Hello, and welcome to the Eurasio H1 twenty twenty five Results Call. Please note this conference is being recorded. And for the durations of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the call. I will now hand you over to your host, William Cadouche Chachon, Co CEO and Christophe Bavier, Co CEO, to begin today's conference.
Good morning. Thank you for joining this call. Christophe and I are pleased to welcome you to our twenty twenty five Half Year Results Presentation. Our presentation as customary will be in three parts. First, I will share with you the financial and non financial highlights for H1.
Second, Christophe will focus on fundraising, commercial dynamic and asset rotation. Third and last, I will detail our financial results. We will then be available to take questions. Let me turn to the financial highlights. During the first half of twenty twenty five, we made further progress in the execution of our strategic plan.
Let me share some key facts that summarize the performance in H1. First, as you can see, asset management continues to grow. Fundraising stands at EUR2.1 billion for the first half with some notable closings in PE and DEPS. This confirms the attractiveness of our franchises to our clients. Fee paying AUM from third parties are up 10%.
Management fees from third parties are up 6%. Asset management contribution is up 9%, thanks to good cost control and an increase of both management and performance fees. Second, we continue to have a dynamic rotation of our balance sheet. Year to date, we have realized and announced transactions for more than EUR900 million of assets from the balance sheet or 12% of the value of the portfolio at the beginning of the year. We are just more than halfway to our historical annual average of 20%.
Important to note, these realizations are all made in good conditions around NAV. Third and last, our portfolio remains resilient at EUR103.4 per share. On an organic basis, fair value is down 1%, but this is 0% on a per share basis, thanks to the share buyback. Growth in our portfolio remains robust with underlying EBITDA in buyout up 17%. Our fair value is nevertheless negatively impacted by foreign exchange variations, particularly the euro dollar parity for minus 2%.
As you know, we follow a two pronged strategy in sustainability aiming at top rankings in ESG on the one hand and striving for leadership in impacts with dedicated funds and investments. We continue to be recognized for our best in class sustainability practices with new awards received again in H1 twenty twenty five on our private debt and all Article nine funds for example. We also continued to drive our impact investments with 13 new investments over six impact funds, both in climate solutions and healthcare.
Thank you, William. Good morning, everyone. Let's now dig into details, starting with Pendre, euros 2,100,000,000.0 from our clients in H1, in line with last year, but with a higher a significantly higher share of private equity in the mix. This is particularly encouraging given a challenging environment for fundraising. According to PEI, Private Equity International, private equity fundraising was down 17% in H1 twenty twenty five.
So no doubt, this success highlights the quality of our franchises as well as the relevance of Eurasio positioning as a European, mid market, growth and impact focused investment firm. Basically, let me give you a few details of this. We have had notable successes in private equity with the final close of the EuroZero Capital V program at EUR3 billion. We've also a first close on planetary boundaries at €300,000,000 We just announced a first close for Eurozero growth for at €650,000,000 with a €1,000,000,000 target size. Our talented growth team has been able to gather interest from marquee international investors to create one of the largest growth funds in Europe, already invested in several rising stars within the AI space like Conegy or Fever.
This is another proof that Eurozone is able to build top franchises. Private debt continues to enjoy a strong and steady momentum with EUR900 million raised in H1. Keep in mind that H1 twenty twenty four had been particularly strong, to the successful first closing of our direct lending flagship EPD seven, which has now already raised more much more than EUR 2,000,000,000. So Wealth Solutions continues to deliver. We raised EUR479 million in H1, up 6% year on year, building on a strong position in France and expanding across Europe with notably some successes in the Benelux region.
You will recall from our Capital Markets Day that we outlined our ambition to further expand our client franchise. First, with the internationalization of our LP base and second, through the development of our wealth channel in France and abroad, We've made progress in both directions in H1 twenty twenty five. We raised EUR 1,600,000,000.0 of institutional money in H1, out of which 72% came from international LPs, a share that continues to grow year after year. To support extension of our reach, we made senior appointments in our coverage team in key geographies such as The Nordics, The Middle East and the DACH region. We expanded significantly our Milan office and we opened an office in Tokyo to better cover Japan.
