Can people hear me okay? Good morning, everybody. My name is Rich Handler, and I am very happy to be here. For those of you who've noticed or in the room, I did have a knee replacement surgery last week. This is not the financial markets. It's actually self-inflicted from jumping on a trampoline seven times a week for the last 10 years. But I feel like I wanted to hear, I wanted to cheer get myself cheered up a little bit, so I wanted to come in today and hear the story that we have to tell, 'cause it really is quite a story, and I'm really proud to be here.
I had a bunch of remarks I had jotted down before my surgery, and then the week that occurred since last Monday, when I had the surgery, kinda made me reflect a little bit on things and reflect on our company, our people, the world, our stock, my ownership of our stock. And it, it came down to one thing, really, and clearly, it's been a brutal week in the Middle East, and I think people saw how our company came together to rally, you know, for the cause of justice and goodness in the world. And our compassion goes to all the people who are innocent victims of a tragedy over there. But it made me really reflect on what it is about our company that is our secret weapon.
Why am I so happy to be a shareholder? Why am I so all-in and committed? Why am I so sure that this is just the beginning of building our company? And it really comes down to our culture and our people. And, you know, there's lots of investment banks, not as many as there used to be, but there are plenty of investment banks out there. But I don't think there's a lot of them that have the compassion and the humanity and the desire, and the orientation to treat each other as partners, to really go the extra mile for clients, treat their clients like, you know, like they are. It's their own company. I've seen it time and time again. Deal through adversity, come out stronger every single time, and quite frankly, care about society as a whole.
And I look at a lot of the banks, a lot, a lot of our competitors, and there aren't that many that are, you know, compared to where I started. And it comes down to, I'd rather it be us for a bunch of reasons. And I was going to start talking about the macro environment and talking about what a rough year it's been in terms of everything from the regional banking crisis, and interest rates, and the debt ceiling, and, and, and Credit Suisse, and, you know, second debt ceiling, and more interest rates, all that stuff that we've gone through. And I reflect back on the last, you know, 3three years I've been at this company.
What we do every single time when there's a period like today and a period like this year, these inflection points, what we have done as a firm, because we come into these environments in a really, really healthy place from a capital perspective, from a clean balance sheet perspective, from a culture perspective, from a client relationship perspective, because we come into these situations clean, we are able to play massive offense. I think what you're going to hear today in the course of this transition year that we're having, you're going to hear from a bunch of the people at, you know, at our company who are doing the lion's share of the work, not myself or Brian, it's really the team and, and people working with them.
You're gonna see a firm that has built another firm within itself, you know, doubling our size effectively, in my mind, in terms of capability long term, but you'll see the numbers and the scale and the scope. You'll see what we've been able to build. And what I love most about our company is the culture of our people welcome new people as partners. And, you know, you look at the new people who've joined us, both at the junior level, the middle level, and now, most importantly, this year, at the senior level. You know, you need a push and a pull to get people into your company. And we have lots and lots of pulls, but we haven't had lots and lots of pushes out of other companies. There are lots and lots of pushes right now.
A lot of it's cultural, a lot of it is changing the strategy of our competitors, a lot of it is mismanagement, a lot of it's just luck. But there's lots of pushes. Or bad luck, I should say. We have pushes, and we have pulls, and I think what you're going to hear today from our team across the board, you're going to hear, you know, the caliber, the quantum, the geographical expanse, the sheer industry knowledge, the oneness of one organization working with sales, trading, and research. You're going to see our alternative asset management business being built. You're going to see all the pieces in place that I think for the next three to five years, is going to take our company to just the next level.
I just want to add one thing about our partnership with SMBC. You know, we at Jefferies are good partners. We know what it's like to be a partner. You can only tell people, you know, through cycles, whether they're good partners or bad partners, but we're good partners. We're good partners with Berkshire Hathaway. We're good partners with MassMutual. We're good partners with Leucadia. We're going to be really good partners with SMBC. Why? Because they deserve it. They're good partners. I can see throughout our organization, working hand in hand together across the board, you'll hear some of it today. You'll see some of the capabilities that they're bringing to our clients and many of the capabilities that we're bringing to their clients.
And you're gonna see the fact that Jefferies today is a firm that still is entrepreneurial, flat, hungry, motivated, driven, you know, low ego, you know, humble, but we have every single tool in our toolbox. Everything. We've got everything we need, and now we have better, you know, more and even better and great combination of people that we've ever had as an organization. And all of a sudden, somehow people are starting to talk about our brand and our market position, okay, and our market share. And it takes a long time to get there. And we're nowhere near declaring victory, but I gotta tell you, we have every piece in place right now to go build. And I can't tell you when the market's gonna come back.
I can't tell you what quarter, what day, what week, what month, but I can tell you it will come back. There'll be a need for companies to merge, acquire, raise equity, raise debt, restructure, trade stocks, invest in stocks, invest in bonds, you know, build alternative assets. You know, we have everything that people need right now, and we're one of a kind. And I'm really proud of it, and I wish I was, if I wasn't so hobbling up here, I'd be more excited and more revved up. But I just want everyone to know I'm here because I wanted to hear the story myself and my partners, and I really thank everybody for coming and for being on the phone. So thank you.
Thanks, Rich. I'm Brian Friedman, President of Jefferies. In many ways, Rich just summed it all up. We're, we're a firm that's in an exceptional position and a future that's incredibly bright. Over the next two hours or so, you will get a deeper feel for the management team that is leading us forward. You'll also have a sense of the breadth and depth of the capabilities that we've built. This little statement, that we are one of the world's leading firms, is something that we would have liked to have said for many, many years, and I think we can say it more clearly. We can stand taller today. We can back it up more than ever. We're in an industry, and we'll talk about this in a minute, that has experienced a great deal of consolidation.
At the same time, we've taken a very interesting balance in our approach, where on the one hand, apropos, Rich, Rich hobbling in here this morning, you know, we would walk to Alaska. It would be a slow walk for a deal tonight, but at the same time, we take a 5, 10, and even longer year view of what we're doing, where the value is, and how this compounds. We're gonna go through this again in a minute when we talk about where we've come to in our brand positioning, but our focus on clients, our prioritization and understanding that our differential is in our ideas and our insights, and a structure that doesn't get in the way, but really facilitates. All of that together puts us in a unique position, puts us in a position to deliver for our clients and ultimately to build our firm.
Another way of saying what Rich talked about before, there is a huge competitive opening. We are in the late stages of the consolidation of this industry. It, some people might say it goes back to 1975 and May Day. Some people would say it goes back to 1997 when the Fed allowed banks and Wall Street to combine. Whatever it was, not a lot of it actually has produced value, and the flip side of it is that the number of true competitors we have today has never been smaller. It is a fraction of what it was when my career started and the opening for Jefferies, which is something that for the last couple of decades, we felt and we saw, but it started as a crack, and now it is a wide-open opportunity.
At the same time, as you're gonna hear from us today, we have more than we've ever had, and not by a little. We have grown our capabilities in every part of our firm by a meaningful amount, yet again, a fair amount in the last three, four years, and we have just so much more to offer our clients in the world. Finally, as Rich alluded, we're not gonna make the call on what day and how, how steep the slope is gonna be, but there's no doubt that there is a cyclical recovery ahead. Arguably, it has already begun, and so at a time when we have more to offer, arguably fewer pushing back against us, we also have the wind at our back. We're gonna talk probably disproportionately about our investment banking opportunity, because if you go back in time, Jefferies was built as an equities firm.
It then expanded 30+ years ago into the high yield business, which became the leveraged finance business, which became a broader fixed income business, and in many ways, investment banking. We'll talk about asset management, part of the future, but investment banking is still our youngest business, and the proportionate upside is by far the greatest. This little chart is worth a lot because it tells you the investment that we made through these last, really three years. We use four years as a measure, but three years, and as you're gonna hear in a little while, with the typical ramp period for new MDs, whether they're promoted from inside or hired from the outside and depending on a lot of little factors, it's anywhere from one to three years until you get to full throttle.
