So, ladies and gentlemen, welcome to this first Capital Markets Day for PINT. We're actually more than 50 persons in this room, between 50 and 60, and we have almost the same amount online, listening in to this Capital Markets Day. So really, a great turnout and a good reflection of the excitement that we see around PINT. My name is Vagn Sørensen. I'm Chairman of the Board of PINT. I'd start with introducing my two board colleagues in the room, Patrick O'Donnell Bourke, who's our Audit Committee Chair, and Andrea Finegan. And we have online, Anne Baldock from Florida, also joining us. It's been almost exactly two years since the IPO, exactly the 11th of November. And it's been a very exciting time.
When I originally was contacted and asked about chairing the board of PINT, I was really excited because what I saw was a combination of a compelling value creation model, a very well-reputed, high-quality investment manager, and the opportunity to, from scratch, compose a top-class, very qualified board with members who had all infrastructure experience of different kinds, and really complementary skill sets. Once again, welcome, everybody. Thanks a lot for joining us today. Really appreciate that, and I would hand over to Andrea Echberg, who will take you through the market perspectives.
Thank you, Vagn, and good afternoon, everybody. As Vagn said, I'm Andrea Echberg. I'm a Pantheon partner based in London, and I am the head of our global infrastructure and real assets platform. So today, I was going to spend some time talking about some of the key market factors that we're seeing that are impacting the infrastructure sector more generally, how that impacts our investment strategy, and also the portfolio company performance. I'd really like to say that I'm very excited to see the success that we've had with Pint, with the IPO and the subsequent deployment into a really diversified portfolio of high quality, growth-oriented assets. And that's working alongside multiple top-tier sponsors.
Pint really is an integral part of our $21.5 billion AUM private infrastructure investment business, and we've got 32 global investment professionals dedicated to this strategy, originating and managing investments for Pint alongside our private vehicles. So please, come and talk to me today, during the breaks or at the drinks at the end of the day. I can answer any questions you have around the Pantheon infrastructure platform more generally, or on Pint. So just focusing in really on the infrastructure market, what we're seeing today is a continuation, a reflection of the impact of the volatility that we've seen over the last 18 months or so.
It's really been the rise in OECD inflation that's triggered falls in public market valuations as central banks have quite aggressively raised interest rates in response to the inflation. These changing market conditions have in turn impacted fundraising for private infrastructure funds. Last year really looked like the most difficult fundraising market for infrastructure funds since the global financial crisis. But despite this, most top sponsors are still raising money, and we do expect that 2023 will be pretty much as strong a market for fundraising as 2021, even if not quite as strong as the record year that we had in 2022. Private market valuations for infrastructure are remaining very robust. We're seeing that the infra M&A market is continuing to be very functional. Debt markets are open for good quality assets and good quality sponsors.
The M&A activity generally is supported not just by the continuation of fundraising this year, but also the two-three years' worth of dry powder that we saw raised back in 2021 and 2022. We did see a drop-off in deal activity in 2023, but that has really been balanced with the drop-off of raising in capital, so we've. We continue with a good balance of the supply and demand over that year, over this year. You'll see that public market valuations are down, but headline EBITDA growth is very strong, and so this is implying opportunities for attractive entry points into new assets, but also mirroring growth in existing cash flows in our underlying portfolio companies. And I think to summarize, in times like this, it's really important to have a very well-diversified portfolio.
Growth-oriented assets perform well where they have multiple levers to create value. So just turning to inflation. We're starting to see some signs now that inflation has subsided, particularly in the E.U. and the U.S., in response to the central bank actions. It does, however, remain elevated, particularly so here in the U.K., and it does look likely that higher than target levels will persist. There is potential for further increases to inflation, I think notably around risk of any escalation in the Middle East and the impact on oil prices, but for infrastructure assets, inflation is a positive. Most infrastructure assets have a positive correlation to inflation, and PINT's portfolio certainly is positively correlated to inflation. So high inflation has been a net positive to the asset class.
On the chart that we have on screen here, this is some data from our company data, proprietary company data from our private infrastructure platform. Within the GBP 21.5 billion assets under management, we have over 1,500 underlying private infrastructure companies that we have valuation data on. So we've taken data from here. What you can see on this graph is that the very faint dotted line is actually OECD inflation really picking up in July 2021, and then the dark blue line dropping down is the MSCI World that's dropped substantially in response to that. The pale blue line, however, these are our infrastructure assets in our portfolio, and they've continued to grow steadily in terms of valuation, and over that same time period, we've actually seen a 25% uplift on valuation.
The real reason for this is, if you think about the factors making up the infrastructure valuations and the discounted cash flows that value them, the headline revenues are positively correlated to inflation, and these increases have more than offset the negative pressures on valuation being increasing costs in the company, increasing debt costs, although in many of our assets, we have very long-term financings locked in, so that's been less of an issue, but also increasing discount rates. But that's all been more than offset by the rise in the revenues themselves. So just a little bit more of some data from our underlying private markets platform for infrastructure.
But the data here really is looking across all investments that have been made over the last five years within our portfolio, and this includes all of our primary funds that we've invested in, as well as the co-investments and secondaries that we've invested. So it's a really good proxy to kind of market activity in the infrastructure space, and you can see in the different bars here, the changes of allocations that GPs have made to different strategies over the last five years. Some notable things to really highlight here, the increased investment into digital infrastructure. This has been driven by macro tailwinds, use of data, that really accelerated post-COVID. And what we saw in 2020 was actually 51% of all allocations made by infrastructure GPs were going into the digital infrastructure space.
Unsurprisingly, that also corresponded with the period of peak valuations for infrastructure assets. Since that point in time, we have seen digital pricing fall off, and we are now starting to see some more attractive deal opportunities in this space. We can also see from this data a decline in traditional infrastructure energy investment post-2017, in turn replaced by a consistent deployment into renewables. I think also notable here is the recovery in transportation assets post-2020, and this has largely been driven by investments into logistics. So from Pantheon's perspective, what we're looking to do is really to find attractive investment opportunities across all of these sectors. We're not wedded or tied to a single sector, and indeed, we think that having diversification across all the sectors is really key to a robust portfolio.
Just want to say a few words on realizations, and again, you know, the data we take here is from our broader infrastructure platform. But what we have taken is all of the underlying portfolio company full realizations since 2021 through to Q2 of this year. So you can see that there have been 13 full realizations, which, you know, backs up my earlier comments that although the infrastructure exit market may have slowed, it's still certainly is still very functional. What this also illustrates is how valuations have held up during this time. And what we have shown here is that the valuations for companies one year, the holding valuation one year before that exit, they've seen a 35% uplift in valuation at the time of exit, on average.
