Tikehau Capital (EPA:TKO)

Earnings Call: H2 2019

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Mar 19, 2020

Thank you very much. Good morning to all of you. Welcome to the presentation of the annual results for TIKIO Capital. Thank you for your presence on this fairly special day. We'll try to be precise and cut straight to the chase and answer all the many questions you may have about the economy, financial markets and of course, Techeo. I'll start with slide 5. 2019 was a year of major growth for all key performance indicators, particularly a record year in terms of fundraising with €4,600,000,000 raised for all of our business lines. Profitability grew significantly, especially in assets management. Major asset rotation because we had major disposals, a dividend that we will put to the AGM of €0.5 per share, a capital increase of €715,000,000 as well as a bond issue for €500,000,000 which helps us significantly shore up our balance sheet because we now have 3,100,000,000 in equity, 1,300,000,000 in cash at the end of the year, a €500,000,000 credit line. So for the TIKEO Capital Company, we have €1,800,000,000 in dry powder and average debt of 5.6 years that was lengthened. And in asset management, we've got €5,200,000,000 of what we call dry powder, I. E, cash and cash equivalents. So we proved that for all of our business lines, we had growth and some resilience. And we have an infrastructure now which is very robust with over 600 people to date, presence in 11 countries and a balance sheet that is fairly well sized for all types of weather. Now I will move on to Slide 7. Indicators, key indicators. First of all, assets under management within the scope of the group at €25,800,000,000 versus a target at €24,500,000,000 that was raised to €25,000,000,000 So we ended the year well above our guidance. Fee paying AUM grew by 23%. This means that we will receive more in management fees next year. A NOPAM, which is net operating profit from asset management, up 48% at €58,500,000 And last but not least, net profit of €178,000,000 up €269,000,000 Next slide now. A slide that we've used a lot since the IPO. During the IPO, we gave you a few KPIs and comparing them to where we are now. 1st, AUM, TKO's business is to be an asset alternative asset manager. So we had €10,000,000,000 worth of AUM at the time of the IPO and we're already at €25,800,000,000 so a 2.6 times increase. Management fees are up and what's important is that our AUM helps us collect management fees. We had average management fees of 71 basis points. We were able to raise that to 92 basis points. Usually people talk about margin erosions in traditional asset management, while so far margins are not eroding at all. And in our case, they're even increasing. Income from asset management has been increased 16.7 fold. At the time of the IPO at TKO. We had a large part of the infrastructure that cost money, but fairly low profitability management because in 2017, the profitability of asset management was 1% of the group and in size roughly a third of the group with €58,500,000 in NOPAM. Our clients are now more international compared to at the time of the IPO. 21% of assets at the time of the IPO came from outside France. Now it's SEK 7,500,000,000 out of EUR 25,000,000,000. Now we've beefed up our infrastructure significantly and we acquired Soffy D so that we could increase the number of employees to 532. The number of 600 that I gave you a minute ago is to date and within the scope of the group. And more offices in terms of development, we think it's important to have a global platform both to collect capital globally because there are places that work better than others and saving structures that are more attractive than others. So having we need to have a global presence to collect savings. We need to be able to invest globally too. And we can see that during crises, it's important to understand and have good understanding of what's going on in Asia. Our offices in Seoul, Tokyo and Singapore in Asia have been faced with the coronavirus for 2 months. And so at the level of the group, we could be a lot more responsive, both in health terms, public health terms and also in economic and financial terms. Now moving on to Slide 9. In TKEO's entrepreneurial endeavor, we always considered that we needed to have a robust infrastructure in terms of human capital, equity, systems and it's now achieved, as I've said many times, we have SEK 3,100,000,000 in equity, SEK 1,300,000,000 in available equity and 500,000,000 in undrawn credit lines, 5,200,000,000 worth of dry powder within asset management. So in financial terms, we've built up major robustness since 2004 because if you remember and if you've been following us for so long and thank you for that, we created TIKEO as a company as such and it's only in 2000 and 7 that asset management was created. We were always very focused on infrastructure, diversification in our model. That's why now we are presenting 4 asset classes. And as you'll see, we will announce the creation of a 5th business unit. We've always been diversified in terms of asset classes with lots of granularity in our assets. And the utmost selectivity, As you'll see, we've increased the number of transactions that we've looked at by asset class and that were actually done. There have always been questions focusing on this slide, questions about our hybrid model with both equity and asset management, whereas other asset managers are pure asset managers. It's clear we've always been very strong about that. The slide 10 now. You've got the breakdown of AUM by asset class. As we said, we have 4 business units, business lines, private debt with SEK 8,600,000,000, up 4%. Growth was slower this year because we didn't have any flagship or specific fundraising, but still we collected capital. What is important is this funding business is highly diversified, corporate lending, senior loans, LBO senior loans, direct lending. So within private debt, we've got several business lines with exposure to various geographies. And in the portfolios, we've got a lot of granularity because, for instance, if you take our TDL IV fund, which is our flagship direct lending fund, we've got roughly 40 issuers. So a lot of granularity within this business line and within the business units. Real estate has grown a lot, especially with the acquisition of Soffitib. If you remember, we bought Soffitib for SEK 5,000,000,000. Now we have SEK 9,200,000,000 worth of real estate in fairly long term vehicles that are very robust. And here a specific comment. For all of our AUM, apart from capital markets strategic, which are usage with daily liquidity, all of our liabilities have 10 year maturities or more. So we've been given capital for very long term with so there's a lot of stability in our assets under management and therefore in our income and so we can make the right investment decisions. So in real estate, we have 2 rates, 1 in Singapore, which owns assets in Germany and Selectirantes, a listed land owning company. We €217,000,000 in Select Durant in which we brought PRIC institutionals in France and we are constantly managing that. So in real estate, private debt and private equity, it's important to remember that we manage long term capital. Private equity, we've accelerated things with the recruitment of a new manager last year. What's important in PE is that we are only making minority investments with families or investors. We're not at all equity investors in majority LBOs, which are heavily leveraged by definition. Our job in PE is to provide assets to help companies grow. And we've done that in a mainstream way for our traditional fund, but also with a specific focus on the energy transition. If you'll remember, we launched a fund devoted to the energy transition with Total. Last but not least, capital market strategies, SEK 3,800,000,000 with a smaller part smaller, lesser known part of TIKL, which is faring well during the crisis because we have daily valuations, so we can fairly well track the positioning and performance of the portfolios. And if you regularly read our monthly memos or regular podcasts, these funds were managed with 30% to 50% of cash before the recent events. What you can take away from that is that we've got great granularity in our business, in our funds in the Verus business units and a relatively defensive positioning and this for a long time already now. Moving on to Slide 11. As we usually say, we are entrepreneurs in the financial sector, in financial services. We think that this industry has been changing a lot both on the asset side, on the liability side, on the distribution side, more digital, new businesses being created. So what TK has been trying to do in the last 15 years is to be part of the change and the transformation of the financial industry. So we are launching new initiatives. That's what we did with our Energy Transition Fund 2 years ago before it became really very fashionable and everybody spent talking a lot about impact and green investment. We have a biotech initiative in Singapore now active for 2 years that we've been developing fairly satisfactorily. We'll come back to that. And as part of our development, we've considered that it was timely to create a business unit called Tactical Strategies, bringing together 2 things, both our legacy investment part in discounted debt assets. If you remember at the end of 2007, before the 2008 crisis, we create a special situation fund to buy discounted debt. There's a big dislocation on this market, so there are lots of business opportunities. And on the distribution side, we've decided to innovate by creating with help from Intesa, the bank. We created a product, sell it with the high net worth retail clientele of Intesa. So we let them invest in all of our funds via a feeder organized by Intesa. So we raised €400,000,000 with 3,300 clients in just over a month and a half. So we've decided to bring it all together, these two businesses led by Maxime Laurent Belous, who's been with TKO for 13 years. He's a specialist of all these discounted investment items. So both on the asset and the liability side, we think that there's a lot of possibilities that are accelerated because of recent events. So we are now announcing the creation of this business unit, which has been in place in fact for a few years because the TSO 2 front, IKEAO special opportunities, too, has already been raising funds. Now moving on to Slide 12. As you know, our job is based on people. So we've tried to set up a very knowledgeable infrastructure in every business, not just investors and managers. You need to be good in legal terms, in compliance terms, in systems terms. So we've always put in place a fairly extensive infrastructure, but also diversified in terms of nationalities with people who have fairly significant experience in various asset classes or businesses. We've continued because that's part of our model having a very strong alignment of interest, skin in the game because management still owns 45 percent of TKO Capital, which