Ladies and gentlemen, welcome to Wendel's 22nd Investor Day. We are very happy to have this Investor Day today with public in the room. What about the process today? You will see the agenda on the next slide. And we have, as you know, limited time for Q&A, but at the end of each sessions, you will be able to ask questions, but no time for Laurent to speak. Laurent, you can come to the floor.
Great. Thank you, Olivier. Good morning to all of you. I'm sorry, this is not the best day for me, to be fair. I've got a little bit of a cold, so I'm gonna try to make sure that my voice can go up to the end of this presentation. Today, during this Investor Day, we're going to try to explain to you how we want our business model to evolve and to create value to shareholders, and that's really all the aim of this day. You will see also some presentation of our two of our portfolio companies, Stahl and Scalian, a newcomer. And you will see also a presentation from IK Partners, which is a new initiative which was taken in order to develop the Asset Management business.
Before starting, a few headlines. On Permanent Capital, you will see today, the few sector where we want to focus the investment of our permanent capital, strategy and the IRR target that we are putting to ourselves. You will see also that Stahl has decided to pay Wendel a dividend of EUR 85 million by the end of the year, and also, that we have now a new CEO arriving at ACAMS early 2024. In the A sset Management field, you will see how we want to build an Asset Management platform in the private assets, and our target as fee-related earnings for 2027, which is EUR 150 million. And last but not least, how much do we want to return to shareholders, and how do we want to do it?
The most number one takeaway is that the dividend payout will be increased this year to 2.5% of the NAV, which will be at least a sort of a floor, sustainable, ongoing forward, and it could increase up to 3.5% by the development of the Asset Management. But I will come back very much more on that later on. Since we last talked together, well, at least since our annual meeting, where we presented the strategy of Wendel, we've done quite a few number of things, and in line with what we've decided to do at that time. First, we've said to you that we want to have an active management an investment policy.
I think, as you've seen today, during the year, we've done two major things. One, we've made the acquisition of Scalian, a great company where we think there's a very significant growth profile. We want to multiply by three the revenues by 2028 of Scalian. But Yvan Chabanne will come back on that more in length to later on. And then we've also taken the opportunity to divest from Constantia Flexibles, and I think we've made one a very good sale of it. Probably the sale, of course, I'll say, is one of the largest transaction in the LBO space market this year in Europe.
It's EUR 1.12 billion of proceeds for Wendel, which is higher than the value on our latest NAV, which I think illustrates well the fact that this NAV is always calculated on fairly cautious standards. During that day, also, we've said that we wanted to be a hands-on investor with active role in the portfolio companies and oriented ourselves in value creation. I think we've done the same. Stahl, and again, we'll come back to that, has acquired ICP during this year, which is preparing the transformation to a specialty performance coating company. Constantia Flexibles has made several acquisitions before we sold it.
IHS, we have, I can tell you, active discussion with the management in order to improve governance, which we think is a new element of the value of this company going forward. On Bureau Veritas, I've taken the chairmanship of the company, and we have a new CEO with Hinda Gharbi, who took the leading position there, and there will be a Capital Market Day on March 20, I think, on Bureau Veritas to present the new strategy. One key item of our strategy was also to say that we want to develop a third-party private asset management. Since then, well, we've moved forward, and we've made a major step on October 17, when we announced the acquisition and the partnering with IK Partners. IK Partners is a unique European mid-market private equity firms.
Maybe you will hear me saying that a lot of time, because I do believe it is one of the key very valuable assets that you can find in the market, but we'll go onto it more in length with Chris later on. This first step is key because this business is going to be a source of recurring cash flow for Wendel through the fee-related earnings, and also through the carried interest that we will get over time later on. And then it's also a source of value creation, and I will come back to that, with the sponsor money that can on one side get a significant return on it, given the performance of IK in the past, but also is a factor of accelerating the growth of IK tomorrow.
And then we've said that we will have an active balance sheet management, and I think we've been pretty active onto that. You remember the exchangeable bond on Bureau Veritas. You remember the liability management that we've done. We end up the year with an LTV ratio pro forma of all transaction of 10%, so, well, in line with our objective to stay investment grade at any time. And also, we've announced the initiative of making EUR 100 million of share buyback, which was launched on October. Now, what do we want to do? Our objective is really to deliver double-digit average TSR to our shareholders. We want to revamp, to change the Wendel equity story, and, and to do it with the creation of two growth engine, two engine of value creation.
One, which is the long-standing, long-time DNA of Wendel, which is to be a permanent capital investor, investing on long-term value and creating value through that. And the second one is to create an Asset Management business that can generate flow business, recurring fees, through a multi-specialist IM platform, and we will come back more in detail. So that's, I think, a very important element of the new Wendel story. Two, we want also to put a strong emphasis on operational efficiency, taking all the possibility of creating synergies, optimizing our organization, so that we can reduce the cash burn of managing the assets of Wendel. And third, well, we want to have improved return to shareholders, not only in NAV, but also making sure that there's regular flows to shareholders with higher recurring, predictable dividends.
All of that should reduce, hopefully, the discount and offer to our shareholders, both by NAV accretion and dividend double-digit average TSR. Now, let's go on our value proposition and explain our model. I hear sometime that we're talking about hybrid model. Hybrid is a little bit like a kind of, like there was no frontier, like it's, it's mixed things. We're not trying to do that. We're trying to have two separate legs. On the one side, again, we have the permanent capital, and we want to invest money, creating long-term value through investment in priority in non-listed controlled companies, supported by megatrends, with no constraints in time of it. That mean that we invest money with long-term view.
We're not competing with PE-like firm, and we're not trying to replicate what a PE firm, because we want to have some element which is differentiating ourselves, time horizon, no time horizon. We can. No constraint on it. Doesn't mean that we will hold the asset forever. It mean that we can. We don't have a constraint, and we can choose, depending on the asset, what time horizon we have. It is very important, where our target is to have double-digit investment return, rate of return, net, of course, on that permanent capital business, and we should generate, through that, regular dividend. And when I mean regular dividend is, by definition, investment business is non-recurring, because the flows are not regular flows. You invest money, you will get the money back. Afterwards, dividends are not always recurring.
We want to transform that long-term performance into regular, predictable dividends, and basically what we're saying, let's say that we're going to give back, on an annual basis, roughly 20% of what we expect to do on the long term on the permanent capital business. On the other side, and the second leg of our strategy, is to develop an asset management platform. We think that we can create long-term value through the creation of a sizable private asset management platform based on a multi-expertise organization. This, and our target by doing that, is really to create an engine that has regular cash flow, to the contrary of the permanent capital. Regular cash flow through the FRE. 90% of that should be distributed back to shareholders, because this is an asset-like business that doesn't need, by definition, itself, more capital.
Over time, we will generate PRE, which is performance-related earnings, let's say, carried interest, in other words. Again, we will distribute a significant portion of it to shareholders. We can generate value creation in that area, too, through the sponsor money we're investing in the funds, because we're only selecting and taking a very first-class asset managers, which will return great value on the money we invest to that. And the money we invest to that, getting good return, but help also the growth of the asset management, which make a double potential, because then it creates more value through value creation of the asset manager itself through the growth of FRE over time.
If I try to sum it on a simple slide here, or I don't know if it's simple, by the way, but I'm trying to make it very clear, this is a dual model. It's not a hybrid model. You see that permanent capital on the one side, we invest long-term money, we expect to have double-digit IRR, and we will serve on that 2.5% on NAV as dividend to our shareholders on a regular basis. On the other side, we've got the third-party asset management platform, where we do two things. We have GPs, we have teams that are creating fee-related earnings through their activity, either...
One of the value creation will be the double-digit put opportunity to grow those FRE over time, together with the opportunity to do M&A to create more platform, and that will create significant value by being done. And that money, the value we create through that, we return it fully to shareholders. 90% will be paid to shareholders as annual dividend. On the other side, we also invest sponsor money to support these asset managers on those strategies. The sponsor money will never be above 10% of the fund. It's not like this is a, we're mixing capital, permanent capital, and asset management. It's really only sponsor money, relatively low part of every fund.
This sponsor money will generate significant return because of the quality of the asset manager we have, and we will return 3% of that on an annual basis of what we expect to that, to the shareholders. That mean that as a mixed, we're going to start with a 2.5% NAV dividend, and this percentage of NAV will progressively increase through the growth of the asset management platform. So the asset management platform is there to enhance the, our ability to return and pay high yield, high dividend to our shareholder on an annual basis. Which mean that the, we will have a 2.5% starting 2024, and then it will move gradually to 3.5% on midterm, and potentially higher with the growth of the item.
And then that leaves us also the opportunity to make share buyback, depending on how the discount is in time. All of that has one objective, to have a Total Shareholder Return above 10% on average over time. So that's basically the model we're trying to build. And again, I say this is not hybrid, this is a dual model. And there's the only link between the two is that over time, we will allocate more capital to the third-party asset management platform from the permanent capital. So over time, the share of the asset management is going to increase progressively within time. Now, why do we want to build a third-party asset management platform, and why do we think it's the right moment to do so, and we will create value by doing so?
Sorry, I take a little break if I have want to have more voice. Good. So I think we already present you this slide, but I want to come back to that. We want to create a true platform, a true private asset management platform, which mean that, as you've seen it, Wendel is really putting some capital, buying GPs, helping GP to grow by, helping them to do bolt-on capital or creating new teams in order to grow. He is in charge and is in control of strategic decision, put sponsor money, co-invest, and that firstly. Then, we want to do different private asset class, in terms of, I would say, verticals.
The first one of it, the one we know the way, the best, the one where we have more legitimacy, is the private equity, and that's why we've done the transaction with IK. I will come back on IK. IK is absolutely a great, great platform. But IK now is Wendel vertical in order to invest in private equity. And we can build on that. We can build on growth to grow them, but we can build on adjacent strategy through IK to go and increase and accelerate the growth. But we will build other class of assets. You've seen some on the screen. It could be a secondary business, it could be infra equity, it could be private debt. And we only want to have, on each class of asset, the best teams, so that we've got great offer altogether.
By creating that, we're creating a platform where you can put together the ability to access to the client, specifically the strategic client, with a common sales force that can, you know, talk to those big LPs that don't want to have too much relationship on, on earth. They want to have a few big asset manager where they discuss to, and you cannot do that if you are too small. Creating a platform can create into that. We can create initiative in order to move into the retail and wholesale distribution, which is a growing part of the asset management and private assets tomorrow.
We can have a sort of operational backbone that can make us saving costs and making sure that we can expand this platform at the best level of cost structure. Now, why do we think it's the right moment to build this platform? Well, first of all, we all know, and you all know, that private equity industry is really at a turning point. Fundraising is much more challenging since a year now, raising interest rate, slowing economy, many reasons are explaining that, and that make that even best in class, even best in class, have difficulties in raising money in this macroeconomic context. Number two, we are probably at a period where there's transition between teams. Teams have created some businesses or taken over some businesses a few years ago.
Now they are transitioning in terms of generation, and they need often to have third party helping them because they cannot, you know, they cannot—the value is out of reach of the next generation in order to cope with that. Third, there's a strong willingness of many GPs to be backed with a large institution with permanent capital, and you see the consolidation trending in the industry. You have to open the newspaper every five days, you see a new merger in that industry coming from those reasons. So this is a turning point. This is the right moment to come. Why is it good for us to develop ourselves in the third-party asset management through M&A, rather than by creating this asset management business by ourselves?
Well, first of all, again, the environment is difficult, so it's difficult for an established brand to raise money. I mean, think about it, when you are not already there with a track record, so it's difficult for it. But more importantly, you start with established brand, with track record, specialized team and talent. You have demonstrated fundraising experience and strong LP base, and through that, you can unlock quickly the third-party money and really create the movement to create a platform and accelerate the growth of that platform. Sorry, I really need water. Again, is it the right time to do so? Can we say that, you know, tomorrow, probably, asset management, you know, the big wave of private equity is behind us?
Well, if you look to the studies of here it's McKinsey and Preqin, you see that effectively, growth has been very strong over the last 10 years, and that growth will probably be somewhat a little bit less strong than it is, but we're still talking about double-digit growth on that industry. There's a turning point, there's a period of difficulty now, but the perspective of private asset tomorrow is still very good. It's still very good because you need, I think that the, the fact that companies are owned by private equity is a good thing for private, private companies, and is a superior way to manage them and to create growth. It is true also for private debt.
We see that private debt is growing because the need of, I mean, the tension on banks make that a significant portion of the business is moving to private debt, like it is in the U.S., for example. Third, you see that in infrastructure, the need of investment is so huge that you need private capital to come and to have that. So there will be significant growth, coming forward. And if you look also, is it the right moment to do so? Well, effectively, I think that, it is certainly a better moment now than it was two or three years ago. The price, yeah, two or three years ago was very high because everybody was expecting that the trees were rising to the sky. I think it's not right.
Now we have, I think, a more reasonable vision of what the future is, and I think it's a right timing in terms of entering the market. Now... So why Wendel would be an attractive partner for a private asset manager? Well, I think that you will have a live explanation of that by Chris, but let me give you a few points. What are the existing strategic options for GP that want, I mean, is facing this difficult environment? For some period, IPO was seen as being an option. Probably today it's less the case, but we've seen last 2 years, significant number of IPO. Today is much more difficult, and the one that have been going through IPO sometimes think it's less of a good issue solution than they were expecting.
