Investor Update

Jul 30, 2020

Morning, everyone. This is Matthieu Chebron. Thank you for joining the Piquel Capital First Half twenty twenty Results. I'm joined today by Antoine Flammarion and Henri Marcou, and we wanted to thank you to join us this morning. So let's start with a quick overview of the H1 2020. At the end of June 2020, our assets under management reached €25,700,000,000 representing close to 10% growth over the last 12 months and 1.2% growth over Q2 despite a fairly unprecedented context. The 1st 6 months of 2020 have demonstrated our capability to achieve a very solid level of fundraising in a complex and uncertain context with €1,100,000,000 of net new money for the asset management activity. Our teams have been fully operational and an impressive level of dedication in spite of the context. This level of fundraising in H1 is very much in line with the amount we raised in H1 2019 a year ago, even though the environment is dramatically different as we all appreciate. This is clearly a strong achievement from our teams and we are grateful for the contribution. We're also improving our revenue mix with the continued growing contribution from real estate and private equity, one act that we've been very focused on over the past few years, which accounted for 80% of the H1 fundraising. In private debt, as some of you may remember, we didn't have a We already have several funds like that, that goes back to 20 We already have several funds like that, that goes back to 2011 and 2012 under management and this is new success that confirms our positioning as a key player in financing the real economy. I should also add that we remain active in the management of our portfolio. In particular, we save the opportunity to crystallize some value from our investment in DWS. In parallel, we remain strongly committed to developing our strategic partnership with them and we have a very positive situation caused by COVID-nineteen pandemic, H1 has definitely been a positive period for us, where we demonstrated our ability to maintain our growth momentum. Now we wanted to give you a quick update on the post cutoff, June 30 to July 30 today, and Q3 is starting very well. Since end of June, we have gathered a number of major commercial successes, which in total represent an extra €1,600,000,000 of assets under management added in just 1 month then. More than €1,000,000,000 comes from organic growth. So we raised in just 1 month effectively the equivalent of the whole first half We'll get back to these milestones being private equity with ACE Management or in private debt. And last but not least, we closed yesterday the acquisition of Star America Infrastructure Partner in the U. S, which we announced after the Q1 results a couple of months ago. So moving on to the next slide, a quick snapshot on fundraising. What is important to highlight here is that during H1 2020, we have raised €1,100,000,000 as I was seeing almost the same amount as in H1 2019, keeping in mind that the circumstances were obviously fairly different. This growth was quite well spread between Q1 and Q2, and Q2 was even a bit better as €600,000,000 fundraising. You will see that this is exactly the same amount that we had been raised in Q2 2019, which once again we see as quite an achievement. All of our asset classes contributed positively to the asset management fundraising, but it is important to note that real estate and private equity have largely driven fundraising for the period, attracting 80% of net new money in the first half compared to 60% last year, confirming the appetite of our clients for these 2 asset classes and also helping us further rebalance our business mix towards highly revenue generating strategies. As a reminder, our average management fees were 71 basis points in 2017, 83 basis points in 2018 94 basis points in 2019. We are obviously very much focused on keeping this trend and growing our top line asset management revenues. Moving on to the next slide, Page 6. This slide here gives you a view on our assets under management evolution over the last 12 months and over the last 6 months for our 4 asset classes. I think it's important to know that for a business with long dated closed end funds, quarterly analysis can sometimes be misleading and the last 12 months view brings some long term perspective. So private debt is slightly down on a yearly basis, but remains stable in Q2. This has to be put in perspective with our natural fundraising cycle since we didn't have any flagship fund in the market for the past 12 months. Yet we have had the success of the Novo 2020 I was mentioning and we made some distribution to Marcu will come back on is that we had the first closing of our 5th direct lending fund in July, but Henry will comment further on that. As for real estate, assets under management are up by a solid 20% on the last 12 months basis. In 2020, after a dynamic Q1 marked by the final closing of our value add fund Trio, TK Real Estate Opportunity and a solid fundraising momentum at Soffiti, our asset under management increase in Q2 was lighter given the context. Our real estate business is very diversified across European geographies and also across asset classes since we operate residential, offices and some retail. Private Equity has also seen very solid growth over the last 12 months, more than 50% with now €2,300,000,000 of assets under management. We are convinced that Equity Financing Solution will be a key tool to finance the economic recovery and the verticals on which we are positioned such as the growth equity, the energy transition through our firm T2 are proving increasingly relevant. Just as a reminder, 2.5 years ago, when we went public, we had just shy of €100,000,000 of asset management in private equity. So we are clearly delivering on that front as well. Finally, regarding our capital market