Welcome to Partners Group's business update 2020 and outlook 2021. I hope you're all healthy and I wish you well. My name is André Frei. I'm a Co-CEO of the firm based in Switzerland. I'll be joined today on this call by my partner and Co-CEO, David Layton, based in the United States, and by my partner and CFO, Hans Ploos, here in Zug. You realize we have decided to move our calls from morning time to afternoon here in Europe, so that our U.S.-based shareholders can join these calls live as well. I would like to start the presentation on slide two, which summarizes our solid growth in 2020 despite the challenging environment, and shows that we are well-positioned for 2021 on both the client and investment side.
Starting on the client side, Partners Group is a leading global private market firm with more than $100 billion assets under management. Our aim is to deliver sustainable returns across the economic cycle. With our tailored private markets investment solutions, we serve nearly 1,000 institutional investors. We contribute to the financial well-being of around 200 million beneficiaries. Despite the volatility in 2020 and the highly challenging environment for global investors, our clients entrusted us with $16 billion in new capital commitments. This brings total assets under management to $109 billion as per the end of 2020. Looking into 2021 and beyond, we see the fundraising momentum continuing. We expect continued client interest. Many of our clients will further increase their exposure to private markets.
We expect to onboard between $16 billion and $20 billion in new client commitments in 2021, which we will invest responsibly over the years to come. We're grateful for and pleased with the continued support by our clients. Turning on the investment side, the right-hand side of the chart. Due to the market disruptions caused by COVID-19, our investment activity in 2020 was lower than last year or 2019. We invested a total of $9 billion on behalf of our clients, with the majority of these investments undertaken in the first and fourth quarter. We move into 2021, we have built a substantial pipeline of investment opportunities to be transacted on. Dave will talk about this later in his presentation. Our portfolio management and investment discipline have created strong portfolio performance in 2020. We're pleased with the resilience of our assets and the stability of our portfolios.
We observed an amplification and acceleration of long-term trends in the operating models of many of our assets, this ultimately drove performance. We're convinced that the uncertainty we see today creates challenges, also opportunities. In this climate, we firmly believe that offense remains the best defense. In fact, our investment strategy remains unchanged. We research themes, we leverage our platform as well as our broad network. We aim to create outsize returns by transforming attractive businesses into market leaders during our ownership phase. We want to do so at scale with thousands of assets at the same time to creating lasting positive impact for all our stakeholders. After this introduction, I would like to hand over to Hans, who will talk about our assets under management development.
Thanks, André. Also a warm welcome from my side. It is clear that 2020 has been a very different year as COVID became a new reality. Now that we enter 2021, we're positive that our portfolio is strongly positioned, confirming the strength of our transformational investment approach. This, combined with our bespoke client solution, gives us the confidence that our growth journey will continue. Let's move to the next slide to discuss the 2020 AUM development. At the end of 2020, we reached $109 billion in AUM. The total AUM growth of 16% was helped by a more favorable U.S. dollar to euro exchange rate, which had a positive impact of 5%. This leaves a strong net underlying AUM growth of 11%, confirming that our growth continued in 2020. Demand remains strong as we continue to drive sustainable returns for our clients with our transformational investment approach.
As said in the introduction, this gives us the confidence going into 2021. Remember that our business remains a people business. Therefore, it is important that we continue to invest in the future of our business and our people. We have seen strong team growth across the entire platform in 2018 and 2019. In 2020, we slowed our hiring efforts as we had the benefits of the hiring over the previous period. We remain a long-term investor and also a long-term employer. We did not let go of people because of COVID-19. Today, we employ 1,533 professionals worldwide across 20 offices. The number of professionals grew by 5%. With that, let's go to slide five. In 2020, we saw continued strong client demand across all private market asset classes and received $16 billion in new commitments.
This compares to $16.5 billion in 2019 and was slightly above our guidance of $12 billion-$15 billion, which we gave in July of last year. The recovery of the markets drove overall client demand in the second half of 2020. This was further helped by a shorter conversion period for new commitments. Fundraising continued to be well-diversified across asset classes, starting with private equity, which represented 40% of the total inflows, amounting to $6.4 billion. The inflows were diversified across our program strategies. Bespoke client solutions, includes our evergreen programs and tailored mandates, made up about 2/3 of the private equity inflows, while traditional programs accounted for the remaining 1/3. Private debt represented 23% of our all new commitments or $3.7 billion. While our debt business continues to benefit from lower yields, two strategies contributed to the fundraising. First, our CLO business.
