Good morning, and welcome to Eurazeo's 2022 financial results. I am today with William Kadouch-Chassaing and Christophe Bavière, our co-CEOs. William will first give you the highlight for the year. Christophe will then detail our fundraising and asset rotation activity. William will be back to present our financial results, and I will touch on the coming changes in our financial reporting. Of course, we will end up with a Q&A session. I now hand over to William for the highlights.
Thanks, Pierre. Thanks you all for joining this call. Christophe and I are pleased to present to you our results for the year and answer your questions. We continued in 2022 to move forward in the execution of our strategy. Allow me to highlight four key facts. First, we continue to grow our Asset Management business with double-digit growth in management fees and fee-related earnings.
Second, we executed well on our asset rotation program in spite of a more challenging environment, and continue to invest selectively. Christophe will come back to this. Third, we posted another year of value creation across our portfolio with an 8% increase for the year. Our choice of sectors riding future trends has paid off with strong performers and inflation-proof companies.
We continue to improve shareholder returns by proposing to the AGM a dividend at EUR 2.2 per share, an increase of 26% year-over-year, and by launching a new share buyback program of EUR 100 million. To sum up our key figures for the year, our asset under management are up 10% at more than EUR 34 billion.
Net income reached roughly EUR 595 million. Net asset value per share is up 8% at EUR 127. In 2022, we also continued to assert our leadership in ESG, which we believe is a key differentiating factor. Again, a few key facts. 90% of our active funds are now classified as Article 8 or Article 9 according to the Sustainable Finance Disclosure Regulation. This compares with 83% a year ago.
We renewed or improved all our ESG ratings, which are some of the best in the industry. As a case in point, we have the best possible rating in all the relevant categories of the UNPRI, and we improved our Carbon Disclosure Project climate change rating to A- versus B in 2021. We validated our SBTi decarbonation trajectory in early 2022. I now leave the floor to Christophe to comment on fundraising and asset allocation.
Thank you. Thank you, William. Let's start with fundraising. We raised EUR 3.2 billion from our clients in 2022, above guidance of EUR 3 billion for the year. We had a limited range of funds on the road in 2022, but those for which we were fundraising did well. First, in buyout. Our small mid-buyout fund closed at more than EUR 1 billion, quite a success. In addition, still in buyout, ECAF. ECAF is a fund dedicated to help our portfolio companies to expand revenues and profit in China. ECAF raised an additional EUR 200 million and is continuing to raise now. Second, we continued to enjoy a solid momentum in our early-stage funds in biotech, digital, and smart city. Third, we raised around EUR 1 billion in private debt, proving again its attractive risk-reward profile for our investors.
Finally, we launched a first-time fund, a promising sustainable infrastructure fund, which had a first closing at more than EUR 200 million and which is continuing to fundraise. As part of our fundraising efforts, the wealth management segment continued to be very strong, serving as a key differentiating factor for Eurazeo. In 2022, we raised more than EUR 800 million from private clients. This is a 50% increase year-on-year. One of our fund is a combination of private debt and secondary. This fund exceeded EUR 1 billion in asset under management.
We also experienced very good success in the growth segment with fund, Eurazeo Entrepreneurs Club, which has raised more than EUR 400 million. Private client solutions now represent 14% of the entire third-party asset under management of Eurazeo, and we see this as a major source of new growth in the years to come. Market penetration is still today generally low.
Eurazeo has strong competitive advantages with more than 20 years of experience in this field and with an extended network of distribution partners, which include banks, insurers, life insurance companies, and IFAs. To support our growth, we continue to invest in new resources, and we are launching new innovative products. We are targeting more and more international distributors, and we are digitalizing our client service to support additional volume.
As an example, Eurazeo just signed an agreement with Moonfare to distribute Eurazeo's fund to a broader international audience. Let me turn to our part pipeline of fundraising for 2023. We have a solid and diversified collection of new funds coming up, both on the institutional side as well as on the wealth segment. Let's talk first about institutional LPs.