We have a lot of upside and a lot of future baked into the actions that we've taken in the last several years. As Rich mentioned, that growth, particularly in these last couple of years, has been across the globe. This was the period where we were able to make inroads in almost every part of the world. Our growth was significant. This is just investment banking, MD headcount. It's kind of a 70% overall global increase in the four-year period. Quite interestingly, the way the numbers line up, it's a little over 50% in the US, almost 90% in Europe, Middle East, Africa, and 200% in Australia and Asia. No surprise that that mirrors sort of our relative immaturity. It mirrors the fact that over the years, it's been most difficult to drive consolidation the further you go from New York.
The U.S. is by far the most mature market in which we operate. It also happens to be the market where the globals are also the locals. When you go to Europe, you face local competition. When you go to Asia, you face intense local competition. That being said, what happened over many years in the U.S. is the prologue to what will happen over time in the world, where increasingly companies and investors are thinking global. They need providers that are able to service them on a global basis. They need insight that is global, and our global footprint will have incredible value to our clients and to Jefferies. This is the point that over half of our MDs are MDs at Jefferies for less than three years. The maturation of this team has a great deal of opportunity for our future.
On the revenue side, which is another measure, what's interesting to us is that the downturn wasn't that harsh. Because of our own commitment, because of the mix of our business, and because of the commitment we've had to growing the platform, we're bottoming well below- well above where we previously were topping. That says a lot. You know, Rich intimated what the potential is over the next couple of years. We firmly believe it. We believe all of the stats support it. We believe the competitive circumstance supports it, and we believe, again, with the wind at our back, we will make that move. You can see that we went from number 12 to number saeven in all of the key investment banking products. We went from number 10 to number six in the two products that really drive our business.
M&A, M&A advisory and ECM are the two core products. Leveraged finance is a byproduct of our M&A activity. So in terms of where we stand when clients make decisions, having moved to number six, and we believe with the work that we've done over the last two years to further grow our platform, we will have fairly quick upside from that number six position. Not to say it's all about investment banking. Quietly, carefully, and consistently, and you'll hear more of the detail on this, our equities business has continued to grow market share. That, again, speaks to our strengthening what we have, the competitive set changing in a way that gives us more opportunity, and as we go into the next periods, hopefully the wind at our back in the markets. I tried both.
Sorry, if you're online, we're having a little tech glitch here, so give us a second, please. Got it. Okay. Similarly, on the fixed income side, our positioning, our market share growth over the last four years has also been significant, and the opportunity, we think, will continue as, again, the competitive set favors what we're offering. Our consistency of message, our consistency of team, all we think will pay off with continued opportunity. We'll get into more detail when our team presents in a little while, but the alternative asset management business is effectively a nascent part of what we're building. Our experience at Jefferies and our experience in life is that a period passes a lot of good effort, and then at some point it combines and is what creates the step change in opportunity.
Just as we've seen multiple step changes of opportunity in all our other businesses, we expect to see step change of opportunity from our alternative asset management business and see it also become a meaningful contributor to our future. When you step back, it's our talent and our talent development, driving market share gains as we come together and get better and better at what we do. We'll talk in a minute. We'll talk in more depth during the investment banking presentation of what SMBC means to us, but it is meaningful. Technology and ESG principles will be meaningful accelerators and facilitators of what we're doing and ultimately, the growth of our brand will make this easier and more readily growable. I think we've talked enough for the moment about what we've done on the talent side.
You'll hear it again as we go through each of the businesses. The one point I'd like to spend a second on is that about six years ago, and it's kind of interesting given the developments of the last few years, we made a conscious decision to meaningfully increase our investment in talent development. The irony is, part of it was driven by a view that over time, people who trained at commercial banks might not be able to come over to Jefferies on Wall Street and be additive. We truly doubled down on the efforts to train. We now have training programs that are a year-long at every level in the organization. We've put together a talent team over the last six years to drive that and lead it.
Our leaders across the board are part of the faculties and part of the, you know, culture and education carriers that drive this. Despite the success we had in the last couple of years with lateral hiring, this remains a critical part of our future and something we're meaningfully devoted to. The alliance with SMBC, particularly the announcement that we made at the end of April this year, is very significant to our future. What has changed with this latest announcement is that the alignment of SMBC's balance sheet and strength in credit provision and credit-related products is aligned with all of Jefferies in the trading markets and in investment banking. And particularly on the investment banking side, this meaningfully opens up for us larger public companies, companies where revolving credit and access to credit is an element in their overall relationship with Wall Street.
Now, a true Wall Street firm is available to them on a basis that they find attractive and comfortable. These tombstones, which, if you see, are all dated between May and October, okay? We have 10 deals here. These are deals that are, for the most part, closed already. Some are still closing. This is really the product of what's happened in the last less than six months. Behind this, there are other assignments that have already been signed up. There are many other discussions that are taking place. This is the tangible proof that aligning SMBC and Jefferies and going to market with the joint capabilities is massively differentiating. It's absolutely fair to say that none of these would have been at Jefferies, and I'm not sure much, if any of them, would have been at SMBC.
The collaboration at the next level that we started really in late April or early May, is paying off. If we can do this in the first five months, we believe that in 2024, this will already have a tangible and meaningful effect on our results and our opportunity. As Rich alluded to, we have a long history of fruitful partnerships. We're able to benefit from those partners, both directly in the things we do together and indirectly in our ability to again work together, align, and share ideas and opportunity. Technology is everywhere and critical. It is in the front line of our business, in our interactions with our clients. It is critical to how we communicate and partner internally. Our investment is at the peak and will probably go higher.
We believe that whether it's our trading technology, that every day makes a difference in how we and our clients work together or makes a difference in how we execute and bring them best opportunities, or on the investment banking side, where, you know, artificial intelligence is being used to help us execute our assignments, to help us conceive opportunities. Technology will be an ever more present part of our strategy. At the same time, everything from taking street leadership in advising companies and investors on ESG and its proper place in the economy and in the capital markets, to its impact on how we behave and how we operate Jefferies, it's a meaningful guidepost to our future. I'm gonna pause a minute to focus on our brand, and this is something that really is the compounder. It's ultimately an opportunity expander and enhancer.
What is coming today for Jefferies is lead acquisition, and warmth of opportunity is being led by the continuing strength of our brand. We actually spent the time. We started about a year and a half ago, surveying our clients and people that we wanted to see as our clients, to understand where our perception was, what their perception was of alternative providers, what we could do that would differentiate ourselves, or what we were doing that would differentiate ourselves. They told us what they valued. They told us what they saw in Jefferies versus competitors, and it synthesized to a very straightforward thought process that didn't require any change in the way we behave. It may, in fact, have engendered a little bit of a change in the way we talk about ourselves and the way we approach our clients.
But what's clear is that in a modern, crazy, busy, volatile, ever-changing world, everyone needs more thought, everyone needs more ideas, and when they look to the research, sales, and trading side of Jefferies or the investment banking side, they're looking for ideas, they're looking for insight, they're looking for value add, and we distinctly provide that. We provide it more readily, we provide it more clearly. We do it from a platform that is driven as few others. I think you can hear it in Rich's voice and my voice, and hopefully, you'll hear in all of our team. We are a firm that is intensely focused. We are not distracted by other businesses. We're not distracted by other politics.
We are focused on our clients and focused on building Jefferies, and we see every relationship and every opportunity as deeply personal, deeply real, worthy of our effort, worthy of our focus, and that comes through to our clients. So we have a culture, we have a way of going about business. Some could argue that this was the culture of Wall Street going back 30, 40, 50, and more years ago. It got lost over time in changes, in structure, and other things that have happened in our industry. By being the pure investment banking and capital markets firm that we are, we think we have great distinction for our clients and for ourselves. It is now.
