Good morning, everyone, and welcome to EQT's year-end announcement. In addition to Christian and Kim, today, Gustav, head of our business development team, will be participating in our quarterly webcasts, and will do so from here on. We will present the results for about half an hour as normal, before opening it up to Q&A. If you have registered ahead of the call, you should have received an email with your personal pin code to participate in the Q&A, a new procedure. With that, I'll hand over to Christian. Next slide, please.
Thank you, Ulf. Good morning and welcome, everyone. 2022 was the most transformative year in EQT's history, despite the headwinds and uncertainties during the year. Through the combination with the BPEA, add-ons in real estate and life sciences and new funds, we created a diversified global leader in active ownership strategies. We strengthened the EQT Executive Committee, reflecting our diverse global footprint and our added focus on scaling the EQT platform. We had an active fundraising agenda with the successful close of a number of funds, including in EQT Growth and EQT Ventures, and we made good progress in our flagship fundraisings. In the business lines, EQT continued to make selective thematic investments, and we drove and preserved value across all of our existing portfolios, with all key funds continuing to perform on or above plan.
The deterioration in market conditions, of course, resulted in a drop in investment and exit activity, value creation was largely flat despite robust performance in our portfolio companies. As a result, reported carried interest was lower, we slowed down our hiring pace with additional focus on cost and efficiency. As you can see on the right, the combined EBITDA landed at EUR 1.06 billion for the year. Having activated the latest generation of flagship funds, management fees are set to grow in 2023 while we do scale our global platform. Recently, we're seeing signs of the macro situations and markets turning more constructive, which is good, we do plan for continued uncertainty. The fundraising market will continue to be affected by lower liquidity for investors for some time, which is now resulting in longer fundraising timelines.
On the investment side, with a global platform, a team of exceptional people, and more than EUR 50 billion of dry powder, I'm quite confident in our ability to seize investment opportunities ahead. Our deal flow remains solid. The long-term trend to investing in private markets remains strong, driven by our proven ability to generate good risk-adjusted returns. Many investors across the world remain under-allocated to the asset class. Having said that, deal activity across private markets is somewhat cyclical, as we saw in 2022. At some point, markets and activity levels will rebound. The longer trend in private markets remains positive and growing. We've also seen a more constructive start to 2023.
Whether the current situation turns out to be a shorter downturn or a recession, our priority is always to come out stronger, this requires sharpening our future-proofing capabilities and continuous decisions in managing our portfolio and transactions. With EQT's governance model, the insights we gain from our 250-plus portfolio companies globally allow us to do exactly that is to take action. Looking back, some of the best investments were made in times of volatility. After the financial crisis, we did some strong deals such as Altos Medical, KMD, Tampnet, and Anticimex, deals that delivered between three and ten times gross multiples of invested capital. Since then, we've sharpened our thematic investment strategy, sharpened our portfolio construction methods, have much deeper value creation skills and tools to create long-term value.
Looking at past cycles, our key funds have always delivered at least 2x returns and thus always generated carry. We have 10 years+ of time in each fund to secure such returns. The journey hasn't always been smooth. We've seen IPO windows come and go, funding markets dry up, higher interest rates, and deep recessions and market corrections like the dot-com implosion and the financial crisis. We always maintain a long-term perspective. In this recent hot cycle, we did not maximize leverage in our portfolio companies. We did not pursue hyped assets or financial engineering like SPACs or cryptocurrency, nor did we assume that valuation levels would remain at record high levels in our underwriting. In fact, the average expected exit multiple in EQT IX was 4x lower than the entry multiple.
We want to own the right companies and assets supported by long-term macro trends, which we can transform through active ownership. Resilient market-leading companies also see robust valuations throughout the cycle. Our deal flow remains strong, supported just by being local with locals in every single country where we invest. Our investment approach is built upon the belief that delivering strong returns goes hand in hand with creating a positive impact, and that these are mutually reinforcing, in fact. With our scale, the value of the assets we manage is more than EUR 210 billion. We make a difference as an active owner by committing all of our companies to the Science Based Targets. Over 1,000 clients globally trust us with their capital, and most of our clients are managing capital for pensioners and savers around the world.
Thus, we have a responsibility to develop these companies in a manner which creates long-term value. Under EQT ownership, we work to future-proof our investments. We create more sustainable companies that will attract the best people and have resilient business models, which digitize operations, invest in R&D and in people, we build global platforms through consolidation. Of course, we also need to drive efficiencies and cost measures when needed and drive transformation of industries like, for example, GETEC Energy Services, which we exited last year. Over the past years, valuations have benefited from low rates and availability of capital. As these tailwinds abate, it will be more important than ever to transform companies and assets through active ownership, in our view, to grow revenues, expand margins, gain market share, de-risk assets. This is what active ownership means. Take IFS, for example.
Since 2015 we've appointed a new management team, upgraded the organization, almost tripled sales and more than doubled the margin. We sharpened the company's focus on five core verticals, strengthened the sales force, and accelerated new customer acquisition, becoming a global leader and making more than nine times multiple invested capital. EQT is well-placed to continue to make attractive investments, and now is clearly an interesting time to invest. We have EUR 50 billion of dry powder at our disposal. We're local with locals, as I said, and we have the people and the EQT Network Advisors, more than 600 of them, supports to support due diligence and bring deep sector expertise to our companies and management teams. Valuations, and the bid-ask spread between buyers and sellers is starting to settle.
We invest in sectors supported by secular growth trends, often providing essential services to society. In private capital, we have Envirotainer and SPT Labtech in healthcare. We actively pursue public-to-private like Billtrust and va-Q-tec and corporate carve-outs as well. These are areas where we have deep experience, also including tech service transactions, for example, in Asia. In real estate, we're investing in solid locations, primarily in logistics, supported by long-term trends. We improve the assets, and we have strong relationship to lease space with our hands-on approach to global blue chip tenants. We upgrade those assets to the highest energy efficiency, making them more sustainable and more valuable. In infra, we have strong deal flow across sectors, all of which are connected to important societal themes such as climate and energy transition, where the need for capital and competence is immense.
With an estimated incremental annual $3 trillion of investments for energy and land use systems to deliver on net zero ambitions by 2050, as well as the digitalization of society and the aging populations. I'd actually like to show you what this means in practice with a short video.
First Student provides full service transportation management, route optimization, and maintenance with a fleet of approximately 45,000 buses. Now we're leading the industry by converting our traditional diesel school buses to electric.
