Thank you for standing by, and welcome to the Navigator Global Investments Limited interim results briefing. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Stephen Darke, CEO. Please go ahead.
Thank you, Melanie, and welcome to everyone who has joined the call this morning to discuss the 2024 first half results for Navigator Global Investments. I appreciate the focus on NGI rather than the NVIDIA earnings call that's also happening now and may be receiving some more attention globally. I'm Stephen Darke, Navigator's CEO. I'm joined today by my colleagues, Ross Zachary, CIO of Navigator and head of NGI Strategic Investments, Sean McGould, CEO and CIO of Lighthouse, and Amber Stoney, NGI's Group CFO. Slide 3 is today's agenda, for the call. But before we begin, I'd like to just provide a brief reflection on my first five months at Navigator.
From day one in this role, I've been excited by both the company's focus on alternative asset management as well as the compelling opportunity for me personally to lead this development of the Navigator platform along with the team. There continues to be strong long-term macro tailwinds for both the alternative asset class, but also the independent asset management model, as well as a growing acceptance of the investment proposition of providing strategic capital to support asset managers' growth. More specifically, though, after meeting many of the principals of our partners' firms over the last few months, I recognize the quality and diversity of the strategies and the opportunities for material growth across the Navigator portfolio. Many of the managers, as you know, are leaders in their respective sectors, generating top-tier performance for their investors and raising capital in somewhat challenging markets.
With Ross, I've spent a lot of time with the Blue Owl team discussing potential new opportunities, their impressive Business Services P latform that supports NGI managers, and overall, their perspectives on the GP staking market, of which they are the clear market leader globally. I would like to thank Sean McGould for his support and guidance during the CEO transition period. He has a long history with Navigator, and also is the founder of Lighthouse, the business with which he can now turn his full focus to. So turning to slide 5, the company overview. Navigator is importantly the only ASX-listed company that derives 100% of its revenues from a portfolio of alternative asset managers.
As at the end of the calendar year, across our partner firms, including Lighthouse, Navigator manages AUD 108 billion across 37 strategies, which are invested via the implementation of now 179 investment products. Such strategies have typically low correlation to global and equity in fixed income markets, and importantly to one another. Turning to the business model, and before we cover Navigator's first half business and financial highlights, I wanted to take a brief look at the business and the platform for those who may not be completely aware. In essence, Navigator is a relatively simple company. We provide growth, capital, and strategic engagement to a diverse group of well-established, high-quality alternative managers we refer to as our partner firms. Currently, that portfolio comprises 11 asset managers.
Our model is twofold: We acquire minority interests in asset managers, providing financial capital to drive the growth of those firms via a permanent capital structure, being our listing, that provides then the opportunity for us to take minority stakes and have strong alignment to preserve and increase value for the underlying firms. Navigator also provides strategic support to its partner firms, either directly from the NGI management team, who have a combined 70 years plus experience in alternatives, and also indirectly from the utilization of the 50-person business development team of the NGI, the GP Strategic Capital part of Blue Owl, who economically now owns over 50% of our stock and is our strategic partner.
In terms of our portfolio, given the breadth of many of their platforms, it's often challenging to bucket our partner firm strategies, but the diagram shows our portfolio across liquid alternatives and private market alternatives, with those managers who have elements of both included in the center. It's important to note that liquid alternatives refers to the underlying nature of the hedge fund type strategies, including multi-strat, equity hedge, discretionary macro, commodities. In terms of private markets for Navigator, that includes private credit, real estate capital solutions, asset-backed lending, and specialized private equity.
In terms of the future, I wanted to upfront just indicate for sort of NGI and its shareholders, the growth of the business derived from four sources: increased net inflows across our partner firms; secondly, positive investment performance generated by our partner firms that provide fund returns for investors, but also performance fees and carry; and also improving margins and operating leverage at the partner firms, which increases their profitability and distributions to Navigator. Finally, accretive investments in new partner firms, bringing exposure to additional fee-paying assets, further diversifying the portfolio and increasing the resilience of our revenues. Turning to slide 7, addressing the business highlights for Navigator. 2023 was a pivotal year, with a focus on simplifying the structural complexity of the Navigator business and positioning the company for continued growth.
In the last six months. The company progressed a significant transaction, which saw it acquire the remaining interests in the six strategic portfolio managers originally acquired in 2021. This was done by the early settlement of its 2026 obligation with our major shareholder. This transaction delivered the full earnings of the NGI strategic portfolio two years earlier than under the prior deal terms, and removed a significant liability from NGI's balance sheet, strengthening our financial position significantly. Related, the company launched an entitlements offer on the fifth of December, 2023, to raise cash to partially settle that transaction. Shares were allotted just after the reporting period finished on 3 January, 2024, and Navigator settled the transaction, including payment of $48 million to our. Pleasingly, there was a 93% take-up level for that entitlement offer.
We are announcing today that Navigator has executed an amendment with existing bank lenders that closed on 15 February, increases the size of our revolver to $100 million from the prior $70 million existing facility, and extended the original 3-year term, which was maturing in June of next year, now to a 5-year term, maturing in February 2029. This credit extension provides additional flexibility and liquidity to efficiently manage the Navigator business, and was possible because of the result of the strengthened financial position of the firm post the restructure in equity. It's important to note that Navigator will continue to be conservative in that use of leverage. Finally, Navigator deepened its leadership team with the appointment of an Australian-based CEO, improving the ability to actively engage with the Australian market and execute growth initiatives, working alongside Ross, Sean, and Amber.
I'd like to call out that in October of 2023, Ross was appointed as NGI's Chief Investment Officer and head of NGI Strategic Investments. Ross has been with Navigator since 2016, and has been instrumental in the company identifying and executing what have been transformative transactions for the company. Now, turning to Slide 8, the financial highlights. It has been a strong start to the financial year. We have grown both AUM and profitability across the business. Partner firm AUM increased 16% during calendar year 2023 to just under $74 billion, an increase of almost $10 billion. At the ownership-adjusted AUM level for Navigator, it increased 10% during the course of the year to $26.1 billion.
