Good morning, ladies and gentlemen. Welcome to the Capital Markets Day of Investec Asset Management, becoming Ninety One. You've just seen evidence that we have prepared for a rebranding. We've announced the new brand, which will take effect upon de-merger. In the circular, we refer to the Ninety One business. We still operate under the Investec brand until demerger is effected. I hope you saw the logic behind the brand choice, and also you can be comfortable that we are well prepared to execute on that. Just some housekeeping. We have many people dialed in. This is a webcast, not a live presentation in its format, so I'll be slightly more formal than usual.
People in London should excuse me for that, so that we make sure that people who follow from their desks and via their computers or their mobile phones can appreciate and get the whole entire presentation. Today's question and answer session is for shareholders and analysts. The journalists will have their own individual sessions starting later today and tomorrow. Please, allow us to just keep giving the people who own our shares and who ultimately will be responsible for making the price, the chance to use this opportunity. I welcome all the others who have dialed in and would like to now, along with my colleague, Kim McFarland, who is the Finance Director of the soon-to-be listed Ninety One and also an Executive Director of the Investec Group and currently Finance Director of Investec Asset Management, to work with me on the presentation.
Actually, it's the 3rd of December. On the 1st of December, Kim and I have worked together for 26 years. Kim, thank you very much. You didn't do what I asked you then, that's to keep staff numbers under 25. Ladies and gentlemen, it is important to start with why we're in business. This business that I'm presenting today has developed clarity of purpose in a very fast-changing world since its existence. Today, we're discussing a very significant step in the development of the Investec Group. I have my Co-Chief Executive Officer, Fani Titi, here, and Nishlan Samujh, the Finance Director of Investec and Chief Financial Officer, to answer any questions on the demerger if they may come up. We had a call this morning specifically dealing with demerger questions.
We will keep away from technical, but go on to the strategic realm here today in this session. This is part of the simplification journey of the Investec Group, and it's also part of the next phase of growth for Investec Asset Management, under the colors of Ninety One. We're evolving our ownership and our structure, but we're not changing our name. We are changing our name, but we're not changing who we are. That's really important. We are the same business that has evolved organically and sustainably over the last almost three decades. Our purpose remains the same: investing for a better tomorrow. And we do this by building a better firm, by trying to invest in a better way, and by contributing to a better world. Thank you very much for taking the time to understand us better.
Now let me just come back to the demerger rationale. Why does the demerger work for this business? It works because we will be in a more simple, more focused environment, which will facilitate growth. We've highlighted four benefits for the demerger, which is the value of independence in the active asset management sector. I don't have to go into it. It is very well understood. It also creates a better context for employee ownership because now there's no cap or limit, or we are far from the cap on employee ownership, which means we can satisfy the equity demand for our long-term employees and many of our employees are in it for the long term, if not most. We're therefore creating a structure which is ideal not only for talent retention but also talent attraction in a very competitive talent game, which is the asset management industry.
Finally, it aligns us all, clients, shareholders, and staff, and the communities we serve, with the long term and not the short term. What will change is the shareholding structure upon demerger. Currently, Investec plc and Investec Limited own 80% of the shares in Investec Asset Management, and the staff own collectively through a management vehicle, 20%. The demerger will allow a bigger free float, a free float of up to 65%, but give an opportunity to the people who work in the business, along with new shareholders to buy in and add to their investment. This is not, and may I just say it very clearly, said it before, this is not a liquidity moment for staff or anyone who's worked in this business.
This is an opportunity to invest more for the long term because there is a story ahead of us which we're all, as people who work in the business, very excited to participate in. We are listing via or retaining the dual-listed structure of the Investec Group because it enables us to remain connected with our roots, particularly the South African market. Ninety One will be premium listed in London, with a secondary listing on the JSE. That's Ninety One plc. Ninety One Limited will be listed on the JSE exactly in parallel with the current Investec structure. That aligns us with all regulatory requirements. Finally, I just want to ensure that shareholders, all of you, will have equivalent economic and voting rights. There are no special votes, there's no controls, mechanism, et cetera.
Our shareholders will have full rights as in any other plc or Johannesburg-listed company that is premium listed. We are changing our name, but not who we are. I think it's really, really important that this is a demerger within a business that is not going to lead to massive change, particularly from a client side. That's really important. We are the same business. We're just simply giving you transparency and clarity of what is inside the Investec Group, and we're setting these businesses on growth paths, each on their own growth path, in order to maximize value and growth potential. In the circular, we've announced our board. I'm not going to go through every member except to say this is a very experienced board with significant international experience, plc experience, strong governance experience, and very exciting as well, very important, it is independent. Our new chairman is Gareth Penny.
Many of you may know him, but he's an independent chairman. Finally, our board has a very significant, I think, 50% female representation, which we're very proud of. We think we're in position to be a well-governed, independent business. Today, we're going to address three things in the agenda. Firstly, the key differentiators of this business in what is a very crowded market. Review our strategic principles and priorities, which you should know by now, but we'll go through them again and emphasize. Finally, Kim will cover the financial performance and the outlook for the business. This is a global asset manager with a very strong emerging market heritage, and therefore, in tune with the current developments in the world.
As the world becomes more multipolar, as the economic weight shifts east, we will be confronting a very different world from the one many of us grew up in and many of us had to learn the trade. It has a unique culture and combines that with a high degree of employee ownership. That's an important differentiator from its listed peers. It has been built organically and sustainably over time. Yes, we've done one or two acquisitions along the way, but we've learned the value and the power of organic growth. That will be the prime driver for our future success. I've covered the point of emerging market heritage, which I think is important, also a growth vector for the business, as you'll see when I discuss the product offering to the market. Finally, this business provides distinctive specialist active strategies. That's what we do.