So there's a 35% pop on average from a year before the holding value. And for me, this demonstrates the conservatism with, with which infrastructure sponsors value assets until such time as they've prepared them to maximize value at exit. Infrastructure sponsors don't get paid fees on NAV, and they do want to outperform on exit, and this gives us real confidence in the underlying valuations. And not only does this imply conservatism in the valuations, but I think it also really validates Pint's strategy to hold assets for five-seven years alongside the sponsors, maximize the value on this exit, and then recycle that capital into new investments. Just a little bit on our platform. I really do believe that our scale platform is a real competitive advantage for sourcing co-investments for Pint.
We've been active investors into primary infrastructure funds since 2008. We've invested over GBP 10 billion across 95 funds, supporting 55 different infrastructure sponsors. And you can see on the slide a selection of some of these, sponsors that we partner with on a regular basis. We have advisory board seats on more than 100 infrastructure funds, and this gives us great information access, as well as really fostering these partnership relationships that we have. And I think this scale of our platform and the relationships, long-standing relationships we have with these top quality infrastructure sponsors, and the fact that we've got a view of activity across the whole market, really, you know, provides an opportunity for us to source, the best co-investments that we think we can find in the market at any time.
And just to focus a little bit more on the sourcing of infrastructure deals, we're really focused on the infrastructure characteristics of the assets that we are originating. We're looking for high quality infrastructure assets with downside protection, and this means that assets are typically essential services with long-term contracts or very strong market positions and low churn. We focus on investing into operational assets in OECD geographies, and ensure that all the assets we invest in have conservative and suitable capital structures. ESG screening is a really key part of our investment process and due diligence. Our recent flagship infrastructure fund, Pantheon Global Infrastructure Fund IV, our private fund, and also PINT, as you will know, are both designated Article 8 Light Green. And you will have seen in September, we issued our inaugural sustainability report for PINT.
I think finally, and very importantly, given my earlier comments on the stickiness of OECD inflation, we ensure that the assets we invest in have strong inflation protection. Just to illustrate all of this, on the right-hand side of the chart, you can see our deal funnel. So with this scale platform, we've been able to source nearly $78 billion of deals since 2015. And from this, we were able to be highly selective and focus in on advanced due diligence on just 76 of these deals, totaling around $6.6 billion in value, and ultimately closing 52 of those with $4.4 billion of value. So you can see, we've been highly selective in only needing to invest 6% of the deal flow that we see.
But when we like a deal, we've had a two-thirds success rate in getting it closed. So I'll now hand over to Ben, who's going to cover some of these portfolio characteristics in more detail for our PINT assets.
Thanks, Andrea. Good afternoon, everyone. Just to introduce myself, if we've not met before, I'm Ben Perkins. I'm a Principal in the Infrastructure and Real Assets team at Pantheon. I work exclusively on delivering PINT, so there's probably some sort of a gag about a barman in there somewhere. Anyway, I'm just gonna do a quick intro on the positioning of the portfolio. So I'm not gonna dwell too long on this slide. I think a lot of you who've been to the roadshows or been to the meetings with us are quite familiar with it. But just to set the scene, at 30th of June, we had GBP 458 million invested across 13 assets. So PINT is now effectively fully deployed. The majority of IPO and sub-share capital has now been invested.
We do have some firepower with the RCF. It's safe to say, however, that the bar is now a lot higher given the current macro backdrop, and there's no rush to deploy that capital. In any event, what is covered over the following slides relates solely to the existing 13 assets in the portfolio. In that respect, we're very pleased with the diversification we've achieved from a geographic, a sector, and a sponsor perspective. You can see we've had a slight emphasis on digital to date. This is a function of the high quality deal flow that we continue to see. It's also further diversified by the fact that we've invested in three very unique subsectors. So data centers, towers, and fibers, all of which have very distinct characteristics.
Moving to the right, we can see that 85% of revenues arise from regulatory or contracted sources, and we think that this points to the continued focus on downside protection. A word on sponsors, as Andrea touched upon, it's 55 at the last count. I think we've been really happy to see how those relationships have flowed through to the deal flow that Pint's been able to execute on. We'll hear more from Jesse and Matt a bit later about how those relationships work. Now just to take a look at portfolio characteristics. So we've tried to capture here what this underlying diversification means in terms of the actual investment characteristics and the risks inherent in the portfolio. So these are the relative credentials as we see them.
And so we put them across a number of the key touch points, and these can be read across the things that we focus on when we're looking at doing a deal and the due diligence phase. I think probably the key thing to note here is that we are as being a diversified play means that there's no single discrete risk throughout the portfolio. So that's much like you might see in a single play strategy, such as U.K. renewables or U.K. PFI. We've also made a key point about Pint being that its differentiator is that it's got a, it's a growth play. So there's some element of growth as well as some element of yield.
This has been most apparent in the digitalization and decarbonization, but it's safe to say there is some form of growth opportunity across all the investments that we've made. We're very excited about this growth potential, but it does sometimes come at the cost of, of yield, specifically in the cases where sponsors have a very deliberate focus on recycling operating cash flows into new CapEx opportunities. That said, we're also very mindful of the importance of yield, particularly in terms of portfolio construction and how we make sure that we are medium and long-term covered from a dividend perspective. So what you can see here is that there are some assets that are expected to generate yield. Perhaps just to give you a sense of the key, the dark green spots are ones that either imminently or already yielding.
The light green ones are ones that we expect to yield at some point during the whole period, and then the yellow color coding is for assets that we'd expect to be more of a pure growth play. Looking now at inflation, so it's obviously a bit of a hot topic for everyone right now. Because PINT is sector and region diversified, it means there's no uniform linkage to inflation. So this, again, it's unlike a U.K. renewables or PFI fund. Inflation flows through assets differently. Some will directly capture inflation, so that could be contracted or it could be through regulated streams, and in some cases, it will be implied through pricing power. So we see that in some of our fiber deals, for example.
In some cases, there may not be a direct link to inflation, and companies may benefit instead from fixed escalators or there might be the presence of caps. Just to look now at the risks. So again, to be clear, the dark green should be read as lower risk and vice versa. Absent any strong mitigating factors, we're generally averse to GDP or volume risk. So this isn't to say there isn't any GDP or volume risk across the portfolio, but the majority of deals do have robust offtake arrangements in place. The same pretty much applies to interest rate risk. So there's a few elements of financing risk. Interest rate risk is typically mitigated through hedging strategies. This is not always possible where there's a heavy utilization of CapEx facilities.
