Good morning, everyone. delighted to spend this Good Friday morning with with my good friend, Jonathan Atkin. Jonathan, thank you for agreeing to spend some time with me this morning to talk about DigitalBridge and what's going on today in digital infrastructure. I know you were here in our offices a couple days ago, and you and I talked about maybe perhaps it was a good time to check in with investors and just share a little bit about what's going on in our world and more broadly in the sector and with some of the investments we've made. Thank you. Thank you for agreeing to spend some time.
Thank you. I look forward to spending the hour with you.
Likewise. Well, look, Jonathan, maybe I'll turn it over to you, and we can frame the discussion, first. Maybe you wanna kick it off and we can start with some questions. We do have some prepared materials which I may lean on from time to time, but, really, this is more of a open fireside chat.
Yeah. Yeah. I think, you know, maybe we can, you know, just to give you a preview as to where I think investors' heads are at. I think at some point we'd like to maybe touch on fundraising and kind of the targets for this year, timing and magnitude deconsolidation that you've talked about on your earnings call, when and at what valuation mark. Of course, capital allocation, buybacks, checkouts of preferreds, further acquisitions and so forth. In broad strokes, that's kinda where we're heading. Maybe starting with capital formation, if you would, maybe spend a little bit of time digging into core credit flagship. Specifically, what do you do in each, and how much will you raise this year?
Well, absolutely. We can go through all that. Look, I think this is a good chance for us to really answer some of the questions, some of those questions, and honestly, some of the questions that we've been getting, Jonathan, on the road about, you know, our valuation and where do we sort of put a marker in the road. I think one of the things that's been pretty consistent is around this valuation disconnect, you know, that we've heard. It's been pretty consistent. I think the best way to sort of frame the discussion today is to really first start out and maybe go back, Jonathan, a couple years ago when we were in the midst of transforming ourselves from a diversified REIT into a digital infrastructure, you know, owner and operator.
You know, at that point in time, we told investors very clearly that the best way to think about us was to take a step back and look at the sum of the parts analysis on an NAV basis. I think, you know, today the big difference from where we were two years ago, Jonathan, is today we're now an earnings-driven business, less of trying to assemble disparate parts of various parts of the real estate and digital ecosystem and sort of smash them together. When we think about where that takes us today, you know, first and foremost, you know, we're really taking guidance that we put out there that's really based around earnings and to your point, capital formation, which we'll go into some granular detail today.
The second thing I would say is we've also provided a really simple summation of what are the four parts that really drive the value of DigitalBridge and why we think it's the most compelling digital infrastructure platform out there. The first value bucket, I think, is pretty easy to get our arms wrapped around, which is, to your point, around invested management earnings. You know, the products that are driving our earnings today and that are driving some of our investment decisions. Really what we tried to do is guide investors to a simple framework for 2023 that is primarily 75% based on earnings. Our expectation is that we'll deliver on really, again, to your point, Jonathan, two key goals: deconsolidation and fundraising. There's some subcontext to that which you and I will go into today.
Maybe a good place to start is just to start with the picture's worth a 1,000 words. A simple slide to really frame the conversation today is right here. We'll go forward a couple of pages. This is really the framework for the discussion, which is, as you can see, the vast majority of the value of our share price today is based on a simple premise of FRE, fee-related earnings. These are predictable and growing management fees associated with long-dated funds. That's really important to understand the long duration of our funds, Jonathan. These are 11-year funds with multiple one-year extensions. The consistency in those fee earnings are much like akin to a tower lease or a data center lease or a long-haul fiber lease, where you've got that consistency from investment-grade counterparties.
Valued on a multiple of an FRE basis, it's really consistent with what other alternative asset managers are doing. Most importantly, we adjust that for DigitalBridge's growth, which is I've telegraphed to investors, we're anticipating, you know, 25%-30% growth this year. Our margin profile, which is improving, again, something that Jackie and I have laid out. Taking $10 million of cost out of the business, raising $8 billion in new capital, which we think comes in at $0.90 on the dollar of pure margin for 2023. The simple algorithm is taking that fee in, multiplying that by an average fee rate margin at the IM business, and it really allows investors to value the business on a very simple earnings-driven model. The second thing we've discussed is performance fees.
Now that we manage over $70 billion of assets, we have a lot of performance fees. We have a lot of performance fees that'll be realized, you know, over the next five to 10 years as these funds mature and they deliver performance. Different fund products have different fund lives. We have different continuation vehicles that have different ultimate horizons and performance fees associated there. Really the future value is based on the targeted fund level performance. Here's where we are performing. Our Flagship Fund I is performing well. Our Flagship Fund II is performing ahead of plan. Then, of course, our credit and core products are performing quite well, as are our continuation funds and our liquid security strategy.
We do anticipate a minimum of $5-$7 of value, Jonathan, just embedded in our performance fees. If you sort of unpack that, there's over $35 billion of fee-bearing equity at work, and most of those products have a 20% performance fee. Over at T-Mobile, you can very simply get to this notion of what carry is worth, realized carry will be worth over the next 5-10 years. Look, we know as a relatively new asset manager, no one's gonna give us credit for this. This has been the struggle. I always remember listening to Blackstone quarterly conference calls when Blackstone first went public, and Steve Schwarzman was always frustrated with the fact that the Street gave them no credit for performance fees.
