Earnings Call: H1 2018

Nov 14, 2017

Good morning. Thank you for joining us for our half year results presentations. I'm delighted to report on another solid set of results and record fundraising numbers. Our performance this first half, I think, underlines the strength of the business model and also highlights the high degree of visibility in the growth of the fee income. From an operational standpoint, there are 3 main themes: fundraising, investing and portfolio performance. Fundraising, it's been a record half for us, €5,700,000,000 raised and we're on track for a record fundraising year. This is largely for this half due to the success of our largest ever fundraise for a senior debt strategy in Europe. That is cementing our leadership position in direct lending in Europe. It's also importantly and I'll come back to that later, it's helping us kick start our senior debt strategy in North America. Another thing to mention about the senior debt fundraise, SDP is a strategy that features fees on invested. So these fundraised amounts are not yet translating into fee income and profit. They will as we start investing. Our first deal should close for that new vintage should close in January. Nevertheless, because we have been able to increase the average fee rate on this strategy by about 25%, this represents a meaningful reserve of future fee income and profit. On the investment side, the general market environment remains highly competitive, but nevertheless, we're investing very well across our strategies. And more than ever, this is down to the strength of the origination platform. It's all about origination in this market environment. And portfolio performance, all of our portfolios are performing well and very few assets are underperforming. This is the result of a combination of things, investment discipline, the very strong focus we have on downside protection, but also obviously we are benefiting from generally favorable economic conditions. Financial highlights, this half is a milestone for ICG. Our IC profits are back to a more normalized level. You may remember last year, we had one off accounting capital gains. But for the first time this half, FMC profits have surpassed IC profits and by some margin. And this is on the back of a very strong semester for the fund management company. Profits are up 30%, essentially driven by an increase in fee income. The other thing I'd point to in these financial highlights is that as per our policy, interim dividends are up 20%. Our strategic priorities, this is a slide you will be familiar with. Actually, it hasn't changed in a long time. I think it should. We've made a lot of progress achieving our targets. And by and large, we're 2 years ahead of plan. So I think it's time for us to refresh this slide and look beyond 2020. So that's something to look forward to at our upcoming Capital Markets Day. But back to financial results, Phil? Good morning, everyone. A very good first half across all of the KPIs in the business. Fundraising £5,700,000,000 Our AUM is now £27,200,000,000 Margin for the fund manager 45 percent and the co investment rate, so the balance sheet compared to total AUM has dropped from 8.4% to 7% in the half, which is also a really good indication of our leveraging of the asset base. So looking at the segmental results, continued strong trajectory for the Fund Management Company. Revenue up 18% profits at £44,300,000 up 30% and the margin, as I mentioned, 45% as some of the strategies that we launched 2, 3, 4 years ago are really beginning to hit their stride. Investment company at a more normalized level of return. And what we've done now is shown the investment company with the impairments up in the investment returns. So we now see all of the flows that result from investing under one line, which is exactly as our clients who invest in our funds alongside us would see the results from their investments. So investment returns at 14%. Over the last few years, that's been 13% to 14%, so pretty consistent now without the release of the capital gains that we saw in the last financial year. And of course, as Benoit mentioned, fund management profit, CHF 44,300,000 IC profit CHF 36,700,000 So a nice a bit of clear water between the 2. The fluctuations in the balance sheet in this half really reflect its subordination to the Fund Management Growth Strategy. The biggest change in the balance sheet has been through the increase in the assets that we hold for syndication, 2nd line down, moving from £90,000,000 to £294,000,000 We use the balance sheet in order to assist the fund management company in its growth and its development. And this is a great example of how we use the balance sheet to facilitate the success of the fund manager. In this case, the buildup of that line on the balance sheet was assisting mature strategy European Mezzanine where we warehouse on the balance sheet 2 assets, £200,000,000 worth of assets that have subsequently been syndicated. What that has allowed us to do in the European Mezz strategy has been to underwrite larger deals and to be more in control of those deals, but also allows us to offer co invest to our most important clients. So a really good use of the balance sheet there to drive the fund manager. On the liability side, securely funded, the average remaining the average life of average remaining life of our debt is 4.3 years, and the gearing is nicely within the range that we've articulated for a few years now. Cash flow profile, a little