And in terms of refinancing risk, this is mitigated by having long-term or amortizing debt structures, and typically, we like the companies to have a debt maturity profile that aligns with the targeted hold period. We also make a strong point around capital adequacy. So what we mean by this is that no business plan should be unfunded when we go in, and we know that this, again, is quite a hot topic right now. I think we're also always very keen at the underwriting stage to make sure that there's enough means of capital to fund the growth, and we'll actually touch upon that in a few slides. I think the final point here is on commodity risk. So we don't want bucket loads of commodity risk up front in the portfolio. We don't think it's very infrastructure-like.
So one of the things we do with all our deals where there's some element of merchant exposure, is to sensitise what returns look like if we strip them out entirely, and to make sure that the crash case or the extreme downside case still stacks up. We also have a focus on making sure we can pass on as much commodity input cost as possible through to customers, and again, this would normally be outside as the typical escalator mechanisms that we've got. So we talk a lot about growth, but what does that look like? So we've put together this slide, which seeks to take a look at what the portfolio could look like in 2030. So just to stress, this is projections on the current portfolio of assets. It's the 13 deals we've done.
We're not assuming that we go on a spending spree and do more deals. It's actually driven by a relatively forensic approach. These numbers are taken from the sponsor's base case forecast. So it's what each sponsor is saying they think they're gonna deliver in their underlying base case. In themselves, these kind of forecasts are driven by an assessment of addressable markets, and these will typically be produced by external consultants, and it's something that, during the due diligence phase, we will get the benefit of looking at. Overlaid on top of those kind of addressable markets, we take a long-term view of the market share that can be captured by the companies Pantheon's invested in, and this is ultimately gonna be one of the key determinants of success of these companies.
So again, we set this out by the key tailwinds that we see in digitalization and decarbonization. Just to address them each in turn, in data centers, we're seeing a material expansion here, which is driven by cloud computing, the Internet of Things, and also artificial intelligence, which is a relatively fresh development in terms of those companies. And that, that affects CyrusOne, Vantage Data Centers, and to a lesser extent, also GlobalConnect. In the tower space, we're expecting a doubling of the current footprint. This is principally driven by build-to-suit in support of regulatory 5G requirements. There's also some element is driven by expected M&A activity, as we would expect some pockets of consolidation in some markets. In terms of fiber, there's a more measured approach to growth there, and there's very target-specific intervention areas in the companies that we back.
To take an example of NBI, that's a PPP in collaboration with the Irish government. They've got a very specific intervention area of 560,000 homes, so there isn't really a market to go beyond that, and similar principles also apply to Delta Fiber and GlobalConnect, which is also in the fiber space. In renewables, we're expecting growth here to be mainly driven by Calpine, so they are looking to diversify away from their mainly gas-fired fleet into conventional renewables and also augmenting their geothermal footprint. In terms of electric buses and lorries, the current footprint's around 1,000. This is expected to increase massively. Zenobē is leading the charge in the electrification of bus fleets in the UK, in Benelux, and also pockets of North America.
And then Primafrio are also decarbonizing their operations through the rollout of electric and hydrogen-fueled vehicles. We actually had the privilege of being taken for a spin in one of their EVs recently, and they've got very luxurious cabins. On the battery storage space, there's again huge opportunity here. This is being driven by the massive increase in intermittent renewables on the grid. I'm sure you'll all be familiar about these touch points. This is gonna require an enormous expansion of flexible generation that, quite simply, the grid isn't currently capable of providing. Even with some assumptions around declining market share, this is expected to translate to around 5 gigawatts of additional storage capacity, and that's across Zenobē, Calpine, and also Fudura, which you'll hear from Jesse on later.
This is also to say nothing of the prospects of being part of the hydrogen backbone network through National Gas Transmission. We're actually very encouraged by the recent National Infrastructure Commission, which gave its backing to this, and I think yesterday, Rishi Sunak was actually visiting one of the sites. So the flip side of this very ambitious rollout of CapEx is the cash required to fund this. So sponsors are estimating, in aggregate across the 13 companies, around GBP 45 billion of CapEx to 2030. PINT's share of this is around GBP 600 million, the progression of it we've shown here, up to 2030. I think it's very, very important to take away that this is intended to illustrate CapEx that's being incurred to PINT's benefit. It's not an expectation of additional funding.
As I've noted previously, we're very, very focused on making sure CapEx programs are typically fully funded upfront. This would be through a mixture of headroom in their existing debt capacity, through cash flow recycling, or actually headroom on the equity tickets that we write. We might announce a deal worth GBP 50 million. It may only be GBP 45 million that goes out on day one. We're keeping that GBP 5 million back through existing liquidity. There's always a chance that businesses could outperform this. This could, in theory, present additional funding opportunities, particularly M&A. I guess, by its nature, it's less obvious. By being a co-investor, this would give us optionality to participate, but in no way would it create an obligation to fund.
So I think that's another critical point, and to the extent Pint has capital available to participate and it wants to, then it will be able to, but it will not be an obligation, and Pint's participation or otherwise, will not be a drag on companies achieving their growth. So how does this all translate to earnings? We've set out here, what we think is gonna be fairly material earnings progression, up to 2030. You can see that we've got a compound annual growth rate of around 11% during that period. So this is, forecasting from around GBP 45 million today to just north of GBP 105 million in 2030. In tandem, we'd expect companies to deleverage. We've illustrated how this could look.
So we've created a look-through net debt to EBITDA reading, which is intended to be a proxy for the look-through gearing of the companies. In absolute terms, debt may still grow, but it will grow at a lower pace than earnings. So we're forecasting a drop from around 7x EBITDA today to just shy of around 5x in 2030. I think the final note for this is for the eagle-eyed among you, the current figure of GBP 45 million is slightly less than what you saw in the interims of GBP 49.9 million. That's because we adjusted for some short-term subsidies. Finally, just to contextualize what the deliverability of this looks like in terms of a risk and I guess portfolio return perspective.