Now today, performance fees at Blackstone are a big part of their earnings, and it's very predictable. On the operating segment, this is also important. These are our minority stakes in DataBank and Vantage. Both of these assets performed exceptionally well, and even taking conservative multiples, you get to a $2-$4 worth of value on our share price. This is very simple. It's valued on a multiple of EBITDA, consistent with comparable digital REITs data centers in particular. For example, DataBank is very much like Equinix. In fact, I'd offer to you today it's the 2nd largest edge computing interconnected business in the United States behind Equinix, with actually a faster growth pile than Equinix. We believe that the DataBank shares are vastly undervalued when you compare that against Equinix.
Vantage SDC, there's not another data center operator in the world like it. These are long-term contracts with investment-grade tenants in the strongest U.S. markets. There is not a pure play hyperscale data center public vehicle today that investors can buy in. Digital Realty and Equinix have hyperscale campuses, but nobody offers a pure play to hyperscale data centers like Vantage SDC does. Again, this is a conservative mark. Ultimately, the balance sheet we have here at a slight negative impact to NAV. How do we get there? This is really simple. It's cash, it's our corporate debt, and it's our preferred equity. Just being very intellectually honest with the over $600 million of current cash, about $590 today, plus another $300 undrawn on our revolver.
Take the 860 of pref's, the $300 million of securitized debt, and the $200 on the converts. This is where you get to this net balance sheet value. I like making things really simple. It's a good place to start our conversation today, Jonathan, and we can deep dive into each of these silos. I imagine we wanna spend more time on the FRE side, which is our investment management business, but I thought this was a good place to start the dialogue today.
Yeah. No, that's a, that's a good backdrop, and we might circle back to some of these later on. Maybe, going back to kind of, you know, the strategies that you had two years ago. You've introduced some new ones over time. You mentioned a lot of the data center focus. Maybe, expand a little bit on what you're doing across the different strategies and some of the highlights that you want to kind of point out.
Well, look, I think, you know, starting with Flagship, which is really sort of the cornerstone of what we do, which is our first fund and second fund, we've had a lot of success there. We've had some exits, most importantly, Jonathan, we continue to invest in those 27 companies. We think they are some of the most interesting businesses in the world, they provide connectivity and mobile support to some of the most important and trusted logos in the world. I think that has really been our core, which is, you know, really infrastructure, digital infrastructure investing, focusing on long-term contracted cash flows, high concentration to investment-grade counterparties, strong escalators, and of course, inflation protection, where we have those costs passed through to our customers.
Today, as you saw from the fourth quarter marks, both of those portfolios moved up in value in the fourth quarter of 2022. They moved up in value in the third quarter of 2022. A lot of investors said, "Well, why is your portfolio moving up, and perhaps other alternative asset managers have had valuations move down?" It's really simple. It was a playbook that we made a conscious effort about two years ago to initiate, which was, we were deleveraging the portfolio. We were taking free cash flow, investing into the physical plant, whether it's building new data centers, building new fiber ladders, building new towers, buying new towers, buying new data centers, but really focusing on core organic growth at these companies. The best way to increase NAV is really simple.
It is ultimately to lease unoccupied space on a tower inside of a. Sorry, Jonathan. We had a temporary. Can you hear me now, Jonathan? Okay. Ultimately, the way you get an increase in NAV or net asset value across the portfolio is through that discounted cash flow analysis, right? Ultimately, you value businesses, Jonathan, based on private mark-to-market. You can obviously get there through public market comps and then private market comps. The way we ultimately value our business is through those three metrics. That's kinda where we are today in terms of the core. What we did do, Jonathan, is about two years ago, we made a decision to enter digital credit, and we made a decision to enter our core strategy.
What we did is two years ago, we built out operating teams in both those spaces, Dean Carreras running and Mike Zupan running credit, and of course, Matt Evans and Peter Hopper running our core strategy. Both of those strategies have performed exceptionally well. In fact, I'd offer you today, when we talk to investors, particularly coming out of a couple weeks ago, we were in Berlin at the Infrastructure Investor Global Summit. We had conversations with about 113 global investors over four days. What is working is core and credit. Why do investors wanna be in core? Being in a core fund where you've got 25-30-year contracted cash flows, very safe, 4%-7% current yield, returns in 11%, 13% zone, but all contracted.
So there are certain pension systems that wanna risk off, Jonathan, and take that safety. In addition to that, what we've also seen is on the credit side, people wanna take advantage of the rise in interest rates and the inability for traditional banks to finance digital infrastructure assets. This is where our credit fund has really excelled, and that fund is outperforming its benchmark, and it's outperforming our underwriting and our targets. There, what we're seeing is loans typically with anywhere from an 8%-12% coupon. We're seeing great downside protection, perfecting either a first lien through a unitranche or a second lien structure, or in some instances, where we're going out and we're buying secondary paper. One thing is clear, the traditional credit market and traditional credit, Jonathan, as you and I know it, has been disrupted.
That's really provided an opportunity for us to invest, and our investors have really piled into that strategy. We're taking advantage of that strategy with co-invest as well. Big Canadian pension funds, big global allocators, not only are putting capital into that fund, but they're also doing co-investments with us. Flagship is working, Core is now working. Core has really come on strong in the last 30 days with investors. In addition to that, credit is working incredibly well. Sorry, we had a little bit of technical glitch here with the video system here, but I think you heard everything that I said. There is a fourth strategy, Jonathan, that I would mention to you, which we've talked about before, you and I have, which is co-investments. Co-investments are not specifically in our flagship series, our credit and core.