Eurazeo is on the road with four flagships, flagship funds in growth equity, secondary, mid, large buyout, and direct lending. In addition, we also have smaller thematic funds in our range in early stage, in asset base, and in sustainable infrastructure, notably. This comprehensive range of funds will help us to continue to internationalize Eurazeo's LP base. Second, on the wealth segment, I mentioned earlier that Eurazeo has a large range of dedicated funds.
As an example, I mentioned our evergreen fund, a mix of private debt and secondary transaction. It is called EPVE 3. This is continuing to collect strongly in 2023. We are also launching several new funds in growth, in buyout, and secondaries. Let's talk about asset rotation. In a more uncertain macro environment in 2022, Eurazeo had a good year in realization which average a total amount of EUR 2.9 billion.
This is the best testament of the quality of Eurazeo's asset, illustrating that with the right positioning in the right sectors, we can deliver regular exit. In equity, the average growth, cash on cash multiple on the realized asset has been 2.9x, and this means an IRR of 24%. In private debt, Eurazeo is positioned on the very attractive mid-market, mid-cap unit range market.
Eurazeo also experienced a good year with realization of EUR 700 million and an average IRR of 10% on realization of private debt investment. Eurazeo continued to deploy capital at a healthy pace, investing EUR 4.9 billion in all, and this has been achieved while remaining very selective in the investment. In private equity and real assets, Eurazeo's strategy is to invest in category leaders and we continue to favor sectors with structural tailwinds like tech-enabled business services, healthcare, financial services, and energy transition.
Demand for direct lending remains very high in the segment covered by Eurazeo as we are gaining market share over banks particularly. Eurazeo has deployed EUR 1.9 billion in 2022 and was able to pass or to maintain additional spreads on top of higher floating rates. This has been achieved while containing the cost of risk. In fact, Eurazeo default rate remains close to zero. I will now hand over to William who will present our financial results.
Thank you, Christophe. I will now take you through the financial results for the year. Let me start with the Asset Management. Total asset under management were up 10% in 2022, reaching EUR 34.1 billion, with third-party AUM alone up 12%. The main drivers of this growth were EUR 1.5 billion of net new money and EUR 1.9 billion of value creation with our funds. Fee-Paying AUM were up strongly at, by 29% at 24, and now stand at EUR 24.3 billion. The growth in AUM obviously translating the growth in recurring revenues. Recurring revenues from the Asset Management posted another year of double-digit growth. Management fees stood at EUR 380 million in 2022, up 20% from the previous year on a comparable basis.
This reflects the growth of our AUM base, as I said, combined with a high management fee rate at around 1.4%. Fee-Related Earnings for the year 2022 amounted to EUR 120 million. They are up 26% from last year when adjusted for perimeter and foreign exchange variations. Our FRE margin improved by 140 basis points to reach 31.6%. We indeed further improve our operating leverage even as we continue to invest in our teams and operations. Looking ahead to 2023, we expect to achieve strong growth again in FRE thanks to continued revenue growth combined with good discipline on cost. On medium term, our medium-term target for FRE remains unchanged, with a margin in a targeted range of 35%-40%.
Overall, the contribution of the Asset Management activity amounted to EUR 214 million in 2022. This is the result of two main factors. On the one hand, as I mentioned, double-digit growth in recurring management fees and FREs with, which are up respectively 20% and 26% on a like-for-like basis. On the other hand, a decrease in performance fees explained by the normalization of the volumes of our exit in 2022 after an exceptionally busy 2021. Performance fees from third parties are due to increase in the next years. Remember that our fundraising has accelerated relatively recently, our performance fees will become more and more significant when our funds come to maturity.
In the medium term, we expect performance fees from third-party to represent a share of our revenue more in line with our peers. Let's now move to the contribution of the investment activity, i.e., the balance sheet. As Christophe said earlier, we have executed our asset disposal well in 2022, in spite of a more challenging environment.
This is true for all the firms. This is obviously very true as well for the balance sheet. First, we realize amount, the realized amount was on track. We announced five exits in private equity, four which were realized in 2022, representing around EUR 1.3 billion of proceeds, or circa around 18% of our net asset value at the beginning of that year.
