It's a pleasure to welcome you to the 2018 Annual Results Presentation for Partners Group. My name is David Layton, Co-CEO and Head of Private Equity. We've got a good group here in the room, and also welcome those of you joining by phone. From the company in the room with me here are my partner and Co-CEO, André Frei, Philip Sauer, the Co-head of our Group Finance and Corporate Development team, and our Executive Chairman, Steffen Meister. I'll kick off things today with a brief overview of our investment platform and some of our investment activities. Our firm today has approximately 1,200 people across 19 offices globally. In 2018, we invested $19.3 billion into private markets opportunities on behalf of our clients. $11.5 billion was invested directly into assets, and we also complemented that with $7.7 billion that was invested into portfolio assets.
We generated $13.4 billion of underlying portfolio realizations. Our investment dollars were diversified, I think in an appropriate way, across geographies. We had 29 direct investments in North America, 42 direct investments in Europe, and seven in Asia-Pacific and the rest of the world. Overall, our investment committee today remains highly disciplined in assessing risk and return in the current market environment, and we're investing in only the most attractive assets on a global basis. Our deal flow in 2018 was robust. We looked at about 2,800 assets on the direct side, investing in only 78. We also had a very broad funnel of portfolio assets. Importantly, we focused our team on thematic sourcing and away from opportunistic deal chasing. I think that has also helped us gain a little bit of efficiency over the past year. Our investment dollars, as mentioned, were well diversified in 2018.
Looking at our investment mix by geography, 47% of our mix went into North America, 36% in Europe, and 17% in Asia-Pacific and the rest of the world. 60% of our investment mix was in direct assets and 40% in portfolio assets. With regards to each of our business lines, our private equity business today has invested $58 billion into the asset class. We generated a 19% net return on our lead and joint lead investments where we have active engagement. We have over 300 specialists within the firm today that are engaged across the value chain, from research to origination, execution, and value creation, and 65 assets in the portfolio. Some of our key investment strategies include investing into platform companies.
These are very strong management teams with a solid infrastructure that operate in fragmented industry segments, where we feel that we have the opportunity to drive incremental scale by putting institutional capital behind those platforms and rolling up those sectors. We're also investing in niche winners where we can leverage our unique scale to drive expansion into new geographies. We're also investing into franchise companies. These are bedrock companies that are as relevant to their clients in a down market as they are in a good economy, and that's got appeal to us in the current environment for obvious reasons. As mentioned, we're focused on thematic sourcing today, our research teams are spending considerable time looking at the universe of opportunities and trying to identify sub-sectors that we believe exhibit transformative growth trends.
That includes outsourced product development, automation, discount retailers. We have some good investment examples to show where we have been focused. Our private debt business today has invested CHF 28 billion into the asset class, generated a 6.3% net IRR on those investments. We have 100 specialists within the debt side of our business and have had an attractive 0.24% senior loan annualized default rate. We are focused on a couple of things within the debt side of our business. Number one is we are oftentimes focused on creating bespoke custom solutions, oftentimes unitranche solutions for our clients for very specific needs that they have, financing target assets. We are also targeting attractive sub-sectors and are, I think, particularly capable at financing buy and build structures where the capital structure is going to need incremental capital consistently to make acquisitions.
We have, I think, solutions that work for our clients across a range of different debt products, including unitranches, first lien, and second lien opportunities. Our real estate business has also been growing with CHF 16 billion invested in private real estate over the past number of years. We generated an attractive 13.2% net IRR within our main real estate opportunities portfolio, and we have about 100 real estate specialists on the platform that are looking after 79 assets. In that segment of our business, we are focused on rebounding markets where we can buy below replacement cost. We are focused on older buildings in good locations where we can buy them and fix them up and invest into those opportunities. We are also focused on developing core assets in markets with strong underlying fundamentals. We have a couple of examples there of some markets that we've been focused on, Denver, Raleigh-Durham, and Vienna.
Denver, we obviously have some corporate business development activity there, know that market well. We've got an example there of the Block E building in Denver where we are taking a lead role in growing that. Our private infrastructure business is also quickly growing. We have CHF 10 billion invested overall in infrastructure. We've generated a 14.5% net IRR on direct investments, and we have approximately 100 people within that asset class looking after 39 assets. We are also focused on platform opportunities there. These are opportunities where we have the ability to scale up over time after making the initial investment, oftentimes investing follow-on capital into those same situations, focused on building core investments and rolling up our sleeves to enhance value to those companies. Some of the areas of interest for us today include midstream processing assets.
We are also spending some time on infrastructure services companies, where we can have coordination between our private equity team and our infrastructure team to drive value in those infrastructure opportunities. We've got a particular area of focus on renewables. Our success as an investment manager is driven by active value creation. Our view is that the role of the board of directors is critical to value creation. Once we become stewards of an asset, we first look to assemble a board that's highly competent and engaged. We then implement our model of entrepreneurial governance, which might be an oxymoron for some. Governance for many has an administrative feel to it. For us, entrepreneurial governance means that we roll up our sleeves, we get to work, we create a high-tempo environment where we engage with our assets in a very engaged way.
We have regular evaluations of our boards to make sure that they're functioning as they should. Each board member individually, and as part of a group, must be able to contribute value to the company. We look to make our boards the center of vision and strategy and accountability for our portfolio companies. They work in partnership with the management team to execute on the plans that we've rolled out. We have a team of operating directors and lead operating directors that oversee individual projects as well as the performance of the board overall. Our investment performance and returns are directly correlated to the development of our underlying assets. The broader economy obviously plays a role, we believe that many elements of our assets, financial, corporate, and business development success are within our control.
We have approximately 200 ongoing value creation initiatives going on within our portfolio companies today. We realized 80 projects this past year. We had over 200 board meetings that took place, we made over 100 business introductions to our various portfolio companies. We're pleased to be able to have driven 11% revenue growth in the underlying portfolio, as well as 15% profit growth. We're also pleased to welcome 13,000 new jobs to the Partners Group family this past year. I'll now hand over to my partner, André, who will walk us through some activities on the client side.
Well, thank you, Dave, a warm welcome also from my side. I'm happy to give you an insight into what was happening on the client side. At Partners Group, we have seen sustained growth in assets under management over the last decade. You know that at this point, or as per the end of 2018, we count €72.8 billion in assets under management, managed by more than 1,200 people. The split, as you well know, is about 50% private equity, then the second half of our assets under management can be attributed to real assets and finance. I think over the past decade, we have grown strongly, almost 17% in terms of assets under management and about 13% in the number of employees. You see there's some, but actually very limited economies of scale in our business.
As a company, we plan to invest strongly also in the future to grow the platform, both on the investment side, also on the clients and services side. On the investment side, as Dave highlighted, we will need a number of professionals and leaders to source assets, to perform due diligence on those assets, also primarily in the value creation phase during the holding period. On the client side, it's about, of course, fostering client relationships. As a company, we're strongly committed also to providing service excellence to our clients, not only the big ones, the mandate clients, actually also to clients in our off-the-shelf products smaller clients. We will consciously invest into the platform also in the years to come. Actually, we returned energized from Singapore.