bit different to last year. Last year, we saw an unusually high level of realizations from the balance sheet because we were seeing off some of the last of the older, larger balance sheet positions, of which now there are hardly any left. This half, you can see £261,000,000 £204,000,000 deployed, as you saw, much stronger a strong half for deployment, but particularly strong using the assets for syndication balance, as I mentioned before. So both in terms of the long term book and assets held for syndication, we saw good levels of deployment, indicating strong investment activity and again, all in service of the Fund Management Company. So looking at fundraising, a great fundraising half dominated by SDP III, but also saw issuance of a CLO and really good development in liquid credit funds, which is an area we've been investing in for a while and real estate. The outflows below the line in orange have actually been higher or higher this half than they have been for a long time at £1,400,000,000 And that is a result of very buoyant markets, mainly in assets that we're holding kind of we're investing in alongside our European mezz and Senior Debt Partners funds, a very active market. So we saw a reasonable number of realizations there. That €1,400,000,000 for the half compares to €1,500,000,000 for the whole of last year. Now in addition, there was €800,000,000 reduction in AUM as a result of FX because the euro strengthened against both the dollar and sterling. Fee earning AUM actually also experienced about just under a £600,000,000 reduction as a result of FX. We do expect fee earning AUM to grow during the second half and really drive fee growth into the end of the year. So in terms of guidance going forward for fundraising for AUM, I expect to see realizations to be at a similar level in the second half to the first half because we see activity continue. Obviously, it is unpredictable, but we're seeing the same sort of momentum. And for fundraising, I expect the second half, the guidance is going to be more in line with our long term guidance, which is £4,000,000,000 a year through the cycle. So please don't double the first half to get to the second to get to the full year. I thought this would be interesting. This shows the power really of the ICG income model. What we've done here is just taken all of the funds that we currently have raised and we're currently managing and shown the contracted fees based on existing AUM. So if we raised nothing more and just invested out what we have, this would be the fee levels that we would over time. The total amount is £815,000,000 of fees. It compares to £139,000,000 last year. Now it doesn't include performance fees, which if we include at a fairly conservative under fairly conservative assumptions, that gives us roughly 7 years of revenues that are contracted to the company as we stand here today. Across all our asset classes, we're not seeing pressure on fee rates. If anything, we've seen some of the pricing dynamics move in our favor. So there's no significant change. We've had a slight increase the increase in the liquid strategies and raising of new CLO slightly suppressed the weighted average fee rate from 91 basis points to 89 basis points. But just to take SDP III as an example, the fund we've just raised, we've raised at 85 basis points with no discounts. The previous fund, SDB 2, had an effective rate of 68 basis points. So very nice uplift for a larger fund, which shows where we are within the pricing dynamics with our clients. Performance fees for the half were 9,300,000 pounds and I expect the full year to be roughly in line with the guidance that we've given in the past of £15,000,000 to £20,000,000 So good uplift, a really good uplift in the margin for the half at 45%. Again, result of the fact that the new products that we've introduced are really beginning to have a material contribution to the profit in the fund management company. Over time, we'll always put new business costs through this P and L, so it will be subject to fluctuations as we continue to invest in our platform. For the Fund Management Company, no significant increase in costs with some operational leverage beginning to come through. Staff costs were up 8% on last on this time last year, 5% as a result of headcount and the rest is salary increases. The incentive line is much higher than a year ago, but similar to the prior half. As last year, the incentives were costs were weighted to the second half of the year, expect them to be this year to be reasonably well in line with the full year last year. Overall, though, we've focused on cost discipline in the last 12 months. So although we saw an increase in the cost for the fund management company of 9% compared to half 1 last year, there's actually a reduction of £2,000,000 compared to the prior half. Moving on to the investment company. I think it's becoming very, very clear now that the balance sheet results are the outcome of allocations made 3 to 7 years ago as we made co investment decisions related to what we invested into our funds. So what we see now is a balance sheet book, an investment company book where the co investment ratio is 7%, down from 8.4% 6 months ago, as I mentioned, a bias towards the higher returning assets. Now if you take those two things together, what you see is an increasingly efficient leveraging of our asset base in order to drive the fund manager. The returns on the investment company at 14% and somewhat normalized compared