Good morning. My name is Sylvie, and I will be your conference operator today. At this time, I would like to welcome everyone to Fiera Capital's earnings call to discuss financial results of the second quarter 2024. All participant lines have been placed on mute to prevent any background noise. After the speakers prepared remarks, there will be a question-and-answer period. As a reminder, this conference call is being recorded. If you would like to ask a question during the Q&A period, simply press star one on your telephone keypad. If you would like to withdraw your question, please press star two. Thank you. I will now turn the conference over to Ms. Marie-France Guay, Senior Vice President, Treasury and Investor Relations. Please go ahead.
Thank you, Sylvie. Good morning, everyone. Welcome to the Fiera Capital conference call to discuss our financial results for the second quarter of 2024. Note that today's call will be held in English. Before we begin, I invite you to download a copy of today's presentation, which can be found in the Investor Relations section of our website at ir.fieracapital.com. Also note that comments made on today's call, including replies to certain questions, may deal with forward-looking statements, which are subject to risks and uncertainties that may cause actual results to differ from expectations. I would ask you to take a moment to read the forward-looking statements on page two of the presentation.
On today's call, we will discuss our Q2 2024 results, starting with an update on our AUM flows, followed by highlights of our public and private markets platforms, as well as our private wealth business. We will then review our financial performance. Our speakers today are Mr. Jean-Guy Desjardins, Chairman of the Board and Global CEO, and Mr. Lucas Pontillo, Executive Director and Global CFO. Also available to answer questions following the prepared remarks will be John Valentini, President and CEO of Private Markets, and Maxime Ménard, President and CEO of Fiera Canada and Global Private Wealth. With that, I will now turn the call over to Jean-Guy.
Thank you, Marie-France. Good morning, everyone, and thank you for joining us today. The second quarter saw economic and inflation data that increases the likelihood of a soft landing. The U.S. economy has cooled to a below-trend pace, with the latest consumer price index coming in on the soft side for both headline and core inflation. There are tentative signs that the labor market is finally coming into better balance. Still, the Federal Reserve has reinforced that officials would like to see further evidence that the disinflationary trend is intact before pivoting. In Canada, the economy continues to run at a slower pace, with growth slowing to below the economy's potential rate, as the impact of cumulative rate hikes weighs on heavily indebted households. Inflation continues to slow at a faster rate compared to the U.S., allowing the Bank of Canada to carry on a lower rate policy.
Equity markets rallied in the second quarter, with many global indices breaching new highs. But the rally has been narrow in breadth, with a limited number of technology stocks driving a majority of returns. As we have seen over the last week, global equity markets sold off sharply, as fears over the health of the U.S. economy deepened, while concerns over valuations and waning enthusiasm for artificial intelligence dampened the outlook for technology companies. Fixed income markets generated mostly positive returns in the second quarter. Treasury yields pushed higher as investors reduced expectations for rate cuts from the Federal Reserve, but Canadian bond yields were restrained by softer inflation, supporting the likelihood of further cuts from the Bank of Canada.
Over the last couple of weeks, fixed income markets rallied strongly, as the latest string of softer-than-expected economic data was seen as cementing the case for more aggressive rate cuts from the Federal Reserve this year. Against this backdrop, we reported assets under management of CAD 158.9 billion, which was down 3.8% over the quarter, reflecting market appreciation across both of our investment platforms and positive net organic growth in private markets. This was offset by outflows, largely related to the now complete, previously mentioned outflows in PineStone from a large Canadian financial intermediary, as well as outflows in fixed income from the same client. Assets under management in our private market division grew CAD 300 million, or 2% from the prior quarter, to CAD 19.1 billion, driven by new contributions of CAD 400 million and modest market appreciation.
In our public markets division, assets under management declined CAD 6.6 billion, or 4.5%, as positive market impact of CAD 1.5 billion was offset by CAD 8 billion in negative net organic growth. Public markets net outflows included CAD 5 billion from PineStone sub-advised assets under management, of which CAD 3.4 billion were pre-announced from the large Canadian financial intermediary client and transferred directly to PineStone.
Excluding PineStone, public markets assets under management declined 2.5% from the prior quarter, reflecting net outflows of CAD 3 billion, partly offset by positive market impact of CAD 500 million. Now, as mentioned in our preliminary press release, outflows were largely due to CAD 2.2 billion in rebalancing of an existing fixed income mandate from the large Canadian financial intermediary client. These were lower fee flows, and their departure has resulted in an increase in our average fee rates.
