Dear ladies and gentlemen, welcome to the webcast of Partners Group. At our customers' request, this conference will be recorded. As a reminder, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions via the telephone lines. During the presentation, you may type your question in the webcast window. If any participant has difficulties hearing the conference, please press star key followed by zero on your telephone for operator assistance. May now hand you over to David Layton, who will lead you through this conference. Please go ahead, sir.
Good. Thank you very much, and welcome to the semi-annual results call. My name is David Layton, co-CEO of the firm. This is the first time that we're presenting here at the London Stock Exchange. 15% of our company is owned by U.K. investors, and this is an important market for us, and we're happy to be here. I'm going to start with a brief overview of our investment activities. We covered quite a bit of this on our July assets under management update, and so we won't dwell on this topic. I'll then hand over to André Frei, who will cover some of our recent client developments, and then Philip Sauer will speak about our financial update. Our firm today is one of the largest private markets firms globally. We have about CHF 40 billion in assets focused on corporate assets across a broad range of sectors.
We have CHF 40 billion focused on real assets and financing activities across infrastructure, real estate, and our financing businesses. We have stewardship for about 220,000 employees that work at our portfolio companies, and that's a responsibility that we take very seriously. We view ourselves as a true partner to business, and we leverage the boards of our portfolio companies to really drive the actions there. We call our approach entrepreneurial Ownership or entrepreneurial Governance, and we recognize that for some, entrepreneurial Governance sounds like an oxymoron. You have entrepreneurship, which is this drive to run through walls and to accomplish and get things done, and governance tends to invoke more of a box-checking oversight function. For us, what that means is that we look to guide our portfolio companies the way that a founder would guide those businesses.
It's not just as an interested and engaged shareholder that comes in and looks to tweak a few things over a three or four-year time period, but we're looking to build a board that becomes the center of vision and strategy for that company that looks out 10 years, 20 years into the future to say, "How do we need to shape this business to win market share and to beat our competition." That approach is central to our ownership philosophy. The market environment for private transactions today is quite robust and dynamic. We did experience some temporary weakness in Q4 2018 that led to a gap in valuation expectations between sellers and buyers, which depressed private equity volumes in the first half of this year.
As reported in our July assets under management call, we did have fewer realizations in the first half of 2019 versus the first half of 2018. However, we have seen a meaningful rebound in that type of transaction activity. While the new investment levels as well were not up to the 2018 levels that we've seen, we're pleased with the CHF 6.9 billion. We believe that's a satisfactory investment amount given some of the volatility that we've seen earlier in the year. We have the benefit of operating within a market that is highly fragmented. Even as one of the larger players in the sectors, we only have about just over a 1% market share in Europe and less than a 1% market share in the U.S. and the rest of the world.
What that means to us is that we have a tremendous amount of blue sky ahead of us as we continue to grow and expand our platform. In this broad and expansive market, which we operate within, we're also being truly focused on key themes. We have a proactive approach to origination, whereby we identify topics and sectors that we believe are structural winners in the long run. Then we build a list of target companies in those sectors, and we pursue them proactively. We call that approach thematic sourcing. While there's a lot that you could go and chase in the current market, we're very selective. We invested in only 2% of the direct opportunities that we saw in the first half of this year, which resulted in 29 executed transactions.
We also invested $1.4 billion in secondaries and $1.4 billion in primaries, also a very selective process. Our platform today is quite diverse across geographies as well as asset types. We invested 30% of our investment dollars in Europe, 13% in Asia-Pacific and the rest of the world, and 57% in North America, in total investing about $7 billion in the first half of this year. Consistent with prior periods, our asset mix has been about 60% direct investments and about 40% portfolio assets. Looking back on what has now been the longest economic expansion since the 1930s, at least in the United States, we see valuations for many types of assets at the upper end of historical ranges. Rates are stubbornly low, and that's pushing investor demand into other higher-yielding asset classes. Private equity has certainly been a beneficiary of much of that investor demand.
At the same time, what we're finding is that anything that has a defensive label stamped on it is going for an incredible premium in the current market. It's late in the cycle. Businesses that have resilient cash flows and operate within historically defensive sectors are attracting real significant demand. We're seeing, in many cases, unprecedented valuations being paid for businesses that have these characteristics. We, as a firm, are beginning to rethink what defensiveness means. We believe that in the current market environment, offense is the new defense.
