Good afternoon, this is the Chorus Call conference operator. Welcome and thank you for joining the Azimut Holding update on TNB conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Giorgio Medda, CEO of Azimut Holding. Please go ahead, sir.
Thank you and good evening, everyone. Thank you for joining us today, even on such a short notice. I'm Giorgio Medda, CEO of the Azimut Group. I'm speaking to you today from New York, and I'm very pleased to be joined by Alessandro Zambotti, our Group CFO and CEO, and Alex Soppera, our Head of Investor Relations, both connecting from our HQ in Milan. So we are here to present an important chapter for our group, one that we go down in our history books, the launch of TNB, a new generation wealth bank for the Italian market. So, without much ado, let me dive right into the presentation and let's please move to slide number two. So let me begin by outlining the key elements of this transaction, the transaction that we are announcing today.
In the last hour, Azimut has signed a binding agreement with FSI for the creation of TNB, the new generation wealth bank for the Italian market. This transaction follows the exclusivity granted to FSI in December 2024 and the launch of the TNB project, which was announced to the market in late March last year and became operational in May last year as well. This deal represents what is a very major milestone in the evolution of Azimut platform. First of all, it unlocks very significant potential value of over EUR 1.2 billion that is over time through a combination of different components. The first is EUR 240 million of upfront cash payments. The second is EUR 210 million in deferred proceeds. And the third is more than EUR 760 million in cumulative earnouts that are linked to both performance and value creation milestones.
Very important in this transaction is the fact that Azimut will still retain a 19.99% strategic stake in TNB, and that will definitely give us exposure to the future upside in what we believe is a very high potential banking initiative for the Italian market. Moreover, what sets this agreement apart is a EUR 2.4 billion revenue guarantee for net commissions over the next 12 years. That is the result of a long-term economic framework based on what is the most important element of this transaction, that is an industrial partnership with TNB, providing for Azimut a recurring, visible, and resilient revenue stream for the group. TNB will become Azimut's main third-party distributor, and obviously, TNB will have access to a very broad range of current and future investment solutions provided by us, including mutual funds, alternative funds, discretionary solutions, as well as life and retirement products.
At the same time, TNB will also become Azimut's preferred banking partner, and all this is sealed in a distribution agreement with a duration of up to 30 years that reinforces the strategic alignment between the two different entities. So moving to slide three, please. So there are five key messages that I would like you to bring home tonight, the five strategic takeaways to keep in mind. The first is that we are creating two distinct, focused growth engines. On one side, Azimut will continue to operate as a global listed multi-generational financial advisory platform. And on the other hand, the initiative is leading to the creation of TNB, an independent digital player focused on advanced wealth management services that has the ambition to become a leading reference across several customer segments, retail, affluent, and obviously high-net-worth individuals.
Secondly, I mentioned earlier, this is a long-term strategic partnership that has been built for mutual benefit. The initiative combines Azimut's distinctive Asset Management as a Service model based on performance, a broad product suite, and our global reach. T hat goes with the entrepreneurial energy of a new bank-enabled wealth platform that is what TNB wants to be. Together, this creates value for both Azimut and TNB, and above all, for clients. Let me tell you that everything has been engineered here, keeping always clients and the interest of clients at the center of our strategy and ambitions. T hird, I think I would like to spend a few more words on this. This transaction is crystallizing value at a very attractive multiple.
The perimeter that we are contributing to the partnership has been valued at 13.4x 24 earnings, representing a significant premium to Azimut's current trading multiple of approximately 9.5x . This 9.5 is actually calculated on Bloomberg Consensus Forecast for 2025. We have calculated this based on the pro forma net profit of TNB on a self-sustaining basis, and we will detail on this later in the presentation. We are taking into account only the upfront cash and deferred cash components that we will receive. Already, when taking into account only a minor part of the potential proceeds that we expect to receive out of this transaction, one thing is becoming very evident. There is a gap, a very meaningful gap compared to our current market multiples.