Our Wealth Solutions franchise also continues to grow at a steady pace. In France, we continue to grow with our existing distribution partners and we are adding new significant ones. Our strategy to expand outside of France is paying off. We begin to have flows from international markets, especially again from Benelux. And we prepared the launch of our two new Evergreen funds in this in H2 survey of this year that should help us to continue to grow all over Europe.
For the rest of the year, we will pursue our fundraising on the back, as you can see, of a solid and diversified pipeline, both on the institutional side as well as on the wealth segment. Of course, obviously our funds are at different stages in their fundraising. We continue to raise on EPD seven in direct lending and on ESS five in secondaries. We had first closing in H1 in EGS4 in growth and EPDF in impact buyout that we continue to raise over the coming quarters. Additionally, we will have several new funds on the road in H2, a much anticipated fifth vintage for Elevate, raising Eurozone PME five, an operational related estate fund, ESORE, a second vintage in SME, investment decarbonization financing, and we will start the marketing of a second vintage in our sustainable infrastructure strategy.
On web solution, well, we are happy to announce that our blockbuster ePV is €3,000,000,000 mark, which confirms its leadership status in Europe. We are about to launch a new prime line of Sezorian funds that will be totally designed for European distribution. And finally, we are already launching Eurasieu Entrepreneurs Club three, the successor of our growth son dedicated to wealth. So let me now turn to deployments and realization. After a promising start at the outset of the year, the M and A market has shown signs of weakness in Q2 with rising trade and geopolitical tensions.
Nevertheless, we continue to see appetite for quality assets in the mid market segment in Europe and Eurozo has been able to seize opportunities both in term of deployments and realizations. Eurozo deployments amounted to EUR 2,200,000,000.0 in H1, up 37% from the same period of last year with transaction reflecting an expanding pan European investment approach. Let me give you a few details. Main deals include in Spain, Mapal, a clear leader in hospitality software that we intend to develop through a buy and build strategy. In The UK, Ichthyssen completed a significant buyout by build up story in cybersecurity with the acquisition of Brightwell.
In Germany, Omax has been acquired. It's a leading digital consulting firm. And in Italy, we acquired Aquadence, a large spa operator. Our debt franchise also continues to internationalize 70% of EPD seven deployment in H1 twenty twenty five was in Europe outside of France. And Eurozo is well placed to continue to grasp opportunities with €7,400,000,000 cyber power out of which EUR 5,500,000,000.0 of third party CyberPower.
Realization. Realization stood at EUR 1,300,000,000.0. Private equity exits are stable compared to H1 twenty twenty four. This is, for example, the sale of Albania and of CPK in Bayer. You also have several exits in venture and secondary.
This concerns our ability to generate distributions at a satisfactory pace, I now hand over to William who will get through our results.
Thank you, Christophe. I will now take you through the financial results for H. Gland asset. Let me start with the asset management activity. Overall AUM growth and particularly, key paying AUM growth illustrates the dynamism of our asset management business.
Total assets under management were up 4% in H1, reaching €36,800,000,000 with third party AUM up 10%. Fee paying AUM were up 8% at nearly €28,000,000,000 with third party fee paying AUM growing also 10%. Management fees stood at EUR211 million for H1, up 3% from the previous year on a comparable basis. Third party management fees were up 6%. The difference between management fee growth and fee PE AUM growth in H1 is largely explained by the fact that some fundraising pertaining to higher yielding PE, particularly gross equity, occurred towards the end of the semester.
This should normalize through the end of the year. Of note, management fees from Wealth Solutions are up 13% in H1, thanks to strong fundraising over the last twelve months. Balance sheet management fees were down 2% as we voluntarily limit our new commitments in our funds. The contribution of the asset management activity excluding financial cost and other income, is up 9% from H1 on a like for like basis. Whilst investing in our future growth, we continue to be very disciplined on cost with OpEx up 3% only year on year.
This translates into a stable operating margins at 34.8%. Let me remind you that we have increased our margin by nearly 500 basis points over 2023 and 2024 and that we have a mid term objective of 35 to 40 free margin. Realized performance fees amounted to $6,000,000 for the period of which four are related to third parties. Despite rather uncertain market, we have been able to accelerate the rotation of our balance sheet for the second year in a row. As you know, this is an essential part of our strategy to build an asset lighter business model and execute on our promise to return more capital to our shareholders.
