Good morning to all, and welcome to Sunny Paris, albeit by video. It is my pleasure to introduce you to our videoconference regarding the Q1 results of Amundi, and it's my pleasure to introduce Nicolas Calcoen, our Deputy CEO, and Aurelia Lecourtier, our CFO. Just as a brief introduction, please remember that this is a videoconference. For the time being, you are on mute. If you want to ask a question, please raise your hand virtually via Zoom, and we will unmute your line. Please make sure that, obviously, your mic is also unmuted so that you can ask a question. Without further ado, let's start with Nicolas for the introduction.
Thank you, Cyril, and good morning, everybody. Thank you for attending this videoconference on our Q1 result. I will, as usual, go first through the highlight of the quarters, and then I will leave the floor to Aurelia to go more into details of the results and the activity, and then we'll take your questions. So to start, the beginning of this year was, as you have seen, a very busy and intense period for Amundi, busy in terms of commercial momentum, with a good level of inflows and a record level of asset under management and high level of profitability, but also very busy and intense in terms of development initiatives, both organically and in line with the priorities of our strategic plan, but also in terms of M&A with the announcement or confirmation of two significant and value-creative transactions.
So first, let's have a look at the overall numbers. As you can see, we posted a very strong performance in both activity and results. Our net profit was up by 6% year-on-year, on which we ended on EUR 18 million, driven by the growth in management fees and by our best-in-class operating efficiency, with a cost-income ratio of 53.3%. Our net inflows reached EUR 17 billion and were positive in active as well as passive management, well diversified across client segments and across geographies. Our net inflows, sorry, and thanks to these high inflows and thanks to the good level of the market, our asset under management reached an all-time high above EUR 2.1 trillion. At the same time, we continue to make progress in our key strategic growth pillars. First of all, third-party distribution gathered EUR 7 billion, representing an annualized flow rate of 8%.
It's worth highlighting, again, that this business accounts now for more than half of our retail business. We also continue to grow in Asia, where our assets reached EUR 422 billion, so 6%+ compared to the beginning of the year. I'll go back in a second in more detail on that. Amundi Technology revenues grew by 36% compared to the Q1 of last year, and the business added four clients during the quarter, so a total of 61 clients now in 14 countries. Also to notice that we also accelerated our IT investments during this quarter. Finally, in line with our strategy, we initiated two transactions in the beginning of the year that will accelerate our growth in the future. First, the acquisition of Alpha Associates. You remember we announced it in February when we published our annual results.
The deal was closed on 2 April 2024 , so basically three months ahead of the planned schedule. This means that we have started integrating the business, and we are starting proposing new multi-management solutions to our client base. Second operation, we just announced last week the plans for partnerships with Victory Capital in the U.S. to create a larger U.S. asset manager and get access to a wider range of high-performing U.S. products for our clients across the globe. Both deals are clearly value-creative for our clients and our shareholders, and they will contribute to our future business and profit growth. Let me maybe give a little bit more detail on this strategic initiative and momentum. As I said, in terms of commercial momentum, our net inflows in the Q1 were very much diversified across client segments, across types of management, across geographies.
Europe remained, of course, our main market, with EUR 12 billion in Europe gathered during this Q1. We also gathered EUR 1 billion in net flows in the US, but I would like more specifically to highlight the growth in Asia. In Asia, our asset management, as I said, grew to EUR 422 billion, with EUR 7 billion positive flows during this Q1, split between our JVs and our direct business. Our JVs gathered EUR 4.4 billion, mostly in long-term assets, thanks to, again, very strong performance in India and in Korea. But outside the JV, also very good momentum. The direct business grew significantly and was well diversified across the main countries of the region: Hong Kong, mainland China outside of the JV business, but also Singapore and Japan, all contributed in a very material way, you can see it with the numbers, to this performance.
Turning to expertise, clients continue to favor the attractive risk-return proposal of our fixed-income solutions, both in bond and treasury. In bond, we collected EUR 14 billion overall, of which EUR 12 billion in actively managed products, with in particular the success of our, again, target maturity funds in retail, in particular international network, but also a success in the attractiveness of the asset class within institutional clients. Treasury product was also very successful: EUR 8.7 billion, well balanced between institutional and retail clients. We are seeing retail clients coming back for now a few quarters on this asset class thanks to the attractive returns at the lower end of the yield curve. And finally, in ETF, we posted high net inflows: EUR 5 billion overall, in particular thanks to a good performance in fixed income or in ESG ETFs.