to last year where they were inflated up by 3% to 17% because of the release of gains from the AFS reserve. But I think the tone and the way we see the investment company is it is subservient to the fund management company. We use the investment company and the allocation decisions are to build funds, to seed new funds, to warehouse assets to develop new fund strategies and to support existing fund franchises. Looking briefly at valuation returns. These are non contractual returns on our balance sheet and directionally similar to the income on our funds. So capital gains, if we ignore the gains released from reserves last year, half on mark to market gains were a little bit above the 6 month average, if you look at the dark blue block, driven by benign listed markets and good performance in the underlying portfolios. Impairments at £10,000,000 actually as low as I can remember them for a half. There's no new problems in the portfolios, and our fund portfolios are universally performing well. Like the Fund Management Company, the investment company cost base shows good cost discipline with staff costs in line with this time last year. There was a spike in the second half of the staff costs related to a one off costs associated with the Recovery Fund 8 transaction that consummated last year. Incentives in line with the prior half. Non staff costs up a bit this year this half. These are this is mainly related to due diligence on failed transactions, which is inevitable in our business, particularly across the broad range of strategies that we engage in. Inevitable, but very difficult to predict. But it's we'll always look to do some deals that we won't manage to do and have spent some money in the process. Guidance remains unchanged across the board with the exception of tax, which I've discussed with quite a few of you already this morning, either outside or on the phone, which we expect to come down to low single digits over the short term, which for modeling purposes, I would suggest would be for 2 years. Fundraising in the second half, in line with our long term guidance. And I think in summary, with all metrics moving as we would hope and as we expected, this half has been a very good half for us financially. With that, back to Benoit for the operational review. Right. Our operating model, you're also familiar with this by now. And as I pointed to earlier, at the broadest level, our operating model is simple. It's raising money, investing that money and managing it to generate superior returns. So I'll look at each of these activities in turn. The fundraising environment is extremely favorable, and it's particularly for us. These are recent frequent statistics. And what they show is that long term allocation plans from institutional investors clearly favor the strategies that we are deploying, the strategies where we are strong. So be it private debt, private equity, real assets. So there's a clear focus on our alternative strategies. And this is not a temporary phenomenon. If you look at the smaller bar chart on the right hand side, what you could see is that this is a trend. There is a clear trend. There is a structural shift towards our strategies. In addition to that, is this momentum is disproportionately benefiting larger, well established managers with a strong track record. So there's no doubt that ICG has and is clearly benefiting from this general market trend. And this translates into our numbers. I'll come back to SDP, but we've been successful in the first half in other strategies as well, actually in all of the other strategies that were in the market for us. We closed on our first strategic secondary strategy at close to $1,100,000,000 that is well north of what we had initially anticipated for what is a first time fund. We raised the number of mandate for real estate. Now that's an ongoing effort, but quite successful in this first half And quite a promising development is we've started to see some real traction in our credit fund management business. Phil was mentioning that earlier, we've raised about €600,000,000 for several of our more liquid strategies, notably European loans and alternative credit. And on the back of some significant hires we've made over the past couple of years, mean, it's good to start to see some momentum there because that is that's a volume driven business. So we want to see some volume gathering there. Back to SDP, that's obviously the success story of this first half. There are a number of things I think are worth mentioning there. One, obviously, we're very proud of this result. This is a strategy that 5 years ago did not exist. And that now is boasting close to €8,000,000,000 of AUM. So obviously, a very good result. A few things I'd like to point to when looking at this fundraising effort. 