Torghatten is the leading private passenger transport company in the Norwegian seas. Torghatten's ferry route network significantly shortens travel time along the coastline, making us a vital part of the country's domestic transportation system. In the last 10 years, our goal has been to become the sustainability frontrunner in our industry, operating the world's largest all-electric ferry on Norway's busiest route, as well as developing green hydrogen vessels.
Cypress Creek develops, finances, owns, and operates utility scale and distributed generation power plants across the United States, powering thousands of homes and businesses with clean energy.
One of the greatest challenges with renewable energy is intermittency. Sun doesn't always shine and the wind doesn't always blow, so we're developing massive energy storage sites for energy storage at scale.
develops, installs, owns, and operates rapid electric vehicle charging stations across the U.K., giving EV drivers seamless access to fast, reliable, and easy charging. InstaVolt's charge points are most often situated at retail food and beverage sites like Costa Coffee and McDonald's, on or near to the strategic road network or in ultra-urban areas, offering a convenient service for the end user who can combine their charge with other day-to-day activities.
Covanta is a leader in sustainable materials management, providing environmental solutions to businesses and communities around the world. Every day, our sustainable processes divert waste from landfills through combustion, which prevents the reduction of the climate-damaging gas methane. This reduction of greenhouse gas emissions each year is the equivalent of removing 4 million cars from the road compared to landfill.
Solarpack is a vertically integrated solar photovoltaic power plant developer and an independent power producer. We develop, finance, construct, operate, and manage utility-scale solar power plants which convert sunlight to electricity. We originated in Spain and have a deep footprint in Latin America and Southeast Asia, with a growing presence in the U.S. and South Africa.
To us, sustainability isn't just the business we're in, it's also the lens through which we view the world and our place in it. At EQT, we're helping lead the world to a more sustainable future.
I hope that brought some of our investments to life. Good. Resilience and value creation. These are not given in any business. We're continuously evaluating risks and reassessing value creation plans in all of our investments. To mention a few recent examples, we were early to extend debt maturities in our companies and focus on pricing and procurement when the market shifted. We reviewed and upgraded boards and management competencies, accelerated bolt-on acquisitions, and performed a full re-underwriting of the private equity portfolio to ensure that we remain on track in our funds. The conclusion is that we have a robust portfolio. On average, portfolio companies grew revenues more than 20% last year, and EBITDA growth was close to 18%. Having said that, we also do have pockets of underperformance.
Certain companies have been impacted by COVID lockdowns, supply chain issues, and rising labor costs. While top line has been robust in most cases, some of these companies have seen slower EBITDA growth in the last year. In real estate, similar to our other businesses, we're focused on sectors with long-term demand drivers and robust supply and demand fundamentals. Despite the uncertain market situation with higher interest rates and softer global demand for real estate, the net operating profit from our properties continued to grow close to double-digit. The fundraising market has become somewhat more challenging, and timelines are being extended, also for flagship fundraisings. Fundraisings which took less than 12 months before the downturn will now probably take more than 12 months to raise in the current environment. We have the capacity to make that happen.
Looking back at the last four to five years, institutions have increased their commitments to alternatives. Given the strong performance in private markets, institutions have reallocated capital from public to private markets. At the same time, financing and M&A markets were wide open and the net liquidity for clients was positive. The main driver of the softer fundraising market currently is less liquidity. As the financing, M&A, and IPO markets were closed or constrained in 2022, institutions were getting some less money back, and thus new commitments actually exceeded distributions last year. Having said that, 2022 was a strong fundraising year for EQT. In fact, we raised more capital than we've ever done in any year before, with EUR 31 billion raised. EQT also has strong relationships with its clients.
We distributed EUR 40 billion over the last 24 months in exits, we've continued to realize exits, notably at or above valuation marks during the past year. We have a young portfolio and strong performance across the board as you see, we're investing behind strong secular trends. As we enter 2023, our immediate priorities are to realize the full potential of our recent combinations. For example, the private capital sector teams are now working as one global team, sharing insights, and working together. With a more challenging fundraising environment, we'll work with our clients to complete ongoing fundraisers and scale our recently launched new initiatives. We'll continue to optimize our global platform while strengthening our future-proofing capabilities across sustainability, digitalization, and artificial intelligence with Motherbrain.
We continue to evaluate and develop new products which would provide access for a wider set of private wealth clients to invest with us. Of course, we'll remain razor-focused on performance, performance. With that, I hand over to Gustav.
Thank you, Chris. Good morning, everyone. By way of introduction, I head up our business development, and I'm part of EQT's Executive Committee. In the recent years, I've focused on growing our global presence, leading the acquisitions of Exeter, LSP, and BPEA. Today, I want to start by providing an update on the EQT Exeter transaction and the development since the acquisition now two years ago. Since then, fee generating assets under management have grown by almost 3x, and EQT Exeter is today a global top 10 player within real estate. In addition to the EUR 22 billion of fee-paying AUM, we have another EUR 4 billion of commitments which will be fee paying as we invest the capital.
Since the acquisition, EQT Exeter has had a very active exit agenda with over EUR 10 billion in realizations, hence de-risking the track record of the existing funds both in the US and in Europe. These exits have mostly been large portfolio realizations, where the funds have sold the assets, EQT Exeter continue to manage the portfolios through so-called managed accounts, and therefore also continue to charge management fees. This is due to the unique setup of EQT Exeter being a real estate operator and being vertically integrated with the in-house leasing team and an in-house development management team. At the same time, EQT Exeter has also been very active on the fundraising side on the back of industry leading returns. Today, we have over EUR 12 billion of dry powder to deploy.
At the time of the acquisition, the key short-term lever was to scale up within logistics. During 2022, we've raised both the value-add fund and the core-plus fund in the U.S. The core-plus fund is approximately three times larger than the previous fund. The value-add fundraise is still ongoing with over $4.5 billion raised to date, hence more than doubling the size of the last fund, despite being raised in probably what's the most difficult fundraising year for a long time. The real estate market is experiencing uncertainties with higher inflation, higher interest rates, and global supply chain disruptions. EQT Exeter is of course also impacted by this.
Mitigated by the focus on sectors with long-term demand drivers, in markets with stronger demand and supply fundamentals, and also by the significant exit wave that we saw in 2021. Going forward, the focus is to take advantage of the repriced investment market with the significant dry powder, as well as to continue to expand into other sectors and asset classes such as within multifamily. Moving over to BPEA. We're very excited to have a scaled platform in Asia, especially in today's markets where we see weakness in Europe and North America, whereas Asia is providing a very interesting diversification opportunity with an uncorrelated cycle and different drivers of growth and return. Asia is supported by positive long-term trends across GDP growth and middle class population, creating significant investment opportunities in the years to come.
