Let's start. Good morning, everybody. Thank you for coming to the Jefferies Shareholder Day. My name is Rich Handler. If you remember, a year ago, I kind of limped up here with a replaced knee. I'm happy to say my knee is fully replaced, and I'm fully ready to go. But more importantly, Jefferies, which was never limping, is in a remarkably good spot. I think you're going to hear that today from our team. I'm very excited for you to hear it. The bottom line is, our firm has never, ever been stronger. We've never been more globally capable.
We've never been more able to collectively affect our destiny, which in this business, is a very tough thing to do, and it's mostly through our capabilities, our brand, but most importantly, our people. We've never been better aligned with our clients or better positioned to serve them. The human talent, which we talked about for years and years and years, it has never been stronger, and most importantly, our culture, which is very unique and very strong, it has that glue that is really propelling us to a whole different level, in my opinion. Our capital is robust. Our strategic partnerships have never been more important and more valuable and more complementary to our organization. So, you know, like, what could go wrong? The fact of the matter is, there's lots of crosscurrents out there.
And we can dwell on them a lot. You know, U.S. politics coming up, geopolitics around the deficit. You can go on and on about the issues out there. They never ring a bell when things are good or bad, but quite honestly, in our opinion, where we see the world today, and we're not overly optimistic people in terms of how we see the world. Financially, we are optimists at heart in terms of our people and our culture. It generally feels pretty darn good to us right now. The fact that our firm is so well-positioned today, it's in addition to something that's very unique. The fact is, it feels, and again, it could change. It feels like the wind is really at our back. The debt and capital markets are open and fully functioning.
We finally have breadth in the market. It's not just a handful of technology stocks that are really driving it. There really is some breadth, which is very healthy. Speaking of healthy, the M&A environment is very positive. There are motivated buyers, there are motivated sellers, there are people who need to have capital returned. There's plenty, plenty of fresh capital out to deploy. It makes for a very good environment there, and there's clearly pent-up demand for transactions and strategic advice. Further, there's the backdrop of generally very positive momentum of normalized interest rates and perhaps even slightly lower interest rates. We can talk about that. Low unemployment is still among us. The financial sector is incredibly liquid. Corporate performance is solid, and the consumer is healthy. So that is a pretty darn good backdrop. Allow me to digress just for a second.
So I've been here approaching thirty-five years at Jefferies, close to twenty-five years, you know, two decades with Brian and I leading this company. It's been quite a ride. And if I just look back at the last, you know, three and a half decades, the firm that I joined. And you have to forgive me for this, we had one product. It was cash equities, it was third market. It was a lean, mean, good culture, super small boutique.
And you go through seriously, the course of the next three and a half decades, and you step back for a second, and you look at every three to five years, and we all know it, 1994 interest rates, 1998, the Russian crisis, 2000 , technology, 2001 , 9/11 , 2008 , global crisis, 2011 , the sovereign debt, 2015 -2016 , energy and distressed, then COVID. You go through all of those, and you look around at our company today, and you realize what we have become, and we've become that this company, you know, for a handful of reasons, which I think are very important to dictate where we're going to go going forward. There are three basic values. Number one, we embrace alignment as an organization.
Number two, we live with a true ownership mentality, and I talk about all of these. And three, we maintain a consistent and very simple strategy. So call us boring, although my career doesn't feel boring, but if you look at it this way, it seems kind of boring because we've kind of been doing the same thing. It's very important for us to have a culture as an organization. I can't express enough the teamwork and the orientation that our business demands and commands for us to be successful. But we also have to be fully aligned with our clients and our shareholders. And we have to work tirelessly, you know, because our job is to basically help our clients with their most complex challenges financially, and to seize their biggest opportunities. That's what we do.
We've done it through cycles, through fads, through distractions. We've done it as the competitive landscape just changes dramatically. We've done it with a constant sense of urgency, but always thinking about the long term. So what does consistent alignment, ownership, and strategy really mean? And what does it mean for all of you, our outside shareholders? We are truly owners with you. There's roughly 36.5% of our company is owned, and that's close to $6 billion of value on our fully diluted, close to $17 billion market cap, including SMBC shares. That's held by senior management, by our strategic partners, by our board, by our fellow coworkers at Jefferies. We are all in with you.
It sounds obvious, you know, that that alignment is important, but if you look at history, you know, it really says in financial services, it's not particularly obvious. I can't express to you enough how much we value our people and our relationships. We have worked so hard to build a brand. It is really hard to do. It takes ups and downs and consistency and a little bit of luck, and we finally have a brand that I am incredibly proud of, and I speak for all of us at Jefferies. We're proud of our brand. However, we're never gonna confuse the fact that it is our people that drive this company, and you're gonna see that today as you go through the presentations. Then I'm gonna say, and I'll say it, I can't say it enough, zero arrogance in an organization.
Many other companies have gotten close to our point in this industry. A lot of them have faltered. The number one reason why they faltered is arrogance and taking each other or their clients or their shareholders or their bondholders for granted. So what does it mean for a firm that is aligned with outside shareholders? The first thing is, we worry about our downside, and it's great in a good environment like this to actually be able to execute and play offense, but we worry about our downside. That means we're partners with our bondholders, we're partners with the rating agencies, and we make sure we always live to fight another day. That's the only way all of us in this industry as shareholders are gonna create long-term value. We also return excess capital to shareholders whenever it's prudent.
So in the last seven years or so, we've returned about $6.3 billion of capital to our shareholders. That's about 83% of our original tangible equity seven years ago. As owners, we are transparent with all of our constituencies. Our strategy, how we deal with people, what you see is what you get at Jefferies. Everything that you're gonna hear today from our team, as I said before, it all has a sense of urgency, but it's all designed for a long-term value creation. We are not looking at moment-to-moment ROE for the... a very specific period of time. Not suggesting that we don't care desperately about it and want to achieve as much as humanly possible, but we do it with the long term in mind. We don't stray into sexy businesses we don't understand and don't have competitive edges in.
We invest heavily in our people, technology, and infrastructure. That's what owners do. Something that, you know, I just want to reinforce, particularly with our new partnership with SMBC, but I speak for MassMutual, with Berkshire Hathaway, with all of our partners. We strive to be really good, really fair, really honest, really uplifting, value-added to our strategic partners. It's something we've been able to do as an organization, and very few others have been able to, so what can you expect from us going forward? I hate to say it, but our strategy is gonna be the exact same. Okay? Again, kind of boring. Today, it's pretty good out there, so our strategy is to execute and grow our market share.
We're gonna train and grow our people internally, and we're gonna selectively find the right people and the right partners who want to come into our company and help us build in spaces that we really could use their help. We're gonna dream big. Yeah, I look at our company today, and I see all the capabilities, all the human talent, plenty of capital, a competitive landscape I've always dreamed of having since from the day I started here, and now the question for us is: How do we get there, and I think we're gonna get there the same way we've been here all along. We're gonna block and tackle one day at a time, one transaction at a time, one relationship at a time. We're going to leverage off of everything we've spent decades building.
I quite honestly see ourselves at a point where there's absolutely nothing beyond our capabilities to achieve if we stay true to our roots. You're gonna hear from everybody today. I just want you to all hear from me with two healthy knees. I am really psyched to be here. I really think that we have something special, and I'm very grateful for all of our shareholders, so thank you.
Okay. Thank you, and thank you, Rich. When Rich was talking, and I was thinking about this slide and the next couple, I think a lot of Jefferies today is back to the future, meaning it's the Jefferies we've always known, it's the Jefferies we've always appreciated, and it's also the Wall Street model that has worked for truly a hundred and something years. We're not really reinventing the wheel. We're just rolling in a world that somehow stopped rolling. And, in a lot of ways, and this will be clear in some of the slides you're going to see and some of the historic information we're providing, 2008 to 2023 may someday be looked at as fifteen years that were different, and in that vein the Jefferies we have today is really back to the future.
This is a 62-plus-year-old firm. It was built on a client focus from the first day. It was built on the innovation of the third market. It's always been, as Rich is suggesting, the firm that just comes in each day to get the job done, to focus on clients, to bring value, to bring value with ideas and insight, and to bring value with execution. It began as a pure execution firm, and over time, we've expanded dramatically the insight and the value add that we can bring beyond the execution, but we've never lost that commitment to execution. When you look at the firm today, it's really been a breathtaking ride for, in my case, twenty-something years, in Rich's case, thirty-something, for the firm, sixty-something. You're gonna hear a lot about the last five years.