We had our client AGM, annual general meeting, in Singapore last week, which is not really an AGM but almost a conference, I would say. We have welcomed more than 200 clients, more than 30 countries, about EUR 5 trillion in assets under management were represented at this conference. I'm really energized and pleased with the positive feedback we have received by clients. Clients are highly pleased with the performance they have seen. They're familiar with the asset class. They intend to maintain or often increase their exposure to private markets. That was positive feedback that we have received by these clients. What really made me happy and comfortable was that so many clients actually really spent the full three days with Partners Group. We have 50% plus of clients invested in more than one asset class with Partners Group.
Not only private equity as an instance, but also private debt and/or real estate and/or infrastructure. It was good for these clients to see the depth and breadth of our platform, to meet the team. Because if you are invested in more than one asset class, then you probably want to see investment professionals from various regions and various asset classes. It was a unique opportunity for us as a company to feature the depth and the breadth of our platform. Particularly interesting was that we gave a lot of room to the CEOs and chairmen of our portfolio companies. Ultimately private equity, for instance, is equity. It's about companies. They need management teams, and that Dave just highlighted. We wanted to learn from these CEOs and chairmen what works well, what does not, how does governance excellence look from their perspective.
For me personally, it's always a great learning opportunity to talk to these CEOs and chairmen and get feedback about how they perceive Partners Group as an active long-term investor. Well, as I've highlighted, institutional investors, many of them intend to maintain or increase allocations to private markets. The AGM is one touch point, but I'd like to quote a study performed by BlackRock, which has surveyed whether institutional investors will increase, decrease in private public market type of asset classes. You see feedback that a number of them plan to reduce public equities, high yield, hedge funds, and plan to relocate risk in the search of uncorrelated sources of return. That will increase demand for exposure to private markets.
You see that, for example, private credit will be highly sought after, but actually all private market asset classes, real assets as well as corporate equity and debt are expected to have a tailwind in the year or the years to come. We expect there will be a sizable or a number of investors decreasing, for example, public equity, allocating to private equity. You've heard us talking about the number of listed equities, for example, in the U.S., decreasing over the last two decades. In our perspective, in the perspective of many investors, this shift into private markets is not just an alternative, but potentially a must if you really want to have economies and the broader economy represented in your portfolio. The title says that institutional investors continue to embrace illiquid assets. It's really also my perception and feedback I got.
Illiquidity of the asset class is a feature, it's not a problem. Institutional investors globally realize that they can afford 10%, 20%, 30% in more illiquid assets, and that's not a concern for these investors. If you look at how private markets has developed as an industry, you see the strong growth over the past decade. Our industry has grown from CHF 2.2 trillion 10 years ago to more than CHF 5 trillion as per the end of 2018. There is a number of factors that have resulted in this increase, like the institutional assets are growing as a whole, but especially also the rising allocations to private markets and the outperformance of private markets over public markets. You see that Partners Group over this time horizon has grown strongly as well. In many aspects, we have actually outperformed the growth of the broader private markets.
I believe that is really on the base of not only the investment track record or the quality of what we have delivered and want to deliver, but it's also because of the capacity that we want to create as a company. A number of investors don't only look at the returns, but they also want to be ascertained that as an investment manager, we can offer investment opportunities that are sizable and will allow these institutional investors to build up well-diversified portfolios over time.
At least the fact that we offer equity and debt to the corporate side, but equally real assets with real assets and infrastructure, actually can combine these four asset classes, both in a direct way, as described by Dave, or through portfolio assets in some cases, is the reason why Partners Group has seen consistent and strong growth in the years to come, that's why, as a company, of course, we will continue that route. If you look at our investor base in terms of regions and types of clients, you see a similar picture as in the past. 2018 has not fundamentally changed the shift of our client base. About two-thirds come from Europe, a strong presence in DACH, Germany, Austria, Switzerland. A lot of interest also by clients in the U.K. Brexit is not a topic.
Institutional investors in the U.K. continue to invest in this asset class. We expect a strong growth also in the U.S. and Asia. Having an HM in Singapore, giving institutional investors from across the globe an opportunity to sense the local market and giving the local investors an opportunity to get to know Partners Group as a global investor has been a very important signal in that regard. On the right-hand side, you see that our institutional investors are largely still public and corporate pension funds. We equally have insurance companies, foreign wealth funds, asset managers, family offices as our clientele. There is strong interest and growth also by distribution partners since individual investors, high net worth individuals like to mirror the type of allocations that they see in institutional portfolios.
That is something that we almost uniquely can cater to with the semi-liquid or the structured programs that we offer on our platform. In terms of clients, well diversified. You see that the largest client is only 3% of assets under management. The top 20 clients in aggregate account for less than 15%. At this point, Partners Group has almost 1,000 clients and more than 200 million beneficiaries in the form of mandates or closed-ended programs, or the perpetual structures that I had just mentioned before. In terms of mandates, that remains an area where we want to be very active as a company.
We believe that our franchise stability, the resources that we have as a company with more than 1,200 employees, give confidence to these investors to build up exposure and actually know that they're in safe hands also should there be more difficult markets ahead of us. If you look at slide 20, you see Partners Group's expected return framework illustrated in four pillars. Institutional investors, our clients, expect Partners Group to perform and outperform public markets. We have developed a framework or a model that, of course, does not try to forecast 2019 performance, but wants to take the perspective, how public and private markets could develop over the next seven years. We try to assess income growth, but also valuations.
This systematic, and I would say, this sophisticated but also straightforward model, allows us to assess whether private markets have an opportunity to outperform public markets in the years to come. That is clearly our opinion and this expectation that our clients have. 3% to 5% is what the industry, what Partners Group has developed in the past, and is also what is expected from institutional investors for the future. Importantly, we do not only look at risk return on an asset-by-asset basis in the investment committees, but we want to combine that to an aggregate level. Slide 21 shows you how that could look like for 2 types of clients, a more return-focused investor or a more yield-focused investor.
The relative value thinking and the scenario thinking described by Dave Layton just before, actually does not only apply to assets, but equally to portfolios. Return-focused investors, either by picking products or by awarding a mandate to Partners Group, would naturally outweigh the allocation to equity strategies such as private equity or real estate and infrastructure. They would also blend in a certain allocation to private debt and yield-focused investors would actually underweight corporate equity, but go more for real assets and private debt type of strategies. It is our modeling and belief that these type of investors can expect a 3%, 4% to 5% outperformance or delta over public markets for a return-focused portfolio allocation, but also 2% to 3% type of outperformance for more return or for yield-focused allocations.
It is my belief that Partners Group does not have to have a fifth asset class with equity, debt, real estate, and infrastructure. We are not going into hedge funds. We do not want to have a fifth asset class, but in many respects, the fifth asset class that Partners Group offers is by combining those four strategies and building them into a portfolio. With this, I would like to move to slide 22, which is my last slide, and it illustrates expected client demand. I would like to reconfirm the guidance that we have given in January. For 2019, we expect a growth client demand of $13 billion-$16 billion. You know that we have about $6.5 million-$7.5 million of taildowns and redemptions in a base case.
We will have dozens of offerings, including bespoke solutions, that we will offer to clients in 2019. It is going to be a series of products and mandates that will contribute to this anticipated $13 billion-$16 billion asset raising. We assume that the market environment is going to remain benign. That is our expectation. I look forward to 2019. It is still young. We will work very hard to achieve these results for our clients, and this will then naturally translate into the results of the company. Our financials will be presented by Philipp Sauer, I would like to hand over.