We were able to raise four new CLOs throughout the year, which contributed $1.6 billion in new asset rates. Our CLO business represents 5% of our total AUM and is expected to grow strongly in the years to come. In the first half of 2020, we were one of the most active CLO issuers in the market. The second strategy is our direct lending business. It contributed around $2 billion in AUM and stemmed mainly from several senior loan programs and also includes multi-asset class credits. Private real estate represented 15% of the new commitments or $2.5 billion, diversified across a variety of vehicles, focusing on the global real estate opportunity strategy. Private infrastructure represented 22% of new commitments amounting to $3.5 billion, making it the highest growing asset class.
Infrastructure is in the midst of fundraising of its next generation direct offerings, which contributed substantially throughout the year, and this program will continue to make a relevant contribution to fundraising over the next 12 months. Looking at the chart on the bottom left, 42% of total inflows stemmed from traditional closed-ended private market programs, and 58% of client demand derived from bespoke single and multi-asset class solutions, including mandates and evergreens, confirming that we continue to strengthen our global leadership in evergreen programs for investments in private markets. These vehicles cater mostly to high-net-worth individuals and have no contractual end and are subject to potential redemptions. Despite the market volatility and uncertainty in 2020, 23% of total inflows derived from such programs.
These inflows more than offset the redemption across our evergreen programs by $1.7 billion, making them a net contributor to growth across all four asset classes, confirming the strength of these programs, even in a difficult environment. The growth rate of evergreens was 17% in 2020, and as of December 31st, 2020, they represent 26% of our AUM. With that, I would like to move on to slide six. After having talked about $16 billion gross inflows, let's now discuss the impact of, first, tail-ends and redemptions, and second, exchange rates and other effects. We have good visibility on tail-ends and redemptions, therefore, we can provide the market with clear guidance on those two factors. In 2020, both amounted in total $8.1 billion and were in line with the full-year guidance of $7.5 billion-$9 billion.
Let me give some further context about the tail-ends. They amounted to $6.2 billion. The majority of our programs have a long duration, yet when they mature, AUM decline. The decrease in AUM is typically based on a predefined mathematical formula, hence the impact is clear. Redemptions are different. As said, we manage $28 billion in evergreen programs, which provide some form of liquidity, typically quarterly or monthly, and in exceptional cases, daily. The redemptions were $2 billion in 2020, an increase by $700 million compared to 2019. As we discussed before, the evergreen programs were a net contributor to growth because the inflows exceeded the increase in the redemptions. We do not have visibility on factors such as exchange rates and the other items, as a result, we will not provide guidance on them.
As discussed already, an important contributor to underlying AUM growth in 2020 were foreign exchange rate effects, which amounted to $4.9 billion. This was mainly driven by the strengthening of the euro against the U.S. dollar by 9% as of year-end compared to 2019. Remember, 47% of our AUM come from euro-dominated programs. The total growth amounted to $15 billion during the period or 16% versus 2019. Excluding the impact of exchange rate, this leaves a strong 11% underlying AUM growth in 2020. With regard to the other effects, our private markets portfolio experienced some degree of volatility in the first half of 2020. At the end of 2020, we can confidently say that our transformative investment strategy not only provided stability, but also facilitated a swift return to growth in the second half of the year.
As a result, performance-related efforts of a select number of investment programs generated a positive AUM contribution of $2.2 billion. This only concerns a few investment programs that link their AUM to their NAV development. Here we provide you with a detailed overview of the assets raised by asset class and the AUM composition. As you can see, all asset classes showed solid gross client demand. In absolute terms, private equity, our largest asset class, contributed the most. Private infrastructure showed the strongest net AUM growth on a relative basis. We continue to expect private infrastructure to perform strongly in 2021. Before handing back to Dave, I would like to conclude that we're extremely pleased with our fundraising efforts in 2020, confirming the strength of our strategy in a post-COVID world.
We are a committed, responsible investor, and aim to create lasting positive impact for all stakeholders through our active ownership and development of businesses and assets. With the positive feedback we have received from our clients on the portfolio performance as well on how we have engaged with them during such turbulent year, we look confidently ahead to continue to grow together with them. Over to Dave.
Thank you, Hans. With everything that transpired last year, I think 16% asset growth, 11% net of FX is a solid result. It helps to be in a structurally growing segment of the market. Fundamentally, I think private markets is just a great place to be right now. We have a long-term approach. We can look out five, 10+ years into the future to identify attractive themes. We don't have to get bogged down by the short-termism that seems to exist everywhere today. We can chart our own course. We can shape our own destiny with active strategies focused on building, focused on transforming the assets in which we invest. This past year, some of our portfolio companies were obviously subject to volatility, as was the entire market. We rolled up our sleeves, we went to work, we supported, we blocked, and we tackled.
