flows of the Company. Within these Condensed Consolidated Financial Statements, OM plc, HNA, Paulson and their related entities, as defined above, are referred to as “related parties.”

The Condensed Consolidated Financial Statements are prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). In the opinion of management, all normal and recurring adjustments considered necessary for a fair presentation of the Company’s Condensed Consolidated Financial Statements have been included. All dollar amounts, except per-share data in the text and tables herein, are stated in millions unless otherwise indicated. Transactions between the Company and its related parties are included in the Condensed Consolidated Financial Statements, however, material intercompany balances and transactions among the Company, its consolidated Affiliates and consolidated Funds are eliminated in consolidation.

As a result of the Redomestication on July 12, 2019, discussed in Note 1, the Company revised its equity accounts to reflect a U.S. domiciled company presentation on the Condensed Consolidated Statements of Changes in Stockholders’ equity and the Condensed Consolidated Balance Sheets for all periods presented. The previously issued ordinary shares of BrightSphere Investment Group plc were exchanged on a one-for-one basis for newly issued shares of common stock of BrightSphere Investment Group Inc. The Redomestication and related internal reorganization was accounted for consistent with a reorganization of entities under common control in accordance with ASC 805 Business Combinations. Accordingly, the transfer of the assets and liabilities and exchange of shares was recorded in the new entity (BrightSphere Investment Group Inc.) at their carrying amounts from the transferring entity (BrightSphere Investment Group plc) at the date of transfer.

On July 26, 2020, the Company and Barrow, Hanley, Mewhinney & Strauss, LLC (“Barrow Hanley”) entered into a purchase and sale agreement with Perpetual U.S. Holdings Company Inc. (“Perpetual”), pursuant to which Perpetual agreed to purchase all of the Company’s interests in Barrow Hanley in exchange for $319 million of cash consideration, on a cash-free, debt-free basis, subject to certain customary closing and post-closing adjustments. The assets and liabilities of Barrow Hanley have been classified as held for sale as the criteria for held for sale accounting treatment was met and are presented separately in the Company’s Condensed Consolidated Balance Sheet as of September 30, 2020. See Note 3, Divestitures and Assets and Liabilities Held for Sale, in these Notes for additional information.

Certain disclosures included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (annual report on Form 10-K) are not required to be included on an interim basis in the Company’s quarterly reports on Form 10-Q. The Company has condensed or omitted these disclosures. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and notes thereto for the year ended December 31, 2019 included in the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”) on March 2, 2020. The Company’s significant accounting policies, which have been consistently applied, are summarized in those financial statements.

Use of estimates

Use of estimatesThe preparation of these Condensed Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. The three and nine months ended September 30, 2020 were characterized by heightened uncertainty due to the COVID-19 pandemic which could impact estimates and assumptions made by management. Actual results could differ from such estimates, and the differences may be material to the Condensed Consolidated Financial Statements.

Recently adopted accounting standards

Recently adopted accounting standards

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820). This standard modifies the disclosure requirements on fair value measurements and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company adopted the standard on January 1, 2020. Notably, this guidance removes the disclosure requirements for the valuation processes for Level III fair value measurements. This guidance also adds new disclosure requirements for the range and weighted average of significant unobservable inputs used to develop fair value measurements categorized within Level III of the fair value hierarchy. The Company has determined that the adoption of this standard did not have a material impact on its Condensed Consolidated Financial Statements and related disclosures.

New accounting standards not yet adopted

The Company has considered all other newly issued accounting guidance that is applicable to the Company’s operations and the preparation of the unaudited Condensed Consolidated Financial Statements, including those that have not yet been adopted. The Company does not believe that any such guidance has or will have a material effect on its Condensed Consolidated Financial Statements and related disclosures.

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Divestitures and Assets Held for Sale (Tables)

9 Months Ended

Sep. 30, 2020

Discontinued Operations and Disposal Groups [Abstract]

Assets and liabilities of affiliate held for sale

The major classes of assets and liabilities comprising the Affiliate classified as held for sale are as follows at September 30, 2020 (in millions):

	September 30, 2020
Cash and cash equivalents	$	12.2
Investment advisory fees receivable	21.5
Investments, at fair value	27.0
Goodwill	76.1
Right of use assets	12.4
Other Assets	1.8
Affiliate assets held for sale	$	151.0
Accounts payable and accrued expenses	$	3.0
Accrued incentive compensation	8.3
Other compensation liabilities	56.4
Operating lease liabilities	12.7
Affiliate liabilities held for sale	$	80.4

The major classes of assets and liabilities comprising the consolidated Funds classified as held for sale are as follows at September 30, 2020 (in millions):

	September 30, 2020
Cash and cash equivalents	$	0.8
Investments, at fair value	112.9
Other Assets	0.6
Consolidated Funds’ assets held for sale	$	114.3
Accounts payable and accrued expenses	$	0.1
Consolidated Funds’ liabilities held for sale	$	0.1

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Investment (Tables)

9 Months Ended

Sep. 30, 2020

Investments [Abstract]

Schedule of investment components

Investments are comprised of the following as of the dates indicated (in millions):

	September 30, 2020		December 31, 2019
Investments of consolidated Funds held at fair value	$	—	$	119.5
Other investments held at fair value	48.6		95.5
Investments related to long-term incentive compensation plans held at fair value	66.1		88.8
Total investments held at fair value	114.7		303.8
Equity-accounted investments in Affiliates and consolidated Funds(1)	103.7		73.1
Total investments per Condensed Consolidated Balance Sheets	218.4		376.9
Investments related to long-term incentive compensation plans of an Affiliate held for sale held at fair value (Note 3)	27.0		—
Investments of consolidated Funds held for sale held at fair value (Note 3)	112.9		—
Total investments held for sale	139.9		—
Total investments and investments held for sale per Condensed Consolidated Balance Sheets	$	358.3	$	376.9

(1)Equity-accounted investments in consolidated Funds is comprised of Investments in partnership interests where a portion of return includes carried interest. These investments are accounted for within the scope of ASC 323, Investments - Equity Method and Joint Ventures because the Company has determined it has significant influence.

Investment income

Investment income is comprised of the following for the three and nine months ended September 30 (in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Realized and unrealized gains (losses) on other investments held at fair value	$	2.9	$	1.5	$	(5.4)	$	9.3
Earnings from equity-accounted investments in Affiliates	1.0		0.8		2.2		2.1
Total investment income (loss) per Condensed Consolidated Statements of Operations	$	3.9	$	2.3	$	(3.2)	$	11.4

Investment gains (losses) on net consolidated funds is comprised of the following for the three and nine months ended September 30 (in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Realized and unrealized gains (losses) on consolidated Funds held at fair value	$	2.9	$	(0.4)	$	(7.6)	$	2.6
Earnings from equity-accounted investments	(0.8)		5.1		28.1		11.2
Total net consolidated Funds’ investment gains per Condensed Consolidated Statements of Operations	$	2.1	$	4.7	$	20.5	$	13.8

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2020

Fair Value Disclosures [Abstract]

Summary of the assets and liabilities that are measured at fair value on a recurring basis

The following table summarizes the Company’s assets and liabilities that are measured at fair value on a recurring basis at September 30, 2020 (in millions):

	Quoted prices in active markets (Level I)		Significant other observable inputs (Level II)		Significant unobservable inputs (Level III)		Uncategorized		Total value, September 30, 2020
Assets of BSIG, consolidated Funds and assets held for sale(1)
Investments in separate accounts(2)	16.5		13.0		—		—		29.5
Investments related to long-term incentive compensation plans(3)	66.1		—		—		—		66.1
Investments in unconsolidated Funds(4)	—		—		2.7		16.4		19.1
BSIG total	82.6		13.0		2.7		16.4		114.7
Investments related to long-term incentive compensation plans(5)	27.0		—		—		—		27.0
Investments of Affiliate held for sale total (Note 3)	27.0		—		—		—		27.0
Common and preferred stock	5.9		—		—		—		5.9
Short-term investment funds	0.5		—		—		—		0.5
Bank loans	—		106.5		—		—		106.5
Investments of consolidated Funds held for sale total (Note 3)	6.4		106.5		—		—		112.9
Total fair value assets	$	116.0	$	119.5	$	2.7	$	16.4	$	254.6

The following table summarizes the Company’s assets and liabilities that are measured at fair value on a recurring basis at December 31, 2019 (in millions): 

	Quoted prices in active markets (Level I)		Significant other observable inputs (Level II)		Significant unobservable inputs (Level III)		Uncategorized		Total value December 31, 2019
Assets of BSIG and consolidated Funds(1)
Common and preferred stock	$	9.8	$	—	$	—	$	—	$	9.8
Short-term investment funds	0.1		—		—		—		0.1
Bank loans	—		109.0		—		—		109.0
Derivatives	0.5		0.1		—		—		0.6
Consolidated Funds total	10.4		109.1		—		—		119.5
Investments in separate accounts(2)	33.2		11.1		—		—		44.3
Investments related to long-term incentive compensation plans(3)	88.8		—		—		—		88.8
Investments in unconsolidated Funds(4)	—		—		3.0		48.2		51.2
BSIG total	122.0		11.1		3.0		48.2		184.3
Total fair value assets	$	132.4	$	120.2	$	3.0	$	48.2	$	303.8
Liabilities of consolidated Funds(1)
Common stock	$	(0.5)	$	—	$	—	$	—	$	(0.5)
Derivatives	(0.1)		(0.3)		—		—		(0.4)
Consolidated Funds total	(0.6)		(0.3)		—		—		(0.9)
Total fair value liabilities	$	(0.6)	$	(0.3)	$	—	$	—	$	(0.9)

(1)Assets and liabilities measured at fair value are comprised of financial investments managed by the Company's Affiliates.

