Good afternoon and thank you for joining Taaleri's Capital Markets Day. This is a hybrid event, and we are broadcasting live from Helsinki, Finland. Today, we will discuss Taaleri's updated strategy and plans for the next years. My name is Siri Markula, and I'm responsible for investor relations, sustainability, communications, and brand at Taaleri. This event provides you with a chance to hear from members of Taaleri's executive management team, and you can also ask us questions. Our presenters today include our CEO, Peter Ramsay, and CFO, Minna Smedsten. In addition, our business directors will share their views on their business areas and demonstrate their strategy for accelerating Taaleri's growth. You can find the presentation material on our website under Investors section on the Reports and Presentations page.
As you can see on the agenda, we will have two Q&A sessions today and a break after the first one. You can ask questions throughout the event using the question form on the webcast platform, and we will, of course, also take questions from the floor. Questions on the platform will only be visible to the moderator, and I will address them to the presenters. But without further ado, let's get started and welcome our CEO, Peter Ramsay. Peter, the floor is yours.
Thank you, Siri. I want to welcome all our shareholders and all other interested parties to Taaleri's second Capital Markets Day. I have now been two years on the job as CEO, and things have been moving forward in a rapid pace. If we look at the headline here, we say, "Investments powering the change." Investments. Well, the green transition will be very capital intensive. We operate the whole value chain, from project development to the operation of the assets. And the change, well, the change means that we are an enabler of the green transition, and Taaleri creates a better future for the coming generations. Our purpose, this is very important, and we say that we combine our deep industrial and financial expertise with capital to create attractive returns for our stakeholders and to build a better future.
Deep expertise and know-how means we understand our business, we have the necessary networks in our industries, and we understand value creation. For each Taaleri employee, this also means that our work is meaningful, and that we are part of building a better future. For our investors and shareholders, this means that we want to generate good returns to them. Before we go to review our previous strategy period, I will tell you what changes in the Taaleri strategy from 2024 onwards. The drivers for growth will be, we will do more investments from our own balance sheet into the bioindustry ecosystem. We will internationalize our investor base and also selectively our business.
Secondly, our AUM target is EUR 4 billion at the end of 2026, and thirdly, we will have invested at least EUR 100 million from our own balance sheet by the end of 2026. Now, let's have a look at a snapshot of our recent strategy period, which started 2021 and ends this year. So if we start with the goal for our assets under management, we were targeting EUR 3 billion. We now had EUR 2.6 billion at the end of Q3 this year, so we're still a fraction from that. The second goal was in impacts and renewables, and we said that they're gonna be at the heart of our operations. And if we look at our funds, which we have now, so we have nine private equity funds under the SFDR Article 9 or 8 definition.
75% of our AUM is either Article 8 or Article 9 funds, and 62% of our AUM is in EU taxonomy-aligned products, mainly in our renewable energy. Thirdly, we also said that we seek to scale our businesses, and if you look at SolarWind III, which we're now targeting EUR 700 million, that's doubling the size from the previous fund, which was EUR 350 million. Our AUM has increased from EUR 1.7 billion to EUR 2.6 billion, and Garantia, our credit insurance company, has shown that their scalable business model has delivered strong results. We also said that we wanted to expand our sales and distribution of our private equity funds.
Domestically, Aktia has worked very well for us, the distribution agreement that we struck, when we sold our wealth management business, in particular in the renewable energy and bioindustry space. We have also hired placement agents for our international distribution, and we hired a Head of Sales, Mikko Ervasti, who we'll speak to later, last year. Finally, we would optimize the return on capital and how we use our balance sheet. And just some statistics here, we've had a 69% payout ratio on average over the period. Our total shareholder return has been 43.5%. We have a strong balance sheet now that we're going into our new strategy period, but I think that is very good. So what is it that we want to achieve? What is the essential message of our strategy update?
Our focus is to create value and impact through bioindustry and renewable investments. We aim to become an international top-tier investment manager and industrial partner in the bioindustry and in the renewable energy space. This means that we want to team up with industrial partners in order to scale our businesses. We also, as a second point here, want to accelerate our growth by attracting best talent and industrial partners to cooperate with us. For us, industrial partners are both feedstock suppliers, off-takers, but they can also be co-investors in our investments. We also want to leverage the megatrends in a smart way, partly also in so expand our investor base, but also by doing profitable investments. And if we play all this earlier to our favor, I'm sure we're gonna be able to make profitable investments.
Finally, a prerequisite for our success is attractive returns to our shareholders. Good returns to our fund investors drives growth in our private equity business, and we can raise succession funds, and we will then be receiving both management fees and performance fees. Also, the efficient and smart use of our capital will drive value creation in our direct investments. This should drive shareholder return in the form of higher earnings and dividends. So what are the megatrends that are driving Taaleri's business? Maybe none of these are new for you, but climate change is a clear driver. So the international community is trying to limit global warming to 1.5 Celsius. Reducing greenhouse gases is a key factor here, and our renewable energy and bioindustry business are seeking solutions to limit climate change.
Another trend is electrification, and electrification is often seen as a means to reduce greenhouse gas emissions and the dependence on non-renewable energy sources. It plays a crucial role in the broader transition to more electrified and sustainable future. Our renewable energy is, of course, at the core of electrification. Changing values is also a megatrend. The awareness for climate change, nature loss, and human inequality has shaped consumers' attitudes. Sustainability and responsibility are becoming increasingly important selection criteria for consumers. This is guiding companies to seek new solutions. Our bioindustry is focusing on solutions that use bio-based and recycled materials to replace virgin raw materials, and thus cater to the changing values we see. We also talk about resource efficiency. Now, resource efficiency refers to the optimal use of resources to achieve a desired output or outcome while minimizing waste and environmental impact.
Our bioindustry activities are at the core of resource efficiency. And finally, urbanization. The migration continues globally from countryside to the cities. This trend will also continue in Finland, as it is more efficient to produce services for our aging population in cities. Urbanization increases also the popularity of renting and the need for new, modern, energy-efficient housing. Our real estate business addresses these key issues. So if we move over to more concrete market trends currently taking place in the market that affect us, currently, there's a strong tailwind for investing in Bioindustry and Renewables. This is to mitigate climate change and reduce CO2 in the atmosphere. Another driver is the need for security of supply and self-sufficiency of energy. Of course, the war in Ukraine has escalated this need clearly.
Also, there are a lot of regulatory changes taking place that are steering capital towards impact investments, and this means that more and more capital is actively seeking solutions that satisfy both what their beneficiaries want or their asset owners with respect to sustainability and impact. And finally, we see there's a rising allocation into key infrastructure despite higher rates. Estimates done by surveys can be seen here. They show that the expected growth in key infrastructure is on a healthy trajectory of 13% in the coming years. Moving over to our vision. Our vision is to become a leading investment manager operating internationally in Bioindustry and R enewable Energy. This means that we are a party that investors turn to when considering investments in this space. This also means that we operate in several countries with a broad international investor base.
Moving over to our operating model. This is a very important picture and the key to understanding how we operate. Our operating model consists of two investment streams. We have our fund management business, and we have our own investments. As the picture shows, our fund business can be involved in early stage development phase and in the growth phase of the businesses they are operating. At some stage, however, a fund reaches its life end of its lifespan, and then we do a final exit from the fund. Our own investments are typically more growth oriented, but however, as the companies we have invested grow, we will seek industrial or suitable partners for the business. So when the businesses grow and become mature, we seek partners there. This might mean that we actually dilute our ownership to enhance the value creation.
As an example, I can mention our renewable energy business, which when it started, was the first wind farm development in Finland. So we're very much in the development phase here of the fund's business. Then as it grew, we scaled it, we got even international investors in there, and as we know, when the funds are mature, they will exit the holdings. Perhaps another example of our operating model is the acquisition of Garantia. It was a company already existing. The company was taken over, and the somewhat stagnant business was reshaped to a growth and mortgage-focused modern fintech operation with strong partnerships. And so at the mature stage, we took in partners, and we use them as distributors of the product today.
I want to state that it's really important to note that our own investments do not seek to invest in similar situations as our funds do, and thus in no circumstances compete with the funds. The funds have fairly strict investment guidelines, and our investment focus is not the same. On a general level, one could say that if we lack an instrument, for instance, a fund, to invest in a promising investment, we could consider to do the investment ourselves. Moving over to our business model, as you can see, impact, growth, and value creation are at the center of all businesses and span all the business units. Funds on the left-hand side generate management and performance fees. Our direct investments generate investment income, and Garantia generates premium income from the credit guarantee business and also investment income from their portfolio.
Of course, but not least, is the small box to the right. That's the most important ingredient, our human capital. We have very talented employees. There's a lot of ambition in Taaleri that makes all this possible and makes it happen. Now, what are our strategic priorities going ahead? We have four of them. The first one is that we want to grow within our business areas through both funds under management and direct investments. The growth actually strengthens our market position, attracts talent, and makes us a more relevant counterparty to our value chain. We make investments in both talent and companies to drive our growth. Our business areas are in different stages of maturity, and this allows us to grow profitably.
The KPIs to measure our success in this priority is assets under management in the private equity funds, and then for the direct investments, the returns on the investments. Secondly, Taaleri will make substantial investments, industrial investments, and cooperate with industrial partners, and this is especially in the bioindustry ecosystem we foresee. We want to become a meaningful industrial operator in the rapidly evolving bioindustry ecosystem. This means that we will make long-term, either direct, minority or majority, or co-investments in companies that aim to solve global challenges in a profitable, measurable, and impactful way. We create value and opportunities for all our stakeholders by being a frontrunner in the ecosystem. The KPIs to measure our success here is, of course, the investment returns, but also the impact that we make.