Now our ETF asset under management reached EUR 227 billion, up by more than 25% compared to last year. Thanks to these blockbusters, we were able to post better performance than the industry in total net inflows, in particular in active management, as we will see with Aurelia. Turning to the M&A, first a few words about Alpha Associates. You remember the operation. So, as I said, the closing took place a few weeks ago, beginning of this quarter. This means that Alpha Associates will contribute to our profits starting in the Q2. Just a few words to remind what we are talking about. Alpha Associates is specialized in private asset multi-management. They now manage EUR 9 billion at the end of March for around 100 clients, mainly in Switzerland, in Germany, and in Austria.
So this acquisition will allow us to increase our footprint in the fast-growing private asset market and create, in particular, a leader in the multi-management space. We will manage, combining Amundi and Alpha, around EUR 21 billion in these categories of expertise, and we'll be able to sell this expertise to our global institutional client base and also to develop solutions adapted to the needs of retail. So clearly, a very value-creative deal for shareholders, thanks to the synergy revenues expected from the deal. And just a reminder, we expect to have a return on investment in excess of 13% within three years. Second operation announced last week: the partnership with Victory Capital in the U.S.
Again, reminder, this project is to combine Amundi U.S. into Victory Capital, with Amundi Group becoming a strategic shareholder of the new Victory Capital, with a stake of around 26.1% to be exact, and to establish a long-term, 15-year reciprocal distribution agreement between Amundi and Victory. So clearly, this operation is, I would say, a unique opportunity to strengthen our presence in the U.S., and it's fully in line with our strategy in this large country and segments pool. Because indeed, with this deal, our clients across the globe will have access to a broader set of high-performing U.S. strategies, and this is secured through this long-term distribution agreement. And we also create a strong, very comprehensive U.S. investment platform with last distribution capability. Clearly, the deal will create a lot of value for both our clients and our shareholders.
In addition to the organic growth prospects, the new combined entity has already identified around $100 million of cost synergies achievable within two years, that will boost the profitability of the combined entity and hence of Amundi as the main shareholder. This, of course, without any cash disbursement, any issue of new shares of Amundi. The deal will be materially accretive on Amundi net income and earnings per share. I thank you for your attention, and I now leave the floor to Aurelia to go into more detail.
Good morning to all. I will start my presentation from slide nine with a quick overview of market conditions to set the context of this Q1. So all markets were up year-on-year, based on average market data in Europe. Equity markets were up by 15%, and fixed income markets, sorry, by 4%. Therefore, the market effect on our net management fees was positive compared to last year. However, despite this bullish market, European investors in mutual funds remained very cautious this quarter. Moving to slide 10, we see that the activity in the European asset management industry in open-ended funds and ETFs remained low at EUR 19 billion inflows in Q1, representing an increase of less than 3%.
1/3 of these inflows was collected in treasury products, and medium to long-term products were positive by EUR 61 billion, but with a sharp contrast between passive products collecting EUR 68 billion and active ones that posted net outflows of minus EUR 6 billion. Moving to the next slide, we can see how Amundi performed in this context. Assets under management at the end of March reached an all-time high at more than EUR 2.1 trillion, an increase by 4% on the quarter alone and by 9% over one year. In both cases, this was achieved thanks to net inflows and positive market effects. Over 12 months, we see that the market effect totaled almost EUR 150 billion for Amundi, and we posted also positive flows totaling EUR 53 billion in the past 12 months, despite headwinds in the European asset management markets.
Q1 net inflows were at a high level, reaching almost EUR 17 billion. As Nicolas explained, these net inflows were very diversified by client segments, with EUR 6.5 billion in retail, EUR 5.6 billion in institutional, and EUR 4.5 billion in our JVs. It was also well diversified in terms of type of management and geographies. As we see it in the slide, like for the European market, inflows were mostly driven by treasury products and by the performance of our JVs. Treasury products continued to be attractive in an environment of high short-term yields in the eurozone, and thanks to Amundi's wide range of liquidity solutions. On the other hand, despite risk aversion across our client segment, we succeeded in posting good performances in MLT assets with EUR 3.1 billion of net inflows.