strategies, fundraising for the asset class proved very resilient in a particularly deteriorated market environment. Fundraising was positive in H1 and Q2 markets rebound contributed to offset part of the negative market effect seen in the quarter. So moving on to the next slide, Stefan. Overall, at the end of June 2020, total group AUM stand at €25,700,000,000 representing almost a 10% growth compared to the same period last year and a stable level compared to end of December 2019 despite this very specific environment. Regarding the asset management activity, on the back of what I described in the previous slides, we generated more than 13% AUM growth, 1.3% over the last 12 months with AUM of €24,000,000,000 thanks to our unique positioning on diversified and complementary asset class on which we can very much differentiate ourselves. You can see on this slide that the rebalancing of our business mix is real. That is a key component of our strategy and model evolution towards a higher fee generating strategy. On top of that, bear in mind also that 80% of our asset management AUM stands within long dated closed end fund, which leads to a very solid visibility in future management fee generation. Also, our assets under management is rather young, if I may say, and our model does not rely on short term carried interest generation. So at the end of June 2020, the dry powder within our funds reached €4,700,000,000 That is very important item as well, which gives us significant means and resources to invest going forward. At the end of July, on the back of the fundraising, I mentioned for the 1 month starting of Q3, we are closer to €6,000,000,000 Direct investment AUM amounts to €1,700,000,000 at the end of June. The change in assets under management over the first half is mainly due to new commitments we made into our own fund as per the strategy to align our interest with one of our clients. This aggregate obviously also includes some market effects on the direct investment portfolio as well as the dividend payment. We will also see some impact related to some financial instruments we implemented during the first half, which can be considered as a hedging tool for the investment portfolio in the very specific and particular uncertain market environment, but we'll come back to that later. Moving on to Slide 8. This is now a more detailed graphic view on the asset management AUM evolution. Beside, I think, is self explanatory. It shows a solid sales momentum regardless of the period you consider. Our asset under management growth is 1st and foremost driven by a solid fundraising. You can see a strong progression in Asset Management AUM on the last 12 month basis of more than 13% won free, driven by €4,000,000,000 of fundraising, mainly private equity and real estate, as we mentioned. And we also gave back to Investo a little bit more than €1,000,000,000 and market effects were actually, in fact, marginal over the period. So over the first half, asset management AUM proved resilient with a 1.7% increase. As said before, we raised more than €1,000,000,000 over the 1st 6 months of the year, which is a strong achievement in this very specific environment. We distributed €500,000,000 to our investors and market effects stood at negative €200,000,000 with Q2 positive market effect, the market rebound effect partially offsetting the Q1 negative market effect. So Asset Management overall AUM stands at €24,000,000,000 at the end of June 2020. And before handing over to Henri, your last comment on Page 9, on the direct investment assets under management. At the end of June 2020, direct investment AUM stands at €1,700,000,000 representing a €500,000,000 decrease compared to December 2019. This evolution is first leading to new commitments from our balance sheet into our own funds, in line with what we've repeatedly announced as a strategy of alignment with our client. Also, you can see that we have distributed over €80,000,000 in dividend over the period. Regarding market effects on our direct investment portfolio, they amounted to around €70,000,000 negative impact over the first half, mostly linked to leasing investment. And it should also be noted that Q2 positive market effect of €100,000,000 have partially offset the Q1 negative market effect of €170,000,000 As such upon in the previous slide, we recorded also €165,000,000 negative impact linked to some financial instruments hedging that we've implemented during the first half as hedging tool for investment portfolio, especially for its various listed components at a time of the market where undergoing very high volatile and uncertainty and that major systemic crisis was highly probable. Finally, we also have other items reflecting the cash position such as financial expenses or operating cash flow. On that, I will leave the floor to Henri Marcoux to discuss the investment portfolio. Thanks, Mathieu, for that. Good morning to all of you. So Page 10, maybe to give you a bit more color on the asset management of our investment portfolio. As end of June 2020, we had a little bit more than 210 investment line in our portfolio with a high level of diversity and granularity in terms of asset type. Should also bear in mind that the investments we make in one of our funds actually typically accounts for one line. But as you know, each fund has a variety of underlying position, so our portfolio is even more granular as it seems. We'd like to emphasize on that slide that now 65% of our portfolio is now exposed to our own funds compared to 61% at the end of December 2019. And remember, it was 49% a year earlier. So we are now fully on track to deliver our 2022 target by exposing between 65% to 75% of our portfolio to our own funds. This differentiating approach clearly enables us first to fully align our interest with those of our investors and clients, therefore offering, I would