As a result, the expectation is that private markets across Asia will grow significantly quicker than the rest of the world and that global firms such as ourselves will continue to take market shares. Having a large investment platform in Asia is also providing benefits with our Asia clients, as we can serve them better, provide better access to people and knowledge, and build stronger relationships. The Asia market has been relatively resilient over the past year with continued investment and exit activity, and financing markets have been and remain more constructive. As a result, BPEA have used these markets to return almost 50% more than being invested in 2022, further improving distribution to the clients. Fund VIII is just over 15% invested, which means that we have around $9 billion of dry powder to invest.
The first joint step in building out a platform in Asia is a mid-market growth strategy using the existing team and platform to invest across technology, healthcare, and services, and where we've already done a couple of transaction, taking advantage of the current market opportunity. A key focus during 2023 will be to continue to work on the global corporation, use best practices and learnings across the platform in areas such as, for example, capital markets, sustainability, value creation toolbox, and digitalization. Moving into the client side, we continue to see a long-term growth potential within private wealth. Private wealth represent about half of the global wealth and only 1% is allocated to actively manage alternative assets which we, like many others, expect to increase over time.
For us, this is a significant opportunity as private wealth today represent less than 10% of our commitments in the closed-ended funds, and we do not have any semi-liquid funds. As most of you know, private wealth, and especially the semi-liquid market, is currently experiencing some headwinds which we are closely monitoring. We're focusing our efforts within private wealth on increasing the share from private wealth within our closed-ended products by strengthening the relationships with our key distribution banks. In addition, we're also working, continuing to work around the semi-liquid structures, and we expect to launch certain products during the course of this year. I will now hand over to Olof to share a little bit more details on the ongoing fundraisers.
Thank you, Gustav. Having raised EUR 31 billion in 2022, the market is becoming more challenging, as we said. We raised EUR 31 billion over the past year, and that includes Ventures III at hard cap, EQT Growth above target, and EQT Exeter's 4th US core logistics fund and its 2nd office and life science funds. BPEA 8 closed at hard cap, and we progressed various fundraisers including our flagship fundraisers. If you look at EQT Ten, which was initiated in January 2022, this has commitments of EUR 16 billion as of today, including commitments of about EUR 1 billion confirmed in the first weeks of this year. We expect EQT Ten fundraising to be substantially completed during the summer.
When it comes to BPEA, we are establishing a mid-market growth strategy. As you know, we launched Infrastructure VI late 2022, and we have closed out about EUR 3 billion. We expect a similar pattern to EQT X for Infra VI, with strong re-ups in the first close. Demand for infrastructure is healthy, and we expect the vast majority of our infrastructure fundraisings, including Active Core, in 2023. With regards to EQT Exeter, we raised $4.5 billion for EQT Exeter's US Industrial Value VI fund and expect to wrap up fund raising above the original $4 billion US target. We have two further EQT Exeter fundraisings in the market currently. If we look at our AUM development in 2022, AUM increased by $39 billion, or more than 50%. About half is attributed to BPEA.
BPEA had AUM of about EUR 22 billion as of closing. Step-downs of EUR 9 billion refer primarily to the activation of EQT X and Infrastructure VI. EQT IX saw step-downs of about EUR 2 billion, and in Infrastructure V, step-downs impact about EUR 5 billion. Infrastructure V has made investments which have not yet closed and has capital earmarked for CapEx rollouts, and this will actually increase the AUM by about EUR 2 billion compared to the year-end numbers in our report. Closed exits in 2022 reduced AUM by almost EUR 6 billion, and the AUM number is also affected by FX. The BPEA funds are USD-denominated, and at the current FX, the BPEA euro equivalent AUM number is about EUR 20 billion.
The EQT Exeter funds are largely USD-denomi nated, and the equity and infrastructure funds also have USD sleeves, which are converted to euro as we report our AUM numbers. Let's next turn to the investment activity. After a busy year in 2021, we saw investment activity drop by 40%, while exit volumes dropped by 60%. Broader market uncertainties resulted in a gap between buyer and seller expectations, and financing markets were clearly constrained, which limited the scope for larger deals in particular. We still did certain thematic investments in 2022, and EQT X is now 10%-15% invested. Infra six announced its first investment in December and is 0%-5% invested. Deal activity remained solid in Asia, as Gustav said, with BPEA eight being 15%-20% invested.
Financing markets remain constrained, the rates are considerably higher compared to a year ago, of course. There are signs of a marginal improvement in the debt markets. We continue to see debt packages of 2 to 3 billion EUR being feasible, and for the right situations, there could be scope to do larger debt financing, including bank funding, we think. With regards to our existing portfolio, financing structures remain robust. Infrastructure, we recently completed certain refinancings which were done at substantially similar terms to what we saw prior to the downturn. We have no material refinancings coming up, although we typically swap floating rates to fixed, which means we have some hedges being renewed. Whilst we expect near-term activity to be muted, it's a dynamic market with some signs of improvement.
We may consider realizing certain infrastructure assets, for example, where demand for inflation and downside-protected assets is strong. We may pursue certain exits in private equity across the world as well. With regards to new investments, we're actively evaluating several thematic opportunities. In private capital, we're evaluating deals in our core sectors, including healthcare and tech. In real estate, in real assets, sorry, we're actively looking at digital infrastructure, energy transition themes, and we think it's possible, based on the investment pace that we currently see in our flagship funds, that investment cycles are close to the three-year averages which we have seen historically. Lastly, real estate activity levels have slowed down significantly, and we're mainly doing smaller transactions at the moment, but see interesting opportunities, as we said.
Before handing over to Kim, let me also mention that lock-ups on about 7 million EQT shares expired in 2022. The shares are held by Exeter employees. The expiry is in line with the agreements set at the time of the combination with Exeter. To the extent any of these or other previously released shares were to be sold, the process would be coordinated by EQT AB. With that, I will hand over to Kim.
Thank you, Olof. Good morning, everyone. Let's start by reviewing our fund valuations over the past year. Fund valuations were largely stable for infrastructure and for BPEA, somewhat down for our private equity business outside Asia. Our equity and infrastructure companies grew their top line on average at over 20%, saw EBITDA growth of approximately 18%. Around one quarter of this growth came from add-ons, the underlying organic growth remains solid. Almost all of our companies in the key funds are EBITDA positive. It's a robust portfolio with long-term financing in place and a strong ability to pass on inflation. Our core sectors and focus areas such as healthcare, digital infrastructure, and tech see continued robust interest and transaction multiples. However, a few portfolio companies saw headwinds impacting EBITDA growth in 2022.