Equity securities, including common and preferred stock, short-term investment funds, other investments and derivatives which are traded on a national securities exchange are stated at the last reported sales price on the day of valuation. To the extent these securities are actively traded and valuation adjustments are not applied, they are classified as Level I. The securities that trade in markets that are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs obtained by the Company from independent pricing services are classified as Level II. 

The Company obtains prices from independent pricing services that may utilize broker quotes, but generally the independent pricing services will use various other pricing techniques which take into account appropriate factors such as yield, quality, coupon rate, maturity, type of issue, trading characteristics and other data. The Company has not made adjustments to the prices provided. Assets of consolidated Funds also include investments in bank loans. Interests in senior floating-rate loans for which reliable market participant quotations are readily available are valued at the average mid-point of bid and ask quotations obtained from a third party pricing service. These assets are classified as Level II.    

If the pricing services are only able to (a) obtain a single broker quote or (b) utilize a pricing model, such securities are classified as Level III. If the pricing services are unable to provide prices, the Company attempts to obtain one or more broker quotes directly from a dealer or values such securities at the last bid price obtained. In either case, such securities are classified as Level III. The Company performs due diligence procedures over third party pricing vendors to understand their methodology and controls to support their use in the valuation process to ensure compliance with required accounting disclosures.

(2)Investments in separate accounts of $29.5 million at September 30, 2020 consist of approximately 2% of cash equivalents and 98% of equity securities, fixed income securities, and other investments. Investments in separate accounts of $44.3 million at December 31, 2019 consist of approximately 3% of cash equivalents and 97% of equity securities, fixed income securities, and other investments. The Company values these using the published price of the underlying securities (classified as Level I) or quoted price supported by observable inputs as of the measurement date (classified as Level II).

(3)Investments related to long-term incentive compensation plans of $66.1 million and $88.8 million at September 30, 2020 and December 31, 2019, respectively, were investments in publicly registered daily redeemable funds (some managed by Affiliates), which the Company has classified as trading securities and valued using the published price as of the measurement dates. Accordingly, the Company has classified these investments as Level I.

(4)The uncategorized amounts of $16.4 million and $48.2 million at September 30, 2020 and December 31, 2019, respectively, relate to investments in unconsolidated Funds which consist primarily of investments in Funds advised by Affiliates and are valued using NAV which the Company relies on to determine their fair value as a practical expedient and has therefore not classified these investments in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to amounts presented in the Condensed Consolidated Balance Sheets. These unconsolidated Funds consist primarily of real estate investment Funds, UCITS and other investment vehicles. The NAVs that have been provided by investees have been derived from the fair values of the underlying investments as of the measurement dates. UCITS and other investment vehicles are not subject to redemption restrictions.

The real estate investment Funds of $5.9 million and $6.4 million at September 30, 2020 and December 31, 2019, respectively, are subject to longer than quarterly redemption restrictions, and due to their nature, distributions are received only as cash flows are generated from underlying assets over the life of the Funds. The range of time over which the underlying assets are expected to be liquidated by the investees is approximately one year to eleven years from September 30, 2020. The valuation process for the underlying real estate investments held by the real estate investment Funds begins with each property or loan being valued by the investment teams. The valuations are then reviewed and approved by the valuation committee, which consists of senior members of the portfolio management, acquisitions, and research teams. For certain properties and loans, the valuation process may also include a valuation by independent appraisers. In connection with this process, changes in fair value measurements from period to period are evaluated for reasonableness, considering items such as market rents, capitalization and discount rates, and general economic and market conditions. 

Investments in unconsolidated Funds categorized as Level III of $2.7 million and $3.0 million at September 30, 2020 and December 31, 2019, respectively, related to investments in Forestry Funds advised by Affiliates and are valued by the general partner of those Funds. Determination of estimated fair value involves subjective judgment because the actual fair value can be determined only through negotiation between parties in a sale transaction, and amounts ultimately realized may vary significantly from the fair value presented.

(5)Affiliate investments held for sale is comprised of Investments related to long-term incentive compensation plans of $27.0 million at September 30, 2020. These were investments in publicly registered daily redeemable funds, which the Company has classified as trading securities and valued using the published price as of the measurement dates. Accordingly, the Company has classified these investments as Level I.

Level Three Investment Reconciliation

The following table reconciles the opening balances of Level III financial assets to closing balances at the end of the period (in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
Investments in unconsolidated Funds	2020		2019		2020		2019
Level III financial assets
At beginning of the period	$	3.0	$	3.0	$	3.0	$	3.0
Additions (redemptions)	(0.3)		0.1		(0.3)		0.1
Transfers in (out) of Level III	—		—		—		—
Total net fair value gains/losses recognized in net income	—		(0.1)		—		(0.1)
Total Level III financial assets	$	2.7	$	3.0	$	2.7	$	3.0

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Variable Interest Entities (Tables)

9 Months Ended

Sep. 30, 2020

Variable Interest Entities

Schedule of assets and liabilities and information pertains to VIEs

The following table presents the assets and liabilities of Funds that are VIEs and consolidated by the Company (in millions):

	September 30, 2020		December 31, 2019
Assets
Investments at fair value	$	—	$	119.5
Other assets of consolidated Funds	103.0		85.7
Assets of consolidated Funds held for sale (Note 3)	114.3		—
Total Assets	$	217.3	$	205.2
Liabilities
Liabilities of consolidated Funds	$	—	$	6.2
Liabilities of consolidated Funds held for sale (Note 3)	0.1		—
Total Liabilities	$	0.1	$	6.2

The following information pertains to unconsolidated VIEs for which the Company holds a variable interest (in millions):

	September 30, 2020		December 31, 2019
Unconsolidated VIE assets	$	6,393.4	$	6,625.5
Unconsolidated VIE liabilities	$	4,260.1	$	4,320.6
Equity interests on the Condensed Consolidated Balance Sheets	$	12.8	$	17.5
Maximum risk of loss(1)	$	18.3	$	23.9

(1)Includes equity investments the Company has made or is required to make and any earned but uncollected management and incentive fees. The Company does not record performance or incentive allocations until the respective measurement period has ended.

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Borrowings and Debt (Tables)

9 Months Ended

Sep. 30, 2020

Debt Disclosure [Abstract]

Schedule of long term debt

The Company’s borrowings and long-term debt was comprised of the following as of the dates indicated (in millions):

	September 30, 2020					December 31, 2019
(in millions)	Carrying Value		Fair Value		Fair Value Level	Carrying Value		Fair Value		Fair Value Level
Third party borrowings:
$450 million revolving credit facility expiring August 22, 2022(1)(2)	$	80.0	$	80.0	2	$	140.0	$	140.0	2
$275 million 4.80% Senior Notes Due July 27, 2026(3)	272.7		294.4		2	272.4		287.2		2
$125 million 5.125% Senior Notes Due August 1, 2031(3)	121.5		128.3		2	121.4		126.4		2
Total third party borrowings	$	474.2	$	502.7		$	533.8	$	553.6
Non-recourse borrowings:
Non-recourse seed capital facility(1)(4)	$	—	$	—		$	35.0	$	35.0	2
Total non-recourse borrowing	$	—	$	—		$	35.0	$	35.0
Total borrowings	$	474.2	$	502.7		$	568.8	$	588.6

(1)Fair value approximates carrying value because the credit facilities have variable interest rates based on selected short term market rates.

(2)An amendment to the revolving credit facility was entered into on September 3, 2020 to reduce the revolving credit facility to $150 million upon the consummation of the sale of the Company’s equity interests in Barrow Hanley.

(3)The difference between the principal amounts and the carrying values of the senior notes in the table above reflects the unamortized debt issuance costs and discounts.

(4)Non-recourse seed capital facility set to expire on January 15, 2021 was paid down in the third quarter and terminated.

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Leases (Tables)

9 Months Ended

Sep. 30, 2020

Leases [Abstract]

Summary of lease information

The following table summarizes information about the Company’s operating leases for the three and nine months ended September 30, (in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Operating lease cost	$	4.0	$	3.4	$	11.9	$	10.3
Variable lease cost	0.1		0.1		0.2		0.2
Sublease income	(0.1)		—		(0.1)		—
Total operating lease expense	4.0		3.5		12.0		10.5
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	3.6		3.7		11.1		11
Right of use assets obtained in exchange for new operating lease liabilities	0.2		0.1		77.3		5.5

Lease liability maturity

Maturities of operating lease liabilities were as follows (in millions):

	Operating Leases
Year Ending December 31,
2020 (excluding the nine months ended September 30, 2020)	$	3.3
2021	13.2
2022	9.2
2023	11.2
2024	10.4
Thereafter	87.8
Total lease payments	135.1
Less imputed interest	(25.1)
Total	$	110.0

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Goodwill and Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Changes in goodwill

The following table presents the changes in goodwill for the nine months ended September 30, 2020 and 2019 (in millions):

	Quant & Solutions		Alternatives		Liquid Alpha		Total
Goodwill	$	22.1	$	153.1	$	133.3	$	308.5
Accumulated impairment	(1.8)		(5.0)		(27.1)		(33.9)
December 31, 2019	$	20.3	$	148.1	$	106.2	$	274.6
Additions	—		—		—		—
Impairments	—		—		(16.4)		(16.4)
Disposals	—		—		—		—
Decrease from reclassification to assets held   for sale(1)	—		—		(76.1)		(76.1)
Goodwill	22.1		153.1		57.2		232.4
Accumulated impairment	(1.8)		(5.0)		(43.5)		(50.3)
September 30, 2020	$	20.3	$	148.1	$	13.7	$	182.1

(1) In connection with the pending divestiture of Barrow Hanley, the Company assigned $76.1 million of goodwill to “Affiliate Assets held for sale” in the Condensed Consolidated Balance Sheet as of September 30, 2020. See Note 3, Divestitures and Assets and Liabilities Held for Sale, in these Notes for additional information.

