AllianceBernstein (AB) leans into private markets, targeting $90–$100bn to shore up fee revenue

AB leans into private markets to shore up fee revenue

AllianceBernstein is accelerating investment in private markets as a strategic response to active equity outflows and volatile markets, positioning alternatives as a core growth engine. The firm reports private markets assets under management at $82 billion, up 18% year‑on‑year, and says inflows to alternatives and multi‑asset products total $10.6 billion for 2025. Management is pursuing a $90–$100 billion private markets target for 2027, and is using product development and sales momentum to convert strong distribution activity—more than $140 billion of sales last year—into longer‑duration, fee‑bearing AUM.

The shift toward private and other alternative strategies is helping AllianceBernstein expand adjusted operating margins even as active strategies experience net redemptions. Adjusted base management fees rise 5% for the year and adjusted operating income grows 4%, with operating margins expanding 140 basis points to 33.7%. Executives argue that private markets and tax‑exempt fixed income inflows provide a more stable revenue mix and higher margins over time, partially offsetting $22.5 billion of active equity redemptions that drive firmwide active net outflows of $9.4 billion.

Management emphasises disciplined execution and a multi‑year plan to scale private markets capacity, including growing distribution channels and allocating resources to private credit, private equity and infrastructure strategies. The firm cites private markets growth as central to its ability to maintain unitholder distributions and to smooth revenue volatility from the public markets, pointing to a pathway where higher‑margin, less liquid products raise lifetime fee capture and support adjusted earnings per unit.

Other key numbers and operating trends

On a U.S. GAAP basis, AllianceBernstein reports fourth‑quarter diluted net income of $0.90 per unit and adjusted diluted net income of $0.96 per unit, with a quarterly cash distribution of $0.96 per unit. Q4 net revenues are $1.224 billion, down 2.7% from a year earlier, while full‑year net revenues are $4.531 billion, up 1.2%. Full‑year GAAP operating income is $1.050 billion, down 6.5%, and full‑year EPS falls to $2.97 from $3.71.

CEO Seth Bernstein says 2025 delivers disciplined execution and strategic progress, with total AUM reaching a record $867 billion despite market volatility. He reiterates the 2027 private markets target and acknowledges near‑term pressure on GAAP earnings even as adjusted metrics and margins improve.