The group's Adjusted EBITDA for the half year was $35.3 million, at a 67% increase from the prior comparative period. The key driver for this improved performance was the earlier receipt of distributions from the NGI strategic portfolio investments, and importantly, more than doubling of the contributions from the group's specialist private market investments, Marble and Invictus. The NGI strategic business continues to be a key driver of the growth, a key, key driver of the growth, with the company receiving strong cash flows for the half. At an aggregate level, our partner firms have continued to deliver AUM growth through both net flows as well as strong risk-adjusted performance, as we will show, which should continue to grow a diversified and resilient income stream.
Lighthouse delivered 5% annual growth in AUM, importantly, driven by a 26% increase in hedge fund AUM, as well as growth in management fees, which was a 13% increase on the prior comparative period. It's worth noting that 2021 and 2022 were exceptionally strong years in terms of the levels of distributions paid by our partner firms, driven by higher than average performance fees. These years provide an indication of the earnings power of this portfolio. For full year 2023, the result was underpinned by steady management fee revenues at an ownership-adjusted level, but with performance fees returning to more normalized levels.
Based on how the businesses are performing currently, we expect that the second half of 2024 will be stronger than the first half, but the timing of revenue receipts can be variable and at the discretion of the individual managers. So while first half distributions were higher this year versus prior corresponding period, we expect, based on projections of NGI Strategic Investments profitability, that those distributions may be lower overall for the full financial year versus the two previous years, which were exceptionally strong. Also, a portion of NGI's revenues is generated from continued positive performance of its partner firms. Although it's very early in the year, 2024 has started strongly in terms of the performance across NGI strategies.
Turning to Slide 9, there has been continued steady growth of NGI's ownership-adjusted AUM, with the business adding $2.4 billion at the NGI level over the year. The growth was particularly strong from the NGI strategic business, with 17% growth during the year, approximately double the market average. Turning to Slide 10, that $2.4 billion of additional growth in ownership-adjusted AUM has been generated from both net increase ... Sorry, increase in net inflows across the portfolio and positive investment performance, with the growth attributed almost equally from each. Ross will provide further details on attribution between net inflows and investment performance within the strategic portfolio. Turning to Slide 11. As you know, alternative asset managers have strong alignment of interests to the economic performance of their strategies and the returns they generate from their investors.
We have reviewed NGI's current and historical revenue composition, looking through to NGI's share of the underlying revenues of our partner firms. Consistent with the principle, Navigator has a portion of its underlying strategies that are subject to performance fees, with a majority of those strategies having performance fees that crystallize annually, assuming, of course, returns are positive and exceed the strategy's respective high water marks. Accordingly, performance fees should have, and do have, an impact on the ultimate revenues of our partner firms in Navigator. This graph shows the indicative historical split of revenues received by Navigator from both management fees and performance fees, and then the fees by business segment on the right. The average level of performance fee revenue to Navigator in the past years indicatively has been $65 million, representing 29% of total NGI revenues on a look-through basis.
In calendar year 2023, 30% of those revenues were attributed to performance fees in line with the long-term average. It's important to note that given the uncorrelated nature of the underlying strategies, the diversification of the portfolio, and the proven successful long-term performance of our partner firms, there is an expectation that a portion of this overall performance fee revenue should be received every year, providing a resilient source of income for Navigator. For example, of the top three partner firms contributing to NGI distributions in each of 2022 and 2023, only one manager was in the top three in both those years, with four other managers vying for the other key positions. This illustrates the diversification of NGI's partner firms' impact on group distributions.
There will always be variability in the total level of performance fees, with the risk of lower than average overall performance fees, as well as the upside you saw in 2021 and 2022, and frankly, even further potential upside if all managers achieve their targeted returns. Turning to slide 12, having now been at Navigator, evaluating the platform and the opportunity set, I thought I'd just briefly finish the opening remarks to highlight what I believe the key differentiators are of the business, and some further color on Blue Owl and the relationship with Navigator. In my view, the key strengths of an investment in Navigator and our business models are the fact that we are global, and also that we only focus on alternatives. We only also invest in established leading managers globally with track records.
Also, we have a strategic relationship with Blue Owl that provides NGI, not just with a supplemental origination channel for new transactions, but also value creation for the NGI partner firms. In terms of capital structure, being a listed permanent long-term partner in minority stakes in alternatives firms, in my perspective, is the optimal way to support and grow and be invested in the alternative asset management industry. And finally, we have exposure predominantly to equity, hedge, credit, and private assets, which means the portfolio should generate gradual, continued AUM growth with sustained portfolio performance at a portfolio level. Last slide for me, 13. Just a quick snapshot on Blue Owl. It's the global industry leader in partnering with alternative managers, having done 60 deals and having over $54 billion within the vertical that actually provides GP stakes.
Importantly, to the business services platform on the right there, the underlying access that Navigator and its partners have to a 50-person business services platform team that includes just under half in capital introduction that's available to Navigator at no cost to either us or our partner firms. Leveraging this resource, in my mind, is a competitive advantage to Navigator, not requiring the often expensive build-out of a services platform. Typically, given the maturity and leading position of our partner firms, I want to point out that they have their focused business development functions internalized within their business, which in my mind, is the optimal approach to maximizing enterprise value for asset managers. But we do complement that with the Business Services Platform and NGI's direct value add opportunistically. Now, I'd like to hand over to Ross to review the NGI Strategic Investments portfolio. Ross?
Thank you, Stephen. I will start on slide 15 and spend a few minutes describing the NGI Strategic Investments business and why we are so excited about the quality, scale, and outlook of this segment before then kicking it over to Sean to provide an update on Lighthouse. Slide 15 provides an overview on who our partner firms are and what alternative investment strategies they specialize in. These are scaled institutional businesses, time-tested and proven through prior market cycles, illustrating their ability to generate strong investment and operating results through their best-in-class systems and by attracting and retaining top talent. We are fortunate to partner with the businesses who are known as leaders in their respective alternative asset classes.