This is in line with what we announced last year, as we return to our historical average of 15% to 20% of the net asset value after an exceptional year in 2021 again. Second, those exits were realized on very good terms. For the balance sheet, the average cash on cash is 3.5x, and the IRR amount to 33% with an aggregate value of realization well above the value marked in our books.
Overall, exits generated approximately EUR 900 million of capital gain for the year for the investment activity. As a result, turning to the P&L, the contribution of our investment activity was EUR 650 million in 2022, down from 2021, which again was an exceptional year in terms of realized amounts.
Turning now to the portfolio itself, which is the third component of our P&L. In 2022, our portfolio companies delivered another year of strong growth. First, consolidated portfolio economic revenue at content constant Eurozone scope and exchange rate increased 36% compared to last year.
The good performance of our portfolio companies is obviously the result of our strategy to focus on structurally growing sectors, which, as Christophe mentioned, are tech-enabled services, healthcare, financial services, consumer growth or energy transition. These sectors are benefiting from structural trends such as digitization, aging demographics, and the green economy, and as such have proved more resilient than the rest of the economy. Portfolio EBITDA is up over 32% when adjusted for the base effect related to the insurance indemnification received by WorldStrides in 2021.
Companies operating in travel and leisure continue to show a healthy rebound, with companies exposed to energy price and global supply chain experiencing some pressure on margins. We have few of these companies in our portfolio, as you know. Second, our growth companies continue to grow at a healthy rate, also of 36% on average for the year. On top of this, our portfolio companies in the growth segment are very well capitalized with three-four years of cash runway ahead of them. In a nutshell, group net results for 2022 stood at EUR 595 million for the year, which is equivalent to EUR 7.6 per share. After the P&L, let's now focus on net asset value.
Eurazeo net asset value stands at EUR 127.1 per share, which is up 8% and is up 8% in 2022 relative to 2021. 6.4% comes from the intrinsic appreciation of the portfolio and 1.6% result from the accretive impact of the executed share buyback. Let's start with the value of the investment portfolio, which stand at EUR 100.5 per share at the end of 2022, an increase of 7.9%. The four main factors driving the increase as follows: Realization above Net Asset Value account for EUR 2.4 per share. Foreign exchange appreciation account for EUR 1.1 per share.
The first revaluation of some assets which have been held at cost for one year in line with the IPEV valuation guidelines, has an impact of EUR 3.1 per share. Three EUR per share are due to the strong performance of our portfolio, as I mentioned earlier, with higher revenues and EBITDA used for our valuation.
As you can see, on the contrary, the market impact is only slightly positive. It accounts for EUR 0.80, with constructed effect. For our buyout portfolio we use average multiples. Multiples have been kept unchanged except for some companies, particularly in travel and leisure. The vast majority of our portfolio is valued using multiples that remain below spot multiples. For real estate, we use expert valuations, and these valuations reflect the current view on capitalization rates.
For growth companies, we have taken an average 23% discount on the latest rounds of financing. This negative effect is partially offset by the remarketing of Contentsquare, as we discussed in our half-year results, and the reversal of the buffer already taken in 2021, which, let me remember you, amounted to EUR 267 million.
Let me finally stress the fact that we have a very diversified portfolio with more than 60 line that we own on the balance sheet, and no company representing more than 6% of the gross portfolio value. As for the Asset Management, net asset value is up 8% to reach EUR 26.6. This results from two elements, a strong increase of the underlying performance as we discussed earlier, and a downward adjustments of multiples used to value the Asset Management.
The implicit multiple that we use to value our Asset Management is roughly 16 times last 12 months pre-tax FRE, which, as you see, is conservative given our growth profile and margin profile. On PRE, our main approach is a Discounted Cash Flow with a 12% discount rate, and we back it with a cautious approach on multiples with using only a 6x normalized PRE level. Eurazeo has kept a significant financial flexibility and has strong firepower. At corporate level, we ended up the year with a net cash position, and we have firepower of around EUR 7.4 billion for further deployment, with nearly EUR 5 billion of dry powder coming from our clients. Let's turn to shareholder return. As you know, our shareholder return policy is based on a mix of dividends and share buybacks.