	Quant & Solutions		Alternatives		Liquid Alpha		Total
Goodwill	$	22.1	$	153.1	$	133.3	$	308.5
Accumulated impairment	(1.8)		(5.0)		(27.1)		(33.9)
December 31, 2018	$	20.3	$	148.1	$	106.2	$	274.6
Additions	—		—		—		—
Impairments	—		—		—		—
Disposals	—		—		—		—
Goodwill	22.1		153.1		133.3		308.5
Accumulated impairment	(1.8)		(5.0)		(27.1)		(33.9)
September 30, 2019	$	20.3	$	148.1	$	106.2	$	274.6

Schedule of change in acquired intangible assets

The following table presents the change in definite-lived acquired intangible assets comprised of client relationships for the nine months ended September 30, 2020 and 2019 (in millions):

	Gross Book Value		Accumulated Amortization & Impairment		Net Book Value
December 31, 2019	$	108.3	$	(44.2)	$	64.1
Additions	—		—		—
Amortization	—		(5.1)		(5.1)
Disposals	—		—		—
September 30, 2020	$	108.3	$	(49.3)	$	59.0

	Gross Book Value		Accumulated Amortization & Impairment		Net Book Value
December 31, 2018	$	108.3	$	(37.6)	$	70.7
Additions	—		—		—
Amortization	—		(4.9)		(4.9)
Disposals	—		—		—
September 30, 2019	$	108.3	$	(42.5)	$	65.8

Schedule of consolidated annual amortization expense

The Company estimates that its consolidated annual amortization expense, assuming no useful life changes or additional investments in new or existing Affiliates, for each of the next five fiscal years is as follows (in millions):

Year Ending December 31,
2020 (excluding the nine months ended September 30, 2020)	$	1.6
2021	6.4
2022	6.5
2023	6.4
2024	6.4
Thereafter	31.7
Total	$	59.0

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Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2020

Earnings Per Share [Abstract]

Calculation of pro forma basic and diluted earnings per share

The calculation of basic and diluted earnings per share of common stock is as follows (dollars in millions, except per share data):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Numerator:
Net income attributable to controlling interests	$	37.2	$	75.4	$	88.7	$	156.1
Less: Total income available to participating unvested securities(1)	—		—		—		(0.1)
Total net income attributable to common stock	$	37.2	$	75.4	$	88.7	$	156.0
Denominator:
Weighted-average shares of common stock outstanding—basic	80,001,360		89,970,871		81,832,607		92,996,289
Potential shares of common stock:
Restricted stock units	115,155		1,429		48,915		79,775
Employee stock options	735,023		—		245,008		—
Weighted-average shares of common stock outstanding—diluted	80,851,538		89,972,300		82,126,530		93,076,064
Earnings per share of common stock attributable to controlling interests:
Basic	$	0.46	$	0.84	$	1.08	$	1.68
Diluted	$	0.46	$	0.84	$	1.08	$	1.68

(1)Income available to participating unvested securities includes dividends paid on unvested restricted shares and their proportionate share of undistributed earnings.

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Revenue (Tables)

9 Months Ended

Sep. 30, 2020

Revenue from Contract with Customer [Abstract]

Schedule of disaggregation of revenue

Management fee revenue by segment and asset class is comprised of the following for the three and nine months ended September 30 (in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Quant & Solutions
Global / non-U.S. equity	$	87.9	$	92.7	$	255.3	$	276.8
Alternatives
Alternatives	43.2		37.2		126.4		124.5
Liquid Alpha(1)
Global / non-U.S. equity	17.8		21.9		56.5		70.6
Fixed income	6.1		6.6		18.5		19.5
U.S. equity	23.2		38.0		70.7		118.4
Management fee revenue	$	178.2	$	196.4	$	527.4	$	609.8

(1)In July 2020, the Company completed the sale of Copper Rock and announced the divestiture of Barrow Hanley. See Note 3, Divestitures and Assets and Liabilities Held for Sale for further discussion of divestitures. The financial results of Barrow Hanley are included in the Liquid Alpha segment for the three and nine months ended September 30, 2020. The financial results of Copper Rock are included in the Liquid Alpha segment until July 24, 2020, the completion of the sale.

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Accumulated Other Comprehensive Income (Loss) (Tables)

9 Months Ended

Sep. 30, 2020

Equity [Abstract]

Schedule of components of accumulated other comprehensive income including proportions attributable to non-controlling interests

The components of accumulated other comprehensive income (loss), net of tax, for the three months ended September 30, 2020 and 2019 are as follows (in millions):

	Foreign currency translation adjustment		Valuation and amortization of derivative securities		Total
Balance, as of June 30, 2020	$	1.0	$	(19.2)	$	(18.2)
Foreign currency translation adjustment	1.4		—		1.4
Amortization related to derivatives securities, before tax	—		0.8		0.8
Tax impact	—		(0.2)		(0.2)
Other comprehensive income	1.4		0.6		2.0
Balance, as of September 30, 2020	$	2.4	$	(18.6)	$	(16.2)

	Foreign currency translation adjustment		Valuation and amortization of derivative securities		Total
Balance, as of June 30, 2019	$	1.7	$	(21.5)	$	(19.8)
Foreign currency translation adjustment	(0.8)		—		(0.8)
Amortization related to derivatives securities, before tax	—		0.7		0.7
Tax impact	—		(0.1)		(0.1)
Other comprehensive income (loss)	(0.8)		0.6		(0.2)
Balance, as of September 30, 2019	$	0.9	$	(20.9)	$	(20.0)

The components of accumulated other comprehensive income (loss), net of tax, for the nine months ended September 30, 2020 and 2019 were as follows (in millions):

	Foreign currency translation adjustment		Valuation and amortization of derivative securities		Total
Balance, as of December 31, 2019	$	2.8	$	(20.3)	$	(17.5)
Foreign currency translation adjustment	(0.4)		—		(0.4)
Amortization related to derivatives securities, before tax	—		2.3		2.3
Tax impact	—		(0.6)		(0.6)
Other comprehensive income (loss)	(0.4)		1.7		1.3
Balance, as of September 30, 2020	$	2.4	$	(18.6)	$	(16.2)

	Foreign currency translation adjustment		Valuation and amortization of derivative securities		Total
Balance, as of December 31, 2018	$	1.8	$	(22.7)	$	(20.9)
Foreign currency translation adjustment	(0.9)		—		(0.9)
Amortization related to derivatives securities, before tax	—		2.2		2.2
Tax impact	—		(0.4)		(0.4)
Other comprehensive income (loss)	(0.9)		1.8		0.9
Balance, as of September 30, 2019	$	0.9	$	(20.9)	$	(20.0)

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Segments (Tables)

9 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

Reconciling Adjustments

The following tables set forth summarized operating results for the Company's three segments and related adjustments necessary to reconcile the segment economic net income to arrive at the Company's consolidated U.S. GAAP net income (loss):

The following table presents the financial data for the Company’s three segments for the three months ended September 30, 2020 (in millions):

	Three Months Ended September 30, 2020
	Quant & Solutions		Alter-natives		Liquid Alpha		Other		Reconciling Adjustments			Total U.S. GAAP(1)
ENI revenue	$	89.0	$	43.8	$	47.9	$	0.1	$	1.6	(a)	$	182.4
ENI operating expenses	37.2		15.3		15.5		5.8		12.6		(b)	86.4
Earnings before variable compensation	51.8		28.5		32.4		(5.7)		(11.0)			96.0
Variable compensation	18.0		10.1		12.3		0.8		3.3		(c)	44.5
ENI operating earnings (after variable comp)	33.8		18.4		20.1		(6.5)		(14.3)			51.5
Affiliate key employee distributions	0.8		7.3		2.9		—		—			11.0
Earnings after Affiliate key employee distributions	33.0		11.1		17.2		(6.5)		(14.3)			40.5
Net interest expense	—		—		—		(5.3)		(1.6)		(d)	(6.9)
Net investment income	—		—		—		—		6.0		(e)	6.0
Gain on sale of Affiliate	—		—		—		—		7.2		(e)	7.2
Net income attributable to non-controlling interests in consolidated Funds	—		—		—		—		3.2		(e)	3.2
Income tax expense	—		—		—		(11.8)		(1.0)		(f)	(12.8)
Economic net income	$	33.0	$	11.1	$	17.2	$	(23.6)	$	(0.5)		$	37.2

The following table presents the financial data for the Company’s three segments for the three months ended September 30, 2019 (in millions):