You can see by the firm level AUM on this page, that these firms not only have the staying power, but the resources to continue to attract talent, new clients, and generate strong profits as they extend their leadership positions in the years to come. As Stephen highlighted, Navigator and our partner firms benefit from the value-add services and perspectives of our strategic shareholder, Blue Owl. That support is provided at no cost to NGI or our partner firms, and provides us with a true edge in what is a highly competitive and ever-evolving industry. We have the differentiating opportunity to leverage the almost real-time insights, guidance, and relationships of Blue Owl's broad ecosystem across their 60+ market-leading managers with well over $1 trillion of alternatives AUM globally, as well as the 50-person team of industry veterans with expertise across their decades of experience.
If you turn to slide 16, we can start to dig into the AUM of this segment... Slide 16 provides an overview of our current partner firms AUM. This segment represents a uniquely diverse set of uncorrelated, independent, alternative asset managers with $58 billion of collective alternative asset management, over $10 billion on an ownership-adjusted basis. Through this portfolio, Navigator gains unique and attractive exposure to high-quality earning streams with significant operating leverage across liquid alternatives, public and private credit, commodities-based strategies, as well as private real estate capital solutions. No single partner firm represents the majority of our AUM in this segment or the profits we've experienced. As expected, since acquiring these assets, we have seen different firms contribute to our profits more than others in any given time period. In recent years, we have been focused on adding long-term duration AUM to the portfolio.
That focus first resulted in the addition of Marble and Invictus, who both deploy their strategies almost exclusively through private equity style, closed-end, drawdown fund mandates with locked up capital and highly visible revenues. We've also been pleased to see several of our existing managers in the NGI Strategic portfolio successfully raising closed-end funds over the past 2-3 years to further diversify their product offerings and extend the duration of their capital as well. Currently, over 25% of this segment's AUM is long duration in nature, and we expect this to grow over time. As we look across this portfolio, we see a variety of growth drivers across the segment. If you turn to slide 17, you'll see a bit more detail on the key drivers of AUM over the past 2 years.
Across the NGI Strategic segment, we have seen AUM growth both through net flows as well as strong performance, resulting in 9% growth in ownership AUM in 2022 and 17% in 2023. Through that time period, we saw our private market partner firms generate strong growth through a capital raising cycle. This was expected and discussed at the time of our investments. In fact, our capital was in large part provided to support this growth. Given the strong market opportunity and compelling risk-adjusted returns they offer, we are looking ahead to another strong capital raising cycle for these managers in the fiscal 2025 to 2027 timeframe. In 2023, we saw a very strong year for the NGI Strategic portfolio in terms of net flows. This was driven by impressive flows into their flagship products, newly launched products, as well as custom outcome-oriented mandates.
I cannot emphasize enough that this organic growth was achieved in a highly competitive and challenging market environment, and validates that it's the well-established firms like NGI partners with, that are best positioned to attract net flows in today's industry. Please also note, when looking at the past two years, that although there are always several products in the market across this portfolio, these are long sales cycles where they're offering private funds to primarily institutional investors, and therefore, it is normal that it will result in lumpy wins. As an example, some of the NGI Strategic portfolio flows we saw in 2023 were in the works for some period of time.
Although not immune to major market dislocations, the last two years clearly illustrate that with so many growth drivers across this business, NGI is very well positioned to deliver continued growth, which results in higher profits over time. If you please turn to slide 18, we'll provide a bit of detail around those recent profit distributions. Looking at slide 18, you will see the six partner firms in the NGI Strategic portfolio on the left side are operating at multi-year peak AUM, and are well positioned to continue to increase enterprise value over time and continue to generate strong profit distributions to NGI.
With that said, the mix of earnings by manager, each who have unique expense structures and profit drivers, does have an impact on the level of profit distributions we receive, and we expect fiscal 2024 will be in line with the longer-term average we've seen from this portfolio. If you look at the right-hand side of the slide, you'll see that $22.4 million of profit distributions contributed to our first half Adjusted EBITDA. This strong increase of over 100% as compared to the first half last year was driven by both an earlier than usual profit distributions from the NGI Strategic portfolio, as well as strong performance from our private market firms, as they are now generating fees off of a higher base AUM, and we did receive distributions related to carried interest from those managers.
It's important to note that this $22.4 million does not yet reflect any additional cash flows from the NGI Strategic portfolio that we will now receive following the January third completion of the redemption payment transaction with Blue Owl. If you please turn to slide 19, we'll provide a bit more detail regarding the investment performance of these partner firms. The strong performance you see on this page and the deep experience in their respective strategies position these firms for further growth. We are very proud of our partner firms' investment results, and especially we find them especially compelling when looking at them in aggregate. Please note that the NGI Strategic composite shown here covers roughly 45% of the overall portfolio's AUM, and is comprised of many of the flagship products, which we see as indicative of the core offerings.
You'll see here that in calendar 2022 and calendar 2023, these strategies can generate attractive risk-adjusted returns in both up and down markets. Although this performance has benefited in recent years by improved investment environment for hedge fund strategies, these are not beta-oriented or market-driven results. They are comprised of alpha generated from investment processes that have been developed over decades in their respective strategies. We do expect this opportunity-rich environment to continue in the years to come, and believe the focus on interest rate policy globally, geopolitical and US election outcomes, as well as the increase we see coming in corporate event activity and the evolving credit market dynamics, as presenting attractive opportunities across our portfolio.
As you look at the returns from our flagship funds of the private market partner firms on the bottom half of the slide, you will see that their strategies of investing capital into broad, inefficient, and underbanked asset classes produce compelling risk-adjusted returns. They deploy highly specialized credit-oriented strategies designed to generate consistent returns to their investors over the life of their closed-end fund vehicles. Even in an environment like 2022 and 2023, where we saw the fastest interest rate increase in history, several material bank failures, and depressed volumes across both the multifamily housing and U.S. mortgage markets that they invest, our partner firms were able to apply their specific targeted approaches and their decades of experience, and we saw them efficiently deploy capital and realize capital, hitting their return targets.
