Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Azimut Holding third quarter 2018 results 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. Sergio Albarelli, Managing Director and Chief Executive Officer of Azimut Holding. Please go ahead, sir.
Thank you so much, and welcome everybody. We're going to present today our quarterly results ending September 2018. Let me start straight to the point, 2018 priorities. As you can see, we're presenting you some ideas about five very important topics, which are significantly changing the way we're doing business and impacting our profitability going forward. The first area I would like to address is private markets. The second one is the evolution of our advisory business. The third one is FA network and the evolution in hiring. Number four, international, and Number five, FinTech, which is a pretty general title, but it's all about the operating system which we run our business nowadays. Speaking to the first one, as you know, we launched a few years ago, Azimut Libera Impresa, which is aimed in supporting small and medium-sized companies.
As of today, we have roughly EUR 500 million in various products, either private equity, venture capital, with a very aggressive target of EUR 4 billion AUM, with 18 new products to be launched in a pipeline over the next 10 years. This is a consequence of a revolution in the company. We hired a new CEO. We are reorganizing company itself. The business plan has been recently approved, and that's the reason why we are presenting it today.
Number two is advisory. Lots of questions we've seen in the last few months about MiFID II implementation, how things are evolving, what about you, and blah, blah. Well, very simply, we're not starting today because we launched advisory services back in 2014, and as of today, we have EUR 1.3 billion in assets regarding the various sub-items of the advisory channel. It's tailor-made solution for clients, and I mean it.
It's really tailor-made. It's not standardized and not, let me say, generalized, but really tailored. No need to say it's all about recurring fees for Azimut, but very importantly, it's in the return of clients. Going forward, the evolution of MiFID II, the evolution in the market, we do believe we have a say in this field, and the numbers are there, and I will be more verbal in a few minutes. Number three, the evolution of our financial agent network. We are 144 new hires, as much as Italy is concerned in 2018. That's a record as much as our activity. I would say our performance is much better than the industry. As today, we have the opportunity to attack competitor and attract talent, and I will drill down this 144 within the various activities of wealth managers, financial agents, and so on. Number four, international.
The underlying P&L is showing improving trends, significant improving trends. We're going to present you today some data regarding Australia, Brazil. Australia is our second-largest market with EUR 4.6 billion, and it's generating profits. Brazil stands at EUR 3.7 billion, despite all what's going on over there, you may like it or not, and also is in net profit situation. Number five, FinTech. Obviously, Azimut is a company which is centered around financial agents and wealth managers. The transformation of our IT model means, number one, that we already made significant investments in the last few months, dating back 2016. We are actually running over 60 different projects, on top of the one we already terminated in both 2016 and 2018. It's all about focus on volatility, digital enabling, scalability, and automation.
There will be benefits for both people working in the organization, for the organization itself, because it's going to be streamlined, and for clients as well. Let me stick to point number one, private market. Alternatives are implementing our strategy. We're planning a significant expansion into broader markets. The reason is benefiting all stakeholders, i.e., not just Azimut, but clients, our distributors, our agents, and our shareholders as well. Reason, very simply, stable, recurring, healthy fees, long-term commitments. It's a new tool. You may probably question about the definition of tool, but as a matter of fact, these are tools in the hands of the FAs. They're very important FAs and wealth managers we have today in order to see prospect and existing client and revising portfolio allocation. The way we're moving is to make sure that otherwise, retail access to those products will be impossible.
Azimut is going in a pretty new direction. Most of our products will be retail-ish or very retail, not aiming just to be top clients and top institution, but it will really go down to retail investment. This is something some people call it, as you can see, democratization of the products, but in that sense means better and larger access to investment opportunities for a wide range of clients. No need to say, positive contribution to performance in a client's portfolio, diversification, long-term commitment. Not to forget, talking about venture capital, private equity, private debt as a social impact. Basically, we are committing and investing in real economy while banks are under pressure. This is Azimut Libera Impresa. The integrated platform we're talking about, if we go clockwise, we're talking about corporate finance, supporting investment strategies, debt advisory, funding at the renegotiation of any form of debt.
When I say any form of debt, I really mean it. Treasury solutions through Azimut Asset Management and partnership with banking institution, and club deal of venture capital. As you probably remember, we launched months ago a vehicle called IP Club. The aim is to replicate situation like this one. The purpose, promote the introduction of liquidity into the real economy and offer opportunity for expected enhanced performance and value creation. How to make it through the product range, we go from impact funds of funds, private debt, corporate cash, to permanent capital, IPO pre-booking, private equity, and venture capital. As you can see, it's a pretty vast and large and deep product range. No need to say there will be investments in this area. We are already planning hiring analysts and portfolio managers.
The operational support in Azimut Libera Impresa will be strengthened through agreements with the sister company, Azimut Capital Management, about operating processes, compliance, anti-money laundering, and so on. Sticking now to item number two, Azimut Advisory business. As you can see from the histogram chart, growth has been pretty good, fees as well have been pretty good. The numbers are not yet exciting, they are very good in terms of growth, in terms of penetration within our product range, in terms of understanding of our financial agents and wealth managers about what advisory can do. How is it structured? We have an advisory committee, we have an advisory team, we go down to the wealth managers. Going to greater diversification for fully customized solution, privileged access, maximum control, exclusive relationship. Let me stress one point, which is pretty important here.
MiFID II is starting to be effective next year, if you plan it properly, you started thinking about it years and years ago. If you think about launching a service like this one back in 2014, presenting it to our network, and gradually growing to more than EUR 1 billion in order to be ready for the revolution means proper planning has been made. It's a very difficult environment, no need to say. Markets, as all you know, are in a totally different situation than a few years ago, the quality of advice will be key. It will be determinant. I would say it will be the adamant part of any strategy of a financial group in the next few years. If you do it well, if you have proper infrastructure, it means IT, operations, portfolio managers, and agents, you may be successful.