say, a particularly unique model serving growth in our asset management activities. And second, also to have a more recurring revenue streams. We've been also be very active in managing our direct investment portfolio over H1. As such, we took advantage actually of market condition in Q2 to reduce our investment in DWS by a bit more than 50%. As you know, we've been developing on that, but we have a very good relationship and collaboration with AWS as part of our strategic partnership, which is actually not at all affected whatsoever by this portfolio management decision. Finally, we've been recently informed that Conforma, which is a financing that has been implemented by the group early 2018, will be soon repaid the loan that was granted. And so it will actually generate some cash flow for partially our balance sheet and some of our funds as well. Page 11, I'd like to give you a bit of snapshot of the post end of June events that took place. So you will see on that, that we've been achieving since end of June many projects and many very positive things have happened. So as you can see here, we've been very active in the early weeks of Q3, adding a total of €1,600,000,000 in 1 month. So this compares actually to the €1,000,000,000 that were raised during the first 6 months of 2020, as previously explained by Mathieu. This is really, I would say, massive and our teams have shown here a great and really great dedication in all of our business units. In Private Equity, ACE Management, which I remember is a company we an M and A operation we've been doing in 2018, which is our subsidiary specialized in investments in companies in the aerospace, maritime, defense and security sectors has been selected by the leading aerospace players and the French state to manage the support fund for the aerospace industry. Antoine will come back to that in a minute. We have also raised €55,000,000 as part of the Institutional Fund No 2020 within the Private Debt segment. In the same segment of Private Debt, we are pleased as well to announce that we have now received around EUR 220,000,000 of commitment as part of the first closing of TDL5 being the 5th vintage of our flagship direct lending strategy. FICIO Capital committed EUR 60,000,000 in this first closing and we are now actively marketing that fund. So this is a very first positive milestone in that respect even more in the current environment. Also, Secur Capital has been chosen to manage an evergreen mandate for top tier French institutional investors. This is the first actually evergreen SMA we've been closing in private debt and we hope we'll be able to achieve more of that kind in the future. And last but not the least actually, so we have finalized yesterday the acquisition of Star America. This acquisition we announced in May and which is quite instrumental in our North American ambition and which has allowed actually the group to expand in a new asset class being infrastructure. We are very much looking forward to develop that business just like we did with the Soffydd and ACE Management back in 2018. Antoine? Thank you, Henri. Thank you, Mathieu. Slide 12, please. Hello, everyone. Hope you're all safe in this context and environment. I'm very happy to comment the strong achievement for ACE and its team led by Marwan Lalout and Guillaume Belename. ACE has been selected through a very competitive tender by the French government as the sole manager for private equity fund aimed at supporting and strengthening the aeronautic industry. The fund has achieved a first closing of EUR 630,000,000 with €200,000,000 coming from leading aerospace industry players, namely Airbus, Dassault, Thales and Safran, €200,000,000 from the French states and €230,000,000 coming from TKO balance sheet as a strategy of alignment of interest. The goal is to reach more than €1,000,000,000 and provide support in transforming and consolidating the sector supply chain. This is a major recognition of ACE management expertise in the field of investment in analytics and confirmed that TTO is a key player in the financing of the real economy. As a reminder, we bought AC in 2018 because we saw the growth potential. This is a perfect illustration of our M and A approach to scale up promising asset management team focusing on 3 different verticals and continue to be innovative. ACE has an LP structure historically very similar to what we developed in the energy transition with Total. So it's LPs are mainly corporate and we're going to scale that with institutional investor. Next slide, please. Just a little bit of market sentiment here. The COVID-nineteen outbreak has first led to massive shock on the market, severe liquidity challenges and the surge in credit spread. However, Central Bank's action by treating the market with liquidity, maintaining lower rates have helped stabilize market quickly, leading to a strong rebound. The risk of the real economy remained high at various level. The virus is still spreading. Leverage is high. And as you noticed on various H1 including this morning, a lot of industrial company are going through massive losses. Therefore, in this context, a disciplined approach is essential. We are convinced that discipline, deep analysis, reactivity, high selectivity will enable us to come across the situation. Now it's all about asset picking. Our business is to raise money, but also to make sure we invest in a very selective manner. Next slide, please, 14. In spite of a very challenging cycle, we would like to reiterate our strong conviction that the tailoring underpinning private market are structural. You saw this slide a couple of times before, but more than ever, we see it as very relevant. We are indeed positioned on the market segment that benefit from continued client demand, institutional clients need performance to serve their long term liabilities and retail