is a big differentiator with the other asset managers. So we are highly invested. All of the employees and partners in the company are highly invested in CQU Capital. Governance is very strong because in spite of the fact that the company is controlled by management and employees, we have a supervisory board which is 50% independent. And to bolster that governance and alignment of interest, 53% of carried interest and 100% of performance fees are paid to the listed company. We have further strengthened throughout 2019 this coverage. We've created an international advisory board and in turbulent times like today, it meets regularly via conference calls. For instance, we have a lot of people in Asia so that they can comment. And 2 months ago, they commented on the coronavirus events there and now they're shedding different lights 2 months on. We've got people in the U. S. So that we can understand the way the situation is happening on top of the team led by Matthieu Chavarron in the U. S. We can understand what's going on in U. S. Markets. So we've tried to cover the global territory with various fields of expertise. And so we will further strengthen what we call our human capital, which is key to TIKIO capital. I will now move on to Slide 13. Very clearly, TIKIO was a bit of a pioneer on these issues and ESG matters. We are a long term investor, and we know that in order to generate long term performance, it's very clear that you cannot turn a blind eye on all these ESG issues. And so excluding certain sectors or geographies, engaging the companies that we finance and in which we invest to be sure that they monitor their ESG performance in agreement with international principles and what we also think. ESG criteria have been investment criteria for years now in all our business lines. We've had a lot of our funds rated. We were pioneers in the rating of the 1st CLO in Europe, which was created by TKO. So we still try to be very close to all the changes in the ESC world, and we are really trying to remain pioneers. That was one of the major aspects in the development of TKL. We are entrepreneurs with a long term vision. You can't have any long term development without an effective and proactive ESG policy. So beyond that, we've created initiatives so that we can have a positive impact. That's the case with the energy transition fund that was created with Total. We announced that we would create an impact debt fund in 2020 and we'll carry on launching initiatives to further strengthen the position that we've acquired in terms of ESG. Now Slide 14. I said that in my introduction, and I came back to that time and time again. But having a significant balance sheet that's well managed with a lot of equity is clearly a differentiator vis a vis our peers. Having a lot of equity, as we've always said, helps us invest in our own funds and still have alignment of interest and so manage risk a bit more effectively and efficiently. And we can launch new initiatives. When we said a few months ago that we would have a discounted debt fund because there would be a dislocation on the markets and so we could exploit that. We didn't think about coronavirus, but we did that. We have our equity fund, the energy transition funds. So having a lot of equity helps us invest in our funds, launch new initiatives and if applicable, seize opportunities for external growth. That was impossible so far because of the high valuations of the items in financial services and the financial industry, but new chapter is being written now. So we are looking a bit more actively at opportunities. To dwell on this slide for a minute because there are lots of questions, especially with some of our investors, legacy investors, with new investors, also with financial analysts. We now think that having a balance sheet is a strong differentiator and time will tell and show that this was the way to go. We think that regulators will force a lot of asset management companies to have equity. So we have quite a lead on that front. And so we'll still have a very robust balance sheet because you need equity, but you need to invest it with parsimony and effectiveness. And at the end of 2019, as I said, we have €1,300,000,000 in cash and €500,000,000 in credit line. So €1,800,000,000 in cash, which is important for a company our size and in the sector in which we operate. Maybe I'll move on to Slide 15. Quite certainly, We can't stop because of the impact of coronavirus. TIKIO's vision is the following. There was a public health crisis that started in Asia that turned into an economic crisis and which is now a financial crisis. The health public health crisis is improving in Asia, especially because they took very drastic measures that were highly criticized by the West. They were the first to decide on fairly severe lockdown. Now coronavirus is in Europe, a bit in the U. S, a bit in Latin America. Of course, we're not scientists or experts in that field, and we can only see that for the moment. Unfortunately, a few people have a clear view of things apart from saying that there are very clear problems in terms of respiratory ventilators available in hospitals. But we're not in the business of health, public health. So we are still very conservative. We think that research both on vaccines and therapies will make a lot of progress, especially when it comes to treatment, which is key because vaccines will take longer. So there is this public health crisis, which has led to an economic crisis. Why an economic crisis? Because it's first time in history that you have companies worldwide that no longer have any revenues in previous economic and financial crisis. As an industry was impacted, revenues dropped by 20%, income by 50%, now it's totally different. Some companies have no turnover at all anymore. So governments have made a number of commitments that will lead to sizable fiscal deficits and we'll see how everything will be put in place and it's very early to learn lessons of that. But the consequences that we can identify now, there are lots of reactions by governments and central banks and people comment on that a lot. Well, a talk is easy, but the situation is very complex. We think that a lot of measures are being adopted, especially by the ECB. Yesterday, they are fairly impressive. The ECB was severely criticized last week, whereas announcements for banks were interesting. Quite certainly, what was announced yesterday in Europe is unequaled. The economic crisis led to a financial crisis with a lot of panic movements. And so our TIKIO view is that the financial world was extremely leveraged. In 2008, banks were heavily leveraged. So they had to be cured in various ways. We think there's a lot of leverage in the system, especially with a lot of big asset managers. You can see that significantly in the U. S. Because they have high leverages. So a lot of leverage with people and companies in the world of asset management. So there needs to be deleveraging, which is happening at unrivaled speed. To give you an order of magnitude, you find large corporate debt with high discounts, large corporates, I'm talking about very big global corporates. So there seems to be a panic in some compartments of financial markets. Things are happening that are fairly abnormal because everybody thinks that interest rates will remain very low and negative. To give you a note of magnitude, The French 10 year rate went from minus 0.4 to plus 0.4. So we need to be very humble and prepared for all possible scenarios. We need a lot of cash that will be a differentiator clearly. We shouldn't rush to invest. We need to have a good view of the situation and understand well what the stakes that we've invested in and that we finance and they will pan out. Some will do better than others. So for us, there's a public health, economic and financial crisis. The public health crisis needs to be resolved. Unfortunately, we don't know whether it's going to take 1 month or 3. We can hope for it to last as little as possible. Then we'll need to address the economic fallout and then the financial sphere needs to remain robust. A lot of risks in the system, we think that we are prepared. Of course, you can never be perfectly prepared. But since we had a fairly pessimistic view of things, we said that time and again, we said that the premiums on asset prices were crazy. So the fact that we remained fairly conservative should be beneficial in the mid- to long term. Moving on to Slide 16. We confirm the guidance that we indicated, the SEK 35,000,000,000 in AGM in AUM, SEK 100,000,000 in operating profit, 65% to 75% of investment portfolio comprised of investment within TKL Capital and 10% to 15% of rent run rate return on capital invested by the group in its own funds. I'll give the floor to Mathieu to move on to Slide 17. Thank you, Antoine, and good morning, everyone. Thank you for being here in spite of circumstances. Having heard this introduction, let's move on to look at the various business areas at 31 December for our business. On Page 18, you can see that we're very much active in 2019. We delivered significant growth as Antoine pointed out in 2018. We had DDL4 successful launch, which was completed at the beginning of the year and of course contributed to the growth of AUM. You had in 2019 our flagship funds in direct lending contributed to our growth. And this enabled us to redress the balance of our business mix, which was, of course, the objective that we announced, especially as regards private equity and real estate and that's the whole point of being diversified and selective. You can see on this slide a few examples of the initiatives. We mentioned in September, for instance, in private equity, we had the launch of our TGS fund. Or in real estate, we had an increase in capital in REIT. On Page 19, you have the details of this fundraising. 