Thirdly, we aim to expand our investor base outside of Finland and partner with international organizations on investments. We aim to be a leading manager that investors turn to when considering investing in Bioindustry or Renewables, and we will strengthen our sales towards major institutional clients and international investors, both to our own direct efforts and also using third-party distributors. And the KPI to measure our success are 50% of our AUM and our new funds should come from non-Finnish investors, and also that we will establish physical presence for operating teams in other countries when our activities internationalize. And finally, but not least, we will develop impact and sustainability in all investments throughout their life cycle. We use credible sustainability criteria and targets. Among our goals are that all new funds are SFDR Article 9 or 8 funds.
As a company, we've said that we will be greenhouse gas neutral by 2050. Siri Markula, our Sustainability and Communications Director, will guide you later through our broader ambitions on ESG impact and sustainability goals. We say that our strategy is built on three competitive advantages, and these are what we call end-to-end expertise. We have financial, legal, and technical expertise that spans across the entire life cycle of all investments and projects. We also say that the ability for us to commercialize business ideas is a competitive advantage. Taaleri has a long track record and experience to execute, as well as commercialize new potential ideas. Finally, the ability to combine ideas with capital. This is really key for us. We have extensive experience in executing complex investments.
This can be done either through our private equity funds, through co-investments, or then through direct investments. Here you can see our various sources of income. Minna Smedsten, our CFO, will take a deep dive into each item, so I'll only briefly walk you through the four different income sources. If we start with continuing earnings on the left, that's our management fees from our funds. Then we have recurring performance fees. If our funds hit their target returns, they will receive performance fees. These are, of course, a bit lumpier than the continuing earnings or the management fees, but nevertheless, they are very important for our, as an income source. Then we have the returns on direct investments, and, these are the investments, the return or the profits we receive when we exit our investments.
Finally, the returns on Garantia or what we call here strategic investments. So these are Garantia's premium income from the underwriting of credit insurances, plus the income from their portfolio. All of this funnels through to the P&L, and then eventually drives shareholder returns. Moving over to our long-term financial targets. So we have a growth target of 15%, and here we say it's the group continuing earnings and performance fees. It should grow over time, 15%. Our return on equity target is also over 15%, and it's good to remember that our different businesses have different capital needs, both from a regulatory and also from a financial perspective. Our equity is roughly EUR 200 million, and Garantia, for instance, they have a return on equity, which is over 10%, but they consume slightly less than half of our equity today.
On the other hand, the private equity businesses, they have a very low regulatory capital need. However, we have tied up more capital in the private equity business when we are growing the business, as they're in a build-up phase. But as the businesses grow, the relative need to tie up capital falls. So the return on equity in the private asset management business has been over 20% during the strategic review period, 2021-2023, although they've been in a build-up phase. And eventually, our own investments. So the return on equity on our own investments is a function of the success of the investments, as well as the level of debt that we use to finance these investments. Our dividend policies and target is that we will pay out 50% of our fiscal year profit as dividends.
Here we can see a strategic roadmap for Taaleri going ahead. I'll start by saying that by 2026, our target for our AUM is EUR 4 billion. It's an ambitious target, and we know that. We also say that our direct investments will exceed EUR 100 million. For the year 2024, I just want to mention a few things. We know that SolarWind III will be near its final close. We will also exit Wind II and III funds. Our bioindustry direct investment team, and then we're going to grow our real estate business through launch of new products and potential also mergers and acquisition activities. We will continue to strengthen and establish more distribution capabilities globally, and Garantia will be entering the Nordic corporate credit risk insurance market through new partnerships.
For 2025, I just want to mention, SolarWind III should have its final close. We should launch new bioindustry funds, and we will probably execute our first bioindustry direct investment. In order to succeed, we need quality and execution, we need to be able to attract and retain talent, and we also need a healthy awareness of cost efficiency. That wraps up my presentation. Thank you, and I'll hand over to Minna Smedsten, our CFO.
Yes, good evening, or good day, actually, everyone. My name is Minna Smedsten. I'm the CFO of Taaleri. I joined in 2013, and that was when we got listed on First North. I'll go through our earnings models today more in detail, and our long-term financial targets, as well as our total shareholder return. First, our focus, what Taaleri's focus is during the strategy period and now going forward. So our focus is on investment management in Bioindustry and Renewable energy. Our business directors, that is Kai and Tero, they will present these plans to you shortly. We are a growth company, and accelerate growth by attracting the best talent and industrial partners. Naturally, we want to do all this by delivering attractive returns to both our fund shareholders and our shareholders.
I would now like to go through the earnings model more in detail and how we actually execute. Our earnings logic, it's pretty simple. We have continuing earnings, we have the recurring performance fees, we have returns on direct investments, and we have returns on Garantia's performance, that is, on strategic investments. As our earnings grow, our profit grows, and so does our shareholder returns as well. Now, let's go through each and every stage more in detail, and I'll explain why they are so important for our earnings logic. Let's continue with our fund model. So our fund model, it's basically we receive sticky management fees for the fund's life cycle, that is usually ten years.
It's a little bit higher during the investment period, that is during usually the five first years, and then comes down, as well as the assets under management, as you start to exit projects from the fund. When we reach the set fund return targets, we are able to receive performance fees as well. And as you can see from the graph, you usually can receive a pretty big performance fees at the end of that fund's life cycle, and that's pretty high to the annual management fee. And then to the next page. So, when our assets under management grow, our fee income from management fees income, that grows, and the likelihood for future performance fees grow, provided that we naturally reach the set investor targets.
The annual growth of assets under management has been 22% since 2018, and it has grown from EUR 1 billion to EUR 2.6 billion by the end of Q3. On the right-hand side, you can see how our assets under management is split. So 62% comes from renewable energy, 26% from real estate, and 6% from bioindustry that was launched pretty recently. Now, turning to the next page and looking at our performance fees. So we launched our first private equity funds in 2010, and did our first exits in 2014. You are able to receive performance fees at the exit of the fund when you reach the fund's predetermined hurdle rate.
Net IRR for the, for the exited funds that we have made, so, to date, is 11%, and the money multiple is 1.6. And this means that if you put EUR 1 in to our exited funds, you have got, as an investor, 1.6 back. We have received in total, EUR 30 million, EUR 30 million in performance fees, and, we have the latest exits from Forest III, that we did this year. Last year, Datacenter , and the previous one was Housing Fund VI. We are currently working on the exit of, Wind II and III, as Peter also mentioned, and estimate that the exit will take place during H1.
When we are confident that we will receive performance fees, we can accrue performance fees into the income, and we usually do this at the end of the life cycle and use a pretty big haircut of 30%-60%. We have accrued already EUR 40 million in performance fees from these two Wind II funds, that is Wind II and III. Then a few words about our direct investments. Here you can see what we have earned from our investments without Garantia and without the wealth management sale. Just to remember, so we actually received EUR 110 million from the sale of wealth management, but that's not included in the numbers.
We have received EUR 78 million for the last 10 years from the investment income, and that's an annual income of around EUR 8 million. Now, our focus for the, for the coming strategy period is to accelerate the income in Bioindustry, and we have said, as Peter also said, we will raise that EUR 35 million to above EUR 100 million. Maybe also a few words how, how this will look then also in the income statement. So if you have investment income or investments, those will be naturally then recorded as investment income as, as they have today. But if we have shares in associated companies, that will then, that share of the profit will be shown in continuing earnings under direct investments. Then to the fourth piece, that is Garantia, and Garantia's performance.
Here you can see Garantia's performance since our acquisition. That was in Q1 2015. On the left graph, you can, you can see how Garantia's operating profit has developed, and you can see that nice, steadily increasing dark blue bar. That is the insurance, insurance income, or insurance net profit from the operations, and the light gray bar is then the investment income. On the right-hand side, you can see Garantia's net profit according to the Finnish accounting standards, and how much they have distributed dividends to Taaleri Plc. I am very glad and happy to say that Garantia has, today they have, paid EUR 63 million in dividends, and that amount exceeds the acquisition price that we paid in 2015. That was EUR 60 million. A small wrap-up.
So our earnings model and the development for the last 12 months, here you can see the, that, how nicely this build up from these earnings. So you can see that net continuing earnings from fund, fund management is EUR 17 million. You can see that recurring net performance fee income is EUR 12 million. We have returns on direct investments of EUR 10 million, and Garantia's net profit of EUR 14 million. And then, then deducting for our administration expenses and other, other operating costs, then you get our operating profit for the last 12 months. That was EUR 32 million. This was basically the earnings model, and now we will move forward to our long-term targets. And I first, first start with the, with the, long-term targets for this strategy period that is ending, and then let's look at the new ones.
So first, you can see that our continuing earnings, they fluctuate pretty much, and from year to year, and that's based on the launch of new funds. So, when we launch a new fund, that typically goes up, and also it goes down when we exit funds. Our profitability target, it has been to achieve at least 25%. You can see the average number for the last three years, that's 47%, so that has moved very nicely. And then we have the return on equity target, and that target was to... that it should be about 15%, and when you look only at the continuing operations, that has been 15%.
But when you include also the discontinued operations, that is the sale of wealth management, you have an return on equity on average of 33%. Then for the new strategy period, as Peter highlighted, and I tried to also explain here in detail, continuing earnings and performance fees, they are very, very crucial for our earnings model, and they form the basis. And we want to emphasize this importance of lifting also performance fees to the long-term target. And our long-term target now going forward is the continuing earnings and performance fees should exceed 15% per annum. And when you then look back, it has been 17%.
Then we keep the return on equity target to it should be about 15%, but as Peter highlighted, we have said that the guarantees target is that they should be above 10%. And then the payout ratio, so for all operations, it has been 69%, and if you only look at the continuing part, that is without that extra dividend of EUR 58 million that we have distributed to our investors from the sale of wealth management, then that share is 57% of the result for that each year. A few words about our balance sheet. So Taaleri has a strong balance sheet. We have assets or investments in different forms, where our assets total EUR 304 million.