A warm welcome from my side as well. My name is Philip Sauer. I am heading, together with my colleague, Manuel Ottinger, the Group Finance and Corporate Development team. On behalf of the firm, I am very proud to present you today the financials of Partners Group 2018. With that, we are moving to page number 24 on the slide. First of all, I think one of the highlights I would like to mention is that our AUM, our core business, is still growing. We have received or we have experienced 18% average AUM growth throughout 2018, and that has translated into 15% management fee growth. Overall revenues increased 7% and slightly lower than management fees due to lower performance fees. I will elaborate on that later in the presentation.
Given that we have our costs under control, our costs grew in line with revenues, bringing EBITDA up 7%, similar to revenues to CHF 882 million, which is a new record for the firm. I would like to move to slide number 25 and talk about revenues first. Our revenues basically consist of two components, which is performance fees and management fees. We will talk about management fees first. Management fees are predominantly based on long-term structures which we enter with our clients. They have a lifespan of up to 12 years or even longer, and represent the bulk of our revenue streams. Management fees grew 15%, slightly lower than assets under management growth. Why that? Is because we have a component which we call late management fees and other income, which decreased by 15% to CHF 84 million.
That is a component which typically fluctuates a bit, depending on the fundraising mechanism of Partners Group, where we currently raise which kind of funds. To put it in simple words, in years where we launch a lot of new structures, as André just elaborated, these late management fees tend to be smaller. When we close funds for new investors, which are already longer in the market, these late management fees should be a bit higher. With that, I would like to move to performance fees. As you can see on slide 26, performance fee amounted to CHF 324 million and decreased by 13% compared to last year. These CHF 324 million were literally 50 programs and mandates contributed to this CHF 324 million. Quite a diversified range of products.
The majority of these CHF 324 million stem also from products which were launched originally in 2008 to 2012. You see that the performance fees we show are quite kind of mature in its stage from the funds we have raised in the past. We also indicated throughout 2018 that performance fees will not follow a trajectory from 2015 to 2016 to 2017. We indicated that performance fees will plateau, mostly due to the fact that we have a so-called catch-up effect from the past. This catch-up effect is indicated with this white triangle on that slide, where performance fees between 2010 and 2015 were rather low and then literally increased very strongly in 2016 and 2017. That was mostly due to the fact of the financial crisis. The financial crisis let us hold some assets longer.
We did more value creation in those assets, so the performance fees from the years 2010 to 2015 were postponed and actually unfolded their potential in 2016 and 2017. With the performance fees from 2018 onwards, this effect is now completely absorbed. You will see, as shareholders going forward, that performance fees materialize from the years 2012, 2013, 2014, 2015, and as this slide indicates, typically follows our AUM growth. What does this mean concretely? On slide 27, you see that our performance fees in 2018 represented 24% of our overall revenues, and that is within the guidance we provided. We provided 20%-30% proportion of total revenues will be performance fees. Looking at our structure and all our portfolios we currently operate, we have over 300 structures we currently operate. Each structure is in a different life cycle.
We have invested them over a long time period. We believe at Partners Group that these performance fees are somewhat quasi-recurring as these programs mature. Also going forward, we believe that these performance fees will increase also in absolute terms, but remain within the guidance of 20%-30%. What you will see in the next two, three years is literally portfolios coming through 2012, 2013, 2015, 2013, 2014. Thereafter in the more long term, portfolios will materialize or will contribute to performance fees, which were invested in 2016, 2017, and 2018. Management fees are still predominantly our revenue source, and this is shown also on page or slide number 28. There you see that we have a constant revenue margin of around 125%. That is the average over the last 10 years, and we expect this number to be stable.
If you add performance fees to it, you come into a range of 170-180 bps. With that, I would like to switch gears and talk about costs, the costs which incurred in 2018 on page 29. Our costs increased roughly in line with revenues. It is worthwhile to understand it or look a bit deeper into this because 85% of our costs are literally personal expenses. Personal expenses is the main cost driver, and we need to look at that closer to understand why our costs or our personal expenses grew with 5%. There are two components which I would like to highlight. One is our platform growth. André talked about our fundraising, our investment capabilities, which we try to ramp up. This is what Dave said, and that requires more people.
That's why when management fees grow, when our assets under management grow, we hire people, and that's why our regular personal expenses, which is base salaries and equity incentives and all components around base salaries are growing by 17%, literally in line with the platform growth. What you also see is the second component, which is the performance fee-related compensation. Obviously, if performance fees are reduced, the performance fee-related compensation is reduced as well. This makes Partners Group to have a highly flexible compensation structure. Our operating expenses grew in line with the platform, bringing EBITDA to CHF 882 million. With that, I would like to talk about quickly about our EBITDA margin. On page 13, you see that our EBITDA margin has been stable. Last year it was 66%; this year it was 66%.
I would like to highlight again that all incremental management fees and performance fees we will generate as a firm, we will spend 40 cents on the dollar or on the Swiss franc in that regard. With every incremental dollar spending having a 60% EBITDA margin, we assume that our EBITDA margin will slightly revert towards 60%. That is, at this point in time, highly dependent on the FX rate, FX movement, as you can see on page 31, because Partners Group currently has an AUM which consists of literally euro and U.S. dollars, and that AUM translates into management fees in the same magnitude. If you look at the composition of our management fees versus the composition of our cost structure, you see that there is a certain mismatch. The mismatch is most pronounced between the euro and the Swiss franc.
In 2018, the euro strengthened against the Swiss franc, which helped us on the EBITDA margin side. Actually, the FX changes in 2018 supported our EBITDA margin by roughly 1%. You don't see any performance fees on that chart because for us, performance fees are EBITDA margin neutral, meaning that whenever we receive performance fees in either dollar or in euros, we translate them into local currencies to pay our people. With that, I would like to move to slide number 32, where you can see on the left slide our whole P&L. I'm not going to go through this again, but I explained everything down to the EBITDA and EBITDA margin. I would like to highlight two components, which is the financial results and our income tax.
On the financial results, most of you who know us for longer know that we typically invest about 1% alongside our clients. This is also what you see on the right side, CHF 646 million is currently our own investments on the balance sheet, and they typically are the strongest contributor to our financial results. The reason why it was a bit less than 2017, we had still performance in our portfolio. We had certain currency and hedging-related effects which reduced the financial results slightly.
On the income tax side, as you can see, of course, with an increased profitability, income tax should rise. Our income tax disproportionally rose now from 11% to the tax rate to 13%, and that was mainly due to the fact that we had started 12 to 18 months ago, due to the Brexit vote, to restructure some of our fund administration and advisory services. We brought them from London currently back to Switzerland and Luxembourg, and that triggered, amongst others, a higher tax rate. Going forward, we assume that the tax rate will remain between 12% and 14%. Looking at our balance sheet, we have CHF 1.2 billion net liquidity and about CHF 2 billion in equity. With that, I would like to move to page number 33.
