Bridgepoint Group plc (BPT) Earnings Call Transcript & Summary

[Audio Gap] CEO, to open the presentation.

[Audio Gap] before spending more time on our existing business, with a particular focus on our leading European mid-market private equity platform. Ruth will then walk you through our financial performance and update on guidance in detail before we open for Q&A. Back in March, when we presented our full-year results, I said that we were increasingly confident in the outlook for 2025 and beyond. I'm really pleased to be able to report that we continued this trend of strong financial performance throughout H1 despite continuing geopolitical and economic volatility. Both FRE and PRE are on track with a decent pipeline of exits in the next 18 months across the business, which should allow us to keep returning capital to our fund investors in addition to the EUR 2.6 billion returned in the first half of this year. Importantly, we're increasingly confident on delivering our fundraising target of EUR 24 billion by the end of '26 as a result of strong fund performance, product diversification and the investments we have made in our investor services team, together with a further strengthening of inbound LP interest in the newly fashionable European middle market. Now while today, we're specifically focused on current trading and an update on our existing business, one quick word on the inorganic strategy, not least to save a question later. Although I don't have anything specific to report on in the 4 months since our full-year results, we continue to explore multiple options to develop the business, and I remain highly confident in our ability to deliver the inorganic component of our journey to $200 billion of AUM. So now on to performance. AUM at the end of June stood at $87 billion, 20% higher than a year ago, with fee-paying AUM of EUR 37.5 billion. This drove 11% growth in management and other fees and 22% growth in fee-related earnings once catch-up fees, which were material last year at GBP 30 million are excluded. EBITDA increased by 7% due to the relative timing of PRE recognition and perhaps an overly cautious decision we took to not reflect the uplift in the Constellation share price since the announcement of the Calpine sale. Looking on a 12-month basis, though, PRE is up 40%. In terms of fundraising, overall, we have now raised over 1/3 of our EUR 24 billion target. Having closed BDC V and BG II earlier this year, we have now started the pre-marketing phase for BE VIII, with a formal launch to follow post the summer break. We continue to expect it to become fee-paying in the second half of '26, but not be fully raised until '27. And so a full fund is not included in the EUR 24 billion. I'll update you more on progress at the full year. Diversifying sources of capital beyond the institutional LP investor base is a key opportunity, and we expect to launch our wealth product generations on the 1st of October. As a reminder, this will be an open-ended evergreen private equity vehicle that will deliver our flagship strategies to individual investors and will be distributed principally through regionally focused private banks. We've made good progress with fundraising for ECP VI, which became fee-paying in May and has already received closed or fully approved capital of around half its cover number. ECP is also raising its core plus Evergreen product, which closed on the significant anchor investor announced in March and will initially attract further institutional capital before entering the wealth market. In credit, BDL IV has made strong progress, and we've commenced fundraising for Credit Opportunities V, which is expected to start investing and charging fees shortly. In our syndicated debt strategy, having priced CLO VIII in March, CLO IX is now in warehousing and is expected to price later this quarter. I've talked previously about the investment we've made in our investor services team, our fund investor services, that is. Scale has enabled us to do this, and we have resources to afford the investment in the sales team. But importantly, we now have the diversification of product to keep them all busy. Since IPO, our client services team has more than doubled, with 30 new people joining, including 16 senior colleagues focused solely on coverage. Perhaps more strikingly, where not too long ago, the team was based in 3 locations, it is now in 11 globally. The impact of that growth is best illustrated by the fact that the number of meetings we held with LPs in the first half of '25 was 6x the number in the first half of 2022. Looking at the most recent fund from each of our business units, we're beginning to see the benefits of this investment in sales coverage, not just accelerating the number of meetings held, but converting those meetings, too, with a significant uptick in both the number of new investors to the platform and the number of existing investors coming into a new strategy, a trend that given the current pipeline is set to continue as we build out ECP VI and then launch BE VII after the summer break. So, I do feel we are in good shape, both strategically and from a fundraising perspective. Not a surprise as we have 3 great businesses. So, I wanted to take a bit of time now to look at each of them in turn. Let's start with credit. 