Two, you can integrate yourself into a large platform, which mean probably that you, the, the, the story you've built is going to disappear a little bit, but it's, it's an option, and we see some of them going through those days. Three, you can sell a minority part of your GP stake to some funds that are or companies specialized in buying minority GP stake. Or third, you can sell yourself to a sponsor, which means somebody that can bring permanent capital. That could be a life insurer, that could be a bank, and it could be somebody like, like Wendel, which is less of a large organization than those sponsor-like. So what do Wendel bring?
I think we bring a real friendly framework, which is able to attract and retain the best team, and our objective is to create this platform with the best teams. Again, you will have a great illustration of that with Chris later on. What do we offer? We offer them autonomy... We think we're not there to manage their day-to-day management. They have proven track record in order to do investment management. They have proven that they know how to invest the money. We should not interfere into that. We should just make sure that they have a few guidelines, and we're moving on those guidelines. We bring them long-term perspective. We are a long-term investor. We are an actor that has been there for years, and we're investing in this business for years, so we're giving long-term views.
We give capital to sponsor existing and future funds, which today is a true asset in a period where raising fund is difficult. It doesn't make the full thing, but it helps. And, you know, anything that can help is important in this period. We can bring capital to help equity redistribution between generation, which, again, is an important element, because if you want to have sustainable success in this company, you need to make sure that the young generation has the means to come and keep on going during the firm, and that the firm doesn't die with the people that have created it, and that is a very important element that we bring, continuity, long-term view for that. We bring capital to fund new initiatives. You know, new initiative mean J Curve. New initiative potentially means, acquire, acquiring new teams or acquiring bolt-on acquisition.
And final, while the GPs stay private by themselves, they could benefit of the fact that Wendel is this. And to execute the strategy, which is, I think, a fairly ambitious one, I think we've got a team that has experience in that area, and have experience and has a true expertise on transaction. Now, our ambition by developing this asset management platform is really to deliver strong value creation to our shareholders. You have here two elements of the impact, impact on NAV on one side, impact on flows on the other one. Impact on NAV is by investing in that business, we're creating value by itself. The GP we buy, we're going to grow it, help it grow, and that will generate value by itself.
The sponsor money we're investing in the funds are gonna get great returns and be an element of value that we create on the NAV. And last but not least, I think it's important, the carried interest, which is a sort of participation to the value created by the GP we're investing in. And then it's also have, which is an important element, this is a business that generates strong, regular cash flow, predictable cash flow. And that mean that the company we invest in will pay back to us regular and recurring dividends to Wendel.
We will have carried interest in the future, and we can, as I mentioned, create a platform where we can operate, we can manage the operating costs, mutualization of synergies, which will make that this platform will be more efficient than the standalone company GP by itself. Our ambition is to grow that, to make a sizable one, and if we take a first target, is to have EUR 150 million FRE. I don't express myself in asset under management, because I think the asset under management can be a misleading KPI, as you don't have the same return on a debt fund than on the infra fund or private equity fund. So let's think about FRE.
Our objective is to have EUR 150 million of fee-related earnings by 2027, and that we'll achieve through organic growth by taking the start of IK, but also by doing some opportunistic external growth. I think we've demonstrated our ability to do smart transaction that are fully aligned with everybody. That give me a transition to IK. IK is really the first step toward that new Wendel strategy. Today, we have the permanent capital on the left side of the screen. Well, it's the left side for you, yeah, left side of the screen. Today, EUR 7.2 billion of NAV. You know well how earnings are coming from that. Progressively, we're going to move, the first one has been IK. IK now is a third-party asset management platform, EUR 12 billion of AUM.
We're going to add some Wendel sponsor money into it, and there will be organic growth from IK. Then progressively, we're going to reallocate some money from the permanent capital to move on to the third-party asset management further, either through helping the growth of IK or through making new acquisition. But IK is really the first start to that journey. The acquisition of IK is really acquiring a first step, as I mentioned, but is a very key one. This is a first-class Mid-Cap, Mid-Market Private Equity Fund, and what we want is on all our class of asset to have just very first-class teams... By the way, IK, by its strategy, is largely complementary to Wendel investment own strategy, which is higher size of investment and longer term compared to IK strategy.
The potential of synergies, as I mentioned, is significant, and we will work in order to make our model more simple, which means a little bit less costly than it is today. We have the ability to leverage Wendel's own capital to invest through sponsor money in the fund, which will create growth. And this is really the pivot. We're pivoting Wendel business model toward more recurring revenues and profitability. I will stop there in order to present that. We will come back on IK later on. And now, I will leave the floor to David, who will give you the presentation of what we want to do on the permanent capital. David, please join. The floor is yours.
Thank you, Laurent. I hope you feel better. Hi, everyone. I'm very pleased now to have the opportunity to tell you why we believe that our portfolio can deliver a double-digit return. So let's first start with our listed assets and our investment in Bureau Veritas, IHS, and Tarkett. Laurent mentioned earlier the mega trends, where we want to invest, because we believe that backing companies which are benefiting from strong tailwinds is the way we're going to create a lot of value and reach a double-digit return. When you think decarbonation, when you think additional regulations, when you think change in supply chains, all those mega trends are affecting the economy, and they require additional services that Bureau Veritas can provide.
So by being a shareholder of Bureau Veritas, we believe we can benefit from those trends, which are very strong, and Bureau Veritas is servicing this with very strong professionals. The TIC industry remains fragmented, and Bureau Veritas continue to do accretive bolt-on acquisitions. It has announced recently some acquisitions. It has still a strong pipeline, and we believe that can complement the organic growth of the company. Bureau Veritas recently announced that it's going to have a Capital Market Day in March 2024, and we highly recommend you to attend this for some additional news on how they're going to create value midterm.
You can see on this slide the potential that the market sees on the share price, so the short-term potential is quite significant, and we share the view that there is a lot of growth to come from, from Bureau Veritas. Regarding IHS, the recent behavior of the share price was quite disappointing. It does not reflect our view on the potential on IHS. The company did reiterate its short-term guideline and its objective in terms of sales and EBITDA, and we believe that midterm to short term, it's a high-growth asset. If you think of where the growth is to come in Latin America and Africa, the two largest market for the tower industry are Brazil and Nigeria, where IHS is the clear number one. So mid-market, we have no doubt there is a very high potential.
You can also see on that slide the potential that the Wall Street's, sorry, the market sees on the, on the share price, which is very significant. We don't know if we're going to reach that number, but for sure, we see a high value creation potential at IHS. Regarding governance, we are working hard with the management, the board, and other stakeholder of IHS to make some progress. We have a very constructive dialogue, and hopefully, we're going to reach an agreement soon with the company for better governance. On Tarkett, which is today representing less than 1% of our gross asset value, the current trading is actually good with some good organic growth, and the dividend bridge is also quite significant for the year.
Now, regarding the private assets in our portfolio, where we also see a double-digit IRR potential. I will speak about Stahl, but probably shortly, because you're going to benefit from a good presentation from Martin, which is going to tell you about the current trading. But with a long-term perspective, we see a lot of potential with for Stahl. Margins are strong. The company has proved over the years that it can generate very good cash flow, not just EBITDA, real cash flow. We still leverage over time. I think today, Stahl has distributed more than two times the capital we invested in Stahl over since 2006, and it's still growing. And we see this potential continuing.
Martin is going to tell you more about the work they're doing on strategy, and on M&A, where after acquiring a company early January in the U.S., we see more potential and more, potential for consolidation in the specialty coating. CPI is showing, strong growth since we, invested in the, in the business, in late 2019. This year has been strong again, and we don't see that growth to, go down. There is a clear need for, the training that CPI is delivering. We are just at, the tip of the iceberg. We, we see the, addressable market to be very significant and our current market share to be, very small to what is achievable, so very, high potential in terms of organic growth.
We also see some adjacent markets, which is new. We have done a lot of work with consultants to see where we could go next, and we have identified some additional markets which are probably as big as where we are today. So we see a lot of leeway and continued growth for CPI. The margins are strong and should stay strong at CPI. Regarding ACAMS, it's almost two years since we invested in ACAMS. A lot has been done, so now the carve-out is fully achieved from its former parent company at Thales. So we have a standalone and operational company with a standalone management team.
We changed recently the learning management system, which is very core to the company, and the business model from the company is moving from a hybrid model, as Laurent was mentioning, B2C and B2B, towards more B2B. So there is a lot of emphasis which is put on B2B, and we believe with this new organization, this new management, and this new focus on B2B, the growth is going to continue to be very strong. So we see, we see a double-digit top-line growth at ACAMS for the remaining of our holding. Last, Scalian. Again, I'm going to be short here because you're going to have the chance to see Yvan later today. But suffice to say that the company has proved it can grow organically and through M&A quite actively.
The company is very, very well organized to source M&A targets, to execute acquisitions, and to extract synergies. It's a very, very professional organization you're going to see with Yvan later. The need for digital transformation has never been that high in our society, and Scalian can provide those services. We are very, very confident in terms of organic growth and M&A on top of it. This is our current portfolio, and now I would like to spend a bit of time on what are the profile of the companies we want to welcome in the group. On the left side, you can see the profile, which is not new to you.
It's companies based in Western Europe and North America, and as Laurent was mentioning, the key criteria for us is, can we hold this asset without an exit horizon? Actually, we are not a long-term investor, we are a no-term investor. When we invest, we don't want to be constrained with a definite deadline, and we want to grow and work with the management team with a view to grow on the long term, without having any view to sell shortly in three or four years. So when we see a stakeholder being the management team or co-investor who have the same mindset, that's when we decide to spend time on the opportunities. What is new on this side, on this slide, sorry, is the range of equity investment we are ready to make.
We used to say EUR 300 million-EUR 500 million. Here you can see that we have extended this range to up to EUR 800 million. We feel today that there is room for attractive opportunities in that range. We have the balance sheets, certainly to look at those opportunities, so we are extending our scope to larger situations. On the right side of the chart, you see the profile of the companies we are looking for, sorry. First, very resilient businesses, business which can handle a downturn like we saw during COVID or during 2008. So resilience is really at the core of what we're looking for.
I spoke about the cash flow generation, so low capital intensity, high very high ROE, and limited working capital is part of the grid that we are looking at when we are looking at the new acquisition. Sustainable margins, it's a short way to say that we're looking for assets with moats, with defensible position, typically leaders with a good level of IT, where we believe that the high margins that we see are going to stay for quite a long time. So we are not only looking for companies with a 15%-20% margin, but companies with, for good reasons, can keep these margins at this level.
In terms of ESG, we want to create a positive impact on the society, so we're looking for companies with a very strong profile. But we're also open to to see and look at companies who have the potential for transformation in terms of ESG and where we can bring our know-how to help them to transition. I'll, I'll come back to that later on in a few slides. And last, again, the mega trends, the tailwinds, that is going to boost the return and the organic growth of those companies. It's very important for us that those companies operate in industries which are backed by those strong tailwinds, and I'm going to show you now the four tailwinds that we have identified and we want to to invest on. The first one is demography.
It's a very, very strong force, and being aging or the advent of new generations, we believe they bring very attractive investment opportunities because new generation or aging population need new services, new retraining. They need services provided by some companies, and those are the companies we are looking for. I spoke about decarbonization. Obviously, a very strong trend in the industries and for quite some time, and we want to support companies which are going to benefit from those trends. The world is more and more risky and require more and more regulation, being digital risk or physical risk. We used to be an investor in Allied Universal, the largest security provider in the world. And we...
This is a type of tailwinds where we feel we have a good expertise and a good experience in terms of increase, in terms of compliance with ACAMS, regulatory, and obviously, TIC with Bureau Veritas. So again, that's the core focus of our team today. Last, technology. Last time we were here, we spent a lot of time on the Wendel growth and the potential we see with this team in this investment. But in every single portfolio companies, we want to see how we can turbocharge the growth with technological innovation. So four megatrends leading us to three industries where we are spending most, if not all our time. Business services. Historically, you remember that we were the shoulders of Capgemini and Allied Universal, I just mentioned.
But today in the portfolio, we have a lot of companies who operate in this segment: Bureau Veritas, ACAMS, Scalian, CPI, and some of our companies in Wendel Group. Technology is also an industry where we spend a lot of time. Today we are exposed through the Wendel Group, both directly and through funds. And IHS, as a provider of service to the tower industry, is very active in this field as well. Energy transition is a space where we are exposed through Bureau Veritas, but today we are spending more time and looking at new opportunities to see how we can even be more exposed to this industry. So three sectors, 17 subsegments, where we are spending all our time.
ESG, I mentioned earlier the type of companies we are looking for, so positive company, companies with missions like CPI and ACAMS, and companies we can also transform. So you can see the results of some transformation that we, that we've made over the time with Bureau Veritas or Stahl, and Martin is going to talk about it a bit later. Constantia is not on this slide because we are in the process of closing the sale of Constantia. It's hopefully a matter of weeks at this point. But just to illustrate this slide with what we did with Constantia and what the management team did, it's pretty significant. The level of incidents at work at Constantia went down by 82% under our ownership.