Their investment, financing, and portfolio allocation expertise has been tested, and they are now operating in an attractive environment where their capital is even in higher demand, and we see this strong opportunity set going forward as they deploy their recently raised funds. If you please, slide to, excuse me. If you flip to slide 20, we're providing some analysis on the NGI strategic portfolio and illustrating just how uncorrelated our partner firms' core strategies are to the market, as well as to one another. This diversification benefit was examined at the time of acquiring these assets and continues to contribute to the stability of our composite returns, as well as the AUM trends of this portfolio.
Please note that the strategies shown here also have a low correlation to the private credit-oriented returns of our private market firms and show similar low correlation numbers when run against the investment returns of Lighthouse's main strategies. Please turn to slide 21, and I'll touch on how we are now approaching new growth opportunities. We remain focused on growing our number of unique earning streams and capitalizing what remains a growing need by hundreds of alternative asset managers globally for access to growth capital, or a way to facilitate the evolution of their partnerships, which NGI is well positioned to assist with. We have the proven ability to identify, structure, and execute lasting partnerships with leading alternative asset management firms, and have a true sourcing edge through our partners at Blue Owl.
We approach every partnership knowing that their needs are unique, but with a clear objective to position them for long-term growth while generating attractive returns for NGI shareholders and increasing the scale and diversification of our business. We remain focused on the same characteristics that have resulted in the strong profits and sustainable alignment with our existing portfolio. As part of the scale and diversification effort we continue along, we intend to increase exposure to areas of the alternative asset management industry experiencing secular growth. Our pipeline today ranges across specialized private equity, private credit, as well as hedge fund strategies, which we think may further diversify and are global in nature. We also see a very attractive opportunity set within the broad real assets and infrastructure asset classes. Some of these pipeline opportunities came through us directly from our partners at Blue Owl, while others were sourced directly.
This is an exciting time for the company, as we will have access to more cash flow and increased debt capacity this year, allowing us to capitalize on new opportunities in our pipeline. Sean, over to you.
Thank you, Ross. If we could turn to the next page, just Lighthouse overview and strategy. Wanna hit on a few things. So AUM right now, up to $15.6 billion in AUM across the firm. As many of you know that have listened to these calls for a long period of time, Lighthouse has really gone under quite a transformation over the past decade. When we started the decade, we were more of a fund to funds and allocation business, and we've really transformed the business to be more hedge fund oriented now. So that transformation continues to be very important to us and shows up in the flows that we're seeing in the various products that we offer, particularly in the equity and macro space on a global basis.
So I'm very happy with the progress that we've seen there. The second thing that's most important for Lighthouse is just to continue to deliver on results that our clients expect from us, so from a return, from a return perspective. Calendar year 2022, I think we delivered those results very strongly. It was a difficult year for all sorts of capital markets, whether it's bonds or equities, within the range of asset classes and performed well. I think when we look at the first half of fiscal year 2024, definitely the conditions have been a little bit tougher, particularly for equity hedge strategies like we run. We run very low beta equity strategies. When the markets go straight up, presents a little bit more difficult environment for us.
I would say that's changed since November, despite the markets doing very, very well. The strategies continue to deliver good results here in the first couple of months of the year, and are very optimistic about what we can do going forward. Kind of the third pillar of the business is our clients, and in that respect, we continue to diversify our client base globally. We continue to receive very high marks on our client service, the information we provide to our clients, and the partnering attitude that we have with them. So those are kind of the three pillars of Lighthouse and what we're trying to work on. And, I'm gonna flip to the next page to talk more specifically just about some of the operating results for 2024 here.
When we look at the first half of 2024, we've seen an increase in total fee revenue of $48.1 million. That's a 12% increase above the same period last year. So that's driven really by mainly by management fee income that's come through there. Performance fees have remained very similar to that, and that is reflective of the environment that we've operated in for the first half of this year. So very happy to see growth in total fee revenue of about 12%. Happy with the way that we're seeing trends in AUM and the client diversification again. The biggest drivers of that growth continue to be from the hedge fund business.
The performance fee revenue, as I mentioned, was flat, and the performance fee revenue, I would also point out, is going to continue to vary. As we've pointed out in other parts of the portfolio, I think we're very comfortable that across the NGI portfolio and across the NGI company, performance fees are a part of our revenue mix, but they're much more stable because of the number of businesses that we own. Lighthouse has the same effects. We're gonna see some variability in those performance fees, but you can see they are very consistent over time. So very happy with how we're positioned there.
If we go to the slide just with the AUM trends, on that, just looking at where the growth came from, since 2022, you can see it's up about 26%, in terms of the hedge fund growth, and that is what we have been focused on. That's where the transformation has really taken place. We embed those hedge fund portfolios within our Hedge Fund Solutions business. So when I look at these businesses combined, again, happy with the growth rate that we're seeing. The commingled funds, customized solutions business, as we've said, those will be a little bit slower growth businesses as we emphasize the hedge fund business, but still, seeing growth there.
And then, the Managed Account Services business, which we continue to work on and structure, really to focus on larger, clients and partnership, related elements to those clients, meaning we can help them with just more, than kind of the pipes and plumbing of some of the managed account and other, securities work that we do for them. The growth rate, there has been about 4%. But again, there, I'm happy with the clients that we're working with. I'm happy with how we've prioritized, that business, and as we've described in the past, it's really, more kind of elephant hunting there and developing those relationships, over time. So, you know, we definitely, as we've talked about, the fundraising environment, definitely changes.
It ebbs and flows for our business with really kind of the state of the markets and the euphoria that we see in the markets. If things are going well, things are reaching new highs in stock markets and bonds have come back, that can create a little bit of a headwind for us. I think that these types of conditions pass. Been doing this now for over 27 years. I have seen all different types of environments. The pipeline that we have is very, very strong. The relationships we have with our clients are very strong, and we see time periods more like 2022, when there is enhanced interest in hedge strategies.
