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 questions 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. I may now hand you over to David Layton, who will lead you through this conference. Please go ahead, sir.
Good morning, investors and media representatives. Welcome to today's assets under management announcement call for the first half of 2019. My name is Dave Layton, Co-CEO of Partners Group. I have with me on the call today Philip Sauer, our Co-Head of the Group Finance and Corporate Development Department, Alex Soppera, a member of our Corporate Development and Investor Relations team. Also, in order to provide you with some detailed insight on one of our most recent investments, we have on the phone Esther Peiner, who's a managing director in our European Private Infrastructure team. She's today dialing in from on-site from one of our most recent acquisitions in Norway. As always, we appreciate you following our business and our organization and for taking the time for this call today.
Over the next 30 minutes or so, we want to provide you with an update on our investment client and our assets under management developments for the first half of the year. As per usual, we won't be commenting on the financials on this call. André, Philip, and I will be presenting our H1 financials to you in London this September, and we're looking forward to meeting most of you in person then. With this, I'd like to turn to page 3 of the presentation. Partners Group now has EUR 80 billion in assets under management. Approximately half of these are in corporate equity. The other half are in real assets and in financing activities. We have more than 1,300 employees in 20 offices around the globe, and our investment engine is powered by more than 600 private markets professionals.
With this scale and presence, we have one of the most comprehensive private markets platforms globally. I think that the culture that we've developed over the years is unique. Our large regional hubs are located in Zug, Switzerland for Europe, in Denver for North America, and in Singapore for Asia. By virtue of having our largest footprints outside of the typical large capital markets, our model has evolved to be that of a very outbound-driven firm, and that's served us well. We don't expect things to come to us. Every client that we have, every asset that we own, is a result of somebody getting on an airplane and building a relationship. We proactively identify interesting opportunities, and then we track them down.
Thanks to our highly talented professionals, our research team, coupled with insights into thousands and thousands of private markets portfolios that we track, we're able to generate consistent, attractive deal flow. We target assets in which we have high conviction, assets we know we want to own, rather than just those that are available in the market at any point in time. I also think that we're unique in the way that we own and manage assets. I had one of the directors of one of our portfolio companies recently tell me that he felt that Partners Group's approach to ownership and governance was more akin to that of a family office than to that of a typical financial investor. I think it's probably true. I think the board of our portfolio companies plays an important role.
We look with those companies at the way that we need to develop, not only the next five or six years, but over the next 10- 20 years, and we invest accordingly. We don't just focus on financial gimmicks and games. We call our approach entrepreneurial governance, and it's at the heart of our strategies for improving businesses. It's how we align the interest of all of our stakeholders, and we believe that these efforts will be a main contributor to our future outperformance. We also have a large and expanding network of experienced external operating directors that bring hands-on approach to our various companies, and we have a large in-house team of industry value creation professionals that immerse themselves in our assets. Please now turn with me to page 5, where we show an overview of our platform activities for the first half of 2019.
We've continued to expand our employee base. Our headcount is up 10%, from 1,203 at the end of 2018 to 1,326 at the end of H1. This is a trend that you can expect to continue in the quarters and years to come. We have been and will continue to hire across all of our asset classes, and we continue to build our investment capacity and our investment capabilities. On the investment side, it proved to be a satisfactory year for the first half of 2019. While not quite up to the record investment levels achieved in 2018, we invested $6.9 billion in private markets on behalf of our clients. In H1 2019, we invested the majority of capital, 60% or $4.1 billion, into direct transaction. While the remaining 40%, or about $2.8 billion, went into portfolio assets, such as secondaries and primaries.
This is in line with the long-term estimate that we've provided to invest about 60% in directs over time. On the right-hand side of this slide, you'll see that 29 direct investments that were completed in the first half of the year across debt and equity were spread across regions. We did 13 transactions in North America, 12 in Europe, and two in Asia-Pacific and emerging markets. We also generated $4.7 billion of gross underlying portfolio realizations. We work hard and with an entrepreneurial mindset to propel growth and drive value creation initiatives within our underlying portfolio companies and our assets, and we then realize value for our clients when the time is right. A good example of this was the sale of our stake in Billy Bishop Toronto City Airport at the beginning of this year.
