Ladies and gentlemen, welcome to the Partners Group Interim Results Announcement Conference Call and Live Webcast. I am Sandra, the Chorus Call operator. I would like to remind you that all participants will be in listen only mode and the conference is being recorded. The presentation will be followed by a Q and A session. Webcast viewers may submit their questions or comments in writing via the relative field.
For publication or broadcast. At this time, it's my pleasure to hand over to Partners Group Management. Please go ahead.
Thank you. Welcome to Partners Group's Interim Results 2021 Call. I hope you're all safe and well. My name is Dave Layton. I'm the CEO of Partners Group currently joining from the United States.
Also presenting on today's call will be my partner And the Co Head of our Global Client Solutions team, Sarah Brewer, who's joining from the UK my partner and our CFO, Hans Plos, who's joining from Switzerland And Philip Sauer, a senior member of our business development team in Switzerland, he'll be on and available for the Q and A portion of the call. I'd like to start the presentation on Slide 2 and this is really just a quick summary of some of the key messages from the first half of this year. We are proud of the strength that our global investment platform has continued to demonstrate this year. In the first half of the year, we invested $13,000,000,000 On behalf of clients, this is a challenging market for many who are aware, but in some ways it's played to our strengths. Our thematic investment approach is helping us to get out ahead of opportunities with foresight.
Despite a strong level of investment activity, we continue to add to our multi $1,000,000,000 investment pipeline which gives us reasonable visibility into investment opportunities that may be actionable for clients in future periods. We took advantage of a supportive exit environment to divest a number of mature companies and real assets on behalf of clients, including some exits originally scheduled for 2020 but postponed due to the pandemic. This resulted in $10,500,000,000 Portfolio realizations during the period, these strong realizations are a testimony to the significant value creation efforts In the second section of the presentation today, we'll zoom in on the client side. We saw strong demand for a broad range of private markets offerings in the first half of this year. Clients across all regions entrusted us with $12,000,000,000 in new commitments bringing total assets under management to $119,000,000,000 as of the 30th June, 2021.
We confidently expect 2021 to be a solid fundraising year and confirm our previously upgraded guidance. In the 3rd and final portion of the formal presentation, we'll report on financials. A robust set of results across the board This led to solid financials for the first half of this year. Performance fees have been particularly strong stemming from exits. At this point in the year, we also have improved visibility on H2.
The 2020 catch up effect that I mentioned a moment ago combined with the strong value creation efforts and robust market is going to help us drive an exceptionally high level of performance fees this year. We're providing specific guidance that we anticipate performance fees to 40% to 45% of total revenues for the full year 2021. We continue to have strong profitability with Stable EBIT margin at 62%. The combination of these and other factors has led to a triple digit percentage increase in Swiss franc profits from Same period last year. And with these introductory comments, let's jump into the first section on investments.
On our last call in July, I already gave quite a bit of commentary on our first half investments and divestments and so I'm not going to spend too much time on this slide, but I would just like to reconfirm The positive outlook that I've previously given on both investment and exit activity for this year. We're confident that we can continue to grow our investment activity while remaining selective, providing attractive relative value for clients that need differentiated investment content in this market. As valuations in the private markets are still near record highs, underwriting discipline and scenario testing is essential right now. Our thematic investment strategy is all about identifying long term structural trends. We focus on companies and assets that benefit from these transformative trends, Target companies that we can develop into market leaders through strong governance and hands on value creation and we're pleased that this investment approach has translated into solid tangible outcomes for clients.
Track records have been further strengthened and solidified By locking in these realizations during this period, much of our demand for new investment offerings comes from existing clients and these results hopefully add to the already strong foundation that we have with those investors. H1 2021 has been the strongest 6 month period for realizations in our firm's history. We also have good visibility on exits that were materially progressed or signed in the first half of the year but had elements that needed to be resolved or closing conditions which pushed the recognition in the second half. GlobalLogic is such an example. These high visibility liquidity events are expected to result in at least another $5,000,000,000 in distributions in H2.