It should be noted that this quarter we posted positive net flows in active management MLT for the first time since Q3 2022, outperforming the European market. This was achieved thanks to strong inflows into key areas for Amundi, well adapted to current market conditions, and in particular, active management bond solutions and ETFs that collected respectively EUR 12 billion and EUR 5 billion on the quarter. Next slide, we see that the good result came from sustained performances from our investment teams. More than two-thirds, as you can see on the slide, more than two-thirds of our AUM in open-ended funds were in the first and second quartile over one, three, and five years, according to Morningstar. We have 262 funds rated four of five stars.
To take a broader view, including all active strategies, 83% of our assets under management outperformed their respective benchmarks over the last five years. This is obviously supportive of our commercial activity across all our client base. Turning to slide 14, I will detail the performance on our retail segments. So overall, we achieved net inflows of close to EUR 7 billion over the quarter, the highest level since Q1 2022. This was driven mostly by third-party distribution and French networks. In third-party distribution, positive flows were driven by passive management and treasury products, but also by active management that was positive this quarter. In French networks, flows were driven by treasury products. International networks posted net outflows due to mainly the strong competition, again this quarter, of the BTP Valore in Italy, thanks to the strong tax advantage, and still outflows in the multi-asset space in the Italian market.
On the other hand, our partner in Spain, Sabadell, posted net inflows thanks to the success of our structured product and of our target maturity funds. Moving to the next slide, we can see the institutional segment that posted net inflows of EUR 6 billion in the Q1. Treasury products gathered EUR 4 billion in this segment, driven by institutional and group insurers, while corporates cashed out from this product, as it is usually the case in this time of year. As for MLT flows, net inflows into MLT assets totaled EUR 1.7 billion on this segment, thanks to institutional and sovereigns, and despite a EUR 5 billion withdrawal from an index mandate in an institution in the Gulf region. The group insurance segment posted also net outflows of EUR 0.6 billion MLT, but due to redemption from Euro contracts.
The employee and savings and retirement segment also posted net outflows, as employees took profits from the strong performances in the shares of their employers, and following, as we see, usual trends at this time of year. Moving to slide 16, we can have a look at the commercial performances of our JVs. As mentioned, it was positive overall by EUR 4.5 billion in the Q1, with a strong contribution of India and Korea. SBIMF in India totaled EUR 2.9 billion inflows, despite seasonal outflows from treasury products at the end of their fiscal year. Please note that we expect material withdrawal in AUM at SBIMF, probably in the H2 of the year, but with a negligible effect on our revenues.
Actually, SBIMF manages, along with one other asset manager, the fixed income mandate of the Employee Provident Fund Organization, that is the largest Indian pension fund, with EUR 240 billion assets, out of which SBIMF manages EUR 98 billion. The Indian authorities have decided to share this mandate with other asset managers instead of two today. So this reallocation that is expected to take place in the H2 of the year will lead to material AUM withdrawal for SBIMF, even though it is not possible for the time being to assess their amount. However, looking at the revenue from this asset, they are barely material and totaling few hundreds of thousands, not millions, EUR. So this withdrawal will have almost no impact on SBIMF revenue and, obviously, to its contribution to Amundi's net income.
Turning to South Korea now, NH Amundi also posted good inflows of EUR 1.5 billion. And last, concerning our JV in China, ABC-CA, the stabilization of flows is confirmed, with slightly positive net flows in mutual funds. Moving now to Amundi's results for the quarter. So starting with our revenue, they reached EUR 824 million in the Q1, up by 4%, and EUR 30 million compared to Q1 last year.
This was entirely driven by the good performance of our net commission income, which were up by 4% and also EUR 30 million as the total revenues. This is due to the rise of our average AUM on the quarter of 6%, excluding JVs. However, as you can see, the positive volume effect of the net inflows was partially offset by the impact of the product mix on our revenue. Concerning the other revenues, performance fees were down 38% year-over-year due to a cautious management of our funds, that we assume, when net financial income were up by 43% thanks to higher short-term rates, and technology revenue still up of 36% on the quarter. This healthy revenue growth was obviously complemented by good operating efficiency, as we can see on the next slide.