We're using 2019 as a benchmark. You know, it happens to be five years ago. It also happens to be, you know, pre- pre-COVID and pre-post-COVID, so, you get a kinda clean look, although, again, I could argue that you have to go back to two thousand and seven to get a clean look, and on a couple of slides, we will go all the way back. But today, we are truly global. We are operating 45 offices in 21 countries. There's literally one more country, Saudi Arabia, where we need to firmly plant our flag and not just fly in and out, and that is in process, but there aren't two. So we really are far along in being a truly global firm. I'm not gonna even, you know, say the statistics. Statistics are out there more than enough.
We're in a very, very, very strong position. We are deeply shareholder-minded. At this point, over the last seven years, the return of cash and marketable securities is 82% of the tangible book value that we had in 2017, has been returned to our shareholders, and we're not gonna stop. We've increased our dividends six of the last seven years. Our commitment to our shareholders is unwavering. When you look at it again, and you're gonna see 2019 on and on here because it's the right place for us to start as to what we've accomplished in the last five, and to get a sense of the momentum and where it can take us. All of these stats benchmark again, and it's meaningful increase in our market position, meaningful increase in our revenues.
If you look at the bottom right corner, what's interesting is that this is with 23% increase in our head count, and that operating leverage is gonna be the story we believe, of the next several years. Now that we have formed a base, and Matt Larson, our Chief Financial Officer, will go into this in some detail, now that we have formed a base at this new level, and as we grow from here, the operating leverage will be very, very significant. We created a peer average. The peer average are the five American banks that represent our primary U.S., and to some degree, global competitors. So this is taking together JPMorgan, Morgan Stanley, Bank of America, Citi, and Goldman Sachs, the five bank holding companies.
It compares the last twelve months to 2019, and it gives you a sense that our investment banking revenues have grown 91% against a market that's all but flat and against competitors that are essentially flat. Our equity revenues outpaced meaningfully, while our competitors were modestly above the market, and in fixed income, you see the same result. This does the same thing using market share and shows our increase in market share, again, against relatively flat to slightly down market share for the five primary competitors. You know, we can get into later, where else was market share moving around, but this is, we think, one of the best measures of what we're doing on a relative basis. We will get, over the next two hours, into the detail of where we think we are going business by business.
But as you look at this, you can see the momentum that just five years have given us in terms of getting to a base level of return on equity. Again, Matt will start to illuminate why we think there's operating leverage from here, and it could be very substantial. Our business units will get into the individual opportunities represented in investment banking, equities, fixed income, and asset management. But we have a fair amount of confidence that we can enter the top five in our industry. We don't necessarily think we should just enter it. We think we can have a meaningful position inside that group, and we think what we offer and the way we offer it is distinguished in a way that resonates with the customer base, and are growing our platform on a sectoral basis, on a product basis, on a regional basis.
We have not yet remotely matured into who we are today. This, to me, is one of the most interesting slides, and it's one that I think is very relevant to understanding our opportunity. Rich focused meaningfully on what is special about Jefferies today, and very much I agree with him that we are the best Jefferies that we've ever been, and we have a route to being even better. The other part of the equation is not just what our competitors are doing or not doing, or how they're changing, how they're prioritizing. It is, what is the market and where is the market going? And, you know, you can see the little blue dot shows you how we've come up through time, but equally important is the cycles of the market.
As I mentioned, the last 15 years stand out for the lack of direction, and they stand out for the toing and froing, which is not the history, which again, you know, for me, and maybe we should have themed this back to the future. To me, perhaps this is back. Perhaps we're back to a world with a real interest rate, and if there is one distinguishing argument, in my view, it is the real interest rate. Again, we will see. We truly have no idea. We do not manage the firm to our expectations of market other than on a risk basis each day. We manage the firm to the clients and to the competitive opportunity, and then the market will give us the final result.
But with the momentum we have, we see a market for M&A, ECM, and leveraged finance that has lagged equity market capitalizations. It has lagged GDP. It has lagged most of the conventional measures, and whether we get a reversion or a version of reversion is what we will see in the next year or two. The bottom line for us is where we are as a firm, where we think our competition is and where they may be going, and at the same time, the addressable market and what happens next. And with that, we will focus on growing our market share, continuing to develop and recruit the best talent. We will always, always center this with a focus on our clients.
That is, what we get up in the morning to do, is to serve them, bring them insight, execute for them, and add meaningful value. Rich mentions our partnerships with SMBC, MassMutual, and Berkshire Hathaway. All of them are long-standing now. All of them are important to us, and all of them have further upside for us. Excuse me. We do this while we maintain a strong capital base, and we continue to manage our risk every day, every moment. We're gonna turn this over now, first to Matt Larson, our Chief Financial Officer, then our leadership from our business units, and they will give you further detail on where we are and where we're going. Matt?
Thanks, Brian. Let's see. The consistency of our strategy, strength of our balance sheet and capital base, and our lean and efficient operating structure allow Jefferies to focus on executing business growth, delivering, and creating shareholder value, clearly understanding and actively managing our expense base, and always intensely focusing on managing risk while maintaining a strong capital and liquidity profile. Gains in investment banking market share and the beginnings of a market recovery, combined with expanded global equities products and capabilities, and continued strength in our fixed income credit businesses, has translated to meaningful growth and durability in our overall business.
At Investor Day in two thousand twenty-one, we discussed reaching a new level in our capital markets business and said we should sustain levels above $500 million per quarter, which had grown from $350 million per quarter in about 2018- 2019 . We've now reached an even higher level, which is producing sustained levels above $600 million per quarter, and you'll hear more from Pete and Fred about their businesses and what's driving that growth. As Brian mentioned, and you'll hear more from John, Rich, and Andrea in investment banking, our momentum is accelerating right as the market is recovering and growing from the lows of 2023 .
I want to reiterate one point that's been made in the past and is even more true as we look ahead, and that's that a significant and growing portion of our revenue comes from riskless or low-risk business. I didn't include a slide on it specifically, as I've done in the past, but the growth in investment banking revenues and our commission-based activities, particularly in equities, constitutes a significant majority of our business. This, along with an increasing contribution from asset management, ultimately translates into a firm that generates substantial and increasing operating income and free cash flow, even as we continue to invest in product capabilities, infrastructure, resilience, and most importantly, our people. One of the things I've really enjoyed since I've been here at Jefferies for, what's this, about four and a half years now, is this growth mindset and at a clear understanding.
You heard from Rich and Brian. You'll hear from others, clear understanding that our opportunity comes from growth in the top line, and of course, maintaining a strong cost discipline, as we always have. Again, you've heard this, but I'll reiterate. We've always prioritized shareholder value, and have consistently returned capital to shareholders through a mix of share buybacks, dividends, and special distributions. In 2023, and thus far in 2024, we've returned to shareholders approximately 15% of the 2023 beginning tangible equity base, and as you heard, since 2017, that's about 85%. In mid-2024, we increased our annual common stock dividend by 17% to $1.40 per share, which was the sixth increase in the past seven years.
I'd also highlight that special distributions from the spinoffs of Spectrum Brands and Vitesse have both performed very well and have provided meaningful value to long-term holders of those shares. As we look ahead, we expect growth across all of our businesses, with the largest opportunity for growth and enhanced operating margin coming from investment banking, which is not a capital-intensive business. This should put us in a position to expand operating margins while keeping our capital needs in check and returning meaningful further capital to shareholders. Our non-comp expense ratio is improving, having dropped from 46% in 2019 to 35% today, even as we've invested meaningfully in technology modernization to support growth and resiliency, as well as longer-term efficiency investments in emerging workflow and AI capabilities.
Furthermore, we've increased in investment in our people through enhanced training programs and modernized facilities. Industry consolidation in the technology and data sectors has put pressure on costs, as has the overall inflationary environment. We've experienced this over the past couple of years. However, managing costs will continue to be a focus area for us to help ensure that we realize widening margins as our revenue base grows. With the completed sale of OpNet and Foresight over the past few months, the book value of our non-core investments has dropped almost 75% since 2018 to about $700 million, with the vast majority of that balance being made up of HomeFed, and the remaining mostly coming from Stratos and Tessellis.