We will propose at the next AGM an ordinary dividend of EUR 2.2 per share, which is a 26% increase year-on-year. Investors who have been on the register for more than two years will, for the first time, be eligible to the 10% loyalty bonus. In the coming years, our intention is to continue to gradually increase our ordinary dividend. As for the share buybacks, a program of EUR 100 million for cancellation we announced last May has been completed. It had a net positive impact of EUR 0.90 per share on our net asset value. We announced today another EUR 100 million envelope of share buyback for cancellation. To conclude, let me highlight the levers of value creation we will be activating together with Christophe and the team to accelerate the development of Eurazeo into one of the leading asset managers in private markets.
First, grow our third-party AUM. Our objective is to increase our market share with institutional clients, both in Europe and abroad. In addition, as Christophe mentioned, we have the potential to be leader in Europe in the wealth segment. We are just at the beginning of the wealth opportunity. Leveraging on our success in France, we are preparing ourselves to expand internationally and through new distributors, such as platforms, as Christophe mentioned earlier.
Second, focus and scale. We benefit from being diversified. That said, we think we have the opportunity to scale our flagship funds through better focus on the commercial side, greater differentiation, and a continued top-tier performance. As we grow volumes, we will in parallel invest in digitizing our platforms to secure and scale operations. Third lever, improve our operating leverage. We confirm our goal to reach a 35%-40% FRE margin in the medium term.
On top of scaling our funds and keeping a disciplined approach on cost, we have started to roll out an RI approach on all new initiatives and are reviewing the target operating model of back and middle office operations as well as key corporate functions. First and last, optimize capital allocation. Our goal is to rebalance the value of the company between the balance sheet and the Asset Management in the medium term.
We aim at reducing progressively the weight of the balance sheet in our fund to 15%-20% maximum, with keeping significant support to seed our strategies. This will enable us to redeploy capital creation towards shareholder remuneration and seize potential opportunities to participate in the industry consolidation. Lastly, we will review our minority stake in general partners. Thanks for your attention.
That was it for the presentation of full year 2022. We have now one last subject to touch upon before the Q&A session. As you know, our group has been undergoing deep transformation in the past few years. The result of 2022 speak for themselves. Much that we have determined that Eurazeo now responds to the IFRS 10 criteria designating an investment company. This has technical implications on the way we consolidate our companies and on our financial reporting, which Pierre will describe briefly. Let me say that this is a natural evolution of the group, and we think this will make our accounting more straightforward and legible, and legible for you, and in the end, will help you better value the company.
I will now hand over to Pierre Bernardin, Eurazeo Head of Investor Relations, to present you the implication of that change. We will then be available for your question. Pierre, give you the floor.
Thank you. Thank you, William. I will now briefly comment on some of the reporting changes that we are going to introduce in 2023. We will be holding a specific workshop and a Q&A session this afternoon to get into all the details, you will have the call on the website of Eurazeo. With the deep and progressive transformation of the group's business model and the way the company operates, we have determined that Eurazeo fulfills all the criteria to be defined as an investment company under the IFRS 10 standard. This new qualification implies that we will apply the IFRS 10 consolidation exemption from the first of January 2023.
In practical terms, this means that first, we are no longer going to consolidate our portfolio companies. Second, from now on, the value of the portfolio companies will be marked to market in our balance sheet. The change in fair value of this portfolio will be passed through the P&L. Of course, our main activity, Asset Management, will continue to be consolidated.
As a result of the first revaluation of our portfolio, we will have a one-off positive effect in 2023, which we currently estimate to be around EUR 1.8 billion. We will apply this new reporting from Q1, which we will publish mid-May, at which time we will give you the exact figure for the one-off I just mentioned. Here is now a summary of the main changes on our analytical P&L. Let me take you through this line by line.
The contribution of the Asset Management activity will remain virtually unchanged. Balance sheet performance fees will be aligned with what we do on third-party fees. On the contribution of the investment activity from now on, the portfolio is going to be fully marked to market. Its change in fair value is going to be passed through the P&L. As we will not be consolidating portfolio companies anymore, the third line, contribution of companies, will of course disappear.