In order to be successful as well, you need to expand your network of financial agents. As you can see in item number three, there's a record 144 new agents entering into our network. The breakdown is pretty interesting. 33% of these new agents are coming from banks. You probably remember we launched a significant project called Banking Revolution, aiming exactly at hiring people coming from banks. Still, a healthy 50% is coming from competitors, FA networks. 13% is coming from what we're talking about millennials, very young professional with growth opportunities in front of them, where we are planning to invest in training and support. 4% is made by others, insurance agents, as an example. This is an answer to some of the, I wouldn't say criticism, mild comments we receive about what's going on in hiring in Azimut.
Very simply, all the good planning and all the good activity already done in 2017 and 2018, early 2018, is generating now the numbers. Hiring people is not like posting something on the internet. It takes time. You need to analyze. You need to go deeper into the ability of each financial agent you are talking to in order to understand if they're good or not. You need to understand how flexible are clients of the financial agents in order to relocate. It is not a question about performance or not performance on the existing portfolio. It's a question about the credibility of the financial agent and the ability of this person to generate performance for the end client. The process may be long, if you do it well, these are the numbers we're talking about. International business, pretty healthy, pretty good.
EUR 2 billion net new money in nine months, entirely organic. Once again, criticism about, well, you're growing abroad, and what's the reason why? The numbers are here to demonstrate that if you do it properly, you can do pretty good things. 31% of our business, as much as assets, is based in Europe and Middle East and North Africa. 31% in Brazil, Mexico, Chile, and United States. 38% is Asia Pacific, with obviously Australia having the lion's share. +8% year-to-date, 100% organic. Please consider also the negative impact coming from the evolution in the market. The number could have been much better, but that's the market. Nothing we can do about that. Case study. We're presenting you some pretty interesting items about Australia and Brazil. Australia means AUD 7.4 billion in four years of operation.
Very strong local talent and good market opportunity. Strong talent means local people, hiring, and getting into Azimut the best professionals in the market. If you see on the right-hand side of the chart, you can see the geographical breakdown of our presence. It's very interesting to note that we're not talking about only the main areas in Sydney and Melbourne, are we talking about geographical dispersion and the ability of our business model to be presented Australia-wide to a wide range of clients. The team is made by three different operations. AZ NGA, the leading platform in order to calibrate financial planning accounts in Australia. AZ Sestante, Australian financial services licensed entity with six multi-manager funds and 12 manager accounts for the Australian markets. Sigma Funds Management, it's a value-style Australian equity boutique we established back in 2009 by some ex-Credit Suisse Asset Management team.
Left-hand side, bottom side of the chart, the growth, pretty impressive. Not too much to say, the annual growth rate, 117%. More important than this, the strategic priorities. First of all, next-generation technology. You cannot be successful in a market like Australia if you are not part of the leading pack as much as technology. Leadership and governance. This is a federated model. You need strong governance in order to make sure that everything is run properly. Common backbone, the infrastructure which is supporting all these various entities. Becoming part of the Azimut Group is based on a backbone which is made common to each and every one of them. Succession, because we're thinking about how to make sure that entrepreneurs will be able, in this business, to pass over business going forward. Profitable growth, organic and sustainable acquisition.
If we stick to these priorities and we keep performing as we are in order to make sure that they are consistently on our radar screen, I think going forward, this business will be probably generating even much better numbers than we're talking today. No need to say, the Australian market is pretty different from the rest of the markets we're talking about. It's a fee-based, advisory business-driven. There is obviously some institutional opportunities over there. The annual contribution to Australians to financial assets is very important. Comparing this business with the rest of the organization on Azimut needs some caveats, and I'm quite sure that all you know perfectly what the caveats are. Talking about Brazil, which is our third largest market, let me start with the left-hand side bottom of the chart, of the slide you can see the chart. An impressive growth.
It's not like Australia, only because it's slightly longer than we're talking about. It's 42% on CAGR. Nonetheless, with EUR 3.7 billion in Brazil, we are a significant player over there. Most of our funds at AZ Quest, which is one of the two entities we're talking about, are best in class. We're talking about equities, we're talking about long/short, we're talking about macro and fixed income. We're talking about some very sophisticated type of products like arbitrage and impact. In a word, it's an award-winning situation. A large number of our portfolio manager, a large number of our funds, have been awarded of best fund in Australia, sorry, in Brazil, best portfolio manager in Brazil and going forward. As you think about it's Azimut. The success of this company has always been top performance, top people in distribution, and in portfolio management.
Azimut Brasil Wealth Management is the future of focus on wealth management. We have a proprietary sales force, very similar to what we have today. The breakdown of our presence in Brazil is on the right-hand side of the slide, where we have local offices in Belo Horizonte, Salvador, Recife, and so on. Pretty important to say, while obviously São Paulo, Brazil, is the largest financial center and most of the richness and wealthness of the countries over there, we recently opened up an office in Rio de Janeiro with a local partnership. They are now part of our organization, and we do believe that going forward, this will be as successful as São Paulo has been. Last comment, you can see on the right-hand side of the chart, bottom part of it, services and offerings. This is what we're doing over there.
Segmentation is the name of the game in Brazil, like in most of our markets. Aiming in order to offer FX solution, retirement planning, standard asset location, goes to more sophisticated situation like portfolio consolidation services, custom investment solution, and financial planning. In this case, all this is possible because operations and technology in our Brazilian operation is state of the art. Last point number five, FinTech evolution of our system. We started back in 2017, a process in order to transform the IT model that was supporting our distribution since long. The idea that guided us was very simple. If you talk about digitalization just as a way of automatization of existing process, you may gain some productivity, but this is nothing new and nothing exciting.