As such, virtually all of our equity base is now supporting our core business, where just over a few years ago, over 25% was supporting non-core business. Our capital and liquidity position is very strong. For years, we've talked about the importance of ensuring the vast majority of our assets can be easily understood and valued. One primary measure of that is our Level 3 assets, which would continue to remain minimal relative to our overall balance sheet and capital base. You can see or hear that we've maintained that discipline, even as all our businesses have grown substantially over the years. Our tangible leverage ratio continues to be very modest at 7.7 x, which includes the impact of our significant debt capital raise earlier this year.
We're well-positioned to support the next leg of opportunity as we continue to gain share and expand our global capabilities. With that, I'll turn it over to my partners in investment banking, starting with John Miller.
Wonderful, Matt, thank you. Brian and Matt highlighted our growth through fiscal third quarter, resulting in LTM investment banking revenues of $3.1 billion. Just to level set, our LTM Q3 investment banking revenues are up 35% from where we concluded 2023. They're the second highest in the firm's history, and reflect a substantial outperformance of the global wallet that is currently trending to be up about 14% year over year. These results are driven by material market share accretion, which we're gonna discuss in detail momentarily. Also worthy of observation, our LTM revenue performance of $3.1 billion is up 82% from the $1.7 billion that we delivered in 2019, against a wallet that is essentially flat over that five-year period of time, again, evidencing substantial market share accretion.
Spend a minute just evaluating the investment banking playing field. This slide charts thirty years of history, of global fee activity, and it is inclusive of M&A, ECM, and leverage finance, which comprise our addressable market. It's clear that we've turned the corner in 2024 . You can feel it, but more importantly, the data supports it. I think as Brian referenced in some of his commentary, we believe that we're in the early stages of a sustained recovery. If you look at thirty years of history, there tend to be periods of long-term growth following a correction, and we believe it feels that we're entering such a time period right now.
After reaching a historic high in 2021, our industry troughed in 2023, and interestingly, over the last quarter of a century, we've never seen three consecutive down years. So if you look at the bottom row of this slide with the red and green cells highlighted. Again, never, never have we seen three consecutive down years. And consistent with that, we saw market resilience starting in late 2023 and continuing into 2024, again, with annualized fee pools currently trending to be up 14% year-over-year. Against this backdrop, Jefferies' position in the market has risen consistently from an 88th-ranked position back in 2000 to a 6th-ranked position today. We believe the material growth evidenced in global market capitalizations that Brian referenced provides further substantiation for continued momentum in global wallet activity.
Here we see a 51% rise in equity index performance against an IB fee pool, the wallet, the addressable wallet, that is essentially flat over that same five-year period of time. Again, we believe that there's material upside implied in this dynamic for the IB opportunity set in the years to come. Notwithstanding the market headwinds in recent years, Jefferies has attracted best-in-class talent in a truly magnetic fashion. Our MD ranks are up 70% since 2020, reflecting 150 lateral hires. As such, more than a third of our MDs are new to the firm in the last 3 years, and these new MDs are long-tenured, truly proven leaders in their respective areas of focus, with more than 20 years of average experience against their client opportunity sets.
Most importantly, we've aligned our hiring very tightly with the deepest parts of the opportunity set, where we've historically been furthest away from our share ambitions, and where we found truly unique opportunities to attract top- decile talent in a dislocated market. We're bringing on members of the team where we think that they can drive outsized results. Industrials and TMT are prime examples of this. As you can see, 23% of our hires over this period of time have been against the industrials opportunity set, which comprise about 30% of the wallet. Another 23% have been associated with the TMT opportunity set, which represents about 22% of the wallet. Groups like healthcare, energy, and consumer have deep historic resident benches of talent, and therefore.
Strong client presences in their respective spaces, and therefore, investment there has been surgical. So too, investment through the lens of region. Region has aligned with the deepest areas of opportunity for growth across the Americas, EMEA, and Asia Pac. And now I'm gonna turn over to Raph to review in detail the very clear and tangible results of our recent headcount investment and how they've manifested themselves in material fee share accretion. Raph, over to you.
Thank you, John. John spoke about what we've done and how we have invested over the past few years. I'll now touch on what the result of that investment has been. The most objective and accurate measure of progress is GAAP revenue disclosure, which we narrow to advisory and ECM, so that we have an apples-to-apples comparison with our competitors. As we, by and large, do not compete in investment-grade debt capital markets, which are typically awarded by clients, based on bank lending, in which we serve in partnership with SMBC. As you can see on page 30, Jefferies now stands fifth globally in advisory and ECM revenue.
Since 2019, we've meaningfully overtaken competitors that were historically categorized as bulge bracket, such as Citigroup or Barclays, and have now meaningfully narrowed the gap to competitors who remain larger than us today, such as Bank of America and Morgan Stanley. On page 31, we can see another measure of our progress, which is our growth in market share, as measured on an approximate basis by Dealogic. For the first nine months of 2024, we ranked sixth globally across advisory, ECM, and leveraged finance. Critically, we have gained more market share than any of our competitors by a factor of more than 2x. On page 32, we can see that this growth in market share is broad-based. Our market share in M&A, ECM, and leveraged finance are all running at long-term records, and we now rank sixth globally in M&A, a record for our firm.
On page 33, we can further see that our growth in M&A market share is broadly diversified. We rank fifth in U.S. M&A, as well as ninth in EMEA, both records for us. Our focus on serving financial sponsors continues to pay dividends. We rank third globally in sponsor M&A. Critically, our focus on serving corporate clients is also bearing fruit. We now rank in the top ten in corporate M&A for the first time. Similarly, on page thirty-four, we lay out the broad growth in our ECM franchise. We now rank fifth in U.S. ECM and sixth in EMEA, a new record for us.
In APAC, over the last several years, we have built best-in-class teams across Sydney, Mumbai, Seoul, Hong Kong, and Singapore, and have moved from essentially not ranking to sixth in the region within two years, a result that we're proud of and that should create the foundation for further success. In our rankings, we exclude China, where we don't have an onshore presence, and Japan, which we largely serve in partnership with SMBC. Finally, on page 35, the investment we have made has resulted in us serving global franchise clients on their most important transactions. Transactions like Diamondback's $26 billion merger with Endeavor, SRS's nearly $20 billion sale to The Home Depot, and the $6 billion sale of Darktrace, are illustrative of the global breadth and quality of our advisory teams.
Similarly, in ECM, our serving as lead underwriter for the IPO of Loar Holdings, sole placement agent for the $1 billion-dollar rescue financing of New York Community Bank, and leading the $2 billion share sale for Vodafone Idea in India, and sell downs for the Italian state of its stakes in Monte Paschi di Siena and Eni, all illustrate the strength and depth of our capital markets franchise globally. I'll now hand it over to Andrea to conclude with a discussion of our unique culture and offering, and why so many outstanding partners have chosen to join our firm. Andrea, please.
Thanks, Raph. Raphael and John just shared what our investment banking team has achieved. I want to close with a perspective on how we do it. I joined Jefferies roughly twenty-three years ago, right as our leadership team began the journey of transforming a company once largely known as an equity trading house into a global investment bank. Today, we are truly a pure Wall Street firm, providing our clients with traditional investment banking products, including value-added capital market solutions, direct access to capital, and financial and strategic advisory services. And that's how our market share has grown exponentially across M&A, ECM, and leveraged finance. As I reflect on my time with Jefferies, several traits explain the sustained growth of our investment banking business. The first, it's our culture.
We are a flat, nimble, entrepreneurial firm that attracts the most talented investment bankers, people who come for the freedom to serve clients in the best way possible, without the headaches of working at a commercial bank, and that's important. We're a firm of people who outwork the competition. We rely on our insights, broad capabilities, and culture of service, not our history or heritage to win the trust of our clients. Go to a Jefferies office in any one of the 21 countries where we operate, and you'll find senior bankers with deep relationships who are relentlessly focused on delivering for our clients. When I recruit people to Jefferies, I tell them: "You will get every resource you need to help clients succeed without any roadblocks," and it's clear we're delivering on this promise because 70% of our teams' business is repeat business.
Once our people come to Jefferies, they tend to stay. They see the upside and excitement of belonging to a firm where everyone from our global leadership down, works collaboratively to deliver for our clients, where the entire firm rallies around clients, especially in difficult moments, and where our collective efforts deliver long-term growth and success across the cycle. The second thing that makes us so special is the breadth and quality of our global footprint. We have the best people across every major country and geography. This allows us to reach global buyers and investors with a depth and consistency that few competitors can replicate, serve our clients with increased differentiation, and nurture and attract significant talent that further deepens our bench and drives our insights. This brings us to the other major distinction that separates Jefferies, the breadth and quality of our capital markets and underwriting expertise.