Instead of paying up for the next historically defensive asset, very high valuation, and adding a tremendous amount of leverage to that business, we're focusing today on slightly smaller businesses where we can play an active role over the next 3-5 years to build out the defensive characteristics of that business, to help them diversify into new customer segments, help them expand into new geographies, help them convert their business models from transactional into recurring business models. Those are the types of situations that we're gravitating towards. It requires more work, it requires more effort, but that's where we're finding value, and that's where we're finding opportunity in the current market. You'll see in some segments us focusing on slightly smaller transactions versus maybe what we've done in years past.
Our investors give us a tremendous amount of flexibility to invest across the middle market with valuation sizes that have ranged from multiple billion CHF of transaction value, just down to a couple hundred million CHF. We have the ability to play the entire spectrum. Our private equity business is established. We've invested CHF 62 billion into private equity since our inception. We've generated a net return of 20.2% on our direct investments. We have over 300 professionals that are focused on this segment of our business, and we have a portfolio of over 60 assets that we're responsible for. One area that we're particularly active right now is on platform assets. Just about anything that you buy today, you're required to pay a very full and fair price to get access to those platforms.
You'll see meaningful acquisition activity across many of our portfolio companies today as we look to buy a platform at a market price, but then leverage that platform to be able to make smaller add-on tuck-in acquisitions at lower accretive multiples and buy down our multiple over time. Our private debt business is also very established, with CHF 32 billion invested over time. We've generated a 4.6% unlevered net return on first-lien investments, an 8.5% unlevered net return on second-lien investments, and we have over 100 professionals focused on this segment of our business. In the current market environment where debt is cheap, we're focusing on leveraging the relationships that we've built with our investment partners over time. We're building custom structures, custom tranches, oftentimes to meet the specific needs of our investment partners to be relevant and active partner for them.
Within our private real estate business, we've invested CHF 18 billion. We've generated a 12.7% net return within our real estate opportunities portfolio. We have over 100 professionals focused on this segment of our business, and we've made over 80 direct real estate investments. In this part of our business, we're seeking opportunities in cities that benefit from transformative trends. These are expanding geographies, oftentimes tech economies. We're also looking to buy assets that are operating below their potential, where we can expend resources, CapEx, and human capital to help reposition those assets through proactive measures to sell them at a gain. In our infrastructure business, we've invested CHF 10 billion over time. We've generated a 14.8% net return on infrastructure investments. We have over 100 professionals in that business as well, and we have a portfolio of over 40 positions.
Core infrastructure today are trading at very attractive levels, and so you'll see us engaged in building core platforms. We're actively involved in the construction phase or in repositioning underperforming assets, ultimately to be sold to core investors that have a very strong demand for these types of assets today. That's a little bit of a overview of our investment activities. I'd like now to hand over to my partner, André, who will walk us through our clients.
Thank you, Dave. I'm excited to provide an update about how Partners Group made progress on the client side. I'd like to share my client perspective with you today. Since the IPO of Partners Group back in 2006, we have actually seen sustained growth in our assets under management, which is illustrated on this chart. Today, Partners Group counts a bit more than 1,300 employees. This build-out that you have seen at Partners Group, both in 2019, really happens because we do see the growth drivers in our industry and also at Partners Group in tech. We see that there's a structural growth in institutional assets under management, and we observe rising allocations to private markets. Number 2, we see that clients increasingly focus and intensify their relationships and collaboration with those managers that really have the capacity and capability.
With Partners Group offering solutions across asset classes, we are one of those managers of choice for many of our institutional investors. Actually, if I talk quickly about the hiring and the growth of the platform in 2019, you see that we did intensify hiring activities over the last 12 months. I present that for a few different time horizons here. You see that over the past 10 years, average Assets Under Management and employees have been almost perfectly in line. We had over the past three to five years, a slight under hiring or basically Assets Under Management growing more quickly than our employee force. Now in 2019 or over the last one year, we see that we have successfully hired employees all across the globe to strengthen our platform. Where did we hire?