On page 33, you see our dividend development since the IPO. Our board is based on the achievements in 2018, willing to propose a dividend of CHF 22, which is an increase of 16%. That should mirror also the fact that our platform is growing quite substantially, management fees growing 15%, and we will propose that to the AGM in May to our shareholders. Maybe quickly on our dividend policy. When we define the dividend, we look at the overall development of the business in all asset classes and region in general. We look at the operating results, which was strong on the EBITDA side. Of course, it is about the sustainability and the confidence we have in our future of our business, and that defines our dividend.
With that, we have a 76% payout ratio. We hope that the shareholders like that and accept that on the AGM. With that, I conclude my presentation and would hand over to our chairman, Steffen Meister.
Good morning, everyone, also on the conference call, also from my side. My name is Steffen Meister. I'm the executive Chairman of the firm, and I've got the privilege to conclude the formal part of this presentation with two topics. One is a few words on the changes to the board that we announced about two weeks ago, and then I would like to share some perspectives on the challenges, opportunities in private market investing in the next few years ahead of us. Starting with the board adjustments, we have a couple of adjustments actually this year.
The first one is that Dr. Peter Wuffli will not be available anymore for re-election at the shareholders' AGM in May. Peter, as most of you know, joined us about 10 years ago, first as an ordinary member of the board, later became the head of the Risk & Audit Committee, and 2014, Chairman of the firm for four years. Peter has contributed a lot actually in terms of institutionalization of the firm over the years, but in a way that never compromised the entrepreneurial culture, the entrepreneurial governance approach that we also try to really live here, but as a benchmark actually for our portfolio companies and our own board. Peter, as one of his first actions, actually when he became Chairman in 2014, we formalized our rules for independence for directors.
One of the parameters that he introduced was that he felt that no independent director should be seen as independent anymore after 10 years in service. Do we have a problem with the technology? Can you still hear me on the VC, on the conference call? There was some strange noise. Do we have a chance to find out whether they hear us on the call?
Yes. We can hear you.
Fantastic. Thank you. Okay, let me try to continue here. Just please tell me if that's not loud enough in terms of volume. Peter introduced this rule for this 10-year limit for independent directors, consistent with that rule, he decided earlier this year to pass on the opportunity for re-election in May. A second change is the leaving of Dr. Charles Dallara from the board as well. Charles joined us in 2013 very much with the idea that Charles, with his background in treasury, but also at the helm of the IIF, would really help us in internationalization of relationships, especially the client side in Asia, in the Middle East, in Americas. Charles was really very material in building the business together with us, the platform in these years.
Charles has turned 70 last year, that's a less formalized rule that we have established also a few years back, that this is kind of an age limit for the board. Consistent with that age limit, Charles is also not available anymore for re-election. Charles does actually stay with us as an advisory partner, that's essentially with a reduced time commitment, a part-time engagement, helping us still with some of the relationship building in different parts of the world. I'm very happy to announce that we have a new board member with Dr. Martin Strobel. Martin has, as some of you might know, had a, I think, a bit unusual career, actually. His background is computer science, so he's an engineer by background, technology person.
He was with Boston Consulting for several years before joining Baloise here in Europe, as the head of technology, which he saw as a great venture at that time to change from consultant to actually managing a business. He was very successful. He became quite quickly thereafter the head and CEO of Switzerland, thereafter actually CEO of the whole business. Some of you might know that he has actually, in that period, reformed the whole operations of Baloise in a quite dramatic way, actually, using some of the American peers as an example for a real reset up of the operations, making it super effective, turning actually the insurance business, the life insurance business from Baloise from a negative contribution to a 30% return on equity business. It became a little bit the gold standard, actually, insurance in Europe.
Martin brings us next to the C-level experience and the board level experience, this, I would say, very specific experience and the skills that he has in technology, cybersecurity operations, which is something that is incredibly relevant actually for us in our board set up. Two smaller changes. Dr. Eric Strutz, he is today Chair of the Risk & Audit Committee. He will succeed Peter Wuffli in becoming the Vice Chairman and Lead Independent Director. We have also Michelle Felman. She is our Chairwoman of the Investment Oversight Committee, who will join the Risk & Audit Committee, plus the Nomination & Compensation Committee. We have three members in all of these committees going forward. As you see on the left-hand side of this slide, that's a citation out of our paper on governance.
What is relevant for us when it comes to board members is that they contribute individually and through their relevant committees to the strategic direction of the firm. This is really just to confirm to you, this is certainly unchanged with the changes. If you look today at the board, all of them are actually individually through projects directly with the CEOs, the management team, with regional offices, also in their committees, actually, they're contributing to extremely important strategic projects of the firm. You see that we have five committees. In the first three, they're focusing literally only on strategic items. That's the Strategy Committee, Investment Oversight, and Client Oversight Committee. I would say even in Risk & Audit Committee and NCC, we really are very careful that the focus in these committees is not on processes and controls. That's all checked.
We make sure that they run properly, the time is really spent on a more relevant item. This is, for instance, on the Risk & Audit Committee side, where I'm very happy to have Martin Strobel on board, who brings clearly new perspectives on cybersecurity and on operational effectiveness and things like that ultimately are actually at the core of making our firm a better firm, so that Risk & Audit becomes a simpler thing going forward. With that, I'll move to the last topic here. That's sharing some perspectives on the Altugon market. André talked about the AGM in Singapore last week, and I guess one question that at least is on the mind of many of our investors, and I guess that's true for most large investors globally, is we had 2 decades of very successful investing, certainly in private markets, strong outperformance.
What is ahead of us? There's a lot of noise in the market. There's a lot of tension, trade talks, and so forth. What is ahead of us, and what does it mean for you in private markets? It's something I talked about last week in Singapore, and I just want to summarize a little bit for you also here just to share some perspective and just speak a little bit our mind. How we see the next few years. We have structured this in four dimensions to give it a little bit of a better system here to go through that. One is more the economy, geopolitical environment. The second is talking about disruption. The third one is about what's happening in the public markets, which has an impact also on private markets.
The fourth one is actually talking about our own issues in the private market or our own challenges. Just to start quickly with the environment, what's important, let me put this up front, we don't have a crystal ball anyway. It's not about forecasting a crisis, a huge correction, or anything of that nature. We don't know. One thing we are very clear about in our mind is that we will not have the kind of tailwind that we had now for 2 decades. That tailwind is simply not going to be there anymore, and we'll talk about what that means. If you talk about that tailwind, what we do actually mean by that. This is just four examples, but there's actually more to it.
There's clearly one big driver the last 2 decades we've seen, that's interest rates that have completely lifted all financial assets, not only in private markets. I don't know what's going to happen with interest rates, but the chance that we will have that kind of tailwind going forward, that's very slim. The second, that's going a little bit into the same vein, is the global leverage in the system. We have seen 2 decades of continuous build up of leverage, originally more focused on the private sectors and households, now increasingly the last 10 years in governments. The thing is, if you assume that a dollar is spent for financial stimulus, that translates in about CHF 0.30 growth in the midterm. We know that. The reality is a lot of the growth we have seen over the last few years came through stimulus, okay?