So we've run a couple of sensitivities, stressing what a range of outcomes could look like in terms of portfolio returns. The starting point here is the 14.5% base case portfolio IRR. So this is different to the discount rate, which we disclosed at the interims of 14%. It's actually based on a weighted average of the base case IRRs of all the deals that we've done. Also worth noting that the 14.5%, that's a gross figure, so it doesn't include the impact of any fees or running costs. Starting from the top, so exit timing, you can see PINT's relatively insensitive to this. This is because we also assume with any delay or any bring forward of the exit, that EBITDA would also be toggled.
So a quicker exit, therefore, foregoes growth and vice versa. So the increase or decrease of the actual exit proceeds arising from that timing would largely offset any IRR gains. In terms of exit proceeds, that's a bit more material. To give some background around what we're sensitizing here, so this is intended to be a singular way to capture the sensitivity to the terminal exit value that we assume across these deals. So this could vary for a number of reasons. It could be that secondary IRRs, the IRRs that would-be purchasers require are higher. It could be that their debt costs in support of those transactions are higher, or it could simply be through underperformance.
It might be a case that a sponsor doesn't deliver the top-line growth that they're expecting, or their margins are lower due to a combination of increased CapEx or OpEx. Similarly, distributions, this speaks the same. It's pretty much a proxy for ongoing business performance. We know that, as we touched upon before, some of the portfolio expects to yield underperformance would impact the ability to pay those distributions. Returns are, however, a lot less sensitive to a sensitivity to distributions than they are to exit proceeds, and this is a function of the relative proportion of value, which is driven by in-period distributions. Finally, at the bottom, you can see we prepared an underperform or crash case, so as well as a reciprocal upside.
What this does is it layers a 20% reduction in the terminal value that we touched upon earlier over a 50% distributions haircut and also a one-year exit delay. So you can still see here that we're delivering a fairly robust 9% return. So we think this feels. We feel that this demonstrates the relative robustness and general diversification of the portfolio when considered from an aggregate perspective. As you know, we've got a pretty heavy skew to digital assets at PINT. So we thought, what better way than to get one of our most prolific digital players up on stage here? Matt and the team go back a long way. We've been working with him and in his prior life and probably for the last 10 years.
I think we've probably put them in business some time ago, Andrea. And Matt joined DigitalBridge, I'm gonna say, what two and half ?
Two years ago.
Two years ago now. We executed our first deal with DigitalBridge back in 2014, not in Pint, still on the platform. Towers business in the U.S., one of the biggest independent tower companies out there. We've also had the pleasure of doing a follow-on funding round, where we took Pint into that asset. We've also invested with Pint across Vantage Data Centers and also GD Towers more recently. So three deals, great exposure across kind of the different subsectors, and, you know, just pleased to have Matt on stage, and he'd help to sort of dig into some of the digital themes. We've also got just over $1 billion of capital with DigitalBridge, so a very big exposure for us and a team that we respect.
... No, we stay on that one. So Matt, I guess why don't we start maybe just telling us a little bit about the DigitalBridge, the sort of the sector, and why you think being a specialist in the sector matters?
Sure. Thank you, Richard. Firstly, let me say thank you to Pantheon for their partnership. Yes, you acknowledge you have been a very big and important client and partner of ours over the years, so thank you for that. I guess where I'll start is just to talk about sort of why digital, right? Why do we think investors should have an allocation to digital in today's world? You all have seen sort of various charts about the tailwinds that surround the digital sector, and I guess I always try to bring it back to one very, very simple thing. All right. We all use in our day-to-day lives, whether it's at work or at home, or in our interactions with government, or in our interactions with healthcare, an exponentially increasing amount of compute cycles per day, right?
That's where it all boils down to, right? That is, in whatever form we're using them, at our desk, in our car, on our phones, it's just that exponential growth in compute cycles today that is driving everything that we see in terms of the need for incremental digital investment. Right? So, it's most obvious, and, you know, most of you will see a lot of headlines right now in the data center space, right? And I'll talk about AI a little bit later and some of those big trends that are driving it. But everything that we see in the mobility space, right? 'Cause I guess the other sort of big trend to talk about is something that we were probably promised, you know, over 20 years ago now with the advent of 3G, which is basically location neutrality, right?
That it shouldn't really matter where we are, but we should have the same connectivity and ultimately the same access to compute that we have in every other place that we're located. And, you know, we're probably still, frankly, a good decade away from that actually occurring. So those are the two big trends. And, you know, I'll dig in a little later into some of the themes behind that. What does that mean in terms of how you invest and why we think you need a specialist digital manager? These assets are typically operationally complex, and typically operate in what is now quite a diverse ecosystem, right? So there are plenty of diversified managers out there, some with very good digital teams. Don't get me wrong.
But there's other diversified managers out there who might only have one data center investment or one investment in a set of towers. If you don't have the breadth of expertise in a market that you're investing in to understand mobile, fiber, and data center architecture, you're taking a very big risk, 'cause all three sectors are really inherently connected today. I mean, we've been talking about convergence for 15 years, and when it started, it was really only, I'd say, a consumer trend. Today, it's an infrastructure necessity, right? You need to have converged infrastructure in order to deliver the services that comprise a sort of a modern digital offering.
So, you know, we think that convergence side and being able to understand all three big sectors, and there's a couple of smaller sectors that we refer to and being sort of small cells and edge infrastructure. But basically, we talk about towers and wireless, data centers and fiber as being the three core sectors of digital infrastructure, and understanding that as an ecosystem is incredibly important.
Thanks. That was really helpful. Might be good maybe just to try and, like, double-click down into, say, one of those sectors. So maybe, you know, what are some of the... What are some of the tailwinds, 5G deployment and sort of more about sort of the global spend on.
Sure
... mobile?
Sure. So if we look at sort of where we are in 5G, and frankly, I don't like the term generations that the industry has started using. I think it's, at least these days, a misrepresentation and actually doesn't do the industry any favors. But where we are with the development of what I'll call a sort of a modern mobile standard, and look, people will start talking about 6G soon, it will just be an evolution, is we are barely 25% of the way there. So if you look globally, only about 50% of the world has 5G implemented, and in the vast majority of those countries, and look, you know, here we are in London, it's a classic example, 5G implementation is actually very, very poor, right?
It's very possible to walk around any of these streets and find yourself on a 3G signal, right? Which basically, in today's world, with the apps that we all use, means you don't have connectivity. It's not, it's not real. So why is that occurring? It's occurring because the first phase of almost every transition in mobile technology is about coverage. It's about getting people to see that there's a little 5G in the corner of their phone, and that they might want to pay a little bit extra to have access for that. And then it becomes commoditized, and then we all start to say, "Well, hang on, my network experience is actually pretty poor. I'm going to have a look at the other networks." And that puts pressure on all of the operators to increase network quality, and that's when they start to spend on what's called densification.