Digitalization means you took the opportunity to revise the operational model, you reanalyze processes and procedures, you eliminate bottlenecks, in order to transform them in digital services, you really achieve productivity. The principles, the guiding principle of our model revolution has been modularity, digital enabling, scalability, and automation. Three targets, I mentioned to you right at the beginning of our conversation, improve financial customers' experience, simplify life and work of our networks and financial agents, and obviously, reducing the operational load throughout the supply chain. In 2018, we already introduced, for example, simplification of our digital signature and activation of digital services for clients, new full digital onboarding process for prospective clients. In 2019, we're ready to launch digitalization and communication and official report for clients, We operate new open distribution platform and redesign our processes in a front-to-back logic.
For those of you who are in love with technology, this means a brand new company, a brand new backbone of our operational system. All this has been designed internally and has been built internally. Obviously, we're using suppliers for our software and technology, but it's important to say that we revise internally the way we are operating, and we do believe that the day we will be launching officially the system, will be above competition significantly.
Sticking to the numbers. The first nine months of 2018 have been, considering what's going on in the markets, pretty good. Our total assets are EUR 52.4 billion, up 8% versus the same period of last year. Italy, EUR 38.9 billion, international, EUR 13.5 billion. Net inflows, EUR 3.6 billion versus EUR 3.9 billion, and strong organic contribution, as I mentioned you before, from our overseas business. More to come from international in the next few years. Financial results.
Our total revenues are up 8% versus the same period last year, up to EUR 189.9 million. Our net profits, EUR 39.3 million, up 12% versus EUR 35 million in the third quarter 2017. In the nine months, we have total revenues above EUR 565 million versus EUR 591 million, same period last year. Recurring revenues, this is important, EUR 521 million, up 5% versus 2017. Despite the disappearing of a significant portion of performance fees, our recurring revenues are up, which is a confirmation of the sustainability of the business model, the sustainability of our product range, and the way we operate. We're talking also about net profits, almost EUR 112 million versus EUR 156 million in the same period 2017. Most of the difference is due to lower variable fees.
On corporate development, as I mentioned you before, the kick of the private market project through Azimut Libera Impresa, a new CEO we recently announced yesterday, if I remember well, with a press release. A EUR 4 billion a year on target and 18 new products to be launched. On financials, we completed further EUR 10 million buyback tranche, a total of EUR 110 million since January 2017. We do believe with the continued expansion we experienced in Australia, up to AUD 7.4 billion, we continue going forward. Evolution of our assets under management, nothing I can add to what I said you before, but please consider the following. This picture is a picture which is supposed to stay, i.e., the validity of our presence in mutual funds, in discretionary portfolio management, in insurance product, and so on.
It is not just based on what we're doing here locally in the Italian market, but we see a significant contribution going forward from international assets. We're talking about 26% of international versus the total. Sticking to performance, the numbers are still in our favor. Our net WAP is above the market average. As you can see from the chart, it has been consistently superior for a long period of time. Transfer down, a good increase in equity, going from 10%- 10.6%. This at the expense of flexible, going down almost 1%. We have more or less stable bonds, we have a slight increase in bond, very slight, we're talking about 0.4%. Cash, pretty stable. If we go to the underlying assets, total equity, stable, 44%. Obviously, this is due to market condition, evolution to client mode, evolution to redemption and subscription going forward.
Also, on the bond side, we're talking about 33.2%, very much in line with the previous figure. Italian equity, 6%, even if it's about a 10% decrease, is negligible as much as percentage terms. If we go to diversification, geographical diversification, Europe, 39%, North America, pretty good, from 20.8%- 23.3%. Emerging markets, slight increase. Others, more or less in line. The only thing we can highlight for you is a slight decrease, 1% in Asia Pacific. On the fixed income side, we're talking about an investment grade more or less in line with high yields. We're talking about hybrid going down, with clients favoring different investments and our portfolio managers as well. We have an increase in sovereign funds, mostly due to some investment, almost on a tactical basis, on the Italian government.
Please remember, a few years ago, for those of you who were already part of the business, we had a very nice campaign talking about the opportunity in investing in some, at the time, risky assets. As of today, our portfolio managers, who are pretty brave and active, are taking action in the same direction. Talking about net inflows, Azimut is above the average Italian industry. We're talking about 11.9%. Industry average is - 1.3%. More interesting for you, I do believe, is the breakdown of the hiring process in this first nine months of 2018. 144 is the total. Pretty interesting to see. Wealth managers, 19. Average age 55, average assets EUR 41 million, with managed funds in the region of 78% of the portfolio. On the Banking Revolution side, even if the numbers are smaller, you're talking about 16 individuals, average age is pretty younger, 41.
Average assets lower, but very importantly, managed funds 85%. We have plenty of growth in front of us over there. Millennials, extremely interesting. Very young, very small portfolio, very well managed, talking about 77% on managed. Financial advisors, bread and butter of our business. Slightly higher age than Banking Revolution. We're talking about 52, very much in line with the average age we have in our network. Average portfolio of EUR 15, lower than the one we have today on average, opportunities in front of us because they will be running their business in a completely new, more professional, and effective way. 82% of portfolio already invested in managed assets. No big changes regarding geographical distribution. We're highlighting for you something probably you might already be aware of, but I think it's pretty interesting. We have a truly unique positioning in the high wealth density market.
First of all, if we compare Italy versus the rest of the world, we're talking about 8% versus a similar 8% in the U.S. on compound growth. If we talk about the numbers of millionaires, despite all the taxes that Italians are forced to pay, we're talking about an increase in a significant number, talking about 17.3%. The evolution of this situation as a consequence on Azimut, as you can see from the chart, compound growth 13.2% versus 4.1%. Let me say, all these numbers, which I obviously leave you in order to analyze in deeper terms, are talking about the way we are in this business. It's always to be on the front line of the opportunities and on the ability to generate significant returns. Our position has always been very strong in this field.