On a portfolio-wide basis, within our controlled private equity portfolio, we saw double-digit earnings growth from August 2019 to August 2020. There's a lot that goes into creating that performance, but a couple of important elements include, number one, carefully selected growth themes. We have a very selective investment process, and we try to avoid cyclicality where possible. We recently invested into Wedgewood Pharmacy, which is a leading animal health pharmacy in United States. The veterinary market is one of those markets in which we're very deep. We obviously have some other investments in that space, and we see very strong fundamental growth drivers. Through much of the pandemic, veterinary care has been regarded as an essential service, and the company's performance has remained resilient. Many veterinary practices have seen performance during 2020 that strongly outpaced prior years.
I saw a recent survey that suggested that many pet owners would sooner cut their TV or their Netflix subscription than they would their pet care. There's a lot of these attractive niches out there. I think we've demonstrated to our clients that we have a strong edge in identifying and capturing investment content in these attractive themes. Number two is platform-building strategies. We find strong anchor businesses in fragmented markets with good bones and good management teams, and we help them scale and densify through acquisitions. In 2020, we acquired EyeCare Partners, a leading medical vision service provider. During 2020, many of that company's sub-scale competitors in various markets have struggled to navigate all the challenges that 2020 has thrown at them.
They have proven to be more receptive today to joining forces with a larger platform that can help them steer through this challenging environment. We completed nine or so acquisitions into that platform last year. Similarly, between January and August of last year, our France-based portfolio company, Foncia, completed more than 50 tuck-in acquisitions, and continues to maintain a very busy pipeline. The third aspect of generating strong underlying performance today is what we call asset transformation. In this market, which is marked by high valuations for stable assets, you can't expect to generate historical levels of returns just by going long leveraged equity. You have to shape, you have to enhance, you have to transform assets. We invest today with an eye focused on transformation. One of our portfolio companies, GlobalLogic, for example, has doubled its earnings since our acquisition in 2018.
We've had a value creation strategy that incorporates geographical expansion, a more targeted sales approach, and improved pricing models. With PCI Pharma Services, where we've been at work for the past number of years, partnering together with the company's leadership team, we've been driving operational excellence, and we've been repositioning the company into higher value segments of the market. During our ownership of PCI, the operational focus was shifted away from lower margin commodity business towards high-value services in growing areas like biologics. We also implemented numerous sustainability initiatives, such as establishing best practice health and safety standards across PCI's global operations. This strategic transformation under our ownership has resulted in approximately 25% earnings growth per year. If you can drive earnings growth like that, attractive returns follow, and that was certainly the case for that investment.
The next slide shows a breakdown of our new investment activity during the year. As you would expect, during a portion of last year, it was all hands on deck, helping our existing assets navigate the environment and helping them find continued avenues for growth. For a portion of 2020, we had a disproportionate amount of resources focused on protecting and even enhancing our clients' existing asset value. Overall, we were very happy with the outcomes there, but as a result, we did make fewer new investments. In 2020, we made $8.6 billion of new investments for our clients across all of our private markets asset classes. In terms of strategy, we continue to invest the majority of capital, 67% or about $5.7 billion, into direct investments. The remaining 33% or $2.8 billion, went into portfolio assets such as secondaries and primaries.
For private equity secondaries, the distress window was short-lived. During Q2 2020, many transactions were put on hold due to wide bid-ask spreads. In the second half of the year, secondary market prices for many high-quality assets rebounded to their pre-COVID levels. We're committed to maintaining our price discipline and our focus on inflection assets where value creation potential remains intact. We also haven't been as hot on some of these GP extensions, which have made up a material part of the secondary market last year. In terms of regions, we invested 53% or about $4.6 billion in North America, and 40% or about $3.4 billion, in Europe. Finally, our underlying portfolio distributions amounted to $11.8 billion for the year. We find the current market environment to be very interesting from an investment perspective.
We've built a significant investment pipeline going into 2021, amounting to double-digit billions of potential actionable opportunities in the relatively near term. Over the medium and long term, we're confident that our thematic sourcing approach will continue to result in a steady and hopefully somewhat predictable pipeline of hundreds of target companies. With this, let's move to the next slide. We recently published what we call our Private Markets Navigator for 2021. The Private Markets Navigator summarizes our economic outlook and the key investment preferences that we have, and we've been providing this to our clients for a long time. A lot of people ask me how COVID has shaped or changed our investment approach.