2019 was a record year in terms of new money, €4,600,000,000 money in new money. The asset management was the main growth driver there with SEK 4,100,000,000 in net inflow of new money. There was also some close funds where we returned capital. The distributions were due to our private debt strategies to the tune of 1,400,000,000 euros That's the orange part on the chart. We also had positive market effects, €600,000,000 in 2019 and assets under management was about €20 €26,000,000,000 at the end of 2019. All in all, this was a very sound year for fundraising for TECO Capital. On next page, on page 20. On page 20, you can see a detail of our assets under management, the growth of AUM. This was a 17% growth in 2019, an increase of SEK3.8 billion over the year. You can see that we almost doubled in size since the inception because of organic growth and selective external growth, especially in 2019 on real estate and private equity. AUM business is up 16% to €3,200,000,000 And the AUM on our investment scope are up €500,000,000 including the increase in capital of €715,000,000 that we announced after the quarterly announcement. On Page 21 now, focusing on Asset Management. If you look more closely at the performance, the scope of that AUM was very dynamic because there was €4,100,000,000 in new money, mostly driven by 3rd party investors. As you will see on the right hand side of the pie chart, that 63% of the new money was collected in our private equity and real estate businesses, as announced at the beginning of the year, rebalancing on real estate and private equity. So we are very much in line with the strategy that we announced during the IPO. For those of you who have been with us since March 2017, we are developing both businesses. We rebalanced our historic activity of private debt and direct lending, which has positive effects on the product mix, but also on the financial performance. Antoine mentioned the growth in management fees, which is somewhat counterintuitive in the asset management business. And Henri L'Accoup will give you more details in the financial reviews. Let's move on to our clients. I like this slide. This is Slide 22, which we've been showing for some time, the breakdown of our customers in terms of who they are, but where they are because we have been international for the past 3 years, internationalizing as part of our strategy. You have about onethree of the assets and under management are from international investments, so twice as many as last as 4 years ago. And in the same time, the basis the base of AUM was multiply fourfold. If you look at 2019, if you look at the right hand side, you have to restate the numbers because there were acquisitions, well, there was Soffitae and there was eddie.fr, and these are products for exclusively for French customers. But if you restate this for that, you have 60% of our fundraising was performed abroad just like in 2018. So this trend was confirmed and in growth in absolute numbers. And then so we have a diversified customer base. If you look at the pie chart on the left hand side, at the bottom left, you have an institutional base, but many more and more private investors that we have been acquiring through SoffeD, so private customers or liquid funds and new innovative initiatives such as the one we launched in Italy in Q3 and Q4 last year in partnership with the with Fidoram, which is a private bank. And let's look at this more closely on Slide 23. So this is the type of initiative which we propose to pursue at TIKAYHO, especially in this market environment as described by Antoine. This was a fund that we launched with Fiduram, which is Italy's 1st private bank, Intesa San Paulo. And it shows it's an example of our ability to innovate and forge partnerships with looking for private investors that are looking seeking access to these private solutions. So in terms of performance, we have, of course, financial markets over the past few weeks have been volatile. So it has been for us to find the right partners, the right formats in terms of distribution, structuring. And of course, for the launch itself, this was a new tactical strategy driven by Maxime, who's been with us for 13 years. We were able to reach 3,000 private investors €400,000,000 in assets that were raised in 3 months. And so these private investors can have access to private debt, private equity, real estate and co investment, which is very innovative in this context. So capital fundraising, of course, important, but it's also important to know how to invest it because that will define tomorrow's results. So if we look at 2019, we were very much active in 2019. EUR 3.6 €1,000,000,000 were deployed in our closed ended funds, especially in private debt and real estate, and that is a 36% growth year on year compared to SEK2.7 billion invested in 2018. That business in terms of deployment was not done to the detriment of selectivity. We remain very selective indeed, very disciplined and very cautious on the risks we take when deploying the funds trusted upon us by untrusted upon us by our customers. We you can see that on private debt, on real estate, on private equity. We are very cautious and there was no deterioration on the 2019 vintage compared to the previous years. And Antoine mentioned this skin in the game thing. We are a major investor in our own funds, and that reinforces this cautious and selective approach. Let's look at the various business areas, starting with private debt, which is our historical business. Look at Slide 26. For the 3rd year running, we were the 2nd most active player on the European mid market environment right after the American giant called Ares Capital. And that has confirmed our position for the past 10 years. All our teams have been driven by Mr. Majer Levy in Europe. We have this strong position. I would like to spend time on the question as to whether there's too much was there too much money invested in private debt strategy? Is there a risk of a bubble? Well, events have shown that there will not be enough resource to remedy the situation in terms of financing and refinancing. Antoine mentioned companies that have no business at all, have had no income at all for the past few weeks. So in fact, private debt will be very much at the heart of our activity in the quarters and indeed years to come. We are launching the 5th vintage in our direct lending fund, And we are satisfied that this present, this expertise being close to the companies themselves. That will make a big difference in terms of providing new solutions in this very tense situation. On Page 27, you have the highlights of the 4 vintages of private debt funds. The last one, TDL 4, the direct lending for was €1,200,000,000 So you have a major vintage also in 2020 that is planned for this year. And this is joins what I said about having international customers. If you look at the last CLO that was launched a few months ago, you can see there's great diversity and a great international base of investors that are trusting us on this. On Slide 28, I said that we're very highly selective, and we will remain selective for all our investment processes. You can see that on private debt, there's this upside down pyramid that we show every year. In 2019, there were 400 deals that were considered by our teams. 39 firm offers were then proposed to the companies. And in the end, 30 operations were completed. So the conversion rate is only 7.5%, but this has always been the case. Historically, we've had about 8% over the past 5 years. You should also mention that we remain we continue our investments throughout the countries where we have a presence here in Spain, for instance, but also Belgium, Italy. So we have local presence in many territories, in many jurisdictions. And that makes a big difference again because we can be make a differentiating offer to our investors. On page on Slide 29, this is something rather new in our reporting system. This is something that shareholders have been asking for. Louis Egonet, our Investor Relations Officer, has met a number of analysts and investors. Some of you are listening today. So we have to report on the historic performances of our funds. So this is our private debt strategy. We can see the performance, the internal rates of returns of the various funds. As Antoine was saying, these have high granularity, both in terms of upstream selectivity, but also the breakdown of the portfolios themselves. These are very there's very little leverage there. You can see that the weighted average net leverage at closing the 3rd line from the bottom, the leverage ratio paradoxically has come down since direct lending number 1, because that was a pre crisis fund in 2008, 2009. And since then, we have a constant ratio of 4.1 to 4.2x of net leverage, which compares favorably with the rest of the market. Now debt the size of the fund increases, but the average entry ticket remains the same. And that shows a diversification. So the performance here you're concerned about is achieved through assets that were exited. So we're looking at actual performance. And so it shows the performance of our investment teams who get all the credit for that. So these are gross rates of pre management fees. And so that gives you an indication of performance of the various strategies of the private debt funds proposed to return anything between 7.5% 10% of IRR depending on the strategies. On Slide 30, to compare ourselves with the European benchmark and the American benchmark, which is a much more mature market on private debt. This slide is interesting. We can see TKU's positioning with the blue squares, both in terms of leverage, but also in terms of covenants and default rates, but also the shareholders' support that is a contribution equity contribution. We want to remain on the left hand slide side of the chart. The gray boxes are the average ratios of the lots of benchmarking that is being done by consultants on this private state market. And then on the black or black squares or dark gray. This is what you find on American markets, but we're not there. And we can mention some initiatives in secondary private debt. This is being driven from New York. And I think we'll have new opportunities because of this new situation in the market where investors might decide to let go of some of their assets and choose others. So you have we don't want to take undue risks on documentation because we don't want to go with covenants, but to have a secure lender. And the debt to equity ratio must remain reasonable. And of course, in the present environment, that means we should be in a position to support the borrowers. I'll give the floor to Antoine, who will tell us about real estate. Thank you, Matthew. We move on to Slide 32. You can see that real estate is our historical activity at TKO and we have the TKO platform. You may remember that the first investment in 2004, we don't want to be archaeologists, but we sold we bought and sold this in 18 months, sold it to the Duke of Westminster. Soffit, we're looking at the SEK 2,500,000,000 with the growth of new money last year. We have now SEK9.2 billion adding the SEK5 billion of last year. So on Slide 32, you can see that we are present everywhere from core to opportunistic. So we can look at more or less risky ventures. Of course, it depends on the territories. You can see that for the first time, we invested in England For the first time, so we've been investing in Britain last year. For 15 years, we were outside the real estate market in Britain. And with the dislocation of Brexit, we've been looking at investment there. So this real estate platform is highly robust and can perform in various countries. We have at the head the former CEO of AXA Immobilier and the Real Estate Officer of Goldman Sachs Europe. We have the Soffidee team that has been reinforced with the CEO of TKO Asset Management that drives the real estate business. So we have an integrated team that can work in various segments. If you look at fundraising, and this takes me to Slide 33, this year we launched Treo, which is our 1st real estate listed real estate fund. We had a satisfactory inflow of €500,000,000 This is significant because, of course, when you launch a 1st time fund, it takes some time normally. And