Let's now move over to the next slide I can give you an overview for each asset class. Regarding private equity, this is obviously a very established asset class for us, dollars 77,000,000,000 invested, a strong track record in We differentiate ourselves by picking our spots very deliberately and very carefully and running assets with the mindset of an entrepreneur, not of a financier. We're trying to position ourselves to ride tailwinds and to avoid areas of probable disruption. Once we find a good area and a target in that space, it's well positioned to be an industry leader 5 to 10 years from now with the help of active ownership. We're happy to spend months years in advance of a formal sale process to make sure that we're well positioned once that target does come to market.
You'll sometimes hear private equity professionals talking about how they look at public markets with Envy in at least one regard And that's the fact that public investors, once they find a space they like, once they find a good target they like, they hit the buy button and they create that exposure. But in private markets generally speaking there's only one or a very small club of investors that can create a particular exposure for clients per asset And you have to compete, you have to win against some of the most aggressive individuals that you'll ever come across in order to do so. And so how you differentiate yourself is important, It's very relevant. Our thematic approach has been working for us. We're also actively using strategies to buy down purchase price multiples.
Many of our large platforms have been acquirers of tuck in acquisitions. For one of our large European positions for example, we had to pay a very full and fair price to create that exposure for clients with an upfront purchase price of over 12 times EV EBITDA, but since adding that company to the portfolio, our team has helped the company to make dozens of smaller add on acquisitions at a discount to the platform valuation. Today when blending together the upfront purchase price Together with the valuations of the acquired add ons, we've brought our blended purchase price down to closer to 10 times EBITDA post synergies and you'll see that strategy being applied in several places across the portfolio right now. We're also establishing ourselves as a firm that drives transformation through active ownership. Those of you that have visited our Colorado campus or have seen the plans for our new campus in Switzerland Well note that these structures do not have the look and feel of your typical investment firm.
They feel industrial and they're being built as a contrast to Wall Street. A few months ago, I banned the word deal from our corporate vocabulary. As our industry matures, we're the transactional side of the business where many of our peers are still strongly rooted and we're emphasizing governance and culture And strategy, sustainability and operational excellence. In private equity, we've actually merged Our operators with our investment professionals together into 1 combined team with 1 set of objectives and we're driving towards a more transformational And a more industrial approach to private markets investing. And as I look at the spaces where we're active, physical therapy, digital engineering solutions, next generation property management Crop Lifecycle Management Solutions is a few examples.
We like these spaces a lot in this environment and we're driving value enhancement in these assets. Maybe I'll move a little quicker through the next few slides. On the next page regarding private debt, this is an asset class where we built a $38,000,000,000 track record. 2021 is shaping up to be a record year for new institutional loan issuance in the market. Default rates are still very low.
On the direct side, we maintain our overweight in the most senior parts of the capital structure and focus on mid And upper mid market companies with solid business models. We apply an equity style approach to due diligence and we look at companies through our thematic sector lens. On the liquid loan side, we prefer the primary market over secondary. The secondary pricing seems to have increased beyond fundamentals for some companies. Now on the next page regarding real estate, while last year was bumpy at times during the shutdowns, By the end of 2020, we had our collection rent levels back up to the high 90s for our major categories, except for retail which is a small part of the portfolio.
This year performance has continued on that solid trajectory. Industrial and residential performed strongly through the pandemic and overweights for new investment opportunities right now. Amenetized residential and urban logistics are of particular interest. We apply a thematic investment approach but remain a situationally driven investor. Cap rate expansion is a major risk considering rising inflation and Potentially higher rates, in some cases we're directing our teams towards shorter lease durations, offering the opportunity to capture inflation led rental growth in certain relevant markets.
Office for new investment remains deemphasized. We still have some portfolio rebalancing to drive in that regard. Our team is also considering alternative sectors such as life science and hospitality. Now moving to Slide 8 regarding private infrastructure. In infrastructure, we've invested 14,000,000,000 globally.