However, we will continue to give you supplementary information on revenues and profitability of our portfolio. On the other lines, portfolio companies will also no longer be taken into account. Amortization of goodwill, income tax, non-recurring items, and minorities will no longer take into account the portfolio companies. Overall, our analytical P&L should be simpler and easier to read going forward.
There is going to be a change in the way we report the value of our assets as well. As a reminder, the net asset value is an ad hoc disclosure, and at the end of 2022, it included, on the one hand, the estimated value of our portfolio by strategy and the cash and other assets and liabilities for around EUR 7.8 billion. On the other hand, the value of our Asset Management activity is around EUR 2.1 billion. We will no longer be disclosing a separate net asset value. Instead, if we place ourselves on the first of January 2023, the value of our portfolio plus cash and other assets and liabilities will be directly recording in our balance sheet for the same amount of EUR 7.8 billion.
Subsequently, it will be marked to market every semester with the same methodology as before. As for the Asset Management activity, it will no longer be revalued, and instead, its asset will be kept at book value in our balance sheet. The Asset Management activity, it will be up to the market to attribute a value to this activity based on the prospects of FREs and PREs. For you to value Eurazeo, you will thus have to first attribute an estimated value to our Asset Management activity and then add the estimated value of the portfolio. On top of these accounting changes, we will make associated adjustments in our financial communication. First, we will now give you more regular details on the performance of our main funds.
Second, we will no longer have the value of the Asset Management activity, of course, in our AUM as it will no longer be in our net asset value, which will disappear. On the other hand, as is market practice, we will add Eurazeo's commitment in its own funds to AUM. These commitments currently sit at around EUR 2.5 billion. Finally, we will give you regular updates on our accrued performance fees. That's it for me. Thank you for your attention. We can now open the Q&A session with William and Christophe. As a quick reminder, before the Q&A, we will have a specific Q&A session this afternoon on the reporting and on IFRS 10.
Thank you, Pierre.
Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. We will take the first question from line Joren Van Aken from Degroof Petercam. The line is open now. Please go ahead.
Yes. Good morning, everyone. I have three questions. The first one is a bit of a clarification question on the new accounting for the NAV. If I understood correctly, you will continue to report the value of the investment portfolio and just not the value of the Asset Management business anymore. Is that correct? The other two ones are more open questions related to the discount. Why do you believe that the discount has been so sticky over the last couple of months? What do you believe is needed to reverse this trend? Thank you.
Thanks for your question. Given the nature, I will take them. Yes, you're right, we will no longer report an NAV, but you're also right that we will continue to report on the value of the portfolio. Intrinsically, the value of the portfolio will be done with the same methodology. And the amount is very similar to the one we have mentioned should we be in 2022. One thing which is important that Pierre mentioned, and we'll detail this afternoon in the workshop, is that this value of the portfolio will be now becoming an accounting number because it will be, you will see that on the asset side of our balance sheet, and as such will be also audited.
You still have this value, pretty much the same number, but audited. With regards to the discount, this is already obviously a key topic for the management of this company. let me say that, you know, as you know, a portion of the discount is not under our control. There is an element of the link to the macro, and the risk appetite in the market. Clearly, so long as there is uncertainty on the central bank monetary policy, we may have a discount. This is not specific to Eurazeo, which doesn't mean it is... We are satisfied with that.
What we can do is work on what is more specific to Eurazeo, and make sure that people understand that the fundamental value of the portfolio on the one hand, and the fundamental value creation we can deliver on the Asset Management on the other hand, is well understood by the market. Clearly, I mentioned a number of levers, but they are the levers we want to work on. We are convinced that if we rebalance the business model with a better pro-proportion allocated to the Asset Management, that will help. That will come from organic development of the Asset Management and capital rotation, as I mentioned. We are convinced that the market underestimate the growth in our earnings.