No passive. We under-emphasize core. We want to be relevant to our clients in a world where they demand more. This will not be achieved if we didn't have the right business setup. I think it's really important to understand that this is a mid-sized business with superior global reach. We have access to large and sophisticated markets. We deal at the sophisticated end of the institutional and the advisor channels. We have significant growth potential across our existing skill sets. We don't need to change massively in the near term to continue growing. Of course, you have to be open to change as the markets evolve around you. Finally, the business has an attractive financial profile with high cash conversion, and we want to emphasize our capital light business model. At its heart, this is a people business.
Our culture is a vital element of our long-term success. We strive to do the right things for clients, the communities we serve, and our people. Our people have the freedom to be themselves. We talk about freedom to create, but freedom to create within very clear parameters set by our values, set by the team context, and set by the strategy. We combine individual expression with collective ambition and team discipline. We always insist on results, but never at the expense of the human spirit. Relationships matter. Relationships with the outside world, relationships with clients, regulators, but relationships amongst ourselves, really important. We believe this is a team sport. Finally, we balance our relentless drive with decency. It's all about the drive to be better.
Every day we wake up, we think about building a better firm, investing in a better way, and contributing to a better world. The evidence of this is clear if we look at the longevity and the stability across our business in terms of people. We are differentiated by the experience and the depth of our teams. This is not a new management team positioning a turnaround or deal synergies. What we present today is a business which has been carefully built over almost three decades, and which in our view, has significant potential. Just to look at the numbers, you'll see that the leadership in each of our three pillars have been in place between 15 and 17 years. Our executive committee level, by the way, which has some new members, has 20 years with the firm, not 20 years in the industry.
Therefore, if you go further into the business, you'll notice that the average tenure in each of our three pillars, the investment, the client, and the operations pillar, is on average seven years. We believe that provides an enormous strength, particularly in testing times. Longevity itself is not enough. There has to be alignment. We think ownership and alignment through our compensation model, which we've followed since inception, has helped us to deliver value not only for shareholders, but also the markets with the clients we serve. Since 2013, when employee ownership was established by a buy-in, and may I just mention and be very clear, the management of Investec Asset Management did not get shares. They did not get them through dilution or anything. They bought them with after-tax money, and they own them collectively for the long term. That's another differentiator.
Now we have the opportunity to widen ownership through an employee benefits trust and our share schemes which underlie that. We also have the opportunity for the leadership group or the senior management group to continue to build their position in the business and own it collectively. This is not a sell-out. This is a buy-in. This business has been organically built over almost 30 years. This is the picture. Earnings have largely followed assets. We've had three distinct phases. We're going into the fourth phase now, the phase of independence, the phase of really using the platform that we've carefully built over so many years to benefit not only our clients, also our shareholders, and to grow the business so that the staff can have an experience which is worthwhile and which allows them to express themselves and do business at the highest level.
Better firm, better investing for a better world. I come back to our emerging market heritage. We were a single country business in a smallish or a mid-sized emerging market in 1991. That has evolved through the internationalization phase to a business which operated in major developed markets, ultimately never lost touch with the fact that we know how to invest globally and we know how to invest in emerging markets. Today, those of you who build models should note that about just under 60% of our asset exposure, i.e., of our investments we do on behalf of clients, are exposed to emerging markets and about 40% of that to developed markets where we're also competitive and want to compete. Our client base is well-diversified.
Our capital sources come from both the emerging and the developed markets, approximately 51% from developed and 49% from emerging markets, which means we have a well-balanced supply of capital to invest. We do that through distinctive specialist active strategies. On an asset class basis, where you've come to know our business, we have about GBP 54 billion out of our 121 in equities, 34 in fixed income, which is predominantly emerging market fixed income, GBP 22 billion in multi-asset, and approximately GBP 4 billion in alternatives. You would have noticed that we manage these assets not purely by asset class, but by skill sets. We've organized our investment team in 6 skill sets. 3 of them are equity skill sets, the other 3 are asset class-related fixed income alternatives and multi-asset.
You would also notice that the number of people which I have in the slide here, is slightly different from what we presented in the first Capital Markets Day, simply because we're a dynamic firm and we move. For example, we presented our fixed income as emerging market fixed income, but we've actually brought some of the developed market people over into the fixed income team since then, because we felt that it was a more appropriate place, and we focused our multi-asset business on growth because we see a substantial growth opportunity. Largely, we serve the market in two ways. We provide specialist active strategies and outcomes. The outcomes product range is obviously more aligned to the multi-asset side and to the solutions that clients purchase or invest in the DC context. In the DB context, it's more the specialist active outcomes.
Those are two things we do, and we serve two channels, as you'll see later. We have a diversity of skills and we have the capacity to grow. Those are two important components to our business. If you look at investment performance, the sine qua non of this industry, of this business, it's been good over time, solid. What's more important, we think we have adequate investment performance in the right areas where there will be demand, and therefore, we can continue to grow. That is our core focus every day to beat benchmarks. You don't always beat them, to beat them and to deliver good performance relative to peers. In this chart, you see some evidence.
It is very difficult, though, to report in aggregate level in an accurate way, and I think the relevant part is in each of our areas we compete how well we do against both peers and the benchmarks. At this point in time, we believe we have a strong performance platform to grow the business from. We move to our strategic principles and priorities in the business. They have not changed for many, many years. Let me recap. We offer organically developed investment capabilities through active segregated mandates or mutual funds to sophisticated clients. Secondly, we operate globally in both the institutional and the advisor channels, and we serve those channels or those markets through five clearly defined or geographically defined client groups.
Finally, we have an approach to growth which is driven by structural medium to long-term client demand, and of course, supported by competitive investment performance. This is a patient, organic, long-term, and intergenerational business. Our strategic priorities, therefore, also don't change that often. Firstly, it is important that we are set on capturing the growth inherent in our current capability set. The current platform has growth space. Secondly, we developed differentiated strategies anticipating client needs. Thirdly, we focus growth on professionally intermediated channels, institutional advisor. We stick to our knitting. This is not a direct business, and hence, this is one of the reasons why this part of Investec changed its brand. Whereas the B2C part, namely the bank and wealth area, which deals directly with individual clients, would have had a far bigger brand campaign to convince their market that the brand is still relevant.