here, we were able to have €560,000,000 and we have another investor that is co investing to the tune of €90,000,000 And when we talked about entries earlier on, we have a very highly operational platform with an ability to invest. On Slide 34, we have a few examples of real estate investments. You can see that just like we had well, the same slide is for the private debt. We have the upside down pyramid. We looked at almost 180 screen deals, and we only closed 9 out of the 179, that's 8 more than in 2018. In 2018, there was only a single investment in Real Estate. So we are highly selective. You can still be we can afford to be highly selective because we have a large platform. So we source many opportunities, but we chose them very selectively. Indeed, just like we choose our real estate opportunities, we have very little leverage, almost no leverage at all in the company's real estate funds. If you look at this largest funds, more than CHF12 1,000,000,000 is less than 10% leverage. So whereas in the real estate markets, most of the players, both REITs or private real estate companies or investment funds, they buy leveraged highly leveraged real estate funds real estate deals, whereas we have very little leverage, which means that in times of economic crises, we can face these situations without concern. On Slide 34, you can see that we have discipline in terms of investment, but we also have to seize opportunities as they arise until the end of 2019. We dispose of the real estate portfolio that we had acquired in 2014, Ellis, that was a 1.9 multiple, which is pretty good if compared to private equity where there's less risk disposed, for instance, of a property that we had in Charleton. And we started selling sites that we had acquired from EDF. And to give you an order of magnitude, we are anywhere between a multiple of 1.51.7 on our EDF properties. So we have to invest selectively. We have to buy these assets with little leverage, and you have to be able to dispose of your assets to take capital gains throughout the cycle. I would like to emphasize LS once again not just because of the high multiple there, but the reason I choose this example is that during the 2008 crisis, we decided to acquire a significant part of Ellis' debt. This is, of course, now the debt of companies were being discounted. And we spent quite a bit of time on Ellis' debt. We bought several €100,000,000 of discounted Ellis debt. So we have a good knowledge of Ellis. When Ellis decided to sell its properties with a 15 year lease and just like it's with the debt being discounted, our teams work together. We came up with a firm offer. And we were able with the TKO platform to be much more responsive. And we returned the asset to Blackstone, which is the largest alternative investment company in the world. Let's look to 36. We have a few KPIs on Soffy D, SEK6.2 billion in assets under management, up 20%. I mean, there was a record year in terms of new money, €1,000,000,000 collected, so twice as many as in the TKO universe. We were able to raise funds at the end of the year to the tune of €217,000,000 And we have this strategy of significant equity that we can use at the right time. The Tiho platform is in a position to raise well, to have several capital raising of several companies and several bond issues the same year, which shows that we are very versatile and very relevant. And very few companies are capable of doing several capital markets operations simultaneously. And in our structure, we're in a position to do just that throughout the year. And so we doubled the size of the listed REIT, a real estate company. It's relatively modest, CHF373 1,000,000. We were able to raise CHF217 1,000,000 without a discount on the share price, and that is rather successful. So we were able to collect money on the real estate company, on the real estate fund. And you can see on the next slide the historic performance of the track record of the Soffitie Funds. We can see that there's a good appetite on this asset class because many investors, both private or institutional, will be looking at real private assets with less volatility compared to what you have on the market. And if you look at the historic performances of the flagship of Soffitie in Morente, we through the 2,008 crisis, we still have a 9.5% rate of return internal rate of return. So we will be publishing our performances quarter on quarter to show that we can raise money, we can be selective and we can deliver performance over time to our investors because, of course, in this business, it's all very well to raise funds. But the main thing is to be able to invest them soundly over time to be selective and patient. If you look at the level of dry powder we have in the group, it shows that we are very selective and very patient. We don't rush into things. In terms of ESG, as Soffy D, we have the same best practices as we had in Itikayo. And so now, Sophie D is fully compliant in terms of ESJ. I'll now give the floor to Matthew on Slide 39 to tell you about private equity. Private equity. Well, private equity at TKO, we talked about it during the strategic development that we started 18 or 24 months ago. This is not about majority investments or buyouts with very high multiples as you are used to seeing with announcement of deals 10 or 15 days ago, operations at 17, 18, 20 times EBITDA. We buy minority stakes in growth equity invested with families and management teams in order to develop companies with capital invested into the company and not bought from another PE fund, a corporate company that would only invest. So we choose our verticals. So with the growth equity, with sectoral themes like the energy transition with the T2 Fund or since the acquisition of ACE Management, ACE, we are now also invested in aeronautics, defense and cybersecurity. We invest in sectors where we've got strong beliefs and we can see the main structural trends that emerge. So private equity funds have only been marketed since 2018. We now have EUR 2,000,000,000 in AUM as you can see on the right hand side of the Slide 39, which is very encouraging for 1st vintage funds or the first time funds as they are called, in the industry. Now Page 40. This growth equity, this minority approach and the historical know how that we acquired from the acquisition of Salve Pa, if you've been following us for 10 years, then it has a lot of advantages as we can see in terms of risk return because now we've outsourced our track record of 2.4x gross NYC in multiple, but we invested on valuations of corporate value over EBITDA of less than 7 times. So that shines favorably compared to majority investments and the underlying leverage of the companies in which we invest. The debt is less than 2 times, which thereto compares very favorably compared to the majority LBO markets. Page 41, you can see a spotlight on our T2 fund. As we said, fundraising is still ongoing with quite a bit of success so far. So there's a strong ESG belief as Antoine was saying in the introduction. And the aim is to contribute to the development of a low carbon economy. For us, ESG is not about greenwashing. It's not a buzzword. There are real funding needs for profitable companies that are growing and contribute to the energy transition. That's the purpose of T2. It was one of the very first PE funds devoted to the energy transition, as we said in the introduction. And most importantly, it's an investment of private equity fund, it's not an infrastructure fund. We think that this type of approach should not be at the detriment of IRR or performance. So we invest to create value for our investor clients in a theme that we think is buoyant and also with a strong societal goal. We were truly innovative. We found partners, strong industrial partners to translate that strong belief into investment opportunities. Page 42, you can see the utmost selectivity in terms of investment even higher than for private debt that I was talking about. The conversion rate is 4% and the pipeline included over 700 opportunities that were reviewed and it's only growing because of our geographical footprint. I'll hand over to Antoine to conclude with Capital Market Strategies. Thank you so much, Mathieu. Capital Market Strategy is what we used to call liquid strategies. Liquid strategy doesn't really work well in English. So we think that capital market strategies is a bit more illustrative of what we are doing in the listed part. So these are corporate bonds, financial bonds and we have a fund that's also slightly present on equity markets. What's important to remember is that when we created TIKIO Investment Management in 2007, we started with credit funds. So we were present on high yield and financial subordinate debt markets that were undergoing major dislocation as we are now beginning to see on some markets now. So we've built up a very strong research teams. We conduct our own research ourselves. We have strong fairly strong beliefs with a major track record that was created during the 2,008 crisis. So we were already faced with a crisis. And unlike our other businesses, it's highly scalable as they say, because you can have a fund that starts at €35,000,000 that's what happens, collected €500,000,000 last year. And since the beginning of the year, it still had net positive inflows. So it's a fund that's invested in corporate debt and corporate equities. So if we continue, we could have a fund with €5,000,000,000 or €10,000,000,000 To give you an idea of the performance to date, it's the only part where we're suffering a bit. It's a fund that was at minus 10% year to date to compare with equity indices that lost 35% to 45%. So we are highly defensive. It was managed like the rest of the TKEO company with a lot of selectiveness. So we think that we have a growth driver, a lot of a lot under the pedal for the next few years with these strategies. Along the ethos of the group, while we have these funds with ESG ratings from Lux Flag. Most TKO private and public funds are now rated by various fully independent agencies that choose to rate our funds or not by the way. Now Page 45 to give you an idea of the performance of the INCA fund. INCA means TIKIO income cross assets. We were at €392,000,000 in 2019. We ended the year at €1,000,000,000 And last week, we were above €1,100,000,000 so we are still getting inflows. It's a very wide universe of stocks because we are looking at roughly 200 companies with in-depth analysis. The performance of the funds in previous years had remained humble because the market was rather very good, very buoyant. Now we can see that in a more bearish market, it really stands out. And that's all that I can say about INKA. Our other credit funds that were managed between 30% and 50% cash. And now we think that we are well positioned. And as I said already, there are significant growth drivers in those because it's the opposite of what's going on with ETFs. With ETFs, you replicate the index here. We stock big. We decide to invest for the long term and divest when we think that there's going