We work with the management to see if we could commit to have 100% of the product being recyclable, and we achieved that in the eight years of our ownership. So we are very proud of what we achieved with the management team, and it's very important not only to create value and to see growth in the company, but when we do sell companies, it's also a key feature that buyers are looking at. And when you see recognitions like this EcoVadis Platinum Award, it is actually very valuable. To be part of the 1% is something that people are looking for, and hopefully will pay a premium for. So now I will leave the floor again to Laurent to wrap up on value creation and value distribution.
Well, thank you. I'm gonna be very quick with you, but just to come back to what we said, we really want to transform Wendel into a compelling investment opportunity so that return to shareholder can be recurring, predictable, and growing. We're creating, as we said, a permanent capital, David mentioned, with an increased focus on sectors driven by megatrend, because we're investing with a sort of no constraint in time. So, trends are very important to that. We're more efficient investing model by organizing ourselves in a more agile and simple way, which should enhance value creation to our shareholder. On the other side, we're developing the asset management with a potential EUR 150 million FRE objective in 2027.
The potential of creating synergies through platformization and the value that we can create through sponsor money. All of that should lead to a much more balanced and attractive equity story, recurring and predictable cash flow, which is, I think, important, and that should obviously improve that, and translate into, as a dividend, to increase from a floor to 2.5% of now, adding to 3.5% with the growth of the asset management over time. The immediate target is to increase dividend by in paid in 2024 to 2.5% of the NAV that we will have at the end of this year. And obviously, if the discount stay high, to make some opportunistic share buyback, like the one we're currently going through.
Thank you very much. This is the end of this first part of the presentation.
Thank you, David. Thank you, Laurent. Now it's time to turn to Q&A session. The session will last roughly 15 minutes. And remember that you can submit questions in writing on the webcast platform. But let's start with the questions from the room. So please don't be shy.
Can you hear me? Yeah. Thank you. Geoffroy Michalet from ODDO BHF. Thank you for the presentation and the explanation of the shift toward a dual model, another hybrid model, which, in my view, perfectly makes sense. There is something that was not mentioned in the presentation and maybe in the future of Wendel. It's the weight of Bureau Veritas, which seems a bit high, it's not something new. It's something you have started to work on with your exchangeable bond at the beginning of the year. And yet, despite a relatively poor share price performance this year, in spite of a decent operational performance, Bureau Veritas is still more than 50% of your value. What's your view on that? And do you agree or does your board is thinking about making something about it? Thank you.
...Well, first of all, I think that Bureau Veritas is a great company. And this company has had extremely good performance this year. Extremely good performance for the last three years, by the way, huh? And when you compare Bureau Veritas' performance compared to other big players in the market, I think Bureau Veritas' performance were better than the others, with a great margin, 16% margin, and significant high teens growth. I mean, above 5% growth, huh? So it is a good company. It is true that the tech sector is well or is less valued in term of multiple than it used to be.
So despite those good performance, the share price of Bureau Veritas had, I would say, disappointing trend since a few years and specifically since the beginning of the year. And again, I don't think it reflects the quality of the earnings of this company. We are a shareholder of Bureau Veritas for 27 years, so we will keep on helping the company to develop a compelling strategy. And by the way, we have, I think, you mentioned it, David, we have an Investor Day on March 20, where I invite you to go and to listen to the new strategy that Hinda Gharbi will present to the market. We think there's value creation to be made by Bureau Veritas on it.
Now, do we have a view of how much Bureau Veritas we will own in, in three or five years' time? No, that will depend. We'll be-- We're very pragmatic in the way we are going to manage it, but we think that today there's potential value to be created with Bureau Veritas. If I recall well, the target price from analysts is 18% higher than it is today, so I think there's value to be created today. Now, is there any sort of, how do you say that in English?
Cyclical.
Quick out? The answer is probably no.
So if no question in the room, I have questions from the web. Question from Samarth Agrawal. On dividends, what factors would you consider to increase the dividends to 3.5% of NAV?
Well, it's a little bit mechanical of what I say, because if you think about it, you're paying 2.5% on NAV business on the, you say that we're going to make double-digit on the NAV. We're going to give something like around 20% of that back to shareholders. 80% of the rest will be NAV increase in the future to reinvest the money and create more NAV in the future. Then you've got the asset management, and the asset management is creating value by itself by increasing the value of the GP, but it's also generating significant flow. And we say we distribute 90% of that to the shareholder.
Implicitly, by distributing those 90%, you enhance the 2.5, and the movement from 2.5 to 3.5 depends on the size of the asset management within your portfolio. And while the asset management portion of your portfolio increases, then the dividend reported to the NAV is increasing naturally to 3.5. And if we take the assumption that we will have, which is our ambition, EUR 150 million of fee-related earnings in 2027, then we will have at least or around 3.5% of dividend at that time. So it is a pretty mechanical.
It is like you've got an engine that gives you 2.5 flow, and then you've got an additional engine that gives you more speed through the development of the asset management. Because otherwise, you can ask, "Why do you want to do asset management? Why don't you keep the permanent capital?" Well, I'm saying that the asset management is creating the ability to give more flows and more value to shareholders. But we cannot do that in one day. This is a journey, and we have to move progressively some capital from the permanent capital to the asset management. While we still say, and we say that strongly, we want to keep a permanent capital strategy because it's part of the long-term DNA value of that.
I think that, you know, people like to say, "We want, we like pure play." I think sometimes that to have a model that have two legs is an element of less volatility, more flexibility, and give, and I think that all asset managers today realize that to be backed by a permanent capital company make a lot of sense. That's it.
Thank you. We have a question in the room.
Yes. Hello, Arnaud Palliez, CIC. My question is about ACAMS. I just would like to understand why there is this change in CEO. Is it a consequence of the strategic move to B2B? And what will be the profile, what kind of profile will have the new CEO?
Thank you. Good afternoon. No, it's, I think there is companies, they grow with different phases, and when it was part of the Altran Group , it was a phase. When we did the callout, it was a different phase. And today, when we have all different bricks in terms of learning management systems and, and, and all the processes I mentioned earlier, the new B2B model, I did not speak about the new product offering, which we are simplifying. So the company is now, like, in a mode to go full speed in terms of growth and potentially M&A soon after that. This is a different phase....
And I think the team that we backed when we invested, it's at the carve-out, had a lot of talent, and they did this carve-out, they did this transformation, being like a small division in a huge listed companies, to the performing group that we have. And we thought it was the competencies we were looking for were different at this phase in terms of drive, in terms of strategic vision, in terms of being global, and then a change in leadership was kind of obvious. So we took our time to look for the right profile.
And so the person we found, we can't give you the name yet, but hopefully soon, is managing, like, global business, worldwide, has B2B type of customers. It's a leader, it's high margin, good pricing power. He ran this type of business of a larger scale and is very excited to work in a more standard organization. Today, he's in a bigger group.
But it's true that he will bring, I think, something different, and that's the phase of the B2B. He will be much more client-focused than the previous one, and I think it's an element of the growth of the company tomorrow.
Good afternoon, Pierre Gauthier from AlphaValue. Thank you for this very clear and convincing presentation. Can you afford to be more specific about how much money you aim at transferring from permanent capital into the sponsored side? That's the first question. Second one is really about the timetable to measure your success on the, obviously, on the fund management side.
Well, I think we've given a clear target, EUR 150 million in 2027. So it's a pretty clear target, EUR 150 million of fee-related earnings. How much does it mean in terms of shift of capital from where we are today to tomorrow? Well, if you make simple math, so I'm going to make it for you. Well, let's say that it will be a little bit more than a third of the capital that will be invested in the asset management business in 2026, 2027. And again, it's a journey. So do I—I mean, I think we're giving a target. We're going to go there. Normally, we try to execute on what we say. Remember, we've talked about developing the asset management platform. When was that? Nine months ago.
Well, we've already made an acquisition, and I think a great acquisition in good condition, not in terms of, is it a good deal or not? I mean, good condition because it's a smart transaction. I think it's a landmark transaction, with a very good alignment of interest of every stakeholder. This is how a good transaction is. It's a transaction where all stakeholders are fully aligned. Alignment of interest with the LPs, alignment of interest with the GP, alignment of interest with the shareholders, and the employees, because they can get access to that. So that's, that's for me, what, you know, what is important. So let's, you know, when is the milestone? You will see.
I mean, we will, I mean, it's not going to be done in one day, but I think you will see regular progress toward that strategy. We will not reach 150 in one day, and I think it would be probably too dangerous to do it in one day. We need to do that on a progressive to create a sustainable platform, but we will do that. Geoffroy?
Yeah. Geoffroy Michalet from ODDO again. Coming back to your platform of third-party asset management-
Yes.
I think today we see two kind of areas where the third-party asset management has traction. The first one is wealth management from retail or high-net-worth individuals. The second are evergreen vehicles from third-party asset management. But I think when you think a bit about it, it's not only asset management, it starts to become a bit asset and liability management. That often is coming with a layer of burden and sometimes regulation as well. And I think you were clear when you arrived that you didn't want to go into too regulated business at Wendel. So what is your view in wealth and in evergreen third-party asset management? Thank you.
Well, thank you. Regulation is really something I know a little bit about, and probably the one of the reason, not the only. The number one reason I came to Wendel is because I thought Wendel was a great story. Maybe one of the reason I wanted to leave the banking is because it's becoming too much regulated business, and when I read the last declaration of the ECB vice president recently, it doesn't make me think that I was wrong. Well, I think there's growing elements and areas in private assets. I'm talking about the investment asset. Credit is one, infrastructure is one. When you talk about wealth management, here, it's more a sort of distribution issue. Where do you want— Who are the clients that will buy this thing?
I talk in one of the slides about retail and wholesale, I think. This is one of the key and high development parts of the where the money, the flow of money is going to go into the asset management. And yes, we need to make sure that we create a structure where we can plug ourselves with wealth managers, not becoming a wealth manager by ourselves, but making sure that we can deliver products for the wealth managers. And that's where creating a platform is important, because then you can talk about different class of assets with the clients.
You can have the scale in order to invest, because if you want to be good with the wealth management, you need to have great reporting, you need to have IT system that can support that, digital reporting, and so on. And that is significant investment that any single GP by itself is hard to do. If you create a platform, then you can do it. So yes, it is a target, not to be a wealth manager, but to target the wealth managers as clients.
Thank you. I have another question coming from the web. The latest performance of permanent capital investment has been at least poor. For example, IHS, Tarkett, Bureau Veritas, not creating a lot of value over the last 10 years. Why don't you sell all the permanent capital and focus only on asset management?
Well, it's, for the time being, I mean, no, but it's, I hear that, it's smart question. First of all, asset management business today for us, we've made one investment, EUR 387 million or 83. The permanent capital is 9.6 billion gross. So, if I take the cash away, let's say EUR 8 billion gross. So the size is not exactly. What I'm saying is that there's a journey, and we're moving to that journey. We, I think, showed to you that even in a company that have been poorly performing in the past, we think there's opportunities. IHS, for example, we're not saying that IHS, we're happy about the share price development, but doesn't mean that there's not an unlocked value within IHS today.
Doesn't mean either that we will stick to our assets forever, and I'm not naming any assets because we never name assets we want to sell. But if we want to do our program, it means that we will have to sell some assets to reinvest in the asset management industry, and we'll do whenever we feel that it is the right timing to do so. We've proved that with Constantia this year, and we keep on being very active on managing our asset portfolio.
So thank you. I think time is over, so if you have additional questions, we will, of course, answer to you by email. We have now to turn to the next presentation. I'm talking about IK Partners. Jingle, please.
So I'm back, but just only for a few minutes. I'm promising now it's going to be the turn of Chris. So, I'm here just to say that, to remind you about the transaction we've made on IK Partners. It's really a partnership that we've created with IK, and I think Chris will come back to that. Just to remind you, IK is a company which is one of the best private equity firm on the mid-market in Europe. And I say one of, but I could say the best, I think. But Chris won't like to relisten to that.
It is a fast-growing, mid-market private equity firm, highly complementary to Wendel, and it's a great opportunity for us to start building this asset management platform we've discussed. The transaction is EUR 383 million, invested to buy 51% of the GP in IK. It will pay one part now, one part in three years, 51%. The rest, the 49%, will be paid over time, in years six, seven, or eight. And we are getting 51% of the GP, and we're getting 20% of the carried interest in the future fund. This is, I think, a pivot for Wendel by doing the transaction, and we're doing this in a spirit of a partnership with IK in order to align the interest of everybody.
As I say, I think it's really a landmark transaction. Now, I won't go more onto IK because Chris will do that. Chris is going to join us. He has been the leader of that company, the CEO of IK for a decade, and he's under his leadership, the company has done great, developing itself, but he will give you more of that. So let me introduce you, IK CEO, Chris Masek. Chris.
Boy, what an intro! Hello to everybody. It's my pleasure to tell you a bit more about IK Partners, a firm that I joined in 2000, and I think it was Charlie Munger said he went to the office tiptoeing and dancing every day when he went to the office. Although it's not always quite like that, and nevertheless, and I think most of my partners will say the same, really enjoy what we do, and it's a privilege to share what we do with you today. So IK as an overview, you heard a lot from Laurent, maybe a little bit of history. We are arguably one of the pioneers in private equity, certainly in Scandinavia.