But more importantly, I think with this transaction, we are confirming what is the intrinsic quality of our overall business as a leading institutional investor such as FSI is ready to recognize this value. W e believe that that is obviously a key difference from what the market today is recognizing in our stock. We believe all in all that this transaction will act as a catalyst to unlock hidden value within Azimut and obviously should help to bring it closer to a fair market appreciation. A fourth consideration is regarding the capital position of Azimut that comes out much stronger out of all this. Obviously, this partnership will give us the financial flexibility to accelerate our strategic agenda, whether that means investing in financial advisors in Italy, expanding international, pursuing target M&A.
But at the same time, it puts us in an even stronger position to reward our shareholders through dividends and buybacks, fully aligned with our commitment to capital discipline in the context of capital efficiency and long-term value creation. And finally, if there was for this transaction, that would be business as usual, but stronger. We believe that this transaction is a decisive step forward in strengthening Azimut's equity story. We are removing a key overhang that might have weighed on the stock for the last year, certainly for those concerned about the future direction of our Italian business. We are reinforcing Azimut's role as a global multi-generational financial advisory platform. It will do so with the same energy, ambition, enthusiasm, and client-centric focus that have defined our journey so far.
The transaction will make us leaner, more focused, and better geared up to capture future opportunities both in Italy and across our international market. And let me tell you that we are very excited for what lies ahead in the months to come as we enter this next chapter. So let me move now to slide four to give you a few important high-level considerations of the different implications of the transaction on our business perimeter. Alessandro later in the presentation will go through the technicalities of the deal, and you'll be able most probably to have a very complete overview of what that entails for us under the different dimensions of our business. So let's examine the impact on total assets first. So we are using here December 2024 figures.
That is only for making everything easier, but you should assume that any impact is proportionally reflected on the figures that we have discussed during our Q1 earnings call, so December 2024, Azimut's assets under management stood at EUR 107.5 billion, and following this transaction, we would expect to report a proforma figure of approximately EUR 101.2 billion, reflecting a reduction of EUR 6.3 billion, essentially related to third-party assets and advisory solutions that fall within the TNB perimeter. What is very important here to underline is that this portion of assets that will be deconsolidated from Azimut have a very limited impact on our revenues. These are mainly assets where Azimut acts as a distributor of third-party products or advisor rather than a product manufacturer, and thus their contribution to margin is relatively marginal.
At the same time, you see that TNB will start operation with EUR 25.6 billion of client assets, out of which EUR 19.3 billion are Azimut-managed products. Because Azimut remains the asset manager of these assets, these are not deconsolidated from our platform. So in short, this slide, I think, makes a very key point. Azimut remains a EUR 100+ billion asset management platform post this transaction. Now, turning to page five, let me walk you through the impact of this transaction on our net profit. So we start again from reported 2024 net profits of EUR 576 million. And this bridge analysis illustrates the transition to a pro forma net profit of EUR 535 million, showing that approximately 90% power remains intact post-transaction. This is a very, very important message to take away from today's presentation.
So looking at the details, first of all, on the negative side, revenues see a limited decline of EUR 37 million, mainly reflecting the deconsolidation of commissions related to the third-party assets I mentioned earlier. A s I said, there is a very minimal impact on revenues as they actually come with a significantly lower margin than the house-managed products. Acquisition costs will increase. The net impact of this is EUR 50 million. There will be a shift to a new rebate model where TNB will receive 90% of the management fees, and they, in turn, will pay their own financial advisors out of this. You remember that is very different from our current direct system where we direct rebate 40% of the management fees to the financial advisors. Hence, the increase in the cost out of this transaction.
At the same time, on the positive side, we have EUR 60 million savings in operating costs thanks to a leaner structure, obviously fewer employees as some of our colleagues they move to TNB. We also benefit from a EUR 20 million reduction in taxes. That is the obvious result of a smaller consolidated perimeter post-transaction, and having all these figures up, the consolidation of TNB results on a proforma basis would result in a net income of EUR 52 million. You should assume that that would correspond to a theoretical projected 20 24 net profit for TNB. Something that obviously we need to add to this analysis is the fact that we are holding this strategic stake, the 19.99% in TNB.