And that can certainly wane a little bit when you see markets just, kind of take off like we've seen. But as I've said, we have a very, very strong pipeline. We have a global footprint, global client base, and we continue to deepen our relationships with our clients. So, I think we're in good shape from, from that perspective as well. On page 26, just a little bit on the, on the performance. Looking at that, you can see 2022, you know, better year, certainly relative to the markets. 2023, a little bit more challenged, particularly, in the macro, strategies.
But again, I think we're comfortably positioned to deliver on the promises that we have for our client, and when we evaluate it over a three-year period, I would say we have met the expectations of our clients. I would also point out, as Stephen mentioned, we're seeing some better results here in the first two months of the year. So through the first six weeks of this year, the alpha production globally has really returned nicely. Good results in January, good results here in February, and we're trying to build on that going forward. The last thing I'd point out is just on the focus on our client relationships. So we continue to expand our geographic footprint.
I would say that our business and the growth rates within our business, despite being based here, headquartered in the U.S., I think of Lighthouse as a global company. I always have. We have operations not only in the U.S., but in Europe, in Asia, and we've had these operations for well over 10 years. It's very, very important that we continue to have a global footprint. It's very important that NGI's partner firms have a global footprint because this business and the alternatives business is going to continue to grow globally. And the assets that we see and the growth that we see, and the types of clients that we serve are both within the U.S. and external.
So I'm glad that we've made the investments that we have, in the people, in the offices, to continue to show strong growth. Managed account services, we did reposition that business, and again, we wanna work with our clients, in a much deeper way, in terms of what we're doing there, in terms of the investments, in terms of the operation, in terms of the risks, all of those things. We have very strong partnership relationships with our clients. That's what we want to target, going forward, and that's what we continue to target our marketing efforts towards. And I would say, even since we've done the repositioning, we've had success within those elements.
I think that's the right strategy to do going forward, and happy with what we've done there, from a realignment perspective with the greater Lighthouse business. I think the team is very energized. The clients, certainly, that we service within that segment of business, when we described what we wanted to do and how we wanted to do it, they were extremely receptive, and I think it's helped to deepen those relationships even further. And then the last thing I would point out is just some of the fundraising across distinct client channels. So we have a number of different client verticals that we serve, everything from sovereign wealth funds to pension funds, to hospitals here in the U.S., to foundations to individuals to retirement plans.
Really across the board, we have tried to segment our business and make sure that we're serving those verticals, and we are meeting kind of the needs of what our clients need within the hedge fund universe, for each of those. So I think when our clients speak to us, they know that we are listening, to what they're trying to solve for. If we can help them with that, we're gonna go ahead and do that. If we can't, we've also been very helpful in pointing out others that can. Hopefully, in the future, as we continue to expand the Navigator ecosystem, it will be within our own ecosystem because they are looking for us for trusted advice and trusted advisors.
All of these clients, more than any time in my career of doing this, they want to work with trusted firms that have a lot of experience, that have been through different market conditions, that have experienced executives. This is a tougher time for, I would say, startup elements of the business, particularly within the hedge fund space. Our clients, we have become trusted for them, and that's a great feeling for all of us here. I truly think we're helping our clients helping them in all different sorts of needs. And when you have that trust element and you have an idea for them, and they listen to that, that's really how we're going to increase our growth and deepen our relationships with our clients. So, you know, we're here to service them.
The success of our business is gonna be a derivative of how well we do for our clients, and that's the mentality here. As Stephen mentioned, now that I don't have some of the obligations that I had previously with the holding company, my full focus is on delivering for our clients here, continuing to grow the business, provide opportunities for the employees that work here. But overall, I'm very excited about the NGI platform in total. Lighthouse is one piece of that. When I think of NGI, I think of it as a portfolio of companies that are similar to Lighthouse in terms of what we're doing, but the strength now that we have across these multiple firms is much stronger than when NGI, quite frankly, just owned one business, which was Lighthouse.
And, this may have been where I spent my whole career, but there's power in this portfolio, that's greater than any one element. So I'm super happy with our position. I'm super happy that Stephen has joined us, for the work that Ross and Amber have put in to make this possible, to get this transaction settled with Dyal, and to the partnership that we've developed with Blue Owl and Dyal. So couldn't be happier with how things are positioned, and I'm super excited to see what the next six months brings. So with that, Stephen, I'll pass it over to you or to Amber.
Thanks, Sean. I'll start with slide 29. So as Stephen said earlier, the first half of the 2024 financial year has started strongly. The $35.3 million of Adjusted EBITDA is up 67% on the prior period, and it's driven by increases in revenue across the business. As Ross outlined, the NGI strategic portfolio made distributions of $54.5 million, $15.4 million for the first half, which is double the amount received for the equivalent period last year. This is due to several of the partner firms paying a portion of their profits out ahead of the end of the calendar year, which is a shift in trend that we experienced in the prior two years. Marble and Invictus also contributed to the earnings uplift, distributing $7 million this half, as compared to $3 million in the prior period.
The increase in part reflects the monetization and distribution of carried interest in certain products, which was anticipated this period. Sean has outlined the impact of the higher management fees for Lighthouse, which came in at $41.8 million or 13% up on the prior half. The increase in management fees has been an important contributor to the higher result. With revenue being the key driver of improvement in this result, we also saw a 25% increase in the adjusted EBITDA margin for this period. On slide 30, we set out the key numbers for both statutory EBITDA and adjusted EBITDA. Both statutory revenue and expenses include approximately $53 million of fund reimbursement costs. These represent the cost of Lighthouse funds, which Lighthouse incurs and then fully recovers from the funds.
The size of the reimbursements has grown as Lighthouse continues to build out its hedge fund business. Since they generally net out, we exclude both the revenue and expense side of these reimbursements in adjusted EBITDA. As such, the $72.1 million of the non-IFRS revenue shown in adjusted EBITDA is primarily management fees, performance fees, and distribution income. To get to adjusted EBITDA from statutory EBITDA, we adjust for a number of items. The largest is the change in fair value of assets and liabilities recognized in the P&L. This adjustment excludes from EBITDA gains or losses that are created on the revaluation of the NGI Strategic Partner firms investments, as well as the revaluation each period end of the redemption liability as it progressed closer to its original payment in 2026.