We were founded in 1989 by some Scandinavian individuals who were both entrepreneurs and former investment bankers. So around for 34 years, not quite the same time horizon as Wendel, but not bad, again, in our industry. We're covering seven offices. For those of you who are American in the room, you'll notice that this is actually not a Rorschach, it's a map of Europe, just to be clear. So we have locations across seven offices, Stockholm, Copenhagen, Hamburg, Luxembourg, Amsterdam, Paris, and the more recent investment office, although the first and where we're still headquartered today is London. We have four strategies, all basically in buyout. Our flagship strategy, you'll hear most of the statistics in this presentation on the flagship strategy, is our midcap strategy.
Then next to the midcap strategy, in 2015, we launched a small cap strategy, where the average equity check is more or less around EUR 60 million. Then more recently, in 2020, we launched a development cap strategy, where the average equity check is about EUR 20 million, again, mainly doing majority deals. And last but not least, we launched a Partnership Fund strategy. This is a strategy that allows us to take minority position in larger companies, often with other like-minded sponsors, and also offering significant amounts of co-investment on attractive terms to our partners. So that's IK in a snapshot. In our approach, we have clearly identified with our geographic base, we have a very sector-focused approach.
This is mainly in the thought process of sourcing, so that we're not sitting and expecting to receive investment memos from, investment bankers, however wonderful they may be. It's important that you have a view exactly on what it is you want to invest in. So the four large areas you hear of, and I'll go zoom into that a little bit later, are business services, healthcare, consumer, and industrials. In practice, what we are addressing is approximately 31% of the addressable market here. Now, a core characteristic of what we built at IK, you heard a lot about AUM. We managed to build a substantial platform by extending to the other strategies, and in doing that, we can afford a backbone.
We can afford a platform of dedicated resources of very high quality, who can then support us in strategic areas for value creation in our portfolio companies, which is core to what we're about. The first element of our platform is our operations team. We have 13 full-time, dedicated operations professionals, who then leverage another 300 boutique firms that support further our companies. These resources are across all of our different offices. That team is then supplemented by our capital markets team. The capital markets team is a team that's really created a lot of value for us. Again, I'll come back to that. But that really allows efficiency in financing solutions.
And last but not least, this is a fundamental area in what we do, how we approach our investments and in the world we live in, which is an ESG platform, and we have five full-time professionals supporting that. On the performance, you can see some of the metrics, over EUR 19 billion in proceeds generated, 117 realizations, since inception. We also realized 2.7 x money on the investment capital. On a gross basis, 26% IRRs, and that is based on two core ingredients, again, through our operational approach. Which is, one, focusing on the improvement of the performance of your underlying portfolio companies. So on average, when we realize an investment, we more or less double the EBITDA of those companies, and the other one is not to make mistakes.
So we have a very, very low loss ratio. Now, when I talk about IK, the first need to believe is what we have on this chart. The first need to believe is you need to believe in private equity. You need to believe in buyout. It's, it's not for the fainthearted. It is long-term money, or at least medium-term money, certainly by the Wendel standards. That's point one. The second need to believe for us is Europe. We are focused resolutely on identifying market leaders, national champions in the European market, and bringing them to a larger scale, internationalization on the European market, as well as abroad. The third need to believe for IK is what we call here the mid-market.
Now, I've tried to define that based on our track record, which is enterprise values of anywhere between EUR 150 million and EUR 400 million. According to a recent study, what we've seen is that IK, in that space in Europe, is the most active private equity fund there is. So that's our ecosystem. Now, why did we choose that ecosystem, and why, why do we seek to continue to develop and expand in that ecosystem? The first reason is there's more choice. We see more deals than Large-C ap Funds, by definition... We estimate across our different platform strategies that we cover, we look at actively up to 1,000 new deals situations every year, which of course, then we whittle down through our funnel by order of relevance into what we ultimately identify as companies that we wish to invest in.
On an annual basis, we'll invest anywhere between 12-20 new platform investments, it depends, and we will exit usually, typically a similar amount of companies. So again, the first reason we go there is it's a big ocean. The second reason we go there is that in that ocean, it's a situation where you have, I would say, less professional, less articulate vendors at the point of time of exit. So what we find on relative terms, compared to the larger cap segment, are assets that are for better value. That's important for us in our investment thesis. The third characteristic of those deals is that these are businesses that have more room to grow. It's easier to take, if I take our midcap strategy, a business that has. Our average there is about EUR 25 million in EBITDA entry.
To take a EUR 25 million EBITDA company and double that in size over a 4 or 5 years than it is to do with a business that starts with a EUR 100 or EUR 200 million. It can be done, but it, it is more tangible and easier in many respects to do that. What that allows us to do is core to our strategy, which is strategic repositioning. It allows us to completely move the company from being a local French applesauce producer to one that is a global player with multiple other products as an illustration. What's the benefit of that? Strategic repositioning is, at the point of exit, you will find larger buyout firms or strategic buyers who will willingly pay a higher multiple, a premium, for those quality assets, and that is what IK is all about.
Not only in the good times that all of us have experienced over at least until two years ago, but even as you'll see from the charts we'll put up, shortly in the more recent markets. The fundamental advantage of being in the lower mid-market space is that you can borrow money and you can sell your assets, you can achieve liquidity, and I believe that's a fundamental characteristic. The next point that's characteristic of the IK platform is the fact that we leverage a strong platform of other professional resources, not only in the investment professional side, where we have close to 100 full-time investment professionals across Europe, which again, is one of the largest teams active on the European market today, but again, because of our best-in-class operations, capital markets, and ESG teams.
So this allows us, in other words, to be positioned on a market which is highly attractive, but with the same characteristics, the same professional talent and skills that you will find in larger cap funds. That, in a nutshell, is what IK is about. Moving along a little bit now on the type of investments that we make. This is a chart for our midcap space, but the same would apply to our other strategies of our core investment thesis. The starting point for us is to invest in high-quality assets. We don't do turnaround, and if we have to buy an asset, at the price, we will pay the right price to get it. Not crazy, but we will, and we understand that. These are focused assets, so first and foremost, we focus on B2B.
Secondly, we look for market leaders, again, national champions that you can build on. Thirdly, a track record of demonstrated strong double-digit organic growth. And finally, high cash conversion, which is, for us, critical. On that basis, in our models, over a 4-year period on an LBO multiple, we managed to double EBITDA, and you can at least do, on a growth basis, 2x your money. But for us, that's not enough. The second element in our strategy is buy and build, core to our positioning. When we look at any new platform acquisition, we view it as a platform, and one on which we will add further adjacencies. So we do a lot of homework up front.
Typically, when we're looking at a new deal, we'll look at up to 45 new potential add-ons for those assets, and then we execute with management and support them on executing that. That allows us to move from 2x-2.5x g ross. And then the last piece, which is our alpha, again, comes from our ops team, capital markets team, any kind of post-merger integration work, and the like. That then leads us to what we've experienced on average, in the last more than a decade, of 2.7 x growth. On the areas we invest in. So we first look for solid growth, secondly, resilience.
So we buy extraordinarily boring businesses, but we make them exciting with the management teams, and we look for fragmentation, because as I told you, one of the core themes of our investment approach is to achieve buy and build. So behind those four big pillars that you see, our teams are allocated amongst the different strategies and geographies into core subsectors that we review on an annual basis. So in business services, to take an illustration, we look into business process outsourcing. An announced deal that's closing next week is a company called Aspia, which is a business that was PwC's accounting and payroll service, where we realized the very strong return there. So that's the type of BPO. In financial services, we look into independent wealth managers, independent financial advisors, insurance brokers, and the like.
So that would be the kind of area. And in IT services, what we look into, for instance, is cybersecurity consulting. But basically, in business services, which represents approximately 30% of our investments, we stay clear of anything that's tech and sophisticated. The same will go, we just look for decent, proper cash flow generating businesses. On the healthcare front, you can see some of the names of the subsectors that we've identified. Again, a recent investment that we just realized was in the med tech space in Germany called Klingel. They make instruments that are used for prosthetics. We stay clear, again, in this space from any type of government reimbursement, particular. The third area, consumer. I remind you, we're B2B focused.
So in this space, we'll look at, for instance, education, which has been a really successful platform for us, mainly benefiting from the trend of privatization of education in Europe and supplement of public education. A second core area for us is private label food, where we have one of the premier practices in Europe and a long-standing track record, in addition to other areas. There in consumer healthcare, we invest approximately 30% of our funds, in consumer, approximately 20%, and finally, last but not least, industrials, where IK came from. Originally, IK was called Industri Kapital . So very much, I think, like the Wendel family, those are our roots, and we continue to deploy 20% of our capital in that space, and are very successful there with high returns.
Now, on the platform, I shared this a little bit with you before, also will be a little bit more brief. We have, on the ops side, 13 full-time professionals, which is quite sizable. They are laser-focused from the inception, when we're already doing the search, the identification of targets, and the initial due diligence on providing work and support then that they will share with the teams. One of the added values of this is that we don't charge money for their task. They're part of our deal team. So, most managers are very happy to see them come on board and provide real expert support, where you see some of the metrics on ERP transformation, geographic expansion, even the measurement of our alpha. Another pillar in what we have is our capital markets team.
I cannot share enough of how much this has added value to our proposition. Not only does it free up time when you're putting together your financing packages, but it optimizes the packages. It's allowed us to, for instance, on the French market, which is our largest market at IK, about 35-40% of our investments. In the French market, we created the first bond that was the first green bond with one of our companies, and this was all down to the work that our capital markets team did with our ESG team. So we've continued along those lines, and we were also, with this team, I think, a very fundamental value creation element was we were the pioneers or one of the pioneers in the European market to put systematic hedging in place for our portfolio.
Because not too long ago, interest rates were close to zero, and people forgot that interest rates could actually rise and were not prepared for that. And in October 2021, we imposed on our portfolio companies to actually put that in place, which, in hindsight, seems obvious, but I can assure you this was not a position that was shared across the industry. So we've saved literally EUR millions in our portfolio and for our investors in doing that. And last but not least, in our platform, the ESG piece. The ESG component, not just words, this is integral to our processes, from, again, inception throughout. We've more recently continued to raise our game in that respect.
Our IK X Fund, which is our more recent Platform Fund, has obtained the status of Article 8 Plus, namely relying on, environmental, climate-related characteristics. Wendel, I know, is quite advanced in that as well. So we were one of the first ones to obtain verified science-based targets, and then we rolled out other initiatives in order to benefit from this status. The big new frontier for us is going to be biodiversity, and I'm sure if I'm invited still next year, that I will be able to share a little bit more with you. So that's for the IK platform. Now, a little bit more about the performance and our more recent year.... This, for many investors, is an extraordinarily boring chart. What does this show?
These are the returns for over 10 years of our midcap, so our flagship strategy, on all the exits. What you see in this chart is consistency, and what I expect to be able to share with you in the coming years is continued consistency in our performance. We will deliver year in, year out, somewhere between 2x and 2.5x the money, gross, on a regular basis. We'll have some outliers, but also, and most importantly, we will avoid the underperformers, which is why, as you can see on this chart, we have such an incredibly low industry standard low loss ratio for the portfolio. This is an overview of all the live IK Funds. So, across this, you have from top to bottom, our Mid-Cap funds. What's missing here is the IK X fund.
I'll tell you a little bit more about that, where we have announced our first investment, which will close in Q1. For the people from Stahl, you'll be pleased to know that it's a Dutch-based business. So there you are. So IK IX , which is a 2020 vintage, followed by, again, IK VIII, which is in realization mode, IK VII, so those are the midcap strategies. Small Cap strategies, Partnership Fund, and Development Cap. What we try and do with these funds, one, is return these funds in their entirety within a 10-year period. Another aspect is we're, generally speaking, depending on the strategy or the vintage, but we're targeting, on a gross basis, 2.5 x returns, which means on a net basis, yielding over 2x the money.
Perhaps the most important on this chart, with the way the world is now going, is an obsessive focus on DPI. This is the money that counts. It should be for you, as investors, frankly, the only metric that you should look at when you're judging our performance. It means, in fact, this is how much over this amount of time we've returned on the money that you actually invested with us, and in that respect, IK is most certainly one of the top quartile players on the European landscape. Last week, we had our annual investor meeting. During the annual investor meeting, it was an easy day for me because we had phenomenal news to share with them. The first piece of news was on the liquidity front. We've generated this year EUR 1.4 billion in return capital to our investors.
Now, on your scale, it may not seem as much. For us, it's quite significant. In fact, we have two further transactions, we hope one of which we'll be able to announce before the end of this calendar year, which would then allow us to actually position 2023 as a record year for capital return to our LPs. I can assure you there are very, very few people out there in my industry that can boast that. Average returns, 2.6x gross, and as I said, hopefully, soon to be announced, a further exit. Another characteristic of this chart is that we deploy less capital than we return. This, you'll see the next chart will illustrate that even more. It's important for us to be net returners of capital to our investors as best as possible on an annual basis.