That's in the advanced economies, that's also in China and other parts of the world. Hard to say what's happening from here, probably not sustainable, but the reality is there's a cost to that past growth, right? That cost could be inflation, it could be lower spending, it could be taxes, we don't know. Again, here, the chance that we see that same tailwind that we have seen is probably quite slim as well. There's a third element that I think gets a little bit unappreciated sometimes, or let's say the focus, I think, is a bit one-dimensional. That's China. There is probably this end of the China super cycle. Most people talk a bit about the growth that is fading. We're not really sure whether that's the main point. No one really knows what's the growth anyway.
We've seen the last official numbers, Brookings Institution has about a week ago corrected these numbers. They think it's about 2%-3% higher. Maybe the absolute level of growth is not so much the issue. For the point, it's probably more the structure of the Chinese economy. It has completely transitioned from highly export, re-export oriented with very little value added actually in China to something which is much more what they call and translated from in Mandarin is internalized economy, which is much more actually domestically driven as an economy, much more value added. In parallel, we see a number of Chinese super competitive global leaders being built up. A lot of the clients of a lot of the Western firms 10 years ago have actually turned into competitors.
The net benefit of that Chinese economy for many businesses in the Western world is probably going to be neutral, if not sometimes even slightly negative. The last point is the global trade climate, this is not so much a question about the tariffs. Again, we don't have a crystal ball, we assume at one stage people will find some resolution on tariffs. The tariffs are probably not even so relevant because in most cases they are relatively slim, actually. The point is probably more that we see more of the national agenda setting that's not only in the U.S. With CFIUS, we've seen Macron with his proclamation 2 weeks ago in the parliament. It's something which is topping in Asia, it just makes it more complicated for business. A little bit less predictable and more complicated.
What that overall means to us, again, it's not necessarily that there's a crisis tomorrow, it's just we cannot assume homogeneous growth. That's not even a sector, sub-sector where we consume that. Growth is very patchy. What we have to do is we have to be much more theme driven in the way we look actually for assets. Dave touched a little bit on that. I give one example maybe here to make this a bit more tangible. Most people probably agree that technology is not a bad sector per se with what's ahead of us next 10 years. Within technology, the sub-sector of outsourcing is probably also quite a reasonable sector. We would probably have that view. Even in that sector, we see a change.
A lot of the businesses that were very successful business in the last 10, 20 years, they're actually stagnating because there's too much competition. There's not enough base growth. Even in sector like that, we have to look for certain pockets and themes like for instance, here, next generation product engineering, which essentially apps of Walgreens to manage the prescriptions of patients, of doctors, and things like that, which are so critical for the firms that actually that theme is growing at a much higher rate of about 25% for them. Sector focus and subsector focus is important, it's clearly not sufficient anymore. It's really about this thematic investing. The second point is now about this disruption. If we say disruption, it's important. This is not development.
Disruption is really if you have a sector and advancements and developments outside that sector and other sectors suddenly have a spillover effect and do actually materially adjust the economics or fundamentals of that first sector. Retail is a very well-known example. I don't have to go through that. The reality is today, we face disruption in literally every sub-sector all the time. One example, healthcare. Dave talked about platform strategies as something we like in healthcare. A successful platform strategy in the past was, for instance, radiology. It's a specialized business, a lot of smaller shops historically. It's a business that hasn't really changed a lot over 15, 20 years, and MRIs got better and better. We realized we're really bad at reading these pictures. Machines are much better than that.
In no time, we see suddenly this sector or this theme or sub-sector actually changing radically from something which was really resources-oriented and making MRI better into something which is AI-oriented. How do you go about that? It's very simple, actually, in two ways. You try to avoid disruption where you can. In retail, we're, for instance, investing in an Indian value retailer, second, third tier location, far away from delivery, from supply channels, there's not much disruption from Walmart or from Amazon and others for the next few years. Or in healthcare, for instance, investing in physical therapy businesses. Maybe there will be robots at one stage, but that's not something we foresee in the next 10, 15 years. The second approach is, of course, you look actively for that disruption. Sometimes it's actually relatively boring businesses that get disrupted.
Just one example I want to quickly take up here, that's Techem. Techem is an industrial type of infrastructure service business that essentially provides metering services, originally just in Germany, now expanding Europe. This is a business we are just about to change in a technology company. That's a combination of two things. It's sensors, rather these more mechanical machines, and the second is data analytics. Okay. That changes the company and also opens up totally different routes of engaging with the 11 million households, the clients here, going forward. Second, I guess conclusion is here, you have to understand the sector, sub-sectors, but sometimes it's more important to understand what affects these sub-sectors around us. That requires a lot of skills, people, resources in research. That's why this is actually the fastest-growing team, the IBC team, the research team in our firm.
A very quick word on the public market dynamics, something we talked a lot about in the last year that we clearly feel that with this race to passivism in the public markets, we see a decoupling between shareholders and management teams. The boards that sit sometimes in the middle, a little bit more like as an agent or audit committee, often the board is not so focused really on strategy, but much more on processes, controls. We see number of listed stocks going down. There's what we call this governance fatigue in public markets, and that has an impact because, of course, in our business, sometimes you want to IPO into public market or sell to public market firms, so that might actually restrict sometimes this opportunity. Here, the good news is that there is clearly more benefits than disadvantages. I certainly have to say this.
I see two dimensions. One is the leadership opportunity. We hire incredible talent from public firms, whether that's more on the operational level, management teams, but also then for the board level. Ultimately also the investment opportunities. I clearly predict that we see more public to private investment opportunities going forward. Just think of a typical two, CHF 3 billion business today, whether it's now in Switzerland or elsewhere in Europe, U.S. There's hardly any coverage. Often there are only ETFs invested. Sometimes these management teams don't have boards that take really this active stance, there's a clear interest for many of these owners, but also management teams to move more to private markets. We have our own issues that's, I would say, a bit self-driven. I think we have become a little bit the victim of our own success.
Our market has become phenomenally competitive. That's just reality. Whether you like it or not, there's a lot of players in that market. Not only professional players, but also some wealth funds, for instance, large pension funds. We have clearly seen a structural shift to valuations which are essentially resembling public market valuations. There's clearly no arbitrage anymore. We see timelines and execution which get unrealistic. You can only transact on these timelines if you have prepared actually for that transaction. There's no way you can really DD a transaction in 10 weeks or some of that nature. As a consolidation, that's probably something that helps us. If you take this together, we really believe that there's four dimensions or four pillars here for success going forward. The one is our pipeline development has already changed but will further change in the next few years.
It will become enormously proactive. We are developing hundreds of investment opportunities in private markets, family businesses, potential spin-offs, could be public businesses in parallel. We develop the investment hypothesis. We develop value creation plans. We start to think about what will be the right board members, what will be the right management team members. If then ultimately an asset becomes up for sale, we are ready to preempt and to gauge very quickly. The upside is only created through your own value creation. It's literally impossible to buy anything today that gives you more upside organically or directly compared to what you anyway pay for. The upside compared to public markets is only what you create actually on your own. The second dimension is the ownership excellence.
We really want to become the benchmark for the industry here in formalizing how we make the governance in the boards a systemic success driver by being very proactive in finding board competitions, in actually hiring board members well involved of transactions of investments, and have these boards being trained and reviewed, guided and supported to make a real difference for our portfolio companies. That's the last topic, which is the long-term investment strategy. That's something we are rolling out as we speak. We have increasingly situations where we own assets, and after four, five years, when maybe our more traditional buy-out funds will actually look for an exit. We have many clients, large clients, some wealth funds. They see continued potential. We see continued potential and value creation opportunity. Sometimes you have a category leader.