You see, for example, in the U.S., that we have intensified our investment platform build-out. For example, in the new Denver campus that David's leading. We also did hire substantially in Europe and in Asia. In Asia, for example, we did hire substantially also into corporate client services functions that are important to provide services that go beyond investment functions. Our clients do equally benefit, and so do you as a shareholder. Clients benefit also from compliance and risk management, from portfolio management, and reporting and data analytics. We are equally building out functions that are not increasing capacity in the short term, but are important to satisfy client demands and position us well for the future. Actually, there can be no doubt that we live in a challenging world and market environment.
Of course, I could talk about trade war and Brexit and disruption and low interest rates. The fact is that despite this complexity of building up private markets portfolios, and also despite or amid these challenges in financial markets and public markets and private markets, investors really seek additional and more substantial exposure in private equity and debt, real estate, and infrastructure. I strongly believe that investors do that because they want to have exposure to real economy that they cannot access via public markets. You know that many companies go public later or not at all. Clients like the Partners Group offer the relative value exposure, so we flexibly shift allocations across regions or asset classes if they're a mandate client. Last but not least, and very importantly, I safe to say, Partners Group stands for operational value creation.
We want to actively engage with our portfolio companies to create growth as opposed to just betting on growth in public markets that we don't see for years to come. If I look at our assets under management in terms of regions and types of clients, you see a strong diversification. On the left-hand side, you see the regional split of our EUR 80 billion assets under management. See about a third plus has been contributed by clients out of the U.K. and the Americas. You see about a third from Germanic-speaking Europe, and a third by countries and regions like Asia, Australia, Northern Europe, that really have become stable contributors and really pillars by now in terms of asset raising for our platform. On the right-hand side, you see the type of clients.
Still about 50% of our assets under management have been contributed by pension funds, both public and corporate. You see that Partners Group has raised substantial assets from endowments, sovereign wealth funds, asset management family offices that often want to access our asset class by mandate. Finally, but importantly, you see that distribution partners and individuals have contributed significantly to the assets under management of Partners Group. Actually, if I look at the split of our clients, you see that our roughly 900 institutional clients really are nicely diversified. The largest client only amounts for 3% of assets under management. The top 20 clients account for about 25%, slightly less. You see a nice split, I believe, in terms of mandates, products, but also structured finance.
What makes me happy and a bit proud is that Partners Group can cater to the largest and most sophisticated and most demanding clients, like sovereign wealth funds or larger pension funds. Equally, Partners Group has an offering, like structured finance that allow retail investors, individuals, high-net-worth individuals, to allocate their portfolios in a similar way as institutional investors do. As a company, I believe we truly grow by combining the large and the small investors. They have different preferences, needs, and this forces us and allows us to build out our platform on the investment side, but also in ancillary services in a nice way. In terms of client demand, 2019, we're happy to reconfirm the full-year guidance. EUR 13 billion-EUR 16 billion is what we expect for the full year.
With EUR 7.4 billion raised in the first half, that's pretty much in the middle of that range. Our guidance does assume that markets are a bit more volatile and low growth, actually still overall benign. Over the next 12-18 months, we expect to raise from various solutions, including flagships and mandates and semi-liquid offerings, that's pretty much a continuation of what you have seen in the past. Paydown effects and the redemptions actually will account for about EUR 6.5 billion-EUR 7.5 billion, there's a tilt towards the second half, as we have communicated in the past. Partners Group does not provide guidance on other effects such as FX rates. I don't believe we are experts in those areas, that's why we don't provide guidance, which I think you appreciate. In general, we're really satisfied about the dialogue that we have with our clients.
One of those topics that causes a lot of interest is, of course, ESG. Actually, we did not talk about environmental, social, and governance considerations last time, and many of you approached us afterwards whether that's important for Partners Group. We decided this time to simply make it part of the presentation. I think Partners Group has a really unique and operational approach to ESG. Now, if it's in contrast to public markets, because in private markets, it's about really doing it, really contributing to ESG aspects as opposed to pretty standardized and sometimes generic way of assessing a company, in terms of ESG. What we do at Partners Group is we fully embed ESG considerations into our investment process, like the ESG experts work hand-in-hand together with the investment teams during the due diligence process.