Costs remained under control in Q1 at EUR 436 million, up by 3.3% on the quarter and EUR 14 million year-on-year. This growth is below the one of our revenues, and therefore showing a positive jaws effect, despite some investment, as Nicolas mentioned, in our growth initiatives, and in particular in technology, where we see that almost half of our growth is coming from our investment in Amundi Technology. Further efficiency gains have compensated this and managed us to keep our cost-income ratio at the best-in-class level at 53.3% this quarter. Coming to our results and adjusted net income for Q1, as you can see, it is up by close to 6% on the quarter, reaching a high level of EUR 318 million, and the increase of our gross operating income exceeded the one of our revenues at 4.4%+ year-on-year.
This growth was also underpinned by the contribution of our JVs, up 30% year-on-year. Finally, the adjusted earnings per share was at EUR 1.55, up 5.5%. I thank you for your attention, and I now leave the floor to Nicolas for a few words of conclusion before we take your questions.
Thank you, Aurelia. I will be brief and just wanted to summarize this presentation by saying that, as you can see, Amundi is on the move. Thanks to our very diversified profile, our long-term growth drivers, both organic and through the deals I announced, and thanks to our high profitability, I am very and we are very confident in our ability to continue to create value for our clients and our shareholders. Thank you, and now we are with Aurelia at your disposal for your questions.
Okay. Thank you, Nicolas. Thank you, Aurelia, and thank you for your attention. So as a reminder, if you want to ask a question, you have to raise your hand virtually. And we already have four questions, starting with Arnaud Giblat from Exane. Okay.
Good morning. Hopefully, you can hear me.
Yes.
Yes.
Good morning, Arnaud.
Yeah. Great. Good morning. I've got three quick questions, please. Could you talk about Alpha Associates? Now that that's on board and you're thinking maybe of distributing more products, what sort of new products could you bring to leverage Amundi's distribution? What's the outlook there? Maybe on the retail side and the institutional side, any color you can give would be helpful. Secondly, on real estate, I'm quite surprised. Despite some challenging performance you've had and the market has had generally in real estate, you've had virtually no outflows. I'm just wondering what the outlook is there. Are you seeing redemption requests in the OPCI products? Or yeah, any color there would be interesting to hear. And thirdly, on technology, good growth year-on-year, flat quarter-on-quarter.
I'm just wondering how the outlook in terms of growth acceleration looks like, bearing in mind that you have a EUR 150 million target. Is that still a valid target? And how did you get there? Is it selling more to existing clients? Do you have a pipeline of new clients? Thank you.
Okay. On Alpha Associates, so the question was about kind of products we could propose to our clients. So it's quite diversified. You have a look, obviously, at what they have. And just to give a few illustrations, I know they are in the process of commercializing a new infrastructure fund. So it's clearly one of the things we could propose to our institutional clients. But again, it's multi-management, so they are able to propose solutions in, I would say, the three main spaces of the private asset: infrastructure, private debt, private equity, or to combine.
Globally, I would expect, continuing the market appetite today, to have probably more appetite, especially in the institutional space, for infrastructure and private debt. As far as retail is concerned, what we are working on is to build solutions that are adapted to retail, including solutions that basically are globally an exposure to all the categories of private assets, so using blocks based on both private debt, private equity, and infrastructure. Second question was on real estate. We do have outflows. I don't know exactly the number.
It's EUR 300 million this quarter?
300 million this quarter. So we do see outflows. But you have to look at various businesses. And in retail, you have mainly two kinds of products, what are called SCPI, which are not open fund. And so we have limited outflows, I would say, by definition. And we are seeing outflows in what we call OPCI, which are partially open funds and funds that are exposed to real estate by around 60%. On these funds, there is liquidity which is offered, and we are seeing outflows, but it's very well managed. That's for retail. On the institutional side, we don't see outflows. And maybe at some point, now that the valuation has already come down significantly, at some point, it may become an entry point for some investors. And as far as technology is concerned, so there's a good momentum.
Its revenues are flat quarter-to-quarter, but it's linked to the level of build revenues that vary from one quarter to another. You can see that directionally, if you compare to the Q1, the increase is significant. We are confident in continued growth, and it will come both by onboarding new clients, as we did, as you have seen, on the Q1 again, but also, to use an expression that in this business is widely used, by farming existing clients, so proposing new solutions and sometimes also adapting the pricing of the offers for existing clients.