Inside of co-investments, we create an entity that will ultimately have third-party capital come side by side with our funds to own some of our most valuable businesses. These are really good strategies. What we introduced two years ago with the advent of Vantage SDC is continuation vehicles. Last year, we did a continuation vehicle for DataBank. We just announced a continuation fund for our Vantage Europe hyperscale portfolio. We have long-term capital for Vertical Bridge, for ATP, for ExteNet, for original Vantage, which sits outside of a fund structure. Having these long-term perpetual capital vehicles, Jonathan, are really powerful. I think of all the GPs out there in the digital space, nobody has done more continuation funds than us.
It really provides our LPs the chance to get more exposure to the best products they like. You're on mute, Jonathan.
There we go. How do you win against competing scaled funds? What gives you confidence that you can continue to fundraise in the current environment? You talked about Core having a strong last 30 days, maybe just amplify a little bit about that process.
Look, I think, you know, the dialogue that I've had with investors for the last two quarters, going back since October, gone out to probably have seen about 250 investors. I'd say there's four really consistent themes on, I think, how investors perceive us, Jonathan. You know, one is they wanna be with an industry specialist. I think that's super important. Being exposed to somebody that understands digital infrastructure, at an intrinsic level and understands how to operate these assets at a very, very intense level is really important. I also think big asset allocators today are only going to put capital with what they think the market leaders are.
I've heard this in the last 90 days from about 20 of the top allocators around the globe, they actually tell me they're shrinking their number of GPs who they're investing with in 2023. It's a lot more competitive, it's a lot more selective, and what we're finding is the big allocators are shrinking their list of GPs and are going with the trusted set of names. I think when they look at us and they talk to us, they know that we've been doing this for 29 years, and they know that we're a trusted set of hands. The fact that we have $70 billion of assets is about three times bigger than our nearest competitor, two to three times bigger than our nearest competitor, which in the digital space would be an EQT or a KKR, or a Blackstone or a Macquarie.
None of them have our depth and our expertise. We have 257 people that wake up every day and focus on digital. I think GPs appreciate that specialization. I think also in this environment, being the best at what you do or being the biggest at what you do, is very important. We're not the biggest in private equity. We're not the biggest in credit. You can imagine folks like Ares or Apollo are doing quite well in credit, or people like TPG or Blackstone or Carlyle are doing quite well in private equity. When it comes to digital infrastructure, that's our street corner. We own it, LPs know it, our 29 years of returns and our track record are second to none.
We think that's where we really differentiate ourselves, is our ability to get in there, operate the assets, create a little more alpha. Ultimately, when an investor wants to go deep into digital infrastructure, they know that when they're working with us, they're gonna see every opportunity on the planet. Whether it's in our flagship, our credit or core co-investments, you're gonna see every good digital opportunity if you work with us.
Great. Couple questions on capital deployment, maybe starting with data centers, which you highlighted earlier. Hyperscale data centers is where probably the greatest volume of capital is being put in by yourselves and others. How do you see returns evolving with so much capital out there, people chasing different types of forms of digital? The original advantage was backed by, you know, a VC firm, essentially, looking for private equities type returns. Obviously, that has changed over time. The evolution of returns that you're expecting with hyperscale and towers, which you've been involved in a long time, that's kinda seen a similar trajectory. How do you see that evolving?
Yeah, look, I think on the hyperscale side, let's start there. Hyperscale, if it was easy, everybody would do it, right? I think in a market where capital and liquidity is pulled out of the system, there's very few people that are performing on a global basis at scale. On that basis, that's what we're doing today. We're having a lot of success building large hyperscale campuses in Asia, in North America, down in South America, and of course, in Europe and in Africa as well. We wake up every day and we perform on five different continents for our customers on a global basis. They know if they call us, they're gonna get a certain experience and they're gonna get a certain type of facility that'll be built for them.
That is a competitive advantage for us. We really feel like that's something that we can do that nobody else can do. Last year, just by example, Vantage, you know, leased over 400 megawatts of hyperscale leasing, which was bigger than Equinix and Digital Realty. That wasn't by accident. That's because Sureel had the land. He's got the will serve letters for the power, and most importantly, he's got great mass releases, and he can move quickly. The ability to be in a private format for hyperscale data centers is a huge advantage. I think we're seeing that now with Switch. After two quarters of fantastic results under our leadership, their leasing volumes have increased because we're able to form capital, and we've been able to help them continue to grow their asset base.
We don't see hyperscale leasing subsiding this year. In fact, what I did offer at my PTC conference in Hawaii is that this will be the second year consecutively, Jonathan, where we've seen lease rates rise. We had about a 6% increase in rents last year. We've seen anecdotally in some markets in Europe and the U.S., rental rates have risen as high as 10%, 15%, and 20%. Why? Again, scarcity of capital. Everything is about liquidity. When you take the liquidity out of the system and there's a scarcity in capital, very few people can go out and build 200 megawatt campuses. That's what we're doing today. It was so important what we did earlier this week in creating that vehicle to own stabilized data centers in Europe.