But maybe just to highlight what the changes will be, so you can see on the left and up high, so that EUR 35 million, we aim to increase to above EUR 100 million. And our equity stands today at EUR 206 million, and our equity ratio at 68%, and naturally, that equity ratio will come down, as we have said, that we will use leverage to enable these investments going forward. We only have EUR 50 million in debt today. Then my favorite chart, this is the value creation that we have made to our shareholders, and since our listing on First North. We have raised EUR 38 million in share issuances.
We have made EUR 290 million in profit, and we have returned 44% of this profit, that is EUR 129 million, to our investors, and our equity stands today at EUR 206 million. I'm also very happy to see the number of shareholders and the trust and support that you have shown us. Our number of shareholders have increased by 72% during the strategy period to 11,200 that we have today. We are well-positioned among mid-cap organizations and finance sector on the Helsinki main list, according to Trust and Reputation survey by T-Media. Our biggest shareholder groups are private companies and households. Finally, my last two pages, and this is the total shareholder return.
You can see that our total shareholder return, how it has developed since our listing in 2013, and then also how it has developed during the strategy period. So it has been 14.9% on an annual basis since our listing on First North, and the corresponding number for the OMX Helsinki Growth Index is 8.5%. It has been 13.6% on an annual basis for the strategy period, compared to -1.3% for the OMX Helsinki Growth Index. Then also these numbers in total returns.
Our total shareholder return since our listing has been 331%, compared to OMX Helsinki of 136%, and 43.5% for the strategy period, compared to OMX Growth Index of -3.6%. And before I hand over now to our head of sales, Mikko Ervasti, I would also like to thank our shareholders and all stakeholders, as this is also my last Capital Markets Day, and I wish you all the best, and I want to thank for the great journey that has been so far. Thank you very much.
Okay, good afternoon to all of you, either via the video link or here in the room. My name is Mikko Ervasti. I'm the head of sales here at Taaleri Group. Been here since 2022, as Peter mentioned, and before that, some 15 years in institutional equities. And today, my topic is to discuss and tell you about how we will be expanding our investor base, and especially internationally. So we aim to be that leading manager that investors turn to when considering investing in Bioindustry or Renewables. And to get that attention, find those people, find those investors, we are strengthening our sales towards major institutional clients, the Tier 1 clients and others, and international investors, both directly, from here at Taaleri and through third-party distributors. That number has been mentioned a few times.
We are aiming for that EUR 4 billion of assets under management by the end of 2026, and we also want to have, in our new funds, 50% or more coming from non-Finnish investors. We have this platform in place for international growth. Headed by myself as the Taaleri Head of Sales, we are organized in this manner: Taaleri, direct sales, local distributor sales, and international distributors. Within Taaleri, we have the group sales function that oversees the whole group sales activities across all our business areas. Within business areas, we have the fund manager level, investor relations, like that of, SolarWind III fund within Taaleri Energia. But I have to highlight that the general partner teams work a lot in getting those new LPs on board, because this is a people business.
Their profiles, their reputation, their track record, is really what closes in the new investors, and we work hard with Tero, Kai, and others to make sure that these needs are matching. In Finland, we have local distributor, Aktia. And why is Aktia here mentioned in this international growth path? They give those proper first closings for our funds and those initial references of local LPs that then help us to attract the international LPs. A very important starting point for us in pretty much all fundraisings, because it's a good start, the investment teams get underway, and then we can continue internationally. And this is really the Taaleri and the local distributor setup is what we've had for quite some time already. Now, moving forward, we are focusing more on international distributors as well.
We have already and will have selected regional or global placement agents and wealth managers, and we will utilize their networks to bring those new LPs in front of our general partner teams. This is just a framework. The most important thing, as I said, is to have the right product for the right investor, to have the profiles of the funds, the structures of the funds, in a way that they appeal to our international audience. We have to differentiate and, and be different, because those LPs see that ocean of opportunities out there. We deliver in-house expertise or partner with experts in our investments, overseeing the investment's life cycle end to end, as has been mentioned. Sustainability and impact is at the core of everything we do, in operations, governance, and reporting as well. We want to be early movers.
As you can see from these graphics, the onshore wind turbine there, we were the early movers in Finland for wind power, and now are one of the largest wind power producers. We want to be able to capitalize on the opportunities are brought to us among the first ones out there. Then a little bit more detail. It is important that we only fundraise for our own products. We are not acting as a third-party distributor for other managers' funds. We invest our own capital as a GP or as an investor, like the other LPs. And then finally, last but not least, I want to highlight that this group as a sponsor, the Taaleri Group there, is a robust platform to foster new versatile teams and investment opportunities. And not many other managers out there have this.
We have that strong Taaleri brand really to, to, that appeals new talent and investment ideas. From the group level, we are able to bring that financial support and administration. For example, if we have a new strategy launching, engineers possibly running the show, we are helping in fundraising, and we really facilitate these fund manager structures for effective and quick deployment of strategies. We can leverage experience, share common resources across the organization, and really get things going when we want. We are a listed company that gives additional governance and transparency, which also helps to build a stakeholder trust. And as already mentioned, we have our skin in the game being an active investor, just to name a few there. And the market opportunity is quite sizable.
As has been shown already before, only in infrastructure, unlisted infrastructure globally, in a few years' time, by the end of 2027, EUR 1.7 trillion will be deployed. This is high double-digit... mid-teens growth in CAGR during this period. There are really those sustainability-driven mega trends that require something to be done, done for this planet, and especially within the bioindustry and renewables ecosystems. Then we have that investor base who wants to invest that money, their money, in the sustainability and impact-driven solutions. So we are there as the mediator, getting that capital to those projects. The competition out there that we see in Renewable Energy, we see infrastructure funds that are the main competitors in this space that are fundraising.
But as you have probably seen, this year, we have been quite successful already in the fundraising, against or, or with the other infrastructure funds out there. In Bio industry, we are very well positioned to capture the growth. Regulatory environment is always there, EU level, country level, for example, and it's rapidly changing. It's not only a channel—it's not only a challenge, it also provides us new opportunities that we try to capitalize on. And then a little bit more detail about the market opportunity and the sentiment. Yes, there has been certain times now, interest rate, opportunity cost higher, some question marks around the asset class. But as you can see from the survey results, alternatives are doing just fine.
The investors are saying that they will either maintain or increase allocation in many of the subsegments that are in this space. And more, the Taaleri focus areas mentioned there, for example, private equity within the bioi ndustry vertical, or real estate business, or the infrastructure business in the renewable energy, we will have, investors increasing allocation in at least in the private equity and infrastructure side. Also, in real estate, this allocation will be maintained, going forward. So we are quite well positioned also in this sense. The only areas within this field where the allocations might be going down are natural resources and hedge funds, where we are not involved. To summarize, the platform is well in place.
We are going for that EUR 4 billion of assets under management by the end of 2026, and more, 50% or more of the AUM in new funds will come from non-Finnish investors. We are already above the clouds, soon in the cruising altitude, and ready to tackle the opportunity. Thank you very much, and I will now pass the word on to Siri Markula.
Thank you. Let's move on now to talk about our fourth strategic priority, impact and sustainability. As mentioned before, my name is Siri Markula, and I'm responsible for sustainability, investor relations, and communications at Taaleri. As Peter said, sustainability and impact are still at the heart of Taaleri's strategy. Our strategic goal is to develop impact and sustainability in all our investments throughout their life cycle. Through that work, we, of course, want to also enhance the value of our investments. As we have done already up until now, we emphasize positive impact in our operations. We strive to find and promote solutions to climate and other sustainability challenges with our investments. That's why we want to consider also impact potential and sustainability risks alongside economic factors when making investment decisions. Some of these principles go back a long time at Taaleri.
We have committed to the UN Principles of Responsible Investment already in 2010, and we also committed to the Net Zero Asset Managers initiative in 2021. Before we tackle our sustainability KPIs, let's have a quick look at the framework within which we operate. I apologize for all the acronyms in my presentation and this busy slide, but for us, EU's sustainable finance regulation is a very concrete and fundamental part of our work. That's why I will talk about, for example, SFDR and Taxonomy in this presentation. EU's green transition and net zero goals are driven by global initiatives such as the Agenda 2030, United Nations Sustainable Development Goals, and the Paris Agreement. We can divide the EU regulation in two when thinking about our business and actions.
The first part on the left here is the Sustainable Finance Disclosure Regulation, which aims to direct funding into more sustainable economic activities.... The demand for ESG and sustainable investment products has grown, as Mikko said, considerably, but the problem has been that there has not been adequate transparency and comparability. There has, for example, been so-called cherry picking, where fund managers might have reported about the positive things, but left out negative issues. This has meant that the final investors have not been able to evaluate how green or impactful their investments really are. The EU Taxonomy and Sustainable Finance Disclosure Regulation, the SFDR, aim to tackle greenwashing and promote transparency. The taxonomy is a classification system establishing a list of environmentally sustainable economic activities. In order to be taxonomy-aligned, investments need to fulfill strict additional criteria.
The SFDR, as its name disclosure regulation implies, defines how we, as fund managers, must disclose sustainability-related information about our products to the investors. The second part, on the right here, is concerns our reporting as a company. The Corporate Sustainability Reporting Directive, CSRD, and the European Sustainability Reporting Standards will apply to Taaleri starting in 2025. But we have already started to report group-level information, taking into account the future requirements. Now let's take a look at our KPIs for sustainability under the updated strategy. I will go through all of these in more detail shortly. The first KPI is very familiar from our current strategy. All our new funds are either SFDR Article 9 or 8. The second KPI is increasing the volume and share of investments aligned with EU Taxonomy.