What we can do as a management is not only show this growth on a quarterly basis, but it's also obviously deliver on the improvement of the operating leverage. We also convince of the strength of our portfolio. This is a mix of improving the disclosure. We think that what we have announced today will help you be more comfortable with the disclosures on the portfolio. It's also, as Christophe mentioned earlier, continue to execute our asset rotation, the exits at a price that is at least consistent with the portfolio value we have in our books. In fact, our history has been that for each and every exit, we overperform relative to last mark.
There is one point which Pierre mentioned, which is also something we work on, which is to make sure that on every disclosure we make, we are consistent with the best practice in That you see with Pierre. You should expect that we will continue to improve. Last, of course, shareholder distribution. As you can see, after a 14% increase of the ordinary dividend in 2021, we do a 26% in 2022, combined with share buyback, which we know is an important topic for our institutional shareholders. All that, we think, will deliver, and obviously this is for us to be consistent on a quarter-by-quarter basis.
Okay. Thank you. Very clear.
Thank you. We will take the next question from line Oliver Carruthers from Goldman Sachs. The line is open now. Please go ahead.
Morning. Thank you very much for taking my questions. You're making the case, I guess, to be a the European leader in the wealth channel. Maybe as a first question, you know, do you see the growth opportunity in private wealth as being greater in the open-ended semi-liquid fund space or through platforms and feeder funds? You know, as a follow-up to that, you know, what is your expectation for fundraising in the private wealth channel for this year? Which it was obviously up 50% for you last year. Just, you know, how have January and February been? How do you see this playing out for the rest of 2023? A separate question on this IFRS 10 shift.
I think you did mention it already, but can you just confirm that this shift doesn't have any impact on the valuation methodology of your portfolio companies, you know, or on the use of external appraisals, even though it will now become an IFRS number? Thank you.
I'll start with the second part, which is obviously more for me, and Christophe. Will talk to you about Wealth. No, this has absolutely no impact in the way we value the portfolio. By the way, the way we value the portfolio is exactly consistent with what we show to our LPs on a quarterly basis. As you know, Eurazeo invest as an LP in its funds. So, what we show you in our NAV is consistent with what the performance we show to our LPs. The only difference is not linked to the methodology, but it's more to the auditing of this number, because as I said, now we're moving to a limited audit on the NAV to a full-fledged audit as it will become an asset on the balance sheet. Christophe on the Wealth.
Well, thank you. Thank you for asking this question because obviously this is an emerging market. It's not entirely mature. We need to adapt our product offering. We need to adapt our behavior to our partners. Again, we don't sell directly to private individuals. What we do is that we have strong partnerships with banks, life insurance companies, and IFAs.
Regarding to your question, which is a very precise one, huh? There is a market for semi-liquid fund and there is a market for open-ended fund. In reality, we do both. Maybe the upper end of the wealth market is more open to funds that have a subscription period, holding period, and redemption. Maybe the lower end of the wealth management, closer to this concept of retailization, we need to be more adapted with semi-liquid vehicles.
What is also important is that Eurazeo is investing a lot of resources to first digitalize access, so to reduce the cost of access. Also we are investing a lot of resources to be able to promote through unit link contracts, so through life insurance contract, and also through direct solution. This is quite unique.
Thank you. Very helpful. On the kind of outlook for private wealth fundraising through 2023, given, I guess, you had a very strong 2022, even right through the fourth quarter. If you're able to comment on that, it'd be very helpful. Thank you.
The trend when you Again, I mentioned the fact, sorry for that. I mentioned the fact that the market penetration is still very low. A standard institutional investor, like a life insurance company in Europe, will have probably something close to 2% of its asset allocation in private equity, maybe 6%, 7% in private debt. Private individuals, I'm not talking about family offices, I'm talking about your neighbors, private individuals.
Their proportion of real assets, private equity, private debt, and infrastructure is still incredibly low. There is a huge potential. When I was mentioning that we raised north of EUR 800 million in 2022, this has been done mainly in France because our relations with French banks, French insurance companies, and French IFAs is the oldest.