clients, which is a pretty new trend, are more and more willing to enter alternative asset classes, regardless of their illiquidity. This adds up to our disciplined approach in a particularly volatile and uncertain market environment and to our unique setup of alignment of interest. Next slide, please. In the face of the various challenges raised by the COVID-nineteen pandemic, we have all the needed assets to perform well through cycle. We have built over the years a unique platform with strong financial means and a unique team. Asset selection, investment discipline, alignment of interest, sustainable performance, these topics are a good summary of our investment DNA, and we will remain more than ever entrepreneurs. We are confident that this culture added to the strong and unique liquid balance sheet is a key asset to navigate the current cycle. And finally, to the next slide. 2020 is still full of uncertainties, but we are confident in achieving our 2022 targets, thanks to our strong setup and selective and disciplined approach. Thank you very much, everybody. And I think we are ready to answer our question. Louis? Yes. Operator, can you let us know if there are some questions? Thank We will now take our first question from Jens Ehrenberg from Citibank. Please go ahead. Hi, good morning guys and thank you very much for the update. Just hopefully two quick questions for me. One is a bit more particular. So you've mentioned the ongoing fundraise for the funds for ACE Management or ACU Management. And that's I think currently that stands at SEK630 1,000,000 after the first close, SEK230 1,000,000 contributed by CKO. And that debt is hopefully going somewhere north of €1,000,000,000 Just in terms of the TKHO contribution there, do you expect that to stay at the 230? Or would that basically increase with the size of the fund? That's the first question. And the second question is more a broader question of how you see the market. So we had I mean, we had the large investment banks reporting that overall M and A activity has remained rather muted, but there has been some indication of a pickup over the last month or 2. How do you see that for your capital deployment and investment access? Do you see some signs of recovery there? Or is everything still relatively quiet? Thanks. Okay. Francois Laurin speaking. I'm going to try to answer your two questions. First of all, ACE illustrates perfectly what we'd like to develop. So we hired a very small team of 20 plus people 2 years ago with the real idea to extend that. At the time, Euro Fund number 3 was a circa €200,000,000 fund, so pretty small fund, but a pretty good track record. Obviously, with the current pandemic and turbulence in the aerospace sector, we consider that extending this platform was very relevant. At the same time, French government, with the 4 largest European 4 of the largest European industrial company in the sector decided to launch this tender. We submitted a proposal with strong competition from pretty large private equity players. And our view and part of our G and A, as you know, is to commit large amounts of our balance sheet. So we committed €230,000,000 We're going to stick to that to answer your question. If it's a €1,000,000,000 plus, it's, let's say, 20%, which is a pretty large commitment. So we are going to stick to this €230,000,000 commitment. It's a pretty strong initial closing because we did not have to market the firm yet. So it's been the tender. The fact that we have the 4 industrial companies investing there, which create pretty strong alignment of interest with them. And I think they're going to help us on the fundraising. So the target, as mentioned, is €1,000,000,000 target firm with a €230,000,000 commitment from us. And that's only a mature touch base on that, but it's private equity. So that creates a better mixed product, if I can say, within our asset management because it's private equity. So this fund is a 1.5% plus 20% carried interest. So that should help the business mix and therefore the profitability of the Asset Management. On your second question on M and A, I make two comments, more general M and A comments and then Asset Management M and A comments. First of all, this crisis has been very quick and very unique. It's been initially a cemetery crisis, financial market crisis. And then probably now, we are entering an economic crisis, which will be very different around the world, but we see a lot of bankruptcies and special situation coming and pointing everywhere. Obviously, investment banks are pushing very hard to create M and A opportunities. As you all noticed, they had some very strong second quarter, thanks to huge and unique capital market activities, primary and secondary. But we think that investment banks will push prior to create M and A opportunities. So we're going to probably see here or there some M and A opportunities. But if you remember, some pretty large deal collapses and have been not concluded during H1 because very often buyers decide to walk away. And with this economic uncertainty, it's difficult to see if we're going to have yet a huge M and A activity in broader term. But we see our view is that it's probably too early to see a lot of activity because multiple are still very high and economic downturn is only going one direction. So multiple should decrease. So that's 1. 