Excluding these rebalancings, public markets assets under management, excluding PineStone, were essentially flat over the quarter. So I will now turn to highlights of our commercial and investment performance across our asset classes in the second quarter. So starting with our public market asset class. During the quarter, we were pleased to announce that Fiera was selected to manage fixed income investments on behalf of Investi Fund, led by Innocap, a global leader in managed account platforms, and Finance Montréal.
Funds will be invested in our global sustainable and impact bond strategy, which has outperformed its annualized benchmarks and is ranked in the first quartile within the global fixed income sustainability and impact investing universe since its inception in 2020. Fiera was also awarded a mandate to manage a new Canadian core fixed income solution for Lloyd's, the world's leading marketplace for insurance and reinsurance.
An initial investment of around CAD 90 million was made in the quarter, with significant further inflows expected going forward to potentially reaching billion-dollar levels. This is the second public asset fund on Lloyd's investment platform, from which it seeks to provide broader access to investment opportunities and operational efficiencies through collective investing. Now, this new mandate is a reflection of our ability to generate consistent positive alpha in Canadian fixed income and a testament to how seriously we take our fiduciary duty to clients and their capital across our product suite.
Turning to investment performance in public markets. Performance in equities was mixed in the quarter. Canadian large-cap strategies posted positive results for a second consecutive quarter, with the flagship strategy continuing to rank among the top of its peer group. Meanwhile, the U.S. equity core strategy did not outperform its benchmark after three consecutive quarters of outperformance.
Now, global equity strategies underperformed their benchmarks in the second quarter, largely due to security selection in the information, technology, and healthcare sectors. The strategies continued to rank in the top quartile versus peers and outperformed their respective benchmarks over the longer term. Now, the frontier markets and emerging markets strategies maintain their record of outperformance. These strategies continue to outperform their benchmarks by a significant margin since their inception.
We were also pleased to announce that the portfolio managers of these emerging market strategies were ranked in the top 10 fund managers in Europe in Citywire Selector's annual Euro Stars report. This is a fantastic achievement and positions Fiera among industry leaders in the emerging and frontier market space. Fiera's flagship Canadian fixed income strategies generated positive results relative to their benchmarks and continue to consistently outperform their benchmarks over the longer term and since inception.
Now, turning to our private market platform. Private markets delivered positive net organic growth of nearly CAD 300 million in the second quarter after returning capital of CAD 150 million to investors. Growth was driven by new mandates of close to CAD 400 million, primarily from Canadian clients into agricultural mandates and EMEA clients into infrastructure. In addition to the CAD 400 million in new mandates in the quarter, CAD 500 million was deployed, and we maintain a pipeline with CAD 1.3 billion available for deployment into future opportunities.
With respect to investment performance for private markets in real estate, valuations have begun to recover as liquidity returns to the markets and rate cuts take hold, particularly in Canada. Strong operating and rental fundamentals have re-emerged slightly earlier in Canada than in the U.K. to date, and portfolios with heavier allocations to the industrial and multi-residential sectors, such as our Canadian and U.K.
Strategies managed by Fiera Real Estate are expected to be well-positioned to outperform going forward as the recovery begins to gain momentum. The majority of our private credit strategies generated positive performance during the quarter as they continue to benefit from strong yields. Our real estate financing and infrastructure debt strategies continue to post strong performance, and our European debt strategy deployed its first capital in the quarter. Corporate credit strategies also generated positive performance across North America and Europe. These strategies continue to be positioned well because of prudent credit selection and conservative loan structuring. Our global agricultural strategy delivered solid returns in the second quarter. Each of the strategies recently added partnerships continued to be integrated into the portfolio and have generally performed well through their initial periods.
During the quarter, Fiera Comox announced an agreement to acquire an 85% interest in a sustainably managed forest plantation in New Zealand. This investment marks the initial acquisition by our Global Sustainable Timberland strategy, which invests in high-quality private forests globally. Now, lastly, our private equity strategy generated positive returns as well in the quarter and is in final stages of closing a new direct investment in the U.S. healthcare service sector. Moving on to private wealth, our Private Wealth assets under management decreased slightly in the second quarter to close at CAD 14.1 billion.
Efforts into building deeper relationships are already beginning to bear fruit, with over CAD 125 million in new flows generated from First Nations with further opportunities and relationships in the near term. The second quarter was, however, impacted by negative contributions driven in part by the change in the Canadian capital gains inclusion rate, which occurred in June. With that, I will turn it over to Lucas for a review of our financial performance.