And so we are adding in this analysis a pro forma EUR 10 million adjustment in the form of our equity participation in the business that will continue to give Azimut exposure to TNB's earnings and obviously growth for the years to come. So putting everything together, the pro forma 202 4 net profits for the group would equal to EUR 535 million. We are excluding here non-recurring items such as performance fees, capital gains. We have, I think, very extensively elaborated on these items last year. By way of reference, we will have what is the recurring net income of EUR 364 million compared to EUR 405 that was before the transaction. So in a nutshell, what this slide shows is that we are delivering and executing what is a transformational transaction, but we are preserving the majority of our earnings capacity.
A t the same time, we are reinforcing the quality and resilience of our platform. So now let's turn to slide six to conclude the first part of my presentation by introducing TNB, an independent digital player focused on advanced wealth management services. TNB has the ambition to become a leading reference, as I said, for a number of client segments, retail, affluent, high-net-worth individuals. From day one, TNB will stand as one of the top 10 networks in Italy in terms of number of financial advisors and total client assets. I mentioned EUR 25.6 billion in assets, a team of more than 900 advisors, more than 100,000 clients. That means only one thing, that TNB will benefit from day one from immediate scale and credibility in the market. TNB obviously will combine the strengths of a very comprehensive product offering, including banking and wealth solutions.
We'll have access to Azimut's proven asset management capabilities. But at the same time, it will be uniquely positioned to capture both fee-based advisory flows and net interest income, tapping into what is the blue ocean of the EUR 1.8 trillion deposit-based opportunity in Italy. Paolo Martini, that was formerly one of Azimut's CEOs, will take the lead as CEO of TNB. Personally, I don't think there is any better guy than him for this role. It brings industry expertise, a clear vision for what this platform can achieve and bring to the Italian market.
Just like we have been doing at Azimut since our listing more than 20 years ago, but in fact, this is actually part of our DNA since the company was created and founded by our chairman 30 years ago, we are aligning incentives of everyone on the platform for long-term success, and a portion of the capital of TNB will be allocated to financial advisors. Having said that, let me now hand over to Alessandro, who will provide you with a detailed overview of the transaction.
Thank you, Giorgio. Let me walk you through slide seven, which offers a clear overview of the key steps in executing this transformational transaction and creating TNB as a new, independent, and well-capitalized banking platform. First, Azimut will acquire a target bank for which there are ongoing and advanced discussions with the counterparty.
The deal will exclude any non-core assets such as the loan book. Next, we will rebrand the acquired bank into TNB, and we will transfer part of our Italian distribution business to create a specialized platform focused on serving retail and affluent clients. TNB will present a very solid regulatory capital position to start its operation. Just as a reference, it is expected to start with a CET1 capital of up to EUR 120 million. Third, FSI, together with a group of co-investors, will acquire just over 80% of TNB. For Azimut, this transaction represents a total potential value of approximately EUR 1.2 billion over time from the sale of that stake. In addition, we are retaining a stake just shy of 20% TNB, giving us a continuing exposure to the upside we expect from the growth and the long-term potential of the project.
So then moving to slide eight, we are now looking to the two parts. This slide provides a clear snapshot of what Azimut and TNB will look like post-transaction across the main business and financial indicators. For simplicity, all figures are set out as at the end of 2024, as we did for the previous slide. On the left, we have the status quo as Azimut it is, so with EUR 107.5 billion including assets and just over 800 financial advisors. Following the transaction, Azimut will continue its growth as an independent global player with over EUR 100 billion in total assets and around 880 financial advisors in Italy and over 850 professionals worldwide. We will continue to offer our full range of investment solutions across both public and private markets alongside the best-in-class wealth advisory services globally, independently, and at a scale.