The other adjustments include an add-back of cash paid in relation to office leases, which under IFRS is considered a financing cash flow rather than an operating expense. We also adjust out transaction costs recognized in the P&L in the period, which were incurred in relation to any completed transactions. Finally, the last adjustment is the non-cash share-based expenses. So when you take out those items, you end up with an adjusted EBITDA, which is more reflective of the true earnings of the business without the extra noise of those items.
The largest adjustment this half, and the key driver between the difference between statutory EBITDA and adjusted EBITDA, is the $40 million impact of writing up the redemption liability from its 30 June 2023 carrying value of $160 million, to the $200 million agreed consideration value, which was settled on the 3 January 2024. Moving to the next slide, 31. Here we set out information about the key drivers of adjusted EBITDA for the half. On the revenue side, the 33% revenue increase is driven by AUM increases on both Lighthouse and NGI strategic businesses, and an improvement in average management fee rates from Lighthouse, which were 51 basis points in the prior period and are up to 54 basis points this half.
There's also strong potential for performance fees, with 25% of AUM on the Lighthouse side subject to performance fee arrangements and 76% of AUM on the NGI strategic side. Operating expenses for the period, after excluding fund reimbursement expenses and offsetting some sundry income, which relates to certain cost recoveries, they came in at $34.6 million or up 6%, half-on-half. The group's largest expense relates to employee costs, which were at $1.6 million higher for the half. This was generally due to increases in compensation across the group, largely in response to inflationary pressures. There was also $2.1 million of non-operating expenses, which were incurred during the half, and they were mainly related to the repositioning of the managed account services business that Sean previously mentioned. Other expenses remained relatively flat after netting out sundry income.
There was a $0.2 million increase overall, and that includes a $0.5 million increase in the third-party distribution costs, and these costs have gone up consistent with the growth in the related, assets under management. On slide 32, we set out how we've positioned Navigator with a flexible balance sheet and enhanced cash flows to support our strategic objectives. The early settlement of the redemption liability leaves us in a position where our current funding obligations around deferred consideration of $88 million are met with existing, operating cash flows of the enhanced cash flows and our access to debt. As Stephen mentioned earlier, we've recently closed on an amendment with our existing bankers to increase our secured credit facility from its current $70 million capacity to $100 million, with an increased term of 5 years, now maturing in February 2029.
This facility is flexible, with no minimum draw and flexible repayments, and is at competitive interest rates. The renegotiation of this facility was possible after completing the early settlement of the redemption payment. This was a significant transaction, and slide 33 sets out both the capital structure and the net asset position of Navigator, both pre- and post- the transaction. We were extremely pleased with the results of the rights issue, which formed a part of the funding for the transaction, and the 95% shareholder approval at the AGM, and the 93% participation in the entitlement offer demonstrate that it was strongly supported by our shareholders. The transaction closed on the third of January 2024, and so other than the write-up of the redemption liability to $200 million and its reclassification to a current liability, it's not reflected in the 31 December 2023 balance sheet.
Slide 34 shows the pro forma 31 December balance sheet as if the transaction had closed on that date. The particular adjustments are set out on the slide, so I won't go into them in detail, other than to note the pleasing reduction in total liabilities of the group from $370 million to $168 million post-transaction. I'd also like to point out that as part of the terms of the transaction, Navigator drew $15 million on our loan at the launch of the entitlement offer on the 5th of December. The cash from that draw is included in the $65 million of cash held at balance date.
Given the success of the capital raise, Navigator only used $3.2 million of this cash to fund the consideration for the transaction, and once we'd settled transaction costs, we've paid an additional $18 million against our outstanding loan balance so that the principal owing as of today is $13.5 million. So that ends my section, and I'd like to hand it back to Stephen.
Thanks, Amber. Turning to slide 36, I just want to spend a few minutes on sort of Navigator's growth profile and strategic objectives, and then summarize and hopefully leave a few minutes for questions. On slide 36, which is a fairly simple slide, because it's fairly clear what are the compounding opportunities to grow the business. But there are multiple growth levers in the NGI business model. There's the growth in the alternatives industry, which Navigator specializes, and the tailwinds behind that business, and the interest in strategies that are uncorrelated to the broader markets. There is also continued partner firm growth, and that can either be exhibited via inflows, performance, or increasing operating margin at the underlying businesses.
And then Blue Owl and Navigator can opportunistically, and in a considered way, think about how it can add value to its underlying partner firms to accelerate those firms' growth trajectory. And then finally, as Ross spent some time talking about, it's the addition of new partner firms. Accretive investments in additional managers that help really compound the investment opportunity, and importantly, increase the diversification and resilience of the AUM and earnings. And just stepping back, I mean, our portfolio is just a high-quality portfolio. There remains a concentration on, you know, liquid alternatives and private and public credit. Therein lies the opportunity to add a number of different strategies across the alternative spectrum, and we're looking at those very closely.
A portfolio of minority stakes in alternative asset managers, such as is provided by an investment in NGI, provides a combination of downside protection, upside optionality, and attractive cash flow yield. Turning to slide 37, I don't want to spend much time on this. This is not the forum to discuss the benefits of alternatives, but you can see that out of the asset management industry, of which there are some sectors under some pressure, the alternatives category is growing and expected to grow at double the overall market. The interesting element here is the graph on the right, showing that by 2027, certainly some people think that alternatives will capture over 55% of global revenues in the industry.
With this sort of very favorable macro backdrop, owning equity stakes in a portfolio of leading alternative managers, and thereby sharing in those material base and performance fees by virtue of the equity stakes, should have a material upside for NGI and its stakeholders if those managers continue to successfully invest and grow their business. Next slide, Melanie. The strategic objectives are clear. We need to support and provide value add to our partner firms opportunistically. We need to identify and execute on accretive partner firm investments in growth markets. We won't be doing transactions for deal's sake. We'll be doing transactions that make sense in the overall mix of the Navigator portfolio and business and the backdrop in which we find ourselves. Then finally, to drive capital efficiency and increase operating leverage even further at the NGI level.