to be a major structural shift both on the equity market and on the credit market. I will now give the floor to Henri for the financials. Thank you, Antoine. Good morning, one and all. Let's look at slide 47 before we get into the details of the P and L to remind you that in December 2018 after the go ahead from the relevant authorities, we finalized the acquisition of the 2 management companies, Suffidy and ACE Management. And so now these companies are fully integrated and consolidated. So they had an impact on the 2019 P and L. That's why we compare 2019 with published results 2018 and pro form a 2018 to replicate all of our operations if these two companies had been fully consolidated in 2018. Let's start with the income statements for FY 2019 with the first part in blue, the first engine in our model with asset management activities generated an OPAM of €58,500,000 up strongly by 48% on like for like or an increase multiplication of 2.9 times compared to the published figures of 2018 that shows once again our ability to generate profitable growth. Regarding our investment activities in gray at the center of the slide, generated operating income of €199,000,000 due to the cumulative effect of an increase in recurring revenues and the fair value adjustments for a number of listed assets. I'll get back to it in a minute. Financial interest was minus €33,000,000 down by €9,000,000 compared to 2018 mostly because of the fair value adjustments of our hedge of our rate hedges on our syndicated bank loan. Tax was a charge of €39,000,000 mostly related to deferred taxes for €30,000,000 and so net profit at €178,000,000 for FY 'nineteen. On Page 49, you've got the split of our AUM, €25,800,000,000 17% growth for FY 2019 in order to measure the performance of our business lines. They've been brought together into 2 scopes On the left hand side, you've got NOK23,600,000,000 for asset management. So AUM managed within funds by our management companies, assets entrusted by third parties or investors, but also partly by TQ's balance sheet. And so these AUM generate fees like management fees or carried interest split over the 4 business lines that Antoine and Mathieu talked to you about. I'll focus on the orange part, which is the alignment of interest between TCO and its investor clients with close to €2,000,000,000 invested by the balance sheet in our managers' funds. And then in gray on the right, you've got the direct investment AUM for €2,200,000,000 bringing together assets managed by from the balance sheet outside of TIKIO funds as well as the group's cash. On Page 50, you've got an analysis of our fee paying AUM so that you can get a grasp of our ability to generate revenues. So we need to analyze the nature of our AUM. That's why we're now showing our AUM in 3 segments, what generates fees, what will be with the deployment of funds and what will not pay fees. So in dark blue, fee paying AUM is now €19,900,000,000 very strong growth, 23% over the FY. The reason for that is mostly because of solid inflows in real estate, especially for Soffiti, as well as for the private equity business line, but also with the sustained development of our funds, which favored that increase. You can see once again that 2018 acquisitions strongly bolstered the profile of the fee paying assets 2.2 times compared to the end of 2017 from 9,200,000,000 to 19,900,000. We also benefited for €2,600,000,000 of assets under management generating that will generate fees. This aggregate is mostly explained by the fact that our private debt business line and partly by real estate for Trejo. We receive management fees based on the capital invested and not based on the capital committed by investors. So that's the future revenue equivalent in excess of EUR 20,000,000,000 which is not yet reflected into our P and L. Still on the fee paying on Page 51, you can see that it now accounts for over 84% of our AUM plus 4 percentage points compared to the end of 2018. And if you look at the nature of the fee paying AUM within the €19,900,000,000 you can see what we discussed earlier, liquid strategies, capital market strategies now of €3,800,000,000 open funds, but also at the bottom you've got the funds managed by Soffiti, €5,600,000,000 and they have a hoarding average hoarding time higher than 12 years. And for the closed funds scope, there is over 98% of assets generating revenues over 3 years, for more than 3 years so that we can have visibility over our revenues over time. So the nature of revenues, revenues for FY 'nineteen, SEK 175,000,000 up very strongly, plus 39% growth compared to FY 'eighteen, life alike. Compared to the stated results that we had in 2018, that's an increase of 2.3 times. So that should be compared to the growth of our AUM that is fee paying, as we explained previously. So over 95%, that's the blue part of our revenues are made up of management fees. That's the first engine in our business model. And the contribution to revenues of performance fees and carried interests and over performance fees were €8,500,000 for FY 'nineteen and you can see at the bottom right that the split of our revenues by business line has diversified a lot. At the IPO, we said we had diversified the AUM, but one of the consequences is also diversification in revenues because now real estate accounts for 47% of revenues, private equity over 14%. Page 53, one of our key indicators is to measure the revenues that I've just explained and compare them to the average of our fee generating AUM for FY 'nineteen, the management fees were on average 69 basis points compared to AUM. Because of the strategic initiatives that have been launched since the IPO explained by Antoine and Matteo, but also because of the effect of external growth, our management fees grew very strongly for FY 'nineteen, standing at 92 basis points on average for FY 'nineteen. We also state that we give the breakdown of all of the revenues by strategies so they can have the various positive mix effects because of the stronger share of real estate as well as private equity. Performance fee and carried interest related revenues account for 5 basis points on average because of carried interest, mostly because of the disposal of the Ellis portfolio that Antoine was talking about a minute ago, but also performance fees for our business units and capital markets on all the bond funds for FY 'nineteen. I'll dwell for a minute on the issue of carried interest and the alignment of interest related to carried interests on Slide 54. The listed company receives 53% of the carried interest on closed ended funds. The eligible quanta to these revenues have increased strongly, plus 27%, now reaching 8,600,000,000 within the business lines of private debts, real estate and also private equity. Carried interest is triggered at maturity as soon as hurdle rates, the target rate has been exceeded. Our ability to generate these carried interest will depend on the ability that we have to invest wisely, the money that we're entrusted with and as we've done in the years since the creation of Ticchio. As a reminder, the capital markets funds are still eligible to performance fees, which are annual and which stay 100% within the listed scope. I'll draw your attention to the right hand side of the slide where you can see that the quanta of invested assets that are already above the hurdle rate, the target IRR have increased by over 17% compared to 31 December 2018. Now regarding profitability in our asset management scope, we've talked about revenues, but now net income is €58,500,000 plus 48 percent like for like. This is the result of the deployment of the strategy that we announced at the IPO. This is the outcome of a combination of organic growth, but also acquisitions that were strongly value enhancing for the group, almost 3x the operating income that we published for 2018. Because of revenue growth, we still invested in the platform, which is a key asset to carry on with our development. So growth in cost was driven by staff costs and also because of the international development. So compared to revenues, we have an operating margin rate for 2019 of 33.5%. Now let's look at revenues related to our investment activities on Page 57. Investment revenues stood at €278,000,000 for FY 2019 to be compared to an amount of minus €32,000,000 for FY 'eighteen. The first component in our investment income is the orange bit, which has a cash impact, dividends coupons on our investments, standing at €89,000,000 versus €73,000,000 in 2018, so an increase of over 21% to be compared to the increase in the size of our portfolio invested from our balance sheet. The second part of the revenues is the changes in fair value on the assets. The positive impact was €189,000,000 because of the appreciation in the equity in the value of a number of assets in the portfolio. If you look at the components in all that, you can see that on top of what is related to our listed stakes, I simply wanted to draw your attention to 3 things. First, the impact of the disposal related to the creation of our secondary private equity fund generating a gain of over €10,000,000 The impact of disposals that were made during the year, be it HDL, SPIE or Justco in Asia. And last interesting item, the impact of TCO funds in the makeup of that result, they generated over €90,000,000 Well, precisely regarding the impact of the component of TKO funds on Page 58, you can see that this contribution to income more than doubled compared to 2018. The impact of our consolidated P and L was €44,000,000 For FY 'nineteen, that result was over €90,000,000 fully in line with our strategy to deploy our funds, and over which we've got better visibility and in-depth knowledge of our investments. These SEK90 1,000,000 compared to the amount invested from the balance sheet and the funds shows a yearly return of close to 8%, up 150 basis points in FY 'nineteen compared to FY 'eighteen. Now let's look at the balance sheet review, Page 16. Our balance sheet structure is still relatively robust, and it's still a differentiator against a deeply changing backdrop. Equity was €3,100,000,000 of shareholders' equity, strongly up plus €865,000,000 because of the capital increase that was finalized in June. Our cash position was strengthened at over €1,300,000,000 because of the capital increase, of course, but also the deployment of our balance sheet, but also all the divestments that were made during FY 'nineteen. The group's got dynamic management of its balance sheets in terms of asset recycling and the level of care that we have on the level and the structure of our debt. Let me dwell for a minute on the structure of our debt on Page 61 to remind you that our net financial debt is at SEK 1,000,000,000 with a gearing level that's improved level, significantly at 32%. That debt is made up of a syndicated loan, which has been drawn for €200,000,000 a bond issue of 2017 for €300,000,000 and another bond issue in 2019 for €500,000,000 As Antoine said, we still have a bank facility that's available and undrawn for €500,000,000 Last