	Three Months Ended September 30, 2019
	Quant & Solutions		Alter-natives		Liquid Alpha		Other		Reconciling Adjustments			Total U.S. GAAP(1)
ENI revenue	$	93.1	$	37.4	$	65.2	$	0.1	$	2.0	(a)	$	197.8
ENI operating expenses	40.8		16.1		18.5		8.3		5.5		(b)	89.2
Earnings before variable compensation	52.3		21.3		46.7		(8.2)		(3.5)			108.6
Variable compensation	18.8		7.8		15.6		1.9		—		(c)	44.1
ENI operating earnings (after variable comp)	33.5		13.5		31.1		(10.1)		(3.5)			64.5
Affiliate key employee distributions	1.5		5.0		6.1		—		—			12.6
Earnings after Affiliate key employee distributions	32.0		8.5		25.0		(10.1)		(3.5)			51.9
Net interest expense	—		—		—		(5.7)		(2.2)		(d)	(7.9)
Net investment loss	—		—		—		—		7.0		(e)	7.0
Net income attributable to non-controlling interests in consolidated Funds	—		—		—		—		(7.6)		(e)	(7.6)
Income tax (expense) benefit	—		—		—		(12.3)		44.3		(f)	32.0
Economic net income	$	32.0	$	8.5	$	25.0	$	(28.1)	$	38.0		$	75.4

The following table presents the financial data for the Company’s three segments for the nine months ended September 30, 2020 (in millions):

	Nine Months Ended September 30, 2020
	Quant & Solutions		Alter-natives		Liquid Alpha		Other		Reconciling Adjustments			Total U.S. GAAP(1)
ENI revenue	$	257.9	$	128.2	$	147.5	$	0.3	$	5.8	(a)	$	539.7
ENI operating expenses	109.3		47.6		52.7		19.4		0.4		(b)	229.4
Earnings before variable compensation	148.6		80.6		94.8		(19.1)		5.4			310.3
Variable compensation	52.7		29.0		36.0		2.6		17.4		(c)	137.7
ENI operating earnings (after variable comp)	95.9		51.6		58.8		(21.7)		(12.0)			172.6
Affiliate key employee distributions	2.9		20.0		8.9		—		—			31.8
Earnings after Affiliate key employee distributions	93.0		31.6		49.9		(21.7)		(12.0)			140.8
Net interest expense	—		—		—		(16.5)		(5.1)		(d)	(21.6)
Net investment income	—		—		—		—		17.3		(e)	17.3
Gain on sale of Affiliate	—		—		—		—		7.2		(e)	7.2
Net income attributable to non-controlling interests in consolidated Funds	—		—		—		—		(21.3)		(e)	(21.3)
Income tax expense	—		—		—		(31.4)		(2.3)		(f)	(33.7)
Economic net income	$	93.0	$	31.6	$	49.9	$	(69.6)	$	(16.2)		$	88.7

The following table presents the financial data for the Company’s three segments for the nine months ended September 30, 2019 (in millions):

	Nine Months Ended September 30, 2019
	Quant & Solutions		Alter-natives		Liquid Alpha		Other		Reconciling Adjustments			Total U.S. GAAP(1)
ENI revenue	$	277.3	$	125.7	$	202.8	$	0.3	$	6.0	(a)	$	612.1
ENI operating expenses	120.4		49.4		60.0		25.4		4.8		(b)	260.0
Earnings before variable compensation	156.9		76.3		142.8		(25.1)		1.2			352.1
Variable compensation	57.6		28.0		48.1		7.5		4.6		(c)	145.8
ENI operating earnings (after variable comp)	99.3		48.3		94.7		(32.6)		(3.4)			206.3
Affiliate key employee distributions	4.1		17.1		18.6		—		—			39.8
Earnings after Affiliate key employee distributions	95.2		31.2		76.1		(32.6)		(3.4)			166.5
Net interest expense	—		—		—		(15.4)		(6.9)		(d)	(22.3)
Net investment income	—		—		—		—		25.2		(e)	25.2
Net income attributable to non-controlling interests in consolidated Funds	—		—		—		—		(9.6)		(e)	(9.6)
Income tax (expense) benefit	—		—		—		(36.9)		33.2		(f)	(3.7)
Economic net income	$	95.2	$	31.2	$	76.1	$	(84.9)	$	38.5		$	156.1

(1) The most directly comparable U.S. GAAP measure of ENI revenue is U.S. GAAP revenue. The most directly comparable U.S. GAAP measure of ENI operating expenses is U.S. GAAP operating expenses, which is comprised of ENI operating expenses, variable compensation and Affiliate key employee distributions above. The most directly comparable U.S. GAAP measure of earnings after Affiliate key employee distributions is U.S. GAAP operating income. The most directly comparable U.S. GAAP measure of ENI is U.S. GAAP net income attributable to controlling interests.

Reconciling Adjustments:

(a)Adjusted to exclude earnings from equity-accounted Affiliate, which are included in U.S. GAAP investment income, and to include consolidated Funds revenues and the separate revenues recorded for certain Fund expenses reimbursed by customers, which are included in U.S. GAAP revenue.

(b)Adjusted to include non-cash amortization expense for pre-acquisition employee equity, non-cash expenses for key employee equity and profit interest revaluations, capital transaction costs, goodwill impairment and amortization of acquired intangible assets, restructuring costs, consolidated Funds’ operating expenses and the Fund expenses reimbursed by customers, each of which are included in U.S. GAAP operating expenses.

(c)Adjusted to include restructuring costs and the impact of a one-time compensation arrangement entered into during the first quarter of 2020 that includes advances against future compensation payments, which are included in U.S. GAAP compensation expense.

(d)Adjusted to include the cost of seed financing, which is included in U.S. GAAP interest expense.

(e)Adjusted to include net investment income (loss), net income (loss) attributable to non-controlling interests in consolidated Funds, and the gain on sale of Affiliate, all of which are included in U.S. GAAP net income attributable to controlling interests.

(f)Adjusted to include the impact of deferred tax attributable to the amortization of goodwill and acquired intangibles. Also adjusted to include tax expense or benefits relating to uncertain tax positions, the tax impact of certain ENI adjustments and other unusual items that are not included in current operating results for ENI purposes.

Management Fee Revenue by Geographical Area

Management fee revenue by principal geographic area is comprised of the following for the three and nine months ended September 30 (in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
U.S.	$	134.1	$	148.2	$	395.9	$	459.4
Non-U.S.	44.1		48.2		131.5		150.4
Management fee revenue	$	178.2	$	196.4	$	527.4	$	609.8

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Organization and Description of the Business (Details) $ / shares in Units, $ in Millions		3 Months Ended		9 Months Ended
	Mar. 25, 2017	Sep. 30, 2020 segment shares	Sep. 30, 2019 segment	Sep. 30, 2020 USD ($) segment $ / shares shares	Sep. 30, 2019 segment	Feb. 25, 2019
Business Acquisition [Line Items]
Number of reportable segments (in segments) | segment		3	3	3	3
Ordinary shares repurchased (in shares) | shares		0		5,667,962
Average price of ordinary shares repurchased (in dollars per share) | $ / shares				$ 6.20
Value of treasury stock acquired using the cost method | $				$ 35.3
BrightSphere Investment Group | Paulson
Business Acquisition [Line Items]
Parent owned interest						21.70%
Parent Company
Business Acquisition [Line Items]
Percent of interest sold	24.95%

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Basis of Presentation and Significant Accounting Policies (Details) $ in Millions	Jul. 26, 2020 USD ($)
Disposal Group, Held-for-sale, Not Discontinued Operations | Barrow Hanley | Consolidated Entity Excluding Consolidated Funds
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Proceeds from sale of interest in subsidiary	$ 319

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Divestitures and Assets Held for Sale - Narrative (Details) - USD ($) $ in Millions		3 Months Ended		9 Months Ended
	Jul. 26, 2020	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Gain on sale of Affiliate		$ 7.2		$ 7.2
Seed investments held for sale		139.9		139.9		$ 0.0
Consolidated Entity Excluding Consolidated Funds
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Gain on sale of Affiliate		7.2	$ 0.0	7.2	$ 0.0
Assets held for sale		151.0		151.0		0.0
Liabilities held for sale		80.4		80.4		0.0
Seed investments held for sale		27.0		27.0		0.0
Consolidated Funds
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Assets held for sale		114.3		114.3		0.0
Liabilities held for sale		0.1		0.1		0.0
Seed investments held for sale		112.9		112.9		$ 0.0
Disposal Group, Held-for-sale, Not Discontinued Operations | Copper Rock | Consolidated Entity Excluding Consolidated Funds
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Gain on sale of Affiliate		7.2		7.2
Disposal Group, Held-for-sale, Not Discontinued Operations | Barrow Hanley | Consolidated Entity Excluding Consolidated Funds
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Proceeds from sale of interest in subsidiary	$ 319.0
Assets held for sale		151.0		151.0
Liabilities held for sale		80.4		80.4
Operating income (loss) held for sale		9.6	20.4	33.1	60.5
Seed investments held for sale		27.0		27.0
Disposal Group, Held-for-sale, Not Discontinued Operations | Barrow Hanley | Consolidated Entity Excluding Consolidated Funds | Seed Capital
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Seed investments held for sale		17.1		17.1
Disposal Group, Held-for-sale, Not Discontinued Operations | Barrow Hanley | Consolidated Funds
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Assets held for sale		114.3		114.3
Liabilities held for sale		0.1		0.1
Operating income (loss) held for sale		4.7	$ 1.0	(2.0)	$ 5.4
Seed investments held for sale		$ 112.9		$ 112.9