The numbers are growing significantly in the market, despite what's going on financial situation and economy, and our positioning is there. We are wealthier than the average client base. Our average portfolio size per financial agent constantly increased, 13%, as I mentioned before. Something that I will never be tired to underline and to stress, we are totally focused on portfolio management. We do only portfolio management. We're talking about nothing at all on conflict of interest. We're not talking about deposits, we're not talking about custodian, we're not talking about like this. We are focused on the best part of the economy. We are focused on the best part of the financial markets. We are talking about our ability to stay front running on this.
On financials, let me, as usual, pass the opportunity down to Alessandro Zambotti, our CFO, to highlight for you some details about our profits and loss. Thank you, Alessandro.
Thank you, Sergio. Let's start from the bottom line of the income statement. The consolidated net profit is today, the end of September 2018, EUR 112 million, compared to EUR 156 million of the nine months of 2017. As you can see, we have a decrease by EUR 44 million. This is already said by Sergio at the beginning during the presentation. The result is mainly explained by the negative variation of the variable fees. Let's go through the, let's say, the main element of the P&L. Total revenue, we have a decrease of EUR 26 million. From EUR 592 million of 2017 to EUR 565 million of 2018. As you can see, again, here we have EUR 49 million of negative variation of the variable fees, but at the same time, we reduced this negative impact thanks to the recurring fees, where we are really strong.
We have a positive variation of EUR 25 million. This is again, thanks to our stronger evolution of the assets under management, and evolution of our business in Italy and abroad. Going through the operating cost, here we have an increase of EUR 19 million. At the level of the distribution cost, we have EUR 2 million less compared to last year, September 30, 2017. Again, here is a combination of the evolution of the group in terms of assets under management, charging new financial advisors, as already described, but at the same time, we have the benefit of the new principles, IFRS 15, already described in the previous closing. At the level of the personnel and SG&A costs, we have the significant variation of EUR 20 million, again, here is a link to what has been already said before by Sergio.
The investment, the evolution of the group, and to what we are doing for the evolution of the business. At the level of the interest income, maybe it's the main element that can be, let's say, shared with you. As we can see that we have a negative variation of EUR 7 million, I mean, positive for us. This, if you remember, in 2017, we had the one-off impact of the buyback of the convertible bond. Therefore, now we have less cost. That's it, I would say. Also focusing on quarter-on-quarter, we can see that the result increased by EUR 4 million. Again, here, the main element, I think, is the recurring fees that is increasing very good. On the level of the NFP, the total debt decreased by EUR 10 million. This is due to the reimbursement of last tranche of the senior loan.
At the level of the cash and cash equivalent, we have a decrease of EUR 189 million, compared to the end of December. If we compare the NFP, we move from a positive value of EUR 135 million, compared to today, that is negative of EUR 43 million. If you remember, in June, we were negative by EUR 57 million. As usual, if we try to reconcile the evolution of our NFP, starting from end of December, that it was EUR 135 million, as already said. We include the result, therefore, we should reach EUR 247 million. This amount has actually had to be reduced by the significant and important dividend that we paid in May, EUR 131 million. EUR 32 million of stamp duty and policyholder tax advance, EUR 40 million of buyback, EUR 23 million acquisition.
Thank you, Alessandro. Moving to our summary and outlook. At least from our side, our business model is strong. We have resilient net inflows, sound financial result despite volatile market. Our recurring fees are a demonstration of it. Even if we're talking about a significant absence of performance fees, which has always been an element of criticism versus Azimut, our numbers can demonstrate that the machine is up and running, the business model is going fine, and going forward, we might expect to have even better situation. Our global expansion is showing significantly material results. The EUR 2 billion in net sales generated by international operation are a solid demonstration of it, and they are totally offsetting a very tough domestic market. Let me stress one point. Once again, talking about P&L for international doesn't mean an international strategy may be judged on a quarterly basis.
It's a long-term process. Any international group going outside the main market took years in order to generate first numbers bottom line. What we're talking about here is demonstration of long-term planning. We always been talking about long-term planning. We always been talking about being a presence in our markets. The numbers we're talking about today for Australia and for Brazil are a demonstration that we can build, step by step, significant market presence over there, creating a business model which has no peers in the market. The Italian business is bouncing back with some strong recruitment across the various challenges I demonstrated you before. Despite what's going on in politics and economy, the private wealth in Italy still remains today one of the most attractive in Europe. Maybe there will be less new money available in the market, maybe it will be a question of cannibalization between competitors.
Nonetheless, the numbers demonstrate that there are still great opportunities in our domestic market, and all our investments about hiring new people, launching new products, revising an operation are going into that direction, i.e., exploiting the maximum we can, a very strong and solid market. We're focusing on improving profitability. We're increasing the net inflows for financial agents for the next few quarters. Obviously, as I mentioned to some of you, and even in a couple of calls in the past, a very strong effort has been put in place, and will put in place going forward, about making sure that our financial agents will be even more productive and profitable than today. We're going to support them, and the ones who are not unfortunately at par, will not be part anymore of the Azimut family.
Independence from any banking group is proving to be a strong attraction from talent acquisition. Lots of the people we hire from banks see in the independence they have within Azimut, and independence of Azimut itself, as a strong argument to go and look for prospects and to make sure that the clients will be understanding that independence means no conflict of interest, lower fees for them, better opportunities going forward. Top performance year to date, despite being much better than the Italian industry. Performance is a key element. We're talking about a performance business. We're not talking about just servicing some clients with ideas. We're talking about making sure they will be wealthier going forward. We are significantly considering how to strengthen our operations in portfolio management. We're talking about, as you remember, revising our product range.