Obviously, we intend to internationalize these partnerships, and Moonfare is also helping us to get access to more international targets, more international populations of private individuals. We don't give guidance at this moment of the year. We will be giving it in the probably during the fourth quarter. We are very optimistic on this trend. Again, this is a market that needs to be served with specific tools, specific reporting tools, specific digital access, and also support in term of helping the sales force of our partner to be well trained by our own internal forces.
Thank you. Very clear, both.
Thank you. As a reminder, if you would like to ask a question, please signal by pressing star one on your telephone keypad. We will take the next question from line. Alexandre Gérard from CIC. The line is open now. Please go ahead.
Yes. Good morning, congratulations for the good performance in 2022. 4 quick questions on my side. First question on the governance side, how do you, William and Christophe intend to split roles? I mean, how do you intend to cooperate? Is one of you going to be dedicated to a specific task and the other one to something different?
That's my first question. Second question on the third-party Asset Management business. You intend to accelerate that activity, but at the same time, you with the target in five years' time of EUR 50 billion in AUM remains unchanged. Can you explain why you keep that target at that level? Third question on the asset rotation side in 2023.
Also, are there any signs of a reopening of the M&A market or on the LBO financing side? How do you see the asset rotation of the portfolio in 2023? My last question is. On the M&A side, on the industry consolidation, do we have to understand that there is an increased focus of Eurazeo on that topic? Are there any hot topics inside in the short term? Thank you.
Okay. Thanks. Many thanks for this question. I'll start and Christophe will complement if he deems appropriate to do so. On the governance side, which is your first question, a very legitimate question, both externally and internally. The first thing you have to keep in mind is that this is a collegial way of governing the company that we want to implement.
An Executive Board is in fact a collegial body. This may be sometimes forgotten, but this is a collegial body, which means that many decisions pertaining to the financial steering of the company, the commercial steering of the company, the strategy, the key HR decisions, as a case in point, have to be discussed with a fair degree of challenge within the Executive Board.
We will start with us two, with Christophe. We sit in the same office. We see each other every day when we're not traveling or seeing investors. We confront views on the key subject matters as this new governance we set up implies. More importantly, we also want to make sure that we leverage better on the key strengths of our workforce. There is more we can do in having people involved in transversal topics. That being said, of course, defining clearly roles and responsibilities is important. As you would expect, we will keep each of us responsibility of spearheading the areas which we were already responsible for.
Remember that Christophe, he's spearheading the client efforts, sales, marketing, client services, and the strategy involved with that. Remember that I spearhead the finance strategy functions, as well, as acting as a CIO for the balance sheet. We will remain with this remit under our respective supervision.
There is then a number of key functions which we think have to be reporting to the two CEOs. You can't split Communication, HR, Compliance, Audit. These type of functions, obviously, will re-reported to us two. We will last split the supervision of the investment activities. Allow me not to get into the details, but clearly, each of us will have a responsibility.
Again, that has to be put in the context of a very collegial way of sharing key decision-making on important topics. Leads me to a few important topics you raised in your questions. Third party. I will leave Christophe, if you think to explain what we are going to do. Clearly, no, we don't want to change the target. This is already an very ambitious target. We think it's an achievable target. In five years, that would mean that we grow our AUM every year by about 12%. We've been able to do so in the past years, 2018, 2022, at a pace of 20%. We think it's achievable. Clearly, it's too early for us to raise the bar.
I think, we think it's already an ambitious target. Our topic is more focusing on the execution. On the asset rotation, your question pertains more to the portfolio, as I understand. Maybe, Christophe, you want to add some color on the broader portfolio and the context. As far as the on-balance sheet assets are concerned, as we said, we are back into the normal rhythm of asset rotation. 15%-20% of the NAV is to be expected, there is no reason why 2023 should be very different from that perspective. Last, as we said, this company will generate capital, will create capital in the next years, based on asset rotation, discipline resources management, and the cash flow from the Asset Management.
That will leave us opportunities to improve again the return to shareholders and also to be opportunistic and participate. What we see is starting to be a trend, i.e., consolidation in the industry. Allow me to be not more precise on that. That would be foolish on our side, but, you know, we have the potential to be a consolidator in this industry. That's the only point I would make.