As you'll hear shortly from our partners in equities and fixed income, the quality of our research and distribution has become increasingly unique. We have world-class scale and talent in these areas where our competitors have disinvested. We can seamlessly deliver multi-billion-dollar financing commitments at a scale and speed matched only by our largest global rivals. Again, this quality is a source of vastly differentiated client service and a key asset for us in attracting the best talent. Put this all together, and here's what you see. Jefferies is an integrated investment banking and capital markets platform. By combining broad global advisory and capital-raising capabilities, wrapped within a flat, dynamic, and service-oriented firm, we are an investment bank that stands alone in our proposition to clients. While our business has achieved significant scale, we are still early in our journey. That's why I'm so incredibly enthusiastic about being here.
That's why we are all so confident about what Jefferies Investment Banking will achieve in the years ahead. Thank you.
Thanks, Andrea, and thanks, everyone, for coming. Pete Forlenza, and I run the equity division, here at Jefferies. I'm going to take you through, the outline of the strategy for the equity division. Rich used the term earlier this morning, alignment. I can tell you that the equity division at Jefferies is deeply aligned with our overall capital markets, strategy. The foundations of which are firstly... And Brian used the term insight. We believe in insight, we believe in advisory. And in the equity division, and you'll see it as we go forward, what that means for us is deep, fundamental, and macro research to support both our investor and issuer clients. Another foundation, and Andrea mentioned it briefly, is we've invested in both scale and talent and distribution. We have a very large sales team globally.
Again, support both our issuer and investor clients. And the third foundation is on execution, and execution can mean many different things. For us, the philosophy is solution-based execution. That means distribution of capital markets transactions, but it also means a continued focus on, in the industry on high touch, sales, and trading. We believe in that insight that our teams can provide. While at the same time, we've continued to invest in a suite of algorithmic trading solutions that are generally considered among the best in the industry. And more and more, over the last few years, and you'll see it, we saw the opportunity in providing bespoke delivery, derivative, and financing solutions to our clients. And I want to be clear, we provide those solutions where it fits our clients and us.
We're not trying to be everything to everyone in derivatives. As you can see, and Brian mentioned it earlier, we're on pace to achieve record sales and trading results, which have outpaced our competitor average. And in fact, three of our best quarters have been achieved in this year, 2024 . And what you'll see here on this slide is that our market share gains continue globally. So we're gaining share, and we're also diversifying our revenue streams and equities, and again, the foundation of which is solution-based. I would highlight the one on the bottom that says UA, that's unbundled advisory. So those are clients paying us directly for research.
I'd also like to highlight that our record results and these market share gains have come at a time that the VaR for the equity division globally has actually gone down over the last couple of years as we diversify our business, both from a product and a geography. You can see some of our select rankings. One of the foundations I mentioned earlier was, again, insight or advisory. We continue to invest in research. We believe in it. We now cover, we believe, more stocks than anyone in the industry, and we're continuing to invest. Recently, we hired a team and launched in energy transition here in the U.S. We've recently launched this year in Canada, and in 2023, we launched in both the Middle East and Latin America. So again, a very core foundation to what we're doing.
We want to keep growing, and there's three pillars to our strategic growth, and you've seen some of the success of that, of these over the last year. The first one is to continue to grow our existing franchises. We've got great momentum in these businesses, and we're continuing to grow them. And I want to highlight one that you'll see on the page there, and that is our franchise in India. We had been in India for many years, and in the last few years, aligned with our partners in capital markets, we've continued to grow our sales and trading market share. And in fact, we're one of the leading international banks in equity sales and trading in India, as well as in equity capital markets. And we're taking this aligned model globally into Australia, Singapore, Canada, throughout the world.
The second pillar in driving our growth is really attacking, and I've shown this slide previously, is the total addressable market, or TAM, continuing to grow in places that we can compete in. And if you look at the growth for the last year, for us, a lot of it has been driven by prime services, and again, where it fits us to provide financing solutions to our clients. It's been in equity derivatives, in providing bespoke solutions for our corporate clients, and it's been in portfolio trading, where we will-- were able to fill a gap, when some of the consolidation in the industry happened. We're now one of the leading players. So you can see there's a diversified way that we are growing our business and attacking this TAM.
Again, we believe that we continue to have the ability to grow market share, and you can see the trend that we've had over the last five years. And as I mentioned earlier, we have been filling a gap that's been left by some of the dislocation in the market. And the way I describe it, and I've said this before, we're now being invited in more and more often by both our investor and issuer clients. So we believe that we continue to have great opportunity in front of us in equities. And with that, I'll turn it over to my partner, Fred Orlan.
Thanks very much, Pete. Good morning, everyone. We'll just jump right into our numbers. Our LTM results are up 5% versus 2023, and have risen 67% versus 2019, outperforming our competitor average of 35% over this time period. We're pleased with this performance, delivering better results in our credit trading-centric fixed income business in what has been a less favorable, more compressed spread environment. The improved performance is due to the steady advancement of our client franchise, much as you've heard from everyone else here, which has shown consistent progress over time, and we'll talk a lot about that in the presentation. Looking at this another way, you can see we're also outpacing our 2020 to 2023 average. That includes our best year, which benefited from the COVID stimulus.
This growth is also supported by the ongoing expansion of our EMEA fixed income business, where our revenues have grown by 136% over the last five years. This success is the result of the long-term investments we've made in this region, and together with the intense focus we have on collaboration between businesses, which has added strength to our overall fixed income foundation. This added diversity and global reach has brought more balance and consistency to our performance. Let's talk about the four pillars that underpin our franchise. First, in line with all of our partners that you've heard here today, we're committed to building long-term, sustainable client partnerships. Second, we're dedicated to helping our clients achieve their performance goals by consistently delivering differentiated, actionable ideas and solutions-oriented advice.
Third, we focus on our origination businesses that are synergistically linked with our investment banking partners, which positions us for growth. And finally, we have a strong culture of collaboration across our global businesses, which helps us serve our clients better and capture more opportunities. And our commitment to this strategy has led us to being voted by our clients as having the most positive business momentum across our global credit franchise for five consecutive years. And this means when our clients are asked by Coalition Greenwich which counterparty they expect to do more business with over the next 12 months, more clients have cited Jefferies more often than any other of our competitors, and this is a strong affirmation that our clients recognize the value of our unique approach to their business. So now let's drill down on each of these four pillars.
First, as for building client partnerships, we've increased our client revenues by 2.4x over the last five years with the top 100 most important global fixed income clients. We have top-tier rankings with respect to being cited as having a top-three relationship across many of our businesses. Being a top three, being in their top three means that you've created a meaningful connection with the client, and you're most likely in their inner circle. These two stats demonstrate we're both expanding the business that we do and you'll see a lot of similarity to the way Pete thinks about his business as well.
We focus every day on delivering our client partners actionable ideas, insights, and solutions, which are designed to help them outperform their benchmarks and also to grow their businesses. We strive to be an extension of their team, which makes the relationship more strategic versus simply transactional in nature. I don't know whose water I'm drinking, but it'll be okay. To get to this point, having inner circle relationships is an essential ingredient, and you can see here, we have 65 dedicated research strategists across the globe. These desk analysts sit side by side with sales and trading, which enables them to focus on the most current and timely situations in real time and always be accessible to clients.
And as many of you have heard me mention in past meetings, moving the relationship from transactional to strategic means earning the opportunity to help clients with their most important trades, or said another way, our focus is on achieving quality share above and beyond our simple market share. And you can see this in our quality share rankings from Coalition Greenwich, which show the evolution of the recognition from our clients over time across these nine key business segments. And on the right, you can see our rankings, where clients have recognized us among the dealers who are the best at providing trade ideas. So turning to the third pillar, alignment with our partners in investment banking.
The growth in our investment banking franchise results in more product origination, which is an important source of assets for our investing clients and gives us an edge in trading these assets. Additionally, some of our largest banking private equity sponsor clients are also significant fixed income investing clients. And these important partners are moving beyond their traditional roots by building significant fixed income assets under management through the acquisition of more and more insurance assets. And our relevance and insight in these markets reflexively helps the bankers win more mandates. So we'll continue to focus on the businesses that are aligned with our IB activities, and it'll be easier to add share in those businesses that will grow alongside our investment banking platform.