Azimut will remain focused on what we do best, managing investment and delivering such advisory services globally, while banking services will be offered through TNB with our dedicated and licensed partner. TNB, instead, will start with about EUR 25 billion in total client assets, approximately 130 financial advisors and 40 professionals in Italy. While they will not have their own product factory, TNB's financial advisory network will distribute a broad range of current and future investment solutions to Azimut Group, including our mutual funds, insurance products, the asset management, and private market solutions. Turning to the financial, it's important to underline that our gross revenue will remain broadly unchanged as our total client assets also stay broadly stable. That's because we will continue to manage the same product, now distributed through the TNB network.
On a pro forma basis for 2024, we expect to generate over EUR 1.43 billion in total revenue and just EUR 40 million below the current structure. Giorgio has already walked through the main drivers of this delta, the most notable being distribution costs. And this line in the P&L will be the most impacted as we transition to a new rebate model going forward. We will rebate 90% of management fee to TNB, which will then compensate its financial advisor. This compares to our current setup where we directly rebate approximately 40% of management fee to our own advisor. H owever, all things considered, the deconsolidation effect in terms of net profit remains limited. On a pro forma basis, our 2024 bottom line will stand at around EUR 530 million compared to approximately EUR 580 million under the current structure and a reduction of roughly 10%.
I would also like to mention again that for those interested in the full detail, you will find a complete pro forma P&L in the appendix of this presentation. In turn, always based on a pro forma 2024 data, TNB will start approximately with EUR 234 million in gross revenue, mainly related to the Azimut rebate tied to EUR 19 billion in distributed assets, plus the income related to the management of the additional around EUR 6 billion clients' assets included in the perimeter, not related to the Azimut product.
TNB will start with a net income of over EUR 50 million, which excludes costs to be sustained by TNB on a self-standing basis. The tax items related to the new banking business and other temporary effects stemming from the separation. What's important to highlight once again is the strategic rationale behind this initiative, behind the financial proceeds from the state.
TNB will enable Azimut to assess the currently untapped EUR 1.8 trillion deposit in market in Italy, a space where our main competitors are already active and a lot meaningful upside through the net interest income. So overall, we believe that TNB project offers significant long-term value creation potential for all our Azimut stakeholders, while resulting in only a relatively modest and strategically manageable economic impact for the group. So moving to slide nine, at the end of this transaction, it is a long-term industrial partnership designed to create lasting value for all stakeholders, clients, shareholders, and both businesses. This is not a simple distribution agreement. It is a minimum 20-year strategic framework that integrates three pillars: the asset management, the financial advisor, and the banking services. Through this model, TNB will distribute the full suite of Azimut products from mutual funds to private markets within an open architectural environment.
This model allows TNB to leverage the Azimut global expertise and international track record while ensuring maximum flexibility, competitive product selection, and the ability to enhance the experience for both advisors and clients. Let us now turn to what we consider one of the most strategic pillars of this transaction, the revenue guarantee agreement between Azimut and TNB. So under this agreement, TNB commits to pay Azimut a minimal total of EUR 2.4 billion over an initial period of at least 12 years, which equates to EUR 200 million per year in exchange for the ongoing provision of Azimut asset management solutions and services. This revenue framework ensures long-term revenue visibility for Azimut, providing stable and recurring cash flows over time.
If in any given year the target amount is not reached, TNB will have two options: either to pay the difference between the EUR 200 million in net commission and the amount actually achieved, or to extend the duration of the guarantee by an additional year for a maximum term of up to 30 years. In any case, the EUR 2.4 billion total guarantee remains fixed unless specific events occur, such as material regulatory change. It is important to highlight that assuming the 90% rebate level is agreed going forward, Azimut is already generating approximately this level of revenue from the products currently distributed through the TNB perimeter.
This means that any future growth in TNB's AUM invested in Azimut product would create a natural buffer related to the EUR 200 million threshold. J ust to be clear, this EUR 200 million per year is not a ceiling. This is a floor.