Afterwards, once an investment has been done, it's really about identifying those aspects in terms of ESG that are most material and beneficial for a company. That depends or differs from industry to industry. You see the examples on this slide. It can be about energy management. It's about reducing energy costs, which is good for the planet, but equally beneficial in terms of cost reduction. It can be about health and safety measures, which can save lives, but at the same time, reduce claims. You can really do well by doing good in terms of ESG, and as Partners Group, that's an important aspect, not only because investors ask for it, but because we believe it's the right thing to do, and it does really make us better investors and achieve a better risk-adjusted return for our clients.
That is why I am happy that Partners Group has again retained very high scores from UNPRI for our responsible investment practice. Actually, for the fifth consecutive year, Partners Group has received an A+, which is the highest possible score for our overall strategy and governance, which nicely compares to a median rating of A, and we will keep that up also going forward. We will be an ESG leader in all aspects because we think it is, as I just said, the right and an important thing to do in terms of our investment practice. With this, I would like to hand over to Philip Sauer, who's going to talk about how our activity and achievements in the first half of 2019, but actually over the past two and a half decades, have translated into our financials.
Good morning, everybody. On behalf of the whole firm, I'm proud to presenting you our H1 2019 numbers. With that, I would like to switch on page number 23 on the presentation. What you see is that our average assets under management grew 16%, and that translated into a 14% management fee growth. This basically confirms the structural growth trend of our industry. If you look at our overall revenues, you see they grew 4%, and that was mainly due to the fact that we had lower performance fees in the first half of this year. As André mentioned, we accelerated the build-out of our platform. We hired over the last 12 months, over 200 professionals. We expect to hire also into 2019 and 2020, further professionals. Therefore, our personnel expenses, they grew disproportionately in the first half compared to our revenues.
That muted the EBITDA development. Let me please talk about our revenue composition and then dive into costs. From our revenues, they basically consist of two metrics. It's performance fees and management fees. While management fees are contractually recurring, they are based on closed-ended long-term structures. For instance, they have initial terms in the private equity space or equity space up to 10-12 years. On the private debt space, 5-7 years. That represents about 80% of our AUM. 20% of our AUM, and therefore also management fees, are based on so-called structured finance, semi-liquid funds, where the fee base is the NAV development of the program. The 14% management fee growth was supported by late management fee and other income. They grew by 50% to CHF 51 million, and that supported management fee growth in general.
Other income is earned for fundraising and investment services, but mainly also due to treasury management services. This is where we literally help clients pool their cash and make efficient use of their cash flows. Looking at this number, if you look into the second half of this year, we believe that this number will not be quite as high, but will be more elevated. If we move on to page number 25. On page 25, you will see that management fees will make the bulk out of our overall revenue composition. They represent about 70%-80% of our revenues going forward, and they will do so also for the mid to long term.
You look at our performance fee developments in the first half of the year, they represent 19%, and they were marginally below our long-term guidance. If you look ahead, we confirm the full-year guidance of 20%-30% for performance fees, and we confirm that performance fees will make up 20%-30% of our revenue streams in the very future. We also acknowledge that there is a 10% gap, like 20%-30%, and this gap is quite wide. Why is this the fact? We have over 300 different investment programs and mandates currently running. They are in different life cycles. They are all well-diversified. They contain hundreds of assets.
That means, on the one hand, it will provide a quasi-recurring contribution to our revenues, on the other hand, there is a certain volatility component, which is, for instance, as Dave said in the beginning, affected by volatility in the market. If we look at on the next slide on page 26, I would like to actually make three statements on our performance fees. The first one is the very short-term development of what we have seen in the first half of this year. If you look at the very short-term half-year results over the last four years, there you see that our performance fees has leveled somewhere between CHF 130-CHF 170, and actually reduced in the first half of 2019 to CHF 130 again, which was mainly due to the market volatility experienced in the first half of the year.
Although that correction was rather short-lived, it hindered us to make use of the full potential of the year, obviously. Assuming that we have a benign market environment into 2019, we think that we can make and realize the full potential of our performance fees, meaning they ending up between 20%-30% of revenues. You see CHF 130 million of revenues stemming from performance fees. They, again, were highly diversified. Over 50 programs and mandates contributed to these performance fees. The majority of that performance fees in H1 stem from investment programs which were launched prior to 2012.