And the three charts on the left show the growth in our businesses where, in addition to day-to-day trading, we also distribute new issues and benefit from increased trading flow in the aftermarket. The businesses on the right are areas where we originate off the desk, and you can see the strong growth in both our CLOs and ABS businesses. And in the CLO market, we have the top ranking in Europe, and the collaboration with the U.S. team has led to a doubling of our global market share over the last five years. So this point is a good lead into pillar four, which is collaboration. I think collaboration is something that I, I believe that we just do better than everyone else because it's a core value at Jefferies.
For many years, you've all heard Rich and Brian talk about the flatness of our organization, which makes it easier to collaborate across our businesses. This is ingrained in our culture, and it makes working here at Jefferies a lot more enjoyable, and it makes it easier to deliver the best possible service to our clients. In fixed income, we're growing and integrating our global platform with our key clients, and the success in one region or business reverberates throughout our platform. You can see here in the top box, our international client revenues have grown by 2.4x over the last five years, as we've added significant talent outside the U.S.
You can see in the bottom box, we're consistently expanding the number of product areas we connect with our clients on, and we've doubled the amount of business we do with clients transacted outside of a core business team, which means we're broadening our client reach across products, and as a result. The number of products we transact in with the top 100 fixed income clients has grown from 6-10 over the last five years. As most of you know, e-trading is becoming a bigger and bigger part of the fixed income trading landscape, and we're among the leaders in this fast-growing area. We're the number two dealer in high-yield portfolio trading, and we rank second for the way we collaborate across cash trading, algo trading, and portfolio trading, and ETFs.
Fixed income ETFs trading is a joint venture with our equity partners, which is another important example of collaboration. As for the growth in this segment, our volumes have expanded 16 x in U.S. investment grade and high-yield ETF and portfolio trading, again, since 2019. To summarize, we've adhered to a consistent strategy as delineated in this discussion of our four pillars, leading to Jefferies being recognized as an inner circle partner of choice by more and more of our clients, having been voted as the firm which they are most likely to do more business with in each of the last 5 years. This has translated into significant growth in our client volumes with the most important clients in fixed income, and it's also increased our revenue by 67% over that time period.
Our success is built on the foundation of our exceptional talent and facilitated by our flat structure and culture of discipline. Given our momentum, I'm very confident in our future opportunity and our ability to deliver consistent results throughout the market cycles. Thank you very much. Oh, now I'll turn it over to Nick and Sol in asset management.
Thank you, Fred. Over the next few slides, my partner, Sol, and I will walk you through the firm's alternative asset management activities. These are largely conducted under the Leucadia Asset Management umbrella. Our model is to invest seed, acceleration, or some other form of strategic capital into the strategies of managers with whom we partner, in exchange for a participation in the fees that are generated by those managers. To be clear, this participation in the fees is an addition to the returns that we earn on our invested capital. In essence, the key to our business is that we want to build enterprise value rather than buy enterprise value, and we seek to do this while recycling our capital over time.
Obviously, in building this enterprise value, the key is growing AUM over time, assets under management, at the appropriate speed within each of these managers. And the way we've focused on doing that and in helping them grow their assets is by investing in a global marketing team. And Sol is going to describe that for you in a few moments. We'll also walk you through our managers, not one by one, but in categories.
But the point I want to emphasize is that we seek to have a diversified portfolio, both to manage our own risk and to enhance the returns that we achieve, but also to offer an intriguing and, again, truly alternative product offering to our clients, who are global allocators, you know, endowments, foundations, pension funds, sovereign wealth managers globally. And we're bringing to them, hopefully, products that are unique and value added to their portfolios. One other key point I want to make is that we've built this business by utilizing the reach and breadth of the firm, which clearly, as you've heard over the last hour or so, has only continued to grow and expand.
And it's through this breadth and reach that we're able to meet what we think are best-in-class managers and potential partners, and then to also diligence and conduct, you know, in-depth reviews of both these people and their strategies. Our focused platform is implemented in a range of structures, and this can lead to some interesting ways in which it flows through our reported results. But we partner with our managers in whatever form is most appropriate for the opportunity. This can come through a seed or acceleration deal where we receive a revenue share. In some instances, we've done a revenue share with a GP stake so that we're both top line and bottom line partners.
We've done joint ventures where we jointly control some of these managers, and we've also at times brought employees on to into the firm to run divisions for us. And in those instances, we can control the entirety of the operations of those managers. You know, this is more about accounting, but the real point is that we participate with these managers in three ways: In the management fees that they earn on assets, in the performance fees or incentive fees that they earn on third-party capital, and as well as the investment return on our own capital. While all three of these are linked, you know, obviously, you need to perform to generate returns to bring in new investors, we focus on growing this management fee.
Part, portion of it. To us, that is truly the long-term goal, to have a stable base of management fees in which we participate. We've been successful at growing this over the longer term, as shown here. Despite there being a difficult fundraising environment for the last few years, and despite some idiosyncratic events at some of our larger managers, the trend here has been positive. Most importantly, as I'll show on the next slide, with our current base of offerings and recent performance, we believe we're very well positioned for continued and renewed growth. This slide shows our total revenues on the right side, on the left-hand side here. No, that's the right, sorry.
And breaks out the return on our direct investments into the strategies managed by our partners. We believe we've generated an attractive return as a portfolio for the firm and for our investors in these strategies. And I'd highlight that year-to-date, 2024 would be approaching the prior highs if not for reserves that we've taken for two situations that are currently with ongoing litigation. Again, the key point is we believe this overall strong performance highlights the attractiveness of both our individual strategies and also the portfolio as a whole and the offerings within it for our investors, third-party investors. With that, I'm gonna turn it over to Sol to walk you through the rest of our slides.
Thanks, Nick. So a key focus for our business model is to be efficient with our capital and to recycle that capital to support the growth of new strategies and new partnerships. Each year, as we continue to grow and recycle that capital, our business becomes more diversified. More of our revenue comes from management fees and incentive fees, and less from investment income, and as Nick touched on, that's a big part of our job. The capital raising environment has been challenging over the last couple of years, especially in the hedge fund space, where we have a lot of exposure. Our team, however, has continued to do a nice job raising money in this tough environment.
We've raised just about $2 billion of new capital this year, and we've got a pretty big pipeline for the fourth quarter, and early into next year. We recently launched a new strategy called Greykite, which focuses on European private equity real estate, and we did that deal along with Wafra. We seeded them together, which is something we hadn't done in the past. Our sector specialist hedge funds have continued to perform well, and we have started to see a demand in all of them actually recently. Our multi-strat managers have performed well this year, and have been raising capital, have a very good pipeline for the back half of this year and into the first quarter as well.
Our marketing investor relation team has doubled over the last four years and is up to 26 investment professionals today globally. This team is a big value add to our partners when we get into these strategic relationships, and they continue to do a really nice job. They're all over the globe. We've got a handful in Asia, a handful in Europe, and then we cover the U.S. and Canada out of here. This last slide here is just a snapshot of what our portfolio looks like today. The way we look at it is we break it down into four different groups.
The first would be the multi-manager group, where I'd highlight Dymon Asia and Schonfeld, who are two of our larger partnerships in this group and have both had excellent performance years this year, and very good pipelines, as I mentioned before, in terms of raising new capital. The next would be the credit group. I'd highlight Point Bonita here, which is a firm that has continued to do very well. They're up to about $2 billion in assets and have had a very consistent performance. 463 Capital, who's also performed well, is just approaching $1 billion in assets now, and that was a firm we seeded a few years ago. The third group is our equity long-short group.
In this group, I'd highlight StemPoint Capital, which is a biotech and pharma hedge fund that we seeded a few years ago. They've recently seen some nice inflows and just recently launched a long-only product. And the last bucket, which we call Other, again, you see Greykite here, the real estate private equity firm I mentioned earlier. And along with seeding them with Wafra, we're expecting to raise a good substantial amount of capital here as we get to our first and second close later in the coming months.
You know, this group here, outside of Jefferies Finance, which has had a great deal of growth over the last few years, and we expect to continue to grow going forward, has grown their assets by over 40% in the last three years, while onboarding nine new managers. We're excited about how we're positioned, and I think that's it. I think I'll wrap it up. So thanks for your time, and I'm gonna turn it over for questions to Brian, Rich.