Thank you, Jean-Guy. Good morning, everyone. I will now review the financial results for the second quarter of 2024. Overall, we are very pleased with our second quarter financial performance, which helped drive year-over-year revenue growth on a year-to-date basis across almost every revenue channel, despite a reduction in assets under management. This was largely driven by growth in private market revenues, with total public market revenues remaining essentially flat over the period. We also generated strong free cash flow, surpassing the last 12-month range indicated in our last earnings call. Starting with total revenues.
Across our investment platforms, total revenues of CAD 165 million in the second quarter were up by CAD 5 million, or 3% year-over-year, and on a year-to-date basis, total revenues were up CAD 16 million, or 5%. Year-over-year increases reflect strong private market revenue growth of 11% in the quarter and 15% on a year-to-date basis. Base management fees were flat year-over-year, as revenue growth in private markets AUM effectively offset the decline in public markets. On a year-to-date basis, base management fees were up 1% year-over-year, despite the 3% decline in AUM, as higher base fees from private markets and change in asset mix continue to contribute to an increase in the fee rate. Turning to public market revenues. Base management fees in the quarter declined CAD 3 million, or 3% year-over-year, and on a year-to-date basis, base management fees were down CAD 4 million, or 2%.
This year-over-year decline was driven by outflows related to PineStone strategies and partly offset by an increase in revenues from financial intermediaries from a shifting asset mix toward equity strategies, resulting in an improved average fee rate. Other revenues of CAD 4 million in the second quarter increased by CAD 2 million year-over-year, and on a year-to-date basis, increased by CAD 4 million. Year-over-year growth reflects higher administration fee revenues as part of our private wealth fee initiative. On a year-to-date basis, higher administration fees revenues from private wealth and higher interest income accounted for the increase. Turning to private markets. Base management fees in the quarter increased by CAD 3 million, or 7% year-over-year.
On a year-to-date basis, fees were up by CAD 7 million, or 9% year-over-year, primarily from institutional clients in Canada, the U.S., and EMEA investing in our agriculture and diversified private market solution strategies, along with higher average assets under management from new subscriptions. Performance fees in Q2 increased by CAD 1 million year-over-year and were up slightly on a year-to-date basis, largely reflecting accrued performance fees in transactions in private markets in Asia.
Year-over-year, commitment and transaction fees declined by CAD 2 million for the quarter and CAD 3 million on a year-to-date basis, largely reflecting less deal activity from private debt and infrastructure funds in Canada. Earnings in joint ventures and associates in the second quarter increased CAD 2 million year-over-year and CAD 8 million on a year-to-date basis. Growth reflected the income earned on the completion of several large construction projects in Fiera Real Estate U.K.
Year-to-date, our private market businesses have contributed revenues of CAD 113 million, or 34% of Fiera Capital's total revenue, despite making up only 12% of total assets under management. This revenue contribution is up from 31% for the same period last year, when private markets comprised 12% of assets under management, and up 27% three years ago, when private markets was 11% of total assets under management. The growth in revenue contribution relative to share of assets under management demonstrates the scalability and revenue-generating power of our private markets business. Turning to SG&A in the quarter, excluding share-based compensation, it increased by CAD 5 million, or 4% year-over-year, and we're up CAD 10 million, or 4% on a year-to-date basis. Expense growth was largely due to higher variable compensation costs and travel and marketing, partly offset by lower sub-advisory fees.
We continue to focus on prudent expense management, with year-to-date SG&A expenses, excluding share-based comp, up less than revenue growth. Restructuring costs were also slightly higher year-over-year, related to our regional expansion efforts and the realignment of our distribution model. Turning to adjusted EBITDA and adjusted EBITDA margin. Adjusted EBITDA was flat year-over-year, reflecting the increase in revenues offset by higher SG&A. Year-to-date, adjusted EBITDA increased by CAD 6 million, or 8%, and EBITDA margin improved 60 basis points to 27.2%.
On a last 12-month basis, EBITDA margin remains above 30%. Now looking at earnings, adjusted net earnings were CAD 25 million, or CAD 0.23 per diluted share. On a trailing 12-month basis, adjusted EPS was CAD 1.17, up from CAD 1.06 the same quarter last year. Turning to our financial leverage. Net debt was CAD 669 million at the end of the second quarter, up CAD 12 million from the end of Q1.