It's interesting, as a firm focused on long-term structural trends, we've found that many of our target themes, our strong convictions, haven't fundamentally changed, but certain trends that we've been keeping an eye on, that we've been following and watching, have accelerated. We've had to sharpen our focus and reprioritize on certain topics. We continue to avoid investing into companies that have been overly cyclical or that have outcomes subject to too many factors outside of our control. All of our investment opportunities continue to be vetted by our investment committee, which at the current time remains very focused on a multitude of scenarios. We describe in our Navigator publication certain conservative and stagflation cases. We run our prospective investment targets through numerous similar cases to make sure that they have an attractive risk-return profile for our clients in the current environment.
Given the elevated valuation levels, we continue to factor in meaningful multiple contractions for our holding periods. Although the economic outlook for 2021 continues to remain somewhat uncertain, we're confident in finding opportunity, and we reiterate our belief that offense remains the best defense in private markets investing right now. Let's turn to the next page. As mentioned, for private equity, COVID-19 has amplified certain trends on which we've been focused. One transformational trend that we've been monitoring for a while is the evolution of agriculture. In the middle of last year, we agreed to acquire Rovensa after having tracked the sector and mapped its ecosystem for nearly two years. Our globally growing population requires more food, and rising income levels lift caloric intake.
At the same time, there are constraints to farmland that imply that a material portion of this production growth needs to be borne by yield improvements. Rovensa represents a great opportunity to support a resilient business in a market characterized by steady long-term growth and a trend towards sustainable agricultural products. We think this one's going to be a winner. On the next page, regarding private debt, rebounding investment volumes in a growing private markets universe point us to a belief that we are going to continue to see strong demand for private debt. Within our private debt business, we're laser-focused on downside protection and on capital preservation. In light of the current macroeconomic environment, we've shifted our relative value focus towards the more senior end of the capital structure, which we believe offers a more favorable risk-return profile in the current environment.
The opportunity to invest into distressed situations at attractive terms was largely short-lived last year, and we primarily executed on this in the secondary loan market. We're currently focusing on category leaders in non-cyclical, established businesses with stable cash flows. For example, in July 2020, we invested in the unitranche financing of a European developer and manufacturer of hygiene and disinfectant products on behalf of our clients. Those are the type of assets that we're gravitating towards today. Now, in private real estate, we are a situationally driven investor, and we try our best to source opportunities off-market. This works especially well in times of dislocation. Real estate values will take time to adjust. We place high emphasis on existing cash flows to protect downside, and we seek to enhance return potentials through value-adding strategies.
I think the full impact of COVID-19 on the global real estate market will only be understood with time, but it's already clear that the impact will vary greatly by property type and location. One key trend that we've been following is the acceleration of e-commerce, which is benefiting the logistics sector. To capitalize on this, we recently acquired, on behalf of our clients, a portfolio of industrial assets in the U.S. concentrated on several of our high-conviction U.S. target markets, including Raleigh, Austin, and Denver. For office and residential assets, it's too early to fully assess how remote and flexible working will impact long-term demand in metropolitan areas like New York and San Francisco and London. There will be impacts.
Nonetheless, we have conviction that growth cities characterized by above-average population and employment growth will continue to attract companies and people driven by lower costs and favorable tax regimes relative to high-cost gateway cities. Our investment strategy for office is therefore highly nuanced as we continue to overweight residential and modern offices in very specific markets, and we're avoiding large cities. Poland is an example of an attractive destination for office properties. Global firms are looking to reduce their back-office costs but still want access to a well-educated talent pool. Combined, Kraków and Wrocław host tens of thousands of back-office staff and 32 universities. Rental costs are materially below European averages, made more appealing by lower labor costs. We've recently acquired 11 Class A office properties in these cities. These properties are largely populated by well-known blue-chip companies.
In private infrastructure on the next page, we're maintaining our thematic and value creation focus, particularly as our direct portfolio performed exceptionally well during the crisis. Our modern infrastructure investing philosophy combines traditional infrastructure asset development with a private equity-like corporate build-out strategy to realize extra upside by delivering a more complete infrastructure solution. We see particular growth opportunities in areas that support the shift toward a net zero carbon economy, and a meaningful percent of our investments have been made into renewable energy projects. We're also overweight in the densification of digital infrastructure, an area that has been a clear beneficiary of the COVID-19-induced acceleration of the digital adoption. Non-cyclical new mobility services, which combine transportation business models with new technologies, are another area that offer compelling growth upside. Mobility is a fundamental need, and technology-agnostic mobility services offer an attractive risk return profile.