Now, my second message on that slide is if we now not look at the past, so what we have actually generated in the first half of the year, but just look a bit short-term outlook into the future, net 2019 and 2020, you will see that we will see more programs providing additional performance fees coming through of the vintages which we raised between 2012 and 2014. Over the next probably 18 to 36 months, you will see programs contributing to performance fees from the vintages 2012 to 2014. My third message on that slide is if we now go fast-forward into five, six, seven years ahead, you will see, or we believe that our performance fees will, in absolute terms, be significantly higher than what we have seen today. Why is this the case?
If you just look at the past, over 2015, 2016, 2017, and 2018, what we have invested, we have done a significant build-out of our investment platform. We have invested a significantly amount of equity in these years. We believe that that would definitely contribute to a absolute higher number of performance fees. With that, I would like to move to page number 27 and quickly talk about our management fee margin. Our management fee margin has been quite stable since our IPO. A lot of shareholders ask us why this is the case. "Why can you, in a market which is constantly under pressure for fees, maintain your management fees?" The reason is we have changed our business over the last 10 years as well. We have heavily invested into our investment platform. We have heavily invested into our direct investment capability.
That is a skill which you cannot copy quickly. With that, where we are today positioned, I think we can defend the margins in general. Overall, we see a surplus in demand for strategies like us which we provide, like direct equity strategies, direct infrastructure credit, and direct real estate. That's why we also believe that our fees will stay stable on the management fee side, also in the years to come. The average since our IPO is 125, 126 basis points, sorry, and that is about the same. With that, I would like to move to page number 28 and talk about costs. When we at Partners Group talk about costs, we talk about expenses, and we talk about personnel expenses. Personnel expenses, they make up 80% of our total cost base.
If we talk about costs, please let us talk about the build-up of our platform. When we look at personnel expenses, we need to really separate between two things. We need to separate between regular personnel expenses and performance fee-related personnel expenses. If you look at the personnel expenses, the regular ones, they increased to 25%. They actually increased even more than our average headcount. Our average headcount increased by 20%, expenses by 25%. This is due to this acceleration of hiring. This is also a temporary measure. We believe that for the full year 2019, these expenses will be about in the same magnitude, the growth of these expenses.
You could consider 2019 as a catch-up year for hiring, but you could also expect for 2020, 2021, that we remain within our margin guidance of 60%. There is a second component, which is our performance fee-related personal expenses. They actually decreased by 25%. Why is this the case? Because we allocate a straightforward 40% of the performance fees to our employees, the team. As performance fees decrease, we have a linear decrease on the performance fee-related expenses as well. For those of you who cover us a bit longer, you know that we have changed our key performance indicator from EBITDA to EBIT with this announcement. EBITDA served us very well since our IPO over the last 13 years. What we believe, EBIT will be a better operating measure going forward. Why is this the case? In 2019, there was a new accounting standard.
With this accounting standard, we recognize now right-of-use assets or lease liabilities on our balance sheet. We don't have expenses anymore, for instance, on rents in our other operating expenses, but we need to depreciate them. That, as you can see on the slide, we had a significant increase in depreciation and actually a reduction in other operating expenses. There was a reclassification of CHF 6 million. We said, "Look, it makes just more sense to look at EBIT," because that is probably going forward a better measure of our operating performance.
If you look ahead and say, "Okay, Partners Group will grow, we continue to build out the platform, how do our operating expenses develop?" I think from now on, what you see, I think you can expect that the operating or the other operating expenses will develop alongside AUM or alongside management fee growth. I would like to talk about our new/old margin target. Originally, we had an EBITDA target of 60%, now it's an EBIT target of 60%, that has came down slightly from 65% in 2018 to now 63%, mainly due to the accelerated hiring, what we have experienced in the first half, but also will experience for the full year 2019. Going forward, we have a target in place, which is about 60% on every incremental management fee CHF or performance fee CHF. What we generate, what we spend.