Our historical portfolio also has a lot of breadth and diversification, and will therefore, to some extent, be subject to market dynamics, which is why realizations year to date were lower compared to the first half of last year. Investors were more cautious in Q1 in particular. Q2 felt like a bit more of a rebound. As we look at the pipeline of assets that we have today, which have the potential to be in the market in the second half of this year, we have reason to believe that further meaningful realization potential is ahead of us in the second half of this year. As we look on the next slide, page 6, you'll see that we had a number of transactions that we have screened and executed in the first half of 2019 across asset classes.
You'll see that we were able to generate significant deal flow. Notably, we saw about 1,300 direct opportunities and EUR 85 billion in secondary deal flow during the period. Needless to say, this kept us highly busy, and we had a very disciplined approach and selective approach to executing on only the most attractive investment opportunities in this fast-paced market, and for good reason. The market continues to be characterized by full valuations and strong competition for the most attractive transactions. We therefore continue to apply our thematic sourcing approach by mapping out the most promising companies and assets early on, and fostering relationships that can help outpace the competition.
While this means that we have to spend speculative resources on assets that may not ultimately be for sale for months and years into the future, it helps us to build a longer-term pipeline and to keep us focused on the most attractive situations. We maintain discipline with a 98% decline rate over this period. Please let us move on to slide 10, where we report on the investment split between regions and types of investments for the first half of the year. You can see that investments were diversified across regions, sectors, and investment strategies. In terms of regions, we invested 57%, or roughly EUR 3.9 billion into North America. The U.S. remained an attractive investment region and offered us several good investment opportunities.
For example, we made a notable investment into Blue River PetCare, a leading acquisition platform for veterinary hospitals, as well as Confluent Health, a leading player in the highly attractive physical therapy sector. I'll talk on that in just a little bit. The European market overall was a little slower at the start of this year in terms of transaction volume. We were pleased to find EUR 2.1 billion of attractive investment content. One of these transactions, which was a sizable infrastructure investment, we'll also present to you a little later. Lastly, our investment activities in Asia Pacific and emerging markets amounted to a little less than EUR 1 billion or 13%. Real estate investments were a meaningful part of this segment of the portfolio. In terms of strategy, as previously stated, direct investments were again the largest part of our investment activities in the first half of the year.
Consistent with prior years, directs accounted for 60% of the volume and were split roughly 55% equity investments and 45% debt investments. Secondary investments remain opportunity driven, but we acted selectively in the heated market environment. In the first half of 2019, we invested 20% in secondary transactions, including some large, very complex transactions where we were the preferred solution provider by the seller. Primary investments continue to remain an important part of our business in order to provide diversification for our clients. We invested about 20%, or $1.4 billion of our total investments into primaries into select managers. Turning now to page 8, the macro headwinds have been materializing. We see this with the U.S.-China trade conflict, which extends out with Brexit, with easing growth that we see all around us. We believe that the late cycle expansion will continue for the time being.
The market is now pricing in Fed rate cuts for 2019 and 2020. However, U.S. macro data remains relatively robust. Near-term outlook for the Fed policy is somewhat uncertain. We could see uncertainty leading to market volatility and potential lower valuations. There's likely more downside risk than upside potential for capital markets. Across private markets, we continue to look for defensiveness, but maybe not in a traditional sense. Typically, investors associate defensiveness with low yielding, low risk, non-cyclical, fully valued assets. This is maybe the public market's definition of defensiveness. For us, defensiveness increasingly means target companies that are positioned in a segment of the market that is structurally attractive, where transformational trends exist that can propel growth into the future, where we can leverage our various value creation strategies to positively impact earnings.
We are being cautious and certainly pricing in multiple contraction, but we focus on transformative tailwinds with low risk assets, where we can focus on sustainable growth and on value creation and entrepreneurial governance. We think this provides a stable foundation for outperformance within our target assets. Moving on to slide nine. This slide gives you an overview of our thematic sourcing activities for corporate assets. Our research team conducts regular analysis in order to identify those sectors that we believe offer the highest relative value in today's market. Based on this initial assessment, we systematically map out the sub-sectors within these categories that are particularly poised well to benefit from structural growth and transformative trends. We then develop tangible investment themes for each sub-sector, and spend more time looking at long-term growth prospects.