The third KPI is impact, and what that impact is varies from business to business. It can be, for example, the amount of avoided emissions or the share of recycled or renewable raw materials. In direct investments, we will implement our internal sustainability standards laid out in our investment process. Finally, the last KPI is net zero greenhouse gas emissions by 2050 or sooner. Now let's take a closer look at these KPIs. What does it mean that all our new funds are either Article 9 or 8 funds? According to SFDR, funds may be classified as Article 9 or 8, and the rest are so-called Article 6 funds. These funds have different levels of disclosure and sustainability requirements, where Article 6 is at the lowest level. Article 8 funds promote environmental and/or social characteristics.
For example, our Taaleri Rental Home Fund, which promotes both by providing affordable and energy-efficient living. These funds may make sustainable investments, but that's not their goal as such. On the other hand, Article 9 funds' goal is to only make sustainable investments, and those must contribute to one environmental objective of the EU Taxonomy. They also must not cause significant harm to any other environmental objectives, and they must be aligned with minimum social safeguards. The minimum social safeguards mean that investments meet certain minimum governance standards when it comes to human and labor rights, bribery, taxation, and fair competition. As you can see on the top right-hand corner, approximately 75% of our assets under management are in Article 9 or 8 funds, and we are, of course, proud of that.
All of our renewable energy funds, also the older vintage funds, are Article 9 funds, as well as our Taaleri Bioindustry Fund I. The reason why Taaleri is able to meet the strict Article 9 demands is that we are often responsible for the whole life cycle of a project, meaning, for example, development, construction, and management of a project. We also have representation on the investees' board of directors, and in case of bioindustry, we engage in very active cooperation with the investees, and we train them in sustainability issues, et cetera. Tero Saarno, the Director of Bioindustry, will talk a bit more about this later. So all in all, it's a very different ballgame for us compared to, for example, equity funds. The second KPI is to increase volume and share of investments aligned with EU Taxonomy.
Both the volume and share of taxonomy-aligned investments are growing at the moment with the new SolarWind III fund, but of course, this changes over time with exits and new fund launches. At the moment, 62% of our assets under management are in taxonomy-aligned investments. On the right-hand side, you can see the taxonomy criteria. To be taxonomy-aligned, an investment must substantially contribute to one of those environmental objectives, and those include, for example, climate change mitigation and transition to a circular economy. When thinking about impact of our private asset management business areas, here you can see each business area's sustainability goals, an example of their impact, and sustainable development goals.... Climate change mitigation and replacing fossil energy and raw materials are among our most important sustainability goals. In Bioindustry, 94% of raw materials used were renewable or recycled last year.
In Renewable Energy, our emission reduction was about 600,000 tons of CO2 equivalent. The most important UN Sustainable Development Goals for Taaleri are affordable and clean energy, climate action, and industry, innovation, and infrastructure. Here we have a concrete example of the impact of our funds, our currently biggest renewable energy fund, Taaleri SolarWind II. It's an international fund with projects in the Nordics, Baltics, Poland, Southeast Europe, Spain, and Texas. The geographical allocation is very important when we think about the impact of the fund. The avoided emissions are bigger, and thus the projects are more impactful in markets where currently the majority of energy comes from fossil sources. For example, in Serbia and Poland, the avoided emissions are 3.5x-4.5x as big as in Finland.
As many of the projects of this fund were still under construction last year, the fund's avoided emissions will approximately double in the future to over 1 million tons of CO2 annually. We are also very proud that this fund was awarded the best ESG fund in energy transition by Private Equity Wire last year. Now we have discussed the SFDR taxonomy and impact, so let's move on to our investment process and sustainability over our investment's life cycle. We consider sustainability over the whole investment's life cycle from the initial investment target screening all the way up to exit. In the first stages, the screening and the due diligence, we analyze possible investment targets through various sustainability lenses and tools. We consider, for example, sustainability risks and impacts, double materiality analysis, and minimum social safeguards.
When moving on to the negotiations and investment decision phase, we, for example, document the value and impact creation potential and make an initial plan to mitigate adverse impacts. Also, Taaleri's commitments, like net zero, are taking into account when making agreements. The most significant and longest phase is the active ownership period. During that, we work together with our investees to manage and promote value creation opportunities and to mitigate risks. And finally, there is, of course, the exit phase, where we help the new owners to carry on with the sustainability work by, for example, providing information, data, and methods we have used. Let's move on to our group level before discussing the final KPI. Every business operation has both positive and negative impacts. Here's a picture of Taaleri's net impact according to the Upright Platform.
On the left-hand side, you can see that our negative impacts come from use of resources, greenhouse gas emissions, and waste, mainly caused by the construction phase of our investments. We also use scarce human capital, as our personnel are highly educated professionals. On the right-hand side, you can see our positive impact, which mainly comes from investments in Renewable Energy and Bio industry, which displays emissions, as we have already seen. Positive impacts come also from our investments in circular economy and more sustainable construction. This all leads to our net impact ratio of plus 36%, which is a good number, but of course, we always are aiming higher to maximize our positive impacts and minimize our negative impacts. Our last KPI, net zero, greenhouse gas emissions by 2050, comes from our commitment to Net Zero Asset Managers Initiative.
This means that we have committed both our assets under management and Taaleri as a company to be net zero in terms of greenhouse gases by 2050 or sooner. We have also set interim targets and are currently in the process of making detailed climate work roadmaps for our businesses. And as you can see in our last year's carbon footprint, on the right-hand side, the total amount of our emissions was a little over 2,100 tons CO2 equivalent, including Scope 3, and the positive impact, i.e. our carbon handprint, was about 600,000 tons. Here's a brief overview of the sustainability management at Taaleri. Our executive management team leads and monitors the progress of our sustainability work, and the businesses are responsible for their own sustainability work and for fulfilling internal and external obligations.
In addition to a specialist ESG team, we also have a group-wide ESG committee with approximately a dozen members, and we meet every four to six weeks to discuss and plan sustainability-related issues. All of our personnel are responsible for their conduct and compliance with our sustainability policies. This leads us to the final point I want to highlight. Everyone at Taaleri has a sustainability goal or goals in their short-term remuneration incentives. This is one of the ways we want to make sure we reach our goals. In conclusion, our strategic goal is to develop impact and sustainability throughout our investment's life cycle, and we use a wide variety of KPIs and methods to ensure that. We believe that this is the way to live out our purpose, create attractive returns for our stakeholders, and build a better future at the same time.
Thank you very much for your attention. Now, it's time to wrap up the first part of the presentations and move to the Q&A. I'd like to welcome Peter, Minna, and Mikko back on stage for this part. You can send questions via the webcast platform, but let's start by taking some questions from the floor.
Yes. Hi. Sauli Vilén from Inderes. First, about your, the investment portfolio, the EUR 100 million portfolio, can you... This is obviously a kind of big, big change in your investment profile. So can you give us some insight, like, what type of investments are you looking at? Like, what sizes would you prefer? What kind of IRR/risk profile one should expect from the portfolio when we look at it in 2026? Thanks.
Yeah. So the investments that we're gonna look at are sort of established products, for instance, so it's in the growth phase, where we really can bring something to the pie. Naturally, the background to the investment as such is deep analysis and research around it, and I would say that we're not gonna venture into things that we don't understand. So that's why we've chosen really to sort of highlight it's the bioindustry ecosystem, because there I think we have a competitive edge. The size, rather bigger investments than very small, so that, you know, it's meaningful. I won't give you a number as such, so we don't hang up on that, but in general, sort of notion, rather more sizable, fewer investments than several small ones.
The risk profile and the return profile, so I would say, you know, when you look at our history, when we invest, and it's an illiquid investment, so of course, the return profile is substantial. Perhaps it's a discussion we will take later on the exact numbers, but definitely over our... When we talk about our return on equity, it has to be over that. But it's really eventually also on the risk profile, it's a function of how much debt do we then carry. So it's not only the sort of investment case as such, but then you have the financial risk as well.
Do you believe that the current investments in the bio field, what you have done during the previous strategy period, is a good reflection of the, like, the future profiles you are looking in that sector, the Fintoil and the Joensuu plant, et cetera?
Yeah, it's definitely representative for that, I would say.
Then, on your growth path, and how big part of the growth the possible M&A needs to be?
Yeah, we haven't. So we haven't actually detailed that. We haven't taken that in as a separate sort of split, so that you know what is organic. I would say that the most likely ones short-term would be in the real estate space because of where the market is right now. So, you know, you've had a fairly significant boom, and now you're facing a quite substantial squeeze, and that typically is, you know, the phase when you want to be active because the market will normalize, and the real estate business as such is... It's well-established, and it's not gonna go away anywhere.
On the other sort of issues, I would say, you know, we would never close the door for if we would find an interesting business that we understand that we can add to this. But as such, I think, we're sort of aiming for organic growth in the fund businesses within our Bio industry and our R enewables as such.
On the real estate, I mean, what gives you the confidence to believe that it's, like, the best alternative to invest your limited resources, considering the fact that, well, the previous strategy period in real estate has been, well, difficult at least, and at the same time, with the bio and renewable energy, you have been performing really, really well. So why, why, why not to invest those capitals over there and, like, make even more rapid growth over there?
Yeah. I think we're... If we talk about sort of real investments and sizable investments, it's gonna be in these direct investments in the bioeconomy space or bioindustry space. When it comes to real estate, I would say that, you know, it, it's typically in-market mergers or in-market deals that are the ones where you can create value. So, you know, being aware that it's been a very Finnish-centric business for us, it probably will be that as well. So that would be sort of the venue to go on that. I don't think it's gonna be the sector where we're gonna put up a lot of capital for the expansion, but I think it really presents opportunities to be active.
It's an asset class to stay, and we have a very strong team, operating in there, so definitely worth putting efforts into.