An example of this is our recent investment into Telepass. We believe that this is a compelling opportunity to support an outstanding non-cyclical asset with a strong brand in the attractive high-growth transport sector. Telepass is a leading European provider of electronic tolling services to approximately 7 million clients. Telepass processes around EUR 7 billion in annual toll transactions across 14 European countries. It has essentially 100% market share in the Italian electronic tolling collection market and a 30% market share across Europe. The company is very well-positioned to benefit from growing electronic payments. In summary, we remain confident that by focusing on the right sectors and by driving a private equity-like value creation strategy, we'll continue to have good relative outcomes in our infrastructure programs. Related to relative performance, let's move to slide 16.
Preqin is one of the leading financial data and information providers to prospective private markets investors. They published a study a few weeks ago on the performance of the big buyout firms with an emphasis on consistency of returns since the 2008 financial crisis. I think the thought behind the study is that there have been very distinct eras of private equity investing. Early on, there was an opportunity from financial engineering and cost-cutting and arbitrage. The most recent era of private markets investing, which requires a genuine value creation approach to differentiate, started after the financial crisis. While our firm hasn't put the same weight on brand building as some of our peers, culturally, we tend to keep a little lower profile and keep our heads down working for our clients.
Make no mistake, we have built a world-class modern investment platform that's not just competing, but genuinely differentiating in the market today. We are one of the most consistent top quartile managers in this post-financial crisis era. When travel starts up again, I invite you to our campus here in Colorado. It's brick, it's steel, it's stone, and it's different. At the top of the stairs, when our people come in to work every day, I put some cultural messages, and one of them says, "This is not Wall Street," and you'll already feel that instinctively. The transactional themes that have been so emphasized by our industry over the past number of decades are fading in relevance, in our opinion, and the topics that are relevant to us today and in the future decades for which we're building are industrial themes. They're not transactional themes.
The themes that we're emphasizing today are strategy, excellence, execution, governance, business development, leadership, sustainability, and culture. We're confident that the performance generated by this differentiated approach has created a strong foundation with our clients, and that we're well-positioned to continue to be their long-term partner of choice for investing in private markets. Now, André, over to you.
Thank you, Dave. I'd like to conclude this presentation by providing more details on our full- year 2021 fundraising outlook. Let's please move to slide 18. The secular growth trajectory of the private markets industry in general and for Partners Group also, will continue to be driven by three strategic drivers. First, the growth of institutional assets under management. Second, the rising allocations of institutional investors to private markets. Third, the outperformance of private markets against public markets. A recent study conducted by Preqin indicates that about 90% of investors expect to maintain or increase their allocations to private markets over the next five years. We also observe these trends when talking to our clients. Now, to implement these target asset allocations, these institutional investors seeking private market firms that are proven both in terms of returns as well as service.
They look for investment track record and they look for service excellence. Investment managers are expected to create value and to help sophisticated clients cope with their complex requirements. Many clients demand closer interaction and deeper relationships with the fund managers. They require increased portfolio transparency, advanced ways of reporting, and a commitment to ESG topics. We firmly believe that Partners Group is well-positioned in these aspects, return, and service, with our well-established approach and substantial resources. On the next and final slide, I would like to conclude the presentation with our assets under management outlook. Slide 19 illustrates expected gross client demand in 2021. We have set our expected range of new gross client commitments to $16 billion-$20 billion. You see that we are confident with the sustained demand from clients. Our range reflects this.
Now, we acknowledge that the start into 2021 is more difficult than we had hoped, with longer lockdowns being announced and the slower start of vaccination programs in many countries. We do base our fundraising outlook on the expectation that current uncertainties around COVID-19 will improve as the year progresses. Our range does not account for a, in our opinion, unlikely scenario where the situation around COVID-19 gets much worse or takes much longer. Irrespective of the precise COVID-19 path over the coming months, our platform is well-positioned for client demand and to generate sustainable returns. We expect that fundraising will be diversified across asset classes, with private equity the largest contributor to inflows. Fundraising will also be diversified across bespoke client solutions and traditional programs.
Tail-ends and redemptions are estimated to negatively affect assets under management by around $9.5 billion, of which around $8 billion are estimated to be tail-ends. Estimated redemptions from evergreens amount to around $1.5 billion. As onset, as in previous years, we do not provide guidance on other effects, such as FX rates. With this, I'd like to conclude the presentation. I'd like to say thank you for listening in. We look forward to speaking to you again soon. On 16th March, we will present our 2020 financials. With this, we'd like now to open up for questions.
The first question comes from the line of Gurjit Kambo with JPMorgan. Please go ahead.