Once we've identified our target sub-sectors, we work on building a deep and trusted set of relationships with the most promising companies. Years ago, our thematic sourcing efforts identified physical therapy as a highly attractive sub-sector within the healthcare space. It was ripe for consolidation and continued expansion. Based on this top-down analysis, our deal team went out and met eight target companies, or the owners of those companies, and we built out our understanding of the landscape. I went on the road with our team and met a number of those management teams personally. This thematic work has led us to our recently announced acquisition of Confluent Health, a company which has been on our radar for quite some time, and which I'll explain in detail on the next slide. Confluent Health is a top five independent outpatient physical therapy services provider in the U.S.
The company has a network of approximately 200 clinics in 12 states. We liked it for a couple of reasons. Number one, as mentioned, top-down, the market is very solid, with long-term trends of the aging population in the U.S., people living longer, and oftentimes having chronic conditions that are best addressed through physical therapy rather than through riskier and more expensive medical procedures. We like the trends. In addition to that, we have multiple avenues to grow. First, through consolidation. The company has been the acquirer of choice for independent operators. They want to access the benefits of scale of a larger platform, but continue to operate their practice as entrepreneurs and as practitioners. Confluent keeps the local spirit, the local entrepreneurship, and the local economics alive in these practices, and that has been a winning model.
The company also has a number of growth avenues through new site openings and through expansion into new markets, we have a lot of ideas in this regard. We also think the company has been very wise to vertically integrate. It today owns its education and training for physical therapists. We like how strategic they've been in this regard. Talent is a capacity constraint for growth in this industry. It may be even more so in the future than it is today, and they have developed a model that allows them to own their talent development pipeline in a very unique way, and that education component of the business will be a very high growth, profitable part of the story moving forward in and of itself as well. There's a lot to like here. The theme was identified top-down through our research effort.
We built a rather comprehensive view of the actionable targets within the sector through our bottom-up work, we zoomed in on the asset that we felt had the winning model for the long run. With this investment, we'll target high teens net returns for our clients over the coming years. With this example on the corporate side, I'll now hand things over to my colleague, Esther Peiner, who will give you an overview of one of our recent investments in the real asset space. Esther?
Thank you, Dave. I think before we jump into the investment example, let's also quickly reflect on our thematic sourcing efforts in infrastructure. Like our colleagues in private equity, we're also very deliberate about which assets we want to own and why. We continue to see a lot of opportunity that benefits from strong tailwinds in the renewable sector, where, of course, as the globe transitions towards more sustainable sources of energy, there's lots and lots of opportunity to build and manage those energy generation assets outright. What is also interesting is that actually this trend opens up additional adjacent investment opportunities with assets and businesses that are well set up to help manage the increased intermittency that will be happening and putting constraints onto our electricity transmission system as more and more renewables get built out.
For example, we have recently made an investment in an interconnector that will connect the U.K. to Ireland in order to help both of these island economies to better manage the intermittency from the additional build-out of renewables. There's also a theme that can be invested in conventional energy generation, where as you build out renewable energy, you really need highly reacting and fast scaling up generation assets to balance out the intermittency. CapeOmega, which is the investment that I will talk about in a minute in more detail, fits into that theme. If we move on to the next slide, CapeOmega is a leading Norwegian midstream infrastructure company, to which we committed just over EUR 1.2 billion earlier this year. Cape manages a number of strategic stakes in the Norwegian continental shelf gas transportation infrastructure.
What that means in effect is this company manages the largest offshore network of pipes that is used to transport the gas that gets produced at very, very low cost on the Norwegian continental shelf into Europe. That gas constitutes 30% of the gas consumption across Europe and is used to heat homes. It's used to support the industry across continental Europe. Increasingly, it is used to power gas generation facilities in order to manage the intermittency generated by the renewable build-out. This highly strategic asset allows for a very predictable long-term stream of cash flow that is very, very recurring. That allows us to structure financing on this asset that as an investor then enables us to take a high running yield of more than double digits every year.