I think important to note that there's a fourth component to our priorities which very important for us, is the biggest single challenge the world today faces is that of sustainability. Any business should take it seriously. In this business, where we are stewards of long-term capital and long-term outcomes for our clients, we need to take it even more seriously. More about that later. This is very well known. It's BCG data, just so showing where the growth in the active industry is. This is not a small industry relative to our business. We talk about anything between from GBP 80 trillion and GBP 101 trillion funds to be professionally managed. We talk about revenue pool somewhere around GBP 300 billion in the very near future. We operate and focus on three areas which are growing, the active specialist solutions and alternatives area.
Clearly in alternatives, we are pretty small at the moment. More about that in due course. We believe even in the current areas where we are significant players, there remains growth if you do your job well enough. That's the focus of this business, not how big we can be, not how many businesses we can buy, but whether we can do our job well enough. That takes a great deal of application and a great deal of bandwidth and time. Therefore, we are quite comfortable that we can focus on the growth inherent in our current capability set, rather than do too many new things in the near term. Clearly, in equities, at all our asset classes, we have a global opportunity, but also regional opportunities. I'll explain that when I take you through how we evolve and develop the business.
You'll understand why there's a global and regional interplay. In all of these areas, we feel, or many of these areas, we feel there is a significant growth left in the current construct of the business. Let me take you through how our business tends to evolve over time. Firstly, a lot of it is bottom up, not top down. We have creative people who see opportunities, who exploit opportunities, and that's very important. They stay there for a long time, which means we can trust their judgment. At the turn of the century, we didn't have a global equities platform in this business. Those days, those of you who have my color hair will remember that global portfolios were made up of regional components rather inefficiently.
One of the targets we set ourselves is to develop a genuine global equities platform and ultimately leave space for different styles or different ways of doing it. An example is our 4Factor platform, which is one of our biggest equity platforms or our biggest equity platform indeed. We really worked from bottoms up saying, "How would we do this without armies of analysts spread around the world without regional building blocks?" Therefore, how do we screen, how do we efficiently look at the market, and how we then interpret the data quickly and efficiently and regularly, without behavioral bias to pick the right stocks for a global portfolio? That, of course, has evolved to a very significant capability today. Similarly, on the value side, we follow the same process and later our Quality capability evolve, equity capability evolved in very much the same way.
People believing in a certain thing, in a certain way of investing and then evolving it, but doing it in a genuine global way. Today, we have a substantial global equities business, which we have evolved into a regional equities business. If you can compare, you know when markets are cheap, you then understand markets better, and you dig deeper and you dig into that. Out of the global platforms, we have also evolved and developed some significantly very competitive regionals, one which I'll refer later on this slide. Similarly with fixed income, on a different way.
We used to manage fixed income in a single emerging market, in a local currency. It was quite obvious to us that the world will evolve from just developed market fixed income to what was then a higher yield and still is a higher yield opportunity as bond markets grow around the world. We turned that starting point into an emerging market fixed income platform, investing in both dollar debt and local currency. Today, we're a substantial competitor, and if people mention that category, our name will come up. Again, it was built by portfolio managers who saw the opportunity, who then built teams around them. We hired skill in, but we didn't hire a ready-made team.
We built that over time so the IP is part of our business and part of who we are. Today that is a very important platform in our business. Our multi-asset business was a rather traditional multi-asset business, which went into then diversified growth in others. After the crisis, we realized investors were seeking income, and they were chasing yield, and we didn't think that was a good thing. We still think the yield chasing may end up to some extent in tears.
What we did, we took one of our best people or best sub-teams in the multi-asset team and said, "We need a multi-asset income solution for clients, particularly DC clients or advisor-intermediated clients, which can capture some of the opportunity but manage some of the risks, and there's major risks involved in this search for income and in the thirst for income." Today, one of our fastest-growing platforms is our global multi-asset income platform, largely in the advisor space, but it also attracting institutional opportunity. We put a team there and a leader there who's been with us for many decades, which we could trust. This is the way we evolve. Similarly, from our global equities platform, we developed an Asia offering. Once you're in Asia, you can't ignore China.
Again, one of our key portfolio managers and his colleague came and said, "Well, we think China is a huge alpha opportunity. We want to be part of it." Long before raising assets, we started investing money. Some of the money of clients who would allow us, some of the money of other portfolios which wanted exposure to China. Today, we have a very competitive China A-share or onshore track record. That could translate if we operate the business correctly into very significant growth in the long term. Obviously, this has been postponed by what's currently going on between the U.S. and China. We would have, and we were actually planning for some action in the near term, but theSomeone who tweets a lot got in between us and that growth.
We are confident that developing those skill sets for the long term and ultimately applying client funds in them when you really understand, when you really know what you're doing, when you've proven what you're doing is the way to evolve. As a shareholder, don't expect quick fixes. Don't expect quick changes in strategy. Don't expect us to one day be offering the market one thing, the other day the other. If it gets tough where we are, we will simply tough it out. Finally, in the sustainability world, there is a great deal of action at the moment. We have also looked at offering clients who want specific sustainability-oriented offerings. Number 1, positive inclusion, public markets product or strategies. Number 2, there's an ever-growing impact space, which is largely driven around infrastructure and credit. We've been there for quite a while.
You'll see later in the presentation. That is an area where we, again, will show commitment probably ahead of significant client flows because those skill sets are simply necessary. We also agree that ESG in a broader way, but also sustainability needs to be embedded right through your investment platform to remain competitive. That hopefully gives you a sense of how we evolve as a business. This is an important picture because global, it's not just what we do, it's who we reach matters. We are the mid-size business with an Investec global client platform. It's taken a long time to do, it's taken a great deal of diligence from our teams, and today I can show you here the detail of what we have.