Hi. Good afternoon, everybody, yeah, well done on a good end to the year. It's been a difficult year for everybody. I've got a couple of questions. Firstly, just in terms of the capital that's chasing, I guess, more and more the sectors which are doing better, particularly after COVID, are you seeing more and more competition, people migrating to perhaps replicate the Partners Group model, which has done successfully over the many years? That's the first one, just the competitive landscape you're seeing. The Preqin data, you ranked number two, i s there any sort of bias in terms of the other managers, the managers that do well? Are they typically larger managers or are they more U.S. managers?
I don't want names, but just any sort of similarities to what you do or any differences would be helpful. Then just finally, is there anything going on the fee margins? You're doing a little bit more on the evergreen side. Just a reminder, are the fee margins broadly consistent around traditional evergreen and mandates? Thank you.
I'm happy to take the first, maybe the second of those, kick over to Ploos to cover the others. Are we seeing more capital chasing some of these resilient sectors that we have historically been focused on? The answer is yes. You see almost this bifurcation in the market behind companies that have shown historical resilience and stable performance. The prices that are being paid for those are, in many cases, a premium to the prices that were being paid previously. We're doing a couple of things. Number one, we say that offense is the new defense, because in many ways we're saying that you can't just go out and buy the exposures that you're looking for today. You have to create them oftentimes.
We're sometimes going out and instead of buying that very large, very stable, very proven large cap company that we feel like we can just ride through a difficult environment, we're oftentimes buying a medium sized company that has the right attributes to scale, and we're helping them to convert, sometimes from a more of a transactional business model into a recurring business model. We're helping them to convert from maybe a more narrow product line into a more broad product line, and to diversify it. We're oftentimes saying that you can't just go out and buy the exposures that you're looking for in the market because you are going to pay very high prices today, but you have to be willing to roll up your sleeves and to create them. That's where we've been successful in creating a lot of value.
Regarding the Preqin data, that's a good question. I think it's up on their website. If you're a subscriber, you can just go download it for yourself and do the analysis on who's performing well in the current market environment. I probably won't comment too much on that.
I want to-
With regards to fees, Hans, do you want to cover that?
Yes. No, from a management fee point of view, we will continue to provide the stability as we have done in the past. The fees between these different products is not different. Remember that our fees are driven by the content behind our products, and if you look at our mix of business, that will continue to secure a good management fee.
The next question comes from the line of Máté Nemes with the UBS. Please go ahead.
Yes, good afternoon. Thank you for the presentation. I have two questions, please. The first one on the investment pipeline. I think you mentioned opportunities worth potentially double-digit billion U.S. dollars. I'm just wondering if you could give us a little bit more color on this. Are you expecting actually to go back to 2019, perhaps maybe 2018 levels if the environment and perhaps the mobility restrictions really get better? Related to that, as the large part of the world is still on the lockdown or continued lockdown, did you get a sense that this environment is now really different from, for example, Q2 last year? Did all the stakeholders adapt to operating digitally? Can you actually make all the investments you would make in a normal environment without lockdowns? If you could just talk a little bit about that. Secondly, on portfolio realizations.
It seems like contrary to your expectations, you saw an acceleration in realizations in the second half of the year. Can you maybe talk a little bit about the drivers of these? Were these mostly Q4, I guess November, December transactions? What happened there and what are really the implications for the first half of this year? Thank you.
I'm happy to kick things off. With regards to the investment pipeline, I do think that this has the potential to be a very solid year for us. Whether we reach the 2018 investment levels or not, I think time will tell. I think, though, that we have a number of seeds that have been planted in prior years with our thematic sourcing efforts that we believe will be bearing fruit this year, and we've already started to see a lot of that come through. We have high expectations internally for being able to convert on a number of these topics that we have in the current pipeline. I think the world is kind of going through this up and down phase with regards to lockdown, but I think people are learning how to navigate it, and people are learning how to work within the constraints that lockdown provide.
We're having management meetings. I have just tomorrow, 20 people from a management team, from a prospect that we've been talking to for a long time, that are getting on a Zoom conference, and we're introducing each other, and we're going to do our best to make progress on continuing to advance even during this COVID time. I think while the lockdowns kind of come here and get loosened up over there, and we'll continue to see that until the vaccination is more broadly spread. I do think we're managing it today quite effectively, and the world is managing it today quite effectively. I don't anticipate it being too big of an obstacle in most of these projects. We did see some decent realizations over the course of this year.
Part of that, as we talked about previously, for transactions that were signed in 2019, where the cash was collected in 2020, and then we had a pretty solid Q4 of this year. I think you asked about the implications for performance fees. We've not adjusted our guidance with regards to performance fees. We have a number of new programs that aren't necessarily paying performance fees yet. They're in the early phases of many of these programs. The early distributions go back to our clients until certain thresholds are completed. We did have a decent Q4 from a realizations perspective and are hopeful that the market stability continues into the first half of this year, certainly.