In addition to this very, very steady foundation of the platform, we also have the opportunity to create additional value. There are significant growth projects, not only linked to further building out the transportation system as additional resources get tapped on the Norwegian continental shelf on the one hand, but there's also a significant investment program coming up prompted by the desire of Norway to become the greenest economy in all of Europe. That will require a lot of capital to be invested in order to decarbonize the system. That will create additional ability for us to profitably commit follow-on capital here and really push up the investor returns, hopefully to the high double digits.
All of that is supported by what we find is a fantastic management team here in Norway, with whom we continue to have very invigorating discussions about where the growth will take us next on this platform.
Thank you very much, Esther. We expect natural gas increasingly to be adopted as a complementary fuel source in the context of coal and nuclear retirement across Europe. Through this investment in CapeOmega, we'll become essentially the largest private shareholder in one of the largest gas offshore infrastructure networks in the world, and it's an exciting investment opportunity for us. With that update on our investment activities and the broader platform, I'll now hand things over to Philip, who will walk us through our client and assets under management update.
Many thanks, Dave. With this, I would like to move to slide number 14. In the first half of the year, we continued to see a solid client demand across all private market asset classes and received commitments, as you have read this morning, of EUR 7.4 billion. This compares to EUR 6.2 billion in the first half of last year. While our fundraising in this first half was spread over 20 individual programs and numerous mandates across all asset classes, it really has been the firm's next-generation flagship programs that have contributed most over the past six months to fundraising. The same programs are also expected to significantly contribute to fundraising over the next 12 months. In our industry, flagship programs typically reflect one of the core investment strategies in a specific asset class for a certain manager.
For instance, we are currently raising a next-generation direct strategy in private equity. Over the last decade, we successfully raised several of such programs. Other asset classes, such as private debt, are coming much more regularly to the market. For example, we typically raise several senior loan programs in a year or regularly issue CLOs. On the right-hand side of slide 14, we also show the breakdown of overall AUM. There you can see that closed-ended programs represent almost 40% of our AUM. In terms of flow, in the first half of the year, we saw about half of the demand stemming from these kind of programs. As a result, mandates represented a smaller proportion of inflows in the first half. However, they still account for 40% of our AUM as of the 30th of June. Our listed and semi-liquid programs continued to strongly contribute to overall fundraising activity.
They represented over 20% of the inflows and represent more than 20% of our AUM. Clients in such programs are able to subscribe and redeem on a monthly or quarterly basis. With this, I would like to move to slide number 15, where you can see that all our business lines experienced growth in the first half of 2019. In particular, our two largest asset classes, private equity and private debt, grew the fastest. That brought the overall growth of AUM to 9% in the first half net. Let me give you some color on fundraising in each asset class. I would like to start with private equity. As you can see, inflows amounted to EUR 4 billion, there were literally a mix of different funds raised. One was our next-generation private equity direct strategy, and other inflows stem from our semi-liquid strategies and customized mandates.
Looking ahead, we expect the direct equity strategy to significantly contribute to fundraising over the next 12- 18 months. When we end the fundraising for this program, we will of course inform the market accordingly. With this, private equity grew by 11% and has an AUM of EUR 40 billion today. Let's move on to private debt. We saw EUR 2 billion new commitments in our private debt business. Similar to the year before, our debt business continues to benefit from lower yields of traditional fixed-income investments. In particular, the floating base rate and the shorter time to ramp up debt portfolios is seen as highly attractive by our clients. The two drivers of our private debt inflows were, firstly, our direct lending business. This business contributed almost half of the assets raised, EUR 1 billion, across mandates and several programs, and also includes multi-asset class credit strategies.
The other half stem from our CLO business. In the first half, we were able to close on another two CLOs. The whole CLO business of Partners Group today represents around 3% of total AUM, and we expect this business to grow strongly in the years to come. Private debt was the strongest growing business with 12%, and we are very pleased with the development, in particular because we see this business showing scaling effects. Moving on to private real estate. New commitments in private real estate amounted to EUR 800 million. Real estate grew a bit less than other asset classes, as it is still somewhat between fundraising cycles. It is still investing the last fund, which closed in 2017. Nonetheless, real estate is in its early stage of marketing its new flagship product, which targets global real estate opportunities.