What is interesting is since 2010, we've grown faster in terms of net flows in most of the markets we serve except in our original African market, where we've grown with the market. If you look at the numbers of people and the assets, you can see that in the European time zone, excluding Africa, about GBP 40 billion, a similar amount from Africa. Then the Americas from a late start now about GBP 17 billion under management. That is both North and South America. In Asia-Pac, a GBP 20-odd billion platform, which we expect to grow significantly. A well-diversified source of capital. That's really important in this world where overexposure can affect the firm. We think we can grow in all these markets, and particularly the one where we haven't grown fast relative to the market, that is South Africa.
We think we're positioned as a business to grow, or at least be positioned to capture some growth. Not necessarily market size growth because the market is not going to grow that much, but relative growth, i.e., market share. If you just look at our position, having a very strong position as the largest third-party manager, we have identified three areas which are under-penetrated by our firm, which is the institutional equity space, advisor multi-asset, and fixed income. Those three areas. Our proposition is very clear in that market is that of a high-conviction specialist as it is across the world. We have industry-leading service platform, and that does make a difference in this business. We have very, very strong people there, experienced leadership team, and a well-resourced and rejuvenated but long-tenured investment team. A high commitment to the diversity and transformation requirements of that market.
On top of that, I would never have said we think we can grow if we didn't have a track record that speaks to it. We stick to our knitting. We've for a very long time served two market niches, the sophisticated institutional end, i.e., consultant intermediated or sophisticated trustee board market including sovereign wealth funds, including foundations and other sophisticated clients, and on the advisor side. What's happened recently is advisor platforms, i.e., bank and independent financial advisor platforms or insurance platforms, have become increasingly sophisticated. Both these markets actually do not purchase off-brand. They purchase strategies from you or invest in your strategies when they know your people well, when they know your business, and they know your processes. That is what we focus on.
You will not see lots of high street activity from us because that's not who we are or where we see significant growth. Clearly, the institutional channel is much larger at this point in time. Revenues are closer linked institutional and advisor. In both areas, we see significant opportunity, and we will stick to these channels for the foreseeable future. I think we've spoken a lot in the years to come about the advisor channel, and just want to show you that the plumbing's been done for a sustainable growth phase in this channel. It's really all about getting access to major platforms, linking the firm to them, linking our people to them, knowing the people in those platforms. All we've shown in this chart is in our major regions, we've displayed the fact that we have access to the key platforms.
Of course, you can always sign up more. If we work this infrastructure hard, there is significant growth for the business. Of course, knowing that advisor product is, of late at least, a significant part of that was in the income side and in the fixed income side, which means it's not just an equity sale, it's often a solutions engagement with a client. We've shown significant growth in this area. More interesting, since we started focusing on the solutions part of our business, largely since 2015, we have shown faster growth there because that's where the investor that comes out of the pension system or the investor that generates extra net wealth goes, and it goes to advisor or a bank platform to help them find a solution. That is an area that we see as a significant growth opportunity for the business.
Advisor and institutional. In the institutional channel, again, important, it's about the client-facing team. It's about a very clear product presentational focus and relevant specialist strategies which are offered to them, backed up by investment teams they know and understand. We have substantial consultant traction in our major markets, and therefore the endorsement to approach the kind of clients we deal with. An example here is the North American institutional market, which is a very big market. Just showing you the growth, even in a very short term there, a 25 trillion market. Of course, we can't address all of that market. There's specific niches in that market we address. If you look at the demand away, the swing away from domestic to international strategies, that plays to our strength.
Finally, from a growth point of view, the evidence is how we've grown our U.S. institutional footprint since 2010. You see it at the bottom of the chart. We believe that there is significant growth opportunity in spite of the move to passive, in spite of all the other headwinds that are so often spoken about when people think about the active management industry. I almost want to say to people who talk about that, all industries are tough. It's not just this one. Talk to any businessman. There's always competition from something. We just better get used to it. We probably had an easy ride in the beginning of this industry. Finally, sustainability really matters. In our case, it starts with purpose.
Our purpose, which if you ask the people of Investec Asset Management, if you ask them whether they've agreed with us, were they part of it, they know it. It's all about investing for a better tomorrow. It's all about the three things I've mentioned to you earlier, building a better firm, investing in a better way, and contributing to a better world. We have to ensure that sustainability is at the core of our business. How do we do that? Well, we've broken it into three key channels. The one is how we invest. We have to invest in a way where ESG is embedded in what we do, where all our investment strategies understand. Of course, this is work in progress. Of course, no one's perfect.
By the way, we're not trying to become a sustainability boutique because we think the mainstream should be sustainable. Actually, that's the growth rather than copying the very successful boutiques which you all know. It's invest. Secondly, it's engage. Now, it's how we engage the market out there, society out there, and if you follow the internet or just go do a search that you'll know that my senior colleagues and I have been very clear about the fact that we will contribute in the discussion and the debate around dealing with these challenges, not only climate, but the broader sustainability challenges that humanity is facing. In that engagement, means thought leadership, it means participation in industry and other activities, and it means showing, clearly putting our colors to the mast of sustainability as a business. Finally, how we inhabit.
Now, as we prepare to become a public company, we need to report. We need to report clearly on that, and you should hold us to account. Now, in our business, we don't have a smokestack business, but we do fly a lot. We are aiming to be carbon neutral in our first year of reporting, but that's, of course, scope two. We can't account for our portfolio companies and our clients, which is a further level of carbon neutrality you can achieve. I think it's important to understand that we engage widely. Here are some evidence of all the activities we as a firm and some of us individually have engaged, whether it's inclusive capitalism, whether it's the recent joining of the Impact Investing Institute here in the U.K. There are many others.