The complexity of forming capital in this market and raising that kind of equity in this market was really sort of unprecedented. Having great partners like Generali and Infranity and Munich Re and other pension systems that signed on to own these assets with us was so important. The most important winner in that transaction were our European customers. We're taking that capital, Jonathan, we're recycling that capital back into Vantage Europe, and we're investing for customers. Capital formation, availability of land, will serve letters, great relationships with customers, the ability to move quickly, that will define over 2023 and 2024 who's going to win in the hyperscale data center marketplace. We think we will win. We specifically think Vantage and Scala and Switch will be big winners, you know, in that process.
Just on Vantage Europe, then, announced earlier this week. Do we think about that as a 2Q fund monetization? What can you share about kind of the financial details around that at this point?
Sure. Sure. Well, look, it will be return of capital for our first fund, and so that'll represent another marker for our investors that are in the first fund. It's important. Like, global investors right now are telling us, "Look, returning capital back to us is so important." We started doing that in the second half of last year. I've been very clear and prescriptive that we will exit other businesses this year. We will return capital, we will generate carried interest, and ultimately, we're going out and we're performing for investors. We recognize at the same time, we're asking investors for capital. The best way to ask investors for capital, Jonathan, is to return capital back to them.
One of the great metrics we look at is DPI in the private funds business, the ability to return capital against the original balance in a fund. That's what we're doing. We keep growing DPI under our first fund, and it really opens and paves the road for success in our future strategies. Certainly it's helpful when you're asking for more capital and credit and core and co-investments. Definitely this transaction was about returning capital, but it was also about reinvesting back into Vantage and creating a glide path as we build the next 20 campuses, the next 20 data centers in Europe, that we have a vehicle ultimately where we can put those assets and allow investors to take advantage of, you know, the security and the yield of what we're doing.
Towers, you obviously made a big move in Europe recently with Germany. Talk a little bit about returns that one expects maybe by region. Obviously, you've got developing markets, emerging markets. Developed versus emerging markets. What else is out there? Are we in the middle, later, beginning innings of tower M&A and sale leaseback transactions, things like that?
Well, look, I thought last year that we would see kind of this renaissance of European towers. I thought deal-making would be quite in vogue. Obviously we were really delighted to be picked as Deutsche Telekom's partner of choice for their European portfolio. Shortly thereafter, Vodafone made a decision to create their partnership. I think ultimately you will see more European tower deal-making, Jonathan. I think inevitably there are other assets that are in play, you know, whether it's TDF or whether it's Totem or other European assets which will remain nameless. We do think that there's an inflection point for more European tower deal-making, and we intend to be in the, you know, sort of at the center of that deal-making over time.
We think that, you know, while credit markets are tight, there still is, you know, an attractiveness to European towers and to ultimately the ability to form equity and go out and do deals is something that, you know, that we have a lot of confidence around. I think we definitely feel like that we can continue to raise capital, and we feel like we can continue to do deals, you know, in the European theater. I would say one thing, Jonathan, about returns in Europe. This is a discussion you and I think have had for 20 years when I was at SpectraSite and we, you know, we did those first European tower deals in Spain and ultimately in the U.K. That truism holds today, which is returns for European towers are just smaller.
The reason for that is embedded in it's a lower growth marketplace particular. Our POPs are lower. Growth trajectory on the carriers is lower. It's very competitive. Some of these markets have 3-4 carriers when they really should have maybe two or three carriers. Ultimately, the physical structures that are built in Europe, as you know, Jonathan, are just smaller. When you're building 12 to 18 meter masts that hold one or two RAD centers versus a 190 foot monopole that has five RAD centers, it's pretty easy to understand, you know, when you've got a physical asset that you can only load, you know, two customers versus an asset you can load four customers. Inevitably, the physical constraints of Europe do lead to a lower growth environment.
You know, we've been looking at European towers with a growth rate between, you know, 4% and 5%. Here domestically in the U.S., our U.S. tower business, which Alex Gellman does a nice job, who you got to see earlier this week. You know what Alex is growing at. You know, he's delivering, you know, 8%-9% core organic growth. Then on top of that, with M&A and other accretive acquisitions, he's growing at 14%-15%, which is almost triple that of Europe. The U.S. continues to be the number one tower marketplace in the world. I remain pretty convicted around that U.S. towers remains one of our best bets. It's no secret that being in businesses like Landmark and Vertical Bridge, you know, we think are ultimately the right place for people to be.
Vertical Bridge is crushing it. They had a spectacular first quarter leasing. As you heard a couple days ago with your investor roadshow, their built to suit pipeline is up. They're winning with all three carriers and they're performing. Again, it's about performing. It's about waking up and performing for customers, and that's something that Alex and I've been doing for 29 years.
Turning to fiber, maybe give us an update on Zayo. You talked briefly about it during the earnings call. They since have reported year-end. Seems like they may have crossed the inflection point in terms of performance, what's the update?
Yeah, look, delighted to talk about Zayo. It's been a lot of fun. It's been hard. It's been a hard two years and a lot of hard work and, you know, when we bought that asset, you know, we knew it had operational challenges. It was over, as you know, close to 50 M&A deals smashed together to create, you know, a nationwide and, certainly a pan-US, pan-European fiber business, but it had challenges. As I take a step back, there's sort of six things that we had to transform, and we're just finishing that transformation. That's why you saw the rebound in the financial performance in Zayo and why you can see Steve Smith is excited about 2023 and 2024 and even flying into the teeth of an uncertain macro.