We expect this program to contribute meaningfully to fundraising in the next 12 months. All in all, real estate grew by 4% and today has EUR 13 billion AUM. In private infrastructure raised EUR 650 million, and similar to real estate, we are in a very early stage of approaching the market with a new direct flagship offering in 2019. That has not really contributed to the AUM right now or to fundraising, but we expect a meaningful contribution to fundraising in about 6- 12 months from now. I would like to move to page 16. I talked extensively about the EUR 7.4 billion in new commitments, and I would like to draw your attention now to these so-called other effects, which are tail-downs and redemptions, and FX and others.
On tail-downs and redemptions, as you know, we provide you with full year guidance because we have a very clear visibility on them. We cannot provide you with guidance on factors such as FX and others because there is no visibility. Let me give you some content about the tail-downs. As you know, the majority of our programs have a long duration. However, these programs at one point will also mature. That means when these programs mature, our AUM declines, and this decrease in AUM is typically based on a mathematical formula, which is pre-agreed with the clients at the time of the contract. We will provide you with guidance about the magnitude of tail-downs on an annual basis, so that we did today. For the full year 2019, we expect tail-downs to be significantly larger in the second half.
This is mainly due to the fact that a number of larger closed-ended programs will reach the end of their lifetime in Q3 and Q4. Let me give you some color on that. During the financial crisis, we raised a EUR 2.5 billion secondary fund. That fund had a duration of almost 12 years and is tailing off in Q4. This tail off alone will contribute alone EUR 1 billion of tail-downs in Q4, and we expect several more programs to tail off, and that is why we see the tail-downs tilted towards the second half of the year. Regarding redemptions, we have about EUR 18 billion assets under management in open-ended structures, which provide some form of liquidity, typically quarterly or monthly, and in exceptional cases, even daily. In these open-ended programs, we can have redemptions.
In the past, inflows in these programs exceeded redemptions, and this is why the net new assets have been growing. If we look into the full year 2019 and combine tail-downs and redemptions, we expect them to amount in aggregate to -EUR 6.5 billion to -EUR 7.5 billion. That is subject to favorable market conditions, and that compares to only -EUR 1.7 billion in the first half. Let us quickly talk about other effects. As you can see on the slide, 50% of our AUM is EUR denominated, 36% is U.S. dollar denominated. Thus, any weakening or strengthening of the U.S. dollar will affect our EUR-denominated AUM.
In the first half of 2019, no material FX movement affected our AUM. I will keep this short, but more pronounced was a positive contribution of about EUR 1 billion that stemmed mainly from performance and investment-related effects from only a few investment programs that link their AUM to their NAV development. With this, I would like to move to slide number 17, and after having described our AUM development, our AUM stands today at EUR 80 billion as of 30th of June, and our numbers of employees at 1,326. This development confirms that our most important drivers in our industry remain intact. One, we continue to see structural growth in institutional AUM globally and rising allocations to private markets.
Secondly, we see clients reducing their relationships and concentrating on working closer with managers who can offer them broader private market solutions across asset classes and capital structures. The platform build-out of Partners Group comes unfortunately with limited scalability. We need more resources in order to source, transact, create value on long-term assets. This is also why we will continue to hire talents in order to meet the increasing investment demand from clients in the future. That is why we believe we will be around 1,400 professionals by the end of 2019 and over 1,500 professionals by the end of 2020. With this, I would like to move to the AUM outlook on slide number 19, this last slide.
On page 19, we would like to basically reconfirm our expected range of new gross client demand in 2019 of EUR 13 billion-EUR 16 billion. This full-year guidance assumes that we continue to operate in a benign market environment, which remains our base case. Fundraising in the next 12-18 months will be spread across a variety of solutions across all asset classes, including flagship programs, customized mandates, as well as innovative semi-liquid offerings. Tail-down effects from more mature programs and potential redemptions from liquid and semi-liquid programs are expected to amount to minus EUR 6.5 billion-EUR 7.5 billion. As already said, we expect tail-downs will be strongly tilted towards the second half of the year. As in previous years, we don't provide any guidance on other effects, such as FX effects.