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Divestitures and Assets Held for Sale - Assets and liabilities of affiliate held for sale (Details) - USD ($) $ in Millions	Sep. 30, 2020	Dec. 31, 2019
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Investments, at fair value	$ 139.9	$ 0.0
Consolidated Entity Excluding Consolidated Funds
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Investments, at fair value	27.0	0.0
Affiliate assets held for sale	151.0	0.0
Affiliate liabilities held for sale	80.4	0.0
Consolidated Funds
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Investments, at fair value	112.9	0.0
Affiliate assets held for sale	114.3	0.0
Affiliate liabilities held for sale	0.1	$ 0.0
Disposal Group, Held-for-sale, Not Discontinued Operations | Barrow Hanley | Consolidated Entity Excluding Consolidated Funds
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Cash and cash equivalents	12.2
Investment advisory fees receivable	21.5
Investments, at fair value	27.0
Goodwill	76.1
Right of use assets	12.4
Other Assets	1.8
Affiliate assets held for sale	151.0
Accrued incentive compensation	8.3
Other compensation liabilities	56.4
Operating lease liabilities	12.7
Accounts payable and accrued expenses	3.0
Affiliate liabilities held for sale	80.4
Disposal Group, Held-for-sale, Not Discontinued Operations | Barrow Hanley | Consolidated Funds
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Cash and cash equivalents	0.8
Investments, at fair value	112.9
Other Assets	0.6
Affiliate assets held for sale	114.3
Accounts payable and accrued expenses	0.1
Affiliate liabilities held for sale	$ 0.1

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Investments - Schedule of Investment Components (Details) - USD ($) $ in Millions	Sep. 30, 2020	Dec. 31, 2019
Investment Holdings [Line Items]
Investments at fair value	$ 114.7	$ 303.8
Equity-accounted investments in Affiliates and consolidated Funds	103.7	73.1
Total investments per Condensed Consolidated Balance Sheets	218.4	376.9
Investments held for sale	139.9	0.0
Total investments and investments held for sale per Condensed Consolidated Balance Sheets	358.3	376.9
Consolidated Funds
Investment Holdings [Line Items]
Investments at fair value	0.0	119.5
Total investments per Condensed Consolidated Balance Sheets	101.9	190.6
Investments held for sale	112.9	0.0
Consolidated Entity Excluding Consolidated Funds
Investment Holdings [Line Items]
Investments at fair value	114.7	184.3
Total investments per Condensed Consolidated Balance Sheets	116.5	186.3
Investments held for sale	27.0	0.0
Other investments held at fair value | Consolidated Entity Excluding Consolidated Funds
Investment Holdings [Line Items]
Investments at fair value	48.6	95.5
Investments related to long-term incentive compensation plans held at fair value | Consolidated Entity Excluding Consolidated Funds
Investment Holdings [Line Items]
Investments at fair value	$ 66.1	$ 88.8

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Investments - Investment Income (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Net Investment Income [Line Items]
Net consolidated Funds’ investment gains	$ 6.0	$ 7.0	$ 17.3	$ 25.2
Consolidated Entity Excluding Consolidated Funds
Net Investment Income [Line Items]
Investment income (loss)	3.9	2.3	(3.2)	11.4
Consolidated Entity Excluding Consolidated Funds | Realized and unrealized gains (losses) on other investments held at fair value
Net Investment Income [Line Items]
Investment income (loss)	2.9	1.5	(5.4)	9.3
Consolidated Entity Excluding Consolidated Funds | Earnings from equity-accounted investments in Affiliates
Net Investment Income [Line Items]
Investment income (loss)	1.0	0.8	2.2	2.1
Consolidated Funds
Net Investment Income [Line Items]
Net consolidated Funds’ investment gains	2.1	4.7	20.5	13.8
Consolidated Funds | Realized and unrealized gains (losses) on other investments held at fair value
Net Investment Income [Line Items]
Net consolidated Funds’ investment gains	2.9	(0.4)	(7.6)	2.6
Consolidated Funds | Earnings from equity-accounted investments in Affiliates
Net Investment Income [Line Items]
Net consolidated Funds’ investment gains	$ (0.8)	$ 5.1	$ 28.1	$ 11.2

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Fair Value Measurements - Summary of the assets and liabilities that are measured at fair value on a recurring basis (Details) - USD ($) $ in Millions	9 Months Ended	12 Months Ended
	Sep. 30, 2020	Dec. 31, 2019
Asset of BSIF and consolidated Funds
Investments in unconsolidated Funds	$ 114.7	$ 303.8
Total fair value assets	254.6	303.8
Liabilities of consolidated Funds
Total fair value liabilities		(0.9)
Various Investments
Asset of BSIF and consolidated Funds
Uncategorized		48.2
Various Investments and Affiliate Held-for-Sale
Asset of BSIF and consolidated Funds
Uncategorized	$ 16.4
Real estate investment funds | Minimum
Liabilities of consolidated Funds
Term over which the underlying assets are expected to be liquidated by the investees	1 year
Real estate investment funds | Maximum
Liabilities of consolidated Funds
Term over which the underlying assets are expected to be liquidated by the investees	11 years
Consolidated Entity Excluding Consolidated Funds
Asset of BSIF and consolidated Funds
Investments in separate accounts	$ 29.5	44.3
Investments related to long-term incentive compensation plans	66.1	88.8
Uncategorized	16.4
Investments in unconsolidated Funds	114.7	184.3
Fair value assets held-for-sale	27.0
Total fair value assets	114.7	184.3
Consolidated Entity Excluding Consolidated Funds | Long-term Incentive Compensation Plans
Asset of BSIF and consolidated Funds
Fair value assets held-for-sale	27.0
Consolidated Entity Excluding Consolidated Funds | Various Investments
Asset of BSIF and consolidated Funds
Uncategorized	16.4	48.2
Investments in unconsolidated Funds	19.1	51.2
Consolidated Entity Excluding Consolidated Funds | Other Investments
Asset of BSIF and consolidated Funds
Fair value assets held-for-sale	0.0
Consolidated Entity Excluding Consolidated Funds | Investment Funds Subject to Longer Redemption Restrictions
Asset of BSIF and consolidated Funds
Uncategorized	5.9	6.4
Consolidated Funds
Asset of BSIF and consolidated Funds
Common and preferred stock		9.8
Short-term investment funds		0.1
Bank loans		109.0
Derivatives		0.6
Investments in unconsolidated Funds	0.0	119.5
Fair value assets held-for-sale	112.9
Total fair value assets		119.5
Liabilities of consolidated Funds
Common stock		(0.5)
Derivatives		(0.4)
Total fair value liabilities		(0.9)
Consolidated Funds | Common and preferred stock
Asset of BSIF and consolidated Funds
Fair value assets held-for-sale	5.9
Consolidated Funds | Short-term investment funds
Asset of BSIF and consolidated Funds
Fair value assets held-for-sale	0.5
Consolidated Funds | Bank loans
Asset of BSIF and consolidated Funds
Fair value assets held-for-sale	106.5
Consolidated Funds | Other Investments
Asset of BSIF and consolidated Funds
Uncategorized		0.0
Fair value assets held-for-sale	0.0
Quoted prices in active markets (Level I)
Asset of BSIF and consolidated Funds
Total fair value assets	116.0	132.4
Liabilities of consolidated Funds
Total fair value liabilities		(0.6)
Quoted prices in active markets (Level I) | Consolidated Entity Excluding Consolidated Funds
Asset of BSIF and consolidated Funds
Investments in separate accounts	16.5	33.2
Investments related to long-term incentive compensation plans	66.1	88.8
Fair value assets held-for-sale	27.0
Total fair value assets	$ 82.6	$ 122.0
Liabilities of consolidated Funds
Investment in cash	2.00%	3.00%
Investment in equity securities	98.00%	97.00%
Quoted prices in active markets (Level I) | Consolidated Entity Excluding Consolidated Funds | Long-term Incentive Compensation Plans
Asset of BSIF and consolidated Funds
Fair value assets held-for-sale	$ 27.0
Quoted prices in active markets (Level I) | Consolidated Entity Excluding Consolidated Funds | Various Investments
Asset of BSIF and consolidated Funds
Investments in unconsolidated Funds	0.0	$ 0.0
Quoted prices in active markets (Level I) | Consolidated Funds
Asset of BSIF and consolidated Funds
Common and preferred stock		9.8
Short-term investment funds		0.1
Bank loans		0.0
Derivatives		0.5
Fair value assets held-for-sale	6.4
Total fair value assets		10.4
Liabilities of consolidated Funds
Common stock		(0.5)
Derivatives		(0.1)
Total fair value liabilities		(0.6)
Quoted prices in active markets (Level I) | Consolidated Funds | Common and preferred stock
Asset of BSIF and consolidated Funds
Fair value assets held-for-sale	5.9
Quoted prices in active markets (Level I) | Consolidated Funds | Short-term investment funds
Asset of BSIF and consolidated Funds
Fair value assets held-for-sale	0.5
Quoted prices in active markets (Level I) | Consolidated Funds | Bank loans
Asset of BSIF and consolidated Funds
Fair value assets held-for-sale	0.0
Significant other observable inputs (Level II)
Asset of BSIF and consolidated Funds
Total fair value assets	119.5	120.2
Liabilities of consolidated Funds
Total fair value liabilities		(0.3)
Significant other observable inputs (Level II) | Consolidated Entity Excluding Consolidated Funds
Asset of BSIF and consolidated Funds
Investments in separate accounts	13.0	11.1
Investments related to long-term incentive compensation plans	0.0	0.0
Fair value assets held-for-sale	0.0
Total fair value assets	13.0	11.1
Significant other observable inputs (Level II) | Consolidated Entity Excluding Consolidated Funds | Long-term Incentive Compensation Plans
Asset of BSIF and consolidated Funds
Fair value assets held-for-sale	0.0
Significant other observable inputs (Level II) | Consolidated Entity Excluding Consolidated Funds | Various Investments
Asset of BSIF and consolidated Funds
Investments in unconsolidated Funds	0.0	0.0
Significant other observable inputs (Level II) | Consolidated Funds
Asset of BSIF and consolidated Funds
Common and preferred stock		0.0
Short-term investment funds		0.0
Bank loans		109.0
Derivatives		0.1
Fair value assets held-for-sale	106.5
Total fair value assets		109.1
Liabilities of consolidated Funds
Common stock		0.0
Derivatives		(0.3)
Total fair value liabilities		(0.3)
Significant other observable inputs (Level II) | Consolidated Funds | Common and preferred stock
Asset of BSIF and consolidated Funds
Fair value assets held-for-sale	0.0
Significant other observable inputs (Level II) | Consolidated Funds | Short-term investment funds
Asset of BSIF and consolidated Funds
Fair value assets held-for-sale	0.0
Significant other observable inputs (Level II) | Consolidated Funds | Bank loans
Asset of BSIF and consolidated Funds
Fair value assets held-for-sale	106.5
Significant unobservable inputs (Level III)
Asset of BSIF and consolidated Funds
Total fair value assets	2.7	3.0
Liabilities of consolidated Funds
Total fair value liabilities		0.0
Significant unobservable inputs (Level III) | Consolidated Entity Excluding Consolidated Funds
Asset of BSIF and consolidated Funds
Investments in separate accounts	0.0	0.0
Investments related to long-term incentive compensation plans	0.0	0.0
Fair value assets held-for-sale	0.0
Total fair value assets	2.7	3.0
Significant unobservable inputs (Level III) | Consolidated Entity Excluding Consolidated Funds | Long-term Incentive Compensation Plans
Asset of BSIF and consolidated Funds
Fair value assets held-for-sale	0.0
Significant unobservable inputs (Level III) | Consolidated Entity Excluding Consolidated Funds | Various Investments
Asset of BSIF and consolidated Funds
Investments in unconsolidated Funds	2.7	3.0
Significant unobservable inputs (Level III) | Consolidated Funds
Asset of BSIF and consolidated Funds
Common and preferred stock		0.0
Short-term investment funds		0.0
Bank loans		0.0
Derivatives		0.0
Fair value assets held-for-sale	0.0
Total fair value assets		0.0
Liabilities of consolidated Funds
Common stock		0.0
Derivatives		0.0
Total fair value liabilities		$ 0.0
Significant unobservable inputs (Level III) | Consolidated Funds | Common and preferred stock
Asset of BSIF and consolidated Funds
Fair value assets held-for-sale	0.0
Significant unobservable inputs (Level III) | Consolidated Funds | Short-term investment funds
Asset of BSIF and consolidated Funds
Fair value assets held-for-sale	0.0
Significant unobservable inputs (Level III) | Consolidated Funds | Bank loans
Asset of BSIF and consolidated Funds
Fair value assets held-for-sale	$ 0.0