Zayo is incredibly well-positioned to perform now. What did we do? What have we been up to over the last two years that I think maybe public investors didn't understand? One, we transformed the management team. With the announcement this week with Jacky Wu coming in to be our CFO, I've now completely transformed the C-suite at Zayo. It took me two years to do that, to get the right people into the right chairs, but you can't lead a business transformation, Jonathan, without the right people. Now I've got the right people in the right chairs at Zayo. The second thing we had to do is we had to invest in the physical plant. We went on a 2-year network hardening program, spending over $130 million in discretionary CapEx into making sure that our plant was best in class.
We had, as again, over 40 to 50 acquisitions. Some of our plant was aging, you know, 10, 15, 20 years old, like the AboveNet acquisition, by example. Great routes, great network, but fiber ages, as most people know. You hit the 10, 15 year, 20 year inflection point, you have to keep reinvesting in the network. We've been doing that, and we're now seeing the dividends on that. Service delivery. You've got to be able to perform for customers. When you provision a strand or a wavelength or any service at Zayo, unfortunately when we bought the business, we were gapping out at close to six months in terms of service delivery. Totally unacceptable. We needed to get that metric inside of 60 days. We've now got it down in the low 70s.
We ultimately, where Andres and Steve are driving that, is a customer experience between 30-45 days of procurement, which would be best in class. The fact that we've now cut that down by almost 60%, you know, our team is doing a great job. We brought in an industry veteran who basically helped Mike Sievert build his 4G and started building his 5G network, which took T-Mobile from number 4 network performance to number 1, and was really delighted to bring Brian in and help build out our service delivery platform. That took us a year to build that out. You don't build service delivery in a year. Andres and Brian and Steve have been doing that. Finally, we had our fourth quarter, which was our best net install quarter in company history.
We also had our best bookings year in history. The best gross bookings in Zayo's history was in 2022. Again, investors didn't appreciate that. I brought in Andres Irlando to change the sales culture, take our product set from we had almost 15 different products, distill that down to seven to eight core products, redo the sales culture, redo the sales commission, reinforce our sales back office system, which was Salesforce linked up with our internal database. Investing in people, systems, new commission program, simpler product set, and now we've got the sales engine cooking. People, network, service delivery, sales. The last two pieces are the stuff that you don't see, which is behind the scenes. One, taking cost out of the business.
We believe there was an opportunity to take $30 million-$40 million of cost out of the business. We're now two quarters into that cost initiative. Investors are gonna see that in our financial performance in 2023. There's gonna be a great performance pickup in EBITDA just based on using technology, using information systems, and unifying and centralizing our business into Boulder, where we were running multiple regions. We've now brought that all and distilled under Steve Smith's leadership. Ultimately, pulling cost out of the business that was unnecessary. The last piece is data integrity. We really had to go back to zero to rebuild our database and build our data capabilities. Again, 40-50 acquisitions. Some of them had good data, some of them had bad data.
We went on a data foundation project, which I initiated last summer, and we've been doing that with a big team in Boulder. It's gonna take about two years to completely transform the way we manage and operate our data with dashboards and KPIs and using some software and some stuff that we build ourselves. Going on data foundation projects, you don't fix that in two quarters. You don't fix it in three quarters. It takes years to transform data culture, and we're now in the process of finishing that at Zayo. There's so much that goes into building great companies, and I'll always give Dan Caruso a lot of credit for building that great M&A engine, building Zayo into a great brand, and now we get the chance to take that work that Dan started and finish it.
What you saw in the financial results is the beginning of a transformation that Steve Smith has led. You know, what I can tell investors, particularly bond investors who love hearing about Zayo, is, don't bet against Zayo. It's a company that's gonna perform. It's a company that I personally am on that board. I don't sit on many boards anymore, but the boards that I do sit on, I'm very involved in, and, I have a lot of conviction and confidence around what we're doing at Zayo.
Just to finish out on fiber, Zayo is in Europe. Europe is in, you know, a little bit less consolidation over the years has happened in Europe, maybe more to come. They're in, you know, some countries, but don't have a pan-European footprint like some of the peers. What are you trying to solve for, operationally and strategically in Europe? Asia with Xenith IG, if you wanna just touch on that's obviously at a more kind of formative stage.
Yeah, absolutely. In Europe, in Zayo, we actually do quite well there. That business unit has about 6%-8% EBITDA growth. Really that's largely baked in the fact that we've got, you know, amazing, you know, long-haul transport routes, and we've got great data center connectivity. Being highly connected in markets like Paris, Marseille, Frankfurt, Dublin, Slough, Amsterdam, these are markets where Zayo has really a very, very strong network and the ability to move a lot of data very quickly for hyperscalers. We are seeing a little bit more growth in our hyperscale side in Europe than we are in the U.S. Also our metro routes are performing quite well, and our enterprise routes are performing quite well, as is our transatlantic routes.
Our long-haul transport and wholesale businesses perform exceptionally well in Europe. Now we've got a great leader in Jesper, who's leading the sales team there, who's running our European business. He's doing a great job. I get to see Jesper about four times a year. Very engaged, strong executive leadership in Europe. It's a business unit that performs exceptionally well for Zayo. I think in the other fiber businesses we own, we're also seeing strong performance as well. You go up into Canada, where we have Beanfield, that's our challenger brand to Rogers and to Bell.