Renewables have historically been a meaningful part of this portfolio, Particularly where we're developing projects to be sold to core buyers. A lot of the strategies that are relevant in private equity Also have utility and infrastructure and we share a lot of best practices around platform building and operational value creation measures. Investment themes continue around sustainability and connectivity, but new themes are emerging as well, water, New mobility, critical supply chain, carbon sequestration, new living, next gen infrastructure. Disruption risk in some of these forms of infrastructure is real and needs to be managed. Unlike in the past, the longevity of infrastructure assets is no longer a slam dunk.
A clear long term thematic vision is needed to avoid disruption of high CapEx intensive investments. And we have the trust of our clients that given our track record of doing this on the private equity side, We'll be able to also see around the corner in infrastructure. Now moving to Slide 9 to talk about progress made on our ESG initiatives in H1. As many of you know, we've integrated ESG into our active ownership approach and we have a team implementing ESG initiatives at our portfolio companies. As an example, International Schools Partnership, a holding company that owns over 50 schools all over the world and 55,000 students and staff, Our team has been working with management to ramp up the company's environmental efforts.
We take a very pragmatic approach. It starts with helping the company to map out their footprint, To understand and highlight potential areas of improvement, we then encourage and support as active owners putting together an action plan, which in this case included installing some of the company's first solar equipment at their schools in Spain. The company is also taking students on this journey with them and has formalized their approach to integrating environmental and sustainability topics within their curriculum. In addition to projects run at portfolio companies, We're orienting ourselves towards ESG relevant investment themes where we can make a difference. We're also genuinely working to improve data and transparency And ownership of ESG relevant topics across the portfolio.
So far this year we've had 2 more portfolio companies publish their first ever CSR reports, Increasing ESG transparency to their stakeholders. By communicating proactively on ESG, companies can better showcase the value that they create for employees, communities and broader society. We're increasingly realizing that it's not just about our ESG team driving projects and creating wins, But we're using our governance model to create ownership within the company and to push for increasingly detailed and measurable outcomes. Now moving to the last Slide on Page 10, we've continued to see good growth as a firm. We have 4 solid asset classes And clients that are increasingly expanding their scope of services with us from 1 asset class to multiple asset classes and from traditional investment funds The wait and the stewardship associated with these new assets is not lost on us.
We take our responsibility to our stakeholders very seriously. We also want to note that our people have really stepped up this year. The growth of our business would not have been possible without the hard work and dedication of our colleagues and we're extremely grateful for their efforts. Now looking ahead, we're confident in the strength of our platform and the potential that we have for continued future growth. And with that, I'll pass over to Sarah to talk about the client side of the business.
Thanks so much, Dave. It's a real pleasure to be on this call with you all today. So I'll give you some more insights into our client activities and on our full year 2021 fundraising outlook. So please let us move to Slide 12. So our client base is broadly diversified across regions and types of clients, And we currently have around 900 institutional clients around the world.
European clients continue to contribute the largest share of AUM. It's about 2 thirds currently, and it really remains an important area for the growth of our firm with significant contributions coming from Germany, North America currently represents 18% of our AUM and we see strong growth potential here, notably gaining significant traction with consultants. Equally, there are sophisticated large institutional clients in Asia where mandates are increasingly interesting ways to partner up. The chart that you can see on the right hand side reminds you that around 80 The percentage of our AUM actually stems from institutional investors and around 20% was contributed from distribution partners. They provide access to our products to private individuals and smaller institutional investors.
And over the last few years, we've seen Strong demand coming from this particular area. Turning over to Slide 13, you can also see that our AUM is well diversified across Programs and Structures. So we currently manage around 300 diverse private market portfolios across all private market asset classes. And as I mentioned on our previous call, Partners Group is really strong at managing complex private markets Folios, and we've seen continued growth in this area. Our platform allows us to provide bespoke solutions starting at $100,000,000 And at the same time, we manage large evergreen programs.