Thank you. That's very clear.
The next question comes from the line of Hubert Lam with Bank of America. Please go ahead.
Hi, guys. Good afternoon. Just one question from me. Does your fundraising guidance for 2021 include any contribution from your new UBS venture? I think you previously guided to about $1 billion-$3 billion from it. I'm just wondering how much of it is in there, and if not the whole thing, when do you expect it to reach full potential? Thank you.
Fundraising 2021 is going to be broadly diversified across regions, across offerings, across clients. Distribution partners will contribute. Yes, I would be excited if UBS started to contribute in 2021. Also, it's clear that this is a relationship that will deepen and develop over time. It's part of the guidance that we've provided, like other offerings as well.
Okay, thank you.
The next question comes from the line of Arnaud Giblat with Exane. Please go ahead, sir.
Hi, good afternoon. I've got three questions for you. Sorry, you talked about this already, but I'd just like to follow up a bit more. Can you talk about the exit pipeline? I think you mentioned on one of the previous questions that it looked good into H1. Could you give perhaps a bit more granularity if markets hold up where they are, could we see some significant exits in 2021, for example? Also, I'm wondering on the investment side, how are the opportunities looking? Are you looking at a number of potential deals with markets being at the high level that they are? Can you get deals lined up to get your targeted returns? Thirdly, could you talk a bit about fund performance in 2020? Clearly, you had a big contribution from performance in this update.
Perhaps a bit more detail around which assets that applies to and what percentage that equates to. More generally, if you could talk about the performance of your mandates in 2020, that'd be quite helpful. Thank you.
Okay. Why don't I take questions one and two, and Hans, you take question number three. With regards to the exit pipeline, we do have a number of companies that we have created value in over the past number of years, and some of those exit processes were put on hold during the calendar year 2020. From what we can see today, we look to have a pretty good runway and a pretty supportive transactional market that should be supportive of some decent exit activity in 2021. Obviously, that can change, but based on what we see today, I would expect that. It's very similar on the investment side. It is a very buoyant market, and there's a lot of competition out there.
I think we have really initiated a new era of more thoughtful investing within our firm, less opportunistic, just buying what's out in the market, and much more focused on building and much more focused on identifying themes where we can really get ahead of situations, buying companies that maybe aren't at their full potential today that we can help to transform and drive. Even in this market environment, we do have quite a strong pipeline, and I would expect for us to convert and materialize on a number of things that are in the pipeline in this calendar year. Hans, do you want to tackle fund performance?
Yeah, absolutely. While it's too early to disclose the numbers, because that's what we do in March, let me give some color. Remember, in June, we already shown a solid return performance and outperformance. If you look at the second half and if you look at the quality of the portfolio, the results which we are delivering through the investments we're making and how we have added value to the companies, that performance improved, and the outperformance we have been delivering continues to grow. With our investment approach and what we have been delivering in the second half can confirm that we continue to deliver great outperformance.
Again, in March, we will give you the specifics, but we're positive.
Thank you very much.
The next question comes from the line of Jens Ehrenberg with Citi. Please go ahead.
Hi, guys. Thank you very much for the presentation. That was helpful. Just a couple from my side. The first one, obviously you've commented on the slightly more challenging environment with lockdowns and the developments around the vaccine. Have you seen any major impact on your current portfolio companies there? Secondly, just thinking about the general shift or not necessarily shift, but demand from the retail side, have you seen anything more on the U.S. side with regards to the DC pension scheme opportunity? Appreciate that's more probably for the medium-term, but how's that going for you? Any color on that will be appreciated. Thanks.
First of all, with regards to portfolio companies and how they're navigating the lockdowns, we do have a couple of portfolio companies that continue to need significant support from our side during this environment. We have a couple of restaurant businesses, for example, that obviously are affected by the lockdowns, some other companies in related retail sectors. By and large, our teams have put in place procedures, standards, policies. We've shared best practices across our global portfolio to how to manage things in a remote setting. We're navigating it, I think, extremely well, and you can see that through the performance that has been generated over 2020. I can't imagine 2021 being any more challenging than what we experienced in calendar year 2020. André, do you want to talk a little bit about the U.S. side of things?
Yeah. You specifically asked about the United States defined contribution, right?
Yes.