Right, so densification is an attribute where if you think about a cell site, right, that cell site might support 1,000 connections at high speed, but the moment you go to 1,015, the speed drops for everybody, not just that last 15. And so what you need to do is you need to add in another cell site where half the customers can go to, or you start adding stuff at street level, so on bus stops or on the side of buildings, or on rooftops, right? I mean, rooftops has been around for a very long time. Today, we actually talk more about the incremental infill being at the street furniture level and what we call small cells. All of that requires massive spending, right? So I'll just use some numbers for Europe.
So about 18 months ago, the GSM Association did a study, and they concluded that to finish the 5G project for the EU, I think, and the UK at that time, was EUR 250 billion. Right? So if there's one thing you can be guaranteed, that is not coming from telecom operator balance sheets, right? They simply do not have the capital. Many of them are operating with busted balance sheets from as far back as 1999, right? So obviously, a big chunk of that will be debt, so you need, you know, very functional debt capital markets, but you also need the involvement of private capital, and that's why we've seen sort of the increasing rise of the independent tower company, or at least the separated tower company in Europe, right?
First, with sort of the growth of Cellnex, and then more recently, Vantage Towers and the GD Towers transaction that that Richard just alluded to, which I was heavily involved in last year. And we'll continue to see that play out. I think it's probably a slowing rate at this point, but there's still a very large number of MNO-owned towers across Europe. I mean, if you just look at our partner in GD Towers, Deutsche Telekom, still has another 28,000 towers across Europe that it owns in various geographies, despite having sold us and our partners and keeping a stake about 43,000 towers in that transaction. So, you know, that'll be a trend that continues as they need to continue that spend on network improvement, fundamentally.
That's probably a good segue actually to talk about GD Towers. Obviously one of our more recent investments. It'd be good to kinda hear, I guess, where kind of the build-to-suit opportunity was there and just sort of the wider investment rationale for that deal.
Sure. Sure. If I think about sort of the wider investment rationale for the deal, I mean, this was an asset that, well, my boss, my CEO, Marc Ganzi, had been trying to buy for about eight years. So it was a very long time in the cooking, so to speak. We felt that GD Towers was the best-positioned, sort of, single country asset, and we have set towers in Austria as well, and that's a good dynamic. But Germany, and being the leading operator in Germany, is we felt the best-positioned tower asset that you can have for a couple of reasons. Perhaps first and foremost, the strength of DT as an operator and partner. You know, they are the mobile brand in that market, and they will have to continue to be so.
It's, it's sort of the entire reason for their existence, if you like. So they will continue to spend what it takes on their network to continue to have network market leadership in that market, and it's effectively demanded of them by the German government, who remains a shareholder in DT. On top of that, and this comes to the sort of build-to-suit opportunity and why that build-to-suit opportunity exists, is that Germany, if you look at data usage per person, is at only about 50% of the European average.
If any of you have been to Germany recently and tried to check into a hotel and been given three handwritten forms to fill out, and if you've had a cancelled flight and you're at an airport hotel and watch a queue stacking up behind you, you'll see that there is a massive impetus in Germany. And actually, I had a conversation with the German Deputy Minister of Finance, where he went out of his way to sort of be telling me about everything that the government is doing to try to improve digitization in that economy. You know, it's probably the only place in Europe where people would still give you a fax number, genuinely. Look, the uplift in data usage, and therefore, the continued spend that the operators will need to make on densification.
So that has two implications for a tower company, right? The first is, and frankly, we're already seeing this today, we've had demand in excess of what we expected from other operators to co-locate, locate on our towers, right? The second is to build more towers, right? So, and actually, even since we acquired the business, the German government has announced some new rules requiring greater coverage requirements on major transport routes, for example. So we've seen some additional upside, even since we bought the business, in our expectations of how coverage is gonna be demanded in Germany. So, you know, if we look at the DT asset, I mean, you know, out of what we have about 33,000 towers in Germany, we'll be building well over 10% of that.
I mean, we have an order book that's about 1,000-1,200 towers per year. It varies a little bit up and down, but it's a very significant order book. We have a very big focus on that production organization. And again, this is why I talk about digital specialists, right? We've done this, you know, 10 or 12 times around the world in taking tower companies, sometimes that existed, sometimes that were just divisions of telcos. GD Towers, I would say, was somewhere in the middle, where it sort of was set up as a business, but it wasn't really profit-oriented. And so, you know, we've brought in new members of the management team, not the CEO.
We've left Bruno as he is, but we've brought in a new chief production officer to manage what we call the factory lines for the production of new towers. He comes from the construction industry. So bringing these sort of additional disciplines into play is part of the reason why we, as a specialist digital infrastructure investor, I guess, sort of earn our keep, so to speak.
... Great. Let's pivot to towers. Need to try and get through the subsectors here.
Yep.
We've talked about towers, hyperscale, data centers. Everyone's talking about the hyperscale opportunity, but there's also, you know, the multi-tenant facilities as well.
Yep.
You mentioned at the beginning, you know, edge data centers. Could you sort of lift the lid a little bit for the audience in terms of-
Sure
... kind of the opportunity set is?
Sure. So look, I mean, if you think about what a data center is, fundamentally, it's a large and boring building that supplies power to servers, right? And cools those servers down, right? Those are the two things that you need to do compute. You need large amounts of power coming into the building, paid for by the, the customer in terms of energy usage, but the actual availability of power is the core function of a data center. And then pulling hot air off servers and cooling it down and putting it back into the data center is the other necessity. Right. If we look into sort of who uses data centers, right? Historically, where the data center industry came from was actually corporates thinking, "Well, I shouldn't have this in my head office. It's too expensive.
I'll put it somewhere else." And then they thought, "Well, now that it's somewhere else, I probably don't need to have it just in a building by myself. Now, I'll put... You know, I'll let other people come into my building, or I'll sell the building, and someone else can bring other, other computers into that building." And then we had this thing called cloud, right? And what cloud was, was the provision of, fundamentally servers owned by other people and saying to predominantly corporates, right, "We can run your compute more cheaply for you than you owning these servers," right? Now, that's not the case in every case, but that's been the fundamental reason behind the cost of the growth of cloud, right? You know, we all think about this as being very technological.