Since 2008, we've been thinking about this because we developed or we engaged in the impact investing world since then. I would believe investing money across frontier markets itself is impacting an emerging markets, has delivered positive impact. In the sort of more technical sense, that of measuring your true impact. We've been in for it for some time, and we want to grow it. We also want to grow the integration and make sure our integration is at the highest level across our investment platforms, and we need to develop public market solutions, public markets inclusion strategies, which clients can, and investors can identify with because we can sense, in a recent survey we commissioned, confirmed that there is significant client demand in that area. Sustainability is part of what we do.
It's inherent to what we do, but we're not trying to be a sustainability specialist or boutique. We're a mainstream money management firm. Let me recap our strategic priorities. It's capture the growth inherent to our current capability set. Develop differentiated strategies anticipating client needs. I think the latter example is one of those. Focus our growth on the professionally intermediated channels, both institutional and advisor. Finally, make sure that sustainability is at the core of our business. Now I'm going to ask Kim McFarland to come and take you through the financials and deal with some of our outlook questions. Thank you, Kim.
Thank you very much, and good morning, everybody. I'm going to probably be quite formal in the way I present here, so please bear with me. There's quite a few numbers here, and I just want to make sure that I can clearly articulate, both especially for people actually listening to this recording as well. To start, I'd like to remind you that the figures I'm going to show here are all reported numbers that you've actually seen already, and in many ways, they're just a continuum of some of the numbers that we showed at the CMD, gosh, just over a year ago. There is, however, one key change on how I presented these numbers at the first CMD, and that is I've actually excluded the Silica operating profit from these figures.
This, therefore, allows me just to focus on the pure asset management business, which I think is what we want to do here. To clarify, Silica is 100% owned subsidiary of Investec Asset Management. It's established industry utility with more than GBP 100 billion of assets under administration. This is mainly a third-party business as well. It has just over or just under actually 500 employees. As you'll see on a later slide, it actually doesn't generate material profit because the idea is always that it would go and reinvest whatever profits it had back into its platform. Through these slides here, I just want to emphasize that you can see here we have a long track record of organic growth. As Hendrik mentioned earlier, our AUM growth going back to 2009 has a CAGR of 15%.
Over this period as well, our operating revenue base has grown from GBP 190 million to GBP 541 million. This is predominantly management fees. We have, however, experienced a declining management fee rate as experienced by much of our industry, although we still consider this to be strong at the 48 basis points. We have continued to invest in our people and our capabilities from our existing capital base. This is reflected in our operating expense line. Yes, although disciplined in spend, it has increased with the business growth that we've experienced. Finally, our operating profit has grown across the cycles. Although our operating margin has fluctuated around the 33%-34% with some recent downward pressure, this is a highly cash generative business, as you're going to see later on. It's important to highlight here the diversity within our business model.
Our revenues and our profits are sourced from a range of asset classes, strategies, and geographies. We have limited concentration risk in any particular area, meaning that we have financial robustness, which limits our vulnerability to specific market shocks and factors. This slide, which is again, something I showed last time, breaks down our AUM growth over the past now six and a half years. The key message here is the consistency and strength of our organic growth. Again, something Hendrik referenced earlier. We have strong net flows last year and again have done so this year to date. Our average churn ratio has been strong around about the 5%.
We do recognize this figure is actually high, and therefore, at this point, I would caution on you using this going forward, because as you can note, that even as we saw in FY 2017, this actually can go negative on us. The next slide. As mentioned and reflected here, over the past six and a half years, our distribution team has generated net flows in every year other than FY 2017. This demonstrates to us our client relevance. Clients engage with us and commit with us on an ongoing basis, even in a moving market. Yes, we had a strong start to FY 2020 with GBP 3.2 billion of flows, of positive flows. That's net flows, in fact.
In the first six months, again, GBP 6.1 billion of net flows in the prior year. This is against the backdrop of increasing volatility in global markets, where many others have actually been experiencing and suffered outflows. Net flows are broadly spread with no dependence on any one asset class or region, as you can see in these particular slides, in these bar graphs here. In line with our business model, this is a mixture for FY 2019. We have fixed income net flows from Europe and Africa Client Group, and that's reflected in that green bars. 4Factor Equity from U.K. and the Africa Client Group and the equities there in blue. For HY 120, in the first half of this year, we've had strong flows from fixed income, again from Americas Client Group, Europe and the Africa Client Group.
We had strong flows from 4Factor and Quality Equity from Europe and the Africa Client Group. As you can see, quite diverse, different asset classes, different strategies, and different regions. As Hendrik was talking about earlier, you can also see we've had particularly strong net flows in the advisor channels since FY 2018, which is in line with our strategy. These are the asset management operating earnings. As I mentioned earlier, I've stripped out and I show on the next slide, the Silica profit and the net interest income, because I believe this is a clear way of actually showing our business here. The other thing I just want to highlight here, I've not adjusted the NII, the net interest income for IFRS 16.
What I've got here are like-for-like comparatives and ensures therefore, that the operating margin that you see here is a true position of our business. The adjustment for HY 20 should be GBP 1.4 million. That's the IFRS 16 adjustment. Now I've left that in our operating expenses line. I know some firms show it differently, but I thought that would be a good way of putting it across at this point. Our revenues are mainly driven by high quality management fees, which have increased in line with the growth of the AUM, as you saw earlier. Diversification and product evolution helps us to defend our fee levels, which are currently around 48 bps. You'll see here performance fee mandates are predominantly based in South Africa and only comprise a small portion of our total operating income.
I'd like to point out that we don't expect this to grow or to change largely going forward. I've also shown here the FX gains and losses, and these arise from the USD to GBP movement. In fact, one of the challenges we have is that, as a firm, we report here in GBP. You have to recognize that less than 20% of our revenue is GBP based. Therefore intra-month movement in the revenue is U.S. based. Sorry, it's inside the game. Less than 20% of revenue is GBP based and intra-month movement in the USD to GBP exchange rate results in FX gains and losses. Just over 40% of our revenue is USD based, with the balance being in ZAR, emerging markets and other currencies.