Meanwhile, an overall key objective for management is to broaden the market understanding and growth prospects of the NGI business to a larger investor base, also to potential strategic partners, to potential partner firms, and to other market participants, as the business has been largely invisible to many. But as a result of the recent transaction, we have an opportunity to change that dynamic. So in summary, last slide for today. I... You know, Navigator's vision is to be the leading alternatives firm on the ASX, and a preferred partner to mid-market alternative firms globally. Navigator benefits materially from owning alternatives and the increasing demand for alternatives. From my perspective, I believe it has the right capital structure, either by virtue of its listing or by virtue of how it approaches minority stakes for alternative managers.
We have shown increased and continued, and expected continued growth in AUM and earnings. Our relationship with Blue Owl, and through the experience of the NGI team, provides strategic value, and we'll be continuing to focus on that. Finally, we've really looked to in a prudent and measured way look to scale the business with additional, you know, asset managers and partner firms, now that our balance sheet has been strengthened, you know, considerably. So NGI enters 2024 with significant momentum across our business, increasing opportunities to invest for growth and an enhanced capital position. Thanks for listening to the speakers today. Thank you for your time, everyone. I'd now like to open the call to questions. Melanie?
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Phil Chippendale with Ord Minnett. Please go ahead.
Oh, hi, Stephen and team. Thanks for your time. First question, just on Marble and Invictus, the $7 million contribution in the first half is, is a nice jump versus the PCP. Can you perhaps guide us to, to which of the two was the main driver here? Or were perhaps the spoils sort of shared between the two businesses?
Yeah, thanks, Phil. Thanks for being on the line. Ross, do you want to take that?
Sure. So Phil, I guess the first point I'd make is, you know, when we executed both in 2022, we saw them as quite complementary. So as you probably remember, Marble does have more carried interest that they generate and that we bought into than Invictus. So as you can imagine, in this period, they contributed more, as we highlighted, carried interest coming through. But when you think about the flows disclosed and the momentum of these businesses, they're both tracking really nicely in terms of growth and overall profits going forward.
Okay, thanks. This might be a question for Sean. Just on the Lighthouse management fees, and apologies, I joined the call about halfway through today, another result. The Lighthouse management fees were very strong. And so I might have missed this, but can you just walk us through the drivers of that strength, please?
Yeah, it's, again, I mean, there was some growth in the, solutions business, but most of that, Phil, came from, the growth in the, hedge fund business. So, if you look at the slide, just pulling this up, if you look at the slide from 25, you would see where the AUM, came from, and that would roughly correlate with the bump in, management fees that we saw.
Okay, thanks. Last question from me, and probably one for you, Stephen. Just, from a high level, obviously now that the transaction's completed, you know, your relationship with Dyal/Blue Owl is very strong. Just thinking about the, the longer term potential here and your business's appetite for further acquisitions.
Yeah, it's a great question, Phil. That's why I spent quite a bit of time in New York with the Blue Owl team. I think the... You know, one thing I would say, and you may have seen the establishment of a new fund vehicle that they've done called the Advantage Fund. But between their mainline funds, that target the top 200 alternative managers in the world, and the Advantage Fund and Navigator, there's effectively a vertical integration of the GP staking space, of which Navigator is a part. I think there's opportunities to do transactions at each of those three layers. Obviously, my focus and dedication is at the Navigator layer. Given the relationship, and we welcome Marc Pillemer, who'll join the board, very shortly, and their shareholding, there's obviously a great strategic, sort of supplemental pipeline.
I'm not sure if you heard Ross, but he had pointed out, quite rightly, that we have our own proprietary origination by, you know, himself and me and Sean, but there's also transactions that Marc and his team refer to us, partially vetted, and we do our work, of course, like we always do. I would expect that'll continue. In fact, with the new Advantage Fund, I would expect that deal flow could actually accelerate. That doesn't mean we do any transaction or that we get over our skis in terms of how we structure the transaction. We're gonna be prudent in how we look at it. Ross indicated just how big the pipeline of opportunities are.
If I could just highlight one thing, you know, it's been a difficult environment for some managers, so there is a real attraction in taking minority growth capital that doesn't broadly impact the governance and autonomy of your firm from a partner who's able to provide a services platform and help you grow the business, you know, with either, you know, money or, or strategic advice. And we're seeing that happen, I think, more when times are a little bit more challenging for smaller, more smaller firms. So I'm actually quite optimistic. I think we have to be careful on the sizing of transactions, and, and we'll be, you know, focused on that clearly, like we have been doing in the past.
Okay, thanks. That's all from me.
Thank you. Your next question comes from Nicholas McGarrigle with Barrenj oey. Please go ahead.
Good day. Thanks. Phil obviously asked all the, really astute questions. I might just, ask one around the strategic portfolio. Normally around this time, you can indicate what the distributions have been for the kind of financial year to date, and then can you give us any indication on that? Or can we kind of just read into that, that you're expecting somewhere between that three and five-year average return on the strategic portfolio for this financial year?
Yeah, thanks, Nick. Hi, thanks for joining. I might start, and then Ross can certainly, or, and Sean can follow up. You know, as you pointed out in the AGM next year, and we were last year, we were sort of, you know, indicating towards the broader, you know, long-term averages. When we thought about it this year, you know, we've had a difference of timing, receipts of the NGI distributions into the first half.
You know, given that there's variability on when the managers, you know, pay distributions and some of the, you know, the concerns about whether that's gonna be in June, July or August, you know, we took the view that rather than try and guide to a rather narrow range and then find ourselves potentially have to reset, not because there's any difference in the performance or attractiveness of the business, but because of the timing of receipts, that that wouldn't be a prudent proposition. So, you know, I feel very strong about the underlying cash flows and profitability of the firms. But do you feel as if you know exactly when you're gonna get paid the money? I think it's challenging. So, you know, we are guiding...