Maybe inside the technology revenue, we can see that we have more than 70% of recurring revenue. So it's less volatile revenue, I would say, than others.
Absolutely. Thank you.
Okay. The next question is coming from Hubert Lam from Bank of America.
Hi. Good morning. Thanks for taking my questions. I've got three of them. Firstly, on the fee margin, I know you don't provide quarterly fee margin, but if you back it out, I have the fee margin actually going up quarter and quarter. I was just wondering if there's any one-off impact to that, any transaction fees attached to that, just because I probably think that fee margins should be going down, just given the mixed pressures towards bonds and money markets. So I found it a bit surprising that the fee margin, unless I'm calculating it wrong, fee margin would be up. That's the first question. The second question is on China. It seems to be doing better now in both the Bank of China business as well as the JVs. I think it's relatively stable, I think, in terms of flows. What's your view on China now?
Do you think we've turned the corner, or are you still cautious on the near-term outlook? And last question is on the SocGen distribution agreement. I think the contract ends in 2025. So when do you expect to renegotiate this, and are you confident that the relationship can be maintained going forward? Thank you.
Aurelia, you take the first question.
Yes. I will take the question on the fee margin. As you mentioned, we do not comment our margin on a quarterly basis. A few elements. As you've seen, we have a 4% increase in our net commission income, mostly due to market effects, but also thanks to positive flows in the active management space. Still, as mentioned in my presentation, we can see that risk aversion has an impact on the product mix still this quarter, as we measure that our average AUM progressed by 6% when our revenues and income were up by 4%.
As a general comment, I would say that our strategy is obviously not to control our margins, but to be able to meet our clients' needs on all the products and expertise that they need, and that we still see at the moment more appetite for treasury products, passive products, and also fixed-income solutions. We stick to the needs of our clients.
But maybe one point to complement, and there's no one-off, no specific on this quarter. It's, I would say, clean data that you can rely on. Your second question was, I think, around China. So indeed, we are seeing a stabilization, I would say, of the situation, and both with BOC, despite still a little bit of outflows, and with ABC, where basically it's, I would say, neutral but slightly positive on mutual funds. Going forward, I would say in the short term, we will remain cautious, and the situation is only moving very slowly. So remain cautious in the short term, but again, positive in the longer term and continuing the potential of the untapped potential of continuing the amount of money that are still on deposit in the Chinese economy overall, including with our partners. And the third question was about Société Générale.
Yes, indeed, the existing agreement will be expiring at the end of 2025. We have not yet started to discuss with our partners about renewal, but it will come in due time. And continuing the quality of the relationship we have with Société Générale, we are very confident that we will continue our longstanding and fruitful relationship.
Great. Thank you.
Thank you, Hubert. The next question is coming from Sharath Kumar from Deutsche Bank.
Yes. Good morning, all. Thank you for taking my questions. And again, congratulations on a very good set of numbers. So a couple of questions. Firstly, on the evolution of client demand, are you beginning to see any shifts in the composition of the demand? It's good to see some inflows in active management, but still continues to be dominated by passive and treasury products. So any thoughts there would be appreciated. Second, on your international networks, can you talk a bit about the underlying trends outside of the impact of the BTP issuance? And maybe a subset to that is, do you expect retail bond issuance to be a continuing affair? We have already seen three large BTP issuances. And can it extend to other geographies? And finally, if I can squeeze in a clarification on Victory Capital.
I understand today there is no additional capital allocation or outflow. Given that you are taking only a 26% stake, would you be penalized on the minority interest rate from a capital standpoint? Thank you.
On client demand, for the moment, no significant shift. Maybe with the exception of, as you may have noticed, on third-party distributors, where we are posting very good level of inflows. Of course, a lot of passive management and ETF and treasury, but also positive in active management. And it's probably linked to the fact that you are talking here in a clientele which is more diverse and can include more, I would say, higher wealth clients. For networks, I would say no big change. And we expect probably the main driver in the coming months or quarters being a change in the level of short-term interest rates.