It comes down to one very basic thing: cost of production, right? It's just like every other industry in the world, cost of production rules, right? So the reason that cloud has become so predominant is that it massively cuts the IT costs for enterprises, except for very specific applications where enterprises are either continuing to use mainframes, and that's a sector that'll exist for another 20 years, or have security concerns, and so it sits in in what we call hybrid cloud, which is more private, or haven't done that transition yet, in which case they'll be in a multi-tenant facility. And then, as we think about just cloud and hyperscale, and I appreciate this, there's a lot of things flying around here, but it's a very complex industry; even in hyperscale, we have single-tenant and multi-tenant facilities, right?
So we have facilities that are Microsoft-only or Google-only or Amazon-only, and then we have facilities that are almost the same size but generally in a much smaller location, where Amazon says, "Well, I only want five megawatts, not the 20 that I've got somewhere else." Then Microsoft says, "Well, I'm basically the same." And Google says, "Well, I want two and a path to five." So it's actually the same sort of facility, it's the same customers, it's just that they're taking 10%-30% of a facility instead of 100%. And that's where the bulk of data center demand is sitting today, is really in those hyperscalers, in varying sorts of facilities.
Okay, and so we're invested in Vantage North America, so the development company out there.
Mm-hmm.
I think clearly data sovereignty is an issue, as you touched upon, and so that's obviously driving latency issues as well. You know, that's obviously driving into edge. Tell us a little bit about the business plan for Vantage-
Sure.
You know, where it's getting to, and maybe just touch upon contract length, because I know that's something that-
Sure
the audience is probably quite keen to
Yep
to hear about.
So Vantage itself really focuses on predominantly single-tenant facilities. We have a small handful of multi-tenant, but it's predominantly single handful, single-tenant facilities with the very largest customers. So, you know, Microsoft, Google, Amazon Web Services are the largest, and then we touch into what we call the baby scalers, so the likes of Oracle and Salesforce and some of those other emerging platforms. What we are seeing with Vantage is two things. So there is, talking Vantage North America here, Europe, frankly, is not all that different with some added complexity, is the continued growth of demand for the cloud product, the continued complexity of that cloud product. And so what, for example, a Microsoft offers its customers is more complex in terms of pricing levels, and those pricing levels are essentially based around availability and resiliency.
That pricing has to be matched by an architecture that is capable of achieving that resiliency, and fundamentally, you, the way you do that is more data centers, right? So what's the barrier? The barrier is power, right? So many markets that we're seeing in the U.S. that have historically been very important data center markets, and, you know, Virginia is probably the key one, are simply running out of power, power availability. And it's actually not generally generation, it's worse because it takes longer. It's the transmission grid. And so grid and transmission availability is becoming a very real constraint. So what's the solution to that? It's the rise of new geographies, right, within... And frankly, we see this in the U.S. and Europe.
The rise of new geographies like Arizona that can cater with relatively low land prices, with low power prices, and with lots of power availability. So we're starting to have active dialogues with our customers about, you know, well, when you request a facility does it really need to be there? Because we're not sure anybody can actually provide it to you in the timeframe that you're, you're asking it for. The other dynamic that I'd point out around Vantage, and I think this is very important to understand 'cause it relates to the contract length question, right? When we build a facility within Vantage, if you think about a 30-megawatt facility, it's probably $300 million just to buy, right?
We would generally acquire the land, and we'd make sure that we have an option and what's called a will serve letter over the power, and that might be of the order of $10-$15 million of spend. We will not start construction until we have a contract, right? So in many ways, this is actually a very low-risk business because that contract will be a 15-year lease, right? That's how we operate in the data center space. I'm always shocked, and I met someone at a data center conference in France recently, who cheerily told me about their Madrid campus, where they've built a shell and don't have a single customer. And, you know, the people who are investing behind that, I think are people who just fundamentally don't understand-
That was a real estate investor.
That was a real estate investor.
Investor.
That's correct.
Had to be.
Yeah. Yeah, that is absolutely correct. A real estate family office, no less.
Yeah.
So, yeah, look, we take. It's a very infrastructure approach, right? It's almost like a project finance approach, where we want it completely de-risked. And what we've done more recently in Vantage Europe, we've done it previously with Vantage North America, is we actually develop the data centers. So we have that very small amount of what I call development capital. The rest is effectively construction risk, and then we're selling some of them to stabilized buyers at the point where the revenue starts flowing. And that's sort of your ultimate form, if you like, of capital recycling or cost of capital efficiency.
Basically, by taking very limited risk-
Yep
... because you've got those contracts in place, you've got the power in place, you're not really incurring CapEx until you've got all of that in place and that 15-year guaranteed cash flow.
Yep.
You build it.
And then you build it, and we're typically making mid-teens to high double-digit development yields.
Compared to what would a stabilized yield might be like?
Stabilized yield for a data center, so stabilized cap rates are sitting at about 6%.
Okay.
So when you think about escalators, et cetera, you're seeing IRRs of circa 9%-10%.
Yeah.
Uh, so-
Okay, so big yield compression.
Big yield compression.
Big, big capital gain on exit.
Correct. Yeah.
Okay. Thank you. We haven't got much time left. I'm gonna say we've got about five minutes left. Why don't we, why don't we touch on AI? Because obviously everyone loves a good AI story.
Yep.
Whether it's AI's gonna take over the world or make all jobs redundant, I think somebody famously said the other day.
Except the addresses.
Well, in my case, no problem. Like, I think a lot of AI feels a bit like PE. It feels quite high risk in terms of kind of what people are hoping to do, what they think the revenue streams might be. How does it apply to the kind of your part of the digital value chain?
Yeah, look, it's-
Where are you-
It's a good question. I don't actually like the term AI 'cause I think it encompasses a set of tools that, in many cases, have nothing to do with each other. But in any case, we have this, you know, new and really advanced set of effectively machine learning tools that we're all starting to use more and more. And when we start to see Copilot come into Microsoft, I think that's when AI-
Mm
... is gonna start to come into its own, right? To your point, you know, where we are is we're at the bottom of the value chain, again, providing that passive infrastructure. So we don't really care whether it's Microsoft platform or Google Bard or sort of whoever comes next that sort of dominates. We don't care if it's NVIDIA chips or if IBM ends up with something else, and we certainly don't care what software platform-
Mm
... ends up running on those. What we do think is that AI is probably an almost cloud-scale opportunity. So we are already seeing... And look, demand in AI comes in two pieces. So we have this thing called training, so that's effectively what we all see the outputs of today. And that really won't require very many data centers, but they'll be very, very large, right? So in the U.S., there's probably gonna be five of those; in Europe, probably three or four, if any. It's not latency sensitive, to your point, which means it can be put, broadly speaking, anywhere. And again, it's all gonna be about cost of production, very, very low-cost energy markets.