We do expect to hold companies on average longer than in the recent past. This could result in somewhat lower IRRs, but gross MOIC expectations are largely unchanged. Next slide, please. Let's next break down the valuation drivers using three of our key funds which are fully invested and in value creation mode as examples. As mentioned, strong operational performance supported valuations in 2022, which is the case in all these examples. In EQT VIII, this was offset by lower reference valuation multiples. Across the key funds, multiples were down by about 10% year-on-year. Not all multiples are down. Some relevant transaction multiples in infrastructure are higher. Infrastructure valuation methodologies include both multiples and discounted cash flow analysis, and valuations are typically resilient.
We have a few listed holdings in our private capital funds, in EQT VIII in particular, which are valued at the last closing share price of the period. On an average basis, our listed holdings traded down in 2022. On a general note, a meaningful portion of our equity and infrastructure funds, especially the earlier vintages, have already been realized. As those exits are cemented in the underlying valuation of the funds, this means only a portion of companies in those funds are actually seeing valuations move. On average, exits in 2022 were made at a 26% premium to the valuations of these assets in our funds, which supports our view that we had cautious valuations in our books coming out of COVID. Next slide, please.
The lower exit activity and flattish valuations translates into lower recognition of carried interest and investment income in 2022. Management fees increased by 22% versus last year or 15% excluding BPA. On a combined like-for-like basis, the growth was around 23%. In the reported numbers, Equity ten was included only for five months, BPA eight only for two and a half months, and Infra six only since mid-December, meaning that we expect the growth to continue into 2023. As a result of the lower carry and the FTE growth in 2021 and 22, our total EBITDA and EBITDA margin is down versus 2021. Excluding carried interest and investment income, however, the margin continues to grow as we have activated our latest generation of funds and we continue to scale our platform globally.
We're very strict on our cost development in this market environment and have taken actions during the year and slowed down hiring, which I will revert to. Next slide, please. The closing of BPEA took place in mid-October, meaning our financials include two and a half months of contribution in 22. As previously communicated, the business model and financial profile of BPEA is similar in many ways to our own. The transaction is accretive as of closing, even though we do not expect any material cost synergies. Looking at our combined financials, i.e., if closing had occurred on first of January, then we would have had combined management fees of EUR 1.6 billion and an EBITDA excluding carried interest of EUR 826 million, which is equivalent to an EBITDA margin excluding carried interest and investment income of 51%.
Including carry, the EBITDA margin would have been 57%. BPEA 8 started generating management fees in September 2021, and the final close at Hardcap occurred in September 2022. Commitments raised during 2022 generated slightly above EUR 10 million of catch-up fees prior to closing of the combination. The increase in management fees year-over-year for BPEA's full year number is largely driven by the full year effect from BPEA 8. As you may have noticed in the report, our effective fee margin increased compared to H-one and was 1.48%. This was driven by BPEA's effective management fee rate, which in general is higher than our other funds. Fund seven entered carry mode in 2022, driven by a combination of exits and rebounding valuations, driving the fund from 1.8x to 2.0x MOIC in Q4.
BPEA VI also contributed to the full year number. Next slide, please. Around two thirds of our cost base consists of personnel costs. Around half of the FTE increase in 2022 came from business combinations, including BPEA, LSP, Bear Loggy and Redwood. The other half is from organic growth in anticipation of our next generation of funds in strategic growth areas such as capital raising and private wealth and in our future proofing capabilities. As mentioned, during the year, we have slowed down the hiring pace significantly. We're focused on efficiencies and scaling the EQT platform. Areas where we may consider further hiring include private wealth and North America and APAC. Total cost per average FTE in 2022 is somewhat lower than in 2021. Variable compensation levels are lower for the year. The variable compensation going forward is depending on how the performance develops.
With growth in headcount in more expensive regions and functions, the average cost could increase from levels in last year, everything else equal. To summarize our financial year in 2022, our total profitability in 2022 is impacted by lower carried interest and investment income. Revenue growth, excluding carry, remains high and profitability is increasing. Looking into 2023, we expect this to continue following recent fundraisings and a very cautious approach to cost growth. In an environment with significant uncertainty, we have a solid cash position and we are receiving our contractually recurring management fees in January and July. In addition, if we were to need it, we have an undrawn revolver of EUR 1.5 billion.
Carry expectations follow the same pattern as mentioned before, i.e., in the near term, carry is likely to be delayed, given market developments, but our carry expectations over the longer term remain. With that, I hand back to Chris for a wrap-up.
Thank you, Kim. In summary, the market environment in 2022, but during that time, we really strengthened our global platform. Our industry is seeing long-term growth, there will be a rebound in activity levels. We saw some really bright spots here during early 2023. Overall, we're in a good place. Our deal flow remains strong. We had an active fundraising year in 2022, we have a significant amount of dry powder to deploy in this market. The majority of our fundraising in 2023 is in infrastructure, where demand is robust, we are confident in our targets. With BPEA, we've created a scaled global platform, I'm quite confident that we're in a solid position to navigate this market and use it to further strengthen our firm and deliver for our clients.
With that, we'll open up for questions. Thank you.
Thank you. To ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. Once again, star one and one on your telephone if you would like to ask a question. We will now go to your first question. One moment, please. Your first question comes from the line of Hubert Lam from Bank of America. Please go ahead. Your line is open.
Hi, good morning. Thank you for the presentation. I've got three questions. Firstly, can you give us your outlook for FTE growth? I know you're saying you have more selective hiring now. How much should we expect in terms of net hirings for this year? That's the first question. Second question is on guidance for fundraising for BPA and Exeter. For BPA, you mentioned the launch of the mid-market growth strategy. How big should we expect that fund to be, and do we expect it to close this year? Also for Exeter, you have a number of fundraisers going on as seen in slide 18. Just wondering how much should we expect from these funds this year in terms of fundraising?
The last question is on manager fees. Were there any late manager fees in the second half manager fee number? Should we expect late manager fees to have an impact in manager fees for this year? Thank you.
Thank you for the sharp questions. Kim, will you take those and possibly with Gustav?
Yes. I'll take number one and three at least. On the FTE growth, you will see that I mean, we're not giving exact guidance on the headcount growth. You will see that the quarterly increase in headcount has continued to be smaller and smaller, and that probably gives you a pretty good idea of what it will look like based on what the market looks like right now. We are an agile firm, and should things change dramatically during the course of 2023, we will adjust accordingly, be that up or down.
I hope that quarterly increase and the trend in that increase gives you a pretty good idea of how FTE growth will develop. In terms of late fees during the second half, there were no significant late fees in our numbers here in.