On the international networks, I'm not sure to have completely get the question, but the outflows we are seeing are very specific to Italy, which is, of course, a country where we have the proportions, the bigger size of international networks, very linked again to this competition from basically the government and subsidies of BTP. That's why it's not really something that we see in other geographies where you don't have the same competition. There have been some countries such as Belgium, where, for example, they have these kinds of products, but not as systematic as we are seeing in Italy. Regarding Victory, I'm not sure to get the question. If it was about the impact on our capital position, if I get it right, it's neutral. So there's no cash disbursement, and there's no capital impact.
So we remain with the same level of excess capital, which is around EUR 1 billion.
Maybe just to comment on Nicolas' question and the Italian market, just to mention that on January and February, the whole Italian market posted negative flows of almost EUR 5 billion overall. So the situation is very specific in the Italian market, and that actually there was a bigger issuance of BTP Valore in February for EUR 18 billion. So it explains the poor result, I would say, of the asset management market in Italy this quarter.
Okay. Thank you, Sharath. The next question is coming from Angeliki from JP Morgan.
Good morning. Thank you for taking my questions. Just three from me as well, please. First of all, on your excess capital, which you just mentioned is around EUR 1 billion, how should we think about the deployment of that by the end of 2025? If I remember correctly, when you presented your business plan a couple of years ago, you had said that either you will deploy this for M&A or it will be distributed to shareholders. I just wanted to understand, if you don't do any more deals over the next sort of year and a half, shall we expect the excess capital that you have accumulated by the end of 2025 to be distributed out to shareholders? Second question on the multi-asset funds. You have seen EUR 34 billion of outflows now over the past 15 months.
There is no sign that these outflows are coming down, are improving in Q1. Are there any specific products or geographies that are leading them? And how has performance of multi-asset funds been in the recent months? And third question, just to go back to Italy. There is another BTP Valore issuance in May that has already been announced. So it's possible that net flows in Italy remain challenging. Do you expect the Italian government is going to continue issuing government bonds to retail investors beyond May? What is your expectation when you're thinking about the outlook for your Italian business? Shall we expect much more volume of BTP Valore to come to market in the H2 of this year and possibly also 2025? Or do you think that the appetite is going to be capped at some point? Thank you.
Thank you. First question on the excess capital and the deployment, no change in the strategy. We are looking to grow, of course, organically, but continue to look at opportunities also to complement this growth through M&A if we see opportunities that make sense, basically creating value. It may be the case. In that case, we will use it. I would say the first possible usage is to continue to do M&A and use the excess capital that way. If it's not the case, we will return the excess capital to the shareholders. The way it will be done will be looked at in due time if, again, there is excess capital at that time.
Regarding multi-asset, I would say the outflows we are indeed seeing for a bit more than one year are the reflection of the low risk appetite, and it's largely compensated by inflows in fixed income. We are basically seeing in retail, in general, and particularly in Italy, outflows in multi-asset and inflows in fixed income. So it's not specific to any product. A big part of it is coming from Italy, and it's not linked to any performance issues. Regarding the Italian market, well, I don't know. I know there will be a new BTP issuance in May. Maybe there will be others. It's not something new. It always existed in Italy or very often existed. It's particularly attractive for clients due to the context of interest rates.
I think, as competition from bank products, this kind of competition will probably decrease over time when we'll have a change in the level of interest rate and in the risk appetite of clients.
In Italy, Nicolas, we posted net inflows this quarter on structured products. We still find appetite from clients in Italy to go and buy our structured product. It was EUR 1.3 billion for Q1.
Thank you, Angeliki. The next question is coming from Bruce Hamilton from Morgan Stanley.
Hi there. Hopefully, you can hear me. Thanks for the presentation. I've got three questions, as is tradition. First one, in terms of the Victory strategic partnership, which looks pretty interesting, I guess it sounds as though the opportunity set is more in selling the highly performing U.S. content into Amundi's international investor base. And you'd obviously get your 26% share of economics in that. But I'm just trying to understand the extent of the opportunity to sell Amundi products into the U.S. and which products you'd be most upbeat on, if I thought about that right, or is it more balanced? Secondly, on China, encouraging to see that the flows are much more stable. Can you just remind us on the channel business? I know it's low margin, but what's the sort of residual risk on that, and what sort of timeframe should we expect that to flow out?