What we have assembled as a firm, what we have amalgamated as Jefferies over 60-plus years, the integration of our businesses and their ability to join together to provide the best to the clients, that's given us some momentum. It's evident in the results that we've had in the more challenging period. It'll be that much more evident as the wind shifts and comes behind us. One of the important factors is that the growth will be in the comparatively low-risk fee businesses. The risk side of our business will not grow as significantly or frankly, that significantly at all. The franchise we have, because it is a pure Wall Street firm, is going to be distinctive evermore, every day, as things separate into how people go to market and how they provide service.
Lastly, I'll spend a minute on this. We have emphasized forever total shareholder return over the long term. We've emphasized it in building Jefferies. We've also emphasized it in the way we have managed capital, capital return, capital structure. We've continued to buy back shares. Earlier this year, in January, we spun out Vitesse. That has been a successful public stock and has driven shareholder value to our shareholders. We will continue the process of the unwinding of the historic merchant bank.
We are actively at work. As always, we're not gonna tell you what we do till we do it, but you know, if it was closer last year, it's even closer this year. In the course of last year to this year, we obviously spun out Vitesse. We're working on other next steps that will get us closer to where we wanna be as a pure Wall Street firm in the public markets, and we think we're getting close. With that, I'm gonna turn it over to our Chief Financial Officer, Matt Larson.
Thanks, Brian. As we look at Jefferies today and compare ourselves to our pre-COVID levels, it becomes clear that we've achieved a meaningful step change in our businesses. We've grown our investment banking revenue by 40% from $1.5 billion in 2019 to over $2.1 billion in 2023 on an LTM basis. We've grown our capital markets revenue by over 50% from $1.5 billion in 2019 to over $2.2 billion in 2023 on an LTM basis. Furthermore, the growth has been achieved in a very balanced way across our businesses and geographies, almost entirely where markets have either contracted or been stagnant, but where we've gained market share, as Brian highlighted briefly and others will elaborate on, as you hear from our business leaders.
It's also worth noting that the quality of our revenues remains very strong, with a significant majority of our revenues continuing to come from fee income and commissions. As we look ahead, we expect this to continue, given our focus on investment banking, as well as the longer-term maturation of our alternative asset management platform. As Brian mentioned, and as shown here, you've heard a long time about our commitment to total shareholder returns. Since 2018, we've returned almost $6 billion to shareholders, which represents approximately 77% of total equity at the beginning of that period. It's come through a balance of share buybacks, traditional dividends, special dividends. Most recently, the $525 million spinoff of Vitesse in Q1. As Brian said, it's performed exceptionally well for shareholders.
Our strategy, brand, market share gains, focus on capital return, and strong future earnings potential has resulted in a peer-leading increase in our stock price, an increase of almost 80% since 2020. We've also outperformed in dividend growth, having increased our dividend 140% from $0.50 in 2019 to $1.20 per share in 2023. We expect that the continued execution of our long-term strategy will allow for this trajectory to continue. Our commitment to share buybacks has resulted in our diluted share count decreasing by over 33% or 120 million shares since the start of 2017, and 20% or 65 million shares since the start of 2020.
Benefiting our long-term shareholders, while still allowing for investment and growth in our businesses and maintaining a very prudent capital base for our bondholders and other credit-focused institutions. Assuming a more normalized operating environment, strengthened results over the next few years, and final exits from certain merchant banking assets should support further our ability to invest in our business and maintain our focus on share buybacks. Our revenue productivity is increasing. Through the delivery of great technology, the hiring of impactful revenue-generating investment banking, and other front-office professionals, and continuing to maintain a lean, non-bureaucratic, and professional culture, we're generating higher levels of revenue per person, even against a challenging market backdrop.
Our non-compensation expenses have continued to push a bit higher, largely as we continue to invest in technology that's enabling our global growth strategy, making us more resilient, and protecting us against ever-increasing cyber threats. As always, we're making these investments with long-term shareholder value in mind and believe that we're well-positioned to expand our operating margins in the coming years. Finally, I'll just close by highlighting a few important points about capital and liquidity.
I waited and to show this at the end, not because it's not important or that it's an afterthought, but because we've been so consistent and vigilant on balance sheet capital and liquidity, that it's virtually unchanged from years past. We maintain low leverage, high levels of liquidity, a conservative tenor of secured funding, and we continue to be prudent around Level Three Assets. With that, I'll turn it over to our partners in investment banking, starting with Andrea Lee, Co-Head of Investment Banking.
Thanks, Matt. As you heard from Brian, investing in our investment banking platform has been ongoing for decades. In the past three years, we've made significant enhancements in sector and geographic coverage, as well as formed a strategic alliance with SMBC and completed a leadership transition. Specifically, we've strengthened our teams in many of our existing sector and product groups and expanded our coverage into energy transition, private equity fund services, and direct lending. We've also expanded our geographic reach with coverage in new international regions in Europe, South America, and most recently, Southeast Asia, the Middle East, and in Canada. And through our strategic alliance with SMBC, the eighth largest investment bank... largest bank in the world, we've already closed multiple successful transactions and won high-profile mandates in equity capital markets, M&A, and leveraged finance across our global footprint.
Lastly, our leadership team is now comprised of Chris Knopf and John Miller, working alongside the three of us presenting today and working in conjunction with our global group heads to spearhead our various strategic initiatives. Through these investments, and with changes in the competitive set that have been favorable to us, we've meaningfully elevated our rankings in every region since fiscal year 2019 in ECM and M&A, the two solutions that drive our investment banking business. The global network we've built across the Americas, EMEA, and APAC regions has significant runway for growth, enabling us to continue to elevate our rankings. As you can see from the stats and the composition of our 1,400 bankers, we have just under 320 managing directors today, of which just over one-half have been on the Jefferies platform for more than three years.
We're confident of our continued success as our global network, our flat structure, and our culture of service enable us to serve our clients globally and with best-in-class talent. This combination of reach, organization, and culture gives us a unique and sustainable advantage relative to our competition. In terms of results, we ended Q3 2023 on an LTM basis with investment banking revenues of $2.1 billion. This represents a 40% increase versus 2019, despite a meaningful reduction in the global fee pool opportunity. During this time, we added 107 net new managing directors and internally promoted nearly 25% of our total MDs. With the seasoning of this group of MDs, the line of sight to increasing our revenues and rankings is pretty clear.
We have the talent in place, covering over 85% of the industry subsectors across the eight key sectors identified by Dealogic and targeted by investment banking. As you can see from this chart, we've remained committed to deepening our domain expertise across all sectors under coverage. As new technologies and innovation change the landscape of the various sectors, we'll continue to add bench strength across our investment banking platform. Now I'd like to hand the presentation over to my partner, Raphael Bejarano, who will talk more specifically about our franchise and the elevation of our rankings.
Thank you, Andrea. As you can see, we have meaningfully elevated our franchise in the period since 2019. Today, we have established ourselves as one of a handful of preeminent firms in global investment banking. For the sake of an apples to apples comparison, we have focused on comparing our GAAP publicly reported investment banking revenues to our public competitors' reported numbers. On the right-hand side of the page, we have compared our advisory and ECM revenues to our competitors. This is intended to best present our relative market position, as those revenues are both widely available and broadly reflect accurate numbers in the primary markets that investment bankers serve. We exclude DCM, as those revenues often include treasury and financing activities that are not provided by investment banking, as well as investment-grade issuance, which historically has not been our focus.
With the investments in talent over the past three years that Brian and Andrea described, we believe that we have created the foundation to help us continue elevating our franchise and market position. It is also worth noting that to date, we have built our business without access to a bank balance sheet. That is what gives our team so much excitement about our partnership with SMBC. Through this partnership, we expect to be able to better serve our existing clients and to serve more clients. Finally, as Alejandro will touch upon, we believe that there is a significant opportunity to expand our franchise with corporate clients. Here again, our partnership with SMBC should make a meaningful contribution. One of the historic strengths of our investment bank is, of course, our franchise serving financial sponsors.