In general, we are very satisfied with the ongoing dialogue we are having with many of our investors about their long-term private market allocation plans. Based on their feedback and interests, we are confident to reach our communicated targets for the full year 2019 and look forward to seeing you in London on the 10th September at the London Stock Exchange in person, hopefully. With this, I would like to conclude today's presentation and open up for questions for people and investors on the call or at the webcast.
We will now begin our question and answer session. If you have a question for our speakers, please dial zero one 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 find your question is answered before it is your turn to speak, you can dial zero two to cancel your question. If you're using speaker equipment today, please lift the handset before making your selection. One moment, please, for the first question. The first question is from Yang Simsong of AWP Finanznachrichten. Your line is now open.
Yes. Good morning. I would like to know how do the trading tensions between China and the U.S. affect your business, and also, how are you affected by the slowing of the economy? Thank you.
We have looked at the impact of the trade tensions between the U.S. and China in a couple different ways. Number one, with regards to our portfolio companies, we have identified a couple of smaller areas where it has the potential to impact the business, but nothing structural or meaningful. I'd say the biggest impact comes from just the broader uncertainty in the environment, which has, we think, contributed to the lower investment volumes that the market has seen in the first part of 2019 as compared to 2018. With regards to the slower growth environment, we're managing this by adding operational resources and operational capabilities. The reality is if you're getting less growth from the market, then we need to pull more value creation levers in order to be able to generate the same or similar types of investment returns for our clients.
We have responded to this lower growth environment by focusing on more transformative change within the businesses that we're acquiring and within the assets that we're investing behind. That's primarily how we've approached this lower growth environment.
Thank you.
The next question is from Gurjit Kambo of J.P. Morgan. Your line is now open.
Hi. Good morning. Just a couple of questions. Firstly, on the liquid and semi-liquid funds that you have, could you just perhaps explain a little bit more in terms of what type of investors are using these structures rather than the closed structures? If there's any sort of redemption profile that you could perhaps just share on these clients? That's the first question. The second one is on the investments that you make within portfolio assets, and I guess primarily within the primary side, is it that you're looking to access perhaps larger deals where you think other managers are better at doing? Or is this sort of particular segments of the market where Partners doesn't play, where you feel it's better to go via a third-party manager? Then the final question, just on venture sort of deals.
I know that's not really a focus of Partners, is there interest from clients for Partners to also look at sort of venture deals?
Thank you, Gurjit. Let me take the first question about the semi-liquid structures and what kind of investors are looking for these solutions. Typically, the most sophisticated large investors, they go in closed-ended structures because they can do mandates, they have a very clear investment focus and content, what they aim for, that's why we structure these programs accordingly. The listed space are programs where we provide access to, let's say, high-net-worth individuals via our distribution partners. In private equity, you typically have a hard time as a high-net-worth individual or retail client, also defined contribution, to actually invest small amounts into that space. We have structured products in the U.S., in the U.K., in Australia, which allow high-net-worth individuals, via our distribution partners, which typically are banks, to actually get exposure to private markets. That is something fairly new.
In terms of liquidity profiles, is you have either monthly or quarterly subscriptions, and in the case of a defined contribution plan, even daily. If you say how much are we exposed to these kind of assets, yes, it's over 20%. They offer you probably over four year as they couldn't be redeemed within one go, they would have a longer many years of redemption need to into these kind of programs until they would literally dissolve themselves. They are quite sticky assets, but they have monthly or quarterly redemptions.
On question two with regards to why do we utilize primaries? Primaries are actually an important component of our investment strategy. We have many clients that do not look to us to just build a portfolio of 10 or 12 assets for them, but they look to us to build them a global portfolio that is diversified and that is interesting. So there are a number of niche strategies or niche geographies where we feel that we can complement the investment content that we can generate within the firm by adding that type of primary content. It has not been a particularly growing segment of our business, but it has not been declining in recent years either, and I would expect it to continue to be a important component for those of our clients that are looking for more diversification.
With regards to venture, that question actually kind of goes with the prior one. The reason why we do not do a lot in venture today is because we have an investment committee full of people that have been working together for 15 years or 20 years, and they have elephant memories, and we just lost too much money during the last dotcom bubble. We realized at that time that it is not a core skill set that we possess. So venture is an example of a strategy where we largely outsource that via primaries as opposed to doing that in-house.