It will be key to make sure that we're going to stay above our competitors. The performance will be looked very carefully in order to assess not what's the best product going forward, but what's the best combination of products, and that's the aim of the product range revision. Areas we focus going forward, private market, that's number one. Absolute terms, we are investing money, we're hiring people because we do believe the long-term products with different market valuation, with different condition, will be enhancing profitability of our clients. Backbone of the company, second key element, digitalization, optimization, revision of our processes. It is not just an element of making sure that there will be better productivity, but also the running of the business will be more effective, and there will be less cost involved.
Obviously, maintain focus on growth as well as bottom line reserve over overseas, and color, as promised, will be given in 2019, starting from today with some flashes in the business we are in Australia and Brazil. Last point, once again, we are always open for opportunistic M&A in those areas where we do not have strong competencies. It may be portfolio management, it may be some other areas. Last comments, a very quick update on our business plan. Not too much to say. Total assets, pretty fine. Net inflows, pretty fine. Dividend policy, let me remind you, we paid EUR 131 million cash and EUR 131 million in shares this year for a total of EUR 262 million, which is a pretty impressive number. The only area where we still have to run a bit, we're talking about the net profit.
As you can see, we have an indication of an annualized net profit. The numbers today are talking, we are at EUR 112 million. I thank you very much. I would love to pass over and open up for questions, whoever might pose some brand new ideas for the company to be discussed.
Thank you, sir. Excuse me, this is the Chorus Call Conference Operator. We will now begin the Q&A session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. The first question comes from Mr. Hubert Lam of Bank of America. Please go ahead, sir.
Hi, good afternoon. I've got three questions. Firstly, on your plan to grow your private market assets by EUR 4 billion. Just wondering if you can give a sense in terms of the timing of that. I know it's a 10-year plan. When should we start to expect to see the flows coming from this? Assume also that you would have to spend to hire new personnel, grow the platform, et cetera. How much cost do you think are associated with this, and when should we start to expect the cost coming needed for this investment? That's the first question. The second question is on your flows. It seems like still much of your managed flows are still coming from your international business rather than domestic. Just wanted to give a sense on the domestic flows.
Is it mainly due to the certain macro situation which are suppressing the flows, or is there anything specific? If you look at the hires you've done this year, advisor hires this year seem to be quite a bit. I'm just a little bit surprised it hasn't led to stronger domestic flows coming from the new hires. Lastly, on international business, I know at this point you're still quite shy in terms of saying how profitable the international business is. Just I know by then, just looking at the growth and the success of Brazil and Australia, which you mentioned today, just wondering if you can give us a sense to the profitability or the contribution of those two regions on your earnings. Thank you.
Thank you, Hubert. Let me start with the first one of your question about the private market business we are strengthening right now. It's not by chance that I say strengthening, because this plan is based on an existing backbone, i.e., Azimut Libera Impresa. Azimut Libera Impresa was launched on a vision, on intuition six years ago. It's been built up gradually. We have gradually educated our financial agents and wealth managers in talking about something they were not used to, i.e., talking about investments which are not the standard long funds. As you can imagine, this has a cost on the one side, but has a great opportunity. Today, if you go and look to some of our competitors, which have been pretty verbal and loud about what they're doing, in reality, they are doing nothing. It's been a statement. Nothing more, nothing less.
What we say today is very simple. We hired a new Chief Executive Officer, a very experienced guy in the business. The guy has been crafting with the top management of the organization, a business plan, a very aggressive business plan for the next 10 years. If you launch a product with seven-year maturity, obviously the business plan has to be very long in front of you. We're talking about something that is supposed to build up 18 different funds, ranging from the equity to the debt, the combination of the products, and so on. No need to say, I think you will be not apologizing, but understanding me.
It's not the case to disclose openly which are the products we're going to launch, how many fund managers and analysts we're going to hire, how much money we'll be investing here today, basically means putting all our cards on the table and showing our competitors what we're doing. What we can do is to tell you that the plan is serious. It will be financed internally. The plan, it's a combination of our existing expertise plus new expertise we are bringing in from outside. It will take a while before our competitors will be able just even to think about what we're doing today. 18 funds may sound something like aggressive or probably a bit too loud to some people.
In reality, it's not. In front of 10 years of opportunities, talking about 18 funds in order to assess today what are supposed to be the investment needs of our clients means we are pretty rational. Think about for a second, one of our brand new products, the private debt fund. A product like this one, you are supposed to stay in for a few years. Five, seven makes sense. It will give you the opportunity to diversify. It will give you the opportunity to look for a different profitability of your portfolio. It is based on the one hand side, on existing resources, on the other hand side, it is based on new resources we hired and a new combination of our portfolio management expertise with external portfolio management expertise.
In that sense, what I'm telling you is, this is an area that lots of people were reluctant to consider as a key element of our strategy. Today, on the basis of half a billion of assets already existing, we are saying we are serious. We are investing even more over there. Obviously, it will be made on a gradual basis. We're not going to hire 15 people tomorrow. We're going to start hiring a few people, launching a few products, making sure there are agents and managers will understand them in order to put those funds into managed portfolios and advised portfolios. In that sense, what you're going to see in this area is to be one of the best contributors to our profitability going forward.
This is, I know, a strong statement. Otherwise, we would not have said we're going to raise in 10- year time, EUR 4 billion. If you compare the EUR 4 billion with the existing business in the Italian market, it's a significant number. If I can speak to your question number two about the net interest in the domestic markets and what has been the impact of financial agents, let me start with the latter. Hiring an agent is a very long process, as I mentioned you before. It doesn't mean that an agent hired in February, with a portfolio of EUR 25 million, day one, immediately took EUR 25 million into Azimut. It takes a while. That's why I was referring to the ability of these people bringing in business gradually, making sure that the clients are happy, and so on.