Our success in serving sponsors is built on several pillars: industry-leading sectoral depth, expertise in providing exit alternatives across M&A, continuation funds, and IPOs, a constant flow of acquisition opportunities that sponsors can acquire or acquire into their portfolio companies, strength and leveraged finance, and an extensive global footprint. In fiscal 2024, we will add a leading group of professionals in fundraising, which will uniquely allow Jefferies to serve our sponsor clients across the gamut of their needs. Fundraising, sourcing, advising on and financing investment opportunities, and M&A, IPO, or continuation fund exits, further establishing us as the leading firm to serve financial sponsors. I'll now hand it over to our partner, Alejandro Przygoda, to discuss our strategic priorities in investment banking. Please.
Thank you, Raph. As Raph mentioned, our recent managing director hires and our alliance with SMBC gives us an opportunity to significantly grow our business advising sponsors and take our business advising corporate clients to the next level. As Brian mentioned, 53% of our managing directors have been at Jefferies for more than three years, and it typically takes 2-three years for those managing directors to be fully established. By the end of this year, we have increased the number of managing directors by 70% since 2020. Those hires bring us complementary industry expertise, new product capabilities, and important client relationships globally. They also benefit from Jefferies' flat culture and structure. We see no reason why, in the next years, we would not see revenue growth proportional, if not better, to the increase in the number of managing directors, assuming a normal environment.
Also, we expect our alliance with SMBC to be an increasingly strategic advantage for us moving forward. To give you a little history, this relationship started 2.5 years ago, and it was originally targeted to increasing our leveraged finance capacity. At that time, we also tested collaborating on large corporate clients, initially in the healthcare sector. Our enhanced partnership agreement, announced 5 months ago, targets investment-grade corporates and large sponsors with a focus on equity capital markets and mergers and acquisitions. We have just recently started, but as you've seen, we're already seeing tremendous synergies between our two organizations, and we are collaborating in virtually every industry across multiple products. Jefferies has a very strong franchise serving sponsors, and we see an opportunity to take our business covering corporate clients closer to where we stand with sponsors.
Our market share with sponsors is significantly higher than our share overall, while the fee pool for corporate clients is much larger. To give you a sense of magnitude, in M&A, for example, corporates represent 75% of the global fee pool. With our new senior managing director hires bringing long-standing trusted advisor relationships and our clients' access to SMBC's balance sheet, we believe we're really well-positioned to achieve our objectives. We find ourselves with this incredible opportunity, thanks to the hard work of our incredibly good team and strong team of investment bankers over many years. Growing and promoting our own talent is a core part of what we do and is ingrained in our culture. And as you heard, we have very robust and bespoke training and mentoring programs that are offered to our investment banking professionals at all levels.
And as Brian mentioned, we will continue to expand our team with senior managing directors when it is value-creating to Jefferies, and we see a cultural fit. I can tell you that most top investment bankers out there miss working for a pure full-service Wall Street firm and realize that Jefferies is the only one of scale left today. We believe that is a strong advantage, and it has helped us recruit top-tier talent. And with that, I will turn it over to our partner, Pete Forlenza, Global Head of Equities.
Good morning, everyone, and thank you for coming. Earlier, both Brian and Matt gave you some details on the market share gains that we have in equities. I want to provide some context to those gains and how and why we've been able to accomplish that, while at the same time showing you the excitement we have for what's in front of us. So you can see here again, both Brian and Matt showed this, we've had a step change in both market share and revenue gains in our equity franchise globally, where you've seen revenues up, you know, north of 40% and market share gains up, slightly north of 50%. I would tell you that is at a time that the wallet is down 1%, so call it flat over that time.
So we've been gaining share consistently, globally over this time period, which is, since 2019. I want to expand a little bit more on this so you can see the momentum that we have globally. A couple of things to see on this slide. One, yes, there's great momentum. That momentum is led by the U.S., where all of this began many years ago. Importantly here, and you can see the momentum in the U.S. that then leads to Europe, that grows into Asia, where we're a bit less mature, but we still have significant upside in all of these markets. And I'm just gonna highlight a couple of key rankings. We are the number one trader of convertibles globally. And importantly, I think it's interesting to highlight, of all the international firms in India, Jefferies' market share is now number two.
So you can see the underpinning of our strategy and how it's working globally. And the underpinnings of all this are the following: an integrated capital market strategy that's based on really three things, advisory, distribution, and execution. And when I say execution, I mean solution-based execution. That can mean many different things, which I'll speak to, in a moment. So again, advisory, one of the core pillars of our overall capital market strategy. And yes, advisory means advisory from my great investment banking partners, but it also means quality research to support our investor clients. So it's both issuer and investor integrated. And over the last few years, what you'll see is that we've expanded our research coverage globally, and that we now cover more than 3,600 stocks globally. So this product is both broad and it's deep.
And when I say deep, you'll see that we are now being recognized in survey results globally as a top-tier integrated research provider. You'll see last year, we were number 6 in the Institutional Investor rankings. The 2023 rankings are coming out shortly, and we're confident that we'll have improvement there. We're also number six in Europe in Institutional Investor, and in Asia, where Asiam oney is the publication that is most highly regarded, you can see we're now number three. So this is a differentiated, highly valued product from our clients. And I look forward to showing you the next slide, and I'll just briefly say this: it was a number of years ago that the MiFID regulations were integrated into the market, and there were lots of questions. What would it do?
I've had many different journalists call me recently and say, "You know, now we're a number of years on. How'd it work out for Jefferies?" Well, I'm gonna show you a slide that a client actually alerted us to, and that is research payments globally. So what you see here, this is from a company called, I believe it's Integrity Research, who is a consultant that was holding a conference for their long-only partners, so the folks that are unbundled and sending checks for research. And what you can see here over this time period, which goes back to 2018, that the payments, the hard dollar payments to Jefferies from this client base, have actually increased 38% at a time.
We were not able to tell you who the other folks providers here are, but I can tell you it is who you would expect that are our largest competitors in the business. This is a recognition that this model is working for us. Driving strategic growth and what we see in front of us, what gets me excited is, yes, we've come a long way, and we've got great market share gains, but we have so much in front of us. What we can continue to do is grow our existing business, and we've got that momentum, and you've seen it. We're continuing to broaden our client footprint. We're growing this franchise globally, and we're also adding to the product set that we're offering to clients. You can look by seeing the map in the investments that we've had regionally.
I would highlight, we've recently opened in Dubai, we've recently launched research for Latin American securities, and we'll be entering Canada shortly. What this does is it gives us a product suite that we can continue to go after a larger addressable market. So yes, we've gained a lot, but the current TAM that we've been operating in, both globally and by product, is the smaller light blue TAM. You can see the size of the TAM we have in front of us, and I wanna make the point that we're not going to try to be everything to everyone. We're going to address the different products that fit us. So what are those? Prime brokerage. We don't aspire to be the largest prime broker in the industry.
What we aspire to be is the most aligned with our clients, and there is a great halo effect when you're a financing partner for a client that helps your sales and trading businesses. We're going to align with the right clients. It's the same thing for our swaps business, and our swaps business here is different than many of our competitors. Ours is really built on sales and trading. It's providing a service for execution. It's not purely a financing business. Derivatives. Our derivative strategy is, one, to provide solutions to both our corporate clients and our investor clients, and it's going to be very targeted and aligned again with our overall capital market strategy. Program trading is a business that very few of our competitors can operate globally. It's very technologically intensive.