In 2022 second half. Next year we will expect some late fees, but given, for example Infra VI was activated here on the last year's side, but how much that will be, we will have to come back to.
On the fundraising for BPA and Exeter. For BPA, we don't have the sizing on the page that you saw because we don't include that for funds that are below $1 billion. So I think that's an indication of the size that it will not be above $1 billion. We have raised some capital for that at the end of this year and expect to continue that throughout 2023 and wrap it up before year-end. On the Exeter side, as we said, the Value Fund VI is we're wrapping that up as in the first quarter here.
We have two other funds with the Core Plus fund in Europe which with the target of EUR 2.5 billion and the multifamily fund in the U.S. with a target of EUR 1.5 billion. We expect to fundraise those throughout 2023. In addition to that we'll probably have one or two additional funds being started during the year.
Great. Thank you very much.
Thank you.
Thank you. We will now go to our next question. One moment, please. Your next question comes from the line of Arnaud Giblat from BNP Paribas. Please go ahead. Your line is open.
Good morning. I've got three questions, please. Firstly on deployment. In the context of a challenging market for deployment, I mean, we talk about wide bid-ask spreads, challenging financing markets which have affected frequent data with a substantial slowdown that hasn't affected you as much. Could you perhaps talk about how you've been able to source assets where others have had more difficulty? In the context of a more robust pipeline that you talked about, could you indicate where the future opportunities may lie? My second question is on FTE growth. Clearly it sounds like you've done most of the hiring.
Are you today sized to be able to do PE, all your strategies and core strategies on a global basis? Is your current FT base sufficient for that, or is it just a case where you're slowing down and building it out into the future? My final question is, thank you for giving us an indication of where EBITDA growth has been. I think you said 18%. What's the outlook on that EBITDA growth for portfolio companies for the next years? Thank you.
Thank you, Arno. On the first one, and then Kim will take the others. Now on the deployment, of course it's always difficult to make an exact prognosis. If you look over the cycle over the last, you know, 30 years or so when we've been operating, the typical cycle, the average cycle is actually three years. When times are good, it's a little bit slower. Sorry, just a little bit faster, and when times are weaker, it's a little bit slower. Given our deal flow, how much we've invested in, you know, in the major new funds, I would expect that we're gonna back on that average three year deployment cycle.
Which actually is a positive because, you know, in the recent cycles that were closer to two years, first of all, it's quite challenging for us because you're, you know, you finish one fundraise and you go immediately to the next one. It's even more challenging for our clients because they have, you know, a setup which is based on more of a three or a four year cycle, which is closer to the average of the industry. How we're generating deal flow. Well, we're in this quite unique position where, you know, we invest behind long-term secular trends in different sectors and subsectors around the world with global sector teams and competence. We're doing that in every single country we're investing in with local teams.
I was in Japan last week, for example, and we had a meeting with a company that we're looking to invest in, and of course, we're doing that with the local teams. When I'm there, I need a translator, but of course, when the local teams are there, it's totally connected, you know, in local culture, local language. It's the combination of those two things that give EQT that uniqueness that we pretty much always have strong deal flow regardless of cycle. Kim?
Yes, thanks. On and on FD growth, I'd say that we are in a very good spot given the investments into personnel that we have done over the last couple of years.
We are well, well sized to capture the opportunities that the large funds we have available can be deployed. There are a few areas where we will continue to invest, and those are the ones that I mentioned, i.e., private wealth is one area where we will have where we will increase headcount. We will also selectively increase headcount in Asia-Pacific and in the U.S., which are areas where we are still not as strong as we would as we would like to be. When it comes to the sort of more central part of the organization, there will be very limited, if any, growth in the headcount going forward.
EBITDA outlook for the companies, portfolio companies. Growth outlook for those, we don't really go into that level of detail. We've said what the EBITDA is has been historically, and you have seen the valuation effect of that to the extent it would be dramatically different from these numbers. I guess it would have had a higher impact on our valuation, so that could give you a hint of it.
Okay, thank you.
Thank you.
Thank you. Thank you. We will now go to your next question. One moment please. Your next question comes from the line of Armin Karch from Comenergy. Please go ahead. Your line is open.
Good morning. Thanks for the presentation. I'm taking the questions. First one would be on the semi-liquid fund that you mentioned or instruments you mentioned that you expect to launch in 2023. Could you give us any more color on that and how it will be distributed? Another question is on the EBITDA margin. Excluding the carry, you say that expanded again. How much more do you see that being able to expand from here or is there any cap on how much operating leverage you can actually achieve in the business over time? Lastly, on the Q4, we saw an increase in exit activity.
Was that seasonal equipment or is that more to do with, as you mentioned, the bid-ask spread has now maybe narrowed a little bit with markets settling a little bit?
Thank you. Gustav, will you take the first one, Kim the second, and I'll take the third.
Sure. On the semi-liquid side, where we are currently is that we are, as I said, planning for launches this year. We're starting to have the teams in place, and also the structures. What we see is that it will probably be a mix of both asset-specific funds as well as a more, let's say, broad private markets structure. I think the main distribution here is through the distribution banks. Of course, also, through the existing clients, especially on the family office and private wealth side that we have already today.
In terms of FRE margin, as you called it, outlook, I'd say that in the short term, you will see an effect from the large fundraisings that we have done or are in the process of doing, combined with the cost conscious and cost-efficient way of operating that we have. That's in the shorter term. Our long-term margin target is, as you know, 55%-65%, including carried interest, and we haven't changed that. We do see potential to work further on our margin over time, but I'm not gonna be able to give you a specific number on that. Chris, you on exits.
Yep. I mean, we're...
You know given the fact that we're investing in these thematic sectors that are pretty robust over the cycle, If you look throughout the year, actually, we were able to do different types of exits, whether it was dividend recaps, sales to strategics, sales of stakes to, you know, other financial firms, and, yeah, and other, you know, private equity exits. Kind of the whole spectrum except for IPO as well. The IPO market was closed last year. Q4, yes, probably some positive effect of people seeing that, you know, the macro conditions in the world are possibly improving now, or at least getting less worse.
You know, the IMF today came out and, you know, with the prognosis that Europe won't go into a recession this year. The U.S. is not expected to go into recession. Asia has been pretty robust, and China is opening up again. That has, of course, helped the capital markets, as you all know, which means that I didn't comment on this earlier, but it also means that the financial markets on the debt side are starting to open up a little bit. And, you know, there was an IPO launched in Germany last year. Sorry, yesterday. And, and there are some more, you know, IPOs that people are talking about coming into the pipeline. We'll see how the markets develop. But probably there's...