We expect the second half result to be in excess of the first half, but you know, potentially not as strong as the second half of last year. So we're guiding, therefore, above $70 million at least, if not more, and we'll just have to see how the six months sort of continues to play out. But Ross, Sean, or even Amber, do you wanna sort of provide a supplement to that?
Yeah. Only other thing I'd add, Stephen, and Nick, thanks for the question, is, as you said, so 15.4 for the first half through 12/31, you're quite right. I think the last two years, given it got us through our prep in those two years, we were putting out, you know, as of, you know, February 22, what we've received. We found it to be kind of less, less important this year because we're receiving everything all the way through the end of our fiscal year for 2024 earnings. But we have received about $6 million, since 12/31, through current date.
Just wasn't kind of as paramount, we felt, to the full year earnings, 'cause as Stephen said, this is gonna be a year where, as with other years, that the second half is quite determinant of what the full year, and we've just got to wait to see when those profit distributions come out. But Amber, I think that's the practice that we're gonna move towards probably, you know, 'cause there's no more prep, just thinking about the two periods separately.
Yeah, agree, Ross.
Okay, cool. Thanks for that. And then I think you gave a number of about $96 million of capital committed into those new investments, 7% return, and you kind of said you're tracking, you want to track towards 10%. I mean, you'll put that money out the door in the next couple of years. With that 10% hurdle, do you think that that comes in on a staged timing with the capital deployed, or it might be after you've fully deployed the whole $185 million, it's a couple of years after that?
Ross, do you want to take that?
Sure. It's really tough to say, Nick, in any given year. Everything's in place, given the capital raising, so that as the tranches of those two commitments go in during our fiscal 2025 and then first half of fiscal 2026, we, you know, the earnings will also ratchet evenly above. As you can see from the 7% with committed capital to date, we're tracking for this year's to get above the 10% target. It's just, you know, some of the distributions can be lumpy, so I think it's safe to assume on a fully funded basis, we can absolutely guide to that, and we hope that it's kind of a glide path in nature. Again, directionally, we feel really good that they're tracking glide path.
We just, similar to the other managers, the timing of the profit distributions can always vary.
Thank you.
Thank you. Your next question comes from Lafitani Sotiriou with MST Financial. Please go ahead.
Hey, good day, team. Congratulations on the improved disclosure. A big improvement with that, and it's appreciated. Can I just clarify with the extension or reformatting of the credit facility, is it at similar interest rate, or can you share a little bit of color? I'm not sure if it's disclosed. I haven't had a chance to find it, but.
Yeah. Hi, hi, Laf, and thanks, and, thanks for your comments re disclosure. We're doing our best over here. In relation to the facility, I think the answer is yes, it's broadly the same, and no, we can't disclose specifics, but, Amber, Ross?
Yeah, I would just say, Laf, there's a slightly higher margin, but that reflects the longer five-year term, which is pretty, pretty usual. But, they're definitely attractive rates when we compare some of the other financing options available in the market for loans that size.
Yeah, got it. And just can I circle back on the environment at the moment? There's a few slides around, you know, what the targets are for M&A within the NGI strategic portfolio. Could you just add a little color to what the existing pipeline is, how that's compared historically? And if you could just also elaborate what the hurdle rate is in comparison to your own... Like, is there much consideration if you're looking at these transactions versus where your own stock is trading?
Yeah, thanks, Laf. I, you know, given I can't really compare to historically how Navigator's looked at transactions and, and given really Ross is leading the way fantastically, maybe Ross, you take this, and I'll add anything.
Okay. Yeah, no, sounds good. And Laf, please correct me if I missed part of the, part of the question. With regards to the current pipeline, I would say it's as active as ever, for two reasons. Number one, as we highlighted in the remarks, the demand for growth capital of established yet growing firms is actually higher than it's ever been from our perspective, because the fundraising cycles have extended, and people realize having the stability to support long-term growth is really important. And also, both the LP base, so the global investor base, as well as management teams, have become much more educated, as Stephen highlighted, on the benefits of having a, you know, credible, long-term-oriented partner that can add kind of, you know, legitimate, but, you know, targeted advice and not be too intrusive in their business.
So that's good. I would say of the active portfolio, it really varies right now across specialized private equity, private credit. We are, as I mentioned, looking at some liquid alternatives firms, if there's a good use for capital, and we view them as diversifying to the business, because as you saw from the NGI strategic portfolio, the cash yields to us can be really compelling off of those type of investments, if it's the right opportunity. And then we are seeing groups within more kind of growth equity, where it may take a little bit more work to figure out if they will come out of this, recent few years as a leader or not.
But those are firms that are continue to see secular growth because, you know, innovation needs capital, and there are really experienced groups out there that will continue to put their specialized resources to work. With regards to how we evaluate the deals, it really hasn't changed. We definitely look at how the overall valuation compares to us, but to our stock. But if we're not really using entirely equity funding, and it's part of the funds or not, we're looking at a holistic basis and, you know, several different metrics around shareholder returns in the early, mid, and late cycle of those investments. And then, as Stephen highlighted, making sure that they're diversifying the business.
I mean, one of the things you can see from the last three years of results here is that diversification plays a really big role, and we think it'll play an even bigger role going forward. So that becomes a focus. But Stephen, I don't know if you want to add anything else to that.
I mean, the only thing I would add, and it's probably subject for a separate conversation, but you're obviously seeing large transactions in the private markets being done, some controlled deals that are in, you know, the spotlight, like BlackRock's acquisition of GIP. Some of the prices that are being paid, not necessarily that transaction, but are quite significant, so, you know, very sensitive to price. I mean, those sorts of businesses, on a smaller scale and more Navigator's focused, you know, they're hard to sometimes to grow private markets businesses, step changes in AUM, and different compensation. So you really need to be very careful that you don't overpay for those sorts of businesses. So we're very wary of that.
That doesn't mean we won't look at them, but it's, it's something that we're very focused as to whether this is the right time in the cycle, on some of these, you know, private credit strategies. But the great news is that there are a lot of other opportunities across the spectrum.
Thank you. That's all the time we have for our question and answer session, and that does conclude our conference for today. Thank you for participating. You may now disconnect.