We took that business from $5 billion of EBITDA to over $50 million of EBITDA in a period of 3.5 years, taking the old Cogeco network, that backbone, and really buying a management team in Beanfield in Toronto. What you're seeing there is Canadians want an alternative. Very few people have been able to successfully go in and challenge the Bell and Rogers brand. That's a business that's about 80% residential and 20% enterprise/data center connectivity. We got a great CEO, great management team, young and energized, and we're sort of defying the odds in fiber in Canada by challenging some of the incumbents. That's going quite well. I think also, down in Chile, we have a business called Mundo Pacifico. We posted, you know, 12% organic subscriber growth last year.
In other logos that were in decline... Actually, sorry, 20% subscriber growth. Our nearest competitor grew 12%, and there were actually two or three companies that had declines in Chile. In terms of total subscriber ads. That's an interesting business where we're a wholesale network where we provide fiber connectivity for our competitors, but at the same time, we go into certain areas, and we build out those zones, and we've had a lot of success creating this hybrid model between wholesale, where we're a carrier's carrier, but also directly facing consumers. Last is Xenith IG, which is really a wholesale long-haul transport business with metro rings in some of the key Southeast Asia markets.
There, we're very focused on hyperscale connectivity, long haul, metro rings, data center connectivity, and now starting to partner with EdgePoint, which owns 14,000 towers in Southeast Asia, to do fiber to the tower, which is sort of an early-stage growth in Southeast Asia today, Jonathan. Small business today, we're partnering with our friends at Columbia Capital who we like a lot. It's growing quite well. It had a great first year. We're anticipating close to 50% EBITDA growth in Southeast Asia. It's a, you know, for us, where Southeast Asia is from a fiber connectivity perspective, Jonathan, is kinda where the U.S. was 10 years ago. It's early days in terms of, you know, dark fiber connectivity to data centers and to mobility.
Xenith IG is gonna be one of the great, you know, great growth stories, much like Zayo was 10 years ago and, some of the other European businesses that we're focused on, you know, cell tower connectivity and data center connectivity.
I'm gonna wrap it up with a couple of questions on kind of corporate-level topics. Kind of roughly, I guess, 20 minutes remaining. Capital deployment, around share repurchases, deals such as InfraBridge, what are kind of the priorities that you see and how would you rank them?
Yeah, look, I'm a pretty sensical CEO, which is I'm looking for a return on invested capital. In everything that I do, I'm focused on a holistic return of capital. And so in today's environment, based on what we see on a macro basis and where we can deploy capital, Jonathan, you know, previously I was looking for a 20% return on invested capital. Today, I've moved that bar up 500-700 basis points, and I'm looking for 25%-28% returns on invested capital. I still believe buying our shares is a great use of our capital. And when we have the opportunity in the window to buy our common, we'll exercise those opportunities, and we'll continue to buy our shares back. We've got to eat our own cooking. We strongly believe in that.
There are moments where our preferreds look pretty interesting. We had a window last week where those traded, you know, into the 18s again. On that basis, it's a very accretive trade for us to retire those. At the same time, when they creep back up into the mid-20s again, it's a 7% permanent cost of capital. In this environment, 7% permanent capital, believe it or not, as you know, is actually pretty cheap. When those preferreds trade closer to par, we become less interested in buying back our preferreds. We're very opportunistic about how we use the balance sheet and how we're going to ultimately repurchase common and preferreds. I think the InfraBridge opportunity was opportunistic, right? We had close to 30 LPs in common with our friends at AMP Capital.
Those LPs came to us and said, "Will you help us? Can you do us a favor? Can you, can you fix this business?" We said, "Yeah, we'll be delighted to come in and fix the business and help you guide those two funds." Ultimately, you know, we wanna grow InfraBridge, and we wanna continue to invest capital in digital logistics, renewable energy, and middle market digital infrastructure. We're focused on businesses like e-charging, certainly focused on renewable energy, very much focused on the future of logistics, particularly around ports and airports, and then, of course, middle market digital infrastructure, where you write tickets between $100 million-$200 million. That's a space that DigitalBridge does not occupy, so we're pretty excited about putting capital to work there.
We bought that business effectively at 6.5-7x EBITDA pre cost synergies. We're already experiencing those synergies a little quicker than we thought. On that basis, we're getting to a high 20s return on that invested capital. That's a good use of capital. Anytime that we can grow our FRE, grow EBITDA, and do it at a single-digit multiple, every public investor that owns DigitalBridge shares knows that that's an accretive trade for us. We're looking at other alternative asset managers. We've been very prescriptive that we're out looking at different private equity funds that we think are adjacent to what we do. We've got a big list of M&A targets that we're talking to on a consistent basis.
We have cash to do M&A, and if the opportunity exists like an AMP, where we can be opportunistic and we can find accretion day one, those are situations that we're going to take advantage of.
Then maybe kind of the inverse of that question. You talked about the valuation framework in the first five minutes. If DBRG shares continue to remain dislocated from fair value after the simplification events that we've talked about, I guess we'll talk about it later as well, how do you think about whether it's the right thing to remain an independently listed entity?