With that little, you know, we said in the presentation that we're seeing some bright spots and some of those are some of the bright spots that we hope, of course, will lead to a more sunny picture. We remain paranoid and quite thoughtful about how we manage our portfolio.
Thank you. If I just may, one quick follow-up. On the carry for H2, am I thinking right about it that it's basically just BPEA that's contributing and none of the sort of EQT funds from before?
I can comment on that, Chris. There's very little carry contribution in H2 from funds outside, BPEA. You're right in that. There has been a few transactions here later on in the year, such as GETEC and Saur, which have not closed yet and, as you know, we are booking carry, prime, in most cases only as and when the transactions close. There's some, how should I say, accruals there, but that's the status right now.
Thank you.
Thank you.
Thank you. We'll now go to our next question. Your next question comes from the line of Michael Werner from UBS. Please go ahead. Your line is open.
Thank you very much, guys, for the presentation. I have two questions, one on fundraising. Just, you know, focusing a bit on Infra VI, I think you started the fundraising process at the end of August. You raised about $2.8 billion through year-end. How should we think about that run rate, which is a little less than $1 billion per month, especially for a fund that you're targeting for $20 billion? Is this one where, you know, because you're out there with EQT ten at the same time, that's having an impact? Do you expect a bit of an acceleration as we go through 2023 in terms of the pace of fundraising there?
Second, just to follow up on those semi-liquid structures, at BPEA, how should we think about the pricing, the management fees on those relative to other AUMs managed by BPEA? Ultimately, is there a target in terms of size of those total semi-liquid structures for the year? Thank you.
Thank you. Very good questions. I'll take the first one and then Gustav the second. When it comes to the fundraising cycle, it's not, it's not like a public company situation where it's maybe more even, you know, month by month. You know, these are... We have about 1,000 institutional clients around the world, and investors come into the fund at different times when they're done with their kind of internal process. That's typically why you see, you know, you see these smaller rolling closes until we get to the formal first close, which is quite significant, and that was around $15 billion or so for, if I remember right, for EQT X.
Thereafter, other investors start to come online, and other channels like private wealth, et cetera, also start to come online. There's no straight line or seasonality, and it's really depending on, you know, this whole process and lots of internal decisions at the investors. I would say that the, you know, the Infra VI fundraising is so far, having that normal pattern. Both EQT X and Infra VI in this market, which is more complicated, will take, you know, more time than it would when markets are really hot. That connects to those comments we had on investor liquidity and other factors.
Great.
Mm-hmm. Gustav.
Yeah. On the semi-liquid side, I would say on the management fee level, it's fairly similar to the levels that we have on the group level. Maybe a little bit higher, but in general, about the same. Just to clarify, it's not specifically to BPEA, but the semi-liquids are if that was the understanding, they are general across EQT. I think on the sizing question, we will not go out with a specific target. I think you should see this as a long-term potential. We will launch it during this year.
It will not have a material impact on the size of EQT in the beginning. Rather over time, we see this as a good way to let's say, target the private wealth market.
Thank you.
Yep. Thank you.
Thank you. We'll now go to our next question. One moment, please. The next question comes from the line of Oliver Carruthers from Goldman Sachs. Please go ahead. Your line is open.
Morning. Thanks for the presentation. Two questions from me. If we jump to slide 20 on your investment and exit activity, but given that you highlight it, you know, you were a net seller of assets at the group level into the strong markets of 2021. You were obviously at parity last year through 2022. If we, if we join the dots and everything you're saying, you know, EUR 50 billion of dry powder, robust deal flow, and a fairly young existing portfolio, should we expect you to be a net buyer at the group level across all your funds through this year? That's the first question.
The second question on infrastructure, given both the need for private capital to support the energy transition, as in Christian, but also the general positive shift in attitudes towards ESG, you know, what are you seeing in terms of interest for your latest infra funds, you know, from new clients at EQT, either in, you know, Infra VI or in Active Core? I think some of the larger sovereign wealth funds who've historically shied away from committing capital to private equity funds are now more open to, say, you know, renewable infrastructure as an example. Any color there would be helpful too. Thank you.
Thank you very much. Interesting question. You know, we try not to, let's say, guide too specifically, in exactly how, you know, deployment will be and exits will be in, you know, in a given year. You know, depending on how the markets develop, and given the amount of dry powder that we have, you know, across the world, and you're exactly right, having made a very large number of exits across EQT, Exeter and BPEA, you know, an overweight towards deployment would be likely. I think that's. You have a logical conclusion, although we're not gonna comment on specifics.
When it comes to infrastructure, yes, you know, as you saw from the video, you know, it is a very, very interesting space that infrastructure is investing in, or spaces, you know, across energy transition, transportation transition, social infra, digital infra, and a lot of capital that wants to move into those, you know, into that asset class, also from new investors. Yes, that goes for Active Core and Infra VI. Also, when times are more uncertain, infrastructure is a really nice asset class because you have typically stable inflation-protected assets, where we apply our, you know, all of our toolbox to grow and develop those assets and create more value and drive that excess return.
As you know, we've been delivering something like 19% net returns in that strategy since inception, and we're one of the clear global leaders. Also there thematically, you're right. It still will take some time to, you know, to finalize the funds, but we're having, you know, nice, dialogues with new investors and very solid dialogues with existing. Any follow-ups?
No, that's very clear. Thank you.
Thanks a lot.
Thank you. We will now go to our next question. One moment, please. Your next question comes from the line of Magnus Andersson from ABGSC. Please go ahead. Your line is open.
Yes. Thank you and good morning, guys. Starting on fundraising, I was just wondering whether you could comment about what markets are the toughest, the U.S. or the European one, and also if you could say something about how different the Asian market is. Related to that, if you could remind us about your geographic split of your fundraising, for example, for EQT X and Infra VI. That's the first one on fundraising. Secondly, just to follow up on Armin's question there was on carry. When I compare your IFRS accounting with your adjusted numbers, we can see that the adjusted carry was EUR 45 million while the IFRS carry was EUR 6 million. Is it fair to assume that the difference there is made up of BPEA?
Finally, perhaps I note that just the net profit was much lower than the general expectations. It looks like you had a quite high tax rate this quarter. If you could comment whether that was a one-off or if we should expect a higher tax rate going forward. Thanks.
I'll start and then I guess, Gustav and Kim, you guys can take over, and Olof also. You know, on the, on the fundraising market, I would say that the most mature market in the world, that's, the U.S. market. That means that, you know, a lot of investors have been more highly allocated, some fully allocated to private equity. You probably heard of the denominator effect, and those investors have felt the denominator effect where, you know, as market valuations fall in the public markets and private market valuations have been a bit more robust, those allocations are impacted.