4 years ago at IPO, the credit business had 2 strategies and AUM of just over GBP 7 billion. Since then, we've doubled AUM to over GBP 14 billion as a result of launching and scaling the CLO business to over GBP 3 billion and increasing deployment and fund sizes in direct lending. As a result of operating leverage, EBITDA has increased 7x and EBITDA margin more than tripled over this period. The credit team of 70 operates at scale and is based across 7 local offices in Europe, plus our office in New York. The team is part of and so draws on the industry knowledge and network of our firm-wide sector teams and benefit significantly from our on-the-ground origination capabilities across Europe. That scale is reflected in the growth of the number of portfolio companies in which the credit business has invested, which now stands over 260. As part of the continued diversification of our credit investments as the business grows, the credit opportunity strategy has been looking for uncorrelated credits. And in the first half, it made our first asset-backed lending commitments, an area we'll be looking to grow further going forward. Importantly, the credit team has established a strong track record of performance, with the direct lending strategy having invested around EUR 9 billion so far in middle-market European companies and delivered targeted performance across its first 3 funds. Now, some of you will know, I'm always slightly hesitant about the next stat, but it continues to be true. The strategy has experienced 0 losses to date. This backdrop has set the team up well to raise our fourth direct lending fund, which now stands at EUR 2.2 billion and is on track to very comfortably exceed the EUR 2.9 billion size of the predecessor fund. Turning to ECP, our infrastructure business. It is in a sweet spot given the continued strong investor demand for exposure to a sector whose growth trajectory is underpinned by several megatrends, most noticeably electricity demand growth and a corresponding shortage of power generation supply in the U.S. Aggregate demand growth is expected to increase by 1.5 to 2x by 2040 due to the onshoring of manufacturing, electrification of transportation and additional data centers. The extra capacity is expected to come from a mixture of natural gas and renewables, driving corresponding investments in carbon capture of gas storage. I've said a lot about ECP since the transaction, and the summary today is that the business is doing exactly what it should be doing, making good progress in fundraising for ECP VI and preparing to invest a significant proportion of the anchor capital for the Evergreen product. There is a strong pipeline of deployment, multiple exit processes targeted over the next 18 months, and we expect to close the Calpine exit later this year. There's been a lot of talk about the impact of the recent U.S. budget on renewables. Now it has passed, the impact is less than feared and there is no impact on renewables, which are already operating or on new developments started pre-2027. Given this and the diversified nature of investments across energy transition, we believe ECP's overall portfolio remains well positioned in the new environment. Now, I thought I'd take a few minutes to talk about the fundamentals underpinning our private equity strategy and why we can build resilient portfolios, which deliver strong returns through cycles. I thought I'd use the next series of slides, which are taken from our fund marketing deck to illustrate the story. There are 3 elements to our strategy: disciplined investment, creating value and then exiting. And in each of them, the middle-market offers the opportunity to drive returns through cycles. In short, we use our market position to buy well, create value and then sell well. And I'll talk to each of them in turn in a minute. But before I do, a quick recap on where we are today. With the transactions we've recently announced, BE VI is at 70% DPI, which puts us in a standout market position ahead of the launch of BE VIII fundraising. BE VII is 70% deployed, right on track with 1 year to go until we expect to transition to BE VIII and a strong near-term pipeline of opportunities. Now, I know there's been a lot of chatter in the public equity market about the performance of the '21 and '22 vintages in the wider PE industry. So, I'd like to address that here. Clearly, a lot of capital was raised and deployed at pace in those 2 years, but we are careful not to buy at prices where good companies cease to be good investments. As a result, I'm pleased to say that across our PE funds, BE, BDC and BG, these 2 vintages are currently held at average money multiples of 2.1 and 1.5x, in line or perhaps slightly ahead of the value creation profile you would expect to see at this stage of their investment cycle. And importantly, we maintained our vintage discipline in BE VI as deployment was broadly evenly spread across the 3.5-year investment period. Okay. So with that established, I'll now turn to why you should be excited about the middle market. If you look at the global private equity market, almost 90% of the deals are below EUR 1.5 billion of enterprise value, the part of the market that we cover. We track all the opportunities we generate, and we look at around 3,300 private equity deals per year across the 3 platforms. The scale and depth of our origination machine, which is one of our key strengths, is very difficult to replicate. This scale of opportunity gives us the optionality, and it also means that deployment is not a limiting factor as we continue to grow our fund sizes. We use the origination process to develop real conviction about the assets that we want