The three concerns I think we have as a business that puts it at financial risk are beta, low alpha, and a strong sterling. You have to note further that over 50% of our cost base is in sterling. I'll leave you to do the math on that. As you can flick here, total operating revenue increased by 7% over the past six months and 6% in the prior year. Our operating expenses increased at a similar rate in the past six months to be at 7%, this obviously results in operating profit increasing to 7%. Our operating profit margin has remained stable since 2019 at around about 32%. Recently, we've had some downward pressure on this as the cost of MiFID had now been included into our cost base.
Our headcount has increased to over 1,100 employees, again, supporting our need to invest in our growth. This continues to bring us to what our reported profit was. As I said, I mentioned and introduced Silica earlier, our transfer agency business in South Africa. This was something we established back in 1999. I'm now showing the profits separately, and as you can see, this is not a material figure. I will note that this does include revenue from IAM. I'll come onto more details on the exceptional items later because I think it's something I actually do want to expand on. These mainly represent the non-recurring de-merger expense related costs for HY 2020. I also show our tax here and our effective tax rate has been stable around 20%-20%.
We don't expect, all things being equal that is, for this to change materially going forward. Therefore, this results in our reported profit after tax being largely flat over the period. All right. Let me now go into a little bit more depth onto the actual cost of the business before I get onto the exceptional items. I'm just going to focus mainly on the last 6 months because it has largely followed a similar trend to what we saw in the prior year. I know I went into a bit of detail on these numbers last time as well. Again, as you can see here, two-thirds of our cost base is staff related. This is a people business, as we keep talking about and Hendrik referenced earlier, and therefore we do invest in this heavily.
The material growth over the past six years is obviously in people. Our headcount growth grew by another 1% in the past six months and 8% for the full prior year. This is fairly evenly spread across the business, although there was a recent focus on growing headcount in North America. I'd like to clarify that over 50% of our staff costs are variable. We believe we're well positioned to protect our margins and our balance sheet in a market downturn. System and information costs you see also continue to grow, as was also seen last year. This is a mixture of MiFID costs coming through, which again, as we've seen right across the industry.
These numbers are baked into our figures and a continual investment into our IT systems. We have an ongoing agenda reviewing our systems and manage our spend here closely to align with our business objectives, efficiency, and growth plans. There are, however, no material spends forecasted here, which is largely focused on data and looking to improve a number of our front-office decision-making tools. The other thing we've had to do is invest into new offices, a material one being the London offices, where we are currently having to expense double rental. We do move next May into the new offices, which is actually just across the road here. Unfortunately, we will then have to turn our focus to our smaller New York and Hong Kong offices, where we're going to have to make changes there as well.
On the right, well, on the little bar chart there, on the right there, I've gone and shown a breakdown of some of the other numbers. Our remaining staff costs are broken down into the following key areas, largely being around fund admin and system costs. As I said last time, we outsource a large portion of our back and middle office operations, and this, I do believe, has shown cost advantages and has really helped us to grow and scale our business on a global basis because it's given us that global footprint. This is something we don't plan to change going forward. Other costs, which are then there shown, are around growth in legal, professional, and regulatory spend.
Just something to highlight here, that increase of GBP 8 million in the bottom graph there, from FY 2019 looks high, but this is largely because we had to, in FY 2018, had a number of credit adjustments. The starting base was actually understated in FY 2018. In that period, we actually had some large refunds around VAT and some other similar type of recoveries. That sort of exaggerates that GBP 8 million growth in other, in the blue at the bottom there. I'd also like to point out that we benefited from the SA low cost base as many of our operational and IT services operate out of our Cape Town base. That graph below, as I said, in blue, just shows what the prior year cost growth, and as mentioned, it does have a similar trend. Okay.
At the last CMD, we flagged that transitionary costs related to the demerger from the Investec Group would be manageable. In fact, the ongoing additional costs represent less than 1% of our FY 2020 costs, and therefore, we believe they're not material to our financials. They're generally in line with what we anticipated and discussed last time and basically what we anticipated these costs to be. I think this really reflects how independently we have operated thus far, even whilst being part of the group. In fact, I think I touched in a little bit more detail on this last time when I showed that the dependencies were limited to IT, some HR services, workplace, and a few other central services.
Let me go through the slide quite carefully, because I think it's an important one, and I know we've had a lot of questions in this particular area. To start at the top there in the graphs, I've shown what the expenses were for FY 2019, what we've actually expensed in the first half of this financial year, and then some of my estimates going forward for FY 2020, and then giving a little bit of guidance as to how these numbers will actually pan out in the financial year 2021. The first line, I've got recurring operating expenses. These include new corporate functions and an increase in some of the replacement services that were previously undertaken by the group. These costs will stabilize, except that, and I'd like to highlight this point, that we do anticipate an increase in our recurring marketing spend from 2020 onwards.
That's really where the guidance is coming through there. Operating non-recurring expenses, which is the second line I've shown there, include the double accommodation costs. Okay, that's not related to the actual demerger, but I've put that in there. Also, cost of duplicate services as we transition from the group. These are costs that we've had to run double, like payroll and some of these, for example, general ledger moves, which we've had to do at the same time. Quite obviously, these costs are going to run off next year, and they will obviously trend to nil going forward as well. The last one are the exceptional items, which you'll see I showed below the line earlier, and we've excluded these from the operating expenses.
These are the one-off project costs of the actual demerger, and specifically costs around the rebranding of IAM to Ninety One. Obviously, these will decrease from what you're seeing here in 2020. Again, looking forward, these will trend to nil as well. Let me be clear on one point here. We anticipate that the increase in the recurring operating expenses, which is the top line I've got there, will actually increase, and that's going to be largely around marketing spend going forward. This is going to be offset by the decline in the non-recurring operating expenses, which you've got in the second line there. The net effect will be flat for these recurring operating expenses. Okay, moving on.