If you have 40% market share, you still grow at 7%, 8%, 9%, 10%. In these situations, we'll more often just hold onto these assets and compound the returns over another four, five, six years, especially as it is very competitive to get maybe similar assets of same quality in the market again. That comes also with a little bit of, I would say, a different positioning of our firm that we have started to, I guess, morph into over the last few years. It's a more industrial, I think, positioning of the firm. Today, if you speak to owners, if you speak to management teams, I think we clearly are seen more as what I call here the partner to business.
It's really a firm that brings a lot of resources on research side, on the value creation side, then also bring the boards for this, what we call entrepreneurial ownership, really helping with them together to build a business, to advance a business. Clearly leaving the, I would say, original footprint, which was a bit of Wall Street footprint maybe 20 years ago, completely behind us. This is not our firm set up, our positioning, and maybe that's best illustrated by our new campus here that you see on this picture on the left hand at the bottom, which is the new Denver campus. Which actually does leverage this theme by actually using this Colorado warehouse style setting, which I think is a good signaling for the employees that walk in every morning that tells them, "This is not Wall Street.
This is a place where you build businesses actually in a hands-on way." With that brief outlook, I guess we conclude the formal part of today and open up for questions.
Good morning. Is it on? Thank you for taking my question. This is Daniel Regli from MainFirst. I have two questions, if I may, sir. The first is about could you maybe elaborate a bit more on the trends in performance fees and particularly in relation to, on one hand, invested assets, and is there a link between these two, given that eventually multiples in private markets have also corrected a bit in H2? The question is basically how much was the correlation between private market multiples and public market multiples in H2, particularly the last part of 2018? There's a second question is regarding your EBITDA margin guidance, and if I understand you correctly, the 60% EBITDA margin you're guiding is really the marginal EBITDA margin, if you want.
If you grow revenues by 10%, we can assume that the EBITDA margin drops by half a percentage point per year. Is this correct?
Maybe I take the second question. This is correct. Maybe quickly saying the first, maybe saying something about the financials of the first. In terms of the performance fees or the multiple correction, I think the private market space is not that quick in terms of adjusting. Typically, whenever an exit process is launched, and for those of who know private markets better, these exit processes, they run for months preparation. When, for instance, instances like the Q4 stock market drop happens, of course, there might be some which will be executed still, and there might be some which will be postponed. The correlation is, especially when you see a V-shaped correction, as we saw it in Q4 and Q1, this rebound, it is not that significant.
Okay. Thank you.
Good morning. This is Matt Amish from Hubbis. I have two questions, please. Firstly, on performance fees still. Could you discuss a little bit the assumptions behind the 20%-30% share of total revenues medium and long term? Do you assume there continued double-digit AUM growth? Also perhaps, do you factor in or do you assume support of exit environment there? The second question is more like a technical one on tax rate. Can you give us a sense whether the tax rate as we've seen in 2018 is of a good indication for the coming years? Thank you.
In terms of the assumptions of performance fees, you're absolutely right. We assume if you assume a 20%-30% contribution of performance fees, you need to make a certain assumption on revenue growth or management fee growth. I think the indication of what André just said in terms of our net assets under management growth of around 10%, I think this is a good indication so far, but we give you guidance on new assets raised only yearly.
Of course, I think our structural tailwinds we currently see will support that growth. It is an assumption of AUM growth of around that what you have seen in the past. With regards to the assumption of performance fees, yes. We have experienced over the last five years, a shift, especially more towards direct investments. You have seen constantly Partners Group raising more capital and deploying more capital in the direct investments phase. That should, over time, translate, of course, into higher performance fees assumptions or performance fees in general. This is already within that guidance of the 20%-30%. Yes, in terms of tax rate, absolutely, I think it is an indication for the future.
Thank you. If I look at money invested, in terms of secondary, it is quite a significant number, CHF 5.2 billion. Maybe you could elaborate a bit more on where this money went from also looking at the cycle, because usually you invest more in secondary at the bottom of the cycle. I wonder where this went to. Thank you.
We found quite a few opportunities over the course of 2018 for new secondary opportunities. There was a couple of things that developed in the market. Number one is, for many years, following the financial crisis, people were still working through divesting of portfolios that were crisis era portfolios. 2006, 2007, 2008 vintage funds were the predominance of what we saw. Our secondary business is primarily a buyer of what we call inflections assets. Buying assets that are in a stage of their development where they're maybe two or three, four years old, and where there's still quite a bit of value creation to be obtained within that portfolio.
In 2018, we finally saw those older pre-crisis vintage portfolios that had worked their way through the system, and we saw a lot of good 2012, 2013, 2014 content that came onto the market that was particularly well-suited to our appetite. That's one thing. I also think we saw an ability to leverage our broader platform. We had a number of secondary opportunities where we could leverage the fact that the seller was divesting of a complex portfolio that included real estate assets as well as private equity assets, for example, and we were a unique buyer in that we could have a one-stop solution for those sellers by acquiring the real estate elements of their portfolio with our real estate team and the private equity elements with our private equity team.
We had a couple sizable complex solutions that we were able to bring to the market as well.
Good morning. It is Michael Kunz from Zürcher Kantonalbank. The two bottlenecks in your business are typically finding the right people going forward and then finding the deals. Are there any new developments? Is it getting tougher to find the people, or do you still feel you can keep growing at the pace you are growing now?
On the people side, what really helps is the increasing brand recognition of Partners Group. Initially, like five, 10 years ago, Partners Group was perceived to be a European company. By now, Partners Group is a globally set-up company. We see the brand recognition in the U.S. sharply increasing based on the investments that we have done, the investments that Dave, on the private equity side, but also in other asset classes, has been performed. I believe Partners Group is now no longer a Swiss or European company, but a global company with an American, a European, and an Asian footprint. That is really helpful. Brand recognition helps. We do need to make a special effort, however.
While maybe in the past you waited for CVs to arrive, and there is plentiful of CVs that you do receive, almost like 30,000 per annum for us as a company. We want to be very active at the universities, present what private markets is and what Partners Group is. We do not want to be passive, but really almost like thematic sourcing on the investment side, to go to the universities, to talk to the students, talk to the professors to attract the best talents. Not only on the economy side, but equally on the engineers, physicists, mathematicians, to achieve this more industrial side of that our Chairman has described.
On the deal side, I think there have been some in our industry that have noted a market share shift that has occurred away from smaller monoline funds towards some of the large platforms. I think there is a number of factors that are influencing that, not the least of which is how competitive and fast some of these sale process timelines have become. We have seen formal sale process timelines that have compressed materially from taking a couple of months to, in some cases, 60 days or 80 days. 60-80 days is not enough time to do all of the work that you need to do, to do the market research and to build your management case and to perform all of your detailed due diligence.