You have to be global, and there are not as many providers as there once was. And I can tell you that the phone is ringing here, where clients are asking us to be a larger global provider of this service for them. So when you put all this together, what you're going to continue to see is significant market share and revenue momentum while capitalizing on the opportunity we have right now, some of which is caused by competitive dislocation. There's just fewer providers. So overall, we're gonna continue to grow our existing business. We're gonna expand our TAM where it fits and continue our overall market share and revenue momentum. And with that, I'm going to turn it over to my partner, Fred Orlan, who's going to speak to you about fixed income.
Thanks, Pete. Good morning, everyone. So let's jump into fixed income. Just like our equities business, our fixed income platform is highly integrated with our growing investment banking franchise, and our key strength lies in our dedicated focus on core credit products that are directly aligned with our origination capabilities in investment banking across leveraged credit, ABS and CLOs, and municipal bonds, together with our related businesses in distressed debt trading and emerging markets. One of our current initiatives is to develop our origination capability in emerging markets and align it with our growing investment banking presence across many of the regions that make up these markets. Like our equities and banking partners, our focus is squarely on our people and our clients, and we lead with distinctive insights, value-added ideas, and innovative solutions.
So with that basic intro, let's talk a little bit about our results. And the results we've achieved really underscore the investments that we've made across our franchise. And these investments have led to a more consistent performance over the last five years, especially in light of the dramatic changes in market conditions that we've been experiencing. So these have led to a more consistent performance over the last five years, and you can see our revenues have increased by 59% since 2019. They're up 40% year-over-year, and they were also up 14% versus 2021, which is a relatively calmer and more predictable market to operate in. So we've significantly grown our revenues while sticking to our discipline by keeping the growth of our resource usage relatively flat across headcount, capital, and risk, and balance sheet.
A core part of this discipline is keeping our balance sheet fresh, liquid, and turning over quickly with inventory that is appropriate and geared towards the needs of our clients, and sized appropriately for the market conditions that we're operating in. Additionally, we maintain this low level of resource usage while making significant investments in the growth of our international business, which we'll talk a little bit more about. While we're pleased with the overall performance over the last few years, we're even more optimistic about our future opportunity, given the improvements that we've seen in our market share and the impact that this is having on our franchise. This is why we're so optimistic about our opportunity, and all this information on the next two slides comes from Coalition Greenwich. First of all, we have momentum.
Jefferies has been voted number one for net positive business momentum across global core credit for four years in a row. This means when clients are asked the question, who do they think they're going to do more business with over the next six to 12 months? More of them have cited Jefferies than any of our competitors. This is the result of our strength in the U.S., together with our growing business and the significance of market share that we've achieved in our European business. This momentum has led to a significant improvement in our credit client wallet share. You can see we've grown ours by 70% since 2019, compared to the rest of the street at 15%. Lastly, this has translated into meaningful market share gains.
As you can see, we've grown our market share by 1.7 times since 2019 to just under 4%, and we think it's very achievable to grow by a further 1.5 times to around a 6% market share over the next three years. So the reason we're so confident in achieving our growth target is because we're expanding and strengthening our client relationships across our franchise. And these charts really highlight the progression. We're deepening and expanding our client relationships and improving the quality of the business that we do. We've almost doubled our client revenues from the top 100 global fixed income clients, i.e., the ones with the biggest wallet. We've doubled our client revenues in our international business, and our European business is now a top 10 player in core European credit.
And since many of these clients are global, this, the impact we're having there reverberates back and really lifts the entire business. And finally, on the right, you can see, we are improving the overall quality share of business, evidenced by being cited for the strength of the quality of our service, including most helpful traders, most helpful analysts, and originators. And the growth in the quality share is helping us position ourselves as the partner of choice for an increasing number of these clients. And when we say partner of choice, we refer to focusing on and winning the situations that are most important to our clients. And these opportunities are typically higher margin, they result in repeat business, and they help reinforce the quality and the strength of these relationships.
Our growing e-trading capability is an important part of our core credit strategy, and it's having a very positive impact across our global business. E-trading across credit products is an exciting area and focus for the market, and it's taking shape in real time and is benefiting from rapid developments in AI, which are vastly improving the tools that we use to progress our execution capability and our profitability. Collaboration is a very important part to getting this right. By integrating our e-trading offering with our traditional high-touch voice trading desks, we're able to provide our clients with differentiated liquidity, especially in times of market stress.
Additionally, we're able to more efficiently process higher volumes of day-to-day flow, and this added productivity frees us up to spend more time focusing on those most important situations, which I mentioned are often higher margin and lead to repeat business. As you can see on the bottom, we're currently ranked three year to date in high-yield electronic trading, according to MarketAxess, and we're a top 5 dealer in high-yield portfolio trading, which refers to the pricing of large client portfolios of bonds that use a combination of our low touch e-execution capability together with our high-touch trading. And we use this together to really enable to recycle the risk again, especially in difficult markets. We're also getting good traction in our investment grade e-trading in both Europe and the U.S.
And finally, we partnered with our equities team to further improve our capabilities in the trading of fixed income ETFs, which further supports our e-offering. So our plan is to continue the rollout of these innovative tools across more and more of our core markets to increase our overall efficiency, help more clients, and improve our profitability. So finally, just to summarize, our approach in fixed income is to focus on core credit products, which are directly aligned with our origination capabilities in investment banking. We lead with unique ideas, differentiated solutions, best-in-class service, and an outstanding high and low touch execution, which, as you saw, is leading to strong increases in our market share.
Our goal is to leverage the market share growth by striving to become the partner of choice for more and more of our clients, and to help realize a higher quality share of the business that we earn from our franchise. So taken together with our exceptional talent, our collaborative culture, and commitment to discipline around the use of the firm's resources- .. across all market conditions, we're very excited about our opportunity to deliver higher returns to all of our stakeholders. With that, I'll hand it over to Nick in asset management.
Thank you, Fred. I'm Nick Daraviras, with my partner, Sol Kumin. We're going to tell you about the activities at Leucadia Asset Management. We're building a world-class alternative asset manager. The key word there is alternatives, which is our focus. We're doing this while leveraging the capabilities and relationships of the firm. This has been a focused effort for roughly six years now, and we believe we've put together a differentiated and diversified product offering. We'll show you statistics that highlight our growth and results, but I think it's important to start by highlighting our unique business model.
We combine providing capital, strategic capital, whether it be in the form of seed, acceleration, or some sort of other opportunistic capital, to high-quality managers, and we combine that with access to value-added services such as operational support and, in particular, fundraising. We think this allows our managers to optimize growth while being allowed to focus on generating returns for investors. It also allows those institutions that invest alongside us to take comfort in the vetting process that is possible from our reach and broad network as part of Jefferies, and also allows them to take comfort in the standards that we expect in terms of compliance, legal, operations, and reporting, given that we invest in all of the managers as well. We seek for these institutional investors, who are particularly allocators, the key allocators to alternatives globally, to think of us as a peer when considering our product offerings.
As you can see, we've experienced tremendous growth in management fees over the last few years. We focus, in particular, on growing this element, the management fee base, as we believe it's the most stable component of our revenue. Performance fees have grown as well, but they tend to fluctuate a bit. Another important characteristic of our model is that a large percentage of our fees are generated from revenue share arrangements, and as such, have low direct expenses associated with them. Sol will talk a little bit more about the difficult fundraising environment in a few minutes, but it's important to note that our ability to support our managers with marketing services and fundraising can further enhance the stability in our revenues. Our performance will fluctuate, both from performance fees and the overall returns on our investments.
We hope to lessen this as our management fee base continues to grow and become a larger part of our overall total. On the whole, we are pleased by the overall performance of the portfolio, particularly when compared with what we believe is a relevant diversified hedge fund index. This positive performance underpins our ability to grow AUM. Not obviously making it easier, but certainly less difficult to raise money when your underlying managers are performing well. And now I'm going to turn it over to Sol to talk about our fundraising efforts, our products, and our priorities.