We have a single operating platform in place, and this has given us a proven ability to scale, and at the same time, we will continue to invest to support our long-term growth ambitions. In this regard, we will look for additional initiatives to enhance our efficiencies. These are going to be in the form of further outsourcing across the value chain. We work very closely with State Street, one of our key outsource partners, in fact, one of our partners that go back to 2004. With them, we've outsourced both our back and our middle office. We do believe there's further scope in the long run for them to move further along that operational value chain with us. Second area is improving investment technology. I mentioned this earlier, and actually closely links to the previous point there as well.
We will look to automate and improve the work done around our investment decision-making tools, especially within the front office. Continued low-cost location usage. This is effectively looking to move further activities to our operational base in Cape Town. The last one is evaluating the opportunities. What does this mean? This means understanding the prize in more detail versus the cost of the actual launch of any opportunity we go into. Also to be clear, we don't anticipate any material outlays for these efficiency initiatives. This is an important but short slide. We benefit from a clean, uncomplicated balance sheet with over GBP 2 million of equity. Our capital position is ahead of our regulatory requirements. Therefore, we have no intention of seeking external finance in any form. We also continue to largely expense all our costs and have avoided encumbering the balance sheet for any capitalized costs.
Lastly, as I've mentioned earlier, and so has Hendrik, we are a highly cash generative business, which supports our dividend paying capacity while maintaining meaningful investment into our business. To note, as you can see from the slide, we have paid out GBP 1.3 billion in dividends from FY 2009. Going forward, we will target a payout ratio of 50% of operating earnings adjusted for tax. We will pay a special dividend, which will comprise surplus retained earnings not needed for regulatory or specific investment needs. This will be agreed with our board of directors at our board meetings. We are listing at the end of the financial period, as you saw in the circular. The first dividend for new shareholders will be paid in respect of the 6 months ending 30 September 2020. At this point, I'll hand back to Hendrik. Thank you.
Thank you, Kim. Ladies and gentlemen, I'd like to just remind you of something again, that we are not trying to change the capital light model. We're not raising capital in this de-merger. We have no intention to. We want to stick to the model you've come to know that has delivered that flow of cash to shareholders and added value to clients. Furthermore, very importantly, I'm saying it for the third time today, senior management or staff are not selling out. They're investing. This is an opportunity to create a model where external shareholders can be allowed or have the opportunity to partner with the management team, growing a knowledge-intensive, capital light business or knowledge-intensive, people-intensive, capital light business for the long run. Allow me just to summarize the strategy or to go through the Give me your papers so you're on top of mine.
To go through the final strategy summary, because I think it is important. You have a business which has a strong track record, both in investments and as a business. You have a very clear culture combined with team longevity. You have an excellent client base. I mean, we've built a client base to die for. We need to do more with them for the long run. It has global reach. It has a clear ownership model which aligns interests. Importantly, our growth strategy builds on existing strengths, and we remain to keep our business model simple and capital light. We have four attributes now, which we hold dearly and which we think will be very important in helping us add value over time. Namely, independence, focus, clarity, combined with highly motivated people.
In an industry where people are increasingly often very negative about the prospects, we see opportunities or growth opportunities for those businesses which operate to the right standard, and we're going to give our best to operate to the right standard in the years to come. Going to Winston Churchill, he said, "A pessimist sees the difficulty in every opportunity. An optimist sees the opportunity in every difficulty." Today, I'm an optimist, ladies and gentlemen. Thank you very much. We'll now take questions. Thank you. We'll start with questions from the room in London. After that, those of you who have, or you can do it now, email questions. They'll be read out, and we'll try and answer them to the best of our abilities. Any questions from the room? Please, when you ask the question, identify yourself.
It's good for all the people on the call to know.
Hi, good morning.
Is the mic working?
Yeah. Hello?
Yes.
Hi, good morning. It's Gurjit Kambo from JP Morgan. I have three questions. Firstly, just in terms of the capacity in the business, you mentioned a couple of times that you do see there's quite a lot of capacity. It'd just be useful to understand how much you believe you can scale up the assets under management without significant investment. That's the first question. The second one was around how do you see yourself in terms of your relationship with platforms? Obviously, you talk about advisors and the institutional market. In the U.K., platforms are increasingly becoming more and more important in terms of distribution channels. How are you looking at platforms globally across your business? Just finally, in terms of the revenue margins, I know you've seen some sort of attrition in the margins there.
Given you've had a bigger shift in terms of flows from the advisor channel, I would have expected that to be margin-positive rather than negative? Is it something around the mix of assets, potentially? Those three questions.
I think we start with capacity. Across our key platforms, we have capacity to grow. I may add that we are mindful of capacity in order to preserve alpha. This is not a free-for-all, everything-go-to-$1 trillion business. We believe that across our key platforms, as we sit today, there is significant capacity to grow the business. I think one of the things we do as a firm is we also evolve what we do. If you look at your business completely statically, you don't use the skill sets optimally to serve clients. If you go back to the explanation of how we evolve strategies that I gave quite a lot of time to in the presentation, just think of that. Therefore, to make a pure static projection is probably not entirely appropriate.
I think importantly, from a platform point of view, we've lived in a world of platforms. In fact, we own a platform in South Africa, a mutual fund platform in the business. We understand how it works to get access, and we also understand, very importantly from an advisor point of view, sophisticated advisor platforms, whether it's large retail banking groups, global or regional, they are increasingly buying in an institutional way. The historic fee differential between what we call mutual fund or advisor business and institutional business is fading, and you're actually priced for your alpha.
For us, given where we come from, now you know the story of the drunk Irishman who stood outside the pub asking the other drunk Irishman, "How do I get home?" The other drunk Irishman told him, "You start from here." The start we have is actually very much in line with the future. If we had a very large, branded, direct distributed mutual fund business, we would've really worried about these things. It's not, for us, a huge concern. Then finally, as far as revenue margins, I've sort of answered it. It's the price for alpha. What we need to do as a firm is stand our ground. Not just for the sake of having flow volume, hand over alpha, scarce alpha product or strategies to the market at a below fair price.