We find ourselves pre-identifying many, many assets that we want to own based on the thematic work that our research team has completed. We spend a year, sometimes two years, sometimes three years, building our internal case for why we should own that asset, and by doing as much outside-in work as we can do. That's a resource-intensive strategy. That's a strategy that requires us to spend speculative resources on assets that aren't yet for sale. When those assets do come up for sale, we're particularly well-positioned to move. I think that's what you've seen over the course of 2018, where we have had quite a bit of investment volume and we've won our fair share of transactions. I think that's been one of the key factors that's influenced that.
Maybe if I can add a few perspectives on the hiring to build up the platform, because I think it's a very important question. I think it's important to understand it for shareholders. There are really two models in our industry. There are franchise models, meaning Wall Street firms that were usually coming out of investment banking previously, 30, 40 years ago, that have added a buyout practice, and over time, they essentially acquired teams. Often these teams, they operate quite independently, one from another. I would point to maybe firms like Carlyle, for instance, which to maybe as an illustration. These firms, they have clearly benefits when it comes to growing fast because they have, I would say, to large extent, kept their individual teams somewhat independent and disintegrated, so you can actually just grow the platform by literally add teams or buy businesses.
You've seen, for instance, the announcement probably by Brookfield a few days back, taking a big stake in Oaktree. You see a lot of that, especially in the U.S. That's the second model, which is more the organic model. This is a model that maybe firms that, next to Partners Group, like EQT or like Advent International, have also pursued. Maybe it's a little bit more European style. There is a cultural element to it. The thing is, that model makes it certainly more difficult to grow quickly, because if you want to grow and you've seen the numbers, we have essentially consistently grown by about 15%. Some of these teams, like the value creation teams, have actually grown much more than that. They've grown by about 20%.
If you think that you grow every year by 20%, 25% in certain teams, that means over three, four, five years, right? You essentially double these teams. That takes a lot of resources to integrate them because they work so much together as a team, it does take time. There is just so much you can do in terms of having new people integrate in a team to keep the culture, to keep the understanding, to have that spirit, how we source the assets. That's why I really believe that the growth rate we have seen is probably at the upper end of what was achievable. I think it was well digested, extremely well managed by Dave, by André and the team.
Going forward, even if that market, which changes from public to private, see suddenly a phenomenally large growth again, I don't think that our platform can grow much faster than that. I think that's a little bit a result of our approach in how we actually run the business.
Song, AWP. My question was also regarding employees. Maybe you can be more specific, if you expect the growth of the number of employees to rise in the same way as the assets under management also in 2019, and where you see the number of employees in the end of the year. Also second question regarding your own investments. The performance has been a little lower than the year before, and what were the drivers? Maybe you can explain this a little. Thank you.
I'll take the first question about employee growth. We have grown by about 150 people in 2018, and I believe for 2019, it's going to be just a similar growth, like 100 to 150 people. I would expect Partners Group at the end of 2019 to be between 1,300 people and maybe 1,350. As Steffen said, it's not like Punktlandung [Foreign language] we say in German, right? This is not perfect engineering. We want to go for really the best of the best. We want to have people that are committed to our purpose. If it's a bit quicker, that's good. If it takes a little bit longer to find that talent, that's also okay. I expect a similar growth in 2019 as in 2018.
Maybe for the performance, both years, 2017 was very strong, 2018 also strong, the majority of the reduction of the financial result was more or less FX related, was not really performance. The performance was also very positive.
Thanks. It's Dan Loeche from MainFirst again. Just maybe if I could get back to the investments you did during 2018, you have increased your investment capacity quite dramatically from 2017. Is this purely due to your change in how you invest into assets, or was this also, let's say, market driven because you saw more opportunities during 2018? Particularly, how can we look into the future? Shall we expect a continued growth in invested assets for 2019 as well? How shall we think about this?
I think the growth in our investment capacity has been important. Our firm has grown assets under management over the past number of years, I think our clients have appreciated the fact that we have continued to grow our investment capacity, at least commensurate with our growth in assets under management. We've not been a firm that stockpiled large amounts of capital, we've grown in a balanced way. Look, with each opportunity we pursued in 2018, there was a certain probability that we would win, a certain probability that we would lose. I think we were particularly good at doing the pre-work that I described and going into those situations where we had a lot of conviction with the full resources of our platform, we won our fair share of transactions in 2018.
I'd say that my expectation for 2019 is we've got a broad range of potential scenarios. I'd say we're building our pipelines over one, two, three years. We have broadly similar, I'd say, expectations for the 2019 years as we demonstrated in 2018 across the investment platform.
Did I get it right? The increase was mainly due to having a larger share of transaction you won rather than having, let's say, more investments you would want to do?
Enterprise value range, sometimes a little bit larger. We'll occasionally pursue a larger transaction like Techem this past year was a €4.6 billion transaction. When we do pursue a larger transaction, instead of creating an outsized concentration for our clients, we'll generally bring in outside partners, as we did with two large Canadian pension funds in that situation to share the equity check. I would say we're about where we need to be from a check size perspective. I wouldn't anticipate a dramatic growth in average check size from here. In fact, some of the opportunities that we're finding in 2019 are actually a little bit smaller sized. If I look at our current pipeline, it's quite a bit smaller size companies, actually, than the average asset that we acquired in 2018, just as an anecdote.
Let me just add to that. I think what's important is to distinguish between the asset size and the actual, I would say, maturity of the business. I think that sometimes maybe a little bit of risk from distance to focus too much on the asset size. I just take the example of Techem. Techem as a business, it's clearly a middle market business. Often with these businesses that have more of an infrastructure type of business model, they tend to be relatively large in terms of asset values. Our focus on middle markets is really around the strategy to bring additional value to the business, to create additional upside. Of course, the more mature a business is, the more complicated this typically becomes. That's why if you talk about middle market businesses, we really largely mean the maturity of the business.
How can we develop that business further? For instance, have a niche winner, as Dave described, and bring that niche winner towards internationalization or additional services. VAT, which is the Swiss example, is maybe a bit better known than some other examples, might be a good example. VAT, I would even say, was maybe in terms of maturity of the business, closer to a small cap business than a large cap business. Right? It was purely focused on one product initiative literally. They were the market leaders by far, but there wasn't any direct distribution in Asia. They didn't have any services business or the things which are actually easy. Right? That's, I think, more the important factor that we focus on. Can we actually develop these additional initiatives? Some of these assets can be very tiny and maybe sometimes they're not so well known.
We have business in emerging markets, they're like CHF 75 million or CHF 100 million equity check size, and hopefully they grow quite a bit through platform and very heavy growth in these regions. It's really more that business focus, I think, that is more relevant.
Just a last question Mark Bolster, VVG, concerning ESG or kind of sustainability issues. With no word they have to mention in that presentation, is there a specific reason for that? Don't you see the urgency that some of your investors or likely the whole system is migrating towards those requirements? Or is it because you don't see the opportunities in real terms to really gather some momentum there as well?
Actually, it was almost a conscious decision not to focus today because this was such a prominent topic in the January conference call. ESG is of utmost importance not only to our clients, but it's also of utmost importance to Partners Group. We have been a signatory to the principles like 10 years ago. We have built up a very sizable team in-house at Partners Group that focuses on ESG aspects. I believe the most important thing about ESG is that we want to completely embed it into our industry value creation efforts. It's not about doing good anecdotally, but it's about doing good systematically. Sometimes, it is actually not only an initiative that you tackle in a portfolio company that's good for the environment or the employees, but very often it's equally good for the profitability of the business.