The guarantee product protects Azimut and its shareholders from downside risk but doesn't limit our upside. As TNB expands and strengthens its commercial reach, we expect this partnership to unlock incremental value for both the institutions. Let me now turn to the final pillar of the partnership framework. As shareholders in TNB, we as Azimut have an important governance right through a shareholders' agreement, which includes the right to appoint one board director and one effective statutory auditor. The agreement also grants Azimut veto rights over centralized methods, as well as standard information rights. Additionally, Azimut holds a call option that can be exercised after seven years, subject to specific conditions. Together, these pillars form a unique and forward-looking partnership structure that combines long-term strategic alignment with financial resilience, positioning both Azimut and TNB to capture meaningful value over the long term.
Let us now turn to the financial dimension of the transaction and the long-term value it creates for Azimut. The disposal of the 80% stake in TNB to FSI and a selective pool of co-investors, including the financial advisor, is expected to generate total potential proceeds for Azimut of approximately EUR 1.2 billion to be realized progressively over time. This amount includes a mix of upfront and performance-linked payments structured to align with the long-term success of TNB. Here is how it breaks down. We will receive EUR 240 million in cash at closing. In addition, we expect to receive up to EUR 210 million in deferred cash paid out through dividends or at the time of the exit. The timing of the full realization of this amount may vary depending on how the actual scenario unfolds.
The project is built on a capital light model designed to generate excess capital over time while maintaining a strong capital position. Furthermore, there will be up to EUR 760 million in cumulative earn-out tied to clearly defined performance targets. It is important to highlight that the total value Azimut could receive depends on several factors. These include, among the other things, the amount of excess capital and dividends distributed by TNB post-closing, the level of deposit gathered, the returns achieved at exit, and when that exit occurs. Finally, there is a waterfall mechanism among stakeholders. So the valuation required at exit to reach the full amount may vary depending on how these elements play out. More detailed information on this can be found in the appendix of this presentation.
It is worth highlighting that the total value potential for Azimut stemming from the transaction is not only related to the cash proceeds but also includes the potential upside from the retaining of almost 20% stake. This ensures continuing exposure to the growth of what we believe is a potential fintech banking initiative and positions us to benefit from future value creation over time. The retained stake also gives Azimut the right to receive pro-rata dividends and value appreciation independent of amortization. Beyond that, as we discussed earlier, the long-term revenue guarantee ensures at least EUR 2.4 billion over a minimum period of 12 years, providing strong visibility on future cash flows and downside protection without limiting upside.
In summary, this transaction delivers immediate liquidity, long-term revenue, cash flow stability, and a meaningful exposure to a growth platform that is well-positioned to capture the future of banking and advisory, to which we are fully strategically aligned. Let's now move to page 11, where I will give you a high-level overview of what we are planning to do with the proceeds of this transaction. The cash proceeds from this transaction, both upfront and over time, give us more meaningful flexibility to strengthen our platform and unlock long-term value across three key areas. First, the organic growth. We will continue to invest in what sets Azimut apart, our people, and our platform. That means expanding our footprint in Italy and across our international markets, investing into financial advisors and scaling up our fintech capabilities and advanced advisory services.
These are the pillars that we will shape the next decade of our business across the 20 countries where we already have a strong presence. Second is the organic growth. We are now even better positioned to pursue M&A opportunities, not only in asset management but also in strategic verticals such as private markets and corporate investment banking, where we see clear strategic and financial upside. Third, the shareholders' returns. We remain fully committed to create value for our shareholders. That means using our strong capital position to return capital through dividends, to unlock value through buybacks, and proactively address what we continue to see as a disconnect between our fundamentals and our share price.
We clearly see this announcement of today as the starting point of a new exciting phase for Azimut, and we look forward to sharing more on our updated strategic goals and dividend policy in the months ahead. So let me move to the slide of my part of the presentation, slide 12. Let me go through the expected next steps. Today, we just signed a definitive agreement with FSI for the creation of TNB. The coming months will be dedicated to executing the corporate steps necessary to implement the transaction. This action will be carried out simultaneously and is already well underway, and we expect them to conclude by the end of Q3 2025.