We also offer co-investment to our LPs, and during the course of this year, we finalized the investment of our IK IX fund, which then, in a couple of years' time, will start generating its first actual tangible exits. On the fundraising front, it's also been a good year, and as many of you are very are very much in the know, this is not an easy market to be fundraising in. We held our first close for IK X in July. We are today at over 70%, of our IK X target, and we signed our first deal. On the platform itself, our portfolio has continued to perform with, I rounded up to nearly EUR 200 million in additional EBITDA across the entire portfolio, both organic and through acquisition. We have healthy balance sheets. We continue to deleverage.
And finally, for the coming year, we will be reaching EUR 60 million in FRE. This chart illustrates what I was sharing with you just before on our consistent net distributor position. So this goes back to 2011, and again, I think there were some golden years, some very good years. Certainly, the period 2012 to 2020, 2021, they were phenomenal years. But to be able to then continue along those same lines in 2022 and 2023, I do assure you that is quite a challenge and an achievement. Another daunting task ahead for us next year, we don't promise that we'll reach a record year in capital returns. Nevertheless, we certainly have something like that in our sights because we're hypercompetitive at IK.
On the AUM position, as Laurent was alluding to, basically, I've had the pleasure and privilege of seeing and overseeing the development of AUM, at the helm of IK. We have done that by adding, in particular, new strategies, and again, consistently and continuously developing, deep relationships with a strong LP base. So today, our position stands, at the end of 2023, just above EUR 12 billion. That does include co-investment, and again, as Laurent shared with you just before, you have, to definitely look into what is fee paying related to that. Now, looking forward to the coming year, we're particularly excited in today's market, because first and foremost, we see opportunity and liquidity. This is a chart of all the exits that we realized at IK since the Russians invaded Ukraine.
So since February 2022, for us, that marks a divide in the market as we experienced it. And throughout that period, there are two things that are important to note on this chart. The first is we continue to benefit from favorable multiple arbitrage systematically. That is strategic repositioning. That's the IK core thesis. Secondly, we managed to identify an approach that allowed us to diversify liquidity. So instead of relying, this chart, you would have taken it before February 2022, you would have seen more than 90% of our realizations towards sponsors. Now, in today's markets, we're selling them more towards strategic buyers, so trade buyers, a lot of U.S. buyers, but equally, a novelty in this market are hybrid buyers. What are hybrid buyers? They're large buyout firms that have large platforms, and those platform companies are buying assets from us.
The other reason I'm excited by this market is something that's obvious to many of you in this room. We believe strongly that we are at the peak of the interest rate hike period, and that now, on a forward-looking basis, we are starting to see anticipation of a lowering of the rates. We know that we will directly benefit from that. You can see this further illustrated in some of the financing terms that are shown in this chart. On the left-hand side, this is what Large-C ap Funds do when they tap into the market. On the right-hand side, this is where mid-market taps. This is where we've seen constant liquidity, even at the peak of the more recent crisis and even during the global financial crisis of 2008, 2009.
Now, in there, clearly, what you can also see is more attractive financing on the bank side, which really picked up again from 2023 onwards. But equally, you can also see how it has become pricier for lower amounts. The other characteristic of the market that we're in is we believe we're going to see more and more value. Not only are we seeing multiples decline on entry on the overall value, but the underlying mechanics or metrics that are used, and this is based on a proprietary study that we did, where we saw the delirium of 2021, where the mismatch between EBITDA that you needed to base your valuation on and actual cash EBITDA, not even going into LTM-based cash EBITDA, was probably closer even to 20%.
Which means that you were buying a business at 15x, but 15x on an inflated EBITDA basis. Today, those levels have come down, which is, we believe, a strong indication of the opportunities that we'll see in the market. Oops! On the valuation front, you will be going through IK portfolios, our assets under management, and the like. I think this chart says a lot. It's important that you realize that we're super conservative. If you take over the last 37 exits that we've realized, there's been a 37% increase to the latest valuation. For us, what matters most is, of course, when you achieve the exit and to achieve stellar exits. It's to manage expectations there. I wrap up my presentation with reference to the IK partnership with Wendel. This is what's in it for us.
For us, the first point is that with the Wendel partnership, we can secure our growth, not only on our existing platforms, but also in adding adjacencies to our strategy. The second important element for us is that we can do this independently, autonomously. It means that Wendel knows what they do, but we also know what we do, and there's a respect, a mutual respect of each's, each profession, each person's qualification, and that was one of the fundamental reasons why we chose the partnership with Wendel. And last but not least, it ensures continuity for the IK partnership in the long term. Overall, it means, again, that today, we believe that Wendel will benefit from what we can contribute. We certainly believe that we will be getting much from that partnership as well, not just in financial terms.
There are deep ties, even at the personal level, with the teams that have been developed and will continue to develop. And most importantly, Wendel is understood for our LP base that IK will remain IK. The latest update on where we stand today on the partnership from a timing point of view. We at IK spent a significant amount of time explaining the transaction to our LP base. We then obtained the requisite authorizations across all of our funds to actually proceed with the transaction, and now, our team and the Wendel team are going through regulatory approval, and we expect that those approvals will be in place by Q2 2024. We'll come out of this stronger, with a better geographic reach. We'll continue to look at other growth opportunities across Europe, in particular, in Southern Europe. Watch this space.
We'll benefit from real institutional support from Wendel on the French market, which is, again, I remind you, our first market. We'll have the capacity to grow, team continuity, and again, a balanced relationship between us and Wendel, between a majority partner and an autonomous operator. So I conclude my presentation by telling you that IK, this year, most certainly did have a record year in terms of capital returns to its investors. We do see the market becoming quite attractive, with more value. Very, very exciting new deals coming up. We have definitely solid fundraising traction. It's not an easy market, and we'll certainly welcome more support from all of you in this room, not just Wendel.
And we're also looking at a very solid portfolio company, a group of companies that have no systemic risk, in particular, no issues around covenants. And finally, a deeper ESG commitment that we'll share with you in a coming year's time. So overall, we're very grateful for the partnership with Wendel, and I look forward to continuing to report on our performance in the years to come. That was it.
Thank you, Chris. So it's now time to turn to Q&A session. I go directly to question from the web. What is the leverage levels within your portfolio, and do you see scope for adding leverage going forward, given falling rate expectations?
Okay, so if I take the overall IK Fund, our leverage is at about 4.8x EBITDA. However, if you look at it across the different strategies and the different level of maturity of funds, basically, the larger the funds or the larger the deals, and the more recent deals, the higher, normally, the amount of leverage. So if I take, for instance, IK IX, which is our more recent fund, and in the Mid-Cap space or a larger fund, leverage was at 5.8x, 5.0x, sorry. And if I take our Development Capital Fund , leverage is at 1.7x. So you have a bit of a spectrum, and of course, we follow that very closely. Another element that's core for us is to follow debt maturities.
So what's important for us, and we work on that with our capital markets team, is to ensure that we don't have any form of immediate looming debt maturities, and we certainly have none of that sort for the next 24 months. So in that respect, again, we're well on top of situations and not doing things in an irresponsible manner. Then we look at covenant headroom and liquidity in our portfolio. So overall, we think that we're quite responsible there.
Thank you. On slide 12, there are two investments with lower realization below one time. What were the key drivers there?
It's funny how nobody picks on the good ones. Okay, there were actually two very different situations. Interestingly, on that slide, so I'll try and come... Oh, I can't come back to it. On that slide, there was, in particular, one called HP, Handsome Protection. What they made was outfits that you put on helicopters leaving Norway to go on oil rigs in the North Sea. Now, in what I just said, there's the word oil. The company did extremely well. When we made the first investment, I think the barrel of oil was at $120 or something outrageous. Then it was another story, but most importantly, this is from an ESG point, an area that's been much more under challenge. So that's one of the illustrations. There you have it. That's called HP.
The other one, L + M, I'd say that is certainly down to us. We combined two businesses in the specialty foods industry in Denmark, and frankly, those two businesses had nothing to do with each other. We did a lot of good things with those companies, but unfortunately, the combination was just simply not the right one.
Thank you. Do you have a question in the room? Yes, Alexandre and Geoffroy then.
Alexandre Gérard, CIC. Thank you for your presentation and congratulations for your track record. Can you come back in more details on what should be the main avenues of development of IK Partners over the next five years in terms of new strategies, maybe new geographies, and to what extent concretely Wendel can help you in developing that? And would it be possible to have some numbers in terms of AUMs? Have you set yourselves any goals in terms of AUMs or fee-related earnings in five years' time? Thank you.
... Okay, a lot of questions there. If I start with the next five years. So we have a pretty clear plan. In the coming year, it's a big fundraising cycle for us, so this is where we'll finalize the mid-cap fundraise to continue again in all these strategies in the same market position. Then we launch our Partnership Fund, which should be, I believe, quite straightforward, because that's with a group of investors who are there and quite loyal and very interested in that strategy. And then we have our development capital and small cap strategy. Those are very, very people like that space, and we've had some really, really successful funds in that area. So we anticipate that while it's a difficult market, we should see some traction there.
So as far as those strategies are concerned, it's developing the same thing, slight uptick in size compared to the prior funds. It'll, you know, generally speaking, but that's that. Now, then, the other step for us beyond that, geographically, we're looking at Southern Europe, so we want to stay in Europe. We believe that we can have an attractive presence on the Spanish market as well as the Italian market. Now, the approach that we would take, and I think that's the merit of our structure, is that we would start with the small cap strategy for those markets first, test the waters. We did the same thing in the UK. And then if we see it works, then we can start rolling in the further strategies. So this, in terms of horizon, is probably around 2026.
The other bit on adjacencies, we are, with Laurent and his team, looking into other possible strategies, so working on that. They might be in, in pref instruments, they might be in... We're even considering a captive debt fund that will allow us to leverage some of the, the businesses we're in, while ensuring that there are no conflicts of interests. So, again, quite a project and program. So again, there's an active dialogue around that. As to your question on AUM, this sort of reminds me, I'm in an inverted position. One of the first deals I did in France was a company called Labeyrie, and they made foie gras, and they were listed on the French stock exchange.
When we delisted them, I'll always remember sitting down with the CEO of the company, and he was very proud, telling me that the company had achieved their performance metrics. I was looking at EBITDA, and he was looking at net after tax. So to your question on AUM, this is still an area that I have to familiarize myself a little bit more with in terms of performance. You've seen the track record and the growth that we've achieved, so I'm very confident that that will continue. But again, to give you specific metrics on that, I will probably have to become a little more articulate and better educated for these markets.
Thank you. I think we have another question in the room. Geoffroy? Yeah.
Thank you. So, sorry, Alexandra asked the kind of question I wanted to ask, so just a tricky one. You spoke about your, let's say, potential adjacent business-
Mm-hmm.
Pref instruments, debt, because obviously you went from mid to small to development. You can't really go higher, can I say, because of Wendel? Or not?
No, it's not a tricky question. It's a very good question. It's not a tricky question. We've realized that we have. I call IK a firm of low ego private equity, so we don't need to be the biggest guy in the room. We like this space. We like to be the best with the deepest team in that space, which is why we would add those adjacencies. So there's definitely an understanding that Wendel does larger transactions-
Mm-hmm.
And we're happy for them to do that, and any support we can provide, we will. We do cover some larger transactions on a minority basis through our Partnership Fund strategy. For instance, during the course of this year, we did a EUR 1.6 billion deal, which we basically syndicated, called Uniter. In, it's a CDMO. So, so we can do larger deals, but that will probably be more in our Partnership Fund strategy, if that answers your question. But they're not, they're not hindering our development au contraire.
Yeah, just to give an answer to that also, that there's no element where we say to IK, "Well, please don't develop in large cap." I mean, if IK wants and feel that they have the skills in order to go into large cap, we will support the fact that they go to large cap. It's not us at all. It has to be something where they feel comfortable that they want to go to that, and that's because at the end of the day, you need to make sure that you want to make good return to the LPs, and that's the number one thing that you have to be confident on.
Thank you very much. I think time is over.
Thank you very much.
If we have additional question, of course, we will answer by email, but we have now to turn to the next presentation. I'm talking about Stahl. Jingle, please.
Three years ago, when Stahl CEO Huub van Beijeren and our partner for 15 years announced that he was retiring, we started looking for unicorn to replace him. We were looking for somebody who was a strong operator, strong focus on cash, global vision, and able to reposition the company with a very strong strategic view. So when we found and met with Maarten, we were very, very pleased. He was our unicorn, and over the last three years, he's been leading this group with a lot of success. Maarten is a chemist as a background. He had then a very successful career at Croda, up to the Executive Committee, managing global firms very efficiently, and we are very pleased to have you on board. With no further ado, welcome, Maarten.
Thank you, David. Thanks for your kind words, and good afternoon, everyone. It's a pleasure to be here again and to give you an update on Stahl. And here today you get a first look at a brand-new Stahl logo. And we believe that this logo and the brand identity matches a lot better with what Stahl is today, and certainly matches with the ambitions that we have for the future. And we hope you like it as much as we do. Oops. Yep. So as always, let me start with a high-level overview of the company. Stahl is focused on flexible materials. We're the world's leading producer of high-performance coatings and service treatments for flexible materials. And 2022 was a good year for Stahl, thanks to a strong second half of the year.