I think we can take questions in the room, and I think there's some that are coming in under the system, so.
We have microphones for the people?
Hi, good morning, Ryan Kenny with Morgan Stanley. So you've clearly hired a lot across all of your businesses. You've taken market share in all of your businesses. How do we think about the pace of that going forward? Are there any growing pains associated with the market share gains, and can you keep the pace of hiring that you've done over the last five years going forward?
As you saw in the slide that investment banking went through, the pace of hiring has slowed down. It was really at a high pace in 2021, 2022 and 2023. From here, it's gonna be more modest, a combination of the fact that we were able to meaningfully fill out our architecture, but also the fact that if we're right, we're going into a more active period, and people tend to have less reason to move and tend to move less readily. We about 7 years ago meaningfully expanded our commitment to developing our own talent by setting up an extensive training program and a real effort to grow our own. So our ability to continue to grow our senior ranks will be facilitated by the fact that we've really doubled down on the internal effort.
I think, you know, it will turn out that the external efforts ramp up episodically, and then quiet down a bit, and we're probably in a little bit of a quieter period. That's okay. We have a couple of years of absorbing the impact of these last several years.
Is my microphone on right here? I would just say, in terms of the growing pains, it's remarkably, you know, few growing pains. The fact of the matter is, the people that we have hired know our existing people. In fact, many of them have helped us hire them. They've known our clients, and their clients have suggested that they come here. So it's not by coincidence, these people are finding their ways towards Jefferies. And when you have both the existing people at the firm, as well as the clients, encouraging you to make a change because you're really good, it minimizes the internal nonsense, and it's been a really great thing to watch.
Just as one follow-up, on the comments throughout the presentation on operating leverage, does that mean that compensation ratio and non-compensation ratio should track downwards from here?
You know, we've always talked about that forever as a product of revenue growth than necessarily cost compression. We should be able to scale those expenses, and yes, both of them, over time, come down as a percentage of revenue, if we're right. Chris?
Yeah. Good morning. Chris Kotowski from Oppenheimer. I think I asked this question about five years ago, and I just thought I'd try it again. But you've kept your balance sheet remarkably compact, and basically kind of flattish since, I think, twenty eleven. Just as you grow the business and push more into larger firms, does it at some point become necessary to, you know, push deeper into a kind of investment-grade investment banking business and to start growing that balance sheet more?
I mean, I think you know, our strategy of keeping a clean, transparent, similarly sized balance sheet is intact, and I think you'll see us go after other businesses in harmony with some of our joint venture partners, most notably SMBC. I don't think we'll ever be a firm that leads with capital. If you look at the people we compete with, they have one, two, three trillion-dollar balance sheets, so it would be a fool's error to try to begin to compete with them. However, strategically, with good partnerships, we could have ample amount of capital to do and accomplish anything. And not to be said that we don't use our capital for clients. We've used we use all of our capital for clients. We don't use it for ourselves.
We use it to facilitate, to help get things done. But, we're leading with ideas and perspective. You saw our tangible leverage ratio went up a little bit in May. That was primarily because, you know, we knew we were prepared for T+1. We weren't sure if everybody else was prepared for T+1. And so, you know, strategically, we will do things like that out of prudence, to make sure we can always protect the foundation of the company, but we're not using that capital to go out there and buy business.
And I guess sort of as a follow-up to that, if I can. You know, you've you're probably more focused on leveraged loans, sponsor finance, and all that, and it whereas the bigger firms are more diversified, right? They have mortgage desks in muni, you know, in a much bigger way. And it kind of makes it for a bumpier ride when credit spreads widen out. And is that okay? That's just the nature of the world, and that's just what Jefferies is, or is there!
There's no doubt we've had... You know, when the world gets a very bad cold, we, you know, we get sick, too. I mean, there's no place to hide in our business. But if you look at all the dislocations that have occurred, even though we're not quite as diversified as the larger firms, they go through a lot of pain, okay? And a lot of the areas that they have been at the forefront of that pain, and quite honestly, a number of them have disappeared because of that pain. So, we're also more, you know, as Brian and Raph mentioned, we're much more diversified today in non-risk revenue streams. So I think the balance is better than it's ever been. We're still gonna be market dependent. There's no place to hide, and we still have a balance sheet. But I think we've proven we're, you know, we're pretty prudent when it comes to sizing our risk and living to fight another day.
Great. Fair enough. Thank you.
Thanks.
Brennan Hawken, UBS. Two questions. First, on capital. You guys spoke a bunch about returning capital throughout the presentation today. How are you thinking about capital returns in the current environment? What should investors be thinking about, buyback, dividend, whatnot?
Clearly, we've pulled back a little bit from the buyback side. We've sent a signal, I think, by increasing the dividend. We are in a year that is, you know, meeting our expectations. You know, we said in our, you know, end of last year that we thought 2023 was the bottom, and 2024 is being, you know, giving us that recovery year. As we see greater visibility into 2025, that'll shape our capital return thoughts. But, you know, some blend of you know, regular dividends, conceivably other types of dividends, and share repurchases will continue to be our strategy, but we're gonna balance that over time as we see it. So we're, you know, coming in a recovery period, and, you know, our confidence will go up as we get into next year, is our expectations.
I mean, put it another way, when you buy 160 million shares at $24, which was basically the size of Jefferies when we merged it with Leucadia, you know, it shows that we are focused on returning capital. It sure feels like dividends are a better way to go right now, not that we don't like our stock price, not that we won't consider buybacks, but it just seems, like as an owner, again, it's all long-term mentality for as shareholders would want.
Got it. Thanks. And, you've spoken in the past a lot about PB and building those capabilities out. Can you speak to where that is today, what the revenue mix within the equities business looks like, and what it should look like in the coming few years?
Pete, come to the... All right. Take that mic, it'll be great.
What I would say is, I used the term earlier, we're being invited in. Some of the dislocation in the marketplace has caused concentration with some potential financing counterparties who are reaching out to us. So we have an opportunity to grow, and we've been growing it this year, both in core PB, but also synthetically through swaps. So we continue to see a larger opportunity, but it has to fit us. Not every counterparty is gonna fit us. So I think that's a unique position to be in. So it's gonna grow and it's going to grow as a percentage of equity revenues, but in a very kind of measured fashion.
Yeah, I just want to add to Pete's comment of being invited in. If you were in my seat today versus the many seats I've had along the way here, and you see on banking, equity, fixed income, asset management, we are invited in everywhere, as opposed to having to bang on the door and explain what a Jefferies is. It is such a different night and day mentality. It's partially because of all the people that have, you know, been internally at Jefferies who've grown. It's partially because of all the people that have brought us in. It's been the global nature of it, and that's a different mindset. And as Brian said, we said this was kind of a transition year of beginning to digest a lot of big investments. Many of those investments have not quite taken. You know, it takes a while.
You know, it takes a while, and we're pleased with the progress to date, but I think that really signifies a bunch of potential upside that we see going forward. You know, the analysts always drive us nuts because we don't give earnings guidance, we don't give ROE expectations, because, quite honestly, every three to four years, the world seems to blow up. It makes all those predictions kind of useless. But the fact of the matter is, we've shown the scale of how we can move ROE on revenue growth during COVID. We saw the operating leverage. The problem was during COVID, and we told people at the time, that wasn't real. That was a unique opportunity, a unique window.
These last couple of years, our goal has been to take advantage of higher interest rates, which, you know, leverage capital markets capabilities to hire great talent. So as we begin to progress, we can start to really grow that revenue base again and drive our ROE to really, you know, attractive rates. That's the whole philosophy. I can't tell you what quarter, what day, what hour, nor will we, but that's the long-term mentality that drives long-term value for our shareholders.
Good morning, James Yaro, Goldman Sachs. Maybe I should just ask what the synergies from the Sumitomo partnership so far that you've seen. Obviously, you've now had the partnership for a number of years, and maybe as you look ahead with a couple of years of this partnership in place, what are you hoping for, you know, over the long term?
Yeah, let me say that I think the real timeframe is about a year and a half. In other words, we initiated the alliance in, I think it was August of 2021 , and that was somewhat limited in terms of focus. It was meaningfully expanded, and I would say by multiples in late April of 2023 . So I really mark it from that moment. That was when we kind of opened the gates on both sides and said, "Let's go." Invariably, it takes longer. It always goes a little slower, but we're 18 months into it. We are hoping by the end of this year to have designated.