As a reminder, historically, our net debt is higher in Q2, reflecting the two dividend payments made during the quarter. Our net debt ratio increased to 3.15 from 3.09x in the prior quarter, but improved meaningfully from the 3.6x in the same quarter last year. Funded debt to EBITDA ratio, as defined by a credit facility agreement, increased to 2.97x from 2.9 in Q1, reflecting the inclusion of the CAD 20 million guarantee on the loan to senior management to finance part of the purchase of the Desjardins stake. Excluding this financing, our funded debt ratio declined quarter-over-quarter.
Year-over-year, our funded debt ratio increased, reflecting an unusually low ratio in the comparable quarter, as cash proceeds on the new debt issuance had not yet been applied towards the redemption of the refinanced hybrid debenture, which was deployed subsequently to the end of the second quarter of 2023. Turning to free cash flow. Last 12 months' free cash flow of CAD 121 million is a significant increase from CAD 45 million in the same quarter last year. The increase is due to higher cash generated from operating activities and a positive impact from changes in non-cash working capital, which included the collection of certain performance fees and accounts receivable that were delayed from the prior quarter.
We remain committed to delivering value to our shareholders as a fundamental pillar of our strategy, and as such, I am pleased to announce that the board has declared a quarterly dividend of CAD 21.50 per share, payable on September 19th to holders of record on August 19th, 2024. This maintains our trailing 12-month dividend of CAD 0.86 per share. In addition, subsequent quarter-end, we renewed our NCIB to purchase up to 4 million Class A shares over the 12-month period commencing August 16th, 2024, and ending no later than August 15th, 2025. I'll now turn the call back to Jean-Guy for his closing remarks.
Thank you, Lucas. As we closed out the second quarter, we were very pleased with the smooth execution of the Desjardins transaction, where senior management and a number of board members acquired all equity of the company previously held by Desjardins. The transaction is a testament to senior management's strong confidence in our strategic vision and commitment to executing on our growth plans, aligning our interests and long-term incentives through increased ownership stakes. Importantly, our ownership structure remains unchanged, allowing us to continue to execute our growth plans seamlessly.
Finally, as we make our way through the third quarter, we are closely monitoring the market volatility that we have experienced over the last week. The evolution of both the economic and inflation data has raised the likelihood the Federal Reserve will successfully engineer a soft landing. This may prompt the Federal Reserve to cut interest rates by more than widely anticipated. Indeed, our closely monitored key policy variables that dictate the path for monetary policy support this narrative. Notably, the U.S. economy has cooled to below-trend pace.
There are also some tentative signs that the labor market is coming into better balance. Long-term inflation expectations remain well anchored and are stable enough to enable the Federal Reserve to cut interest rates soon. As such, it would appear that achieving a soft landing for the U.S. economy seems much more conceivable. Our high-probability scenario assumes that the disinflationary trend reasserts itself in the coming 18 months, with little in the way of damage to the economy. The combination of synchronized lower interest rates and positive earnings momentum bodes particularly well for risk assets and warrants a moderate overweight allocation to stocks over our cyclical time horizon, as central banks globally gradually move to a neutral stance on monetary policy, which in North America is a 3% central bank target rate for the U.S. and Canada by the end of 2025.
That certainly supports our overweighted allocation to stocks over that time horizon. This economic backdrop, coupled with our pipeline of sales activity resulting from our new regional distribution model, has us optimistic about the prospect of positive net organic growth as we head into the second half of 2024. I will now turn the call back to the operator for the question period.
Thank you, sir. Ladies and gentlemen, as stated, if you would like to ask a question, please press star followed by one on your touch-tone phone. You will then hear a three-tone prompt acknowledging your request. If you would like to withdraw from the question queue, you will need to press star followed by two. If you're using a speakerphone, please lift the handset before pressing any keys. Please go ahead and press star one now if you do have any questions. Your first question will be from Nik Priebe at CIBC. Please go ahead.
Okay, thanks. Just wanted to start with a question on flows in the quarter. You had called out about CAD 4.4 billion of leakage associated with the PineStone relationship. I think most of that was anticipated, but the scale of leakage, I think, was a little bit larger than you had initially expected. Was all of that from the same client, or was there another client outside of National Bank that had redeemed specifically for the purpose of investing directly?