That is why, when we look at initiatives to create value in our portfolio company, we find that about every fifth initiative has a direct link to ESG. That can be increasing safety of an industrial asset, and less accidents means less costs and lawsuits. It can be focusing on engagement with local residents when you want to build a renewable infrastructure platform. Partners Group really sees ESG as an integral part of our investment practice. It's a dedicated team, but equally, we want to make sure that every investment professional at Partners Group really focuses on ESG aspects. We have covered this in great detail with our investors in Singapore at the AGM. It's not only a prerequisite anymore by clients, but clients really now look deeper.
They want to figure out, and they are very well equipped to figure out quickly, whether as an investment manager you talk about it or whether you really have an action plan and a focus on these topics. Partners Group certainly has been doing this for a long time, and we have started to professionalize, to formalize, we can also really bring it across in the quarterly reports to our clients and showcase it at conferences like that last week in Singapore.
Can we move to the questions on the phone?
Can we maybe move to the questions on the call?
Yes, of course. To our participants on the phone, if you have a participant speaker, please dial 01 on your telephone keypad now to enter the queue. Once your name has been announced, you can ask a question. If you find your question is answered before it is your turn to speak, you can dial 02 to cancel your 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 Arnaud Giblat of Exane. Your line is now open. Please go ahead.
Yeah, good morning. It's Arnaud Giblat from Exane. I've got three questions, please. Firstly, could you give us maybe a bit more granularity around how you're seeing the realization environment? You've talked about high pricing. Is this perhaps an opportunity to accelerate some of your more mature assets? Second question is on strategic growth. I'm wondering if you're seeing new opportunities to grow into some new subcategories, perhaps like residential private real estate or what have you. If you've got any details there that might be useful. Finally, you talked a lot about competition in private equity, and I'm wondering if you're seeing any impact on the pricing on the front book there. Thank you.
I'll take the first. We saw a strong rebound after some volatility in Q4 of last year. We've seen valuations relatively consistent with what we've seen in 2018. We've seen largely a stabilization. It is a reasonably attractive exit environment, and we would assume that we follow the similar trajectory that we've had in the past for realizing value in the portfolio. With regards to adjacent sectors within our asset classes, like you mentioned, residential private real estate. Our teams are constantly doing research on which areas could be. Due diligence materials that were made available, and a buyer that put a binding offer on the table two days after those 13,000 pages of due diligence material were made available, just as an anecdote. Competition is driving some irrational behavior, and I don't want to send any mixed signals about that.
Having said that, we're navigating the market well. We have a global approach, a relative value approach within our investment committee, where we'll hold up opportunities from North America alongside opportunities from Europe, alongside opportunities from Asia, and we'll be in constant evolution with regards to which markets represent the best value for us. If we do see some particularly hot, irrational activity in a certain area, we'll just focus on a different geography or in a different area.
Thank you. Sorry, if I can just follow up quickly. My third question was more in regards to pricing on the mandate side.
Yeah, right.
With the charging clients.
Well, actually we have managed as a company to keep the pricing of our offerings largely stable. We get often asked whether there's a difference between products and mandates. There is not, except that mandates are typically more sizable than a typical subscription to Partners Group products, that's why, of course, as you grow in size, Partners Group will grant certain rebates. I believe what we see is that while pricing is important, the probably more determinant factor of how to raise assets, whether you raise assets, is the track record. The track record really, as I highlighted before, in my book, covers both quality, just like IRR and multiples of past exits. It equally covers the quantity or the capacity that you provide as an investment manager.
That is why I see due diligence of a client actually covering more than, of course, pricing, but really all the surrounding services that you provide. If you like, you can see the extra services as a rebate by Partners Group in the form of a mandate. For example, clients can basically offload the entirety of administration risk management, hedging, treasury services to Partners Group at modest costs, that is a service that is often looked at by institutional investors.
Thank you.
The next question comes from the line of Morgan. Your line is now open. Please go ahead.
Hi. Good morning. I've got three questions. The first question is, just in terms of your AGM in Singapore, was there any sort of feedback from investors that perhaps was somewhat surprising to you? That's the first one. Secondly, as the sort of formal due diligence time frames narrows, are you finding yourself getting pitched against some of the larger firms as obviously they have the resources required to move fast? Finally, just in terms of your investments, obviously nearly 50% was invested in the U.S. How does that look like from an asset-raising perspective in the U.S. market? Thank you.
I'd like to cover quickly the AGM. I've been pleased, not surprised, but pleased about how long-term and experienced the clients look at the asset class. There was literally no discussion about 2018 Q4 and whether short-term volatility would be a problem for private markets. I believe basically everyone at the AGM really took a very long-term perspective, and these are strategic investors in the asset class that rather focus on the next three to five years as opposed to the fourth quarter of 2018 and the slightly increased volatility. The one thing that probably surprised me was how strongly this mandate theme is on investors' minds. Even if you have built up a diversified portfolio in a highly professional, sophisticated way over the past 10 years, and you've chosen many GPs or general partners and investment managers.
I was surprised about how actively, proactively, and decidedly many of these investors now really contemplate moving to mandate that gives them more flexibility to invest. When we talk afterwards about deployment there, Dave, the key advantage to Partners Group, but equally the key advantage to clients is that a typical mandate, a typical agreement with PG allows and mandates Partners Group to invest on a global base. That is so fundamental to Partners Group. We don't want to be awarded with a mandate to go for Asian real estate secondaries or just brownfield infrastructure in Europe. That's not Partners Group. The key advantage of us as a company is our global footprint. It's the 4 asset classes. It's our ability to invest directly but also via portfolio assets.
This flexibility of investing is really something that an increasing number of investors is trying to more actively use going forward by way of mandate relationships.
With regards to if we're bumping into some of the larger platforms on some of these more compressed time frames, I'd say the size of companies that we focus on, largely being middle-market companies, largely shield us from competition against the other large global platforms. Most of the people that we compete with on the assets in the size that we're focused on tend to be niche, middle-market players, and oftentimes with a regional emphasis or with a sector emphasis. Of course, there's specific situations where we obviously have bumped into the larger firms, but it's not commonplace. With regards to your third question, with regards to the U.S., it is 47% of our investment volume this past year. It's quite a bit less with regards to client mix. You asked the question if we see that evolving. I think we have a tremendous opportunity in the U.S.
We're dedicating a lot of resources to that market. I'm the firm's first American Co-Chief Executive Officer. We have a new headquarters that we're establishing there that'll open up a little bit later this year. We're doing quite a bit of hiring in that market, and we ramped up our headcount there. The U.S. client market will not be a light switch that we flip on. It will be building relationships and building our network and building our credibility with U.S. investors over a long period of time. We see continued growth in that market. We had a particularly strong 2018 relative to our historical experience in that market, and I expect to see also a strong 2019 and 2020. It won't be a light switch that turns on. It'll ramp up slowly over the next number of years, I'm sure.
Okay. That's great. Thank you very much.
Yeah.
There are no further questions on the phone?
No, that's it.
With that, we would conclude today's presentation. Thank you very much for participating. Have a great day. Thank you.
Thank you.
Bye. Bye.