We are putting much effort to bioindustry, as Tero will shortly highlight.
Yeah, if I may continue, a couple of quick ones from Mikko, then I pass on the mic. So about the new sales, I mean, two questions basically. About the real estate, new sales abroad, a lot of your peers have had difficulties on that, even though it's a like a global space, it's still only couple of ones have been able actually to sell those abroad. So I mean, what's your magic trick over there to fix that? And then about the bio, I mean, obviously with the renewable energy, you have been able to attract a lot of capital from abroad. But if you look at some of your competitors or Taaleri in history, they it...
With some slightly more exotic products, which bio probably is in that sense, it has been very difficult to attract foreign capital. So I mean, how you see the bio, bio capital attraction from abroad?
Yeah.
Those two questions. Thanks.
Yeah, for the latter one first, my own experience, touring the world and, talking about these strategies is that it attracts a lot of interest. It's, it's on a clear mission to replace those, fossil-based, materials with, sustainable alternatives, and, and this is appealing to, investor base as a theme and also return-wise, what, what we see there. I think we have found a niche where we can operate quite effectively, and, there is that interest out there. We just have to make sure that the products suit, the international investor, space, for example, by building more international products in terms of jurisdictions, et cetera. So I'm not too concerned about that. Then regarding real estate... Sorry, what was the question again?
Yeah, I mean, like a lot of your peers, they have-
Yeah
... difficulties to attract capital from abroad.
Yeah
... even though it's a global asset class.
Yeah.
Still, so why, why-
There's-
... are you confident that you will able to do that?
Yeah, there's been a couple of difficult years because of the cycle, but now we are making those changes in the organization and focusing on the future. That will definitely entail capturing that international opportunity as well. We've had already good international relations there in our mandates business, and we think the platform is there. There will be the market tailwinds at some point, and it's an asset class to stay, so no magic tricks needed there, just hard work.
Okay, thanks.
Yeah, thanks. Joni Sandval l from Nordea. Maybe a couple of questions, maybe to Mikko. How is currently the investor base, let's say, from the... For example, in Solar Wind III, what is the share of the non-Finnish investors currently?
It's not there at where we want it to be, but it is there. It's approximately 10% at the moment that we have communicated.
SolarWind III?
Yeah.
SolarWind III, yeah. So we-
10% for all, I think.
Yeah, sorry, 10% for all of... Yeah, exactly. 10% for all of our, what we have there, but in SolarWind III, we have communicated that European Investment Fund is there, European Bank for Reconstruction and Development is there, and then, yeah, there's, across our space, there's a few that we don't disclose here, but work is well underway, and targets are there to have it at least at 50% in the new funds in terms of AUM.
Okay, thanks, and maybe one question for Peter. It seems that you are now building team up a bit for the, for the investment cases, et cetera, so, how should we now view your strategy period from, from profit-wise? Are you... Let's say, how conscious you are with the, with the costs going into 2024, 2025, or are you just ramping up that you're offering for, for 2026?
We're always conscious about cost, but as I said, we have businesses in, they're in different maturity. So they had sort of some businesses like Garantia, it's chugging along, it's very profitable. Renewable energy has reached scale, so there, you know, the scale factor kicks in. In Bioindustry, we're building it, so there, we're gonna incur costs. But I think that's the point here, that we can build our future profitably because of the different stages of maturity in our business portfolio. So, but always conscious on cost.
Okay, and last question about the EUR 100 million target for the investments. You have now around, what, EUR 35 million?
Yeah.
So should we look this as a new EUR 100 million investments coming in, or should we look for EUR 65 million additional investments?
You should look at EUR 65 million plus additional investments.
Okay, thanks.
Any more questions from the floor? There are no questions now from the webcast platform. If not, then thank you for the questions. I think this was, was it for this part, and now we're going to take a little break of 10 minutes, and then please join us again.
Welcome to this Capital Markets Day, second part, and my name is Tero Saarno, Head of Taaleri Bioindustry Business Area. In this second part, we will have deep dive to all of our business areas, Bioindustry, Renewable Energy, Real Estate , and last but not least, Garantia. And this time, the youngest member of the family, bioindustry, has the privilege to start. So as you have learned during the first part of the show, bioindustries is quite high on Taaleri's priorities and focus in the coming period of strategy starting 2024. In this presentation, I will highlight a bit, firstly, what we have done during the previous strategy period, and then I try to open up a bit what is the definition of bioindustry to Taaleri, and then we will go deep diving to the new period of our strategy.
If we look at the last three years, bear in mind that bioindustry business area was founded 2021, so at the end of... at the beginning of this strategy period. We have had sustainability at the heart of our operations from day one. So, on the top right corner, you see some of our sustainability goals that are very much in line with the mega trends that we see currently in the market. What we have done so far, we have launched one fund, which is under investing period. We have also managed four direct or co-investments. And, currently, our assets under management is a little bit more than EUR 160 million. We see us as a pioneer or front runner of bioindustry in investment phase. So we launched the first fund 2022.
That was the first bioindustry-focused fund in Europe, being Article 9 on top of that. But we also respect the legacy of Taaleri. Taaleri has been doing prior to establishing a bioindustry business area, Taaleri has been doing investments in this space. So for example, biogas production fleet, a fund that was exited already way back, was kind of a first tip in, tipping toes into this space. Behind of all of this is a strong team that has technical know-how on the area, as well as sustainability know-how on this space, and also industrial transaction experience. And for me, building a team is the priority number one. We need to have the right people in right places to execute this strategy of ours. So if we go to the definition as by Taaleri, what is bioindustry?
So it's an essential part of bioeconomy. Bioindustry is basically the part where you utilize the CapEx to build factories. And what these factories do, they utilize novel raw materials from circular bases or from biobases to produce products that we use daily in our daily lives, but in a more sustainable way. So you could think that this as a material efficient or sustainable material production machine as such. Bioeconomy consists of other things than bioindustry as well. For example, biomedicines or then IT applications that enhance the usage of certain biomaterials, just to name a few.
Essentially, what we are in a nutshell, we are an investor that invests in production facilities that produce normal daily products for you and me, like your clothes, but in a more sustainable way than previously. Then, if we go to the strategic priorities for the next coming years, our priority number one has not changed. We are focusing on sustainable investments in renewable materials, replacing virgin or fossil-based resources. Good examples, packaging materials, fabrics, circularity of certain materials. The next two points, they are new for the new period. We are going to internationalize. So we are going to attract new investors outside Finland, and we are going to launch international funds in different jurisdictions than Finland. We are also going to build team abroad in selected regions, so we will be going to have international members soon in our team.
Then, a word about direct investments that was already mentioned and discussed quite a bit on, for example, on Peter's presentation. We see this bioindustry ecosystem as an ecosystem of companies that are in different stages. There are startups, there are growth companies, there are more mature companies. And in order to be meaningful player in the whole ecosystem, we need to play on all of those fields. Our fund, they have quite strict limitations on how to invest, in which sort of companies to invest, with the what sort of ticket size they can invest. So our funds will be focusing on venture capital and growth opportunities, whereas the direct investments are focusing on areas that are outside of our fund's scope, either on the fund's investment strategy-wise or then ticket size-wise.
They could be growth companies or could be even more mature companies, but well-established ones. Why we do this is, of course, that we want to be growth investors, and we want to diversify our investments, and as said previously, want to be meaningful player in the ecosystem. If we look a bit about the history, some selected examples. Biogas fund, I already mentioned. That was kind of the first time when Taaleri started to dip the toes into this bioindustry ecosystem. So basically building biogas factories, producing biogas from circular economy-based raw materials, meaning some others' waste in this case. In 2019, we did our biggest, so far biggest, direct investment being Fintoil, where the aim was to build a globally, the third largest biorefinery for tall oil, meaning pine oil.
That factory has been now a little bit more than one year up and running in Hamina, Finland, and is a good example of the direct investments that we are committed to do also in the future. Then an example that we started 20, late 2021, early 2022, is our co-investment example, Joensuu Biocoal factory. This factory is at the moment under construction, so civil works are ongoing at Joensuu, and actually tomorrow will be the casting ceremony of the base foundation of that factory. So that's also well on the way. When it starts up, it will be the largest biocoa l factory in Europe. So again, a good example of industrial scale, CapEx-intensive investment that Taaleri is committed to do. And then Bio Fund I launched 2022 on the investment period at the moment.
Three investments done so far in the bioindustry space, and we are looking for the fourth one now. If we deep dive into the next three years on our roadmap, we will of course continue doing the investments from our Bioindustry Fund I. That's our bread and butter at the moment, and managing those investments already in portfolio. We already have also told you about the new fund, VC fund, that had its marketing permit late summer this year, and is under fundraising at the moment. We are looking for first closing of that fund during the H1 next year, and then that fund will start immediately investments. That's a story that I could tell a lot and speak long, but basically, why VC fund? Again, we come back to that being a meaningful player in the ecosystem.
We saw several good companies in our pipeline that were not mature enough for our growth fund, so the logical step for a company like Taaleri is to put a vehicle that can invest in this phase space as well. Then we will start to prepare new funds on this bioindustry, which will be then launched in 2025. So we are aiming for first closing of new funds in 2025. Then these direct investments, we start building the team for that next year. That will be completely separate team looking for those opportunities and realizing and executing those investments. The thing there is, again, that we have a lot of knowledge that we can share, a lot of opportunities that we see that fall away from our fund mandates currently, but are still interesting for Taaleri.
Then this direct investment with separate team will most likely do its first investment during year 2025. And then 2026, maybe the biggest thing there is that Bioindustry Fund II, our first successor fund, will be prepared for launch in 2027. All of this means that at the end of year 2026, we are aiming for EUR 600 million of assets under management and direct investments, as said earlier, more than EUR 100 million. So how this is done? Only with a strong team. And that's kind of my concern, number one, to have a committed, strong team with expertise on this field. We've already proven that we can develop projects in-house, like Joensuu Biocoal, totally in-house, develop projects from site selection, selection, licensing, permitting, all of that, and now it's under construction, under our management.