Yeah, maybe I'll give the breakdown and sort of particular on a year-to-date basis. We've seen in total for the year CAD 7.1 billion of leakage to PineStone. The bank portion that we talked about, the CAD 3.4, as was previously indicated. So that leaves about CAD 3.7 billion, and that's totally in line with the guidance that we gave of CAD 3 billion- CAD 4 billion, sort of ex the bank, if you will. And so again, we had two institutionals that we talked about in Q1 that were redeemed in Q1. So there were two smaller institutionals during the quarter, and collectively, those two made up about CAD 1 billion. So I think that's the excess piece that you're looking for. But even when you include that, as I say, we're up to CAD 3.7 billion ex the bank. As I say, that's in line with the guidance that we gave of CAD 3 billion-CAD 4 billion.
Got it. Okay. And those two smaller institutions that redeemed in the quarter, did they have any additional assets that remain invested in Fiera-sponsored funds that are sub-advised by PineStone, or was that the entirety of their assets?
That was the entirety of their assets.
Okay, got it. And then it looks like the average fee rate ticked up in the quarter. And I think you had alluded to the loss of a CAD 2.2 billion fixed income mandate that had a pretty low fee rate attached to it, but you also experienced CAD 5 billion of outflows from the PineStone relationship, which I would have thought had a higher fee rate associated with it. So what, in your view, explains the higher weighted average fee rate in the quarter? Is it partly the shrinking public markets, AUM versus private, or is there something else that explains it?
Yeah, no, thanks for the question. I think that's great. And to really just get away from any noise or volatility for one quarter, we prefer to look at the year-to-date numbers. So if you look at the first six months of last year for 2023, our average fee rate was sitting at 36.2. And if you look at where we're sitting now, that's materially better at 37.2. So yes, you're absolutely right.
The trail off of fixed income helps, but really what's buttressing or offsetting the PineStone is the organic growth that we're seeing in private markets. And as you can appreciate, those fees are even healthier than what we would be getting on global equity. So there is definitely a positive shift here happening in asset mix. As I say, you're seeing that compensate not only in the total base management fee, but the actual average fee that we're collecting.
Understood. Okay, thanks very much. I'll pass the line.
Thank you. Next question will be from Geoff Kwan at RBC . Please go ahead.
Hi, good morning. I have a question on the CAD 600 million commitment, fund commitment from CDP. I know it was referenced, I think it was on slide five. So was that all included in the Q2 numbers, or is there going to be some portion that's going to go into Q3, and would that have been, or did it already go into the institutional segment, or would it be somewhere else?
No, that all came in during the quarter. There was a delay between the time we press released that versus our own AUM press release, and it really just had to do with coordinating the marketing on both sides. But as I say, that was all included in the quarter.
I just want to make sure I heard earlier, I think it was Jean-Guy, you were talking about the Lloyd's mandate. If I heard it right, it was CAD 90 million was made in Q2, and then there could be significant further inflows in future quarters. And was that number that it could reach billion-dollar levels, or did I hear that incorrectly?
No, you heard that correctly. And the indications that we're receiving from the sponsor, which reflects their enthusiasm about the attractiveness of that strategy to their long list of members in the consortium, their expectation is that that strategy should grow to be a multi-billion dollar strategy over the next few years.
Just maybe if I can sneak in one last question is, when I think about it from a net sales perspective, to get back into more consistent positive quarterly net sales, and that's including net of any sort of redemptions out of PineStone, how do you envisage, what are the kind of key drivers and the conditions that would get you there?
I think there's two things. I think you mentioned the PineStone thing, and as you know, we do expect that there will be a significant deceleration on that front in the future, coming from now, in fact. And the second thing is the impact of the change in our distribution, the decentralization of our business at the regional level with very senior experience regional CEOs.
If you take the time to look at the background of those four CEOs, Canada, India, Asia, and U.S., you will notice that the background of those four CEOs is a background of individuals that have been very successful for every single one of them for more than 15 years each, each one of them primarily assuming distribution leadership and distribution responsibilities. So what we've done in 2023 is implement a strategy where, honestly, probably for the first time in the history of Fiera, we made a significant commitment and put a big priority on our weakness in getting the market share that we felt we should be receiving from our platform of investment strategies, which is very broad, which is very deep, and very competitive from a performance point of view.
I think that what you're going to see in, well, I think in the second half of this year, we're very optimistic about that, but hopefully, we will see the impact of that in 2025, where the combination of the deceleration of leakage on the PineStone side and the acceleration of our distribution capabilities as a result of what I just explained will have a meaningful impact in 2025. So that's our strategy. That's our game plan. And 2025 will, well, the next couple of quarters in 2025 will prove us right or wrong on what we basically put in place in the last, primarily mostly in 2023.