That is great. Thank you very much.
The next question is from Greg Simpson of Exane BNP Paribas. Your line is now open.
Hi. Good morning. Thank you for the color on the flagship programs. It seems there's a number of funds set to close over the next 6- 12 months. Could you give any insight into how predecessor fund performance has been? Do these flagship funds mean that maybe the run rate of gross inflows could be above the EUR 7.4 billion just reported for H1? That was the first question. The second question would be, in terms of investment and realization activity, how are you finding both entry and exit multiples compared to 2018? Has there been any step change in the environment in your view? Thank you.
Let me maybe take the first one on the funds. Yes. I think we have a number of flagship of successive funds which running very successfully. Unfortunately, I cannot share now all the performances of it with you. However, from a fundraising or run rate perspective, we guided for EUR 13 billion-EUR 16 billion. We want to stick to this because, with the EUR 13 billion-EUR 16 billion, it includes fundraising of flagship programs in this year and also in the next year, where we come up with a new guidance for 2020. On specific flagship funds and sizes, unfortunately, I cannot give you further details. We will definitely announce them once we close them when we are at that stage that we ended the fundraising for them.
Thank you. The entry and exit environment in terms of multiples?
Dave, I think you are mute.
Sorry. With regards to multiples that we're seeing, both on the entry and exit side, it's an interesting market environment. I think we've continued to see valuations climb slightly in the first half of the year for the most choice of assets, and there is significant competition. It's been relatively stable for everything outside of those kind of very select prime assets that have very fast time frames and very escalated purchase prices. There have been some purchase prices that have frankly surprised us. For the most select of assets or the very most choice assets that have come to the market over the last six months, to be honest, it's been hard to find the market a little bit because some of the valuations that are being paid are truly unprecedented.
By and large, if you look at averages, it's relatively consistent with the elevated environment that we've seen over the last year or two.
Great. Thank you.
The next question is from Hubert Lam of Bank of America. Your line is now open.
Hi. Good morning. I just got one question. If you can just give us a little more of a feel in terms of your expectations for the realization backdrop for the second half of the year. I know you said that the first quarter was a little bit weak, second quarter was better. Do you expect that realization then for the second half to be higher than the first half? Also maybe just in terms of color around where the exits are coming from. Are they mainly IPOs, trade sales to other GPs, et cetera? Thank you.
Yep. I'll take that. The lower transaction activity that we saw in the first half of the year was not a Partners Group specific phenomenon. The entire market saw quite a bit less activity as has been broadly reported. We did see a rebound in Q2, we see sentiment and transaction activity that's much more consistent moving into Q3 with what we saw in Q2. Assuming that moves forward, I do believe that there's a meaningful potential for some upside in the second half of this year, given how weak Q1 was. The second part of your question was? Sorry.
Yeah, sorry. In terms of the exits, are they mainly through trade sales or sales to other GPs?
Yeah. Primarily through private sales, either trade sales and other GPs as opposed to the IPOs. We've not had a lot of IPO exits in the first half of this year.
Great. Thank you.
Yep.
As a reminder, if you would like to ask a question via the telephone lines, please press zero and one. The next question is from Andreas Venditti of Vontobel. Please go ahead.
Yes, hi. Thank you for taking my questions. Maybe you could add some color on the strong hiring you had in terms of geographies and in terms of areas that you saw the hiring. Secondly, maybe you can comment on the dry powder you're holding. Thank you.
Yeah. Andreas. Yes. The strong hiring, yes, it is indeed a strong hiring in the first half. We saw an increase of 10% of our overall headcount, that is pretty much in line with our AUM growth. We had net growth in the first half of 120 professionals at Partners Group. This growth is pretty much spread, not evenly, but spread across the globe. We have certain centers which are growing a bit faster than others. For instance, one of the focus topics, you heard that a couple of times already in the past, is we're going to build up our America's hub in Denver, and I'm jumping here the queue for Dave already because he's in Denver right now, is there we hire quite a lot in building up investment capacity.