1, if you're looking at the 2 pie charts on the right, one is we've raised money both from existing and new investors. That's important, you want both. Existing investors, of course, because it's a vote of confidence and it's a sign of success of the strategy and it's easier. But you also want to take advantage of a successful strategy, a strategy that is in strong demand to increase your investor base. And that's exactly what we've done. So this is by design. We've looked for this balance between existing investors who had very significant appetite for the strategy, but also leaving enough space to bring on enough new relationships. The other point that's worth mentioning in this fundraising is how appealing this strategy is to pension funds. And that's not surprising. It's a senior secured asset. It's generating a cash coupon. It's much I mean, it's generating a much higher yield than fixed income. So for pension funds looking for yield and looking to diversify away from traditional fixed income, it's a very good asset class to be in. So that's not surprising. And last but not least, and I've alluded to that earlier, the reason we've raised significantly more than what we had initially budgeted is not because of the demand. The demand was not the constraint. We were several times oversubscribed, right? We set the level of the fund at a level that we thought we could reasonably invest in the market in a reasonable period of time. The reason we increased it is we were able to broaden the mandate of the strategy to include an up to 30% sleeve for North America. So we've basically created a call it 1,500,000,000 dollars potential sleeve to launch a North American senior debt strategy. And that's very powerful because we are it shows the strength of the platform that's exactly what this is supposed to be doing. We're taking a successful existing strategy, an existing geographic platform to create a in a very efficient way to create a new product. It's very good for our U. S. Base. It's creating scale. We're essentially going to be relying on existing executives in North America, particularly from the mezzanine team. So very efficient, very cost efficient. It's also a lot quicker than going out to raise a completely new strategy with a first time fund, which takes several years. So a very good outcome. And beyond the headline fundraising numbers, it's one of the big wins of this first half. Looking to the next semester, the next half, the focus will be mainly on our 2nd North American mezzanine fund, which is called Private Debt Fund 2. The first vintage has been very successful. It's exceeded target returns by some margin. And so we market allowing, we are hoping to increase the size of this strategy for the 2nd vintage. The first fund was just short of $600,000,000 of third party funds under management. We're also going to be out in the market with our Real Estate Fund V. And likewise, we are going to try to increase the size of that fund compared to the previous vintage. And finally, I was mentioning that earlier, we and this is a constant effort. We will keep on building on the momentum we're starting to see in the first half in our credit fund management, so European loans, global loans, alternative credit. Investing, this slide is identical to the slide presented last time we met. And the reason is the market hasn't changed. It's still a very competitive market across geographies, across asset classes, still record levels of available capital, but we're still investing well in that market. And as we've pointed to before, this is down to a combination of investment discipline, very strong focus on origination. You've heard this before, the fact that we have a very local approach. All this is clearly a competitive advantage in this market. When markets are that buoyant, you want to be able to have the ability to choose between as many opportunities as possible. It's all down to origination. And this is translating into strong investment performance. As you could see on the chart on the right hand side, a bit more difficult in Asia, as you could see, but they have a reasonably good pipeline and will only take a couple of deals for each to get back on the line. But by and large, you could see where in many strategies, we're either on target or well above deployment target. This is I think I believe I said this last time, but to me, this is the most important graph of the presentation. There's a lot of information there. One, if you look at strategies that have fees on invested such as senior debt, If you look at this slide and particularly if you look at it dynamically comparing it to previous versions, you get a pretty good idea of how quickly these strategies are deploying and therefore how quickly fee paying AUM is increasing. That's one thing. Second thing is you can also get a pretty good feel as to which strategies are going to come back to market and when. And two points to mention here, We've had 2 strategies that have done particularly well investing over the past 6 months, that's strategic secondaries and European mezz. And so it's likely that for both of these strategies, we will bring forward the next fundraising, the fundraising for the next vintage. If I take the case of European mezzanine, Fund 7, we had initially anticipated that this would be a calendar 2019, maybe partially 2020 fundraise, we're likely to bring this forward by some 12 months. So this is likely to be an 2018 effort maybe overlapping into into 2019. I'm talking calendar years here. But that's positive news, obviously. In both instances, it's positive news incidentally. Both of these strategies, strategic secondaries and European mezzanine have fees uncommitted. Portfolio performance, managing our investments, 2 approaches there, top down, bottom up. Top down is we're looking at the fund level, bottom up we're looking at it on a deal by deal, transaction by transaction. At a fund level, what's important about this slide, which is also because of how long our investment periods are, this is a slide that's unlikely to evolve very quickly. What's important about this slide is what it means for our investors or LPs. And what it tells our LPs is that we're