Overall, closed and soon to be closed deals relating to the balance sheet amounted to more than €900,000,000 in H1 twenty twenty five or around 12% of our portfolio value at December 2024. More in details, we have already announced, as Christophe mentioned, the realization of Alpinjane and the secondary transaction on some Bayern assets. In July, we also announced the sale of CPK, which will return around EUR 200,000,000 to the balance sheet. Halfway through the year, we already have announced and realized 12% of the balance sheet portfolio as I just mentioned. Given our good and diversified pipeline of exits for H2 twenty twenty five, we expect to be trending back to our historical average of around 20% for the full year as we announced at the beginning of the year.
Importantly, we've been able to consistently sell our assets at or above NAV. This continues to be the case as a sale of CPK should be done again at around NAV. Let me stress that this is the best proof point to assess the quality of our portfolio approach and process. Let's turn to the balance sheet portfolio value starting with the underlying performance of portfolio companies. As you know, this is a very diversified portfolio that we have on the balance sheet with more than 70 companies and none representing more than 7% of the total. Overall, H1 twenty twenty five was another illustration of the quality of the assets in the portfolio. In buyouts, which represent 60% of the total value of the portfolio, revenues and EBITDA were up respectively 617%, one-seven. Companies in our growth portfolio, which represent 23% of the total portfolio value posted an aggregated revenue growth of 14% with marquee assets such as Doctor. Lip growing more than the average.
The EGS4 portfolio, which is the most recently invested portfolio, continues to perform strongly at a pace of nearly 40%. Our real assets portfolio, which accounts for 12% of U. Zero portfolio value, has shown resilience. Hospitality business posted a 3% revenue growth and infrastructure continues to perform strongly. As you can see, the net value of our portfolio was EUR7.4 billion at the end of H1, down €500,000,000 or 6% minus 6%.
On a per share basis, the decrease was minus 4% only given the positive impact of the share buyback program, which accounted for an accretion of 2%. The scope explains the figures by 3% or €240,000,000 as we sold more than we invested in H1. This is consistent with our strategy to reduce balance sheet weight over time. Change in fair value was a negative $273,000,000 of which $170,000,000 or 2% is explained by foreign exchange as a dollar depreciated against the euro. As you know, under IFRS 10, the main driver of the P and L of the investment activity is a change in fair value, so this translates into a non cash P and L event.
On a per share basis, let me stress that the change in fair value at constant exchange rate is close to 0%. Asset value creation was positively impacted by the operating performance of the underlying portfolio. This bodes well for future value creation across the scope. On the other hand, Forex moves as the negative impact and we adjusted multiples of discounts applied to some specific lines in the portfolio to reflect market movements for some comparables and the overall uncertainties in the market. Given the current slow environment and uncertainties in the market and despite the strength of the underlying figures, we expect value creation for the year to range from flat to a slight decrease.
Let me stress again that over the duration of the plan, I. Through 2027, we continue to expect a return to significant value creation and that the ten years consistent with the ten years average being 10%. Turning to the P and L of the investment activity. Overall, of the investment activity was a negative €364,000,000 in H1 twenty twenty five with the following main drivers. As I said, change in fair value of minus €258,000,000 which I said as a negative is contributed by the negative ForEx impact of EUR176 million.
Management fees paid to the asset management amounted to EUR58 million. This is an interest cash flow. They are as you know considered as a cost to the investment companies. Selling costs were flat year on year reflecting again cost discipline at all levels. In a nutshell, at Group level, net present group share for H1 twenty twenty five stood at minus EUR $364,000,000 for the year compared to minus EUR 156,000,000 negative in H1 twenty twenty four.
This is largely a non cash figure. This reflects a strong contribution from the asset management activity on the one hand and a non cash negative contribution of the investment activity. Thank you for your attention. We can now open the Q and A question.
Thank We'll take our first questions from Nicolas Zasselia from BNP Paribas. Your line is open. Please go ahead.