During the first quarter of this year, we then expect to receive the required regulatory approvals from the competent authorities, including the European Central Bank, the Bank of Italy, CONSOB, and the antitrust authorities. And finally, subject to receiving these approvals, the transaction is expected to close by the end of the fourth quarter of 2025. With that, we outline the clear path forward to closing. I will now hand back to Giorgio to wrap up today's presentation.
Thank you, Alessandro. M oving to slide 13. Again, to wrap up the presentation, as Alessandro mentioned, I would like to show you again where is the spinning wheel that we presented to you during Q1 earnings call.
This is essentially to represent our aim to reposition investor perception on Azimut and demonstrate that Azimut is not only a collection of silos businesses disconnected from each other, but in fact, Azimut is a single high-performing platform with multiple levels of growth. We believe this is a model particularly well-positioned to respond to the structural industry shifts, and thanks to our scale geographic diversification alignment between performance and distribution, we believe that we can see significant growth and value in the future, so we will always start from our commitment to deliver performance to clients. We will continue working on innovating our product range. We will leverage our global distribution reach. That will result in earnings and asset growth, and obviously, we aim at leveraging technology to make sure that this growth also is delivered across multiple client segments.
Azimut will always be a customer-centric, independent global advisory platform delivering an Asset Management as a Service proposition that we believe is unique in the global asset management industry. So moving to the last slide, an update on our targets. That is obviously something that today we can share with you based on what we have announced in terms of agreement with FSI. So let me first talk about the net profit targets. We, in the past, provided a range between EUR 400 million and EUR 1.25 billion.
Today, we are ready to release what is a new net profit target of approximately EUR 1 billion. So the net profit target is based on our original estimate of at least EUR 400 million. T he upper bound of the range, the billion now includes what is a probability-weighted estimate of the capital gain out of the future earnings of the transaction.
So this is something that cannot be mathematically calculated with the figures that we provided today, but obviously, we'll be happy to elaborate on how we get there during the Q&A or even offline. Obviously, this figure is subject to TNB obtaining authorization to operate as a bank and is subject to final accounting treatment upon the closing of the transaction. We also reiterate our EUR 10 billion net inflow targets for the year. As we have seen from our April assets under management figure release, we have already surpassed 50% of this target, and we have obviously strong business coming through, and we are very confident that this target can be achieved, if not beaten, during the year. Also, last reminder, the group will present the new strategic targets and dividend policy by Q3 2025 results, so essentially by November.
We believe that will mark what is a very exciting plan for our next phase of earnings growth and value creation. So I would open now the floor to any questions.
Thank you. This is the Chorus Call conference operator who will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Gianluca Ferrari of Mediobanca. Please go ahead.
Yes. Hi, good evening. Ciao, Giorgio. Ciao, Alessandro. I have many, but I will restrict myself to the three most important ones, probably.
First one is on the use of cash. I think after the dividend payment and with the cash in you are announcing tonight, you are close to EUR 1 billion of cash in the balance sheet. You often flag the undervaluation of the stock, and we remember last year some concerns around the cash position of the company. So my question here is why you are not announcing a share buyback program tonight, considering that you renewed the authorization for a 10% or close to 10% buyback a couple of weeks ago at the AGM? The second is on the level of deposits. It seems to me, at least, that most of the earnout is linked to the capability of TNB to get NII. So it's certainly very important to understand what are FSI expectations for deposits and relative NII. And if you can elaborate those with us.
I think in the presentation, you are putting that the TNB has 100,000 clients. If I take the average deposit per client of your three major listed network with a banking license, we should expect EUR 2/3 billion of deposits, but I recall last year, we were even talking about EUR 7.5-9 billion of deposits at the end of the plan, so can you help us at reconciling what are FSI's expectations here? And the third one is on the rebates that have been raised to 90%. It's very clear what you told us, that it has been raised because it's going to be FSI to pay the commissions to the advisors. What I'm wondering here is that this is the same scheme at the time you presented the project to us in April, or there is something that has changed, and I limit myself here. Thank you.