quite consistent, unusually so. It's very rare for a fund manager to not have a failed fund or a failed vintage and even best known, well known managers have several failed vintages. We have none. And that's a very powerful message to our investors, particularly as some investors are thinking about a potential downturn in whenever a few years or the potential end of a credit cycle and they're looking for downside protection, they will be looking for consistency of performance. So that's a very significant competitive advantage. This track record is one of our most significant intangible assets. And by the same token, it's important for our shareholders as well, because this speaks to the strength of the business model and to future value creation through more fundraising. If we look at the deal level, transaction by transaction, looking at the performance of transactions that have actually exited during the period, What this is telling us is that it's a very favorable period. And these numbers by our historical standards are very high. Typically, even in a very successful fund, you will have better performers and poor performers. In the current environment, pretty much all of the deals exiting are very good performers. We have one exception, which was in one of our real estate funds, but that's more true to form. It's actually in 1 fund, Fund IV that is performing extremely well. And that's kind of what you typically expect to see. All the others are performing or have performed extremely well. Anecdotally, well, actually it may not be so anecdotal, the 2 outliers at the top, so the 2 transactions that significantly outperformed are 2 transactions from our European Mass Fund 5. And this is likely to turn out to be, if not our best, maybe our best vintage, but certainly an excellent vintage. And this is important why it's important because this is what investors will be looking at when we go out fundraising Fund 7, because Fund 6 will be too recent. We've discussed this I think in the past. So investors tend to look at the prior funds. So they will be looking at Fund 5 performance. So that's a strong indication of how investors are likely to perceive us as we go back to market with the next vintage. In conclusion, record fundraising, a strong focus that we maintain on broadening the platform, adding more strategies and obviously a strong success this half with the launch of our North American senior debt. Portfolios are all performing well. We're investing at a solid pace. It's gratifying to see the FMC profit up 30%. This period is a strong period for us. Undoubtedly, I think I could safely say we're somewhat ahead of plan. The strategy is clear and it's delivering results. So we're pleased. On that note, thank you very much, and we'll be happy to take questions. Two questions, if I may. First, if I take you back to page 25 on STP III, you sort of say how much was raised from existing investors and by type. Obviously, how much of that was raised in the U. S? Obviously, you're strong in Europe and that's obviously a market you've been investing in. And my second question is very simply you've outlined in some ways how the balance sheet is serving to the fund management company and the progress there, but also clearly the balance sheet is benefiting from strong investments particularly from the sort of mezz funds. Clearly with Europe 7 looming on the horizon, has any thought been given to how much you might invest in that given the clear trade off one way or indeed the other? Thank you. So SDP geographic split from memory right, we're south of 20% for the U. S. There is a reason for that. It's actually lower than, for instance, what we have in mezzanine. There is a reason for that is we have refused to put leverage on the fund. And a lot of U. S. Investors are looking to generate double digit by putting leverage on it. Now I could go into a long explanation as to why we think it's not a good idea, why we think people think they're taking senior debt risk, but they're not as soon as they're putting leverage and why if you're putting leverage, you should be managing the portfolio in a very different way and in particular by having significantly more diversification in your portfolio, which nobody does. So we've refused to put in leverage and we've been quite dogmatic about it, as you can tell. As a result, we've had a number of large pension funds in the U. S, but we've kind of cherry picked. And those reps we wanted leverage, we've just said, come into our MES fund, you will get the high returns without having to structure it. Do you want to take the well, I can take it. Because there is no because we don't have an answer. So I'll take that. Your question about have you thought about the next vintage, it's too early. And you're right, it's a trade off. But it's a trade off with multiple components. So yes, you're right. These assets we like these assets on the balance sheet because they're very high yielding. At the same time, as you've heard, we're trying to maximize the efficiency of the balance sheet. There's another variable to take into account is our ambitions for that fund. And this is something we haven't yet decided. It also depends on market environment. But if you decide to increase the size of the fund, it's more difficult to decrease your position. You may want to keep it stable and not increase it. But so there are many variables in that and it's too early. I mean, it's we're not quite there yet for the next mess fund. But