Okay, great. Thank you.
Thank you. Next question will be from Étienne Ricard at BMO Capital Markets. Please go ahead.
Thank you and good morning. On private markets, what appetite are you seeing from limited partners to invest more into alternatives relative to, let's say, a year ago as interest rate cuts are becoming more visible?
So your question is, are we seeing more interest or explaining why there is more interest? Is that your question?
Correct. So what change in appetite have you seen from limited partners to invest more capital into alternatives versus a year ago?
I think that I would not agree with the change in appetite. I think what we have noticed is a shift in their appetite from certain strategies to other strategies. So we haven't noticed a change in appetite for our strategies in agriculture, for example, or infrastructure for that matter. But we have seen a change in appetite in private equity and real estate, and I think we understand why.
In aggregate, there is an indication that there's a change in appetite, but it's all related to, I'd say, those two strategies that have been more importantly influenced by higher interest rates, which is, in this case, private equity and real estate. But other than that, we have not seen or noticed a slowdown in the general interest and activity. In fact, what we're seeing is substantial interest and activity and opportunities that are coming to fruition over the next, in fact, we know that over the next couple of quarters, a lot of those opportunities will come to decisions. And the activity is on those strategies that I've mentioned has not changed that much. In our case, it's accelerated, like I've mentioned, because we have a much, much stronger and adapted presence from a distribution point of view in the four regions that I referred to.
What we are seeing is the reappearance of an acceleration in the interest of potential investors and institutions back into real estate and private equity. So it's not something that I'd say that where the money is already coming in, but there's increased opportunities from requests for information and from, as you know, RFPs, questionnaires coming in. And so we have an acceleration in the number of opportunities for new clients investing in our real estate and private equity strategies. And there's a continuation, in our case, an acceleration in the other strategies, but I think I explained why the acceleration. That's the way I would answer your question.
Do you still see a path for doubling AUM over the next five years, even if private equity and real estate interest remains a bit more muted?
Yeah, conservatively, yes.
Okay. And a question for Lucas on capital allocation. It's good to see stock buybacks resuming. To the extent you generate free cash flow in excess of the dividend, do you see buybacks as the best use of your capital at this point?
Yes, indeed. I mean, the view is we still view the stock on an intrinsic basis, not being in line with where it's trading. We're mindful of dilution as well. So absolutely, to the extent that we have excess free cash flow over the dividend, we do intend to deploy a part of that towards the NCIB.
Thank you very much.
Thank you. Next question will be from Gary Ho at Desjardins. Please go ahead.
Thanks. Good morning. Lucas, maybe circle back on the next question. I think I heard your comments. There was CAD 3.7 billion ex the National Bank, and that was in line with your CAD 3 billion-CAD 4 billion. But I think that's on a year-to-date basis. So are you assuming there's no meaningful leakage in the back half of this year?
Correct. That's the assumption.
Got it. Okay. And then while I have you, just on the EBITDA margin, the 27.5% this quarter and then 27% in Q1, how should we think about margins and maybe SG&A overall? Is 30% still a target you hope to achieve on a full-year basis for 2024 and beyond?
Yes, absolutely. I mean, I think you'll see in the quarter some of the uptick in SG&A year-over-year was really related to travel, marketing, and some systems upgrades. Okay. But we're also being very mindful on the one hand of managing the expenses, on the other hand of making sure we're putting the right investment in the organic growth that's required. So we continue to keep an eye on the margin target, but we also don't want to hold back the necessary business development activities that need to happen as part of our new distribution model.
Got it. Okay. And then on your last comment, Lucas, you mentioned NCIB and how the stock's undervalued here. But I did see the 1.3 million shares that was issued to Clearwater after the quarter. Just wanted to connect it to why not, I guess, pay that out in cash and avoid the dilution?
Yeah. No, that's a great question. And I think one of the trends that you're seeing is in terms of not only the executive team, but the management team being well aligned from a shareholder-based perspective. And if you look at the two individuals in question on the Clearwater PPO, Rob and Amit absolutely embody sort of some of the key values that we hold dear here, which is commitment to investment management excellence.
Then on top of that, an entrepreneurial spirit. So with Rob taking over his role as head of Asia and Amit taking over in terms of our U.S. private debt credit strategy, it became very important to just keep those individuals aligned. And I think you'll be seeing more of that in the future. We are talking about ways to create additional alignment, not only at the senior management level, but looking to find through employee stock plans to drive that through the rest of the organization. So that was really the driver there.