That is all under the assumption that FX rates do not move. Why do I talk about FX rates? On page number 30, you see our exposure currently, and you see that our AUM/management fee exposure to FX or currencies are predominantly EUR and USD denominated. If you compare that against our costs, you see that our costs are still tilted towards the CHF denomination. Although the CHF decreased from 45% to 40% in the first half. The USD actually strengthened from 20% to 25%, mainly due to the fact we're building out Denver quite substantially. All that said is FX movements have an impact on our EBITDA margin. If we look at the first half of this year, the FX actually decreased our EBITDA margin by roughly 1%. One year ago, actually, FX supported us by 1%.
There is always a bit of a volatility. If you look at performance fees, which is 20%-30% of our revenues, they don't are exposed to FX fluctuations. Whenever we receive performance fees, we convert it into local currencies and pay it out to our employees. With that, I would like to move on my last slide before we open up for questions. This is on the left side, you see a P&L, which I actually talked about until EBIT. Let me talk about everything below EBIT and then talk about our balance sheet. Below EBIT, there is a certain component which we call the financial result. The financial result is basically the result of the performance of our own assets which we have on the balance sheet.
Partners Group invests roughly 1% for every client dollar or euro we raise, 1% alongside the client in the fund. Today, we have CHF 700 million on these own investments on the balance sheet. Movement of those, they go through our financial results. We had actually, throughout the first half of the year, quite a strong performance of the programs across the platform that supported this financial result in particular in the first half. In terms of taxes, our tax rate will be also in the future between 12%-14%, and that resulted in a profit growth of moderately 1%. Quickly talking about the balance sheet, I think our return on equity remained high, and we expect this to be the case also going forward. From a balance sheet perspective, we have almost CHF 1 billion net liquidity.
I think our war chest is well-filled for opportunities which might arise. With CHF 1.9 billion in equity, I think we can withstand probably more economic challenging times. That said, so far from the financials, with that, actually, I would like to open up for questions in the audience, then maybe on the call. Hubert.
Good morning. It's Hubert Lam from Bank of America, Merrill Lynch. Three questions. Firstly, on performance fees for the second half. What is the visibility and pipeline for performance fees in H2? I guess we're almost halfway through the second half, you probably should have a good sense in terms of what the tax environment has been, or would you say is kind of all to play for in the Q4? That's the second half of performance fees. Second question, again, sorry, is on performance fees. What would you say is the sensitivity of performance fees to the global macro cycle? You admitted yourself we're approaching late cycle now. Does that mean that it's more likely that more performance fee range will probably be in the lower half of that range that you've given? Third question is on personnel expenses.
This year, it seems like you've had catch-up in personnel expenses, which is running higher than revenue growth and AUM growth. Is it just for this year, or would you say there's probably more catch-up or more reinvestment in 2020? Or should we expect for personnel expenses to grow in line with revenues again? Thank you.
We see, in terms of the build-out of our platform, we see that personnel expenses have grown more substantially in 2019. We expect this for the full year to happen. 2019 will be a catch-up year in terms of growth of personal expenses. Thereafter, I think it goes line in line with management fee development. Maybe on the performance fees, I don't want to talk about performance because I think we talk about exit environment first, because performance fee are always a derivative of the exit activity.
I think we have seen a more robust exit environment in the second half, or what we've seen so far in the second half of this year. You asked about the sensitivity of our exit fees. There is a certain element that's always going to be linked to the market environment. We have a strong philosophy as a leadership team that is clients first, and we don't put our clients in a compromised position trying to sell positions that they're invested in if it's not a market that's well-suited for that. We believe that's the right thing for shareholders over the long run. We did hold off on certain divestitures from the first half of the year, given the volatility that we saw. We like what we're seeing right now out of the second half of this year, and hopefully that window continues.
Translating that into sensitivity of performance fees is probably like we had a bit of a buffer start in Q1 that potentially is lost in a sense. If you would consider just in terms of sensitivity, if all our exit activities are going through as planned, we could end up at the higher end of the range. If you have something like a Q1, it lowers that potential. If you have, for instance, some postponements of exit activities, it could go even across the portfolio, could even go lower to the 20% bandwidth. Unfortunately, this is very tough to tell you where it will be because we don't know where we are in the next quarter.