That's probably the market where there's, you know, kind of the more, yeah, complicated discussions in the market between the different market participants. But it is of course the largest source of capital in the world and a lot of those funds are continuing to grow and will continue to be, you know, very large investors in private equity and private markets for the long term. If you look at, you know, Canada continue to be a very strong market, and the Middle East as well, and Asia. In those markets, typically, a lot of the institutional investors are still growing their AUMs and they're growing their allocations to private equity and private markets in general, including infrastructure, real estate, et cetera.
That's basically how the market is playing out. Now historically you might remember that, you know, we have a relatively lower share of our capital from the U.S. and a relatively larger share from other regions in the world, and I didn't comment on Europe. Europe is somewhere in the middle, you know, pretty okay. From that point of view, you know, we're having, you know, positive dialogues around the world, and I'll let my colleagues comment on some of the specifics.
Thanks. On carry, just a reminder that the adjusted adjustment to carry is in order to make the carry that we have acquired comparable in accounting treatment to the carry we have from before. It is from acquired carry, in this case BPA, you're right. In terms of the tax rate, I mean, the general trend for tax is always upwards. There hasn't been any dramatic changes over the year to that. Our tax rate on management fee earnings was in the region of 16, 15% to 16%. Maybe for the year, maybe slightly higher than before, but not dramatically so.
Okay. Thank you. If I just may follow up, if you could give us a feeling for the geographic split in, for example, EQT X and infra on the fundraising? Secondly, just on the tax. There's no one-off? We should expect, I mean 50% and 60% on is reasonable to assume going forward?
There's no one-offs in, involved there, no.
Okay, thanks.
Thank you.
on the split.
Oh, sorry, I was on mute, yeah. Go ahead, Kim.
No. We don't give exact splits by funds, but it's about 1/3 from Europe, 1/3 from Americas, and maybe 25% from APAC.
Yep, and the rest from the Middle East.
Yeah.
You could also say that, you know, If you look at the global market for capital sources, the U.S. market is a little bit over 50%. That shows you the skew that we have. Thanks.
Okay. Thank you.
Thank you. We will now go to our next question. One moment, please. Your next question comes to the line of Devin McDermott from Morgan Stanley. Please go ahead, your line is open.
Hi there. Thanks. Good morning, guys, and thanks for all the slides and the Q&A. Just a quick follow-up on the wealth opportunity. I mean, agree, we've seen that that's quite significant long-term. In terms of how you would manage that product, obviously BREIT is seeing some pressure. How are you thinking about the approach in terms of liquidity terms, where you might sell it? I think, you know, Asia has been more volatile for BREIT, for example. Is it really down to investor education that's gonna be the critical thing in ensuring that there's no misstep? I guess also, you know, what concerns would you have around any regulatory backlash given, you know, what's going on with BREIT at the moment? Thank you.
Yeah. I can take that, Chris.
Go ahead, Gustav.
I think first off, we don't have any products today. Of course. The benefit that we have is that we can start off on a little bit of a clean slate. I think in general, the semi-liquid markets will de-develop as a result of what we're seeing in the market right now. That it will also be clearer for all participants what type of product this is, i.e. that it is a semi-liquid product and not a liquid product.
I think from that perspective, we see this as a pretty good time to actually start off because of course it will mean that we will not have a legacy portfolio and we don't have a legacy impact of it. I think from a general point of view in terms of where we see demand, I think it goes. We see this as a global product. Of course that our strong foothold from a branding perspective is of course initially in Europe, and over time, it will also be stronger in Asia and North America.
Great. Very helpful. Thank you.
Thank you.
Thank you. Thank you. We will now take our next question. One moment please. One moment. Your next question comes from Angeliki Bairactari from J.P. Morgan. Please go ahead, your line is open.
Good morning. Thanks a lot for taking my questions. Just a couple of follow-ups please on my side. Your outlook for fundraising, re-reads quite bearish in your Q4 report, but you have mentioned today that you are seeing some bright spots, in the beginning of 2023 when it comes to sort of deal activity, capital markets, et cetera. I guess, more long-term, from the conversations that you're having with your LPs, do you see that they still expect overall their allocations to the alternative asset class, the private markets, to continue increasing?
Do you sense that some LPs are actually now taking some or changing their thoughts given the interest rate environment appears to be somewhat more persistent and we effectively have a different backdrop? That's my first question. Second question on EQT X and EQT Infrastructure VI. What % of the existing capital commitments are from returning investors from previous vintages? If you can disclose that, please. Third question, the amount of leverage that you use now in deals today, given a more difficult financing market, at least until the end of 2022, has that changed at all versus history? I think historically you have indicated around 50% equity, 50% debt. Is that different today? Thank you.
Actually, I'll take one and three, and Olaf, you can take the middle 1.
Sure.
The fundraising outlook, that was a strong word there, bearish. I'd say that what we mean is that, you know, we believe that the fundraisings will take somewhat longer time to complete than in a very hot market. Most of that is due to, of course, volatile financial markets on the one hand, less liquidity with investors on the other hand. But we don't see any tendencies to the bigger question you asked, which is, are allocations shifting away from private markets? No, we don't see that at all. Actually, we think it's the opposite. We think that the long-term trend is truly intact. A lot of investors around the world, and also, of course, private wealth, is very underallocated to the asset class.
I think this period of volatility has shown that, you know, private markets actually over-delivers in returns as it has done over all cycles, and people wanna have access to that. I think also the volatility in the public markets probably will continue to drive capital to the private markets and lead to many companies to stay private for longer. We think the kinda ecosystem around private markets is very robust. This is more relating to the market conditions, and the time that it takes to raise funds than anything else. On the latter question on leverage. Leverage is probably not that different. You know, we're a growth and transformationally oriented investor, we're typically not maximizing leverage.
The, you know, the size of transactions, you know, the size of debt that's available, is still lower than in the, in the boom times. In this market, you can raise $2 billion, $3 billion, maybe $3.5 billion of debt, which means we can do deals between, you know, a few hundred million and possibly $5 billion. The market is starting to be a little bit more open for kind of our sweet spot range. Olaf?
On the re-up rates for the flagship funds, I'm not gonna give a specific number of that, but what you see typically in the first close is that you have a substantial portion of re-ups from existing clients, and that has been the case in EQT X. As we mentioned in the presentation, we expect that to be the case also for EQT Infrastructure VI. Say the last quarter of the fundraising comprises different sources of capital, as we were alluding to, including private wealth, and to some extent, new clients. In this environment, as we've said before, we probably have a slightly lower conversion of new clients than we had had in an environment where there is more liquidity on the client side.