Sales grew to over EUR 900 million, and our EBITDA increased by 8% to EUR 194 million. This was without ESG, which was acquired in the first quarter of this year. As you know, Stahl is a true specialty company with premium products, so our EBITDA margins are consistently above the 20% level. Stahl started out as a leather treatment company, and today, which means after the ISG acquisition, sales to leather makers represents just over half the group sales. But most of what we do in leather is what we call finishes. These are actually the final coatings layers that are put over the leather to make it look great and feel great and protect the material.
Now, this coatings technology translates actually very well to other flexible materials, like textiles, synthetics, and rubber, which is why we created a performance coatings business. Today, this business represents almost a third of group sales. Since March of this year, we further expanded the range of flexible materials that we sell coatings for. With the acquisition of ISG, we now sell also coatings for paper, and paper that is used in packaging and is used in print, and this represents approximately 12% of the group sales. With this, you see Stahl's strategic direction of travel. We want to continue to expand our coatings franchise for flexible materials, which today is almost already 75% of Stahl's group sales.
In previous years, we've talked a lot about our business model, and we work very closely with our customers, and we have a very deep technical cooperation with them. We have almost 450 technical specialists, we call them golden hands, that work hand in hand with our customers, and we often sell bespoke products. Now, since the ISG acquisition, our regional spread has changed somewhat and has become better balanced. The faster-growing Asian region is still the largest region for us, but thanks to ISG, North America has become more important for Stahl.
Stahl is the clear ESG leader in our space, and I'm proud to report that for the second year in a row, Stahl has been awarded the platinum status by EcoVadis, which puts us at the top 1% of the more than 100,000 companies they have assessed worldwide this year. Now let's have a closer look at where the Stahl products are being used. Our products are used on a wide range of consumer products. Stahl typically sells the final coating layers over the flexible material, and the flexible material can be used in a car seat or on a steering wheel, in fashion, in handbags, on sofas, on parachutes, on tents, on airbags, many different flexible materials, and now recently also on paper for packaging.
But our products actually only represents a very small part of the cost of the end product, but it adds to, importantly, to the user experience. In every car, for instance, there's only a few euros of Stahl materials used in the car interior. But a driver is constantly holding the steering wheel, and that has to be a good experience. It has to feel great. So and Stahl typically is coating the products that the customer, that the consumers are touching very often. Every day, hundreds of millions, possibly billions of consumers globally are touching Stahl coatings. And that is why we have made that the core of our recently launched Stahl purpose. When consumers touch the Stahl coatings, we are touching them, we're touching their lives. And in doing that, we want to give them a great experience.
It has to feel great, it has to look great, and it has to give them protection. But we also want to make it a safe experience for the consumer, and increasingly, a more responsible consumer, as Stahl helps to make its customer products become more sustainable. Now, let's have a closer look at the numbers. 2022 turned out to be a very good year for Stahl, even though at the half year we were still behind the year before, which benefited from the post-Covid bounce back. Overall, we finished 2022 with an 8% EBITDA growth and a 10% sales growth, which we were very pleased about, given the fact that we had to deal with significant raw material cost inflation as well as energy inflation.
Like most other manufacturing companies, in the second half of 2022 and throughout 2023, we witnessed a slowdown of consumer demand, with volumes double-digit down compared to the year before, and we also are seeing a decline in raw material costs. But since the end of 2021, we started to focus on value over volume, and since then, we have steadily increased our unit margins, which has largely compensated for lower volumes. Now, what we see in 2023 is that in terms of EBITDA, we are down still at the first half, but we have a good profit momentum in the second half of this year, and the second half of this year should turn out better than the second half of last year.
So on a pro forma basis, we expect that this year, we finish the year still a little bit behind 2022, which, given the difficult economic circumstances, and certainly compared to our peers, is a very good performance. I'd also like to point out that throughout the economic cycles, Stahl always manages to deliver EBITDA returns above 20%, which underlines the robustness of our business. And this also, is also significantly higher than the profit levels of other well-known coating companies, which reflects the specialty nature of our offering to customers. And we're also pleased with the performance of our recently acquired ISG business, which is delivering in line with our plan and profits ahead of last year. And finally, in terms of cash, again, we're also there ahead of last year.
In the graph you see that on the back of our strong cash generation, we have been deleveraging since the beginning of this year. Early 2023, we completed our refinancing, which also contributed to financing the ISG acquisition. As you saw earlier, that was an acquisition of $205 million, which has brought our leverage back up to 1.6 x at the midyear. Now, Stahl is a very strong generator of cash. As you saw on the previous slide, Stahl's profit margins are significantly higher than the profit margins of other coating companies. Our products also, because our products are sold as a result of a joint technical cooperation with our customers, so they are true specialties. But at the same time, our operations are fairly capital light.
We are mainly selling fully formulated products, so in essence, they are mixtures, mixtures of ingredients. So our operations consist of mixing, mixing stuff, which actually has a very low capital intensity. So as a result, we have great cash conversions at levels of typically 80%. So this means we have plenty of firepower to invest in innovation and organic growth, as well as in external growth. And next to that, we have returned cash to our shareholders in the form of dividends. You heard this earlier. In December of this year, we are paying our shareholders a dividend of EUR 125 million, of which EUR 85 million goes to Wendel, and this is on top of the EUR 341 million of dividends we have already paid to Wendel since 2014. But still, these dividend payments have not constrained our acquisition strategy.
We have done several large acquisitions since 2014, notably Clariant Leather, BASF Leather, and most recently, the ISG packaging coatings business. After the dividend payment, we expect that our leverage at the end of this year will still stay below 1.8x. So what is Stahl today? Where do we stand as a company? Stahl is in a good place. We are the clear market leader in coatings and finishes for flexible materials, but we still have a lot room, lot of room to grow, in our existing markets, as well as in new adjacencies. As you saw in my introduction, we are well diversified in terms of geographies as well as end markets, which makes the business robust.
And we tend to be positioned very much at the high end of our markets, with good exposure to the world's top luxury brands and the high end of automotive, which further adds to the resilience of our business. But the essence of Stahl is our customer intimacy model.... In 34 countries across the world, we have local salespeople, local warehouses, local application labs, and every day, hundreds of technically trained Stahl people work together with our customers to further improve our customers' products. But this also gives us a first-hand insight in the unmet need of our customers, which in turn feeds the input for our innovation teams.
For the size of company we are, we have a very well-developed global manufacturing footprint, and as you heard, as a formulating company, our operations is mainly about compounding, blending of ingredients, which tends to have a low capital intensity, which further supports the deleveraging of our balance sheet. Last but not least, we're also the clear leader in our market in terms of ESG, which I will cover a little bit later in this presentation. Certainly, one of the highlights of this year was the acquisition of ISG, which closed in March. Here we benefited from being able to team up with Wendel, which enabled us to outpace the more established competitors in this space. With this acquisition, we are expanding the range of flexible materials that we sell coatings for. ISG is a leader in paper-based packaging coatings as well as print.
Like the rest of Stahl, ISG provides the final coatings layer over the product, and in this case, over the printed packaging, which has to be protected, and importantly, also has to feel great when the consumer touches the packaging material. In 2022, ISG had sales of EUR 129 million and an EBITDA of EUR 17 million. It has a very strong North American position and emerging positions in the other regions of the world. At the time of the acquisition, we expected synergies of EUR 5 million extra profit in five years, and I'm pleased to report that we are well ahead of delivering that. The integration will be done in 12 months. This so far has gone very smoothly due to the excellent cultural fit.
And we've already closed three of the ISG sites, and at the same time, we're accelerating the global expansion of ISG through the Stahl global network and the Stahl global manufacturing footprint. And I'm very pleased to report that in spite of the difficult market conditions, as well as the busy work on integration, the ISG profits for this year will come in ahead of plan and ahead of last year. So where do we want to take the company? As you heard, we are the world leader in coatings for flexible materials, like leather, textiles, synthetics, rubber, and now paper, and we're looking to further extend our leadership position. And also, several of our existing customers are experimenting with new materials, increasingly sustainability driven.
For Stahl, this is also a great opportunity since, you know, whatever, say, a car seat will be made of in the future, it will continue to need the Stahl layers over it to make it look nice, feel nice, and to give it protection. We are increasingly driving our company to more specialization and premiumization to further support our premium margin model. Our innovation teams are making our portfolio more future-proof in an increasingly sustainable world, replacing solvents with water and increasing the renewable content of our formulations. But also, we are investing in ourselves, in our global footprint, and we will soon open a brand-new center of excellence for performance coatings in the United States, as well as an application lab in Japan. In China, we're about to open a brand-new center of excellence for leather in Foshan.
So we are investing more in innovation, and in typical Stahl fashion, we do this close to the customers. We're also extending the capacities as well as the capabilities of our sites, and we do this now in Singapore, in China, and in Mexico. Acquisitions will also play a key part in our strategy as we look to expand our range of coatings for our flexible materials franchise. Our recently launched purpose has already been helpful in strengthening our employer brand, as young talent is increasingly interested in companies that are doing the right things for the planet. Let me now finally spend some words on our ESG leadership position. Our customers are selecting suppliers that can make them win in their markets by offering the right performance, combined with sustainability credentials.
Today, sustainability is at the core of the strategies of every major brand, and at Stahl, we're well positioned to help them make their products more sustainable. In our leather and performance coatings market, this often means that we need to reduce the environmental footprint of their products. Whereas in packaging coatings, the focus is much more on circular product design and to reuse packaging or to explore packaging solutions from recycled materials. But customers need factual and credible proof of the improved sustainability credentials of their product, so we offer life cycle assessment and supply chain transparency mapping. We offer ISCC PLUS certified products, and we also have a ZDHC-certified product portfolio. And during 2023, we completed the carbon footprint analysis for 200 additional products on top of the 160 we already did in 2022....
We're well on track to have full life cycle assessment and carbon footprint data for at least 300 of our strategic products by 2030. We collaborate with our partners in the value chain to shape the future together on key sustainability themes. Today, 73% of our portfolio meets the ZDHC requirements, and ZDHC is an initiative from the major fashion brands to strive for a safer supply chain. We've also trained more than 1,000 employees of our customers, the brands, and students at our Stahl campus facilities across the different regions in the world. But to deliver on our ambition to be the ESG leader in our space, we continuously have to advance our own ESG commitments, and in 2023, we made important progress in the following strategic areas.
First and foremost, the Science-Based Target Initiative has validated Stahl's greenhouse gas emission absolute reduction target for 2030, cementing our commitment to the Paris Climate Agreement target. Stahl is the first company in its space to have its greenhouse gas reduction target approved by the SBTI. As 90% of our total emissions are Scope 3, so indirect emissions linked to our incoming raw materials, we are focused on replacing fossil-based raw materials with lower carbon alternatives. In 2023, it's estimated that we reduced our Scope 1 and 2 emissions by 15% compared to the year before, and a similar amount of reductions we are showing in our Scope 3 emissions. But the verified emissions data will be published in the Wendel URD and in the Stahl annual ESG report, which will be issued in 2024.
And we've also set ourselves ambitious targets to phase out potential substances of concern from our product, and we want to do this ahead of new legislation. We are doing this ahead of new legislation, but also ahead of possible evolving brand requirements, and we do this because it's the right thing to do. For 2024, we proudly present a series of novel products that offer safe and lower carbon footprint solutions to our customers, and with that, we're raising the bar for the entire industry. We're extending our new NuVera product range, offering renewable carbon, renewable carbon-based polyurethane solutions for coating coated customers, and with the Stahl Ympact and Stahl Cintura ranges, we are offering new and more sustainable products for our leather customers.
Cintura is a unique range of bisphenol-free retanning agents designed with biomass and renewable content, offering our customers multiple sustainability benefits in one product. New legislation, like CSRD or EU Taxonomy, will accelerate the transformation in the industry, and we see this as an opportunity. We've organized ourselves and are now in preparation to align the company with the new EU Corporate Sustainability Reporting Directive by 2025, and this is another example where we are well ahead in our industry. As you heard earlier, we were awarded the EcoVadis Platinum status again in 2023, which places in the top 1% of companies assessed. Now, let me wrap it up and quickly summarize the key takeaways out of this session. As you've seen, Stahl is a robust business with attractive margins and an excellent cash conversion.
We have shown that we can maintain the high profit margin profile also in difficult times. We are the clear world leader in coatings and surface treatments for flexible materials, and recognized as the ESG leader in our markets, with a portfolio that can help make our customers' products more sustainable. Our true specialty profile is the result of our business model of deep technical customer intimacy, combined with constant innovation, and we're driving our portfolio more and more towards premium products. Finally, last but not least, we're looking to grow our attractive specialty coatings franchise, both organically as well as by acquisition. Thank you.
Thank you, Martin. It's now time to turn to Q&A session. Once again, it will last roughly 10 minutes. I already have some questions from the web. The first one: who should you compare Stahl with, and who do you see as your peers?
Yeah, we think Stahl is a unique company, but in terms of, you know, if which companies would look the most like Stahl, as I said, you know, 75% of what we do at Stahl is actually coatings. It's coatings for flexible materials, so probably the best peers that we... The best companies as peers for Stahl are the other coating companies. I mean, they're similar in terms of activity, in terms of operations. But I think, as I said before, the main difference that we have is that we are having significantly higher margins than the typical coating companies that we all know.