And as of the end of June, our 2 largest investment programs our investment programs accounting for 14% of our AUM. The largest program combines private equity and private debt investments, And the 2nd largest is a multi asset class program. The pie chart on the right hand side shows that Bespoke Client Solutions account account for around 65% of our AUM. We can provide investors with tailored access to private markets With the 20 year track record that we have in structuring and managing these customized mandates and evergreen programs, we really believe that this has been and will Continue to be a true differentiator for us. Moving on to the next slide, you can see the pie chart on the left illustrates our client diversification.
So our largest client actually accounts for 3% of AUM and our top 20 clients make up about 23% of our AUM. And these are figures that have actually remained very stable over the past few years. Interestingly, as shown on the right hand side, we find that clients now are finding it attractive to broaden their private market exposure by investing in more than one asset class with Partners Group. And we believe that this is a continued trend amongst investors who really predominantly seek a one stop solution for private markets. And whether this be across asset classes to build a multi asset portfolio or simply the fact that they can get global private markets exposure through one manager.
And in 2,008, 40% of our clients invested in more than one asset class. By now, about 57% of our client base is invested not only in 1, but in 2, 3 or 4 asset classes. For instance, many of the clients I've worked with started with us, say, in private equity and then over time have realized the relative value, the governance, the Efficiency benefits of combining more than 1 private markets asset class with Partners Group. The numbers become even more noteworthy if you factor in that the number of clients has tripled and our AUM has actually 6 folded in terms of volume over this period. So let me conclude my 2021 to be a solid fundraising year.
This is based on robust client demand for programs and mandates in the first half and facilitated by the solid increase in our investment capacity. So we confirm our guidance of $19,000,000,000 to $22,000,000,000 Fundraising is expected to be balanced across all program types from customized mandates and the firm's extensive range of Evergreen Fund Solutions to more traditional closed ended programs. Tail downs and resemptions are estimated to negatively affect AUM by around $9,500,000,000 of which $7,500,000,000 are estimated to be tail downs. Our expected base case of redemptions from Evergreens amounts to around $2,000,000,000 Growing numbers of clients really appreciate the flexibility of choice that we present across nontraditional private markets offerings. And we really believe that our ability to tailor access to private markets, creating and managing bespoke programs that match client specific needs really remains unparalleled in the industry.
And as such, we believe that these structures will continue to drive demand for Partners Group in the years to come. Based on our strong track record of investment performance as well as client service excellence, we believe that we're well positioned to be It continues to be a partner of choice for Global Investors. So I'd now like to hand over to Hans for the financials.
Thank you, Sarah. We're pleased to report strong financials for the first half of twenty twenty one. Confirming the strength of our transformative investment approach combined with sustained strong demand for our competitive offering of Bespoke Client Solutions. Total revenues, which consist of management fees and performance fees, grew 81% to CHF1.30 million. Management fees increased 21% as a result of continued growth in fundraising in combination with additional benefits and timings of fees in the first half of this year.
Strong underlying portfolio realizations resulted into a significant increase in performance fees to 39% of revenue. Profitability remained strong with a stable EBIT margin of 62% and EBIT grew in line with revenues. Let us now look at the financials in more detail, starting with revenue on Slide 18. We have two sources of revenue, Management fees and performance fees. Management fees are long term and contractually reoccurring.
They grew 21% in the first half of twenty twenty one, which is ahead of the average AUM growth of 12 Because we had some benefits from timing of fees from fundraising. First, we benefited from some new commitments that were raised in 2020, yet only contributed to the full fee potential later in 2020. 2nd, we benefited from higher late management fees, which come from successful closings of larger traditional programs. The latter resulted in an increase in other revenue from management services to 74,000,000 in the first half of twenty twenty one versus €42,000,000 in H1 2020. If we adjust for these timing benefits From FEEClog, the underlying management fees would have grown in line with AUM.
Management fees Represent 61 percent of total revenues in H1. Let us move to Page 90 to discuss performance fees in greater detail. Performance fees were exceptionally strong at 39% of revenue because of a more favorable exit market driven by a combination of factors. First, there was the catch up in exit activity from last year. 2nd, there is very solid demand for high quality assets, I.