Okay. Gianluca, I will pick up your first question, and then I'll leave Alessandro to respond to the other two. So the allocation of the proceeds, what we want to do is really come back to you with a comprehensive strategy plan where we are able to fit everything in one place. Today, I think it would be very premature for us to come out with an announcement regarding dividends or share buyback without having provided to you a set of targets. We want really to tell you where we want to see the company five years from now. A s I said, it will be capital discipline as much as capital efficiency. So for us, shareholder remuneration, organic investment, and non-organic investments are all equally important.
Obviously, as you said, we start from almost EUR 1 billion cash position in our balance sheet, and that suggests that shareholders will be at the center of the use of this cash going forward. So don't take this as disappointing news. I think it's very normal for a firm with a global business very devoted to growth to release what is a comprehensive plan for the use of cash. It doesn't mean, I mean, today, the fact that we are not telling you anything about it doesn't mean that we are sort of walking back from shareholder remuneration commitments.
Thank you.
I'll leave it to Alessandro for the other two.
Yeah. So the second question was related to deposit. Probably it's true what you are saying.
I mean, the starting point is obviously taking into account the amount of clients that we have and that we are moving from Azimut to the TNB. But as well as we said in the past, we are opening also on one side the capability of our actual financial advisors to have a bank where to help them in growing the possibility of having access to the bank accounts of the client. Therefore, it's not just a way to work on what we have today, but also to open on a market where they can have access considering also the average of the deposit that the market, the country, and the people has nowadays on bank accounts. So it's a matter more of growth also on what they are doing and they will do. T his is the way FSI is looking to this growth.
A s well, we will participate as Azimut because, again, as we have no banking license, and it's clear that we are not interested. But as well, we will have a partner where we can work with to build the number of deposits, but also the amount in euro amount. U nfortunately, I forgot the third question.
Yes. Sorry. On this one, so you mean that basically FSI is still relying on the old deposit target?
Yeah, yeah. This is the way you can make it.
You think you can make it EUR 7.5 billion-EUR 9 billion?
Yeah. This is the strategy they are fixing and defining. This is up to date.
Okay. And the third one, sorry, was on the rebates raised to 90%. I understand the logic because TNB will have to pay the advisors. I was wondering if it is consistent with the assumption in April 2024 when you presented the project.
Yeah. It was almost in line with what we represented in the past.
Okay. Thank you very much.
The next question is from Ian White of Autonomous Research. Please go ahead.
Thank you for taking my questions. Three from me as well, please. First of all, can you just provide sort of as much detail as you're willing to around the earnouts and the deferred cash portions of the deal? Basically, can FSI defer those payments indefinitely since they appear to be triggered by FSI's exit from the new bank? And what specific hurdles need to be reached for Azimut to receive those earnouts? That's question one, please. Thank you also for the detail on the anticipated capital gain.
Can you walk me through, please, how we get to the EUR 600 million figure there, i.e., the increment to your previous net profit target? And can you also help me? Is the EUR 600 million, is that net of the EUR 120 million CET1 capital that you mentioned the bank will require? I assume that's being injected by Azimut, but please help me there if that's incorrect too. And just finally, what level of annual revenue does Azimut generate from the assets transferred to the new bank today? Basically, is the EUR 200 million a floor beneath the current level of revenue, or is that what you currently earn on those assets, please? Thank you.
Okay, Ian. I'll pick up your second and third questions, and Alessandro will go for the first. So yeah, the answer to your second question is yes, indeed, the EUR 600 million includes the CET1 contribution.
Third, when you look at the business that will be part of the TNB's perimeter, today, you should assume that EUR 200 million is the net fees that we earn on those assets. So said differently, as we move forward and the business grows, although TNB will operate on an open architecture basis, we actually are confident that this number has more than anything else upside rather than downsides. But in terms of downside, we have the EUR 200 working as a guaranteed level.