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Fair Value Measurements - Schedule of Level Three Investment Reconciliation (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Consolidated Funds’ other investments
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Transfers in (out) of Level III	$ 0		$ 0
Consolidated Entity Excluding Consolidated Funds
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
At beginning of the period	3,000,000.0	$ 3,000,000.0	3,000,000.0	$ 3,000,000.0
Additions (redemptions)	(300,000)	100,000	(300,000)	100,000
Transfers in (out) of Level III	0	0	0	0
Total net fair value gains/losses recognized in net income	0	(100,000)	0	(100,000)
Total Level III financial assets	$ 2,700,000	$ 3,000,000.0	$ 2,700,000	$ 3,000,000.0

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Variable Interest Entities - Assets and Liabilities of Funds that are VIEs (Details) - USD ($) $ in Millions	Sep. 30, 2020	Dec. 31, 2019
Assets
Investments at fair value	$ 114.7	$ 303.8
Total assets	1,417.2	1,419.7
Liabilities
Total liabilities	1,145.8	1,221.3
Variable Interest Entity, Primary Beneficiary
Assets
Investments at fair value	0.0	119.5
Other assets of consolidated Funds	103.0	85.7
Assets of consolidated Funds held for sale	114.3	0.0
Total assets	217.3	205.2
Liabilities
Liabilities of consolidated Funds	0.0	6.2
Liabilities held for sale	0.1	0.0
Total liabilities	$ 0.1	$ 6.2

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Variable Interest Entities - Unconsolidated VIEs (Details) - USD ($) $ in Millions	Sep. 30, 2020	Dec. 31, 2019
Variable Interest Entities
Unconsolidated VIE assets	$ 1,417.2	$ 1,419.7
Unconsolidated VIE liabilities	1,145.8	1,221.3
Variable Interest Entity, Not Primary Beneficiary
Variable Interest Entities
Unconsolidated VIE assets	6,393.4	6,625.5
Unconsolidated VIE liabilities	4,260.1	4,320.6
Equity interests on the Condensed Consolidated Balance Sheets	12.8	17.5
Maximum risk of loss	$ 18.3	$ 23.9

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Borrowings and Debt - Long Term Debt Excluding Consolidated Funds (Details) - USD ($)	Sep. 30, 2020	Sep. 03, 2020	Dec. 31, 2019
Fair Value, Inputs, Level 2
Debt Instrument [Line Items]
Carrying value	$ 474,200,000		$ 568,800,000
Fair value	502,700,000		588,600,000
Line of Credit | Non-recourse Seed Capital Facility | Fair Value, Inputs, Level 2
Debt Instrument [Line Items]
Carrying value	0		35,000,000.0
Fair value	0		35,000,000.0
Line of Credit | Revolving credit facility
Debt Instrument [Line Items]
Face amount	450,000,000
Line of Credit | Revolving credit facility | Fair Value, Inputs, Level 2
Debt Instrument [Line Items]
Carrying value	80,000,000.0		140,000,000.0
Fair value	80,000,000.0		140,000,000.0
Line of Credit | Revolving credit facility | the "Amendment"
Debt Instrument [Line Items]
Maximum borrowing capacity		$ 150,000,000
Minimum consolidated adjusted EBITDA		10.00%
Senior notes | Senior Notes, 4.80%, due 2026
Debt Instrument [Line Items]
Face amount	$ 275,000,000
Stated interest rate	4.80%
Senior notes | Senior Notes, 4.80%, due 2026 | Fair Value, Inputs, Level 2
Debt Instrument [Line Items]
Carrying value	$ 272,700,000		272,400,000
Fair value	294,400,000		287,200,000
Senior notes | Senior Notes, 5.125%, due 2031
Debt Instrument [Line Items]
Face amount	$ 125,000,000
Stated interest rate	5.125%
Senior notes | Senior Notes, 5.125%, due 2031 | Fair Value, Inputs, Level 2
Debt Instrument [Line Items]
Carrying value	$ 121,500,000		121,400,000
Fair value	128,300,000		126,400,000
Total third party borrowings | Fair Value, Inputs, Level 2
Debt Instrument [Line Items]
Carrying value	474,200,000		533,800,000
Fair value	502,700,000		553,600,000
Non-recourse Seed Capital Facility | Fair Value, Inputs, Level 2
Debt Instrument [Line Items]
Carrying value	0		35,000,000.0
Fair value	$ 0		$ 35,000,000.0

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Leases - Narrative (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Lessee, Lease, Description [Line Items]
Lease renewal term	5 years
Lease termination period	1 year
Weighted average remaining lease term	11 years 8 months 12 days	4 years 6 months
Weighted average discount rate	3.47%	4.13%
Consolidated Entity Excluding Consolidated Funds | Barrow Hanley | Disposal Group, Held-for-sale, Not Discontinued Operations
Lessee, Lease, Description [Line Items]
Right of use assets	$ 12.4
Operating lease liabilities	$ 12.7
Minimum
Lessee, Lease, Description [Line Items]
Remaining lease terms	1 year
Maximum
Lessee, Lease, Description [Line Items]
Remaining lease terms	13 years

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Leases - Summary of Lease Information (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Leases [Abstract]
Operating lease cost	$ 4.0	$ 3.4	$ 11.9	$ 10.3
Variable lease cost	0.1	0.1	0.2	0.2
Sublease income	(0.1)	0.0	(0.1)	0.0
Total operating lease expense	4.0	3.5	12.0	10.5
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	3.6	3.7	11.1	11.0
Right of use assets obtained in exchange for new operating lease liabilities	$ 0.2	$ 0.1	$ 77.3	$ 5.5

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Leases - Lease Liability Maturity (Details) - USD ($) $ in Millions	Sep. 30, 2020	Dec. 31, 2019
Leases [Abstract]
2020 (excluding the nine months ended September 30, 2020)	$ 3.3
2021	13.2
2022	9.2
2023	11.2
2024	10.4
Thereafter	87.8
Total lease payments	135.1
Less imputed interest	(25.1)
Total	$ 110.0	$ 42.5