2, in our sector, in the asset management sector and the alternative asset management sector, As you know, there are only, let's say, 12 listed asset alternative asset manager in the world, but you have a lot of private alternative asset manager. So we see some activity there, very similar to what we announced on the start closing in the infrastructure. So we see some M and A activity in the alternative investment space, probably more on smaller companies, managing from €500,000,000 to €5,000,000,000 We don't see for the time being some pretty large transaction there. Obviously, we continue to monitor a lot of situation around the world in various geographies and various asset classes. Does that answer your 2 questions? Yes, thanks for that, Antoine. That was very clear. Maybe just a very quick follow on on that given that your comments around the M and A market activity at the moment. And how do you think that will impact your funds directly in terms of how well positioned do you see yourselves to being able to deploy significant amounts of capital over the next 6 months or so? Or do you think focus will remain more on developing the existing investments in your funds? Yes. I think the answer is that it will really depends on asset class on an asset class basis. So for instance, we are raising we start raising TSO, TKO Special Opportunities, which is a fund investing in special situation and stress credit. We start deploying a little bit there. We are monitoring a lot of real estate transaction because as you know, traditionally, people put a lot of leverage on real estate and we see some good situation coming there. So we are monitoring pretty deeply real estate situation. So we could probably deploy there. On our private debt activities, we see a little bit of pickup. So that's some either M and A or acquisition from private equity shop. As you know, we finance them. So we are too active situation there. And then on our private equity bucket, as you know, we have a general approach and 2 specialized approach, AC, we just discussed and also T2, our energy transition fund, which is really sitting in the middle of a lot of activity because as you know, for instance, in Europe, all the governments want that all the money flooded by government need to be channeled through a green recovery plan, let's say. So we're going to probably see some activities in our energy transition space. But overall, we remain very cautious. Valuation are very high. We just enter the economic downturn. So we're going to be probably active, but very selective as usual. Our level of dry powder at the end of July is higher than the one we published at the end of March. So that means that we remain selective and we're going to continue to raise money and invest in a very selective manner. That's perfect. Thank you very much. We will now take our next question from Geoffrey Michelet from ODDO BHF. Please go ahead. Hello, gentlemen. Thank you for taking my question. I hope you are well. I have a couple of questions. The first one has to do with your hedging strategy that costed you €165,000,000 I just wanted to know if you could elaborate a bit on that and give us more insight on what happened there? The second question was on the cash position of the balance sheet at the end of H1 because you gave it at the end of Q1 but not in H1. That would be interesting as well. A third question would be when did you sell DWS at this part of the stake and at which IRR? And the last question would be on AC Management. Do you expect to have normal fees like the normal private equity fees of 2% or because it is a state backed as well fund, you will we would have to expect lower fee rate? Thank you very much. Thank you for your question. I think I'm going to take LG, DWS and AC and Henri will comment on cash. The way we see hedging, we have a €4,300,000,000 balance sheet as end of December 2009, fairly invested. So because this pandemic and this crisis has been very unique and we are very close to a catalyst, we decided to put in place some, we call them, macro edge. And more or less, it cost €165,000,000 which is more or less 4.5 percent of our balance sheet. So let's say we have a NAV reduction of 4.5 percent through H1 on this hedging side. On the other side, obviously, we've got asset value decline in Q1 and then increase in Q2. On DWS, part of the portfolio rotation, we decided to reduce our exposure to liquid assets. So we decided to disclose that. I think we gave the 54% of our stake has been disclosed. And at this stage, because it's AUM, we just we can we are not sorry, disclosing IR, but we took advantage of the market and we've been above, obviously, our investment cost. Maybe Henri will elaborate on the proceeds and cash price exit. And then on AC, as mentioned, despite the fact that it's a tender with a foreign industrial company and the government, The first closing has been done on a 1.5% management fees and a 20% carried. So very similar to a private equity fund. And obviously, it will increase our business mix. Henri, I let you comment on the DWS and maybe price and cash. So on DWS, the total disposal amount as of yesterday is €110,000,000 for 54% of the initial stake in DWS. As far as the cash position is concerned, so the cash position at the end end of 2019 was standing at €1,300,000,000 The cash position at end of June is currently estimated at 0.8 €1,000,000,000 so a bit close to €800,000,000 That cash position is being actually included into the direct investment AUM. So it directly affects the direct investments AUM. Keep in mind that as end of June, our level of financial debt has remained the same as end of December. So EUR 1,000,000,000 and we still have EUR 500,000,000 of revolving facility, which is undrawn at end of the year. That's very clear. Thank you very much. We will now take our next question from Christophe Grulych from Berenberg. Please go ahead. Yes, good morning and thank you for taking my questions. Maybe just to follow ups from me on the ACE Management Fund on the hedging tools. So regarding the fees for the new ACE Management Fund, is there a full catch up effect for the full fees for 2020 this year? And then on the hedging tools, I'm just wondering basically those negative fair value adjustments going through the P and L to the same extent that you have shown in your presentation? Thank you. As far as ACE