Even if you hire 144 people in 2018, nine months, the numbers are supposed to get in on a gradual basis. We're going to see the benefit of this expansion going forward. The last quarter and the next two quarters, quarter one and quarter two in 2019. The net inflows. Everybody knows what's going on in financial markets. Everybody knows about the, let me say, nervousness of some market participants to what's going on in Italy. Some clients, obviously, are worried. They are not just clients of Azimut. They are clients in the market, i.e., clients of Banca Generali, FinecoBank, Allianz, and so on. It's a slowdown in the business. We are not the worst one to see this type of situation. It's a slowdown which is supposed to be longer than expected. I cannot tell you nowadays.
We need to see some reaction to, A, general market conditions, B, what's going on in the U.S. financial markets, C, obviously, no need to say. It's not just impacting Italy, it's impacting Europe, what is supposed to be the outcome of the European elections going forward in the spring of 2019. International business, you're right. We are on the way to provide color about P&L. Today, we gave you a demonstration of what's behind it. We didn't disclose yet the total P&L of neither Australia nor Brazil, because it would have been displacing the attention to the key element here, which is the growth in the business. Azimut is a growth company. We've grown assets. Our ability in gathering assets worldwide is unparalleled. It's above the competition.
We stick to the fact that we are still the company which has been able to do this in the past and can do this in the future. It is important to first give you a picture of our ability in doing this. Then, as promised, in 2019, we will be providing you an idea on how all these assets are going to generate margins and bottom line profits. I am glad to say, or I would like to say, if you honestly should comment the histogram charts about Australia and Brazil, probably you would not have too many examples to compare with our ability in generating those numbers worldwide. Not too many companies can show a type of growth in the Australian market of above 100%, or 40% in Brazil like we did. Thank you.
The next question is from Mr. Alberto Villa of Intermonte. Please go ahead, sir.
Yes. Good afternoon to everyone. A few questions from my side as well, and thank you for the, let's say, presentation of the different initiatives that you are exploring to boost your business. Just to come back to Azimut Libera Impresa and advisory. I just wonder if you can give us an idea, let's say, if a new customer comes in and wants to subscribe an Azimut Libera Impresa product, fund, et cetera. How does compare with the traditional offering of your products in terms of pricing? Is that a big difference in terms of recurring fees? I guess, it does not contribute to performance fees. I wonder if you can give us an idea what the-
What is the pricing there and also for the advisory service? The second question is on slide 12 on fintech. You are presenting a series of initiatives you are planning to deploy in the coming months and quarters. I was wondering, we know that you had already stepped up in the IT cost in 2017, if we have to plan for more costs or investments, how should we look at it in terms of, let's say, the impact on the P&L in terms of potential increase in costs? So if you can give us an idea of a run rate for quarterly SG&A in 2019. My third question is on the net financial position. You have now a net debt of around EUR 40 million.
I was wondering if you can give us a bridge of what happened in the last quarter in terms of how much you invested in buybacks and how much eventually cost for new acquisitions. If the net debt position you have right now is creating any burden, if we look forward to, let's say, future buybacks and cash dividend payments in the future. Thank you.
Thank you, Alberto. Let me start with your first question about pricing and how our agents will be able to offer their client products like this one. Obviously, no need to say, a product like this tends to be likely a bit more expensive than the standard long only type of equity or fixed income products. No need to say, because the complexity of the underlying management strategy, the complexity of the instruments we're talking about and securities, the complexity, no need to say, about the operation behind it. Even if we're not talking about something which is going to be extremely more expensive, no need to say, a dollar in the traditional Azimut funds will be generating a bit less than a new dollar into the new Azimut Libera Impresa products. Is this sustainable going forward?
My answer is yes, because these products are aiming to a much better and different performance behavior. They will be offering the opportunity to our clients to invest in those asset classes and areas which have been almost forbidden to them in the last few years. Diversification in traditional asset classes proved to be good for a long amount of time. Nowadays, where all financial classes, all financial assets, are moving into the same direction, the only opportunity we offering to clients today is to put their money into something brand new, which doesn't mean riskier or more complicated. It means new in terms of products, in terms of performance behavior, in terms of long-term commitment of their investments to both the portfolio ability and the Azimut ability to generate long-term returns.
The true cost we're talking about here is not just about hiring portfolio managers or making sure that infrastructure in Azimut Libera Impresa is up to par. It is a very important task. The true cost here is to make sure that all our 1,700 agents Italy-wide will be feeling comfortable in offering these products to the end client. They might perceive the opportunity, they might see something in front of their clients. Well, this is not enough. We need to help them in order to assess clients' needs, to relocate portion of the money into these products because they will be generating better performance going forward to the end client. No need to say, I'm talking about training.
I'm talking about what we're going to offer to our agents in order to be effective in building up portfolio where a significant contribution in the performance generation will come from something non-traditional. That said, you will apologize me if I'm getting into politics. Is this something new versus offering in the past alternatives? A few years ago, everybody was talking about hedge funds to be offered to the private clients and so on and so on. All the questions were all about the pricing and the training and so and so. Well, let me stress you the following. The market went through this type of situation already in the past. Some mistakes were committed, no need to say. We are in a much better situation because we started offering these type of products long time ago.
Most of our agents are already aware on how those products are supposed to be managed and how they are supposed to be offered to the end client. Now, the question is to help financial agents to assess exactly what is supposed to be the proportion alternatives into client portfolio. It's not a question about pricing at all, even if MiFID II will start kicking in January the 1st next year. It's a question about really helping the clients understanding what the best asset allocation on the long term. That's why we're talking to our people, stressing two points. Point number one, don't stay in product like this one for one or two years. You need to stay for longer. Point number two, you need to be above market cycles in order to see effectiveness of these products.
No need to say, it's an educational process for both agents and clients. It's a long-term process, if we are successful over there, the reason why competitors are copying us, it is because we have already been successful, it is because we are serious about it. We're not just launching one or two products and say we're going to have some alternatives to be offered to our clients. Not at all. We have a totally separated and exclusively dedicated division called Azimut Libera Impresa, in order to make sure that there will be benefit for all stakeholders into this business. Sticking to your question number two, FinTech. Yes, we started long time ago in making investments in the, let me say, revolution of our IT and operational system.