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Goodwill and Intangible Assets - Narrative (Details) - USD ($)	3 Months Ended			9 Months Ended		12 Months Ended
	Sep. 30, 2020	Mar. 31, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Finite-Lived Intangible Assets [Line Items]
Impairment of goodwill	$ 0		$ 0	$ 16,400,000	$ 0	$ 0
Amortization of acquired intangibles	1,600,000		$ 1,600,000	$ 5,100,000	4,900,000
Impairment of definite and indefinite-lived intangible assets	0					$ 0
Minimum
Finite-Lived Intangible Assets [Line Items]
Remaining amortization period				3 years
Maximum
Finite-Lived Intangible Assets [Line Items]
Remaining amortization period				9 years
Customer Relationships
Finite-Lived Intangible Assets [Line Items]
Additions				$ 0	0
Trade Names
Finite-Lived Intangible Assets [Line Items]
Additions				1,000,000.0	$ 1,000,000.0
Copper Rock
Finite-Lived Intangible Assets [Line Items]
Impairment of goodwill	$ 0	$ 16,400,000		$ 16,400,000

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Goodwill and Intangible Assets - Changes in Goodwill (Details) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Goodwill [Roll Forward]
Goodwill gross, beginning balance			$ 308,500,000	$ 308,500,000	$ 308,500,000
Accumulated impairment, beginning balance			(33,900,000)	(33,900,000)	(33,900,000)
Goodwill, beginning balance			274,600,000	274,600,000	274,600,000
Additions			0	0
Impairments	$ 0	$ 0	(16,400,000)	0	0
Disposals			0	0
Decrease from reclassification to assets held for sale			(76,100,000)
Goodwill, ending balance	182,100,000	274,600,000	182,100,000	274,600,000	274,600,000
Accumulated impairment, ending balance	(50,300,000)	(33,900,000)	(50,300,000)	(33,900,000)	(33,900,000)
Goodwill gross, ending balance	232,400,000	308,500,000	232,400,000	308,500,000	308,500,000
Consolidated Entity Excluding Consolidated Funds
Goodwill [Roll Forward]
Goodwill, beginning balance			274,600,000
Impairments			(16,400,000)	0
Goodwill, ending balance	182,100,000		182,100,000		274,600,000
Disposal Group, Held-for-sale, Not Discontinued Operations | Barrow Hanley | Consolidated Entity Excluding Consolidated Funds
Goodwill [Roll Forward]
Goodwill	76,100,000		76,100,000
Quant & Solutions
Goodwill [Roll Forward]
Goodwill gross, beginning balance			22,100,000	22,100,000	22,100,000
Accumulated impairment, beginning balance			(1,800,000)	(1,800,000)	(1,800,000)
Goodwill, beginning balance			20,300,000	20,300,000	20,300,000
Additions			0	0
Impairments			0	0
Disposals			0	0
Decrease from reclassification to assets held for sale			0
Goodwill, ending balance	20,300,000	20,300,000	20,300,000	20,300,000	20,300,000
Accumulated impairment, ending balance	(1,800,000)	(1,800,000)	(1,800,000)	(1,800,000)	(1,800,000)
Goodwill gross, ending balance	22,100,000	22,100,000	22,100,000	22,100,000	22,100,000
Alternatives
Goodwill [Roll Forward]
Goodwill gross, beginning balance			153,100,000	153,100,000	153,100,000
Accumulated impairment, beginning balance			(5,000,000.0)	(5,000,000.0)	(5,000,000.0)
Goodwill, beginning balance			148,100,000	148,100,000	148,100,000
Additions			0	0
Impairments			0	0
Disposals			0	0
Decrease from reclassification to assets held for sale			0
Goodwill, ending balance	148,100,000	148,100,000	148,100,000	148,100,000	148,100,000
Accumulated impairment, ending balance	(5,000,000.0)	(5,000,000.0)	(5,000,000.0)	(5,000,000.0)	(5,000,000.0)
Goodwill gross, ending balance	153,100,000	153,100,000	153,100,000	153,100,000	153,100,000
Liquid Alpha
Goodwill [Roll Forward]
Goodwill gross, beginning balance			133,300,000	133,300,000	133,300,000
Accumulated impairment, beginning balance			(27,100,000)	(27,100,000)	(27,100,000)
Goodwill, beginning balance			106,200,000	106,200,000	106,200,000
Additions			0	0
Impairments			(16,400,000)	0
Disposals			0	0
Decrease from reclassification to assets held for sale			(76,100,000)
Goodwill, ending balance	13,700,000	106,200,000	13,700,000	106,200,000	106,200,000
Accumulated impairment, ending balance	(43,500,000)	(27,100,000)	(43,500,000)	(27,100,000)	(27,100,000)
Goodwill gross, ending balance	$ 57,200,000	$ 133,300,000	$ 57,200,000	$ 133,300,000	$ 133,300,000

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Goodwill and Intangible Assets - Change in Definite-Lived Acquired Intangible Assets (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Net Book Value
Ending balance	$ 59.0
Customer Relationships
Gross Book Value
Beginning balance	108.3	$ 108.3
Additions	0.0	0.0
Amortization	0.0	0.0
Disposals	0.0	0.0
Ending balance	108.3	108.3
Accumulated Amortization & Impairment
Beginning balance	(44.2)	(37.6)
Amortization	(5.1)	(4.9)
Disposals	0.0	0.0
Ending balance	(49.3)	(42.5)
Net Book Value
Beginning balance	64.1	70.7
Amortization	(5.1)	(4.9)
Disposals	0.0	0.0
Ending balance	$ 59.0	$ 65.8

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Goodwill and Intangible Assets - Estimated Annual Amortization Expense (Details) $ in Millions	Sep. 30, 2020 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2020 (excluding the nine months ended September 30, 2020)	$ 1.6
2021	6.4
2022	6.5
2023	6.4
2024	6.4
Thereafter	31.7
Total	$ 59.0

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Commitments and Contingencies (Details) - USD ($) $ in Millions	Sep. 30, 2020	Jan. 31, 2020
Other Commitments [Line Items]
Deposit guaranty on behalf of an Affiliate		$ 2.5
Maximum
Other Commitments [Line Items]
Maximum commitments to fund investment activity	$ 37.0

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Earnings Per Share - Calculation of Pro Forma Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Numerator:
Net income attributable to controlling interests	$ 37.2	$ 75.4	$ 88.7	$ 156.1
Less: Total income available to participating unvested securities	0.0	0.0	0.0	(0.1)
Total net income attributable to ordinary shares	$ 37.2	$ 75.4	$ 88.7	$ 156.0
Denominator:
Weighted-average shares of common stock outstanding—basic (in shares)	80,001,360	89,970,871	81,832,607	92,996,289
Potential shares of common stock:
Weighted-average shares of common stock outstanding—diluted (in shares)	80,851,538	89,972,300	82,126,530	93,076,064
Earnings per share of common stock attributable to controlling interests:
Basic (in dollars per share)	$ 0.46	$ 0.84	$ 1.08	$ 1.68
Diluted (in dollars per share)	$ 0.46	$ 0.84	$ 1.08	$ 1.68
Restricted stock units
Potential shares of common stock:
Restricted stock units/Employee stock options (in shares)	115,155	1,429	48,915	79,775
Employee stock options
Potential shares of common stock:
Restricted stock units/Employee stock options (in shares)	735,023	0	245,008	0

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Earnings Per Share - Narrative (Details) - shares	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019
Earnings Per Share [Abstract]
Employee options not included in computation of diluted EPS (in shares)	8,970,000	8,970,000

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Revenue - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Revenue from Contract with Customer [Abstract]
Revenue from expense reimbursement	$ 1.1	$ 0.9	$ 3.3	$ 3.2

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Revenue - Schedule of Disaggregation of Revenue (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Disaggregation of Revenue [Line Items]
Management fee revenue	$ 178.2	$ 196.4	$ 527.4	$ 609.8
Quant & Solutions | Global / non-U.S. equity
Disaggregation of Revenue [Line Items]
Management fee revenue	87.9	92.7	255.3	276.8
Alternatives | Alternatives
Disaggregation of Revenue [Line Items]
Management fee revenue	43.2	37.2	126.4	124.5
Liquid Alpha | Global / non-U.S. equity
Disaggregation of Revenue [Line Items]
Management fee revenue	17.8	21.9	56.5	70.6
Liquid Alpha | Fixed income
Disaggregation of Revenue [Line Items]
Management fee revenue	6.1	6.6	18.5	19.5
Liquid Alpha | U.S. equity
Disaggregation of Revenue [Line Items]
Management fee revenue	$ 23.2	$ 38.0	$ 70.7	$ 118.4