Thank you. We have a question in the room? Not yet. Okay, I have another one on, on the web. How are consumer preferences impacting the choice of materials that are used in cars, fashion, and packaging?
Yeah, I mean, we see clearly the rise of the conscious consumer. Consumers are increasingly want to know what the product is made of. And therefore, they increasingly want products that are renewable-based, preferably natural. And so, but at the same time, still what we see when we offer alternative technologies that are more sustainable than the products that they replace, still there's a limited willingness for the consumers to really pay a premium for a more sustainable product.
But what we're certainly seeing is that, you know, the brands and the major car companies that we work with, they're trying to make their materials a lot more sustainable. And therefore, you know, they're certainly driving our innovation to help to let us help them make their products more sustainable. Which means, typically a higher renewable content and in Stahl, in our portfolio, we see that the level of renewable materials is steadily rising year on year. And it means that, for coatings, they ideally like us to phase out solvents and replace it by water, which I mentioned earlier.
I'm pleased to say that well over 85% of the solvents in Stahl have already been replaced with water, and again, here, this is where we're leading the industry in doing that substitution.
Thank you. Another question on the web: Looking forward, what share of your revenues could be non-leather activities in five years?
Yeah, I think that's a difficult question, Olivier. I think it depends on, you know, what will. Again, it probably depends on what the consumer wants. We have the attitude in Stahl is that we don't mind what, as the example that I gave, we don't mind what a car seat is made of in the future, because it will always need the Stahl layers over it to make it look good and feel good and protect the underlying materials. So we call ourselves a substrate agnostic. But clearly from our heritage in leather, in the past, we were all about leather. We are gradually broadening our portfolio, so that we're covering more and more non-leather materials.
You know, the direction of travel is very clear, is that, you know, we will gradually see that business broadening further over time.
Okay. Do we have a question? Yes, Alexandre, in the room.
Thank you. You commented on sluggish volumes in 2023, of course. Do you have any visibility into 2024 regarding volumes, but also regarding prices? And, can you comment a bit on your, on the impact of the inflationary environment? And, the last question is regarding also your comment regarding the development by sale of premium products. To what extent these new products could drive your EBITDA margin, which has been, which has been heavily, massively stable in the past, upwards in the coming years?
Okay. All right, yes, in terms of volumes, we basically saw the volumes start to decline during Q3 of last year. Not just at Stahl, I think all manufacturing companies were seeing that. And more or less by Q3 of this year, we saw that the volume reduction started to flatten out. So from Q3 of this year onwards, yeah, we more or less performed at the same level. And in Q4, you know, we've seen that we're operating at slightly higher volume levels than last year. Now, going forward, I think, you know, the visibility that we have, and we say this every year, is shorter than ever before.
I don't think anybody, any economist dares to predict what 2024 will be. But, you know, we are certainly not expecting any further declines of volumes, because part of the volume reduction that we saw in 2023 was related to destocking. So, your question on raw materials, the raw materials are on a declining trend in the moment, and but we do believe that, you know, when the general industrial volumes will start to come back, this reduction will probably stop as well. And what we do today is we are giving those- we're giving most of those reductions in raw material prices back to customers.
We try to keep a little bit, try to keep a little bit for ourselves. So, you know, in the past two years, we've seen a gradual increase of our unit margins. Now, we do not expect going forward that we will see a strong further expansion of that unit margin, because it's... As I said, the market is still relatively soft. And your question on inflation, yeah, certainly we think that inflation has certainly dented consumer confidence. So one of the reasons that you know, volumes are down is due to low consumer confidence levels. But, and you had, yeah, then you had your final question on premiumization.
We do not have a target to take our profit margin level up to, you know, specific targets to increase it further. We're quite happy with where we are, and we want to keep it above the 20%, which is a sign of a true specialty company. From here, we want to grow the EBITDA, and while maintaining that profit margin above 20%.
Thank you. If no more question, I think it's time to turn to the next presentation. Thank you, Maarten. So the next presentation is Scalian. Jingle, please.
I'm very happy to introduce you for the first time to Scalian CEO Yvan Chabanne. As a background, Yvan graduated in physics before joining General Electric as an engineer. After a successful career at GE, he joined Altran and grew up to the ranks up to the Executive Committee, and this is where he left Altran to join Eurogiciel, a very specialized niche consulting firm almost a decade ago, that he grew tenfold in almost less than a decade with his team to create Scalian, that he's going to introduce you now. So with no further ado, welcome, Yvan, and congratulations for what you've done.
Thank you, David. Good afternoon to everyone. Yvan Chabanne, Scalian CEO. I'm very pleased to be there for my first time at this Investor Day. Yes, we have recently joined the Wendel constellation of participation, and yes. Just a few words about the company. It's a first overview for you. Scalian, as mentioned, has changed his name six years ago, but the company is born in 1989 in Toulouse, close to the aerospace environment, and focused on digital activity, close to the chips, close to the electronic in order to develop high complex system algorithm to serve some function for avionics, for control command, for signaling in the railways, for common control, for energy systems in nuclear plants, for example. So it was very specific.
In 2015, I joined the company after another career in the service and in, as engineer in the aerospace, in order to develop, this asset, strong asset, with, through LBO, with Edmond de Rothschild. And, it was in 2015, the company lead around EUR 69 million of activity, and mainly in Toulouse, mainly in aerospace. And the first mission was to diversify the company by using organic growth, by dynamics of the sales force, and also by M&A. We could join at this period, IT, but it was not the case. It was with, Edmond de Rothschild, and in 2019, we had another rotation with Cobepa, before joining now Wendel last July. So, the company leads today around EUR 580 million last June.
It will be higher end of December, close to EUR 550 million with the organic growth. And, close to around 13.5% EBITDA margin, operating margin. The company is involved in, digital. It was, the first asset, and we deploy, you will see, in other area in application, and also in management consulting. And you will see the organization in the positioning, what we call OP, Operation Performance, in order to serve project management, supply chain management, for clients to lead their program, their project, high complex project, cost, quality, delay, performance. And, we are involved in all sectors now.
When we were at 75% in aerospace eight years ago, now you can see, even we grew a lot in this sector, the aerospace leads around 16%, and, the rest is based on the main asset in, in, in industries with automotive, transportation, railways, energy, defense, space, healthcare. And in comparison with some peers, we are, not so much present in the financing or banking area, with less than or around 11%, when, some other peer are more around 30%. So it's a big difference for us coming from, design engineering for product and also manufacturing. We are able to serve, to, to advise our clients in this field. It's why, it's why we are mainly focused in industry. We cover, mainly the business in Europe, with, 95% around that.
The France represents 69%, and the North America around 5%. So the positioning, as already mentioned, is digital system at 55% of the revenue. It means more than EUR 300 million, more than 3,000 engineer consultants, mainly focused on software development, algorithm, analytics, artificial intelligence. They serve industries, as I mentioned, from the sensor, close to the product, to the application. We customize some specific software in order to interface data coming from the product to the ERP to the client. And for that, we develop some through some center of excellence from specific assets. We manage the knowledge with a mirror of the positioning through our organization.
Inside Scalian, you have Scalian DS, Digital Systems, Scalian OP, Operation Performance, and the third division across both the two other, strategy and transformation. In digital, we manage software for clients. For operation performance, we manage cost, quality, delay, performance, sustainability, and we create for them methodology, organization, transformation. And across that, strategy and transformation is working more in advance of the beginning of the R&D or the manufacturing on the strategy, in order to try to develop digital transformation, strategy for them. Using the knowledge we have in methodology organization in OP division, by the leverage of software we have in digital system organization. Today, Scalian is employing more than 500 people, mainly consultant. 98% of them are engineer also.
We cover all aspects of the V- Cycle of the client, and we are involved 2/3 of the activity in work package. It means it's not staff augmentation, it's commitment to deliver results, performance on their project. The duration of projects are more than one year in average. In our extension, we deploy the same model in each country where we are. The portfolio is very interesting, very large, because over time, we never lost any client, and we deploy with also the M&A diversification in order to be resistant to any crisis we could have.
For example, during the COVID, we suffer a lot in aeronautics, but with the same engineer, we were able to move in other sectors, in transportation, in energy, in space, in railways, for example. It's very easy to move the knowledge of our engineer in software or in management from a sector to another one. So it's a good way to have a well balance in our portfolio. It is the case. It won't be the case eight years ago. So today our focus is to deploy more business for each of them, to conserve this diversification and to boost the organic growth in each of them.
Even already, we have a track record of good organic growth, you will see, over the 8 last years. The performance started for myself, and with a new name, Scalian, from 2015. The EBITDA margin was not at 10%, it was lower. Sorry, it's a mistake. It was around 6%, and we double finally the profitability, and in the same time, we multiplied by 10 x around that, the size of the company. 50% of the growth was organic, and the rest was by M&A. It means 50/50. It's a good balance, and we consider it's very interesting to start, for example, for a new sector or a new country, by organic, to learn the market, to learn the culture of clients before activating M&A opportunities.
Like that, with a German manager in Germany, we are able to activate a German acquisition. The same in Spain, the same in North America, et cetera. We already did 3x in Spain, 2x in Germany, 5x , 4x in France, and we are working at the moment with Wendel in order to deploy our strategy to for M&A in the North America platform we create in the last few years. As you can see in the last period, we performed different M&A. The range of size of this build-up are between EUR 5 million revenue to EUR 80 million. It depends of each specialties, each countries, each sector we want to address.
What is interesting to note, it's each company we bought in the past was specialized in one of our three divisions. It means we created inside the Scalian platform, through our positioning, which is a reflection, finally, of our organization and reciprocally, a platform, three platforms able to integrate M&A as specialists. Alyotech joined Scalian DS, CMT+ joined Scalian OP. Tagueri was the first German platform we develop. Indizen for Spain, agencies also, but as a service center for specific expertise centers in cybersecurity there. OneFirst for S&T division, et cetera, et cetera. And like that, the integration is more easy because we speak the same language.
When you acquire, you acquire a company in software, they are working with their colleague, organized also to address the software solution to clients. Across our organization, we have a global account management and sales organization able to address clients and to share any opportunity to do synergies between our division and with build-up we integrate. From 2020, you have some figures regarding the sales and EBITDA performance in consolidated account in IFRS on the left, and on the middle, you have the pro forma adjusted of the M&A in terms of revenue and EBITDA at the last fiscal year period, June for us. 13.5% of profitability for EUR 70 million around EBITDA, EUR 580 million.
The track record of growth last year, it means in June 2023, was 22.6%. Organic only, of course. And today we are like for like around 13.5% in organic growth because we are living in the same world, and during the last six months, the uncertainty in the economy, in the business, the cost, inflation, et cetera, lead the all of our client to a slowdown of their activity, and then we are still above 13% of growth, but with a little decrease of the rhythm, and but preserving also our resources in order to deploy a rebound or a booster effect of the growth at beginning of 2024. What is important to note also is the leverage.
Of course, there is a variation over time of our leverage, because under LBO, as you know, you have acquisition that at the origin of each cycle, you could have some crisis effect also, like in COVID, where you have some increase of the leverage. And after that, M&A also leads to do some fluctuation between each deleveraging you have with the organic growth generation, sorry, and the cash generation. The cash generation is very interesting, more than 70%.
Moving to some client perspective and also the workflow of work package we address, because when you deliver business in work package, you are not paid strictly each month, and obviously, you have some negotiation contractually to do over time each time. But it's a good cash generation permitting us to do a lot of value creation over the time. What is Scalian today? Scalian today is attractive company in terms of capability to address a lot of markets. As you can see, the number of client is very interesting, very impressive. It's only blue chip. So, for each of them, there is a positive megatrend in terms of stakes, integrating new technology, especially digital, especially AI.
For each of them, the challenge is to be competitive. It's to be aggressive in terms of technology, in terms of innovation. Scalian is key link for them in their supply chain in order to boost, to address some specific R&D topics, in order to integrate this technology. It's what we are doing with Scalian DS organization. In each area of the industry, aerospace, automotive, for the electric car, autonomous car, in space, also for new satellite, in energy, in defense, energy with nuclear, of course, you can imagine the lot of work we could do with digital approach or in system engineering approach.
In parallel with the Scalian OP organization, we are also able to serve the stakes of our client, because they need to manage their big programs, their big transformation, or their industrialization of their product on their territory, but also abroad sometimes. It means we are able to help them to address the supply chain, to build the supply chain, to identify, qualify, certify, train some suppliers to them in order to give them the capability to increase their production. We have the case with Airbus in aerospace, for example. We have good position in terms of competition because we are a rare company able to address the two topics at the same time.
There is a lot of company able to do digital, but mainly in IT, when we are also able to do embedded technology, embedded system, I will call, and to do the both at the same time is not so, so common. In parallel, we are able to address the OP. It means operation in program, in organization, methodology, process. The combination of the both aspect, both approach in the same company is not so common. It's very interesting because in the V- Cycle, you are first the phases of strategy, and we can help client with S&T a little bit. After that, we design and we develop the product, and after we help for the production with OP.