but not least, Fitch gave TCO its first rating at BBB- investment grade, which confirms the solidity of our balance sheet. And because of all these operations in 2019, the average maturity of our debt went from 4.1 years at the end of 2018 to 5.6 years at the end of 2019. On Page 62, I'll focus on one of the main aspects of our balance sheet on investment portfolio. This investment portfolio grew by 11% at €2,300,000,000 in 2019 versus €2,100,000,000 at 31 December '18. So we're still deploying our balance sheet according to our allocation strategy. Via our balance sheet, we've invested €700,000,000 We invested €700,000,000 in 2019 very cautiously, sensibly with €200,000,000 invested in our own funds. Regarding the balance sheet, investments in the group grew by over 57% and now accounting for €1,400,000,000 in our balance sheet. And so the share at the end of 2019 was 61% of total portfolio. So we are fully in line with the trajectory that was announced to raise the balance sheet exposure to TCO funds to between 65% 75% by 2022. If you add to that the uncalled amount in our own funds, the total commitments by the group in our funds is €2,000,000,000 And let me remind you that the granularity of our portfolio is high. You can see that on Page 63, All of the portfolio now accounts for over 205 underlying stocks and one TKO fund is one underlying security and still within each fund you've got greater granularity. You can see on Page 63 that the share invested in our funds has grown at €1,425,000,000 For the funds that are invested with TQO, we've got strong diversification. You can see the split between the various asset classes, private equity, real estate, private strategies. And the direct investment share in light blue at the top of the slide is relatively balanced between listed and private assets. Now moving on to the strategy and the outlook on Page 65. Thank you, Henri. Well, we'll now try to give you some outlook and the view of the TKO company, its various partners and employees before we take your questions. 1st, a focus on COVID-nineteen. Of course, we hope that all the people listening to us, their loved ones and their families are healthy and they are now isolated as was requested by the government. Since the public health crisis started in Asia, Bruno de Pomplon, based in Singapore, the head of the management company, has put in place a committee which is operational 20 fourseven given the various geographical footprints fairly early on because we applied the Singaporean MESTA to all of our offices. So very early on, we put in place what was already existing, but it's now fully operational with teleworking. We've got IT and digital teams that are very efficient and they've worked flat out. So now we are fully operational to work remotely whatever the activity. So in terms of TQ operations, we were able to cover all fronts. We had due diligence by a big We had due diligence by a big U. S. Consultant for a New York based pension fund that wants to invest in our alternatives strategies. It was done entirely remotely and it worked fairly well. There's more that we can do of course, but we are fully operational. Of course, the issue is to have close monitoring of all of our investments in all of our asset classes with reviews that were conducted business unit by business unit, company by company to understand the issues for each company. And so we'll try and support all of the corporates, both financially, but also trying to provide them with advice and support. Since we provide growth equity in our private equity activities, even though we are a minority share, we have a specific seat on the Board and so we provide all of our advice to help these companies to make them stronger when the crisis ends. So of course, all that is organized at the corporate level, but also at the business level. Moving on to Page 66. You can clearly see that we need to monitor a situation which is changing fairly quickly and fairly surprisingly, as I said, when you no longer generate any sales, it's quite specific crisis. The issue is to know how long the public health crisis is going to last. And as we said, we're not experts. We can't comment, but we can see some fairly positive news coming from Asia, but fairly different. The countries that were fairly drastic in their approach, China, Singapore are doing rather well in public health terms. The countries that took a bit longer to respond, there are still cases like Indonesia or the Philippines. Japan is rather in the Chinese, Singapore and South Korea field. So we're still monitoring the crisis. Well, it may just disappear immediately, but it will leave a lot of scars, but it will change a lot of habits with individuals in terms of consumer spending and the way people work. It's too early to draw consequences, but we think that a lot of cards are going to be reshuffled. And as investors in a shifting environment with human capital, financial capital and strong stable shareholders, we think we are very well positioned to come out of the crisis stronger. And we're a fairly young company. 4 years after our inception, we went through the 2,008 crisis, which was only financial, but we were really in the reactor core. So we are fairly knowledgeable about crises. So we are fully operational in human IT terms. We make sure that we can help all the companies that we've invested in. We're looking at a lot of opportunities because market dislocation is such on all markets, most operators are now looking at equity markets. You can see things that were not even observed in 2,008 on credit markets with debt discounted at levels that are mind boggling. So we think that we can see some investment opportunities for our funds, for our future funds also. We've got a whole series of funds that are raising funds or that are going to raise. For instance, we had approval from AMF for a dated fund. These are bond funds. We had TK 2024 and now we will launch TK 2020 7 and we want to be fully in on the current situation that is constantly changing. So that's why we don't want to rush though. Page 67, very clearly. Here you've got a reminder of 5 major items that we think are key for success. First of all, we've got a strong team so that we can source opportunities in all asset classes in most geographies. And as I said earlier, the situations are very different depending on the country. We've got very strong alignment of interest with our investors and our funds because each time TIKIO Capital invest €100,000,000 in a fund that means that management and employees invest 45 percent, €45,000,000 So risk control at TKEO is both the risk department, but also exercised by overall employees. We built TKO to be very inquisitive. We are inquisitive entrepreneurs in our DNA, so we want to be very responsive. If we keep our capitals, if we are still very selective, we could leverage the currently observed dislocation on all markets. There are going to be new opportunities as Mathieu said at length. The private debt market will become even more attractive than it was in terms of yields and companies that are going to need funding. Moving on to the last Slide 69. There are a number of mottos at TKO. There's one that we are very fond of. Create not compete. We were created with €4,000,000 15 years ago. And now we are a company involved in investment and alternative asset management with a lot of beliefs. We don't want to brag. We still we just want to remain ambitious. That's why we have a platform in several countries, in several asset classes. We suffered a bit from the last 3 or 4 years because we were extremely cautious. And so time and again, we said that we could not understand valuations. That's why now we've got a lot of cash on the balance sheet, EUR 1,300,000,000 plus the EUR 500,000,000 credit line, so €1,900,000,000 if you remember the valuation of banks, insurance companies, asset managers, especially alternative ones, €1,900,000,000 is now a lot of money. We've got €5,200,000,000 in dry powder in asset management. We'll still raise funds. We raised €577,000,000 in the 1st 3 months of the year. So now there's no net outflows. There may be, but investors are still trusting us because our strategy is fairly conservative with a global platform. It's now paying off. And we're fairly upbeat about the future events. So now Henri, Mathieu and myself are going to take all your questions, if you agree. First question comes from Arnaud Ghibler from Exane. Good morning. I'm from Exane, and I have a couple of questions. Number 1, may I ask you regarding the valuation of your assets? I imagine that you follow the international private equity venture capital guidelines. And so there should be no surprises, no major discounts in due of the widening spreads in the credit spreads that you find in the private equity on the private equity scene. So I imagine there shouldn't be a mark to market correction. So if there's any trigger, it would be from default events. Can you tell us whether there are any assets that are close to their covenants now? Antoine? Maybe a technical answer. There are 2 levels. There are 2 issues: the valuation of all our funds and that are, of course, in line with the IPF guidelines and so both our debt funds, our private equity funds and our real estate funds. And for our balance sheet, we follow IFRS standards and we apply, well, all levels, levels 1, 2 and 3, level 1 is listed. And 2 and 3, we are looking at multiples in line with the ITIL and IFRS standards. Yes. Thank you, Arnaud. This is a very legitimate question because the price of assets may vary considerably. Unlisted assets is pretty straightforward. On unlisted assets, they are international standards. What we can see, what we can what we have is that some of the assets may be affected in the short and medium term. But what we believe is that we have high granularity in terms of funds. Within our funds, we have relatively few leverages in our investments and our funds. I mean, private equity, private debt and real estate. And in the listed part, we are withstanding much better than the competition. So there will be some effect depending on the length of the crisis. It's a bit early days to have a clear view. But one thing is for sure, we are good we have good risk managers because we have a few examples, but you may remember exits in real estate, which would be quite impossible today, certainly not at these values. We have some listed assets. We the Atikoye, we bought it at €2 and we sold it at €39 per share. We sold half of Alveo at €64,000,000 Now they're worth €32,000,000 So we are good risk managers, risk assessors. And the cash that we have everywhere shows that we are very cautious. There will be effects. It's a bit early days for the unlisted part and the private part. On real estate, if you have commercial real estate leased to Deutsche Telekom, it's rather different than what we have. According to our friends from Singapore, it won't be the same as, say, a commercial property in France or elsewhere. So it's still a bit early days, but we do believe we have a good