As I said, the defined contribution market for Partners Group is a strategic growth market. The changes around summer 2020 really have created a lot of interest with prospective investors. At this point, our team is largely educating, I would say, the prospective investors, given that defined contribution has historically not invested in private markets. Like many investors now want to learn about the differences between public markets, private markets, what are the benefits, but especially also how does this work operationally. What are the offerings that we have? What are the whistles and bells? How does it fit into their portfolio allocation? At this point, I believe it's more education than already translating into inflows. That is something that actually we did expect. We do expect that this will take a number of years before it really develops into significant asset raising.
Similarly, to basically how we have experienced semi-liquid offerings two decades ago. Also on that front, given the difference to traditional programs, that was a slow start, but today a significant contributor to asset raising. I would expect that also for the United States, so a defined contribution offering like this potential will be realized over time in the years to come.
Thanks, André. That makes sense. I suppose, my question was also partly thinking about, I appreciate that there's an educational process ongoing, which makes total sense. More now that since the announcement of the Department of Labor, I suppose this is much more visible. Do you see any change in competitive dynamics? Is like some of the bigger U.S. names potentially trying to position themselves as well to get part of the cake or how do you see that?
I believe and expect that there will be some larger competitors moving into that space. That's actually not bad. It's okay if there's a marketplace, if there's a choice to investors. Given the complexity of the requirements, I doubt it's going to be dozens of offerings, maybe half a dozen, I don't know. It's very demanding to offer this product structurally. It's really tough to develop it operationally. I believe there will be a pickup. I hope there will be. Given the very large market size, definitely there's a lot of space for more than one provider.
Got it. Thank you.
The next question comes from the line of Bruce Hamilton with Morgan Stanley. Please go ahead.
Hi. Good evening, guys. Thanks, congratulations on the print. I just had a couple of follow-up questions. I guess first on exits. It sounds like there's a possibility of double harvesting exits in 2021, i.e., some of the leftovers from good businesses that you held over during the COVID pandemic in 2020, sort of more normal course. Is that the wrong way to think about it when I think about the typical midterm guidance? Is that too bullish? Secondly, on bridge financing. I guess in the first half, your revenue margins or management fee margins were a touch lower, partly because of lower investments, which led to lower bridge financing. I guess that we should expect that continues in the second half, sort of recovers with investments in 2021. Is that the right way to think about it?
Finally, given the comments you made on the slower growth in employees. Should we read anything into that around what the operating margins could look like, even if it's very temporary in 2020? Am I overreading that in terms of any impact on margins?
Thank you. First, on the exits and your question about double harvesting. I think the first thing which Dave has given some comments on, our portfolio behind our transformative investment is in good shape. You're right to conclude when markets open back up, postponed investments will happen, and that will support the performance fees. We have the portfolio in good shape. The good news has been that exit markets have been improving. Needless to say, we remain diligent in our approach. We're still in a period of uncertainty. That's why we guided for this year for a lower end of the performance fee of 5%-15%. Remember, over time, they come back to 20%-30% of revenue. My message is, we will deliver on the 20%-30% over time. It's very hard to give it on any given year.
We have a quality of performance, so with that, it will come back sooner or later. It's just where the markets are.
Got it.
Two, you asked, t he bridge financing has been a little lower over the first half. I would say in the second half, a little better maybe. I think you're right to conclude. Remember what we said, we delivered a 63% EBIT margin in the first half. We said that would be a little lower in the second half. Our target remains to run the business at an EBIT margin of around 60%. This year you saw a little bit slower hiring. Remember still, the 5% is year-end to year-end. On average, we have 12% more employees. Our AUM underlying grew at around 11%. We will continue, as I said, to invest into our future business. We will always balance our cost discipline with the growth. We have that balance this year. We guide again around that 60% margin.
Very helpful. Thank you.
I see two questions that have come up online. The question is about why or how we're confident about the client commitments in 2021 accelerating compared to 2020. What, I've explained, slightly slower H2 and now in H1 or a full 2021, more in line with like it was in the past. Basically, we started really strongly in 2020. Q2 with this deep correction was a bit of a shock to many market participants. For some investors, it did result in a pause. I believe that's fair to say. There's typically no rush in private markets. You do not need to sign a 10 year contract when markets are down 30%, 40%. With markets stabilizing and with us all getting used to COVID to some extent, I believe it's now a normal or more normal type of course of business.
With Partners Group having a number of offerings on the shelf, with strong mandate relationships, with distribution partners, evergreen programs, I believe 2021 is really like a return to the growth or the trends that we had started already in 2019, 2020. If there had not been COVID, it would not feel like an acceleration, but literally like a continuation of our asset raising over the past years and the future years.
There are no further questions from the phone so far, gentlemen.
Okay. Thanks a lot for dialing in. We wish everyone a great week and we look forward to speaking to you soon. Thank you.