Then we need to have deal source in transaction execution team, strong knowledge on that, specifically on industrial companies. Asset management, there is the technical know-how of our team, which is utilized widely through the whole lifespan of investments, starting from due diligence, initial screenings, until the exit. We are quite hands-on in that. We require a board seat on our portfolio companies where we invest in, but we go much deeper than board seat. So basically, we sit in project meetings with these companies that are building new factories. Because these companies typically haven't done big industrial scale projects, they don't have the experience on that. We can bring that experience on the table. We have that in our team. So we can guide these companies in executing projects.
Also, sustainability is new for everybody, but we have strong knowledge in our team on that, and we held these training sessions for the portfolio companies multiple times per year. And that is just to highlight that we want to bring more than just the equity into the table when we go somewhere. Fund management, that's then efficient operation, optimization, IR relationship, and high quality on everything what we do. High quality is one of the big important issues for fund business as well, because only with high-quality funds you can raise new funds. So what is the kind of the market sentiment for this bioindustry area? So we've already seen in the previous presentations that private equity is growing.
But inside the private equity, if we look more deeper, for example, in the bio-based materials market or circular economy-based materials market, they are growing pretty fast. And these are, these are the things that we are aiming—we have been aiming from day one, and those still are the priorities for us. So just to recap, what you can wait from Taaleri Bioindustry is growth. Growth in number of funds, growth in direct investments, growth in personnel, growth abroad. Thank you from my side. Next, I would like to invite Renewable Energy Director Kai Rintala to stage.
My name is Kai Rintala. I'm the director responsible for renewable energy, and I've been in the role for seven years now. We are a renewables fund manager, about EUR 1.6 billion under management. We've had and still have six Article 9 funds. In terms of the investment approach, we are really focused on technology. So what we do is onshore wind, photovoltaic solar, and battery storage. In terms of geography, we do Europe and the U.S. Historically, we've also done one investment in Middle East, but that's no longer in our focus.
We have a team of 48 people altogether do development, construction, and operations in our home market in Finland, where we are the largest wind power operator. We do everything in-house. Whereas then once we go abroad, then we do tend to partner with other companies of the highest quality. Our priorities for the next three years is really we've got 27 either operational or construction assets on the books, so the focus must be on optimizing the performance of those. Naturally, out of good performance comes the second priority, which is fundraising performance.
So we had first close of our SolarWind III fund in June this year, and are still fundraising next year and bit into 2025. And the hard cap of that fund is EUR 900 million, and that is naturally something that we are striving towards. And then the third one, we had 50 development projects transfer into the fund at first close. So we are naturally very focused in finalizing development, getting those projects into construction, and then potentially identifying new opportunities as well. And this what it looks like in more detail. So 2024, 2025, fundraising for SolarWind III.
Then all the way through the three years, making investments for SolarWind III, putting projects into construction, and then just managing assets and squeezing value out of them and making them ready for exits. As we talk about exits, then Wind II and III are coming to an exit period, so the expectation is that that will happen next year. SolarWind I will be exited in years 2025, 2026. And then the preparations for SolarWind IV already starts in 2026. Then, if we look at the numbers on the left-hand side, so this is a quarterly rolling last 12 months.
So, if we look at the continuing earnings, which is the darker part of the bar, then it has gone up in the last quarter, given the first close of SolarWind III. In terms of the non-recurring earnings, you are seeing the accruals of the performance fees, but then the two higher bars there also include the premium from the transfer of the development portfolio into SolarWind III. And then if you look at the middle chart, then this is reflected in the operating profit.
Assets under management on the right-hand side, if you look at our growth from 2018, this has been impressive, and this is something that we expect to continue into the future as well. So we've been at this for 12 years now. If we tell the story in a fund vintage, then first we had three wind funds in Finland. Wind I of those has already been fully exited. That has partially turned into a mandate, which we have with a consortium of Korean investors that we are currently managing on an ongoing basis. SolarWind I and II, which is our international funds, have already been fully invested.
And then Taaleri SolarWind III, we are fundraising and also making investments at the same time. And really, team of 48 people, so that is absolutely fundamental to running the business. On the development side, we are focused on the quality of the projects and the development, making sure that permitting-wise and contracting-wise, we get first time through the project financing process. The investment team scouts for new investments, transacts on those, but in addition to that, then also for the projects already in portfolio, is working on the project financing and power hedging on those. Asset management team, construction management, bringing stuff in on time and on budget.
Technical asset management, making sure that every single megawatt hour that can be squeezed out of the assets is also done so. And then commercial asset management, making money move the correct way across the international structure and documenting that in an appropriate way. Funds management, support functions, investor relations, fundraising, investor reporting, risk management, compliance, et cetera. High-quality team is everything. In terms of then the market for the current fund, we're seeking to raise EUR 900 million in total. We're seeking to build approximately 2 GW of generation capacity. On the top graph, we are looking at the size for fundraising in infrastructure funds, and we can observe that it's in the hundreds of billions .
and equally when we're looking at then the market for onshore wind, PV solar, and battery storage in Europe and the US, we can also see that it's in the thousands of gigawatts. So therefore, the conclusion is that the market is there for us, and we are really the drivers in our own success. And with this, I hand it back across to Peter Ramsay for real estate.
Okay, I'm gonna take you through our real estate business, which we call a housing fund pioneer in Finland. And the reason why I'm here is that we've changed the management of our real estate business. Mr. Mikko Krootila will take over, but he won't be in before January first. So in the meantime, I will act as interim head. Our operations are, in a nutshell, the following. So the operations started in 2009. We are only operating in Finland. We do real estate, fund investment, and asset management. And we have seven closed and real estate funds. We are portfolio managers for two non-UCITS open-ended funds, and then we're also the asset manager for an institutional client. All strategic real estate management expertise is in-house, and our property portfolio includes both commercial and residential properties.
As sustainability is integrated into all operations. This means ESG policies and other commitments are integrated. The AUM for the real estate business stands today at EUR 660 million. The strategic priorities for our real estate business is, first and foremost, to grow the real estate business. I mean, the sector has been hard hit by the rising rates, but we think this might open opportunities for us to be active, and we think that at this stage of the cycle, we could strengthen our position through selective mergers and acquisitions. Then we also aim to scale the business. That's partly via mandates and then also through Aktia-distributed products. Secondly, the second strategic priority, I think we're well-positioned for sustainable investment products.
We can leverage our ESG excellency that we have in the group, and we know that there's a growing investor demand for impact on sustainable products also within the real estate space. And the third priority is really to perfect our operations as a professional real estate manager. We want to gain a position as a desirable local partner for our counterparties and clients. The strategic roadmap. So, we have a high target for our assets under management. It's EUR 1.4 billion at the end of 2026. This is, of course, based on the fact that we believe that the market will normalize somewhere between here and now, and that we are successful in gaining a stronger position in the market.
If we look at the activities across our strategic roadmap for 2024, 2025, and 2026, they're pretty much the same. I mean, we seek out these M&A opportunities. We intend to launch new funds. Of course, the funds that are ripe for exit, we will exit. We have several types of funds, and as you can show... or this picture shows you, the different funds that we have. And on the top, we have open-ended real estate funds and mandates. Then the next level is our closed-end housing funds, and we also have what we call property fund or funds, several of them. Those are kind of housing plots that are sort of at the development phase of a project. And then the lowest bar is the exited funds that we have, or the funds that we've exited during our existence.
Now, we believe we have a strong team with deep, deep expertise and various capabilities. So we do everything from portfolio, investment, and asset management. We also do property financing. This can be a very extensive exercise, just as it is for the renewable energy. We do the ESG analysis and reporting and, the financial and risk management also. And then we have a separate in-house alternative investment fund manager organization that then facilitates, the funds themselves. So we all know that the real estate cycle is or can be very extensive, but it is very volatile. And, that's kind of strange because actually the cash flows are quite stable. But, this picture shows you, how investors have put in money into the real estate sector. So the chart above, the dark blue bars, are domestic buyers, it's called here.
So domestic investors active in the market. And as you can see, this was a very sort of domestic market until the early 2000s. We didn't really have foreign investors as such in the market. But on the run-up to the financial crisis, foreigners piled in, and those are the violet bars here on top of the dark blues. So they really came in, and then suddenly there was a freeze, or what we would say, there was a sort of this desert moment. Everybody pulled out. Still, some Finns were active, transacting, but then it really took speed after 2017, where actually the Finnish activity was exchanged to these foreign activities, and the foreigners really were the bulk of the buyers here.
Now, I think what has happened here is we have an established real estate market in Finland, and there's not gonna be an exodus out of it. So it's really become an established part of people's investments. Also, Finland is a euro-based country. That is something that appeals to euro-based investors. And then Finland is part of the Scandinavian investment pool, so a lot of investors look at Scandinavia as one market. So, the other chart, the lower hand chart here, shows you the started or granted building permits, and the other one is the completed apartments. And as you, of course, all know, we've had a total stall when it comes to the new building permits and also the started apartments. Eventually, this will become a bottleneck if we don't start new apartments because the need is out there.
Well, Mikko Krootila, the new head of our real estate business, will naturally refine the real estate strategy together with the team once he starts early January. And I could conclude here, and I hand over to Henrik Allonen for the part of Garantia. Please.
Good afternoon, ladies and gentlemen. My name is Henrik Allonen. I am the new Managing Director for Garantia Insurance Company. I have been with the company for more than four years, and today I will update you on the business model we have at Garantia in our insurance operations, the five competitive advantages we have, the three strategic cornerstones for the coming strategy period, and of course, the financial figures for the insurance operation. First of all, what I would like to do is to sort of, in a very high-level nutshell, describe the business model that Garantia does. We are a non-life insurance company that is specialized only in insuring credit risk, and what that means is that we underwrite guarantees for consumers and for corporates.