Thanks, Nick. So to continue on what Nick was saying, we've really invested a tremendous amount into our team. You know, one thing that we bring to the table when we partner with a manager, is a large 25-person marketing and investor relations team that partners with these firms and really helps them raise capital. We've made a big investment in this team. We've doubled the size of it since 2020 to 25 people. We've put people on the ground in Singapore, in Tokyo, in Hong Kong, in numerous places in Europe, and then we cover the entire U.S. and Canada as well.
We're really trying to build relationships with every large allocator across the globe, and to help these managers have the ability to raise money from all of them and make the introductions. The environment in the first half of the year, in general, just for capital raising, was pretty difficult, and it was actually, you know, somewhat frustrating for us. We felt like the underlying managers' performance was actually pretty strong, all last year and the beginning of this year. We were having many high-quality meetings, second meetings, third meetings, and it felt like we were on the cusp of raising a lot of money, but it was difficult to get tickets written. That has changed dramatically since sort of mid-summer.
We've raised about $2.5 billion, mostly in the last three or four months, and the pipeline for the back half of this year and the first half of next year is really excellent. We're starting to see the good performance trickle down into these underlying managers' raised capital. It's worth highlighting a few. Point Bonita is a trade finance business that we incubated here with an excellent manager. He's raised about $1.5 billion. He's got a great pipeline behind him of investors. We're just continuing to put money to work there, and it's been a really good business for us. One thing also worth highlighting here is 42% of our managers still have less than a three-year track record.
And that's relevant, you know, because a lot of institutional investors really want to see that three-year track record. We do a lot of seeding, as Nick touched on, and we're starting to see now we're getting into year two, year three with some of these managers. We think that we're gonna be able to raise some capital for some of them here over the next year or so. The last thing worth highlighting on this slide is, you know, we are working really closely with Jefferies Finance and their platform. We work closely with their marketing team and ours, and it's worth highlighting a $625 million investment that came from ADIA into a large cap BDC, which we're very excited about.
So on this slide here, this really summarizes, you know, our business, and the way that we look at things. We've got a bunch of different categories here, really three main ones. The first one is the multi-manager category. We've got five partnerships in this area. We love these businesses. They're obviously not correlated to the market. They run with very tight-knit exposure. They're diversified with lots of PMs, and they have a tremendous amount of capacity to grow revenue over time. A few worth highlighting here, Dymon Asia is a multi-manager that's based in Singapore and Hong Kong. They've had tremendous performance over the last year. They've been really one of the top-performing multi businesses, and we're starting to see some really good investor interest here.
And then Catenary is a new firm that we just partnered with this year. It's a managed account platform, so a multi-manager business that makes outside allocations with a little bit of a different way of looking at things, and we're really excited about this business and have had some good investor interest. The second category is credit. We've got seven partnerships here, and outside of Jefferies Finance, as you can see on the slide, most of these are pretty new. We stayed out of this space for a while, and then really, you know, made a big push here over the last few years. So most of these businesses are in year one, two, or three. They've all actually started and done pretty well. There's a few worth highlighting here.
We obviously touched on Point Benita before. The second one is 463, which is, his background as a distressed manager, I would say they do what we'd call opportunistic credit now. Had a good track record, just about hitting their three-year mark, and they're coming up on $1 billion of capital. We've got a really good pipeline for them. The last bucket is, the long-short bucket, where we have four partnerships. A few worth highlighting here. J&T is a TMT fund. They launched really right into the timing where the media telecom tech funds really took a lot of pain, and they really differentiated themselves. They had a really good year when everybody else was down a lot.
Since then, they've continued to perform, we've got a lot of investor interest here, and they're also about at their three-year track record and also close to the billion-dollar mark as well. Also worth highlighting, Sthenos, which is a biotech pharma fund that we launched in February of this year with a female portfolio manager. She's excellent, off to a great start, and we're really excited about the pipeline behind her as well. Then in the other category, you know, Monashee Capita is a capital markets business who's been a really good partnership for us. We did a few years ago.
We'd obviously like to see the capital markets come back to earn some performance fees there, but they've built a great business and have really diversified their their base by starting some stuff in credit, converts a bunch of different things. CoreCommodity is a business we've been involved with for a long time, a big contributor for us. And then maybe the last one here would be Manteio Capital , which is a quant fund for us. Again, relatively new, but just recently got a $450 million allocation from a high-quality institution, so it gives them some scale. And to wrap up here, our strategic priorities, right? First, I mean, foremost, we're focusing on growing our third-party fees, right?
We're trying to generate, you know, dollars on third-party revenues and growing stable cash flows. That is our business. That is what we're focused on. Second, we're trying to earn a return on our invested capital. At the end of the day, we are managing a diversified portfolio. We're focusing on uncorrelated returns with tight risk management, and obviously, we're continuing to recycle our capital to be able to grow our business, right?
We put our capital in these businesses, we lock it up for a period of time, and then when that lockup's done, we stay invested, but we tend to take those dollars and use them to basically seed and use, and do new things. And lastly, we continue to add new strategies and grow our business. We've done three partnerships this year. We have another one that's close, so I think we'll probably end up doing four. That seems to be about the right number for us per year in terms of being able to support it the right way from a distribution standpoint. And that's pretty much it. So I'm gonna turn it over to Rich and Brian, and for Q&A. Thanks.
Why don't we take questions in the room, and I think we then have some E questions also.
Curtis.
Love the story, love the capital return, but are you being a little bit careful these days with the buyback, given that, you know, the business is still tough out there, and the earnings level is, you know, roughly the dividend?
I would say this year in particular, the best use of our capital has been to bring in new talent. So we've made a significant investment there, so we've been a little skinnier on the buyback. I would also suggest that-
Okay.
I would, I would also suggest that, SMBC is probably in the market buying our shares right now, so you never want to necessarily compete with two buyers in the stock. I think you could say our stock is trading right around tangible book value again, so it's a pretty darn attractive price. We're also very cognizant of the rating agencies, so we always want to make sure that we're in a good place with them. So I think you can assume we're looking at every single aspect of this, and we care about reducing our shareholder base considerably, but we're going to do it in a prudent manner. And we also want. We're this is trough earnings for us right now, so we're balancing all those constituencies.
And also with the Vitesse spin
Can you fix this mic?
With the Vitesse spin, we'll have returned, you know, my guess maybe $800 million of capital this year, so, you know, not insignificant.
Just a quick follow-up. This is not a question, but it's incredible that you're not a bank and that you resisted becoming a bank. And that's such an
You know something? We've always managed ourselves with the way I think a conservative bank should manage itself. And when you do it yourself, it allows you not to be regulated by the Fed, and allows you to be more practical in terms of our capital allocation, and it's a blessing. And by the way, there are plenty of times when we thought, "Why in the world are we the only ones fighting this fight?" But the broker-dealer model was never really broken; it was just abused. And if you just use it thoughtfully as an owner, and keep your Level Three assets low, and keep your balance sheet understandable, and use your capital to help your clients facilitate business, turns out it's a pretty good business. I think everyone else lost their way, and we're glad we didn't.
James Yaro, Goldman Sachs. So there are so many cross currents in advisory. You know, you gave the helpful guidance, the long-term guidance around, you know, investment banking revenue growing faster potentially than the MD growth. Maybe you could just talk about the cross currents you're seeing today and maybe the outlook for the next 12 to 18 months in advisory.
Yeah. I'm actually not sure we're seeing cross currents. I think we're seeing trends. The bigger trend is in the M&A advisory business, where the backlogs are building, you know, in a more pronounced way. The gestation of that business is long, so you don't see the translation into revenue. You know, there's no question that we saw dialogue pick up in the second quarter, bookings start to pick up in the third quarter. You know, over the arc of life, the average from booking to closing is probably 7 months. In more complex periods, slower periods, that can elongate to 9 and 12 months. We're probably not back to the 7, but something a little north of 7 is reasonable. That would suggest that absent something getting in the way, first half of 2024 M&A closings pick up.