Well, nothing to add to what you just described, William, but just maybe a personal comment on what you just said regarding these two Co-CEOs culture. I must say spontaneously, we like it, both of us. It's very helpful. It helps to share responsibilities. We have. What is also very important for you to perceive is that we share a common vision. We receive a clear mandate from the supervisory board, and we share a clear common vision, which is to make this investment company, to make this asset manager one of the clear leader in Europe.
All right. Very clear. Thank you very much.
Thank you. We will take the last question from line, Patrick Jousseaume from Societe Generale. The line is open now. Please go ahead.
Yes. Good morning, everybody. My first question is about your review of minority stakes. Could you please comment on this? What are the minority stakes which are concerned? How much do they represent all together in the current NAV? Supposing that Rhône is concerned, I guess that Rhône has stake in Eurazeo, could you a bit elaborate on that? Second question regarding the EUR 60 billion target for AUM, is it at constant perimeter or not? My third question, well, how long do you think it would take for Asset Management value to represent, let's say, 50% or more of the NAV?
Thanks, Patrick. Minority stakes that we refer to here are, as you pointed out, the minority stakes in the GPs. Usually, we have also minority stakes with the portfolio in portfolio companies, but that's more the investments that we hold on the balance sheet. We clearly when, you know, associating it to asset rotation, we're talking about here minority stake in GPs. There are two. One is Rhône, 30%, and the other one is MCH, which is specialized in small mid-sized buyout in Spain. We have 25% of MCH. The only thing we want to clarify is that for us, there is no interest in holding minority stakes in GPs.
It's either we own them fully or we don't own them, because we view ourselves as a industrial player in the Asset Management. Should we do M&A at some point, we will only look at M&A when we are convinced we can integrate the company we would look at on our platform. That's probably a change in the approach. I won't allow me not to comment more. You had a specific question on the value. The value of these minority stakes is within the NAV of the asset manager, so zero percent in the portfolio companies. This is, so in the NAV of the asset manager. Both the value and the contribution is not very material relative to the company as a whole. I'm looking at Pierre.
I'm not sure we disclose the detail of it. You should not take away from what I said that it is material because it is not. The EUR 60 billion target, listen, what I said before is that we think we can achieve it if we have a good pace of growth organically. It would be foolish on our side to commit that it doesn't include other potential contributions such as onboarding platforms or teams. We will stick to the target and then we'll communicate to you with more details should we think that we have something to say specifically. Keep the view that we think that based on our past organic growth, this is an achievable number.
Is there any more questions on the phone, or I should go to the chat?
You can go with for the chat. Thank you.
Okay. I have a question from the chat regarding the buyout market. With the scarcity now of credit and the rising interest rates, what is the impact on buyouts going forward as a strategy and in terms of fundraising?
This is when we discuss the strategy at the board level, a regular topic covered between us, and this is a key element of Eurazeo's differentiating factor. I have two part for the answer. Well, it's true that debt has been cheaper and more available than it is today. Please remember that the private equity industry has been invented in the U.S. at a period where interest rates were much higher than they are today, and the asset class nevertheless was able to perform and to expand. The second component of the answer is more specific to Eurazeo. Eurazeo has an investment style, and we intend to maintain it. Our overperformance has never been based on excessive leverage, on using this opportunity to get access to cheap and easy access leverage. No.
Our strategy of Eurazeo has always been to generate outperformance by relying on growth of underlying portfolio companies. It can be external growth by helping them to accelerate buy and build strategy. It can be organic growth by helping them to accelerate internationally. I mentioned China, Asia as an opportunity to accelerate international growth. It can also be by increasing their ESG process and by reducing the perception of risk. This investment style of Eurazeo will be maintained, and we are entirely convinced that this strategy, which has proven to be successful, will be even more successful in the new environment.
I think our time is up. Thank you very much for joining us today on the full year results of Eurazeo. Our next meeting with you is for Q1 on the 16th of May. Thank you very much.
Thank you very much.
Thank you.
This afternoon for those who want to participate to the workshop.
Exactly.
Thank you very much.
Thank you very much.
Thank you. Thank you.