these are the variables that we are thinking about when we're thinking about allocation. And you never know if you make the right decisions and you've a successful fundraiser, then you don't know whether you made the optimal decision. But there is no doubt I was talking about pension funds and SDP. There is no doubt that particularly for pension funds, the fact that we are investing our own balance sheet is a very significant advantage. I mean, for them, it's always top of the list as to why they like our strategies. To the point where I've heard, and this was not for mezz, this was for private equity, same logic applies, I've recently heard a couple of large U. S. Managers thinking about developing their own balance sheet exactly for that reason. David McCann from Numis. Just two questions, please. The first just on Senior Debt Partners 3 again. So the fund is targeting what sounds like an 8%, 9% type yield, cash yield type levels. Just wondered if you can give us I appreciate the fund isn't invested yet, but what would be the type of issuers that you're going to going after there where you believe you'll be able to get those kind of yields? And the second question, just on the gross fundraising target, which is €4,000,000,000 You've had that for a number of years now. Clearly, the business is much bigger. You've got more teams, etcetera, etcetera. Do you think that the £4,000,000,000 number perhaps needs to be refreshed at some point? And if so, what would that be? Thank you. I'll take your first question the first part of your question and Philippe, you can comment on guidance. Sorry, you have to remind me, first part of your question on SDP. Just the size of the issuers. Type of issuers. I mean, it's quite broad. These are private corporates in Europe and now North America. They tend to be midsized companies, because what's important to understand and that's one of the reasons we are we've been successful in this strategy and why I think this segment of the market will keep on consolidating and will keep on benefiting is to do senior debt you need very sizable funds because even for a midsized company because you're putting say 4 to 5 turns of leverage on them, even a relatively small company of $20,000,000 $30,000,000 $40,000,000 EBITDA, you're immediately talking a couple of $100,000,000 of investment per transaction. And if you want enough diversification in your fund, which you should because it's a senior debt strategy, you need very large funds. So you need the size to be credible and to be able to do those transactions and very few managers have this size. So that's giving us a competitive advantage. And the target is European mid market, which is where we've always operated. That's where we've operated in the mess for close to 30 years now. On guidance, the guidance remains where it is €4,000,000,000 The €4,000,000,000 is very much through the cycle. It's something we look at constantly. We're about to go into a planning cycle as we go into year end and look at budgets in the next 5 years as we do every year. So there's an opportunity for us to relook at that with the Board. But at the moment, the guidance stays where it is. Hi, good morning. Gurjit Kambo, JPMorgan. Just two questions. Firstly, just on the competitive environment. So we obviously cover traditional asset managers in our universe and a number of them have talked about moving into private markets. So just your thoughts on that competition coming. And then secondly, just in terms of performance of your funds, obviously, clearly been very strong. How are clients thinking about sort of target returns? Are they happy with are they sort of accepting that returns could come could be lower in the future or are they sort of expecting returns to remain stable? Well, for now, so I'll start with your last part of your question. For now, our returns haven't come down. So it's hard to say. Are investors expecting returns to come down? Perhaps. In the end, it's not that meaningful because the premium you're getting compared to the public markets today has never been this wide. So even if it tightened a bit, which it's not showing any sign of so far, you're still at a very, very significant you're still at a very, very significant premium. Hence, the success of what is one of our lower yielding strategy, which is senior debt. And first part, sorry, you have to remind me. The competition from some of the more traditional players? Well, there's plenty of competition from all sorts. The more traditional players, we haven't seen them much to be fair. Maybe we will. It's a very different approach. What you will find is that managers who tend to be strong in the more liquid end of the market are typically not very strong on the closed end because it's a completely different approach. In Europe and typically, the way they approach it is through the easiest entry point, which is senior debt. And in Europe, I think it's too late. I think the positions are established. And if you look at I mean, there are a few that have made some efforts. If you look at what they they haven't raised all this much. Even though you would think that they're in a very good position to raise significant amounts, that's not what we've observed. So certainly for Europe and senior debt, I think it's too late. I think the positions are largely established, but they could be present in other strategies. Having said that, we've always had very significant competition. It's always a competitive world. I mean pre