100 joint clients, meaning one hundred clients, where the goal is for us to be providing the services in investment banking and, and capital markets, ex- investment grade, for them to be there on the commercial banking investment grade and other related services, and for it to be as seamless as possible to the clients. That, that number, hundred, will grow, hopefully meaningfully next year, is something that can grow at pretty good numbers for the next number of years. I mean, there is no necessary limit to it because we are working with, you know, by, by stats, the number eight largest bank in the world, ex the Chinese banks. I actually believe that we're partnered with one of the top five great global banks because SMBC has been global longer than most banks.
It followed a lot of the Japanese trading, auto, and other companies as they became global early, and the result is we find that, you know, they're in forty-plus countries, we're in twenty-plus, and the overlap is dramatic, so it's accelerating. It's coming through in our ECM line, it's coming through in our M&A line, and it's also coming through in our ability to jointly finance in the leveraged finance market.
So we, Jefferies, are now in a position to make staple commitments and other commitments in leveraged finance at almost double the level that we were at three, four, five years ago, and that is very meaningful, and it's been meaningful for us this year in capturing M&A opportunities, either in the fact that we might not have captured it without, or more significantly, that our opportunity to do them on a sole or strong lead basis because of the fact that we can, you know, fully staple the transaction. So there's a lot of anecdotal evidence. It's starting to show up in the numbers. They're not so big yet that we're gonna necessarily call them out, but we see it coming, we see it strengthening. We also have put a lot of effort into Japan cross-border.
It's early in seeing the fruit of that, but if we are right in our research view that the trend in Japan toward, you know, higher ROEs and greater global engagement is correct, then we think we and SMBC together can capture a real share of the cross-border flow.
It also might be worth mentioning, 'cause there is confusion both on Bloomberg with the share count and the way people perceive it. The shares that SMBC has purchased on open market have not been retired. It has not changed our share count. It's just converted common into preferred, which eventually goes back into common. So fully diluted, we have 253.7 million shares outstanding. There's, like, 12 different ways people are looking at this. That's the way we look at it.
Yeah, and those shares are really temporarily there. It's basically a three-year preferred that then comes back into non-voting common. So, you know, it is one large exercise that doesn't have any real meaning.
Okay, that's really helpful. Thank you. Maybe just to follow up on sponsors, you obviously have a very unique perspective there. You touched on it in so many different ways. They're obviously transacting a little bit more on the M&A side. Maybe you could just talk about where we are in that process of normalization, give us an update there. And then when you think about the normalized mix of exits across, let's say, secondaries, continuation funds versus IPOs and M&A, what is your base case for what that looks like?
You know, the answer is it is normalizing. I mean, there's a lot of reason to believe that absent an intervening event or a meaningful change in the environment, 2025 looks pretty normal to us on the sponsor side. You're definitely seeing... You know, we see it in our backlog on the M&A side. You may have seen, I forget what day last week, I think it may have been Thursday, John Gray was talking about Blackstone focusing on IPOs for some of their holdings. You know, we sent out a note in August saying, "Hey, the window's open. Has anybody noticed?" And that was a serious point.
I mean, the window, in many ways, opened in the IPO market in the spring of 2023 , and we've had, you know, incredible success taking industrial companies public. The StandardAero deal a couple of weeks ago, you know, one of the largest industrial deals in a long time, has done very well. I mean, there's just been, you know, eight or nine out of 10 transactions are showing really well, okay? It's a high batting average. Our issue is not investors in IPO. Our issue is having enough issuers. The issuers are waking up. So on the private equity side, there's a lot of reason to think that you're in a normal pretty darn soon. You know, the backlog is there, the pent-up need is there, and, you know, if you look at it from an LP perspective, it's there.
You mentioned continuation funds. Continuation funds remain a part of the landscape. As M&A increases and as IPOs potentially also enter the exit scenario, it probably means you don't see them. You've had sort of epic growth in the last five years in where continuation funds play. You're not gonna see that going forward, whether it's flattish, whether it's modestly up, you know, where it is, I don't know, but you will see M&A and IPO revert to mean and then potentially outperform.
Part of the confusion is people were blinded by the euphoria of 2021, and that was not the real IPO market. That was not the real exit market. That was a once, hopefully, in a lifetime confluence of events, coming post-COVID. The fact of the matter is, we are doing pitches each week now. There was a long period of time, for about two years, where we did no IPO pitches. We're on five IPO pitches a week that are all serious. It's not 50 like it was during COVID, but it sure feels like it's going to 10 from five and go back to a much more normal kind of a regime. The sponsors have to return capital to their LPs, and it was just M&A for certainty.
The first sale of a good IPO is generally the worst sale. So even if you have to do an offering that is not where you want to exit your position, a well-functioning, good, well-managed company, you know, on an IPO that does well, will eventually wind up creating the type of rewards that the shareholders, you know, want for private equity. That is gonna wind up happening on a more normal basis. Plus, there's plenty of capital and dry powder within private equity companies to actually do deals. It's all starting to flow. I think this year was a transition year. It bodes pretty well for 2025.
Kurt?
Kurt Feuerman, AllianceBernstein. First, congrats on this, you know, the amazing Jefferies story, and thank you for creating shareholder value for our shareholders. But, I know you're not gonna forecast earnings, but it's such a.
God, you were doing so great! Okay.
It's such a great story. It's, it's been, you know, a compounder on the revenue line, but it, it's not a typical compounder because you have such ups and downs in the industry, but it seems fair to say that, you must have internal, ideas about what you can earn, and is it fair to say that you think you can earn more than peak earnings for Jefferies a few years back, and then also, it seems like in a tougher market, the trough may not be quite so bad as you've diversified and strengthened your firm. Do you have an idea of what you think you could earn in this cycle?
Okay, so without giving one ounce of earnings guidance, what I'll say is, you know, the ROE in 2020, our peak in 2021 is ridiculous, okay? And there was no costs. Everyone was at home. We were printing five deals a day, okay? We were up technologically ahead of everyone else, you know, from a COVID perspective, so we gained huge market share. So that is y ou know, and historically, every firm that had ROEs in our industry in the twenties, you know, blew themselves up, okay? So that's the historical perspective. That being said, okay, in the transition year, we're at 10, okay? And then COVID, I don't know, was it twenty-four, twenty... Some crazy number in the twenties, okay?
It certainly feels to us that we should be able to, on a more sustainable basis, drive this ROE higher, and it feels like we're at a very good fundamental base right now. It's also dependent upon the environment, but it certainly feels like we should be able to drive it higher. And from a cost and operating leverage perspective, you can see, perhaps not to the extent that happened in COVID, but you can see the operating model actually works. And, and we're committed to doing that, and we're excited about doing that. So just because we're not promising it, you know, a specific number and a date, doesn't mean we don't focus on it every single day.
On the downside, our firm feels, and I don't want to jinx ourselves, and, you know, 'cause we can all make mistakes, and, you know, no hubris is our first motto here. It certainly feels like we have more recurring revenue, more, you know, riskless revenue, more diversified revenue, and a better, a better brand, a better, you know, it feels like we have taken a lot of the downside and the lumpiness out. That being said, you know, we'll see. We'll see.
I don't know if there's a system for Rich, earlier, you mentioned tangible leverage ratio. A couple of questions, one from Ryan Keeley at Millennium, another from Arnold Kakuda at Bloomberg Intelligence. Where do you see that going on a going-forward basis?
I mean, I just mentioned it to explain it. I mean, I don't think we're gonna be driving up our tangible leverage ratio. I think we're pretty comfortable around the area that we are. And we did it for the reasons I mentioned.
Okay. Another question from Arnold Kakuda at Bloomberg. There was no mention of Jefferies Finance or Berkadia in the presentation, and he was wondering what the relationship was with them.
The relationship with both is excellent. Nothing has changed. Berkadia is having a reasonable year. In some ways, its business is not terribly distinct from Jefferies in terms of they provide financing, mostly as a broker, as well as M&A services, primarily to the multifamily industry, and have a very large, over $400 billion mortgage servicing portfolio, which generates a lot of income. So they're having a good year, not a great year. The business of refinancing, buying and selling multifamily, kind of went to ground during the period of rising interest rates. It is looking like it is beginning to thaw out, and activity now into the end of the year looks better, and again, we think a reversion as you get into next year.