E. Market leading companies in the right sectors of the economy and real assets. Both enabled us to divest mature assets on behalf of our clients. As a result, performance fees substantially increased to CHF442,000,000 up from CHF 56,000,000 in H1 2020. These strong realizations are a testimony to our thematic investment approach and the significant value created in these companies and assets over many years.
In the second half of the year, we will continue to take advantage of the favorable market. As a result, we also foresee that some exits and performance fees expected for 2022 to be brought forward. Therefore, we anticipate performance fee to represent 40% to 45% of total revenues for the full year 2021, making 2021 an exceptional strong year, Exceptional because of the combination of the 2021, 2020 catch up effect and some acceleration from 2022. Therefore, it is important to reemphasize that for 2022, Performance fees are expected to return within the range of 20% to 30% of total revenues, so back to what we delivered in the past. Remember that we follow a prudent approach in recognizing performance fees.
We only recognize performance fees on realized investments after adjusting for stress tested unrealized investments by applying a 50% discount to the net asset value. This approach makes it highly unlikely that we would have to reverse recognize performance fees. In doing so, it significantly reduces the risk of clawback. Turning to the next slide, we see that the performance fees were highly diversified because of multiple of programs and mandates. More than 18 investment programs and mandates with portfolios diversified across many vintage years contributed to performance fees in H1 2021.
Performance fees were also driven by over 60 direct assets And hundreds of portfolio assets. The highest contributed asset represented only 15% of total performance fees. The investment program that contributed the most, a mature private equity evergreen program represented 24% of total performance fees. This shows the strength of our diversification of the platform and global transformative investment approach. The following slide illustrates the future performance fee potential.
Over the mid to long term, we continue to expect our performance fee potential to grow about in line with AUM. As the value creation period lasts several years, performance fees Often only start to be earned 6 to 9 years after the program starts is investment activities and only if they are successful. We generated around €2,200,000,000 in performance fees over the period 2016 to the first half of twenty twenty one or 25 percent of revenue. These are the results from investments predominantly made over the period Looking at the last 5.5 years, we invested Approximately US80 $1,000,000,000 This is double the level of the 5 year period before that, meaning that we have about double the level of future performance fees in the pipeline. Add to that that our newer programs are more performance fee heavy, such as direct investments.
This demonstrates that we're building a strong future stream of performance fees. Concluding on the revenue, we should also look at the fees over a longer time horizon. Management fees are between 1.18% 1.33 percent and we expect this stable development to continue. In H1 2021, the management fee margin increased to 1.33% as we benefited from more late management fees And higher other income as a result of timings of fees. Important to mention that we expect management fees to grow in line with AUM.
The high performance fees brought the total revenue margin to 2.19%. Let us now look at the profit development on Slide 23. We continue to make the right investments to drive future growth and expand our investment capacity. As a result, the EBIT margin remained stable at 62% and total EBIT grew in line with revenue. Looking at the cost development, personal costs represent about 90% of our total costs.
Headcount was essentially stable versus the first half of twenty twenty. We have to remember that last year headcount was up 19% behind the intensified hiring throughout 2019. Moving forward, we expect headcount to grow to follow AUM growth as we continue to make the right investments to support future growth. Non performance fee related personnel expenses included a discrete Social Security cost on the firm's Equity incentive plans following the strong increase in our share price. Else these costs would have grown in line with management fees.
With regard to performance fee related costs, we allocate up to 40% of the recognized performance fees to our employees. In other words, the higher performance fees directly resulted in higher costs. As a result, Total personnel expenses increased by 114 percent to CHF382,000,000. Other operating expenses were down mainly because of business travel was still low and the one off costs related to Partners Group COVID response in H1 of last year. Turning to Page 24, We target a 60% EBIT margin and confirm in H1 2021 that we're delivering against our target with a 60 2% EBIT margin.
We are a global business reporting in Swiss franc And most of our revenue comes from euro and U. S. Dollar denominated funds. The strengthening of the U. S.