And then finally, on Asia, extra JVs. Obviously, you've had decent inflows across Hong Kong, China, Singapore, and Japan, as per page five. Could I just get a bit of color on is that sort of mainly institutionally driven, or is it selling through sort of wholesale retail channels, just to understand where that encouraging momentum is coming from? Thank you.
Okay. Thank you. On Victory, I think the distribution opportunities is on both sides. Probably the highest and the more obvious one is indeed the distribution of US-manufactured product in Europe and in Asia. It already represents more than EUR 35 billion and the existing stock of assets managed by Amundi US in Europe. And it's growing, and it will grow even faster because we'll have access to complementary good-quality expertise that are today managed by Victory. So that's clearly probably the first driver. But we also expect a lot from the other side, I would say, selling in the US expertise that we manage in the rest of the world. We are clearly working with Victory to identify what could be interesting, probably emerging expertise, for example, some global expertise.
We are confident it will create value thanks to the strengths, I would say, of the combined distribution capabilities of Victory and Amundi US, taking in particular into consideration the fact that at Victory, for example, they have the ETF format, which is very attractive for tax reasons in the US, so where we can embedded expertise that are managed today in Amundi US but also in the rest of the world, possibly. And there's also these direct distribution channels, which looks promising. On China, the rest of the US?
[Crosstalk]
Yes. On China, Asia, on your question on channel business, we still have a big portion of mandate in runoff. I would say that it is, yeah, something like EUR 5 billion still left on the channel business. It is difficult to foresee the rhythm of the outflows, but we can see that it is slowing down. So it's part of the stabilization of the situation of the JV. If we go on your question about Asia and the kind of inflows and activity that we see there in the figures that were mentioned by Nicolas, speaking about China, when we're speaking excluding JVs, it's obviously only retail because on institutional sorry, because retail is in the JVs only. And otherwise, it's rather balanced in the other countries, in the direct business that we have between retail and institutional. For example, in Japan, it's very balanced between both.
Okay. Thank you, Bruce. The next question is coming from Jacques-Henri Gaulard from Kepler Cheuvreux. Jacques-Henri ?
I was muted. I apologize. Good morning, everyone. So yes, just a follow-up on the M&A. I mean, you've had Alpha, your Victory. So I was wondering, that's probably a little bit of resources. You're appointing two people as board members. How many more deals of this type of size do you think it can actually take on without it being too distracting on the day-to-day run-up of the business? And more generally, do you still see deals at this point in time? Do you still have a pipeline of things you can actually look at? Because I think your equity narrative is probably more fun with acquisition than just bringing just money back to shareholders. But that's just a personal view. Thank you.
Thank you, Jacques-Henri . So we can continue to in fact, we do continue to look at potential opportunities. You are pointing to a very valid point and the ability to manage different processes in conjunction. That's obviously something we are very careful about. In terms of financial ability, we have this EUR 1 billion, and there can be deals that doesn't consume or consume a limited amount of capital, Victory being an obvious example, no capital consumption. But we also need to be very careful about, I would say, our managerial capacity to look or to indeed execute different deals. But I'm quite confident that we are in a position to look at a few other opportunities in the coming quarters. But again, it's something we are very careful about and to be able to strike the right deal, but more importantly, to execute it properly.
But we do have this capacity. There was a second part to the question. No? No. That's?
I think it's fine. That's all. Thank you very much.
Okay.
Thank you.
Thank you, Jacques-Henri. The next question is coming from Michael Werner from UBS.
Thank you very much. Yeah, just one question, please. We did see a lot of flows going into Treasury this quarter. And again, not surprising given the environment. I was just wondering if you could kind of have a high-level view on the economics in terms of obviously, I imagine the institutional Treasury products are extremely low margin. But do you get to give us a little bit of color with regards to the retail Treasury products? What type of fee margins or around what type of fee margins do you get, maybe relative to the institutional side? Thank you.
Yeah. Yeah. On the retail side, as we said, we posted very good inflows in the third-party distribution. In terms of product, you mentioned, yeah, Treasury was very attractive, but we saw also positive flows in passive and positive flows in active driving the margin a little bit up compared to Q4.