And the guarantees, they can cover what typically is a loan, but they can also co-cover any other financial commitment. And the underlying logic is that if a borrower fails to pay, we will pay the lender and go after the borrower. And obviously, in this operation, we assume ourselves to credit risk from the borrowers. A very defining feature of this business operation is that actually we tend to write the premiums up front, and only after a period of several years, we typically pay the claim if there is a claim. And that means that actually we are left with a cash flow sitting on our balance sheet, between the time of the premium and the claim, years after.
That cash flow is the investments that we have on our balance sheet, and those investments obviously produce a certain investment return. So you could say that we derive income from two sources. It's the profit from the insurance operations and then the profits from the investment operations. Keeping in mind that in our case, the investment portfolio is rather considerable relative to the size of the insurance operation. And of course, we face corresponding risks. So on the insurance side, we face the credit risk from the guarantee underwriting, and on the investment side, we're subject to all the market risk that we face in the investment operations. Garantia has five distinctive competitive advantages, and first of them is that we have an extensive network of very long-term partnerships.
Actually, this November is the 30th anniversary of Garantia. Garantia was founded in 1993, and I'm glad to say that some of the relationships that we have with our partners and clients are as long as the company is old. Secondly, Garantia operates an insurance model, a business model that is very efficient and very scalable. It means that actually we are able to grow the volume of our underwriting business without incurring a corresponding increase in expenses. Why is this? It's mainly because we strive for a digital operating model. Thirdly, during the last 30 years, we have managed to gain an extensive expertise in risk selection, and we consider that the ability to select the risks that we take and the risk that we don't take is in very center of this underwriting operation.
Fourthly, Garantia is a niche player. We are able to do and make solutions for our clients that the large financial financial institutions cannot do. And even if they could, it would take for them years to do what we can do in months. And finally, we have very strong solvency, and that solvency is there for us, so we can make sure that the beneficiaries of our guarantees can rely on the fact that in any possible future scenario, they will be reimbursed with the claim that they're entitled to. Then moving on to the three key strategic priorities that we have for Garantia in the future. The first really important priority is that we see that in the current distribution channels that we have today, there is significant room for increasing the volume of our business.
This concerns especially the residential mortgage guarantee that is widely distributed in the Finnish home loan market. There is a significant room for improving the utilization rate of that, this product in that market. Secondly, we obviously always aim to increase the number of the distribution channels and revenue streams that we have to diversify the sources of underwriting income we have. This also applies to the plan that we intend to, in the near future, expand our operations outside Finland. Thirdly, as running an insurance operation and an investment operation, it requires equity capital. We need to make sure that we manage that capital efficiently. When we manage to have effective capital management, then it enables us to both grow the insurance operation and to retain an attractive dividend payout rate for our own owner, Taaleri.
Looking ahead for the next couple of years, one of the key priorities is to improve the penetration rate of the residential mortgage guarantee, which is the flagship product that we have at Garantia as of today. We believe there's significant potential, even in the existing distribution channels, to increase the usage. So an increasing rate of mortgage borrowers would use instead of any other collateral form, they would find it attractive to use the residential mortgage guarantee when they apply for a home loan. Secondly, we will strive to get new partnerships for the distribution of our products in the coming years. And, starting from 2024, we are also taking the first steps to expand our underwriting operations outside Finland to the other Nordics.
And this applies to mainly to the corporate side of our business. Looking back at the numbers, Taaleri acquired Garantia in 2015. On the left-hand side, you can see the insurance revenue we produced that year, it was EUR 11 million. Currently, on a 12-month basis, the insurance operations revenue is EUR 20 million, so that's almost double. And if you look at on the right side, in 2015, for every one euro we made in insurance revenue, we paid costs, claims and expenses of EUR 0.71. And as of today, for every one euro we earn in revenue, we pay claims and expenses of EUR 0.22. I believe this is an indication that a credit insurance operation can be run so that it grows and it grows profitably.
And then, looking a bit how Garantia appears on the Taaleri Group income statement. On the left-hand side, you can see Garantia's contribution to Taaleri Group income. Obviously, we have to state that in the beginning of this year, a large IFRS standard came into force, the IFRS 17, which affects the comparability of the figures. The big line is that the blue bars on the left-hand side represent the income that comes from the insurance operations, and we report that on a net basis. So the insurance operation is reported on a net basis on the group income already. So we have very little expenses on the group below income on the group income statement. And then obviously, you see the significance of our investment operations.
We have a relatively large investment portfolio. It's in excess of EUR 150 million, and obviously, the returns fluctuate over the years and affect the income as well. In the middle, you can see Garantia's contribution to group operating profit. Currently, on a 12-month basis, it represents EUR 14 million, and that includes a zero net income from investments. So you could say that it's reasonable to expect that in the long term, you gain a positive return from investments on top of that as well. Ladies and gentlemen, I mentioned earlier that credit insurance is a business that requires long-term partnerships. Good partnerships take long time to build. This is a business of trust.
On the left-hand side, we operate in our residential mortgage guarantee business. We have partnerships with banks that cover almost 70% of the Finnish market. I believe this is a business model that is also very viable in the future as well. Ladies and gentlemen, thank you. I believe next we have time for some questions.
Thank you for the presentations. Now we have time for questions, and you can still send us questions through the webcast platform, but let's start again with some questions from the floor.
Hi, this is Kasper from Inderes. My first questions are for Henrik. Why do you consider the Nordic corporate credit insurance market attractive?
Mainly because the credit insurance product that we have been doing for 30 years, it's a universal product. So, it applies to all markets and Finland as well.
Okay, thanks. My second question is: How does this expansion in the Nordic corporate credit risk insurance market fit into your focus on capital light products and scalable solutions? Does this expansion require, for example, new recruitments in administration or risk management, et cetera?
Obviously, if it requires sort of inputs, but I would expect that it... the inputs would reflect the operations that we have right now.
Thanks. My last question is for Peter. This also is related to Garantia. Do you see Garantia as a part of the group in the long term as well?
Yeah, thanks for asking. I seem to get that question often. I think... Honestly, I think we're the best owners of Garantia currently. Of course, I'll change my opinion if somebody says something else. But if you look at the development of Garantia under Taaleri, it has been really spectacular. So to that extent, I foresee Garantia as part of the group.
Thanks.
Yes. Hi, Sauli from Inderes. About the EUR 4 billion AUM target, let's start with the bio. You had EUR 650 million, I believe there, and that, I guess, don't include the next flagship Bio II , since it was like you are building it up there. So, I mean, can you walk us through, like, what at what components you add up and come up with the EUR 650 million number? Thanks.
Yep. Yeah, thanks for the question. It was EUR 600 million, to be precise.
Oh.
But, yeah, currently, we are about EUR 160 million, so we need to raise that to EUR 600 million, and that, of course, means couple of new funds. That's the aim, and from there it will build. So as, as it was in the, in the roadmap, we... next year, we will start to prepare a couple of new funds, which will be then launched 2025. And the, the final AUM is, of course, collected at the end of this period, 2026.
Does that figure include, like, more co-investments, where you could also use Taaleri's balance sheet on those investments?
Yeah, it could include those as well, but the direct investments, we consider as separate, as you saw.
Then, on the same topic, on the energy you had, let me see if this is the right figure now, EUR 1.9 billion. Does that include the older wind funds, that you get the mandate on those, which is kind of a coin flip, I assume. Do you get them or not?
It does include mandates, but that doesn't necessarily mean that it's those specific mandates. The funds business is focused on putting projects through development and construction into operations, and then once you have the mandate side of business, it's entirely non-competing. So there, the focus is on operational wind and solar assets, and naturally, by far, we are the strongest in Nordic operational wind, where in Finland we are the biggest player and are present in Norway and Sweden as well.
If I remember correctly, when, like, the beginning of the previous strategy period, you were talking a lot actually about the mandates-
Yeah
... that you could get them, and, and that could be interesting business. But then at some point, you were, if I recall correctly, you were more like, "Now we will focus on the ramping up our existing business," et cetera. So what has changed your mind once again, that the mandates are the thing now?
Yeah. So in terms of... That maybe relates to the fact that we had a very good relationship with Korean investors, which we still do. But then the global economy shifts, and the Korean currency changes, and then the allocations in the Korean pension and insurance companies' portfolios also change because of that. Then suddenly, Nordic operational wind isn't as attractive from a risk and return perspective for them. So that's kind of the reason for quite a lot of those mandates that we were expecting to come, not going forward.
So it's a macroeconomic change, but in the meantime, we've kept on building the relationships and with some European players, we're now actually having conversations around mandates into the Nordic operational wind.
So you feel more comfortable about getting the mandates than, like, let's say, 24 months ago, or s-
I would say yes, or maybe 24 months ago, I was really, really optimistic, but then in between, I was a bit depressed.
Okay, okay. Then, about the real estate, you obviously need to grow a lot in there, raise a lot of new capital, since you will be bleeding on the older funds there. So, I mean, you obviously need to do kind of a sizable acquisition in AUM-based to get there, or do I get something incorrectly here?
Yeah, it's kind of twofold. I'm sure, you know, if we do M&A, that will, of course, grow the assets. But then, of course, if you get a sizable mandate, you know, that also sort of rocks the boat. So I don't think we want to, you know, have any specific numbers on what is what, and I, I'm actually more on a general level. You know, I think what really happens is that the market is gonna be quite sour for a time, and once it normalizes, that sort of, you know, will it normalize until 2026? I believe so, and therefore, then you have the opportunities to grow there. But yeah, that's really up to the composition then eventually.