In relation to the earnout, probably you can also follow up and look into the appendix of the presentation. Anyway, the first earnout, so what we call bank earnout, has a Money on Money threshold of 3.4x and no IRR threshold required.
The second one that is called Tier 1 has a 3.0x MoM threshold, and the IRR are based on the year of the exit, 25% if the exit happens between year three and year five, 22.5% between year five and six, and 20% after year six. The earnout Tier 2 has a 3x MoM threshold, and the IRR are based on the year of exit, 25% if the exit happened between year three and year five, 22.5% year five and six and year six, 20%. O verall, then we have also a call option at year seven where we can stop the time to move forward to anticipate the exit.
Thanks. That's really helpful. Just in terms of, just to go back to the EUR 600 million, so it seems like very straightforward math, but basically, the EUR 1.2 billion post-tax sort of not time value or probability-adjusted consideration you might receive for this, you think sort of once you work through the probabilities and likelihoods of receiving these things and a time value effect, that number is more like EUR 720 million, so i.e., the EUR 600 million and the EUR 120 million that you're going to have to contribute to the new bank. Is that right, logically?
Yeah. Yeah. Yeah. That would be a fair reading of the figures. Yeah.
Great stuff. Thanks for your help.
For any further questions, please press star and one on your telephone. Gentlemen, there are no more questions registered at this time. I'm sorry, there's a follow-up from Mr. White. Please go ahead, Mr. White.
Thanks very much. Maybe I'll just ask a couple more if that's okay. I think you mentioned in your prepared remarks that in terms of the EUR 200 million annual revenue guarantee, that there was kind of something like a force majeure clause in there, or that the number could be changed in the event of something that maybe the regulator did or some sort of condition imposed that might impact the fees on those assets.
Can you just help us a little bit more in understanding what would happen or what sort of conditions those might be that would lead to that revenue guarantee figure being revised? And maybe just a final one, what progress has been made so far on deposit gathering? And sort of by extension, what NII contribution is included in the detail you've set out for us on slide six, please? That would also be helpful. Thank you.
So taking the first point and then the focus, and then I will leave it to Giorgio for the second one. Well, the point related to the guarantee, I mean, it is very difficult today to predict the future. Therefore, we cannot anticipate what is going to happen in terms of regulatory requirement or regulatory impact and new accounting policy that could change. So there is a certain element that we need to consider in the future where we should sit down and decide how to approach and how to make it working from the regulatory point of view and as well make all the parties happy with the solution that we will find.
On the deposits raised since we announced to the market the TNB project, as you might remember, we signed a partnership with illimity, a new generation digital bank operating in Italy.
It was a very interesting initiative where we started gathering deposits, and the project really made us work on everything being preparatory for us being able, particularly from a commercial standpoint, to be in the market with an offer that we were not very familiar with to start. I think what happened in the meantime, I think, is very well known to everyone. The Italian banking industry, Italian financial institution space, has gone through a very significant amount of extraordinary M&A, which has, by the way, involved illimity itself. So let me tell you that perhaps the deposit gathering so far has not been performed in a context of business as usual, but we really believe that the deposit gathering potential TNB platform will be realized once TNB would be fully operational in the market, and at the same time, we'll be able to address clients with some brands.
I think, in general, what we have learned as Azimut is to include deposits in our product and solutions range, and we can say that no time has been wasted regardless of the overall amounts of deposits that have been raised.
Thank you. Ian, this is Alex. Just adding to your last question where you said that we were inquiring how much NII is included on page number six. This is very important for the time being. There is no NII in there because the deposits were actually raised on the illimity platform or on our other third-party banking partners with whom we are working with. So the NII is actually on their P&L, not on ours. It will only start basically once this project unfolds that then TNB will be able to collect NII.
Okay. That's very clear. Thank you.
Gentlemen, that was the last questions. I'll give back the floor to the management for closing remarks, if any.
Again, thank you very much, everyone, for attending the call at such late hours. For you, and obviously, we remain available to answer any questions.