Also what we want to stress and highlight is, of course, if the world falls apart now in the second half of the last quarter, that can have an impact on performance fees in general so that they would even fall below 20%. This is not our base case.
Shamoli Ravishankar from Morgan Stanley speaking. Just a further question on how your market shares have been developing within different asset classes, geographies, and even client types. As LPs start consolidating their GPs, what has this really meant for Partners Group of the last few months? Does your more mid-market strategies relative to some of the global players benefit you at this point in the cycle?
We look at market share a couple of different ways. One from a transaction activity perspective, and I'll speak to that, and maybe André, you can speak to from a client perspective. I think that the current environment requires a tremendous amount of effort to get a transaction done. We'll have six or seven lines in the water to get one transaction across the finish line. I think that type of environment where you have to expend a tremendous amount of speculative resources on situations that aren't necessarily at your door yet, I do think benefits the larger platforms. There have been a number of people that have commented on market share pickup that the large platforms have had at the expense of maybe some of the smaller monoline funds. I do think that this very resource-intensive environment they're in is one of the factors driving that.
We have a platform with 1,300 people around the world, we can spend resources on businesses that aren't for sale yet and develop a thesis over two or three years. I think that's benefited us, and we've been a share gainer over the last number of years as a result of that.
In terms of clients, I believe Partners Group is probably best known in Europe. That is where we've been founded. Like Germanic-speaking Europe contribute a third of our assets under management. A very strong position also like here in the U.K. I believe the positioning of Partners Group will remain strong in Europe. A lot of positive feedback by clients. They like the track record. They also like the services that we perform. Partners Group from a client perspective is always the combination of investment track record, but also the additional service that we provide. Maybe that's not on top of everyone's mind right now because the markets are positive. Should the markets shake at one point, clients really start to appreciate the additional services and risk management and portfolio construction. That is precisely what we have demonstrated in Europe now for two-plus decades.
This is being recognized both in Asia and in the United States. We see a strong interest and increasing interest in PG from Asia, and the same is going to happen in the United States.
I believe what is good about Partners Group, as I said, is the combination of mandate products and structured finance. Probably we are quite unique in structured finance that we also have problems in terms of mandates. We want to just be like our peers in terms of flexible offerings. That's the combination of these three access routes into private markets that allow Partners Group to have this strong positioning on the client side.
Hi, Neil Welch from Macquarie. Two questions, please. The first is, with the increasing emphasis that seems to be in place on ESG investing, maybe that's just because the press is picking up, and as a leader in that space, how do you think that affects allocations between private assets and the more public markets and your positioning in that? The second is, you're clearly investing significantly in your U.S. base in Denver. I'd just be interested to know where you are in that development. I understand it is a long-term project. It would be interesting to know where you are in terms of delivery. Are you fully built out both on the client and the investment side? What you think the plan is going forward? What you could share with us would be great. Thanks.
In terms of ESG, I don't believe that is the driving force why investors will relocate from public to private markets. We see interest in private. We see a number of investors that do decrease public equity allocations and increase private equity allocations, let's say. ESG is one of the benefits, but not the key driver of that move. I think what's interesting is that public markets are probably more advanced. There's a lot of reports. You can read a lot. It's all standardized. It's all available at the push of a button, but it's often very superficial, isn't it? We try to do a great job in assessing hundreds and thousands of companies, and then here comes in the private market disadvantage and advantage. Private market is probably pretty much pragmatic and focused on increasing or improving in terms of ESG criteria.
While public markets are better in reporting and sharing information, I believe private markets are better in really focusing on triggering change in these respective companies. The Partners Group, we have dozens of ESG initiatives across our portfolio. As I said as an example, that will positively impact the assets. It's not about finding out what is the perfect ESG asset, but it's about creating a better ESG asset during our holding period.
With regards to our build-out in the Americas, and specifically at our Colorado campus, we're about two-fifths of the way through that ramp up. After the next leg of our construction project is complete, and we expect it to be complete in Q1 of next year, we'll have capacity for about 500 at that location, and we're just above 200 today. Very well represented across client activities, investment activities, and services. Yep.
Hi, this is Amandeep from Deutsche Bank. I've got a couple of questions.