If I may continue still, on the direct investments, you said that in bio there will be over EUR 100 million, if I understood this number correctly. Then, how about the other ones? Obviously, I guess you still want to or need to even put some capital on the new funds as a manager's skin in the game, et cetera. So how big part of the portfolio would the other bets outside the bio be in 2026?
So, just, you know, as a GP, you typically commit 1%-2%. So, you know, I think that's not gonna change dramatically. So that really sort of comes under... And that's also within our sort of strategic investments then. But, I think why we're sort of singling out the bio industry is because it's very broad, it's very novel, it's new. We feel that we have a competitive edge there. And then if you look at our renewable business today, that's really an industrial scale: wind, solar, and the battery storage solutions.
So, you know, if there's something in the renewable energy that then isn't within that that I just mentioned, naturally, we would be looking at that, but it's too early to sort of say that that's probably gonna be the growing ground, 'cause I believe that we have more, more opportunities in the bio industry space. So it's just easier to really focus on that at the time being.
But, like, do you see that the other portfolio would be still in tens of millions ? I mean-
Oh, you mean the non-strategic?
Yeah, no, but I mean, the basic real estate, real estate plus renewables, like those two things. Obviously, you did, as you said, you need to want to put 2% commitment, et cetera.
Yeah. I think, you know, the starting point is there were more GP investors. That's really the starting point. If there would be anything else, then, you know, that would have to be very special and very attractive.
What about then on the real estate? You kind of are relaunching it, you could say, and at least at some of your peers, in order to relaunch and attract capital from capital to the funds, they have needed to make sizable investments from their books in order to prove that they really believe what they are doing. So do you see, is that the scenario? What could also happen that you need to pile up like EUR 10 million or EUR 20 million or something for the next upcoming real estate funds in order to-
Not necessarily-
Smooth the process?
Yeah, not necessarily. I would... You know, you have to look at the mandates and then also the UCITS funds that we manage. So, I think, I think, you know, Aktia is sort of key here as well because they have an ambition to, to, have this asset class at the disposal of their clients. Now, the cycle is always tricky. So, you know, if we look at the cooperation there, we have really good experiences from our bioindustry fund and then the renewable energy fund. So I think if the market is there and the product is there, I think there's appetite. So what we... We shouldn't forget that aspect of it as well.
Yeah, thanks, Joni, from Nordea. Maybe I ask question about, about the management fee levels. Is there any, any difference between business areas and, how you expect this to develop going forward?
There's definitely, I mean, differences between the various business units. So I'd say, you know, in the real estate, typically, they're lower because you also pay for the debt there, so it's a totally different structure. Bioindustry is more buyout driven, so there you have sort of a little bit of different structure as well, smaller funds. And then in infrastructure, or in our case, the renewable energy, it sort of mimics what the infrastructure funds are doing out there. Then on the sort of performance fees, you know, I'd say what really the case is there is, you know, do you have a catch up or don't you have a catch up? How big is that? And I think that depends a little bit on what you have used before.
So it seems like, you know, when you've had a fund with a certain structure, it typically tends to have the same the next one. So I think there might also be differences. So is it 100% catch up? Is it 50%, et cetera? So yes, there are different fee levels.
You're not expecting any major changes going forward on this, only maybe through the mix then-
I think-
Probably.
Yeah. I think also, you know, the behavior of the investors varies. So if you take a very big Tier One institution, what they do typically is they invest, and then they want co-investments. So they're kind of on the side of the fund, they're driving down their fees based on the exposure they have. So, you know, that's something that's been going on for a while, so it's not new. And actually, I think that's gonna continue, also because people are more professional, and they have their own teams, and they have the ability to do this. But then again, I think on the basic sort of structures, I don't really think there's gonna be that much change, 'cause costs have also risen.
The only argument you could make is that if you have a really, really big fund, you know, why do you have so big fees? I haven't really seen that sort of materialize to a large extent. I think what really happens in private equity over time is that really good funds are scarce. Then, you know, investors who wanna get into the really good funds, they're not... The first issue isn't the fees, but then if they're really big funds, then they become an issue.
Yeah. Thanks. Maybe then on renewable energy, maybe the question about the, you know, general view of the market currently, 'cause I think there has been some delays of projects overall. So how you feel and when the market is maybe ramping up again?
Yeah. So, I think that the short view of the market is that post-Ukraine electricity prices will be higher for longer. Naturally, we are currently also experiencing a situation where the interest rates are high, which increases the cost of financing the project, as well as the equipment is changing in pricings. There's variations in that in terms of turbine prices are still at elevated level, whereas panels and batteries are going down. In terms of that is making the decision on new investment, this is extremely challenging, especially in countries like the Nordics, where the electricity price is systemically at a lower level than in Central Europe, let's say.
Our way of tackling this is really twofold. We are diversified, so we have projects across a large number of countries in the portfolio: 58 development projects at the moment, across 10+ markets. And then having those development projects and having acquired them on a cost-plus mechanism into the fund, then gives the fund enough value that it can, with certainty across those markets, in some of them, just keep on putting projects into construction with the certainty of delivering on the target returns that we are communicating to investors. So in summary, we're in a happy place.
Okay, thanks. Maybe then on bioindustry. Maybe a bit, you know, follow-up on this. Have you seen any changes on bio premiums on product categories?
Well, yes and no. It varies a lot on the product. So if you have a bio-based product that doesn't have any competition, then you might have bio premiums in them that the clients are happy to pay. But then, good example could be ingredient business, where you're supplying a bio-based ingredient that is then mixed with other ingredients to create a product. That's heavily competed, and you have alternatives there. So in those, you have to be in price parity. So it varies a lot.
Okay, thanks. Maybe then one question also related to Garantia. How you see the solvency ratio? Now, it's above 270%. I think this has been asked quite many times, but what is the adequate level going forward?
I would say that in Finland, in general, insurance companies have tended to retain solvency levels of above 200%.
Okay, thanks.
Yeah, still about the headcount needs on the strategy period, you now have roughly 80 on the private asset business. What you would expect the number to be at in 2026 if you follow the current client path without M&A?
I'm sure we have a number somewhere, but let's put it this way, that, without giving a specific number to you, that it will increase.
Then, still about the bio investment, I'm not sure is this for you, Tero, but you said that you will start the investments basically in 25-ish. So, I mean, you basically have 24 months during the strategy period to deploy EUR 100 million, which is a lot from your own balance sheet. I mean, so how confident are you that you can actually pull that off, or is it even smart to do it in such a short timeframe, considering that you are basically putting half of your equity there?
36 months, I would say. First investment in 2025.
Yeah, first investment in 2025, and as stated before, these single investments will be larger ones. So, it doesn't require multiple investments, at least so much. So ticket sizes will be larger, number of transactions will be smaller.
And then about still about the investment, the non-strategic timetables. I mean, originally, I guess, you guessed or your previous presenter guessed that you will have divested those at the end of the strategy period, considering the fact that it's one month till Christmas, it seems fairly unlikely. So, what timetable could one expect you to divest the rest of the stuff there?
Yeah, I think, when I look at sort of the various investments, I'd say that, probably if I give you a number, so in a year, probably a third could be gone. But then, then again, that would... That's sort of a guesstimate based on what I see right now. But of course, the ambition is to sell that down. As I said earlier, we just don't wanna sell things to satisfy a certain need to get a number to a certain level, but rather to sort of try to maximize the investment. And that's why, for instance, in this Turun Toriparkki, we did an investment last summer when we recapped it, but that was a very value-enhancing investment.
Then finally, about the SolarWind I for Kai. You obviously won't give us the IRR number, but let's put it this way: How satisfied are you with the performance of the fund so far?
SolarWind I, so my expectation is that we will exceed the target return for the fund. Naturally, you are aware that in terms of mark-to-market NAV, there are methodologies where the risk-free rate is coming through the discounting rate, which already some infrastructure managers have fixed. We have not changed the methodology at this time, and that is naturally slightly distorting the true performance of the asset, but the expectation is that that fund will exceed its target performance.
Okay. Thank you very much.
Then we have a few questions from the webcast. First one is about Fintoil: What are the returns for investors from Hamina now expected versus the original plan, and in what timeframe?
Yeah, maybe I will answer to this one. So, first of all, there are a couple of funding vehicles in that, so I'm not too sure about which vehicle this is directed to. But the market for pulp-based production and also tall oil refineries has been quite tough since one year or so. So the raw material prices went heavily up. Also, the end product prices went up, but then the end product prices started to go down, while the raw material still kept on pretty high level. What we see now is that the raw material prices are coming down as well, very fast at the moment, actually. So I would say that next year will be much easier for Fintoil than the first operating year.
Of course, you are now speaking of a factory refinery that has been built for 25 years of lifetime. Looking only one first year of commercial operation is... I don't see a sense there in that sense.
Then a question about renewables. Middle East is not in focus anymore. Has the Masdar cooperation been discontinued?
No, actually, the Masdar relationship is as strong as ever. It's just that we're not making new investments in the Middle East. We have, for example, lined up an announcement in COP 28 in Dubai for our Polish portfolio. So we continue to do deals together, Poland all the way down to Greece.
Last question about Garantia: How are Garantia credit losses expected to develop in current economic downturn?
I would say that, we are very happy with the underwriting we've done in the previous years, and it's a long-term business. I would say that obviously, the credit cycle affects, any probable claims, but so far it has been good, and there's no, sort of, an increase of claims in sight.
Thank you. I think, that's all for questions now, so it's time to wrap up our Capital Markets Day and hear the closing remarks from Peter.
Well, thank you for your attention and all the very good questions. It has been a long but worthwhile session for us to be able to tell you about what our coming activities are, and at least we at Taaleri are all thrilled of the future. With that, I wish you a great end of this year.