Dollar reduced the revenue growth in Swiss francs. This modestly decreased the total EBIT margin by around 25 basis points. Let's look at the items below EBIT and our balance sheet on Slide 26. Along with our clients, we invest about €800,000,000 into the investment programs. We generated a 10% performance on these investments.
This resulted in a financial result of €51,000,000 in H1 2021. The tax rate increased to 16.4% and the increase was due to withholding taxes from a larger profit distribution in the U. S. The underlying tax rate was stable if we adjust for this impact. We expect the group tax rate to be between 14% This lease profit at €629,000,000 or up 101 percent year over year.
Turning to our balance sheet. We have about €750,000,000 in net liquidity. This includes a strong €430,000,000 in cash and about €1,100,000,000 in short term loans to products. In our calculation of net liquidity, we deduct our outstanding long term debt of €800,000,000 confirming that we have very strong liquidity. This concludes today's presentation.
We will now open up for questions.
We will now begin the question and answer session. The first question comes from Hubert Lam from Bank of America. Please go ahead.
Hi, everyone. Good morning. Just got three questions. Firstly, on the late management fees, they were strong in the first half of the year. How should we think about late managed fees in the second half?
Would you expect the other revenues, the $74,000,000 in the first half to be higher or lower in the second half? And how should we think about these fees in the in next year? That's the first question. The second question is, given the high strong returns you expect in terms of results this year, what do you plan on doing with Your capital accumulation that you've achieved this year, would you consider greater capital return at year end or special dividend? And how should we think about payout for this year?
And the last question is on investment activity. So investment activity is obviously being high. However, market levels are quite toppy. How are you sure you are generating returns expected by investors going forward? Thank you.
Thanks for your questions. As we called out indeed in the first half, we had benefits from late management fees and some of the fee clock, and That's important to mention that was a little higher than we normally see. That's why we're calling it up. We will see some of that in the second half, In line with AUM, that's why we're calling out when we have a little bit more benefit like in the first half. And this year will be maybe a little higher because of that, but over time management fees to grow in line with AUM.
On your second question and Dividend, we have a progressive dividend policy, which over time has grown in line with AUM, and that is expected to continue. Maybe Dave, you take the 3rd.
Yes. And with regards to generating returns In this high priced environment, this is something that we spend a lot of time on. What I would say Our underwriting returns over this last 12 month period have actually been relatively consistent to what they would have been 2 or 3 years ago, Despite the increase in valuations. Now we're having to underwrite more operational impact that our teams are having on these portfolio companies. And that's a trend that you're seeing Across the industry, I think from the more sophisticated players in the market, we have really stepped up the operational resources that we have at our disposal.
And that's I think the real key to Continuing to differentiate oneself based on returns in the current market environment is being able to sustainably and
The next question comes from Gurjit Kambo from JPMorgan. Please go ahead.
Hi, good morning. I just have a couple of questions. So firstly, in terms of the exits you've seen over the last 6 months, is there any sort of skew towards strategic buyers, Other IPOs, etcetera, just a sort of a bit of flavor on where the exits are going. Secondly, In terms of ESG, how do you differentiate yourself when clients are looking, when LPs are looking to invest? Is there any way Which they look at different GPs in terms of the ESG credentials?
Just sort of is there any sort of standards or any processes around that? Then just thirdly, in terms of retail investors, are they looking at more multi asset class solutions or are they sort of going Private Equity first, any sort of color around the retail demand? Thank you.
In terms of I'll take the first 2 and then Sarah, maybe you take the third one. So in terms of exits, it's actually a pretty balanced mix In terms of how we're generating liquidity, we had one very meaningful strategic exit for 2021 that's Already been completed. We had a number of exits to financial buyers And we're in process on a couple of IPOs at the moment as well. So it's quite balanced. Nothing to point out in terms of Any one particular avenue that's working better than another, it's robust across multiple channels.