On the other side, we also hire a number of professionals in Manila as we're building out our services, intelligence services excellence support in Asia. These are more the focus topics in terms of hires. Other than that, I think our offices around the globe are all growing. With regards to dry powder, we have about 1- 2 years of investment capacity as dry powder. Part of it's reflected in our assets under management, is committed capital but uncalled, and part of it's capital that PG can contractually call but doesn't necessarily earn fees on yet until that capital is invested. It's north of 20% of our assets under management today.
At the moment, there are no further questions via the telephone lines.
We do have actually three questions coming from the web tool from Sofia Karadima. The first question for you, Dave, do we see any bumps in the road for the rest of 2019 and 2020? What will be the impact on private markets? The second question is what opportunities do we see in secondaries, specifically in which sectors? Thirdly, what would be the best way to integrate ESG criteria in private equity infrastructure as well as in private debt?
With regards to bumps in the road, not getting into the crystal ball or the tea leaves on things that could happen from a macro perspective, I think one of the things that we're most focused on today is making sure that there's a fundamental match between buyers and sellers that can be created. In the first half of the year, there was an interesting bifurcation that happened in the market where the prime assets, the most select assets that came to market, went at very aggressive prices. It was quite difficult to navigate how to gain access to those situations, and maybe a little bit of a buyer's remorse, potentially, if you were successful in investing in those situations.
At the same time, there was a meaningful percentage of the market, 92 transactions, just that we've been tracking on our own, where a process was started or a transaction dialogue was initiated. Ultimately, buyers and sellers weren't able to come to terms, or we weren't able to come to terms with the seller. One of the things that we're focused on for 2019 and 2020 is being able to create more win-win situations with clients. We're coming up with strategies on how to do that with earn-out mechanisms and maybe with some other strategies.
With regards to opportunities that we're seeing in the secondaries market, we're quite pleased that much of the pre-crisis large buyout content that really dominated secondary volumes for years and years and years has largely worked its way through the market. We're seeing a lot of younger vintage investment content with more upside, frankly. We're pursuing a number of smaller transactions that are a little bit younger in terms of vintage. That's on the one side. On the other side, we're having quite a bit of success with larger sellers of very complex portfolios where our competitors are trying to buy out individual segments of their portfolio. We're able to leverage the global breadth and multi-asset class experience that we have to take down the entire portfolio and offer a one-stop solution.
We've been successful in completing a number of transactions in the second half of 2018 and in the first half of 2019, leveraging that strategy. Our secondary business doesn't necessarily target specific sectors. It's a little bit more of a diversified play where we're targeting rather different strategies. With regards to ESG and the best way to embrace ESG criteria within private equity infrastructure and private debt, we're big believers that the best way to embrace that strategy is to fully integrate it into the investment engine. Our ESG team is a full member of our deal teams. They get involved in the screening process. They give our teams guidance on what to watch out for as we review our pipelines together.
As we're going through the due diligence process, our ESG team has their own set of criteria that they work through as part of that due diligence process to make sure that the company is robust and lives up to our standards. Once we own an asset, they become a full partner of our value creation strategies. They join our onboarding sessions and help us implement the ESG initiatives that we've identified within the portfolio companies in a very hands-on way. We're big believers in fully integrating ESG into our investment engine.
We just saw a last question from the webinar is whether or not Partners Group would follow a same strategy as Dyal Capital Partners in the U.S. This is like buying other private equity players, or at least stakes in other private equity players to actually broaden their network. Here the idea is at Partners Group, we have very also historically grown organically and have done that very successful. We believe that keeping one culture in place and building out our network by ourselves and not buying other GPs in the market or other private market managers, we believe that this is a superior model. In a sense, this is a strategy which Dyal follows, a strategy which Blackstone follows. We are not considering this at this point in time.
From that end, we believe that we're going to build our network and our footprint ourselves organically in the market. That was one question of the webinar, why we would not considering it. With that, I think we're-
No further questions.
There are no further questions. If there are also no further questions on the call, I think Dave and I and Alex would thank you for listening in, and looking forward hearing you again for the financials on the 10th of September in London. Right? With that, I wish you a good week. Thank you very much.
Ladies and gentlemen, thank you for your attendance. This conference has been concluded.