management is concerned, the management fees, there is no catch up effect starting 1st January. The management fees will start as soon as the fund is closed, but the closing was done actually yesterday. So management fees will start to kick in starting yesterday, but not January 1. And your question on the hedging instruments, it will actually fly through the P and L just below the line investment review. So it will affect H1 investment activity within our P and L below the line investment revenue. Okay. Thank you. And can I just ask like what exactly are these instruments? Are these put options? Or what kind of instruments are you using there? It's mainly a futures on Eurostox. Okay. All right. Thank you. We will now take our next question from Mandeep Jagpal from RBC. Please go ahead. Good morning, guys. Thanks for taking my questions. Just 2 from me. The first one is on Star America Infrastructure Partners. Henri mentioned that the acquisition completed yesterday. Please could you provide some color on how we can expect funding to develop for this asset class? And how you are currently thinking about leveraging the North American LP base for Dickhouse other asset classes? And then the second question is just more of a general question on demand for alternatives. Given the impacts of the pandemic upon financial markets, such as lower interest rates, credit spread increases and equity market volatility, In your view, does this make it easier to raise money for alternatives as returns look more attractive or more difficult as clients defer decision making to see how things develop? Thank you, Mandeep. This is Matthew. I may comment on store and Antoine will pick up on your second question. So effectively, we closed the acquisition yesterday. We've been in dialogue with this team and platform for a little while. We disclosed the exclusivity when we reported Q1 and the fact that they were in the process of raising their fund number 2. So today, the group manages roughly $600,000,000 They are in the process of raising fund 2, which now stands at slightly below $450,000,000 There's an objective to raise higher than that, that had not been communicated at this stage. And clearly, we're hopeful that on the back of this new partnership, we'll be able to leverage not only our LP base to invest with them and effectively the other way around because there is no overlap whatsoever between their existing LP base and the Teekayo LP base. I think we indicated that after the Q1 that their NP base was 80% U. S, 10% U. K. And 10% Scandi roughly. So do so to give you a sense very complementary to our current LP days where we are actually very much more modest in these geographies. So the 2 founders, Bill Marino and Christophe Petit are joining us as partners of the firm. And as of yesterday post closing, having a roadmap to effectively start the cross selling between our 2 LP base. You want to take the alternative question, Antoine? Yes. Thank you, Mindy, for the 2 questions. What we have noticed on the alternative demand is that it's remained pretty strong across asset classes and across geographies. Also what we see and what we noticed is that at the end of Q1, pretty large investor, pension firm, sovereign wealth firm, pretty large insurance companies have put on hold some investment decision because they are there to support and to deal with pretty big swing from the market side. So for instance, European Insurance Company had to deal with Solvency II. And as a result, they reduced a little bit their alternative allocation and then it came back. You start seeing similar situation with pretty large sovereign wealth from and everybody has probably in mind that not just as to dispose some assets, some liquid assets. So on and on, we think that the demand remained pretty strong. Investor realized that having less mark to market effect is a good thing. Also, they have to trade in that for liquidity because, as you know, are mainly private and long dated assets. Our flaring in H1 July were particularly across strategies, so real estate, private equity, private debt, the appetite remains strong. And as you see, we are all looking at what's happening in the U. S. Market, which is by far the largest market in the alternative space. So we consider that appetite remain robust. Some investors decided to put on hold a little bit, bit. But overall, the trend, honestly, remained pretty strong. Did that answer your question? Yes, that's great color. Thank you. We'll now take our next question from Nicolas Vecellier from Exane BNP Paribas. Please go ahead. Hi, good morning to you. So obviously, the pace of your fundraising has accelerated in July. I wonder what we should expect for the 2nd part of the year. And if you can give us more color on this. Wondering as well since the end of lockdown in Europe, how are your interactions with investors going? Is it normalizing on this way? Is the fundraising process normalizing? Final question, could you please update us on the performance of your CLO portfolios? Thank you very much. Maybe I'm answering your first your last two questions on lockdown and Cielo performance. Obviously, we have been all going through this lockdown and very unique and crazy situation. TKEO has managed to operate truly as an entrepreneurial company, and I think we mentioned that during our Q1 AUM. But because the crisis, the sanitary crisis started in Asia, our office in Singapore has been really in charge of putting all the procedure in place to remain very active very early. What we can tell you now is that apart of London and New York, the bulk of our partners, employees are working from the office. So for instance, we are at 90% in our Paris office, which is pretty unique because you start seeing more and more film telling that employees will work from home until September, until end of the year, until early 