And in terms of ESG, how we differentiate ourselves I think by having the dedicated resources And by having the ESG processes completely integrated into our investment approach and Investment philosophy. There's a lot of firms out there that will have a handful of ESG people that kind of oversee or that Add a little bit of commentary, but we've actually added ESG processes into our underwriting, into our decision making, into our onboarding processes and into our ongoing governance processes in a way that I do believe is Differentiated to a number of other firms out there. And we hear from clients as they're doing due diligence on us It stacks up well relative to our peer set. Sarah, do you want to talk a little bit about retail?
So distributors that we work with, really it's across the board quite frankly. It's not just on the private So it's private equity and then across all of the asset classes that we cover. So there's been no significant trend They're on one specific asset class.
Great. Thanks so much.
Thank you.
The next question comes from Luke Mason from Exane PNP. Please go
ahead. Yes. Good morning. First question, just on performance fees. So it's good Divest in performance fees in H1 between assets and programs and everything.
I'm just wondering H2 given kind of the increased guidance, do you Any more concentration in those performance fees, specifically if you can say anything on Global Logic, which I think closed after H1? And then secondly, just on deployment levels, very strong. It seems like a good outlook. I'm just wondering around your comments on bolt ons. How much of the mix of your deployment is from bolt ons, for example, and these platform type companies?
And how important is that going forward? And then lastly, just on the comments around cross selling between asset classes for Clients over time, how much of a competitive advantage you think that is in distribution in terms of having the different asset classes and being able to cross sell essentially for clients? Thanks.
Let me start with the first one. Performance fees are well diversified and continue to be well diversified You to be well diversified across programs and investments.
You
could see a little bit because of Global Magic's That will have a little bit a more relevant side of the mix in the second half is included in our outlook guidance. That's
just taking
On Pirex, so all the time, we continue to see the diversification. So we GlobalLogic in the range we gave for the outlook Debt performance fees are between 40% 45%. I also wanted to call out again what we said in the call that in 2022, We expect
to normalize
the 20% to 30% range.
And I'll take the second too. So with regards to bolt on acquisitions, this is typically a relatively small portion of the cost base of an investment. Oftentimes it can be financed these can be financed through Cash flow of the company through taking on incremental debt or in some cases a modest amount of incremental equity is required. You should think about that as an important strategy that our boards are deploying, but it's not necessarily a huge component of our new investment volumes on a typical basis. And with regards to cross selling, I do believe that we have a genuinely differentiated Dialogue with our clients, we're much more of a platform versus a lot of other investment firms.
We are integrated. We have the ability to sit across the table from a client and present a combined offering in a way that our peers oftentimes struggle with because they're set up with different incentives, different pools, different economics for different Investment types, and are there a little bit more tribal in that regard, even though they may share a common brand At the holding company level, they effectively operate oftentimes as separate businesses. The private equity business has their own fund, their own economics And their own business plan. The debt team has their own funds and own economics and own business plan. It's a little bit more of a franchisor and franchisee model, Whereas we are a completely integrated platform.
And so I do believe that our ability to sit down with investors, craft custom Solutions present offerings with 2, 3, 4 solutions in them is a step beyond the capabilities that most of our peers possess.
Great. Thanks.
The next question comes from Yong Sim Song from AWP. Please go ahead.
Good morning. I have one question regarding the guidance, regarding client demand. How come you don't give guidance on the influence of FX like in the past years? Could you please share your thoughts behind that? Thank you.
Yes. No, we give a range without giving an outlook on the exchange rates because that's hard to predict. We give what we know is the guidance on the fundraising, the tail downs, but on the exchange rates, we're not in a position to give any guidance, And we haven't done that in the past.
The next question comes from Thomas Meal from Jefferies. Please go ahead.
Good morning. I just wondered if you could give us some guidance around what volume of exits are required In 2H, Shahit, your full year performance fee guidance of 40% to 45%. I think maybe you mentioned You'd be looking for at least $5,000,000,000 earlier in the call, but maybe I misheard that. And sort of how much will be incremental to the GlobalLogic exit? And then just on fundraising in 2H, could you Give us an idea what the sort of mix by asset class is likely to be, please?
Thank you.