Got it. Okay. Thanks for that. And just my last question. Just want to revisit slide 14. I think your fund performance continues to track well, especially your fixed income side, but we've seen some deterioration on the equity strategies, more so on the three-year. Can you provide some additional color? What drove that, and when do you expect that to recover?
You want me to take that, Lucas?
Sure. Go ahead, John.
Well, the deterioration, and it's primarily, like mentioned, on the global equity side. And it covers all our global equity coverage. And it's primarily related to an underweight position on the technology side. And what will turn that around is clearly related to an adjustment in the valuation of those technology stocks relative to the rest of the market. So you look at the performance of the S&P 500, which is obviously the primary example of that globally. You look at the performance of the S&P 500.
If you exclude the major seven, the performance of the S&P 500 is, and the valuation, in fact, of the S&P 500 changes quite dramatically from the aggregate industry. So we think that somewhere, okay, maybe it's happening now. I don't know. Maybe it will happen next month. But we think that in the course of the next 18 months, that we're going to see a realignment of valuations within equity markets. And like I said, primarily because it's the, I'd say, the most excessive example of that, primarily the U.S. market.
And, John, those funds, are they primarily PineStone managed?
I did say that it covers the aggregate of our global equity strategies.
Okay. Got it. Thanks for that.
Thank you. Next question will be from Graham Ryding at TD Securities. Please go ahead.
I just wanted to just follow up on your constructive outlook for the second half in terms of organic growth. It sounds like you don't feel like there's any more PineStone redemptions to come through. What are you seeing that you think is going to drive positive flows? Do you have visibility on Lloyd's? Are there any other sort of mandates of visibility you have that would be driving organic growth?
Well, we had long list of very competitive strategies. If you want to really drill down, we've got a few minutes here. Canadian equities is a very competitive strategy. And in fact, we are right now very, very successful in gaining market share in Canadian equity management in Canada. Okay. We also are gaining traction on our fixed income strategies.
Not all of them, but some of our fixed income strategies, we are winning new clients and new business currently on that front. So those strategies are also competitive and attractive to potential clients. And I could talk about our SMID strategy, small mid-cap strategy in the U.S., especially to the distribution of the New York Life network that are very active and supportive and quite aggressive, in fact, in distributing into their networks our U.S. SMID strategy. We are also very active at increasing our market share and winning business in our emerging market group of strategies where we have three strategies there. And the one that's generating most attraction right now is the Emerging Markets Select strategy, which is one of the three. So that's on the public market side.
On the private market side, we're seeing a lot of interest, especially in the Middle East, on our ag strategy, agricultural strategy, increasing interest on the combination of our ag and timber strategy on the private market side. Like I said, there's, I'd say, a return of interest in our real estate strategies against the background of expectations about interest rates coming down in the next 18 months. And we are right now very successful in growing our infrastructure assets under management. So we have opportunities there, and we are winning business on the infrastructure fund in Canada as well as in the EMEA market. So I'm sure I'm forgetting a few. So maybe, Max, you want to add to this to complete the answer to the question?
Yeah. Thank you, Jean-Guy. So a number of things. One of the things that we did to accelerate growth in the Canadian market is we have redefined slightly our go-to-market strategy by having dedicated salespeople in the private markets and then the public markets, which, from my early observation, will accelerate our coverage from a consulting standpoint. We have seen an uptick in the number of RFPs, almost double from previous quarter in terms of what we've been getting. To Jean-Guy's point, mainly around in the public markets, we've seen lots of appetite for our Canadian equity mandates, which we have for the second half of the year, a very strong pipeline of finalists and also strong commitment coming in around multi-solutions and balanced mandates as well. That is very promising.
On the private side, we already have a significant win that, unfortunately, I can't announce, but is a significant few hundred million CAD that we have received positive feedback. Then we also have a very strong pipeline for the second half of the year. A number of things that are very encouraging is these are not anecdotal wins. It is a result of a systematic new process that we have in place in terms of how we cover consultants, how we fill out RFPs, and how we are winning additional business.
I've seen an increase in the percentage of closing when we get to the finals. That is encouraging us for the next second half of the year and certainly for the year to come after. So strong pipelines in both privates and publics, and also lots of initiatives around cross-selling of our existing book of business, which is very significant. So I think the second half of the year is looking promising. And certainly, when we look for 2025 for private markets as well.