Hi, good morning. Hope you're doing well. I just had two questions, which are related on the value creation dynamics. So clearly, if we exclude the FX impacts, we still have minus 1% negative value creation. Your portfolio companies still seem to be growing earnings, although maybe a little bit slower.
But still, the outcome is minus 1%. So I was wondering if you had been taking down valuation multiple server across the portfolio and if you could give more color on the process here. And the second question is really related, but you seem to be still pretty pessimistic for the rest of the year in terms of value creation despite the improvement in markets that we are seeing. But also, we have noticed deal velocities picking up over the last couple of months. So I was wondering what makes you be so cautious on that front. Thank you.
Thank you, Nicolas. You're right to point out that the underlying metrics are pretty good across the board. Let me remind everyone that in the remarking of the books, you have to take stock of what happened also in the past. There was a remarking of nearly 40% in 2021, 14% in 2022 and then flat 2023, slightly negative 2024 mostly pertaining to the growth assets. And so when we look at valuations at a given point in time, we look at the calibrations relative to the market multiples.
And of course, we factor in the positive on the underlying metrics. But we take stock of also the remarking that has already happened, so that we are in a situation where we are comfortable with the calibration. At the end of the day, these assets are meant to be sold, so it has to be consistent with what we think we would trade the asset for, which is exactly what happens. Despite the strong discounts factored in by the market operators, we managed to sell our assets at or above NAV. So if you take stock of this element of time, what we have said is there will be kind of a plateau before we resume value creation, which will come in the years to come as we liquidate the portfolio and the previous timing elements that I mentioned are absorbed.
But this is where we are. Now we also and this is linked to your second question. We are not pessimistic. We are rather optimistic on the asset management. As you can see, we operate in a market where fundraising is down across the board.
We continue to have good momentum. We continue to make to win market share, to win new clients. Rotation, you alluded to it talking about deal velocity, we do better than market. We said in 2024 we would have an increase in rotation. This came with some degree of skepticism at the outset.
This is what we delivered. We said at the outset of 2025 we will have a further increase. This is what we delivered and we are confident we will deliver that and that will be and that's the reason why we reiterate our commitment to execute the full 400,000,000 share buyback. So we are optimistic people, but we also are cautious people. And where we are, given what happens in the world, I know that the market are somewhat relaxed or seem to be quite relaxed on some things like the Europe, U.
S. Negotiations on tariffs and the overall geopolitical environment. Nothing seems to be to harm this optimism. But when we look at what can happen permanently in the economy, we are rather cautious. So we have decided, yes, to maintain some calibration that we had historically on the multiple sites.
So that had translated in some increase of the discount or decrease of the multiple relative to the market because we consider we operate in a cautious environment. Let me stress as well that foreign exchange, we operate now in a world where we are back where we were decades ago, I. E. Volatility between OECD currencies. I don't expect I don't have a view as to where the dollar will be at the end of the year.
So, I think it's a cautious approach to consider that where we are with the dollar will stay for the rest of the year at least. So this is what we have. So it's not pessimistic. It's cautious. We are on the plateau.
It's a transition year. We should resume value creation because the underlying performance is good. This whole approach will help us sell assets at a decent price close to NAV.
Thank you very much. That makes sense.
Thank you. We will take our next questions from Jorn van Aken from Degroof Petercam. Your line is open. Please go ahead.
Yes, good morning. Just one question from my side on the real assets segment, which was down 6%. Could you explain a bit what the drivers are here? Are there like any particular assets that were devalued? Because if you look at peers in real estate like Covigio or Justina, their real estate is like down 2% to up 3%.
So the minus six seems a bit on the high side. Thank you.
Thank you. Remember that what we have in real estate, it's two strategies. So investment as a balance sheet in real estate, which is what you refer to rightly. And then we have infra, which is the balance sheet investments in our energy transition infrastructure fund. Starting with infrastructure, we continue to have very good performance.
You see the underlying performance. And you can see and in fact, we had value creations through double digit value creation in 2024. And in 2025, first half, we had also positive value creation for the infrastructure portfolio. On the real estate, this is a program of high quality. When you look at returns, both IRR and DPI, they continue to be in the top quartile as a program.