So, I'll take the first one. With regards to liquidity generated in H2, we have A pretty clear line of sight on already about $5,000,000,000 of incremental volume. GlobalLogic was a meaningful part of that, but not the only one. We have other exits that We already have strong visibility on for the second half of this year. And so it'll be A good blend.
We usually don't give forward guidance on the distribution levels, bridging from the distribution levels To the performance fees is actually more complex than a lot of people realize because the number of programs that we manage And those programs are at different levels of performance fee generation and different points in their lifecycle. But we feel, I'd say good about the 40% to 45% range that we've given, taken all those factors into account. Sarah, do you want to take
the same question?
Yes, absolutely. So we see this to be in line with what we've seen in the first half. I think notably there are a couple of our flagship fundraisers that will have closes in the second half on the equity and on the infrastructure side. And we will obviously do press releases for those when that time comes.
Thanks very
much. The next question comes from Bruce Hamilton from Morgan Stanley. Please go ahead.
Hi there. Good morning and thanks for the detail. Obviously, very good set of numbers. Quick question on the sort of carry paid out to staff at around 40%. I guess there's a number of Listed players out there now who are more generous in terms of the carry share and maybe that they don't compensate people as well or don't offer them It's interesting, Chris.
But I just wondered if you were seeing any sort of pressure or any challenges to new hiring because your structures are not quite as generous around carry paid to staff and if that might have an impact on sort of longer term margins as we think about them.
Yes, I'm happy to take that. I think the forty-sixty split that we have is a mix that we anticipate Holding, if you look at the reason why a number of our peers are increasing the mix of Their performance fees, I think it's less driven by staff demanding that and it's more driven by the fact that they don't believe that the market values it and they're trying to improve their mix of management fees relative to performance fees. It's actually not bottom up driven by Pressure from staff. I think we have a very compelling model for employees that includes a much more significant stock component Oftentimes than many of our peers and that's been a meaningful source of value accretion as well. And so, no anticipated shift to that Forty-sixty mix that we've had historically, Bruce.
That's helpful. Thank you.
This was the last question from the phone.
Okay. We have a couple of questions from the tool and I guess the first one is For Dave, one investor is basically asking, give a bit more color when you say private equity style due diligence in private debt, What you're actually referring to and what this actually means?
Yes. So, what we mean by that is that we do Bottom up detailed analysis on the business model, the business plan, the management team. Oftentimes within private debt, you'll have investors that are a little bit more portfolio focused looking at kind of the exposures of different assets and we do a very detailed Bottom up underwriting modeled after the type of underwriting that we do on the private equity side. That's what we mean by that.
Thank you, Dave. Then there is another one for you and basically asking whether you could advise what's our forecast For the Chinese private equity market space, especially given that the Chinese restrictions tighten in particularly around IT and educational sector.
Yes. So, we think, like many investors that the market in China is important to provide our clients exposure to given the size and relevance of those markets. Obviously, with many of the restrictions In policy coming, something that has to be navigated very carefully and thoughtfully. But in the spaces that we are primarily focused on, we haven't had to navigate that. The education sector is one of those sectors that we're very strong on globally, meaningful positions In different geographies around the world and we've certainly looked at opportunities in China, but stayed away from it because of some of the fears of regulatory impact that we've had on that.
And so the spaces that we're focused on in China are a little bit less, I'd say impacted by some of the restrictions and tightening that we see more recently.
Thank you. And the last question is for Sarah. Another investor is basically asking how we see Asia in In the midterm, how are we expecting to grow there? And where will the growth coming from?
Absolutely. So Asia is Very important region for us, and it has been growing along with our overall AUM. As I mentioned, I think an area that we found to be particularly differentiating there is on the bespoke solution side, where we can really partner up with sophisticated clients in Sovereign Wealth Funds and provide tailored access to Private markets really customizing solutions for their specific needs.
Okay. I think that's the last question that we see From the webcast, we'd like to thank you all for your interest in our company and participation on this call. Please do feel free to reach out if you have any further follow-up questions. Thank you very much.
Ladies and gentlemen, the conference is now over.