Maybe to complement, I think the question was around the economics on Treasury funds. So obviously, it has a lower margin, but for Amundi, it remains very attractive. And the very strong increase in the level of short-term interest rates are indeed, as a consequence of the yield proposed by this kind of products, allowed in the recent period to adapt the pricing. And today, for individual clients, the average margin is a bit lower than the average margin overall of the segment, but let's say it's around 6-7 basis points. So still interesting. And it's obviously more than that on retail. And continuing the fact that you are talking about very, very large, big funds that imply the limited amount of resource, it's a very profitable business for us.
Thank you.
Thank you, Mike. We have a follow-up question from Sharath from Deutsche Bank.
Yes. Sorry for this. Just a couple of very small follow-ups. So firstly, in terms of the accounting for Victory Capital, I guess it would be similar. Equity accounted for the 26% stake, and for the AUM, you would have 100% included. So am I right there? Secondly, on India, do we know the number of partners that the EPFO mandate would be extended to from the two players, just to get a sense of what the quantum of outflows could be? Thank you.
Aurelia, you want to?
Yeah. First, thank you for your question. First, on Victory, yes, it will be equity accounted. The AUM of our share will be accounted at the level of our shares, so 26.1% in our account after closing, obviously. And for India.
But there's no decision yet. We are just saying that there is RFP, and there will be today, this huge mandate is managed by two, including SBIFM. And there's a high probability there will be one or two additional ones.
Yeah. They couldn't say because the RFP is ongoing and will end in June after the presidential election. But yeah, three or four, we don't know yet.
Okay. Thank you for that.
Okay. Thank you, Sharath. We have a new question from Oliver from Goldman Sachs.
Hi there. You hear me okay?
Yes.
Yes
I can. Just one follow-up question from me on Victory Capital. Can you comment on the rationale between the difference in your voting rights and your economic interest here? It was my understanding that they collapsed the share structure a couple of years ago to have equal voting rights or to have a single share class. So apologies if you covered it on the call a week and a half ago, but can you just comment on the rationale here between the difference? Thanks.
So indeed, there's a difference between the economic stake and the voting rights. It's to ensure that Victory, in fact, the new Victory, is not absorbed in the regulation of a subsidiary or even minority subsidiary of a bank. But what is important is in terms of governance, we will have two board members out of nine. So it means that we will have a significant say in the governance bodies of the combined entity.
Okay. Thank you, Oliver. We have a follow-up question as well from Arnaud from Exane BNP Paribas.
Yeah. Thank you for taking my follow-up. Just a quick one. You said two years ago that you'd return any surplus capital if you didn't execute on M&A. I'm just wondering how we should think about that because at that point in time, you probably still want to retain something for small-sized deals. So when we're thinking about the potential for a special dividend, if there's no deal, do we say EUR 1 billion minus a buffer for any small bolt-ons that might arise in 2026? I'm just trying to get an idea of the quantum we could land on. Thank you.
We are not at the time to decide on that. If there's absolutely no M&A, it will be maybe there will be a small buffer, which will be kept, but it will be most of the excess capital at that time.
Perfect. Thank you.
Okay. And we have another follow-up from Angeliki from JP Morgan.
Yes. Thank you. Just a quick one from me too. Can you explain how the pricing works for Alpha Associates? What is the margin that the end client is paying at the moment? And sort of what is the margin that Alpha retains in terms of what is the total cost of the product? Because I would imagine there is some pass-through, obviously, to the end asset manager, the underlying asset manager of the assets.
As it was, the average margin of the product at Alpha Associates level is around 30, 25, 30 basis points, if I remember well. We are talking about multi-management. So it means that we invest in fund managed in fact, Alpha, we invest in funds that are managed by other asset managers. So of course, there's two levels of fees. But I would say the beauty of the model, and in particular, going forward, when you combine our capabilities and the one of Alpha, we have, I would say, a pricing power that a direct investor cannot necessarily have when he invests in a fund. And we are able to, I would say, propose something in terms of overall pricing, which is attractive to the end customer.
Okay. Thank you, Angeliki. It doesn't seem that we have any more questions. If not, I will leave the floor to Nicolas and Aurelia for maybe concluding remarks or if.
Just to thank you for your attention and wish you a very good day.
See you in Q2.
Thank you.
Thank you very much.
Bye-bye. We obviously remain available if you have any follow-up questions. Thank you. Bye-bye.