Those six are not completely linear. There are few assets in the portfolio, limited number. This is the beauty of this portfolio. I mean, it's not too exposed to professional real estate that we had to adjust. This is one asset that we adjusted in La Defense.
The rest of the portfolio is marginally adjusted because there were some weaknesses in comparable multiples. It's not the comparable multiples, but you can see the figures operational are pretty good. So I think it's a one off event. Unless the ten year yields obviously increase massively in the next quarters, which will have implication on the cap rates, I do consider that we have to make these adjustments for one asset, but otherwise it's a very sound portfolio, very geared towards pretty exciting sectors such as hospitality. So, we are confident about the capacity to deliver top notch returns, which helps on the fundraising.
I mean, it's a good dynamic and good traction on the fundraising for this strategy.
Okay. Thank you. Thank you. We are now taking our next questions from Oliver Carrentas from Goldman Sachs. Your line is open. Please go ahead.
Thanks. Good morning. Oliver Carrentas from Goldman Sachs. Just two questions for me. The first one, the $400,000,000 buyback target for 2025 that you've reiterated today, is that contingent on any additional exits in the second half?
If you could kind of parameterize the any moving parts that would lead to the decision making process behind that not being €400,000,000 that would be very, very helpful. And then the second question, just on and to come back to this, just on the comment around value creation for full year 2025. Is this just really a comment based on what has happened, including the FX impact to the first half? Or are there any known negative impacts that would affect the second half value creation that are influencing this statement in the release today? Thank you.
Thank you very much, Oliver. Question number one, we are committed to deliver the return to shareholders that we had said. And so it is not dependent upon having the full visibility on processes. I mean, by the way, there are ongoing processes. It is fair to say that should we enter into a systemic crisis globally in 2,008 or 2020 type, probably we will revisit, but everyone would be revisiting their share buyback program.
So clearly, we are committed to the €400,000,000 second half. And we have a pipeline of exits that makes us comfortable that we will be able to do that in some manner. Value creation, as we know further markdown to be implemented, we would have implemented those markdowns. Simply put, this is our duty when we perform valuations. This is obviously what our statutory accountants would force us to do as a management.
So it's what you said. Forex had negative impact, so we consider okay, for the full year we'll keep that negative impact. The calibration I talked about earlier on, we see. If the multiples, there's a big rally in the market, then maybe we'll be more positive mindset. But we don't necessarily assume that.
You live in a world where you have to do to run your company with scenarios and a stress test. And sometimes, given the uncertainties, you're closer to the stress test approach than to the central scenario. But no, I mean clearly at any given point in time, we perform valuations on the basis of what we know. So, we don't have unknown events. We don't have known events that lead us to that treatment.
Thank you. We are now taking our next questions from Alessandro Girard from CIC. Your line is open. Please go ahead. Yes.
Good morning, Christophe. Good morning, William. I have three questions. The first one on your interest on the value creation. Can you confirm what was the or what is the investment return realized on CPK?
And if I understand where there is no positive effect of the disposal of that asset on your portfolio value? So that's my first question. Second question for us to be able to better understand the sensitivity of your portfolio to the euro dollar parity, can you tell us what is, generally speaking, the impact the percentage depreciation impact on your portfolio value of, let's say, a 1% depreciation on the dollar versus the euro? And my third question is regarding Brands. I had in mind that you wanted to get rid progressively of that segment, which accounts for close to 9% of your portfolio. Can you tell us exactly where you stand on that initiative? Thank you.
Thank you. We in terms of value creation and CPK, CPK is not closed yet and there would be that's the reason why we don't we didn't put the multiple the exact cash on cash multiple is that there would be some adjustment as you would expect at closing on the final balance sheet. But roughly speaking, this is a cash on cash that will be below two times, probably closer to 1.5 times for CPK, which is an industrial asset. Let me remind you, it's not the typical type of investments we do now, which is B2B high growth assets, a good quality asset, but it is an industrial asset. The value creation, I mean, we don't expect that we would necessarily sell every asset at a premium to NAV.
I think it's good that we are able to prove that the NAV is serious number. And so this is what we do with CPK, it's around NAV, so it's let's call it NAV. Eurodollar, so we have fundamentally exposure to the dollar in mid class buyouts and with the brand's U. S. Portfolio.
