StepStone Group Inc.STEP
StepStone Group Inc. Fair Value Disclosure
Fair Value Measurements
_______________________________
The Company measures certain assets and liabilities at fair value on a recurring basis.
Financial Instruments of the Company
As of March 31, 2026 and 2025, respectively, the Company held no financial instruments within the fair value hierarchy measured at fair value on a recurring basis.
Contingent Consideration
The Company previously held a contingent consideration obligation liability that was measured at fair value on a recurring basis. The fair value of the contingent consideration obligation was based on a discounted cash flow analysis using a probability-weighted average estimate of certain performance targets, including revenue levels. The significant unobservable inputs required to value the contingent consideration obligation primarily related to the future expected revenues and the discount rate applied to the expected future revenues and payments of obligations. The management fee revenue target for calendar year 2024 was achieved resulting in the full earn-out amount of $75.0 million, which was fully paid during the year ended March 31, 2025. In accordance with the contingent consideration arrangement, a portion of the contingent earn-out liability otherwise payable to the sellers included amounts paid to certain of the Company’s employees and former employees during the year ended March 31, 2025. As a result, the contingent consideration liability was settled net of $5.8 million paid. Changes in the fair value of the liabilities are included in general, administrative and other expenses in the consolidated statements of income (loss).
Financial Instruments of Consolidated Funds
| As of March 31, 2026 | |||||||||||||||||||||||
| Level I | Level II | Level III | Total | ||||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Equity securities | $ | — | $ | — | $ | 1,800 | $ | 1,800 | |||||||||||||||
| Debt securities | — | — | 92,096 | 92,096 | |||||||||||||||||||
| Total assets measured at fair value | — | — | 93,896 | 93,896 | |||||||||||||||||||
Assets measured at net asset value(1) | — | — | — | 621,439 | |||||||||||||||||||
| Total assets | $ | — | $ | — | $ | 93,896 | $ | 715,335 | |||||||||||||||
| Liabilities | |||||||||||||||||||||||
Debt obligations of Consolidated Funds(2) | $ | — | $ | — | $ | 931,185 | $ | 931,185 | |||||||||||||||
| Forward foreign currency contracts | — | 187 | — | 187 | |||||||||||||||||||
| Total liabilities | $ | — | $ | 187 | $ | 931,185 | $ | 931,372 | |||||||||||||||
(1)Includes investment in funds, which are generally organized as partnership and LLC interests measured using the net asset value (“NAV”) per share equivalent calculated by the investment manager as a practical expedient in determining an independent fair value.
(2)As of March 31, 2026, the carrying value of the debt obligations of Consolidated Funds approximates fair value as the closing date of the fund and issuance of notes payable by the fund occurred near the reporting date.
| As of March 31, 2025 | |||||||||||||||||||||||
| Level I | Level II | Level III | Total | ||||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Equity securities | $ | — | $ | — | $ | 63,664 | $ | 63,664 | |||||||||||||||
Fund investments | — | — | 866 | 866 | |||||||||||||||||||
| Total assets measured at fair value | — | — | 64,530 | 64,530 | |||||||||||||||||||
Assets measured at net asset value(1) | — | — | — | 350,481 | |||||||||||||||||||
| Total assets | $ | — | $ | — | $ | 64,530 | $ | 415,011 | |||||||||||||||
_______________________________
(1)Includes investment in funds, which are generally organized as partnership and LLC interests and equity securities measured using the NAV per share equivalent calculated by the investment manager as a practical expedient in determining an independent fair value.
For the financial instruments presented in the tables above, there were no changes in fair value hierarchy levels during the years ended March 31, 2026 and 2025.
The Company generally values its investment funds, which are generally organized as partnership and LLC interests, using the NAV per share equivalent calculated by the investment manager as a practical expedient in determining an independent fair value. The Company does not categorize within the fair value hierarchy investments where fair value is measured using the net asset value per share practical expedient. As of March 31, 2026 and 2025, investments with a combined fair value of $621.4 million and $350.5 million, respectively, are excluded from presentation in the fair value hierarchy as the fair value of these investments were measured at net asset value.
As of March 31, 2026 and 2025, investments with a combined fair value of $93.9 million and $64.5 million, respectively, were classified as Level III investments. As of March 31, 2026, the significant unobservable input used to value these investments classified as Level III investments may include the yield method or mid probable realization value for debt securities. As of March 31, 2025, the significant unobservable inputs used to value these investments classified as Level III investments may include the enterprise value to revenue multiple or the discounts to recent transaction prices or recent round of financing.
A reconciliation from the beginning balance to the closing balance of Level III financial instruments of Consolidated Funds are set forth below:
| As of March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
Financial Assets of Consolidated Funds | |||||||||||
| Balance, beginning of period: | $ | 64,530 | $ | 13,694 | |||||||
| Transfers into Level III | — | 9,289 | |||||||||
| Transfers out of Level III | — | (4,332) | |||||||||
Purchases | 10,808 | 38,369 | |||||||||
Change in fair value | 4,441 | 7,510 | |||||||||
Deconsolidation of fund - Level III derecognition(1) | (77,861) | — | |||||||||
Initial consolidation of funds - Level III recognition(2) | 93,896 | — | |||||||||
Settlements | (1,918) | — | |||||||||
| Balance, end of period: | $ | 93,896 | $ | 64,530 | |||||||
Changes in unrealized gains included in earnings related to financial assets still held at the reporting date | $ | 4,441 | $ | 7,510 | |||||||
_______________________________
(1)During the year ended March 31, 2026, the Company deconsolidated an investment fund that was previously consolidated in the Company’s results as it was determined that the Company no longer held a controlling financial interest. The related investments previously presented as Level III financial assets were derecognized due to the deconsolidation of the fund.
(2)During the year ended March 31, 2026, the Company consolidated four investment funds as it was determined that the Company held a controlling financial interest. Certain investments held by the funds have been presented as Level III financial assets.
| As of March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
Financial Liabilities of Consolidated Funds | |||||||||||
| Balance, beginning of period: | $ | — | $ | — | |||||||
Borrowings(1) | 931,185 | — | |||||||||
Change in fair value | — | — | |||||||||
| Balance, end of period: | $ | 931,185 | $ | — | |||||||
Changes in unrealized gains included in earnings related to financial liabilities still held at the reporting date | $ | — | $ | — | |||||||
_______________________________
(1)During the year ended March 31, 2026, the Company consolidated a CFE vehicle that issues notes payable that are backed by diversified collateral asset portfolios consisting primarily of equity investments in several of the StepStone Funds. The notes payable have been presented as Level III financial liabilities.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | May 27, 2026 | Showing above |
| 2025 | May 23, 2025 | |
| 2024 | May 24, 2024 | |
| 2023 | May 26, 2023 | |
| 2022 | May 31, 2022 | |
| 2021 | Jun 23, 2021 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.