Thank you very much.
Thank you, Angeliki.
Thanks.
Thank you. We'll now go to our next question. One moment, please. Your next question comes from the line of Nicholas Herman from Citigroup. Please go ahead. Your line is open.
Yes, good morning. Thank you for the presentation. I'm gonna be a bit cheeky and ask for four, if that's okay. So one on fundraising, one on Asia, and then two just quick, hopefully more quick technical questions. On, on fundraising. I guess given the challenging fundraising outlook, are you confident in hitting the hard cap for EQT X? Also more broadly for the industry? LP congestion was a theme we talked about, I guess early last year. I hear you on rising allocations, but I guess, do you see a risk that LP congestion remains a factor for longer? Maybe impact 2024 allocations, given 2023 allocations have been impacted by market uncertainty, denominator effects, and so on. That's the first.
On Asia, when we are seeing signs of China reopening, do you see this impacting you from an investments perspective in the near term? Also just curious if there are any triggers your Asia-based LPs are looking for and what they're telling you. Just the last two, one on the fee rates and one on costs. I heard you before say that there were no material catch-up fees in the second half, but it looks to me like the realized fee margin an effective fee rate of 148. How do I reconcile those two given there were no material catch-up fees? The last one, please.
I guess a lower dollar is unhelpful for you overall but from a cost perspective, after BPEA, could you just remind us, please, what % of your cost base is dollar-denominated? I guess that might be helpful a weaker dollar be helpful keeping your costs lower. Thank you.
Mm-hmm. I'll start on the first two, and then Kim, you can take the rest.
Yep.
Maybe Olaf wants to comment also on the first one. Your cheeky question is good. You know, we typically don't talk about whether we're gonna reach the hard cap or not. The hard cap is something that we set in negotiations with our clients. We do talk about our targets, and we're confident that we're gonna meet our targets. I'm not sending any signals there at all, just stating fact. When it comes to, you know, the trends with investors in general, you know, I don't think we can add much more than we have said. You know, we remain, you know, one of the best performers in the industry. We have very thematic investment strategies.
We're raising capital in areas which are long-term, you know, quite resilient, and we believe will deliver strong returns in the future as well. On the Asia question, I don't think China's reopening necessarily changes any how we invest or necessarily where we invest. For our Asian business and actually for the global economy, the fact that China is gonna be coming back online, I think will help, you know, both in terms of demand, but also in terms of supply with supply chains opening up and becoming, let's say, you know, flow better.
It may be that some more opportunities will arise in our Asian business, which as you've seen, is performing well and where deal flow is strong and where today 15%-20% invested. We're gonna remain quite diversified across that region and across the world in the way we invest. Olof, do you have anything to add on fundraising? If not, we can go to the other questions.
No, I think the other question you had was whether congestion in fundraising, as you put it, would continue. I think I'd go back to what Christian talked about in terms of liquidity for the clients, you know, when we have this period of low realizations. If that picks up, you know, slowly you will see this improving as well.
Thanks.
On the more technical questions on fee rates, to start with, there's couple of elements impacting that which are not one of I'd say. One is BPEA that has a higher fee rate than the legacy EQT has. That is part of the uptick. The second part is that there's a slightly larger portion of Exeter there than historically, and they also have a somewhat higher fee rate sort of than average in the portfolio. Those are the reasons.
In terms of costs and I'd rather look at it actually on both revenues and costs and going forward, if you look at it on a sort of pro forma basis for the combined new EQT, we are very balanced when it comes to dollar exposure because we also have significant revenues in dollars. Most of the Exeter funds, the BPEA funds and the large flagship equity and infrastructure funds also have dollar sleeves in there. It's about 40% to 50% dollars in both the revenue and costs.
That's helpful. Thank you very much.
Thank you.
Thank you.
Conscious of time, I think we should start to wrap up shortly. Let's take a few last questions. Let's try to keep it short.
Yep.
Thank you. I will now go to the next question. One moment, please. Your next question comes from the line of Jacob Michaelsen from Nordea. Please go ahead. Your line is open.
Thank you. Most of my questions have been answered, just one final on the carry recognition. I seem to recall, Kim, that you said in the Q3, I think it was, or was it Q2 conference call that there was still some carry left to be booked from the first half year that wasn't recognized back then. Given the relatively low carry in the second half, I'm just a bit surprised that it's that there is nothing left there. Also, could you maybe just as Armin said, there was quite a few exits towards the end of the quarter, and I think especially one of them was an internal transaction to EQT Future. Why wasn't that one booked now? Just so I understand your methodology.
Lastly, on the methodology, looking at the MOIC development in your funds, in private capital, they were slightly down or flat while public markets were up. Could you just explain that sort of lack of correlation, please?
Yeah. On carry recognition, I can't recall exactly whether I've said that. It doesn't ring a bell. There was one or so transaction as of H1 which we had not closed. Obviously, carry recognition is not only a function of closing deals, but also of the valuation performance in that fund over the rest of the period. So it's not a one-to-one exercise. When it comes to the methodology, it's just prudent to have a closing as the date when we book carry, as then you don't need to form a view on whether there is risk to closing or not. Typically, there wouldn't be. We would typically not have that.
That's the way we operate. That's on carry. What was the other question on?
The last one was just on the lack of correlation between public markets and your MOICs in private capital in Q4.
Well, I think we went through the valuation methodologies in some detail here before. It's not one factor impacting a big portfolio of companies. There's both the public market references, there's the public investments we have, and then there's the performance of the underlying companies and other aspects. I can't give you more of an answer than that really.
Okay. Fair enough. Thank you.
Thank you. We have one further question in the queue. One moment, please. The question comes from the line of Mattias Lundberg from SEB. Please go ahead. Your line is open.
Yes. Thank you. Good morning. Jan, just finalizing with some short follow-ups. On the items affecting comparability and also the relatively large delta in amortization and related to intangibles in the fourth quarter here, how much of that should we see as really temporary, or how much will remain going forward? Thanks.
Well, there's about $80 million of one of items in there, primarily relating to the acquisition-related expenses for BPEA. The rest of the adjustments are more of accounting technical nature. Happy to go through those in detail with you offline.
Okay. Thank you.
Thank you. There are no further questions.
Okay. Thank you everyone for the engagement. Great questions and a good discussion. I wish you a good day.
Thanks.
Bye-bye.
Thank you.
Thanks.
Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.