But then we move into what's called inference, and for that, if you think about a five-day test match, for example, we're in the third over, right? Which is the rollout of AI infrastructure effectively into cloud data centers to support the co-location of AI with the general cloud product, right? Because when we start to use AI, we are gonna be latency sensitive, right? So what does that mean? It means we probably need to do some fairly significant CapEx, in some cases, on our data centers, and the reason for that is that AI racks are about four-five times as energy dense-
Mm
... and therefore, four-five times as heat dense as a normal rack, which means you need probably liquid cooling or at least forced air cooling instead of passive, to pull that heat away, and you need to continue to supply those very large amounts of power. But our view is that if we look out over a 10-year timeframe, we're very optimistic about, well, I'd say, the power demands. The challenge, of course, and we're all talking about it, is where does that power come from? There's only two solutions, right? We can, you know, either drive forward into renewables, we can take power from other pieces of industry, or we can stop using compute. I don't see the third happening. So that's, that's my take on it.
And that 5 times density-
Yep
... I mean, that's massive. So when these data centers were... Some of the older data centers, some of that older capacity that's there... they won't be able to fit those racks.
They will with modification.
With modification.
Even frankly, a modern hyperscale data center is not made-
Mm
For the density of an NVIDIA rack. So a typical cloud data center today, our rack space would support anywhere from 12-18 kW. And a full AI rack will take 45-115 kW, right? So you do need to be talking about installing liquid cooling. So there's a couple of technologies. You can drop what's basically like a fridge down the back of the rack-
Mm-hmm
... or you can have plates that go in and sit on top of every server, and the liquid flows and then goes up into the ceiling, and then flows back to the cooling system. So these are not, again, like enormously technologically complicated systems, but they do require, you know, some quite significant expenditure. The nice thing about the data center space is it's enormously rational. You spend CapEx, you get paid for it, right? The clients just, you know, they'll say to you, "I need this done," and you'll say, "Well, that requires... That's X much uplift in your lease rate." And they say, "Fine, done. Build it.
They're captive. They can't move elsewhere.
They, they can't move elsewhere, but more importantly, there is so much demand and growth in demand that they're thinking about, "How do I get my next data center?" Not, "Well, where could I move that one that I moved into three years ago?
Mm.
They just don't have the mind space for it, and they have no need to. Because lease rates are going up, not down. So even if you try to move today, you're gonna be giving up a cheaper rent for a more expensive rent.
So great tailwinds across the passive infrastructure of towers-
Yeah
... passive infrastructure data centers.
Yeah.
None of the active technology risks-
Correct
-taking there. And valuation environment, maybe just last minute?
So today's valuation environment, I think, is certainly more attractive where it was than where it was two years ago. I think in the tower space, it's only compressed a little bit, more or less the same. We've definitely seen a couple of things in data centers. We've seen a rise in cap rates have stabilized, basically in line with,
What we're seeing at the core infra.
Yeah, exactly, what you're seeing in core infra. And we haven't seen any yield compression for development, which is nice, right? So even though we're seeing a bit of a pickup in the cost of construction, we're essentially passing all of that through to customers and new contracts. So from a sort of pricing environment on what we're building, but also a cost of capital approach, we're not really seeing compression. We're probably seeing a little bit less competition in the space. I think everybody wants a piece of it, but actually it's very hard to convince Microsoft or Amazon or Google to trust you. So you can have all the capital you want, if you don't have the relationship, you're not gonna be able to deploy it.
And so there's a sort of natural barrier to deployment of capital in the space as well.
Being a scale specialist investor-
Is an enormous benefit.
Yeah.
Enormous benefit. And so, you know, today I think there's probably four-six platforms in the world that have access into all four or five hyperscalers and baby scalers. There's others that might specialize in a couple, but there's no more than, you know, say, a dozen that are capable of making sort of multi, multi-jurisdictional, multi-transactional deals with those hyperscalers.
Thank you, Matt.
Pleasure.
Super, super interesting. Hope you all agree. Grab Matt in the break. He won't be hanging around long. Nice to have someone with so-
Thank you
... so much experience alongside us.
Thank you.
Thanks, Matt. We're now gonna watch... We're going to step off stage, short video about Primafrio, and then I'll finish with some closing remarks.
I'm delighted to be here again at Primafrio's headquarters in Murcia, Spain. I'm joined here today by Dave Cohen, partner at Apollo and deal lead, and we also have members of the Primafrio management team, Enrique Fuster, the CFO, Marina Ortín the commercial director.
Apollo Global Management has invested in infrastructure since 1990 and launched its first dedicated commingled infrastructure fund in 2018. We've invested more than $14 billion in over 75 infrastructure and infrastructure-related investments throughout our history. Apollo's infrastructure business operates alongside other businesses within the integrated platform. We adhere to a flexible investment approach that enables us to deploy capital across market cycles, focused on corporate carve-outs, on structured solutions, and on equity buyouts. With a team of over 30 dedicated infrastructure investment professionals, we have deep sector knowledge, and we believe it's our integrated approach that sets us apart. We can tap into the firm's broader capabilities in yields, in hybrid, and in equity strategies. Apollo's commitment to environmental, social, and governance considerations is also integrated into our approach. We utilize the Apollo platform to tackle important environmental and societal challenges.
For Apollo, sustainability isn't just about managing risks, but also about finding opportunities for growth. Pantheon and Apollo have fostered a strong relationship since 2018, when we partnered on the acquisition of a portfolio of assets from GE Capital's Energy Financial Services business. Pantheon was able to support Apollo by executing the deal with speed and certainty while providing in-depth structuring knowledge. This expertise has been instrumental in executing transactions efficiently and supporting the launch of Apollo's infrastructure flagship fund. Importantly, it has also provided Pantheon with valuable insights into Apollo's underwriting approach.
Apollo excels in actively sourcing investment opportunities. They partner and complement management teams and co-shareholders with an active asset management approach. Apollo typically seek to optimize operational efficiencies, capital structures, talent attraction, and deliver growth through strategic initiatives like mergers and acquisitions and technology advancements. This approach has resulted in an attractive risk-return profile for the Primafrio investment.