That's about 50% of the NAV. So if you take the 50%, because I skip from that the Elevate small buyout because they are only Europe and so very limited dollar exposure. So if you take 50% of your 7.4%, then your exposure there is about 20%. So it's easy to calculate what is the variation. Now, the variation we have started to implement some hedging on some positions, but not on all lines and that's the reason why we still have a positive or negative change pertaining to the data.
Any third question? On brands, you're right. What we said is we don't consider that this strategy is ripe for creating a successful asset management franchise. It doesn't mean that we don't have some good businesses in the portfolio. It's a mixed portfolio, particularly in The U.
S. Fair to say. Otherwise, we will not have these adjustments above the dollar impact. The European portfolio is stronger, it's fair to say. So we are in various discussions that may lead to potential transactions and monetizations of part or all of the portfolio to your point.
But I will not comment more. I mean that's obviously not something we are willing to do. But the sense the direction of travel is that we will try to monetize rare disease assets as we can, if we can reach good conditions.
Okay. Thank you, William.
Thank you. It appears there are no further questions from our audio participants. We'll now proceed with the questions submitted via the web. Please go ahead.
Hi. Yes, we do have one question from Isabel Etrick at Autonomous. So she says, it appears that the product wealth fundraising slowed down in Q2 twenty twenty five. What is the reason behind that? Do you see increasing competition as U. Peers enter the space?
Thank you. Well, it's fair to say that some of our U. S. Competitors are very mature organization and fierce competition. But my first reaction to your question, which we say that it is a good sign that the analysis that we can make that the European saving market with private individuals is under penetrated in terms of private equity, private debt, alternative exposure and the fact that savings are relatively rich in Europe.
So there is a very deep market. So my first answer to your question will be to say we see it as the good news because the fact that mature and experienced competition are penetrating the market confirms our analysis that there is a significant potential that it is a long term trend. Nevertheless, it's what you are pointing is to the 2025 is less dynamic. But again, this is the first half of the year that still represents a 6% increase. And it's difficult to comment on quarterly results.
But as you can see, we are currently working on how to diversify our product offering. We are launching new Evergreen vehicles. You perceive that Evergreen vehicles are a good way for democratization of private equity and private debt product offering. So we are currently working on diversification of product offering, which is still today largely dependent on our blockbuster in PV3. And again, it's good news to have passed the €3,000,000,000 mark, but our strategy to fight competition is to increase and to improve and to better serve the entire European market with a new product offering that will have results in the second half of the year.
Thank you. I think we have one last question from the phone. I know, Adib?
Yes. We will take our final questions from Anupallias from CIC Market Solutions. Please go ahead,
Yes. Good morning. I have two remaining questions regarding the P and L of the Asset Management business. The first one is what can we expect in term of performance fees for the rest of the year, considering that probably we will have higher number of realization in H2. So that's the first one.
And the second one is we see in H1 a significant decline in the contribution of a minority interest. So I would like to know if it is explained by IMG and can you comment about the evolution of IMG?
Performance fees, yes, we should expect you should expect that there will be some more in H2 given exactly what you said, a new rotation. As it relates to the minority interest, I mean this is largely due to IMG, I don't have in mind that this is so significant.
The ForEx is only pertaining to IMG. So you have the direct impact on the P and L of IMG. ForEx we put a line below you have both the interest and also the Forex is only relating to IMG.
Okay. And generally speaking, what is the situation at IMG?
It's pretty good. They had 6% management fee increase, 8% adjusted for foreign exchange. But it is fair to say that given the fact that the underlying AUM are rather U. S, they were not particularly in Q2 and then it reversed helped by the market effect that were as strong as in the past. So there is a bit of slowing down.
We see how it's materialized for the rest of the year, but so far the growth at IMG, both management fees and FRE is positive. This is a business that yields roughly 41% EBITDA margin and this is improved from last year for the same period it was 39%.
Okay, thank you very much.
Think Yes. We are done with the Well, thank you very much for attending this call. And if you have any further questions feel free to give us a call or send us e mails. Have a nice day.
Thank you very much. Thank you. Bye.
This concludes today's call. Thank you for your participation. You may now disconnect.