Okay. Great. Appreciate the thorough response. My last question would be just, Lucas, just on the outlook for free cash flow, which is obviously a very positive trend this quarter on an LTM basis. Is this a reasonable run rate, or is there anything sort of in the quarter that would maybe be pushing free cash flow higher than what you would sort of expect on a run rate basis?
No. And thanks for the question. I mean, it's meant to reiterate the fact that in Q1, I did highlight the fact that the reason we were lower than we expected and that you all expected was really working capital driven. If you look at our cash flow from ops pre-working cap, we've effectively been consistent quarter-over-quarter. And so the outsized performance that you're seeing now is really just the reversal of that working cap in the second quarter. We do expect that to moderate back to normal levels for the end of the year. And by that, I mean that we're comfortable that we'll be in a range to cover the dividend, but we shouldn't expect it to be at this excess level.
Okay. That's helpful. That's it for me. Thank you.
Thank you. Once again, as a reminder, if you do have any questions, please press star followed by one on your touch-tone phone. And your next question will be from Jaeme Gloyn at National Bank Financial. Please go ahead.
Yeah. Thank you. Appreciate the extra color on the Canadian markets and change in some of the strategies there. Can you also talk to the U.S. a little bit? Some of the impacts in the quarter and over the course of the last year seem to be also coming from the institutional channel in the U.S., with PineStone taking some of those clients. Maybe talk through some of what you're seeing there and what gives you some confidence on the U.S. side.
Okay. On the U.S. Side, well, first, we're very, very happy with the leader that we've chosen and who's executing our plan in the U.S., Eric Roberts, who's a 15-year veteran from Aberdeen, who joined us to be the U.S. CEO. There's a lot of activity in the U.S. on the public market and private market side. I think you're probably aware that we have a significant franchise in the municipal bond business in the U.S., the munis. And we're seeing a—well, we've made a distribution commitment where we've added a couple of professionals in that distribution leg, and we're seeing some significant impact as a result of that. So there's a lot of growth opportunities occurring and prospects as well in that segment. They're very active, like I mentioned, in combination with New York Life in distributing our U.S. SMID strategy, which is very competitive.
If you look at this in the context of the potential rebalancing of markets that I referred to a little bit earlier, there's a significant acceleration of interest by clients in that strategy relative to a typical large-cap S&P 500 type approach. We're seeing also quite a bit of activity in the U.S. in the distribution of our private market strategies. There, again, the one where we're seeing the most activity is on the agricultural side. That's what's happening in the U.S. We just brought into the organization a new leader to lead our consultant coverage relationship work.
We have three people there doing that in the U.S. We have a new leader who we think will have a significant impact in our penetration of acquiring support from the consulting community in the U.S., as you know, which is a very, very important channel to access institutional business in that market. In summary, I'd say those are the key points.
Happy to add just a number of things here because we're doing a few cross-border initiatives with the U.S. where having a strong footprint in Canada and being able to export this to the U.S. through our strong relationship in the consulting business. As Jean-Guy mentioned, we've hired a new person who's developing a very aggressive strategy to go to market in the consulting market in the U.S. where we want to get additional rating of our products. Obviously, the number of solutions that are being offered in the U.S.
Versus Canada on the rate for the consultant needs to be improved, and we're working actively on this. I think our ability to respond to RFPs in a more effective manner is improving day by day, and we're going to see early success there as well. And then when we look for immediate response in terms of our ability to have success through the intermediaries market where we have strategic relationships, Eric and his team are really doubling down in order to have some of those solutions on the platforms and see immediate flows. We currently have a strong relationship with some very strategic partners down there, including Goldman Sachs, where I think we have an ability to cross-sell some of our other solutions on our platform.
When we look, when you try to figure out what are the immediate success that we could have in the U.S., it's through our existing relationship in the consulting market, through our existing relationship into the intermediary markets, and over, I would say, mid- to long-term solutions and increasing our ratings in the consulting and making sure we double down on our ability to respond to RFPs in the U.S. market.
Okay. Thank you.
Thank you. There are no further questions at this time, Ms. Guay. I will now turn the call back over to you.
Thank you, Sylvie. That concludes today's call. For more information, please take advantage of our website at ir.fieracapital.com. Thank you for joining us.
Thank you. Ladies and gentlemen, this does indeed conclude the conference call for today. Once again, thank you for attending. At this time, we ask that you please disconnect your lines.