we're well protected because of the granularity by asset classes, by geographies, by size of investment and by tenants. I have a follow-up question on your run rate, you maintained your guidance through 2022. But what do you think I mean, on fundraising, what will be the effects in 2020? Well, again, it's a bit early days. We are comfortable with the guidance. Last year, we had SEK 4,600,000,000, but that was a record year. We have a well, our brand is less well known of that of the 12 players, the 12 listed alternative management, 6 in the United States, 4 in Europe and 2 in Canada. We are the youngest. We're only 15 years of age. So our name is not as well known on the market. But if we look at what happened in 2,009, 2008, 2,009, 2010, we accelerated. In 2,007, we had 100,000,000 euros in equity and 200,000,000 in AUM. We are a completely unknown French company. Now our name is better known and better recognized. And we believe that because we were very cautious, we'll make all the difference vis a vis our customers, whether looking at private listed or unlisted assets. And I think without blowing our own trumpet, if we take advantage of market dislocation, we can perform well. We have we are very active as well. We're not closed, and we can show all our investors and shareholders that we are very much present and responsive. There were some initiatives of unlisted debt. We started a fund 3 months ago. Investors can see that we are proactive rather than reactive. We'll see what 2020 brings that we have already €517,000,000 for the 1st months of the year, this is a pretty good indicator, I believe. The next question from Nicolas Payan from Capuchy Point. Hello, Nicolas Bahian. I have a couple of questions. Number 1, apart from the illiquid funds, all your funds are close ended. In other words, you cannot expect any outflows on Tekeo Asset Management. And the second question on your outlook, you say that there will be opportunities resulting from the health, economic and financial crisis. Can you give us more details? Do you expect more external growth at TKL? Or do you I mean, you referred to credit dislocation. Do you expect an increase in private debt funds compared to private equity funds that is a dynamic rebalancing of your funds. Yes. Well, I'll take the question on closed ended funds, and Matthew will talk about M and As and such like. On AUM's €26,000,000,000 that we manage apart from Capital Market Services, all our funds are closed ended funds, that is investments, have made a commitment for 8, 10 years or more. And so there can be no outflows there, no and the extreme case is if you have a listed real estate company in Selector and we have 2 big insurance companies who are part of the capital, even if decided to pull out, we still manage the listed companies. So there's great stability in revenue. The only situations where you have outflows is in the liquid funds, and that has been withstanding the shock. And in fact, we expect new capital to come in. So most assets that we have, they are in close ended funds where investors have long term commitments. Matthew? Yes. And this is an opportunity to comment on the M and A outlook. You have been monitoring us for the past few years. And non organic growth has been external growth has been very selective. We've been very careful in terms of valuations. It had to be accretive for our capital. For the past few years, alternative investors and especially private companies were not listed, have enjoyed high valuations because of the acquisition of traditional players who wanted to be present on the alternative scene and paid a big premium for that or as we said in September, because you had companies well, you had some American companies that have decided to take minority stakes in management companies. And so that brought in new equity to these management companies and ended up with high valuations. So you had people who'd take minority stakes. We decided to stay away from this madness on valuations on the private market, on the listed market where there's great dispersion in valuations if you look at asset light models that had some tailwinds with very high valuations. And then on the secondary market, you had companies with balance sheets where people were concerned about whether the balance sheet was sound or not and their valuations took a hit. Now if you look at the listed players in North America or Europe, you had some pricing shocks right now. Mechanically, we expect some readjustment on the valuation of private companies, unlisted company, because we have liquid capitals. We have fair liquid, we can look selectively at various targets. If the for us, the criterion will be either geographic or the type of industry. We will be looking at companies in industries where we are not present that might bring in expertise, additional expertise on the platform, but we're also looking at jurisdictions that are countries that are more difficult to enter organically creating platforms as we did successfully, I believe, say, in Italy and Spain or indeed the Benelux in Europe. So we are very mindful of possibilities. We are, of course, constantly being solicited by merchant banks to see what opportunities might be taking. There's a general repricing that should enable us to consider acquisitions in the months and quarters to come. Thank you. Next question, Mr. Chris from PowerBooks. Yes, four questions from my side, please. So firstly, in the private sector, could you give us a rough idea of what's the current situation at the moment with regard to the leverage loan and the CLO strategy? And do you expect government support to help your portfolio companies? Secondly, with regard to investment opportunities, apart from the just discussed M and A angle, some on the fund side. So in which asset class do you see the best opportunities arising there? And what would be your key criteria that you would take into account at the moment? And thirdly, is there a possibility that you might deviate temporarily from your strategy to focus on investment through the funds instead of the balance sheet? How would you say this is not really on the table right now? And then lastly, how much of the available cash that you mentioned is already committed to fund? Thanks, Christophe, for these three points. I will start with your last question. So what you you know that we told the market at the Capital Markets Strategy Day on May 15 last year that we will increase to 75% balance sheet resources into our funds so that we would reduce the number of direct investments and obviously reduce the volatility that Arnaud was referring to. So you should expect effectively as we launch new initiatives to see bigger commitment into our own funds, leveraging higher commitments from 3rd party investors. We evidence that, for example, in our private debt strategy during our presentation. And so any investment into the Fund has to stand on its own merits and targeting the return on capital employed that Antoine mentioned of 10% to 15%. But in parallel to that, effectively promote higher third party AUM coming from 3rd party investors, generating management fees and carried. I think we reported the last direct lending fund was €2,100,000,000 the balance sheet in the seat €214,000,000 into the strategy. So there is no rule of thumb of this 10%. It's being decided by the Capital Allocation Committee for every single strategy being launched. Typically, I can tell you that in the context of the private debt secondary business, for example, that we briefly discussed, there will be a significant investment by the balance sheet of at least $200,000,000 It's going to be a dollar based solution that we are managing out of New York. And likewise, in the Special Situation business, part of the tactical strategy unit that Antoine mentioned, Given the very timely nature of this strategy, there will be at least €100,000,000 to €150,000,000 in the same strategy. Those are significant commitments, but they are into a fund. They are not into a direct company. So that should flatten the volatility that get us access to a much more granular portfolio with your view to return effectively the 10% to 15% return on capital employed. So that's for your last question. Now question number 2 as to the M and A and which businesses we could be focusing on. I mean clearly, we said that we wanted to grow into private equity. We demonstrated that we could go from nothing to €2,000,000,000 in a relatively short period of time, thanks to the leadership of Emmanuel Layer, who now joined us and is managing business. If we were to see more opportunities like we saw on ACE Management, we could selectively effectively move on to a private equity. And that is once again not controlled buyout with all the legacy that those GP would have to manage of very high valuation multiple that have been paid over the previous year. That's something that would be along the line of what we are trying to develop in our growth equity strategy. Obviously, we discussed that over the past few months. I mean infrastructure is something that people keep asking us to develop into. I mean, clearly, infrastructure is a very interesting market. That's a market that will be, in our view, repriced. And unfortunately when you look at what's happening right now, a toll road be in France, in Italy, in many countries, I mean, those are assets we're gonna be suffering. Airports, our assets are going to be suffering given all the lockdown. So once again, there's going to be a significant repricing here. And if we were to identify some good fit and for us, the criteria of a fit for an acquisition, obviously, it has to be financial and relative. That's the point I wanted to make to Nicolas Lyon. It has to be relative for TTO Capital. But more importantly, it's about the cultural fit. And this cultural fit, I mean, of key assets are the people and we need to find this real cultural match that we are seeing more and more with some entrepreneurs looking to move into the 2nd step where the balance sheet can be a key differentiating factor for them because they will get this anchor commitment. So those are areas where you could see us effectively moving to now. Having said that, we're not we're fairly agnostic. Antoine like to say and you wrapped up his presentation on creating or compete. There might be some brand new strategy that actually are not even today a sale on an excel spreadsheet of new strategies that we're going to be creating in this market. So that's where you should expect us to move forward, but once again remaining selective. Now if you could just repeat your first question because I did not get it correctly, I think, Christophe. Yes. Just maybe a quick follow-up regarding the investment opportunities. I was thinking apart from M and A, so maybe more on the fund side. So what would, let's say, an ideal investment opportunity in this dislocation look like? And what are the real key criteria for those, let's say, opportunistically timed investments that you would take into consideration? And then the very