It was primarily on the equity side. The debt business tends to have a higher velocity of liquidity through refinancings as rates go lower. The debt business is not a huge driver of performance fees overall. Primarily, it's going to be linked to our equity business. It was reasonably balanced across geographies. Some of the volatility we saw, both in the U.S., at least Europe. There was about a 31% reduction in transaction volume within the private equity market overall in the first half of 2019 as compared to the first half of 2018. It was primarily in the equity side of our business balanced across geographies. In terms of what we can do to protect against volatility there, I think performance fees we can protect through diversification. We have a number of products that contribute to this.
It's not just a couple of big chunky direct investments in there. We have our secondary business that's a meaningful contributor to that. We have our real estate business, infrastructure business, 50 programs in total that contribute in some way. Yes, we do have a couple of bigger chunky positions in the lead private equity portfolio that can move the needle a little bit one way or the other. We have, again, the firm belief that it's clients first, and we're going to hit the windows that are appropriate to make sure that they have good returns and good realizations. If that happens to be next year or the year after that, if that's when the best windows present themselves, then that's when they present themselves. We're not going to try and time liquidity out of our clients' portfolios to meet our financial objectives here.
We're very focused on making sure that we have good returns for our clients, that we meet their needs, and then it kind of falls how it falls.
classes as well. You will see in the years to come that infrastructure and real estate significantly contribute to performance fees as well. Given that the funds and the asset classes in itself are younger, contribution, we have talked about this six to nine years time lag, that will take some time. As private equity is still the largest and most mature asset classes for us, you will see also the vast majority of the performance fees in that. You will see them coming, and they will be more diversified in the process. Question on the call?
If you have a question via the telephone lines, please dial 01 on your telephone keypad now to enter the queue or type your question in the webcast window. Once your name has been announced, you can ask the question. If you are using speaker equipment today, please lift the handset before making your selection. One moment please for the first question. The first question is from Reinhart Fronz of Laken Asset Management. Your line is now open.
Thank you. Thank you for an excellent presentation. I have two questions. Sorry. In the beginning, David described the historical returns since inception, or since the IPO was in 2009, of the four asset classes, which were all very acceptable. We know, of course, that 2009 was a pretty good year to start a record because it was after the crash in 2008. Are you willing to share with us what those performance % were over the last five and three years? I would assume that there's a decline curve in the performance %. The second question is a simpler one. Your own portfolio is about CHF 700 million. You've shared with us, if I can do my maths, you make about a CHF 70 million return on that in 2019, if I analyze the first half.
Is 10% the return we can expect for that portfolio? Is that a pretty good benchmark?
Maybe I'll start on the historical track record. We went public in 2006 and the track records actually start at the inception of the investing activities for those different businesses. For the direct private equity business, for example, I believe it was 1998 or 1999, and goes across cycles. It wasn't just from the 2009 time period up. It's literally across every environment that the firm has been through, and we haven't seen a material degradation in returns over the last couple of years. Now, we have been supported by a very buoyant market. We're certainly not underwriting to returns at that level in every instance.
I think it's safe to say that from an underwriting perspective, there have been returns that have come out of the market over the last number of years, and we need to supplement the loss in market returns with additional resources from our side. That's why you see us building out our operational capabilities to the extent that we are, because we have to go from impacting businesses to truly transforming businesses in order to drive the same types of attractive returns moving forward versus what we've been able to generate historically.
Thank you.
From our own investment perspective, the historical returns, if you use a 10% return on those, you're quite aggressive. Typically, we have seen in the past everything between five and 10% because they are highly diversified across vintages. Some of these own investments are very young, they don't contribute at all. Some of the own investments are very mature, they also don't contribute so much. You have kind of the bulk in the middle, which is actually in full value creation mode. I think assumptions of five to 10% is probably a reasonable one. We have seen everything. It depends a bit on how also kind of the market environment looks like. That's why I cannot give you one number, but currently we're running at a 10% run rate, and that is on the upper end.
Thank you.
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Okay. Well, with that, we'd like to thank all of you for your attendance and for your interest in our company. Thank you for your support, and look forward to connecting with you on our next announcement. Thank you very much.
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