the financial crisis, the banks were our biggest competitors at least for a while. I'm sure we'll have other competitors in the future. Arun Mehdi Macquarie. Just 2. I think one on just looking at fund performance, would you be able to talk a little bit about what's happening in Asia and what challenges you're facing or how the development of that project is going? The second question is on just broader product development. Are you doing anything newer on sort of apart from the themes and replication of themes, are you looking at any other different strategies in sort of the medium term horizon? Thank you. So Asia, so two things. The performance in Asia is very good. It's their deployment that's lagging. And that's a function of the market. The markets in Asia have been difficult for some time, difficult in the sense that there isn't all that much deal flow, and we do not want to compromise on quality. So that has led to a slight lag in for these funds. Having said that, as I said earlier, if I take Asia Pac, which is our MES fund in Asia, we have an investment committee right after this, they have a number of deals in their pipeline. For them, it would only take 2 deals to get right back up on plan. So nothing to be particularly concerned about for now. We're watching it, but at the same time, this is not something you want to force. That's always the difficulty in our industry is you do want to incentivize the teams to do deals, but at the same time, you don't want to put so much pressure that you start doing the deals that you shouldn't be doing. So we certainly don't don't want to go there. New strategies, we're constantly thinking about new strategies and we're constantly talking to teams. Having said that, it's difficult because you need an alignment of stars. You need the right team with the right sort of product, where there is a philosophical match with who we are, the same approach to risk. So you need to be careful. But yes, we're constantly talking to teams. We will certainly add on more strategies as we go along. There is no doubt that when we're able to do what we've done for North American senior debt, that's the best possible growth because we're doing this with a team we know, it's our MES team in the U. S. And we are doing this on the back of a very successful strategy for European senior debt. That's the best way to grow, because it is a brand new product, but you don't have to go through all the risk of finding a new team, going through a first time fund, having to seed it. We don't have to seed this through the balance sheet because it's essentially seeded by the European senior debt strategy. Does that answer your question? Yes. Just a bit. I was wondering, I think if you look at sort of medium term developments of the franchise, are you just going to replicate what you have in Europe across different jurisdictions? Or are you I mean, if I asked you in 10 years, in a 10 year horizon, what do you think is missing in terms of your suite of products? No, I think listen, I think we need to do all of that. So it's bringing what we do in Europe to other geographies, if it's possible, if it's applicable, it may not always be, that's obviously a relatively straightforward thing to do because we have almost immediate credibility. So we should certainly do that. And I was giving the example of North American senior debt. But at the same time, we need to keep thinking about broadening the suite of products to use your expression. And we know where we have potential gaps that are that fit into our sort of approach to investment that we don't have and that our investors like as asset classes. We're not in infrastructure, but it's very difficult. This is a market where positions are very established. So it's not necessarily an easy segment of the market to get into, but that's one our investors like and this is sort of risk that we feel familiar with. We spoke about distressed, for instance. We've had a distressed strategy. You may not remember, but in the financial crisis, we raised a sidecar to our main MES fund to do precisely distress. We called it the recovery fund. So we always have the ability of the market turns to raise a recovery fund too. Interestingly, we've had demand from investors saying whenever you're back with a recovery fund too, we're interested. So it's there. Should we do more? It's a question mark. The distressed funds have had a volatile performance in the past 10 years. I think there is the private, very corporate restructuring driven distressed approach hasn't worked very well in Europe, which is not a surprise. So that's I think you have to wait for a real financial crisis to try that. Are there more optimistic opportunities to find by taking advantage of some inefficiencies in the real estate market and some NPLs? Perhaps. So this is clearly these are all topics that we keep discussing. It has to be sorry, it has to be scalable as well, because we're becoming of a size where there are plenty of good ideas for small strategies, but they have to be scalable, because we also have to be mindful that we've been relatively successful in growing the fund management. So that as you could see, we're out in the market with a number of strategies every year. And there's such a thing as investor fatigue. We can't be knocking on our door with another ICG product every 48 hours. So we need to focus on strategies that have or can build real scale. Any other question? Okay. Well, thank you very much for attending.