first question was on the private debt side, outside of direct lending, so more on the leverage loan and the CLO activities, what the current situation is there at the moment? Okay. So I can react on the leverage ons because there are some indices and it's a broadly or it's supposedly broadly traded market. There's been a drop of 8 to 10 points on the leverage on markets, if you refer to the European indices. In the U. S, it's slightly different because the market is more segmented, but it's the same pattern. And that has clearly impacted also some of the current warehouses of CLOs. I don't need be too technical here and you know this market fairly well. In order to launch a CLO, you first ramp up, you buy some leverage loan that are very often warehoused by a bank. The bank is asking you to put a bit of capital, but provide you with the rest of capital. And then when the market is ready and the portfolio is ready, you issue a CLO. So we at TKL, we issued our last CLO in July last year. We have not we don't have any open warehouse right now. So we're not at risk of any market situation as a consequence to that. And quite the contrary, as I was saying, I believe that, that will create some opportunity to effectively buy and ramp the next CLO in some much more appealing conditions. Now this has been the main source of the liquidity for the lever finance market. The lever finance market is financing the large buyout, the control buyout I was referring to. If this market was to remain under stress, if not shut down for some time, obviously, that would have major impact for the buyout industry, both on the investment and on the realization and the exit of this operation. But looking back to 2,008 2010, Antoine was mentioning that earlier on, and TTO was a company of a totally different scale. This is where we had our most significant growth in terms of stepping up. Credit and stress credit I would say is at the core for DNA. A. So today, we've got the entire platform, our laboratory team, our CLO team, our special situation and tactical strategy team together with private debt, looking at all the opportunity in primary and secondary to be best positioned to address that. So that would be my comments on the leverage of market. Now to be more precise on your previous question about the balance sheet commitments, I mean, we are roughly at EUR 600,000,000 committed by the balance sheet into our strategies. But sorry to come back on this, but the face off, this EUR 600,000,000 are in addition to the EUR 1,400,000,000 already invested by the balance sheet. But that being said, those commitments will be drawn over 12 to 18 months. So it's not commitments that are that may appear right now. Maybe I can do to come back to Christophe, one comment on the CLO. So TIKIO Capital Europe, which is our collateral manager entity, managed actually EUR 2,000,000,000 of across currently 5 existing closed end CLO, which actually match assets and liability in a 12 year term financing structure with limited mark to market pricing triggers. I shall remind that the CLO are not forced seller of assets. The CLO structure has been proven to work through market turmoil, naturally deleveraging and self correcting with limited historical tranche default despite high underlying assets default through the financial crisis. And if you take actually the CEO, CLO portfolio, they do benefit from a high degree of diversification across issuers, sectors and geographies. With that, Christophe, Fitbit, obviously, most of the large funds, TKO, are still in their investment phase. We're not in the realization phase. So we are less dependent on market condition to exit, realize some of our investment in order to not only generate capital gain or potentially carry the interest, but quite the contrary of being able to tackle those market opportunities. Yes, that's all very clear. Thank you. The next question comes from Pierre Bosset from HSBC. The line is open. Good morning. I have a couple of questions. A follow-up question on exits. Is it right to believe that your fees, management fees, are not impacted by the lower valuations in your funds? Could you consider that you have no the fact that valuations have come down is not going to have an effect on management fees? And number 2, it's maybe a naive question, but you said that you have €5,200,000,000 in dry powder, but some of it is already allocated. So is it to say that the €1,300,000,000 that you have in the balance sheet at the end 2019 is also dry or drying powder that you could use left or right? Thank you for these two questions. So the way management fees work, if you're an asset manager, if you manage €100,000,000 if your management fees are 1%, for us, it's 0.92. So it's up, let's say, 1% to make it simpler. It means that you will be collecting €1,000,000 in management fees the following year. If you have liquid funds, if €100,000,000 are liquid funds and €50,000,000 go away, well, you've only managed €50,000,000 1% of that. And if there's a negative mark to market of 50%, the 50,000,000 becomes 25,000,000 and so your management fees will be €250,000,000 So here, we have a small part of liquid funds on which there are no exits. In fact, there's inflows, not outflows. And there has been a slightly negative year to date impact. But for all the assets that we manage, we have management fees either on the investment or the investors' commitment or on that. There could be less management fees over time, but we're talking about small amounts, but we don't give specific guidances. At this stage, we're not concerned about lower measurement fees. As to performance fees, since our funds are relatively young, there's little by way of performance fees, but that could have an impact as speaking under the supervision of Henri, but Luxeo was €6,000,000 in performance fees. It could be less this year. But if you look at the total management fees of €179,000,000 we're not looking at much of a decline there. On dry powder, we have about €5,200,000,000 in cash either in funds or in investors' commitments in our funds. And we have €1,300,000,000 plus €500,000,000 on the balance sheet. So part of a 1,800,000,000 on the balance sheet will be called on the funds that are part of dry powder, but that still leaves room for maneuver. So our balance sheet capacity plus asset management is quite significant. Thank you. There are no further questions on the phone. Well, we have questions that were sent through the webcast and really a question by Geoffroy Michellet from ODDO, who wanted to know whether the dry powder to date was at a level close to the dry powder at 31 December And also the ability to preserve if we have a V shaped recovery scenario, are we able to preserve the IRRs or the various funds and future inflows? Over to you for the answers. I'll take the question on dry powder. The €5,200,000,000 was at €31,000,000,000 No, it's €5,400,000,000 to date. On IRRs for the V shaped recovery depends, of course, on each investment and each strategy. It depends on the length of the V shape and the supports that will be necessary company by company. On primary funds and at this stage although it's on both for private debt and private equity, our teams have daily contacts with companies in order to gauge the immediate impact. But as Antoine said, it's too early to tell, but they were very proactive to offer solutions, flexibility and useful ones. But what you can see on private debt, it's happened over the last few days because of market pricing on the public primary market. There's going to be a new standard regarding finance conditions, as I said in my presentation. What a few months ago was a big question. Is there too much dry powder raised on private debt funds? And is there a risk of a bubble? Well, in the last few weeks, we've been seeing, we've been reading a lot of private players approached either by companies or consortia of banking pools that have put acquisitions or buyouts on hold on which there were advanced negotiations and are now turning to private debt players to provide solutions. The last time that happened was in 2012 at TIKIO. We took positions on great operations that we've since exited from. Companies of over 100,000,000 and more in EBITDA were turning to a still nascent market of private debt that was 8 years ago. Now the market is a lot more established and structured, so we could expect increased business with more attractive conditions and terms for investors. I have another two questions asked Mr. Alex von Casas from Casas Association. Questions talking about TQ's characteristic caution in terms of investment for last 2 years and now what's about the trade off between extreme caution that was very wise in the past and opportunistic and technical opportunism to see short term operations? How is the trade off made? And then regarding the residual ownership in Eurasia, what about potential cooperation? And given the current market decline, what's your feeling on that? Thank you for the two questions. Historically, as we've said, we've always been very cautious and we fared through the 2,008 crisis the same way. We had relatively little dry powder in 2008, but we still had some, so we could seize opportunities. Here we've got a more global platform with professionals carrying out basic research on companies and assets. As a It's possible that we're going to invest and we've got money for that because I said TSO, TKOs Special Opportunities is a fund that is there to seize opportunities coming from credit market dislocation opportunities. We bought debt of a company that's well known at $0.50 a very large international corporation. So a lot of opportunities. The crisis is complex and it's a public health, economic and financial crisis. So we're looking at a lot of things. We'll do things and we've always proved that we were quite responsive. Regarding your second question, as we said, we rarely commented publicly on Eurasio. We had almost 10% since then we've decided to sell half of that at €64 It's now worth €39.4 Well, we hope that the company will continue to be managed adequately in very rough times. And of course, we are very careful about management and what management is going to do because of the crisis. So we're extremely careful about the decisions they're making regarding the management of their equity stakes, but also very careful about their share price. Well, I suggest that we can wrap up. I have a question from Geoffroy Michel Hodeau. I'll call him back separately. There are other companies publishing right now, so we can wrap up this conference call. Well, in that case, thank you very much to everyone for their questions, for their patience, for their interest in TQO Capital. We hope that everyone's going to stay healthy and safe because that's the number one priority. And we need to be able to respond and navigate through the crisis. So we're available to everyone, of course, if you want to discuss about investment opportunities, Thank you so much, everybody. Good luck. Thank you.

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