So we cover all the V- Cycle and integrating the AG aspect or new technology aspect with IA, there is a lot of opportunity for Scalian, too. In terms of organization, we are, of course, very light and agile in order to support our client. What is interesting is we have a local approach. In each country, in each division, we are close to our client. It's very important. No CapEx needed to do our business. We are very much asset light, only personal computer to do the job, some little investment to test some technological system like drone, et cetera, or test bench, but it's not so important. So it means why also the cash generation is interesting at the end. The customer interest is very interesting, more than 30 years.
It means never we lost client. We, we gain more client each year, but our main focus now is to develop more business for each of them, and we have the potential, without M&A, to do only by organic with this portfolio, EUR 1.5- EUR 2 billion in comparison with some of our peers able to do today. But considering the time of to do value creation of our AI approach, of course, we need to go fast, and of course, M&A will give us a booster effect, and we will do it, and you will see what is our strategy in this topic.
ESG, we are proactive internally to be perfect in respect of all certification, all approach we could have to follow our client, our customer requirement, but also in order to be attractive for our consultant, for our engineer. And it's the synthesis of that probably explaining why we are able to do a good organic growth, and which is the key parameter in our performance over time. In terms of medium-term vision, what is clear, it's very simple because we are in continuation of the past. At EUR 500 million, we are not at the end of an adventure to create another one. We need to continue to develop the company and to get critical size in each countries, Germany, North America, Spain, France, et cetera.
So it means to perform three times the size of the group by probably performing more than three times the EBITDA volume by improving the profitability at the end. To get critical size in each market, geographic market, it's important because even in France, we could double the size. It's a plan around that. When we have to triple the size in Germany, the same in Spain, and to create a strong platform in the U.S. in order to globalize the objective, which is to reach EUR 1.5 billion. Today, we are performing only $20 million in the U.S., but fully organically, with more than 20% EBITDA.
Profitability is good, and we are looking at the moment with Wendel for some M&A opportunities, tactic opportunities, in order to develop more, and to diversify the portfolio and, to build a platform at $200 million in five years, for example. And at the end, with doubling, the, the size of the French, the France, sorry, tripling the size, the size of, the Germany and Spain, we will reach $1.5 billion at the end. Increasing gross margin, increasing our, all of our KPI are key also, but we did in the past, and we continue to perform it.
With the also the leverage of Best Shore, because we deploy for a few weeks, for a few months now, a new platform in India with more than 150 engineer able to leverage the growth margin by using them not only as low-cost solution, but also as expert and cost solution locally in India, where also it's a wall of talent in Europe, and the volume of engineer in India is very impressive in comparison of our market. So what we are doing with Wendel now, it's to be sure we are aligned on the value creation plan, and we work on it in order to focus for targeted acquisition in system engineering to accelerate our customer intimacy at C-level in order to get bigger deal.
Today, we are delivering a deal in the range of EUR 2- EUR 6 million a year. That's for one work package. We want to double at least the size of our big deal, so it means we have to be more in advance with our customer in order to prepare this size of deal. Accelerating innovation in AI and also in data analytics. We have a strong asset in this area, and we inject more and more in our work package and in our delivery some ideas, some innovations, some solutions for our clients. Geographical footprint, I already discussed, and ESG initiative and brand expansion is very important for us also, if you want to become a new Scalian in the North American market especially.
Of course, we will work to stay always above the average of our peers in terms of dynamics, in terms of growth, organic growth in the market. Scalian, considering the portfolio we have, we need to have, over time, a lot of certification, accreditation, et cetera, authorization to work in each universe. I mean, nuclear, aeronautic, defense, et cetera. So we add a lot of label, et cetera. And, ESG, it's also key in order to have the panel access for key clients, and we have some level in this, in this dimension, too.
It's also a new factor to develop business with our, with our clients in the OP division, especially, by integrating some IT solution, or some technological solution for satellite, et cetera, to detect in advance pollution or to do decarbonization in the industry. There is a lot of initiative. How we deal with current challenge? We reinforce recently our organization at different level, at the level of global account management, at the level of M&A team, at the level of financial analysis for M&A also, at the level of ESG. But there is a lot of initiative launch with Wendel from the summer.
We are convinced to be able to overperform the market in the next few months again and few years, as we did in the past, and we do today, too. The good brand attractiveness could be reinforced also by some initiative in terms of communication, and also Wendel is positive in our ecosystem for our client and for our employee, with a long-term perspective and also the size of Wendel and capability to address big player, like Bureau Veritas, for example. So for our client, it's very positive for Scalian to give to Scalian some big opportunity of business for the future. We will have to serve also some initiative of gross margin and SG&A improvement.
Even it's very positive today, but in order to reach the business plan in revenue, we want also to improve the profitability at the end, and to increase, at the end, the multiple at the exit if we have valorization. And for the M&A mission, as already described, you have the well organization already, a dimension to do it, and we are working at the moment on several opportunities. We will close the first build-up with Wendel in January, with a little one, a specific and expert company of EUR 4 million revenue only, but expert in cybersecurity in Spain, in the bank area with a specific solution.
So it's good, and it's tactical for us, and we are able, with our organization, to address deals from this kind of size, a specific player to a EUR 100 million, EUR 200 million, EUR 300 million revenue with different geography. If we could have in only one build-up, it could be good. So key takeaways to conclude, Scalian is already a sort of European leader because we combine both aspects of OP and ES at the same time, and we are able to do a convergence between IT, OT, by sector, by geography, by the synergy between our domains of activity. We are in the perspective of a long-term growth, even we are able to measure instantaneous growth.
But through our clients, through our sector, we address with the diversification. We are not expecting some risk. At the opposite, we are just thinking how we will be able to address so much needs coming from our sector and clients. ESG initiative, already I talked about that. Maybe we could have some questions. Just in conclusion, we are very proud to be in the Wendel portfolio now, convinced we could do also some synergy with already the others' participation, to keep the support of Wendel for the North America challenge we have, and also to address strong M&A, stronger M&A, bigger M&A what we did in the past. So thank you very much for your welcome.
Thank you, Yvan. So it's time for Q&A now. I have some questions from the web. The first question: some of your listed peers already announced softer activity. What about you?
Sorry?
Some of your listed peers announced softer activity. What about you?
There is a lot on the stock market. You could find Accenture, you could find Capgemini, Altran, you could find Alten. It's sort of peers. And if you compare the performance, we compare finally in Scalian better growth, but mainly focused in two areas: management consulting for production and digital. When in Altran, yeah, in Altran or Alten, they are covering a lot of scope of business, and inside this business, there is too much legacy business with low growth at the end. So we are not doing ERP integration, implementation. We are just across the product and the systems to custom specific software. So it's not so easy to have some peers in the list, because all of them are able to do the same, but they are not focused on what we do.
It's why when it's complex, it's often for Scalian and not for them.
Thank you. I think we have questions from the room. Geoffroy?
Thank you. Geoffroy from ODDO. Two questions from me. On one slide, we saw the leverage and the spike at end of September. Could you maybe give us some color on the reason, if it is a deviation or if it was, let's say, in the business plan? And what are the actions you are taking, you know, to mitigate that? Second question is on the United States. So you said that you are rather small at the moment. Where are you in terms of states or geography, and what are your targets there?
Thank you. Two questions. The first on the leverage. As you can see on the figure I put again on the screen, we are around 6x. It's a normal things, because it was a deal we had with ICG, which is our partners in this topic. So, the deleveraging will appears, and we were at 6x end of July, so end of December. But August is not significative to have a good deleveraging. But over time, we will go decreasing on this topic. That's the goal, of course. What we could have, it's an effect on the EBITDA due to the decreasing of the growth, slowdown of the growth, for example, or a hit, like during the COVID.
We don't expect that, but even that, we have some covenant to respect, 2 times the half up to this number. So we live without equity cure during the COVID. It was a war situation, so I could not expect we will need equity cure for the 2024 or the 2025 years. We're able to manage that. Now, the key point, it's the equity needs, if we need to invest for M&A. The deleveraging is just balance with that, so... But at the moment, this number is normal. No deviation. Regarding North America, we are in Montreal and in Washington and in San Diego. I address North America as the two countries. Today, it's $20 million, so it means it's 110 people.
It's very small as a scale of these two countries. We started in the past 5-6 years ago from San Diego to follow Airbus, because they need, they need, of course, suppliers in the U.S. market to serve the production of their, of their plane and also to serve their plant based in the U.S. So, it's one of our specialty, and over time, we deploy also the two other specialties in digital and in management of project, not only in supply chain. So, Canada is more digital, and U.S. is more management consulting at the moment. But at the end, the U.S. platform has vocation to become like the France, at EUR 500 million-EUR 700 million in 5-10 years, for example.
It means with the three divisions, it's why we are looking for opportunities in M&A in the three domain of our activity: consulting, operation performance, and digital systems.
Geoffroy, just to get back to your first question as a clarification. So 4.7x, 4.5x, this is pre-acquisition. We did relever the structure when we made the acquisition, and so you see the jump, which is the ICG debt, which has been recalibrated when we invested.
Exactly. Yes, because the Wendel logo is just... Okay.
Bonjour, merci beaucoup. Nicolas Tabor, Moneta Asset Management. J'avais quelques questions supplémentaires, notamment sur la marge. Donc vous parliez potentiellement de operating leverage sur les G&A. Alors, votre marge est déjà assez élevée comparée au secteur. Vous parliez d'être plutôt concentré. Donc est-ce que ce sera un upside supplémentaire ou est-ce que ça viendra compenser l'effet dilutif de votre croissance à l'international? Comment est-ce qu'il faut penser à l'horizon 5 ans par rapport au EUR 1.5 billion? Ensuite, est-ce que vous pouvez plus développer sur la partie nearshoring, offshoring, au-delà de la partie US, Allemagne, dont vous avez parlé, qui est plutôt onshore? And ensuite, simplement, est-ce que vous pouvez nous confirmer le gap entre votre EBITDA et votre EBITDA, que vous nous avez déjà indiqué dans les slides? Merci beaucoup.
Sorry, the last question, the gap between?
The EBITDA and the EBITDA margin.
I don't think there is a gap.
I think you mean post-IFRS and pre-IFRS 16.
Ah, okay. Okay. It's just the difference of methodology IFRS. Here, it's EUR 70 million. It's fully pro forma in IFRS. It means we account 100% of the revenue and the EBITDA of the acquisition you do during the, the fiscal year. On the chart on the left, it's not pro forma, it's IFRS consolidation. It means you address, if you do M&A in April, you have only three months of revenue and three months of EBITDA inside your account. Okay? It's why it's less.
peu par rapport à la marge-
Debt. Sorry. Okay. The gap between EBITDA and EBIT, there is no CapEx, et cetera, so it's 0.5%, something like that. The first question, sorry, what it was?
So the first was, on the margin, how much operating leverage-
Okay.
and how much dilution from,
Yeah, yeah
... going to new geographies?
Okay. No, for the experience we have, it's the M&A internationally is more accretive than dilutive. Even in Germany, in North America, even in Spain, the margin is better than in France. The French market is more mature. Clients are more experienced, probably. I don't know. But what is sure, it's not only the cost of the employee. For sure, it's not the reason. The main reason is the daily rate at the end, and at the end, the gross margin is different between the countries. But in our case, our business plan is to improve the profitability, EBITDA, by increasing the gross margin.
And if we have the opportunity to decrease the G&A by size effect, because when you are 3 times bigger, you don't need the same organization, and you can have some optimization, but it will be the cherry on the cake. It's not a restructuring plan, it's a development plan. So it means we are working to develop the top line by also improving the gross margin level. And the Best Shore or offshore is also a leverage, because if you have a project of 30 people working for delivery of a solution, you can use, I don't know, five or 10 of them in India or in Morocco, in order to have low-cost contribution with the same level of expertise, even higher expertise.
At the end, you can optimize your staffing and your cost distribution in your project for the same revenue, and you improve the gross margin. But to do that, you need to have bigger deal, and to have bigger deal, you need to deploy strategy of development for big account. It's a core of our strategy today, to deepen more business for big clients than to open the number of clients. As you could see, it's already enough with more than 600.
Thank you. I think we have the last question in the room. Yes, Pierre?
Yes. Maybe a silly question: Do you expect synergies between, say, Bureau Veritas and Scalian at some stage? Your digital know-how may perfectly fit with the requirement of the tech industry over time. Is that speculative or?
No, no, no, you're right. We had some meeting plan for beginning of the year. And I'm personally convinced there is a lot of things to do together in order to inject some analytics and artificial intelligence solution inside the organization, inside their offer, inside their asset. Because they do a lot of similar things, operation, performance, organization for us and what they do for the client. We do also some audit, certification, quality, measurement, et cetera. And we don't address that in time and materials. We do that in more package. So this knowledge coming from the industry, we can leverage also that with digital for sure. And there is business connection, their portfolio, our portfolio for sure, but also probably digital synergy between our two organizations.
So we will work on this plan, but not only with Bureau Veritas, with Stahl, probably also some opportunities in the IK portfolio also. And so a lot of things to do, for sure.
So, I think it was today's last question. Many thanks for your presentation, Yvan. We are closing this Investor Day.
Merci beaucoup.
But before that, I would like to thank my team, all the Wendel, IK, Stahl, and Scalian's team, and top management, who made this Investor Day possible. Thank you.