Yeah. Well, look, that's not my decision, right? Ultimately, my job is to serve our public shareholders, and that's what I wake up and do every day. You know, ultimately, whether we stay public or stay private, if somebody comes along and wants to make an offer for the company, I can't control that. What I do do, Jonathan, as you know about me, is I wake up and I focus on my control variables, right? I focus on our total leverage. I focus on our liquidity. I focus on fundraising. I focus on running our portfolio companies. If I stay within those four specific swim lanes, maintain high liquidity, continue to delever the business, continue to outperform on fundraising, and continue to perform at the portfolio company levels, I believe the share price in turn will react.
Look, it's a prove it year for us. We've been saying that to public investors. I think people are looking at the shares. Some people are buying, some are on the sidelines. I tell them, "Look, for us, this year is very clear." If we go out and do what we say we're gonna do, people are gonna look up in the fourth quarter, and they're gonna be very impressed with what we did for the year because we've only laid out a couple of key things we have to do. To finish the transformation, to your point, there's not a lot we gotta do here. We gotta finish deconsolidating, DataBank Advantage. We gotta go make good on our $8 billion fundraising target.
Ultimately, we gotta continue to grow NAV by having our portfolio companies grow at discounted cash flows through organic leasing and through cost savings. We do those things, and I do believe the stock will perform in kind. I do think as we highlighted earlier, we believe there's a dislocation between our current share price and our true NAV. Hopefully investors will do the work. Hopefully they'll come spend time with us. We're always open for folks coming to spend time with us. The more you learn about DigitalBridge, the more you appreciate that there is a dislocation in the valuation framework.
I think you kind of answered what I was going to wrap up with in terms of questions, and what's on people's minds. Can you raise $8 billion this year? If you have any final thoughts on that, please share. The deconsolidation process, timing and what sorts of valuation marks, if there's anything further that you can amplify on that, I think the group would be interested in hearing that.
Yeah, absolutely. I think, you know, ultimately, this gets back to our valuation framework. I'll ask Nicholas to post a couple more slides here just to share with our trajectory and our ramp of where we're going. I think if you take a look at where FRE has been and where it's going, this is a profound year for us, Jonathan, because if we ultimately, if we get the fundraising correct, as you can tell, there's a big step function in terms of annualized FRE this year. We've guided investors to this, and we've said, "Look, you know, on a fourth quarter basis last year, this is sort of run rate annualized FRE.
You know, we generated over $233 million of revenues, and we're going to over $310 million in revenues on an annualized basis for 2023. As you can see, at the same time, our annualized FRE has a dramatic increase from $120 million up to $185 million. We're projecting approximately about a $65 million increase off that $8 billion of fundraising. What we did say is we're taking costs out of the business, and ultimately, my belief is that we can bring, you know, $0.90 on the dollar. We've put a pretty conservative marker out there in our view.
What's really important here is over a 4-year period, we've had greater than 4x growth in revenue and FRE, and we do believe we can continue to do that well beyond 2023. Even as we've told people, "Look, we're gonna raise $2 billion in credit core, $2 billion in co-invest, and we're gonna raise $4 billion in new strategies." Ultimately, that new strategy bucket, folks can extrapolate what they wish, but we obviously are gonna continue our flagship product, which is DigitalBridge Partners, DigitalBridge Partners I, DigitalBridge Partners II, and that fundraising will go throughout this year and will go into next year. Then next year, as we already look beyond into 2024, we know what's working. We know our credit strategy is working. We know our core strategy is working.
We ultimately believe InfraBridge will be in a better place next year in terms of the things that we're doing with those assets. We wanna get back out and continue to grow that strategy. We've also said at some point in time this year, we'll enter the private equity space. We brought in Jonathan Purcell, who's a long-term great veteran of the private equity space, somebody that everyone really respects in digital private equity. We've got everything going in the right direction. Most importantly, we do believe that the benefits of specialization create this margin sorta increase, so to speak. Next page, Nicholas. This is important. You know, as we took costs out of the business, we ultimately feel like we can improve margins. This is a big part of what we're doing this year. Our management fees are long-durated.
That's really important. We're growing our management fees faster than our peer set. As we talked about last year, you know, in terms of our CAGR growth over the last three years, we've been able to put up close to 65% CAGR growth across our investment management platform. That's an impressive growth rate when our peer set's been growing at 23%. Further to that, our average FRE margin was 55%. Our FRE range is 48%-60%, and we think we can do better than that this year, given the cost measures that Jackie and I put in place. The last thing I would say is back to duration matters. The duration of your cash flows is so important. One thing that we do better than anyone else is we have longer-term funds.
Not being exposed to shorter duration funds allows us to have consistency in our earnings. Most of our infrastructure funds today, absent our continuation funds, which have no end of fund life, are greater than 10 years. Look, we think there is a disconnect in valuations. You can see alternative asset managers are currently trading at about 18.3x FRE. We think that ultimately, we're undervalued. Ultimately, we believe we can get there. We believe we have a great business. It's growing faster, it's got better margins, and it's got long-term fees. Ultimately, at the end of the day, that is going to be what differentiates us.