I can provide you some, Alessandro Coralli, if I were talking about from 2016, something like EUR 20 million that we already invested into our revolution. Obviously, this is about investment, i.e., a new infrastructure, software licenses, full-time equivalent employees dedicated to this project, et cetera. The aim is to be effective, the aim is to be productive, the aim is to make sure that the system will be fully digital, enabling our clients and agents to be online and execute orders and trades real time without any paper evolution. On NFP, net financial position, Alessandro, would you like to speak in?
Yes, I think following your question, I think that the main element that we can share in terms of reconciliation, it's EUR 10 million of buyback, almost EUR 6 million of acquisition, EUR 2 million more on stamp duty, and we pay back also the EUR 2.4 million to dividend to our foundation. I think that should be the reconciliation that you need.
Okay. Thank you. Just a follow-up, a couple of follow-ups, if I may. One, quickly on the FinTech. Is there really any cost that we can assume are associated with this, let's say, IT investments in the SG&A going forward? The second one, it's a question related to the 144 people you have recruited so far this year. If I look at slide 21, this makes up for EUR 2.5 billion, more or less, of assets associated. I was wondering if these assets have already been transferred, so are already in the number of the net inflows we have seen at the end of October, or if these are expected to, let's say, represent the tailwind for the net inflows over the following months.
Thanks, Alberto. I'm leaving to Alessandro. Here we're talking about now, I would say, a discussion about how investments and costs should be treated in P&L and statement of accounts.
I would say since we are talking about investment, for sure, we are going to see an increase on the amortization cost. Looking back to the P&L, as you want to, let's say, have a look, and you want to look forward, for sure, we are going to have an increase on the amortization, and as well on personal G&A, we have a few million, let me say, going forward. It's a combination of new investments that will come again, and at the same time, saving costs from the actual one that we are putting in place.
Alberto, apologies. Your second question was about?
Was about the 144 recruitment that you had this year.
Yeah.
If I look at slide 21, you detail also the average asset for the different clusters, and it adds up to around EUR 2.5 billion of assets associated with these new advisors. I was wondering if this amount have already been included in, let's say, transfer to Azimut, and so part of the net inflows figures we have seen so far this year, or if part of this amount, a significant one, is yet to be included in the net inflows figures.
As you can imagine from what I told you at the very beginning, a portion of it, because this is a picture that we took about the FA in the moment they were hired by Azimut. As you remember, it's a question about timing to bring in the business. For sure, you can allocate into the net flows that you see in 2018 nowadays, the assets that we gained from the acquisition of Sofia. We're talking about here roughly around 40 different professionals people in. In the numbers you have, for sure, the assets that immediately came into Azimut, thanks to the acquisition of Sofia itself.
Okay. Thank you, so we have a few more to come in the coming months, so this should increase the visibility on net inflows then.
If our financial agents will be able to transfer the large majority of their portfolio, and obviously market condition will not deteriorate, well, obviously, this is a target we have in front of us. Everything is depending on the one hand side about their ability in convincing clients, and on the other hand side, the markets will not guide away from where they are today.
Okay, thank you very much.
Pleasure, Alberto
The next question is from Elena Perini of Banca IMI. Please go ahead, madam.
Yes. Good afternoon. I have three questions. The first one is on your position in Turkey. There has been quite a turmoil in the country. Are you expecting some write downs or some hurt to your business? What are you currently seeing in the country? I would like to ask you if you can provide us with the performance fees that you recorded on Italian funds in the fourth quarter last year, and what kind of level would you expect for this year? Coming back on the IT investments, I was wondering if you can at least provide us with the range of potential expenses in this. You already indicated that we will see an increase in both D&A and G&A. I would like to ask you if you can provide us at least with the range of the amount of money that we're talking about
Thank you.
Thank you, Elena. I don't like, apologies, I need to contradict you because we didn't talk about increasing G&A going forward. We incur some expenses and some investments regarding our operations and technology. Obviously there will be some expenses as well in 2019 in order to materialize and finalize what we're talking about. Not necessarily this means an increase in G&A. Not at all. Let me start this point. In quarter one and quarter two, where we're going to have better numbers regarding the overall investment that we came through. Please remember what Alessandro said before about costs, expenses on the one side, and investments on the other side, because we need to step in with depreciation and amortization as well. We can be more effective in providing you some information.
On the performance fee, let me understand properly your question. It's about the Italian funds?
Yes.
It's about-
Yes. The Italian funds.
We're talking about roughly speaking, EUR 10 million.
Okay.
Less here. Your first question, apologies if I go vice versa. Three, two, one. Turkey. Honestly, despite all what's going on in Turkey, i.e., devaluation, difficulties in financial markets, economic condition getting tough, and so on. Let me use a proxy to describe what's going on over there. If you look at interest rates on deposits, they had a peak during the summer, and then gradually they went down. All the comments regarding the ability or inability about the new finance minister in order to manage what's going on over there, were totally dissipated by his speech in Bali, Indonesia a few weeks ago. The guy stood up, made clear what was going on over there. There was no plan about capital control. There was no plan about nationalization or whatever.
That said, situation, I didn't say came back to normality because still lots of eyes are on Turkey, but at least on our side, despite all happened in 2018, our business is fine. Our assets are above the beginning of the year. Our team over there is stable. We made some selection in order to get rid of non-performing agents inside the organization. Our portfolio managers are confident that things are getting better. We are there to stay, very simply. I had not the opportunity yet to meet the finance minister. There was a meeting planned a few weeks ago, but unfortunately, it was canceled due to a sudden complication on their side in order to prepare the meeting in Bali.