Berkadia is totally fine and moving along. Jefferies Finance, our joint venture with MassMutual, is integral to our strategy. Two thousand twenty-four was, on the one hand, a relatively active year, or has been a relatively active year in the amount of transactions that have flowed through. However, the vast bulk of them have been essentially riskless repricings, and hence, on the one hand, work, but on the other hand, the revenue per transaction has been very low. That will thaw out with the M&A market. A combination of increased M&A volumes, particularly on the sponsor side, and a greater competitiveness of syndicated lending versus direct lending should bring Jefferies Finance syndicated lending activity, or their commitment levels in that, you know, back toward norms in the next year or so.
At the same time, Jefferies Finance, about four years ago, really committed to the direct lending market, built up a sales force. We are north of $10 billion of AUM in the direct lending business. We have a lot of irons in the fire, as I think Sol mentioned, and we should see a real growth in that. We will not rest until Jefferies Finance is among the leaders in the direct lending market, so we got a ways to go.
I would just add, this Thursday, we're going to be celebrating our 20th anniversary of Jefferies Finance in partnership with MassMutual. If you think about it, you know, how many firms have partnerships that last decades? How many firms have an alignment, you know, with you know real relationships? How many firms have issued 20-year bonds where the same management team actually retired the 20-year bonds? It's kind of wacky, but what it really means is, you know, we you know we built Jefferies Finance for the long term, and it's a very important aspect of our company.
A follow-on about JFIN. Again, from Arnold Kakuda. He's noticed that the SMBC folks have increased their ownership up to 15%, but reduced the lending to JFIN. Is SMBC supportive of the JFIN relationship?
A word there is wrong, which is reduced. SMBC did not reduce. SMBC in 2021, as part of, I think, again, it was August of 2021, as part of the first step in our alliance, provided a meaningful credit facility to Jefferies Finance, and at the time, that was very attractive to us and helped us restructure the capital structure for the next opportunity of growth. We refinanced that. It was an affirmative effort by Jefferies Finance, not anything on the SMBC side. The term on that, I think, had another two years to go. We were able to refinance it in the broad market, generating about a $20-something million annual savings of interest costs to Jefferies Finance. So essentially, we went for a broader syndicated, lower-cost solution. It's not in any way a comment of SMBC's relationship.
As I mentioned before, the broad relationship is stronger than it's ever been, and specifically in the leveraged finance market, we are working jointly on deals, and we look forward to doing a lot together. So all systems go.
I think it's not 15%. I think there are, the numbers are 14.5%. I think they're also cognizant that we do, despite what some people might think, buy back our shares on occasion.
Okay. A question from an individual investor, Jason Aldridge. On HomeFed, liked a little bit of detail about Otay and SweetBay, and also touching on the multifamily performance and opportunity.
Otay is doing really well, and HomeFed, to put in perspective, HomeFed is approaching $500 million of investment at book value for Jefferies. We think it's worth a lot more than that. That $500 million, the largest part, you know, way over half of that, relates to Otay. Otay is a large land area between San Diego and the Mexican border in a town called Chula Vista. When it is fully developed, which is probably another, you know, 12-14 years, it'll have north of 12,000 residential units on the property that we own. I think of it as a mining operation, and we started mining a couple of years ago.
We're mining out in the, you know, 600, 800 -1000 single-family home sites a year, being sold off to home builders, at an attractive price to us. The larger upside is the multifamily development business, where, we are getting in gear. We've already done, we've completed, fully completed and leased up two, and we have the third and maybe the fourth, I lose track, you know, already under construction. So the multifamily opportunity is meaningful. We have the opportunity to build one or two, you know, call it 300 , 300 and something unit, projects a year, in terms of what the market is likely to absorb. If that continues, that business starts to mature in about two years. Mature means we're building what we're selling, and when we're selling, we're getting good gains.
So we today are eating a small drag in terms of return on capital at HomeFed until it gets to that full ramp period. But somewhere in 2026 or 2027, we start to hit stride there, and the return on equity gets to be attractive. So, HomeFed's a little gem inside. We don't talk a lot about it. We try to, you know, underpromise and overperform, and, you know, we think the overperformance is out there. SweetBay is tiny, so I won't spend a lot of time on it, but it continues and there is a little bit of multifamily opportunity there, but it's a, you know, by comparison, it's not. You know, it's maybe a tenth of what Otay is in terms of opportunity and upside.
I think, by the way Brian's talking about this, you could take our comment of being a long-term shareholder, creation value-oriented, and recognize we have some value there. We have to figure out how to fully realize for our shareholders.
Second question from Jason is on asset management. He understands that it takes patience and, time for the managers to build track records, but he's curious on the expectations on when LAM begins to meaningfully contribute to earnings and if there is an AUM level that you think you need to reach to get there.
I think we're closer, if we're fortunate. It starts to contribute. I don't wanna put a big M on the meaningfully, but it starts to contribute in 2025 , and it should accelerate from there. You know, I can go through all the whatevers of what's held us back or why it always takes too long, but if we're fortunate, the long is behind us.
Question from Thiago Osorio at WHG. Can you describe your views for the market and the business scenarios depending on the outcome of the U.S. elections?
I'll just say, I hope that no matter what happens, there isn't a clean sweep on either side.
Okay. Question from Thomas Sliney at Bay Colony Advisors. What are some of your considerations and, you've answered some of this, I think. Forget you've already answered. How will you deal with on a going-forward basis? The question just came in. My apologies. And, one final question from the room, or from the people online, is Rich. I'm gonna read this one. Half a dozen years ago at this meeting, you were asked to dream about the future. At that time, you expressed a vision that included such elements as having an Asian banking partner, now achieved. Will you please dream with us again on large changes available at Jefferies in another five or 10 years?
I mean, look, it's really hard for me to look around our company today and not be incredibly proud. It's the people that have been all the hard work that have gotten us here. It's the culture that's allowed this to happen. So if I were to dream, you know, I don't think we need a specific new partner. I don't think we need a new product. I don't think we really need a new geography. I think we just need to make sure that we... Our people are happy, our people feel like they can make a difference, the organization stays flat and humble. We do everything we can, you know, for our clients and deploy all of our resources, and that means the whole firm behind it.
And we just grind it out and gain market share, and we're not gonna get rich quick around here. It takes a long time to do what we're trying to do. And when it takes a long time, you know, it's durable, and it's real, and it's valuable, and it's important, and it's got purpose. And that's what our company is trying to do. That's what we've been trying to do for a long period of time. And I really believe with all the things that we have in place today, I've never been more optimistic that we're going to get there. And by the way, six years from now, we're not gonna be happy where we are six years from now. We're gonna keep going. And that's the magic of our firm.
I'll say, I'll speak for Brian as well, it's beyond one person at this point. It's beyond two people at this point. We have a breadth and depth within this organization, and that's something that, that we are all incredibly proud of. Brian, you want to add something?
I'll say it. I'll shorten the timeframe. In the next three to five years, we must realize on our opportunity. It is right in front of our noses. There is nobody, there's no anything holding us back. There is no resource that we don't have, and it's just right in front of us, and to me, that opportunity is to be one of the very small handful. I'm inside a top five at this point. We are one of the two or three or four best solutions for the clients we care about, and we just need to realize that, and then, if we're lucky, the market will give us a bigger opportunity.
To give credit where credit is due, that came from Ben N oll, an individual investor. One other question just popped in. Do you see this?
We couldn't end on that one?
I wish we could. I was planning on doing that, but I got trumped. Do you see this as an industry in which there are gonna be five to seven players with maybe 10%-20% market share, or is it gonna remain fragmented as it has been historically?
I mean, let's be honest, there is competition everywhere, okay? Just because a number of large banks didn't disappear doesn't mean there aren't a lot of alternative asset managers out there, doesn't mean there aren't a lot of quality boutiques out there, doesn't mean there aren't a bunch of good bank holding, because there's competition everywhere. If any of you want to find an investment banker, someone to sell you stock, okay, or give you a research opinion, it's not that hard to find that person, okay? The trick is, how do we make ours special, and how do we gain market share, and how do we make ours durable? I think the message you've heard today is our answer to that. But there's always gonna be competition. By the way, competition's good, okay?
We welcome competition, and we face a lot worse competition historically than we have today.
No more questions online.
Everybody, thank you so much for coming. Really appreciate it.
Thank you.