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Accumulated Other Comprehensive Income (Loss) - Components of Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning balance	$ 152.6	$ 21.8	$ 114.5	$ 134.2
Foreign currency translation adjustment	1.4	(0.8)	(0.4)	(0.9)
Amortization related to derivatives securities, before tax	0.8	0.7	2.3	2.2
Tax impact	(0.2)	(0.1)	(0.6)	(0.4)
Total other comprehensive income (loss)	2.0	(0.2)	1.3	0.9
Ending balance	185.8	70.8	185.8	70.8
Foreign currency translation adjustment
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning balance	1.0	1.7	2.8	1.8
Foreign currency translation adjustment	1.4	(0.8)	(0.4)	(0.9)
Amortization related to derivatives securities, before tax	0.0	0.0	0.0	0.0
Tax impact	0.0	0.0	0.0	0.0
Total other comprehensive income (loss)	1.4	(0.8)	(0.4)	(0.9)
Ending balance	2.4	0.9	2.4	0.9
Valuation and amortization of derivative securities
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning balance	(19.2)	(21.5)	(20.3)	(22.7)
Foreign currency translation adjustment	0.0	0.0	0.0	0.0
Amortization related to derivatives securities, before tax	0.8	0.7	2.3	2.2
Tax impact	(0.2)	(0.1)	(0.6)	(0.4)
Total other comprehensive income (loss)	0.6	0.6	1.7	1.8
Ending balance	(18.6)	(20.9)	(18.6)	(20.9)
AOCI Including Portion Attributable to Noncontrolling Interest
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning balance	(18.2)	(19.8)	(17.5)	(20.9)
Ending balance	$ (16.2)	$ (20.0)	$ (16.2)	$ (20.0)

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Accumulated Other Comprehensive Income (Loss) - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Interest Expense
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Gain (loss) reclassified from AOCI to interest expense	$ 0.8	$ 0.7	$ 2.3	$ 2.2

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Derivatives and Hedging (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Jun. 30, 2020	Dec. 31, 2019	Jun. 30, 2019	Dec. 31, 2018	Jul. 31, 2016	Jul. 31, 2015
Derivative Instruments, Gain (Loss) [Line Items]
Other comprehensive income	$ 185.8	$ 70.8	$ 185.8	$ 70.8	$ 152.6	$ 114.5	$ 21.8	$ 134.2
Interest Expense
Derivative Instruments, Gain (Loss) [Line Items]
Loss amount reclassified within twelve months			3.3
Valuation and amortization of derivative securities
Derivative Instruments, Gain (Loss) [Line Items]
Other comprehensive income	(18.6)	(20.9)	(18.6)	(20.9)	(19.2)	(20.3)	(21.5)	(22.7)
Accumulated other comprehensive income (loss)
Derivative Instruments, Gain (Loss) [Line Items]
Other comprehensive income	(16.2)	(20.0)	(16.2)	(20.0)	$ (18.2)	$ (17.5)	$ (19.8)	$ (20.9)
Accumulated other comprehensive income (loss) | Reclassification out of Accumulated Other Comprehensive Income
Derivative Instruments, Gain (Loss) [Line Items]
Interest expense	$ 0.8	$ 0.7	$ 2.3	$ 2.2
Treasury Lock | Designated as Hedging Instrument
Derivative Instruments, Gain (Loss) [Line Items]
Notional amount										$ 300.0
Fair value of derivative									$ 34.4

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Segments - Reconciling Adjustments (Details) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020 USD ($) segment	Sep. 30, 2019 USD ($) segment	Sep. 30, 2020 USD ($) segment	Sep. 30, 2019 USD ($) segment
Segment Reporting Information [Line Items]
Number of reportable segments (in segments) | segment	3	3	3	3
ENI revenue	$ 182.4	$ 197.8	$ 539.7	$ 612.1
ENI operating expenses	86.4	89.2	229.4	260.0
Earnings before variable compensation	96.0	108.6	310.3	352.1
Variable compensation	44.5	44.1	137.7	145.8
ENI operating earnings (after variable comp)	51.5	64.5	172.6	206.3
Affiliate key employee distributions	11.0	12.6	31.8	39.8
Earnings after Affiliate key employee distributions	40.5	51.9	140.8	166.5
Net interest expense	(6.9)	(7.9)	(21.6)	(22.3)
Net investment income	6.0	7.0	17.3	25.2
Gain on sale of Affiliate	7.2		7.2
Net income attributable to non-controlling interests in consolidated Funds	3.2	(7.6)	(21.3)	(9.6)
Income tax (expense) benefit	(12.8)	32.0	(33.7)	(3.7)
Economic net income	37.2	75.4	88.7	156.1
Reconciling Adjustments
Segment Reporting Information [Line Items]
ENI revenue	1.6	2.0	5.8	6.0
ENI operating expenses	12.6	5.5	0.4	4.8
Earnings before variable compensation	(11.0)	(3.5)	5.4	1.2
Variable compensation	3.3	0.0	17.4	4.6
ENI operating earnings (after variable comp)	(14.3)	(3.5)	(12.0)	(3.4)
Affiliate key employee distributions	0.0	0.0	0.0	0.0
Earnings after Affiliate key employee distributions	(14.3)	(3.5)	(12.0)	(3.4)
Net interest expense	(1.6)	(2.2)	(5.1)	(6.9)
Net investment income	6.0	7.0	17.3	25.2
Gain on sale of Affiliate	7.2		7.2
Net income attributable to non-controlling interests in consolidated Funds	3.2	(7.6)	(21.3)	(9.6)
Income tax (expense) benefit	(1.0)	44.3	(2.3)	33.2
Economic net income	(0.5)	38.0	(16.2)	38.5
Quant & Solutions
Segment Reporting Information [Line Items]
ENI revenue	89.0	93.1	257.9	277.3
ENI operating expenses	37.2	40.8	109.3	120.4
Earnings before variable compensation	51.8	52.3	148.6	156.9
Variable compensation	18.0	18.8	52.7	57.6
ENI operating earnings (after variable comp)	33.8	33.5	95.9	99.3
Affiliate key employee distributions	0.8	1.5	2.9	4.1
Earnings after Affiliate key employee distributions	33.0	32.0	93.0	95.2
Net interest expense	0.0	0.0	0.0	0.0
Net investment income	0.0	0.0	0.0	0.0
Gain on sale of Affiliate	0.0		0.0
Net income attributable to non-controlling interests in consolidated Funds	0.0	0.0	0.0	0.0
Income tax (expense) benefit	0.0	0.0	0.0	0.0
Economic net income	33.0	32.0	93.0	95.2
Alter-natives
Segment Reporting Information [Line Items]
ENI revenue	43.8	37.4	128.2	125.7
ENI operating expenses	15.3	16.1	47.6	49.4
Earnings before variable compensation	28.5	21.3	80.6	76.3
Variable compensation	10.1	7.8	29.0	28.0
ENI operating earnings (after variable comp)	18.4	13.5	51.6	48.3
Affiliate key employee distributions	7.3	5.0	20.0	17.1
Earnings after Affiliate key employee distributions	11.1	8.5	31.6	31.2
Net interest expense	0.0	0.0	0.0	0.0
Net investment income	0.0	0.0	0.0	0.0
Gain on sale of Affiliate	0.0		0.0
Net income attributable to non-controlling interests in consolidated Funds	0.0	0.0	0.0	0.0
Income tax (expense) benefit	0.0	0.0	0.0	0.0
Economic net income	11.1	8.5	31.6	31.2
Liquid Alpha
Segment Reporting Information [Line Items]
ENI revenue	47.9	65.2	147.5	202.8
ENI operating expenses	15.5	18.5	52.7	60.0
Earnings before variable compensation	32.4	46.7	94.8	142.8
Variable compensation	12.3	15.6	36.0	48.1
ENI operating earnings (after variable comp)	20.1	31.1	58.8	94.7
Affiliate key employee distributions	2.9	6.1	8.9	18.6
Earnings after Affiliate key employee distributions	17.2	25.0	49.9	76.1
Net interest expense	0.0	0.0	0.0	0.0
Net investment income	0.0	0.0	0.0	0.0
Gain on sale of Affiliate	0.0		0.0
Net income attributable to non-controlling interests in consolidated Funds	0.0	0.0	0.0	0.0
Income tax (expense) benefit	0.0	0.0	0.0	0.0
Economic net income	17.2	25.0	49.9	76.1
Other
Segment Reporting Information [Line Items]
ENI revenue	0.1	0.1	0.3	0.3
ENI operating expenses	5.8	8.3	19.4	25.4
Earnings before variable compensation	(5.7)	(8.2)	(19.1)	(25.1)
Variable compensation	0.8	1.9	2.6	7.5
ENI operating earnings (after variable comp)	(6.5)	(10.1)	(21.7)	(32.6)
Affiliate key employee distributions	0.0	0.0	0.0	0.0
Earnings after Affiliate key employee distributions	(6.5)	(10.1)	(21.7)	(32.6)
Net interest expense	(5.3)	(5.7)	(16.5)	(15.4)
Net investment income	0.0	0.0	0.0	0.0
Gain on sale of Affiliate	0.0		0.0
Net income attributable to non-controlling interests in consolidated Funds	0.0	0.0	0.0	0.0
Income tax (expense) benefit	(11.8)	(12.3)	(31.4)	(36.9)
Economic net income	$ (23.6)	$ (28.1)	$ (69.6)	$ (84.9)

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Segments - Management Fee Revenue by Geographical Area (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Segment Reporting Information [Line Items]
Management fee revenue	$ 178.2	$ 196.4	$ 527.4	$ 609.8
Management fees
Segment Reporting Information [Line Items]
Management fee revenue	178.2	196.4	527.4	609.8
Management fees | U.S.
Segment Reporting Information [Line Items]
Management fee revenue	134.1	148.2	395.9	459.4
Management fees | Non-U.S.
Segment Reporting Information [Line Items]
Management fee revenue	$ 44.1	$ 48.2	$ 131.5	$ 150.4

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Related Party Transactions (Details) - USD ($) $ in Millions	Sep. 30, 2020	Dec. 31, 2019
Affiliate employees | Affiliate loan to its employees
Related party transactions
Related party loans	$ 11.9	$ 16.1