ECM, on the one hand, is more visible, so we point to the fact that, you know, June, July, we started seeing more completions. You started seeing them in the market. You saw a pickup in September. The Arm deal was clearly big. The Birkenstock deal last week, a little more questionable, just in terms of the performance. So I think the IPO market is not as robust or not recovering as rapidly and as broadly as the M&A market. But there's no reason to think that over time a gain, you know, we've got a volatile environment, but there's a lot to say that the window has cracked open. Maybe it's a bit more than cracked open.
Okay. So, you know, I think you now offer every channel of leveraged finance to your clients, you know, and obviously, maybe so maybe you could just talk about the opportunity there and, and the lessons learned you've seen from the past eighteen months, right? You've seen the big banks step away from providing credit. You've seen syndicated markets being shut, this tremendous rise in private credit. What does—what do all those trends mean for your business in terms of DCM and M&A, and, you know, what's the opportunity to benefit from those trends?
The overriding lesson from the impact of rising rates is, and this is something we, you know, we understood going in, I think a lot of folks understood, is that duration in commitments really compounds risk. So the deals that have meaningful regulatory or other requirements for closing put the banks at the greatest risk. That played out because of the relatively rapid rise in rates. You know, there was nothing to be done because the commitment was open. You know, there were one or two commitments where we kind of cheered when they failed at the end because in a way, we got back the, the mark to market. I think that's gonna cause a bit of differential in pricing thinking and a bit of, you know, more focus on structure going forward. So, you know, there is an answer to it.
As far as the direct lending side, as Sol and Nick alluded to, inside of Jefferies Finance for several years now, we've been growing a direct lending business so that we participate. We've said this before, we'll only be able to be more confident when we see another one to two years pass, but the relative market share of direct lending versus syndicated lending is more likely to go down than up as the opportunity for syndicated lending returns.
So in other words, you've had a slow market, and direct lending had a very high market share of that slow market as the market opens up. And right now, the market is actually fairly open. We just don't have the M&A deals to finance yet. So again, when I, you know, we've talked about the green shoots. We agreed earlier today, we weren't gonna throw any more shoots on the table today. But, but the green shoots are still sitting there.
Okay. Just one last one, just a nd I think I ask this one every year, but, you know, any update on your return targets? Any reason why you shouldn't be able to get to that, you know, low double digits, low teens level over the, you know, next couple of years?
Absolutely no reason.
I think one thing you should just keep in mind, as challenging as this year is, it's kind of trough in all of our core businesses for the most part. We've invested heavily, and there's a double positive whammy that occurs when you have some degree of normalcy, and all the people that you bring in, complementary with the people that you have existing, hit the ground running. So it's... You know, I don't want to jinx ourselves, and the world is a crazy place, but if this is as bad as a dislocation year gets for Jefferies, I've been through a lot worse. And so it's setting up, as you suggest, for a very reasonable return environment, you know, over the intermediate and long term.
Okay, thanks so much.
It also, I would say, feels much more in terms of both our competitive opportunity and our momentum. Really, because of the environment, it feels more like what we experienced in the pre-2008 period than what we experienced from 2008 through today. The 2008 through today period had competitors that weren't necessarily going to be long-term competitors lingering. We got rid of a lot of the lingering in the last couple of years, and that's really positive. Again, you won't see the benefit of it till we turn. Where we sit today seems a lot more distinctive the way it did in those periods before the crisis.
Thanks so much.
Chris.
Yeah, Chris, Chris Kotowski from Oppenheimer. Just the slides you showed in the beginning on the growth in investment banking, it almost seems like you did an acquisition, a big acquisition, but I guess it's people coming in from all over the place. But, you know, 70% increase, do you ever worry or I'm sure you worry all the time about control and culture, and how do you manage that? How do you integrate that many people that quickly, without risking something going wrong?
It's easier than you might think because I mean, I'll tell you, when I look at someone's background or resume, first thing I look at is where did they start? And most of the lateral hires that we made at senior levels are people that started at a Wall Street firm. So they may be coming from Barclays, but they started at Lehman Brothers. They may be coming from Credit Suisse, but they started at First Boston or somewhere else on Wall Street. That means a lot to us because then they're of our culture.
We guard the gate carefully. I mean, the best thing we can do when we're hiring experienced people is triangulate like mad, know everything we can know about who they are, and I would say our error rate is lower than it's ever been because we've had a lot, a lot of experience. I also would remind that there are. I'm trying to think of the number, 148, that's between the 212 and the 360. You know, something like 45% of those are internal promotes, so those are people we know well.
I would just add, we know a lot of these people. In many cases, we've been recruiting these people for a very long period of time. I'm looking at some of them right now, out of the corner of my eye. And as I said earlier, it takes a push and a pull. So not only do we know them, the people at our firm know them, and our clients know them. And it's a process, okay? You know, the magic that we have at our company is we have a culture internally that will welcome new partners in to help build a bigger business for all of us. That's a really, really hard thing to do.
Generally, when you do something like this, there's a knife fight right from the beginning, there's turf wars, there's bad behavior, there's all the things that really go against the Jefferies culture. The interviewing process is very broad. Someone has worked very closely with each one of these people over a very long period of time. Quite frankly, the caliber of people that we've been able to get over the course of the last, you know, couple of years, no negative to the people who came before, they're just game changers for us.
It really reflects the competitive landscape that, you know, particularly in the European banks. The European banks were all much, much bigger, healthier, stronger, tougher places than, you know, you know, and more formidable firms than Jefferies was. I wouldn't trade their platform for ours, not for any of them. That's a remarkable thing to be able to say, having been here for as long as I've been here.
Just as a follow-up, have we seen kind of the full expense impact of all these hires? Is this kind of behind us now that-
Hopefully not. Hopefully, they'll be productive. We'll continue to pay them. But the answer, and apropos your point about acquisition, there is an upfront cost to all of this. It's measured in the hundreds of millions, so it's not a crazy amount relative to our scale. And it will sit on our balance sheet and amortize out over a couple of years. So the answer is no, you haven't, but if all goes as it should, it matches up fairly well with the opportunity and the revenue.
Can I just remind you, this is the strategy we've employed the last five cycles, so it's, it's not like this is a new creative thought. It's just incredibly better world for us to be doing it in.
Hey, good morning. Ryan Kenny with Morgan Stanley. So just to follow up on the last question, your pace of MD hiring has been pretty large, up 70% over the last few years. Should we expect that pace continues, or are you happy with where you're at for the next cycle?
We, we would have said no three years ago. So the answer is, you know, a lot would suggest that we're at the tail end of a period of dislocation but never say never. Our needs or our opportunities are much narrower. In other words, we filled out a lot of subsegments, and we filled out a lot of the world in this last three-year period. So, you know, likelihood that it, you know, we take a little bit of a breather over the next year or two. But again, never say never. Our competitors never, never, you know, lack in ways to surprise us.
As we think about the comp ratio. As we think about the comp ratio going forward, your revenue starting to normalize, as you think about hitting your targets, comp ratio go back to low fifties range, high forties range.
Can you repeat the question for the people on the line?
Yeah. The question was whether as the business picks up at Leucadia, will our comp ratio go down, and numbers in the low 50s, high 40s were cited. The answer is that there is operating leverage. You can see that if you actually look at 2020, 2021, 2022, 2023. I mean, you just can see it because you can, you got four different years of revenue levels, and you can see the comp versus the revenue. So you kind of see it pretty clearly.
It's a little masked by the consolidation of merchant banking and some odds and ends, but underneath it, it comes through, I think, fairly clearly. The answer is, with scale, our comp ratio will come down a bit. I'm not sure that it goes down to where you're talking without both a lot of growth and the passage of time, but it'll come down a bit. Again, we've said this before, that, you know, our opportunity is in the upside and the operating leverage. We're not going to drive it out just at the bottom line.