The whole focus here is what is fair, what is the right, because you remember you're selling, in our business, we don't sell historic alpha, we sell prospective or the hope of alpha. What price is right for a client to pay? There's a huge debate raging out there. We are firmly in one corner believing it's something that's valuable. Over time, if you can add your bit of alpha to the portfolio, you make a fundamental difference to lives, to the way people live, to the amount of money they had, as opposed to simply going for the cheap option. I think that's really our response to that. We'll keep updating you on how the industry sees it and how market conditions see it. There is a discussion out there, and it's a battle of ideas.
We believe we have a good idea, but it's not the only idea in the industry. Thank you. Any other questions?
Thank you. It's Mike Werner from UBS. Just two questions. I guess first, when you mentioned about the balance sheet, just going through the demerger, and I don't know the business all that well, but we certainly see a number of unit link products on there, I think between GBP 8 billion and GBP 9 billion, both on the asset and liability side. I assume there's very little market risk from your perspective. How do the regulators look at that from a capital perspective? Do you need to retain capital and hold capital against that? That's the first one. Second, I guess kind of tailing onto the previous question, we've seen kind of flat operating profit margins for the past decade, generally, for Investec.
Where generally we have expected to see maybe, or I would've expected to see a little bit more scale opportunity to kind of build those operating profit margins. You talked about some opportunities at the end of the session, Kim. I was just wondering how do you think about that, at least over the next 3-5 years? Thanks.
Kim, go for it.
Yeah, I can answer it. Yeah, you're right. It's quite difficult when you say you've got the big elements on our balance sheet that are coming through there. They are linked. They're all unit link policies. This is in our South African business, the insurance company that we actually have there. Because it's linked, we don't carry the market risk. It's a very one-for-one relationship. Yes, we are required to carry capital against that. There is capital held against that business, and it is a separate regulated entity in South Africa as well. I think that probably likely answers your first question there.
Just maybe one point on that. We don't expect to replicate that in the rest of the world in our business, because it's a peculiar preference of South African, particularly small institutional investors to pool via life vehicles. Why? When our industry started, it was all dominated by life companies, and there was a lot of regulatory advantage used in the process. We don't in any way see this as a part of the model for the rest of the world. Mutual funds are perfectly adequate for pooling
To your second point, yeah, as I said, we have built the platform over time. The platform is there. It is ready to scale. That's really the job of other parts of our organization to do it. Unfortunately, our expense base, as I mentioned earlier, has been hit with some large recurring costs. One of them, like the whole industry's been hit with, is around MiFID. MiFID, if I look at how our margin has had that slight deterioration, it was two factors that hit it. One was the double accommodation, which is above the line there. The new offices are more expensive. I think the big one was MiFID, which again, had a factor there. I think the expense base is there. The platform is very much there as well. It's a case of the assets coming onto it.
But also-
The last point is, one of the things I do believe, and Hendrik and I debate this quite a lot, is having State Street as my third-party administrator. There's no need to build big platforms. We've obviously, as I said, worked with them since 2004 in that space. I have other third-party administrators as well, but they're the key one.
I think in addition to what Kim said, we are not going into the world of tech spend for the sake of tech spend, for the sake of being fashionable. We use technology and preferably our partners. My colleague, John Green, invented a very nice acronym, triple MC. Not the MCC, triple MC. Multi-market, multi-channel business. Multi-market, multi-channel businesses grow. They create inherent growth, but they don't run at extreme operating margins, and they don't scale like single country, single strategy businesses, and we have no intention to. We've had this debate, interestingly, this debate about 25 years ago with the board. We had this debate. There were a few boutiques growing around us and guys retiring early and looking fantastic, operating margins through the roof. Our board gave us a lot of trouble. We then resolved, said, "No, this is not what we do.
We have a long-term story. We're a high reinvestment rate business and we want to make sure we have access to the right kind of capital, and importantly, able to employ the right kind of people. Now, if you think of our business post the internationalization phase, initially you come out, initially you're at the beginning end of the industry. Then you start building and hiring better people. Better people come to you. Actually, they do quite well where they are. And if you can't accommodate them and can't accommodate their long-term aspirations, you won't have them. They are the ones who ultimately scale you into the top end of the market. Simultaneously, when the top end of the market starts buying you, they don't pay as much on a basis point basis as the bottom end of the market. And we've been through that process.
That's why I think having come through with a reasonably flat, it's still slightly declining, but a reasonably flat fee margin and ultimately operating margin, given the reinvestment rate, is good. We should at some point, but it is not in the near term where we can stand up here and promise you the benefits of scale. If you look at our larger competitors, we're very similar to a shop just over the road here, which is four times our size. It's not that different. The illusion of super scale in a triple MC business would be inappropriate to sell to you. Any other questions? Do we have questions online? Contributions will also be welcome, but maybe questions are better. No questions.
Those who are thinking about it or who couldn't understand what we said but want to read all the papers, you're very welcome to send it to investor relations. What is really important now is that we get your support for the rest of this process. We are putting this to shareholders. We strongly believe, backed by our board, Fani and I, that this is good for the current Investec shareholder and good for the future shareholders. We are not about size, we're about clarity and focus. We will keep updating you on There's a prospectus coming with some more detail on this business. We try to stay high level and make sure the model is very clearly articulated, but there will be more detail for you to go through if you haven't enjoyed Is it the 300 and how many page? 50-page circular.
There'll be more paper coming your way, but we think we're on track to deliver. By the way, very importantly, this is not market dependent. Because it's largely a demerger, it is what it is. If the markets go down as they went down last night, we will not change course because we've set the firm on a course, and we believe it's the right course. Any questions? Last ones. Varney, I've filled some time to make sure that anyone wants to ask a question. No one. Thank you very much to all those who dialed in and for those who were in London. We appreciate your attention, and we look forward to delivering on this project in the first quarter of next year. Thank you very much.