2021. So IKEAO has been very active and ready and as we like saying on the ball. But if you have your team on the ground and also you can work from home, obviously, but we've been really ready and focused and that's why we decided to accelerate a little bit the pace. And that's why our July figure out have been pretty strong, let's say. But you need also to make sure to answer more precisely your question, we need to make sure that your counterparts are working and are ready to work and are on the ground, either at the office or from home. What we noticed overall is that and it's a different question than the one on the LP, but some pretty large institutions have been more calm, let's say, on doing deals on putting preparing materials for investment committee. So we've been very active. Some of our counterparts have been very active, some a little bit less. Also, it depends on the parts of the world. For instance, Asia right now and we have, as you know, 3 offices, Seoul, Tokyo and Singapore are very active. So we can say on and on, TKU has been very active and we are active despite the lockdown and our counterpart, it really depends. But overall, we are pretty satisfied with the trend. Your question on the CLO, obviously, CLO, you have loan on the asset side. And as you all noticed, the loan index closed in March and then went back. So obviously, it creates some volatility on our CLO. But what we can say as of now, we respect all covenants and we have no cash flow defecation. And we remain pretty confident on our CLO business. And we said that we'll do 1 CLO per year, a minimum of 1 CLO per year. We did not have launched 1 in 2020. And by the way, we were pretty lucky or thoughtful on launching the Cielo earlier in the year because, obviously, with the mark to market trigger, it could have been very bad to be marketing a CLO in this turbulent time. So we may launch 1 this year. And maybe I will come back to your first question about the pace of the fundraising. So I mean, we wanted to give you this post cutoff update July because obviously it's an important trend terms of the overall full year. And whilst we're not giving any kind of guidance on the 2020 full year AUM, we are reiterating our target for 2022 at €35,000,000,000 So a few comments for H2. As Henry explained, we held the 1st closing of TDL5 or TKO direct lending fund number 5 and 5th vintage. So that's a very established strategy for and we are hopeful to effectively gain much traction on this strategy. So that's on the mature side of the business. Then on the more innovative side of the business, we mentioned to you last quarter that we were launching the secondary private debt business, which will be marketed starting September. And that's a new strategy within the private debt activity that will also be appealing to LPs. On the private equity side, to comment, so TGE2 and T2 or Energy Transition Fund. So not only we extended the subscription period on these two fronts to effectively make up for the slowdown of Q2 that's a lockdown imposed on many LPs. So we also benefit from incremental flows into these two strategy. And I would also flag an important point for T2. We received yesterday part of the TB program, so some of you may be familiar with that, which is a label that has been granted by the French state for innovative strategy and that we benefit from increased allocation from institutional LP. So that should also sustain that. And last comment, Antoine mentioned about the dislocation of the market. We're still in the market with our Special Opportunity Fund, TSO, which now stands at €425,000,000 We had given some guidance of €500,000,000 target, which we believe we will easily reach in the coming months. So that's for overall and more granular details of the H2 fundraising plan. Does that answer your question? Thank you very much. Yes, thank you very much. We will now take our next question from Carlo Tomaselli from Societe Generale. Please go ahead. Yes, good morning, everybody. Thanks for the presentation. I have three questions, if I may. The first one is on the outlook for 2020. You remain pretty cautious on the macro environment. I hear you when you say that you don't give more granularity on AUM the end of the year. Nevertheless, could you are you able to give more visibility or granularity of the NOPAN expected for 2020 at this stage? 2nd question is on direct investment AUM level. Should we assume further reduction from here or to return in the area of €2,000,000,000 And third question is on the South American infrastructure partner, Morgan America. And color on the price and on the closing date, please? Thank you for your question. I think I'll take 1 and 2, and Mathieu will take 3. On the we said that we consider that the environment is fairly unstable and fairly negative despite the stock market rally. But what we said is that we see a lot of bankruptcy coming, very bad results, still a lot of leverage in the system. So CTO Capital has developed a business model whereby we remain fairly granular. The balance sheet is granular and then our AUM are fairly granular in terms of numbers of fund and then of underlying companies within the fund. So at this stage, we will not give specific guidance on various asset classes and the breakdown of the various asset classes in AUM. What we can tell you and we've been very focused on that since we launched this firm 16 years ago to make sure we are not dependent on 1 fund or 1 strategy. So we can say that at this stage, we don't have huge flagship, let's say, in terms of size, but also size increase and Direct Lending is a good example. If you remember, our TDL4 is €2,100,000,000 TBL3 is €610,000,000 and TBL the predecessor of TDL III is €140,000,000 So obviously, we are raising the size of the fund. But as you noticed, we have now Star America. We have now an ACI Aero firm starting at 