I think one way to think about it is, in 2007, we had a very, very robust revenue number, and Brian and I looked at each other, and we said: "This is great, but it doesn't really feel real." In 2021, we had a very, very great robust revenue number and looked at each other and said: "This is great, but it doesn't really feel real." In 2021, it was more, it was COVID, stimulus, free money, you know, no cost because no one was traveling. Obviously, 2007 was right towards the beginning of the financial crisis.
The trick is, without trying to look at a dial to figure out what the comp ratio has to be, to the second decimal, to get what kind of ROE to the third decimal, okay? It's impossible to do that. Our philosophy has always been: we have to pay our people. Our people can get jobs anywhere. So when you invest and bring people in or you don't, you still have to pay your people fairly. That's just the way it goes. And so you have some sacrifice on margin, some sacrifice on comp ratio, some comp. You know, some sacrifice on ROE. But the goal is, you know, the revenue growth and revenue capabilities, when you get to critical mass and scale in our business, you can see the earnings power these companies can actually generate.
The trick is to get 2007 and 2021 to be sustainable and be real. And, and if you look at our 33-year chart, from a distance, it looks like it's going all the way, right direction. Up close, there's a lot of ups and downs on the way up. This investment that we've made over the course of the last 2 years, when everyone else, it had the knee-jerk reaction to just adjust your numbers, change on the dial to fix your ROE, because you're short, you're short-term oriented, that will never allow you to get to the point where your revenue is sustainable at the higher level.
Everything that we've done the last couple of years, as we've done in prior cycles, has been to get our base to where it could be and then pull it to a more sustainable base. It takes, it takes investment, it takes balance, it takes watching your risk, and it takes, it, it takes time. Having the luxury of time, having a shareholder base that understands it, because we're very consistent, we're saying the same thing today, that those of you who've been around for 20 years, we say the same thing. Having a board of directors that understands it, having an employee base that understands it, having a client base understand, have a rating agency group that under.
That's the hard part. That's the difficult part to balance along the way that gives you the fortitude to avoid the knee-jerk reactions, what everybody else does. Quite frankly, being an owner yourself gives you the conviction because you know we're on the inside of this place. We understand the guts of this place. We understand what makes it work, and we understand this philosophy and this time horizon mentality. That's how you build a durable company, a world-class, durable company, and that's what we're trying to do.
Questions in the room? Okay, some questions from the line. The first from, first couple from Ryan Winrick at Guggenheim. Gets back to the point about MD hiring. How does he know that more MDs translates into more profitable growth once activity picks back up?
You know, history tells us it's so. If we're right that we hired, you know, the people that have the capabilities we believe they have, it actually is fairly straightforward. It's not immediate, but it's relatively rapid. So, you know, the number of MDs is a very good indication, and, and, you know, we have a long history, and people can do the math. We give enough numbers. The productivity per MD holds up. There may even be some upside on that productivity if brand and other things compound in our favor. So the answer is, we think it's there, we think it's straightforward, and, and it'll flow through, and it'll be visible.
His second question is: Can you comment on the uptick in the effective tax rate?
If that reference is to the most recent quarter, that's just an aberration that, with comparatively small numbers and mixes of geography and whatever, you know, the tax rate went a little bit askew. The long-term rate that we've seen over the last couple of years is the rate.
Okay. Question from Jason Aldridge, who is a prior investor. Please provide an operating update on OpNet and HomeFed, as well as your strategic thoughts for each of those on a long-term basis.
HomeFed is ramping up well. The opportunity there is severalfold. One of them, which has really been going on now for a couple of years, is the sale of single-family home lots. The other opportunity is the development of more, self-developed, developed by us, multifamily projects. That ramp up is taking a little bit of time because you have to actually build the multifamily project, lease it up, have it mature. We are 2-three years away from having a constant pipeline, so that we are, every year, starting at least one, if not one and a half, new ones and maturing out one to one and a half new ones. Whether that leads to sales and gains, or whether it leads to some other ideas, such as forming a multifamily REIT.
We have ideas, but I would say HomeFed is very much going in the right direction. Return on equity is still a bit dilutive to us overall. Starts to become accretive to us about 1.5-2 years out, and we see it right in front of us. OpNet remains a little more complicated. The underlying sales of the service haven't lived up to all of our expectations. It's more likely than not that a strategic opportunity will materialize to the point that we'll move forward with it, and it's one of several initiatives that we're working on.
A few SMBC-related questions from Steve Colvin, who is a private investor. At the start of the year, SMBC CEO, Ota, made a statement about wanting to increase its stake in Jefferies to be an equity method investment. Can you discuss how the two companies decided on 15% as a second-stage investment? And in general, an equity method investment has a higher investment threshold. Can you comment on that?
I can comment on parts of it. Ota-san is a great, great, great partner for us and a great leader of SMBC. There was, I think, a moment of enthusiasm that was captured in the Nikkei and sort of traveled around the world. The facts are that when he said that, they were at a 4.9 shareholding. You know, we can now say this in hindsight, we were far along in negotiating what we announced at the end of April, which we knew and he knew. We hadn't actually, at that point, agreed on what the right percentage is. We ultimately agreed that they would increase to a 14.9% position. We've said before that we're open-minded within bounds as to where that ends up. The thought that they might be in a position at some point to take equity accounting isn't a foreign thought, but it's not the current moment.
Okay. A question from Rick Newell, who is a former employee. Please address generative AI as to how you see it being integrated into research and consulting and services at Jefferies.
The broader idea of AI on an institutional strength level is very much integrated. The use of generative AI, we've been running projects, we've been running experiments. As some people may know, the underlying data in it is not perfect, is not fully accurate, is not, in many cases, up to date. So we're being very cautious. We're really looking at what the use cases are and then matching up the capability and seeing if it can accelerate the use case. There's no doubt it will become an increasingly increasing part of our tech stack, but in terms of the newest version of generative AI, it's early days.
Okay. A question from Ed Palmese, who is a private investor. It's sort of a couple of questions. Should quarterly investor calls occur with each 10-Q? Will that help the stock price? I've been a long-term shareholder and frustrated by the stock performance. What if there were stock grants instead of stock option grants and continuing stock buybacks, will that help the stock price? I like what the company is doing and the management, but I'm not being rewarded in the stock price.
We, we're pretty transparent in our strategy. We do stock buybacks. That's generally shareholder friendly. We do RSU grants primarily, that's as opposed to options, for the vast majority. You know, we distribute a lot of capital to our shareholders. I don't think talking about our strategy to more people is gonna make anything better. I think we have to just execute, and I think if you hear the story and you believe that this is a smart plan, you should own our shares, and if you don't, you probably shouldn't own our shares. We think over time, it's been a pretty good investment, at least for us, and we are committed to the long term.
By the way, I should mention that Rick Newell also said, on the prior question, he wanted to thank you very much for managing the company in a good way in these hard times, and, for the generosity and the humanitarian aid you are providing to people.
Next question is from Angus Lang, from Gabelli. "Can you please provide an update on the strategy for the remaining legacy emergency banking merchant banking investments?
I think we did that.
Okay. Then the last question will be from Thomas Sliney at Bay Colony Advisors, which is the same question, so ignore it completely. Thank you.
Any other questions in the room?
I'll just close this up and just say, look, it's hard for me to contain my excitement, but I am excited. The world is a very, very complicated place to be right now. We are prioritizing our people, our clients, protecting our capital. We're investing in the platform. We're mindful of shareholders, and we're mindful of risk. And that's what you get for being partners with us. And we, you know, even though we don't have constant quarterly calls, everyone knows anyone who wants to email or call us, we're always available, and we're always transparent, and we're very proud of the company that we're building, and we're very appreciative of all of you as shareholders or people who cover our company. You're very important to us, and I thank you for coming. I thank you for listening, and have a good day. Thank you.