I'm quite confident that the day I will see the government in Turkey, they will be reconfirming me their intention to be a pretty open financial market with no capital control. We're not feeling anything about making sure that our operation over there is under threat. I'm pretty confident over there. For your information, I traveled to Turkey three times in the last few months in order to make sure that everything is up and running properly.
Okay. Thank you very much for your clarifications.
Thank you, Elena.
The next question is from Filippo Prini of Kepler. Please go ahead, sir.
Yes, good afternoon. I've got two questions. The first one is on the payout of the network. I've seen that you have recruited more financial advisory one years before, even net of Sofia. I was wondering if you can guide us to the trend of the payout to the network for the next year, if you should assume it's to stay stable at 45% or to be a bit higher. The second point is on the basic asset allocation of the client. Remember that during the previous conference call, you mentioned that you would have suggested client maybe to increase on the longer term exposure to equity. Given what you present today, in a slide, basically in the first slide of private markets on, should the new initiative bring us to consider a different asset allocation?
Maybe no more increase exposure to equity bar toward basically these alternative market. Thank you.
Thank you, Filippo. Well, obviously, longer term, we're talking about more allocation to alternatives. That's a matter of fact. It is not supposed to come at the expenses of equity. Even if 10.6% versus previous 10% may sound not, let me say, overly exciting, no need to say, and when I say no need to say, I'm serious about it. If you consider what's going on in the markets in the last few weeks and months, this level of equity investment proves that our clients are there, that our suggestion has been properly understood, and the portfolio location is supposed to be healthier going forward. As much as your question about the payouts, no, I don't see, and we are not planning anything different going forward. Even if we have brand new colleagues, 40 colleagues coming from Sofia, they will be adapting to our standard practice.
As of today, our payout is not supposed to change going forward.
Okay, thank you. Very briefly, to be sure to understand. Basically what we've seen in terms of fee payout in the last quarter, also with new revision, should be considered as a sort of steady rate also for next year.
Absolutely.
Okay. Many thanks.
Pleasure. Thank you, Filippo.
The next question is from Federico Braga of UBS. Please go ahead, sir.
Hello, thanks for taking my question. Actually, just one follow-up question left for me. Again, on slide 12, please. When you mention the new open distribution platform for 2019, can you give us a little bit more color on what you mean by a new open distribution platform? It means that you will push more also, you will have your financial advisors also selling third-party distribution funds. If yes, this will be mainly for those clients under advisory contracts or in general. If you can give us a little bit more color on this aspect as well. Thank you very much.
Thank you, Federico. No, open distribution platform means the platform itself, it's open. It's not rigid, and we can plug in any type of supplier or software or operational items that we'd love to. For a long time, platforms, especially managing companies like us, have been pretty rigid. They've been pretty close to the evolution in the market. That's one of the difficulties when we go from non-automatized to digitalization. We took, intentionally, the decision to have an open platform, which means it is based on a technology which is in evolution, made by players in the market, and it is not rigid. I give you an example. Under the new platform, we can plug in various types of banking providers, as an example, or we can choose one supplier for CRM and two months later change it and attach a brand new one.
We can attach facilities in order to, for example, have live chats between clients and agents or between agents, providing alerts for market situation condition, et cetera. We're not talking about commercial strategy here. We're just talking about the technicalities of the platform. Open distribution platform doesn't mean more third-party funds. It means the opportunity of the platform to bring in different suppliers.
Thank you.
Pleasure, Federico.
The next question is from Gian Luca Ferrari of Mediobanca. Please go ahead, sir.
Yes. Hi, good afternoon, everyone. Three questions from my side. The first one is on Azimut MAX, which is a solution you had since 2014. If I read correctly, page seven, on average, on Azimut MAX, you gain 120 basis points, more or less. The question is, are you going to offer Azimut MAX even to clients, I guess, below the EUR 1 million threshold? This could have a dilutive effect on the overall profitability, or it will remain a service, a product dedicated to really high-net-worth individuals with a negligible dilution to your margins. The second question is if you can give us the net weighted average performance of your clients at the end of October. The third, I admit I'm a bit confused about your dividend policy now.
The official guidance is 65%-75% on the earnings per participation capital. I know we are still in Q3, but in three months, we will have the full year rating dividend. What should we expect? Should we expect the dividend calculated in the 75%-85% of the earnings per participation capital, or there is a new guidance? Thank you.
Thank you, Gian Luca. Let me start with your first question about the advisory service. I think it's a good proposal, going down from the EUR 1 million. Makes a lot of sense. Yes, it's a plan that we have in our mind. No need to say, it's the evolution of MiFID II and the evolution in the market. Even if today, most of the clients, as you can see, not in Azimut, but in the market itself, are very healthy clients looking for fee-based type of services. Going forward, this pressure will be lower and lower. Don't get me wrong, it doesn't mean we're going to be like U.K. in a few months. Probably we're going to see even smaller clients accepting the idea that as well as they pay a doctor to make a visit, they need to pay a financial advisor to do some consultancy.
Performance of clients, this is a metric that we do not disclose. It is something that I don't see very frequently in the market, so you will apologize if I'm not alluding to it. As much as the dividend, I can tell you, we're seriously pondering about what is supposed to be the next dividend for Azimut after a very healthy two years. To be very transparent, I think we're going to communicate this going forward with a very nice press statement.
Okay, thank you very much.
Pleasure. Thank you, Gian Luca.
As a reminder, if you wish to register for a question, please press star and one on your telephone. For any further questions, please press star and one on your telephone. Albarelli, there are no questions registered at this time, sir.
Thank you. Thank you very much to not just our friends and colleagues who pose us questions, but everybody attending the conference call. Obviously, Vittorio and I are more than happy to take more questions and to provide more color about the numbers. I do believe that today, despite market conditions, the numbers are very good and very strong, and we are well-positioned going forward. Thank you very much, and very good evening to everybody. Thank you.
Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.