As you can see, if you take a look at where we think about the core of our business, which is this $14-$17 per share valuation, just on the investment management platform, we think there's a pretty big value arb for investors to lean into. Just once again, taking a look at our 2023 FRE guide, the indicative multiple for where, you know, our peer set trades and ultimately the 3-year average of where our peer set has traded, which is about 22x. Even at today's multiples of 18.3x, we think there's a material disconnect in our valuation, and it's all embedded in this, in our investment management platform. Look, to get there, it's not a leap of faith that gets us there, Jonathan.
We've already had a good start to fundraising this year with good victories in credit and core. We've already talked about some of the co-investment vehicles that we've raised. We're gonna continue to raise capital for DataBank. We're raising capital for Vantage SDC as we wanna grow that portfolio. We created the Vantage European hyperscale data center continuation fund, and there's gonna be more fundraising coming. All three of those swim lanes are moving. You know, the existing funds that are finishing up, which is credit and core, the co-investments with continuation vehicles like DataBank and other fundraisings we have going on. Last but not least, new strategies. New strategies is a big part of what we're doing this year.
Pulling forward our flagship fund product, as you and I talked about when you were in Boca with me this week, that's an important part of what we're doing. So far, happy to go in any granular detail on fundraising. We are having a lot of success and also open and doing Q&A here at the end. I don't know if there's any other questions.
Yeah, there were a couple in the chat. I think I was able to kind of cover most of them. I can see if anything else materialized, as I think we covered the waterfront quite effectively. I'm not seeing any at the moment.
Look, we obviously have made this presentation public. Investors are allowed to go out and grab this information. It's now in the public domain. The last few components of what we're doing, performance fees are important. We did create performance incentive fees for our public shareholders last year. We will do that again this year. There will be exits across our existing funds that will create carried interest. As we raise new funds, we're creating obviously more carried interest over time. You know, this is a big part of the story. It obviously becomes more pronounced, Jonathan, as we exit more businesses. As we start exiting more businesses in fund one in 2023, and then we do that consistently in 2024, 2025, and 2026. Ultimately in 2026, 2027, 2028, you got the second fund maturing.
You've got our credit fund obviously maturing over the next 3-5 years. That creates carried interest. Then, of course, as we wind down InfraBridge's first fund, and we start winding down the second fund in 3-4 years, then obviously that vertical will continue to grow. Carried interest is a big part of our story going forward. I know investors don't wanna give us credit for it today. I get that. We accept that. It's a prove it situation. As we exit a few more businesses this year, and we create those performance fees for investors, I think they're gonna have a better appreciation for it as it shows up in the quarterly numbers as we exit certain assets. Ultimately to your point.
That was a great overview.
Yeah. The last thing I would just say is the deconsolidation. This is a question we got a little bit on the road this week, Jonathan, from some of your investors. Ultimately, as we get Vantage SDC and DataBank under 10%, we will continue to still own a piece of those businesses. I think one of the questions we got from investors on Wednesday was, "What happens when you deconsolidate and you get below 9%, 8%, 7%, 6%? Where does that EBITDA flow through?" Really it moves over to Investment Management, Jonathan, and it ends up being principal investments. Those businesses sit inside of Investment Management. They're both in continuation funds, but we're still getting the EBITDA and the earnings, but those earnings happen in the Investment Management business. They don't happen over on the balance sheet.
The balance sheet piece of our business goes away. We have one clean, unique business, and we'll still continue to harvest value out of those businesses, except it's gonna fall in the investment management side. As you can see here, these are high quality businesses, ultimately at the end of the day. If you look at the multiples that we're assigning to these businesses, we think they're candidly conservative. If you look at where comps are in hyperscale today, you know, good hyperscale data centers that have 96% investment grade and greater than 10-year leases, those are still trading at a 5 cap, pretty much. 5-6 cap range. If you look at what Equinix does and what DataBank does, same situation.
Those assets, highly interconnected assets with those great interconnection capabilities and cross connects, as you know, those are really difficult to replicate. Those assets are still trading, you know, in a tight band in a 4.5-6 cap rate range. Any interconnection asset that comes to market today is still trading in the mid-20s on an EBITDA basis. There's no value to be found in edge compute interconnection, and there's not a lot of value to be found in hyperscale. Other parts of the data center ecosystem are challenged. We had that conversation on Wednesday. Whether it's managed services, hybrid cloud or enterprise colo or old aging enterprise colo, we recognize those businesses are gonna trade at 7, 8, 9, 10 cap rates because those businesses are in decline. They don't have those long-term contracts with investment-grade customers.
Our conviction level here is strong, $2-$4 per share. We are continuing to raise capital into both of these continuation vehicles. We have that ability to raise capital in DataBank until June 30. We reactivated that fundraising on April 1. We've got, you know, dozens of investors in the data room working hard, and we do have an expectation to get both of these things deconsolidated.
Very good. We covered a lot. I think it's important to point out kind of where the peer groups trade within data centers, also towers, as well as asset managers. I think we've got a lot to chew on here and appreciate you taking the time on a Friday. Good Friday.
Well, thank you. It was nice to get a breather from the market today. I know some of my friends that operate portfolios are taking the day off, but they said they would watch this from home. I wanna thank our investors. I wanna thank you, Jonathan. We've been friends for over 20 years now and you put out the best research in the digital infrastructure space. You always do the work, and I'm always appreciative of the time you and I get to spend together. Thank you for taking time out of your day today and look forward to continuing the dialogue.
Very good. Have a good weekend.
Thanks. Take care.