6:30. We launched last year, we closed our 1st value add real estate fund with a program north of €600,000,000 So in terms of granularity of fund, we'll add, sorry, growth strategies. We are launching an impact fund. We still currently market our energy transition fund, which is more or less €600,000,000 now. So I think the strategy that we developed to our various fund, value strategies, I think we'll continue to do that. So it does not answer very precisely at this stage the granularity of the various asset classes. But I think that's where we are now. Obviously, on the profitability of the asset management, we are not commenting at this stage on our NOPAM, net operating profit of the asset management. But because we are adding more private equity and more real estate in the last few months, obviously, the business mix is changing a little bit. And when you look at our 2019 figure, you remember that we moved close to 90 bps on average, which was up. And I think our goal is really to increase that because obviously that's increasing the profitability and the no part of the asset management. And obviously, the TKO valuation is really the net asset value of the balance sheet and whatever multiple you put on the asset management. So I think we are going in the right direction. That's why we decided to reaffirm our 2022 guidance. And your last question on balance sheet size. The only guidance we gave is that we want to increase the percentage of the balance sheet invested in our fund. So if markets permit private and public, we are happy to take advantage and exit. That's what we did on BWS. BWS is a pretty unique and pretty strong company and we have a pretty robust partnership, but we took advantage of a good valuation to exit. Same thing for, if you remember, Henri, and it's part of the press release, we had the opportunity to exit our Comforama financing, which was partially asset management, but partially balance sheet because of the size. So we're going to probably if weather permits, let's say, reduce the balance sheet and increase our commitment in the funds, which will give more granularity and less volatility. Mathieu, I'll let you answer on SAAR. Yes, sure. So the deal closed yesterday actually. So the transaction has been completed now. We did not disclose details on the consideration price, but I'd like to guide you as much as possible on this. If you assume in euros, so €600,000,000 €535,000,000 of AUM, management fees on such strategies are in the magnitude of 1.5 percent management fees. And if you take if you make an assumption of roughly 40% operating margin, which is up obviously some kind of market benchmark that gets you to a €3,000,000 EBITDA of NOPAM generated by this company. And you saw in the past the type of multiple that TK would pay for non organic growth. And if you assume the low part of the range, let's say, 10 to 12 times, that would give you some kind of an acquisition price in the order of magnitude of €30,000,000 €35,000,000 So we couldn't be more precise, but at least that hopefully guide you towards the acquisition price. But we made sure that Bill, Christophe and the team are aligned with us. So they will be TKO shareholder. And also, as Matthieu mentioned earlier, there will be TKO partners as well. Thank you very much. We will now take our next question from Geoffrey Michelet from ODDO BHF. Please go ahead. Yes, hello. Thank you for taking again my question. Two additional questions. The first one on what you said on the Star America Partners. Will they become also shareholders of TCA? First question. And second question relates to your staff in the fundraising section. I just wanted to know how many people exactly apart from you are dedicated to raise funds? So maybe I can pull up on store and this one. So they will become when we call partners at TKO effectively, which is today 40 or 45 partners. They are all indirectly shareholders in TCA through the structure that we call TKO Management. So they will be fully pari pursued with the rest of the partners as well as being a TKO shareholders. That's one. As far as the staffing and distribution, effectively, we have under the leadership of Fred Giovancilli, our partners who joined us a year and a half ago now. It's now a global team of probably 25 people on the sales, distribution, client servicing and investor relationships. So that's roughly the amount of people dedicated to the fundraising with a local presence in any single countries. So in Europe, in Asia and now in the U. S, we have a local presence for the client facing and marketing group, which is mainly centralized in London now. That being said, Jospe, the business unit team are also involved in the fundraising because we think they are the best actually to represent and to expand the performance they've been able to generate. Okay. Thank you. As there are no further questions, I'd like to hand the call back to our speakers. Gentlemen, the floor is yours once more. There are no questions either on the webcast. So, Antoine, Mathieu, Henri, I'll let you conclude. Thanks everybody for your time, your question. We are obviously very happy to continue off line with some of you and some calls are already scheduled. You can be certain that we remain fairly focused and the entire TTO team remain fairly focused. This new world in uncharted territory will generate lot of opportunities to raise new funds, deploy in a very selective manner and help us continue to grow. And I think the firm because of the balance sheet, because of this unique 600 people team and our certain location is fairly well placed to further develop and expand and continue the profitability on the asset management. Thanks for your time. Thanks everybody. That's it on my side. Thank you all. Ladies and gentlemen, this concludes today's call. Thank you for your participation. You may now disconnect.