... Pantheon's speed and certainty of execution has been a crucial element in the success of the partnership. Supported by Pantheon's experienced infrastructure investment team, Pantheon plays a key role in conducting due diligence and facilitating the closing process, resulting in expedited transactions. This enables Pantheon to offer valuable insights, support, and accelerated processes, proving especially beneficial in the co-bid or co-sign scenario. Primafrio is a cold chain logistics business based in Spain, transporting fresh fruits and vegetables to the U.K. and the rest of Europe in specialized temperature-controlled trucks and through a network of cold storage warehouses. The business was family-owned since inception, and in 2021 began looking for external capital to help grow the business organically and inorganically, and also to accelerate the development of additional infrastructure.
Pantheon worked with Dave and the rest of the Apollo team in reviewing the business opportunity and key risks. The underwriting coincided with a period of heightened uncertainty in light of the Russia-Ukraine conflict. As you will appreciate, we're concerned with the potential impact on supply chains and fuel prices. Pantheon had access to the detailed due diligence reports and senior members of the Apollo deal team, and this close cooperation was vital in getting Pantheon's investment team and committee comfortable in proceeding with the investment.
In underwriting the Primafrio investment, Pantheon was very focused on the downside protection afforded by the investment and the infrastructure characteristics of the business, and it was helpful to see that invested in the final transaction perimeter.
Pantheon enjoys an excellent ongoing relationship and dialogue with the Apollo deal team, and receives regular updates on business developments and future plans. The Apollo team are also proactive in communicating any material changes in the business, which is essential for our ongoing monitoring.
Hello, my name is Enrique Fuster, and I am the CFO of the company. I've been working with Primafrio for the last four years. If I could summarize my experience of working with Apollo in just one sentence, that would be: Apollo is there for you. From the start of the collaboration, the team that Apollo assigned to us has been very constructive and not intrusive. We've been operating in the industry for 60 years now, and I think our partners really appreciate that. They want us to keep on doing the things the way we've always been doing this. Nevertheless, even we are a big company, we might not have the experience that Apollo has, and probably our view of certain business matters is narrower. Apollo is constantly, from a constructive way, questioning everything and bringing in new strategic ideas, which is very good.
On the other hand, Apollo is a very well-recognized institution, and partnering with them allows Primafrio to also benefit from Apollo's brand name. Besides some expected benefits that Apollo could brings to us, such as helping Primafrio, for example, with the process of institutionalizations, there are other tangible facts that really matter for us. For example, Apollo has opened us a lot of doors with financial institutions which we have not worked with them before. Very competitive rates, I may say also, which is very good. Their worldwide influence has brought us opportunities in fuel procurement, M&A, business diversification, and that's probably something that we, on a standalone basis, could have not reached. It's definitely been positive blending both names together. Business-wise, things are formal and informal at the same time.
We hold a weekly meeting to follow up business matters, but also quarterly board meetings that are normally more formal. Despite that, we also have the flexibility to make a quick phone call and discuss business matters and solve it right away. That's very much appreciated from our side. I feel I'm working with a partner, not with an institution. People are what make the difference, and people in Apollo make a difference.
Hi, everyone. I'm Marina, commercial manager at Primafrio, and I'm working with Apollo Management since the initial stages of the transaction. During the entire process and after the transaction, I've been in close contact with the infrastructure team of Apollo Management, aligning the two companies. And what I have seen so far is, in Apollo, we have found a real partner for our business. From the very start, the Apollo team showed a genuine interest in learning about the industry and profoundly understanding on how we do things without getting involved in the operational aspects. They place trust in us that we know what we do daily, but on the other hand, we place our trust into them to assist us to become even better in what we do, to professionalize and prepare the company for the next level of growth.
From their side, there is always an open ear to listen to our concerns, to bounce ideas off and brainstorm together in how we can collaboratively become better in what we do. The regular calls and visits also help to maintain the confidence and the trust we have into each other and bring us and our relationship closer. They might be thousands of miles away, but in reality, they are only a phone call away. But also when looking at our client base, after having explained our collaboration and how we work with the Apollo team, they feel at ease knowing that Primafrio has a strong partner with the same vision on ESG, sustainability, and the focus on how to prepare for the future within the logistics industry.
With them by our side, we are able to accelerate the build-out of additional facilities and infrastructure to allow us to better serve our clients and increase our efficiencies. Through Apollo, Primafrio has become a truly multinational company with a strong focus on growth. Speaking realistically, the logistics industry currently experiences a lot of attention worldwide, with a lot of challenges and changes, which we do see as an opportunity, though. The decarbonization of the industry, the energy transition for trucking businesses, and the importance on ESG matters. All these factors have become the basis of our daily business, which we created alongside our partner, Apollo. By leveraging their expertise and combining this knowledge with our know-how of the logistical industry in Europe, we work towards the same goal, the success of Primafrio.
This year, Primafrio is celebrating its sixtieth anniversary, and with this partnership, we know we are set up for another sixty years and many more. Thank you.
There was, I guess I wanted to give just a few closing remarks. Firstly, you know, extremely proud after two years to have assembled what we think is a great portfolio. 13 assets, you know, GBP 458 million committed to those 13 assets. I think we're benefiting from mega trends that you've heard about today, so digitization, decarbonization, and obviously the transition more generally to net zero. We've assembled a portfolio that's got good inflation protection, good downside protection. Ben took you through that slide. I'm very happy to delve into that in more detail, and we'll provide more color at the full year. We're also trying to balance income and yield with growth.
And as you'll appreciate, you know, some of the things Matt was talking about in terms of the growth in some of the digital assets we've got in particular. We're undrawn on the RCF. We've got a robust financial structure. You know, in light of the, I guess, some of the constraints we're seeing in the sector right now, we've got a great portfolio. We'll continue to manage that portfolio. We will realize exits in that five-seven year period, and we will look to recycle that capital. So we've got a business plan that works. We'd love to be able to grow further. We're passing an awful lot of opportunities away that we should be trying to execute on, which are going to other clients. So we hope the markets are gonna be more constructive going forwards.
I'd also like to just say thanks for turning up. It was a difficult act to follow after the King's Speech this morning. But I think hopefully you'll all agree the speakers did a great job. So thank you, Vagn. Thank you, Andrea, Welwin, Jesse, and Matt, for your time today. Hopefully this was useful. Do give us some feedback. Let us know what you wanna hear about next time, and drinks that way. Thank you.