to bring into our funds and make sure that we're acquiring them at fair prices. The evidence of this can be seen when you compare our entry multiples in our equity business, with those of the relevant transactions over the previous decade. As an example, this slide shows Bridgepoint Europe VI. Firstly, we're consistently buying in the bottom 1/3 of the long-term sector valuation ranges, as shown by the blue lines over the shaded multiple range. And you can see how these investments are well spread across the vintage years over the deployment period. It's also worth noting that we're doing this with relatively low leverage for the private equity market at least. In this fund, the average leverage on entry was 4.9x, meaning that revenue and EBITDA growth are key to driving overall returns. Operating in the middle market, once we've bought well, we typically have more levers for value creation. When we invest in a business, we have good products, good services, and it will be in a high-growth niche, but it won't be perfect. And as we scale them, we bring best-in-class capabilities, and we do that in collaboration with the company and its management team. Usually, on entry, a portfolio company would have a leading position in 1 or 2 countries, and we can then expand the business into other European countries or we can take it to the U.S. or to Asia, with help from our offices in New York and Shanghai. We do a lot of bolt-on acquisitions for our portfolio companies. In Bridgepoint Europe VI, there were 18 platform investments, but we've done add-ons worth EUR 3.6 billion, often using our low-entry leverage to fund these through incremental debt, further enhancing equity returns. Overall, this increased control over value creation means that fund performance is more driven by microeconomics than by macro, which leads to consistent performance through cycles. So turning to exits. Here is a version of the chart you saw for BE VI. This shows the outcomes for our 2 most recent mature funds, BE IV and V, plus those exits from BE VI, which have already closed. This chart shows exit multiples as red lines. You can see that we are almost exclusively exiting at a higher multiple, reflecting value creation in the business through growth in revenue and margins and largely independent of cycles. It's a function of our added value, not luck. Coming full circle on the depth and resilience of transaction volumes in the middle market, we have a track record of delivering exits through cycles. And we are really seeing the benefit of that at the moment as we're able to carry on returning capital to our fund investors. When it comes to exiting, because of the size of our companies, we're not dependent on the IPO market. Actually, aside from a couple of reverses during the short-lived SPAC boom, we've done only one IPO in the last 20 years, and that was back in 2007. We sell to trade buyers, to larger PE funds and sometimes to trade buyers backed by large PE funds. As an example, let's look at our most recent sale, Kereis, which we have sold to a large cap sponsor. We invested well at an entry multiple of 9.3x EV at an enterprise value of EUR 1.3 billion. Successful value creation, notably from 25 bolt-on acquisitions, resulted in a 9% EBITDA CAGR during our ownership. This is actually lower than our average. We still exited at 2.2x money multiple for a fund with a capital return of going on for EUR 1 billion to fund investors. This is just the most recent example of our ability to exit through cycles. And with that, I'll hand over to Ruth. Ruth?

Thank you, Raoul. Good morning. I will take you through our financial performance in the first half of '25 and then the guidance for the full year, which we are reaffirming this morning. I'll present underlying results for the group as a whole, assuming ECP had been in the group for the full 6 months of the first half of last year. Fee-paying AUM increased by 2% on a reported basis, which would have been 5% without the headwinds of FX when converting ECP's fee-paying AUM into euros. Fundraising of EUR 8 billion since mid-'24 leaves us well placed to reach our target of EUR 24 billion by the end of next year. Underlying FRE was GBP 76 million, and FRE margin of 37%. ECP VI started paying fees from May, and this will drive a step-up in income and margin for the full year. EBITDA was GBP 128 million with a margin of 48%, and in line with our guidance for the split of PRE in year to be weighted towards the second half. We have recognized carried interest from BE VI for the first time this half year and have a good pipeline of exits for the next 18 months. Lastly, we are all well aware that the low level of trading liquidity in our shares is an issue for some investors. We are very focused on this and are exploring options to increase the free float and therefore, trading liquidity of our shares. We intend to engage with our major shareholder groups to discuss how best to achieve this, which could include measures such as a secondary offering of shares. There can be, however, no certainty as to whether any action will be taken in this regard. So, my summary for the first half is that we have delivered performance entirely consistent with our full-year guidance despite concerns in some quarters about the delivery of PRE. Assets under management grew to $86.6 billion. Over the last 12 months, we raised a total of EUR 7.2 billion across our strategies and delivered EUR 8.6 billion of divestments. Valuation gains in our funds added a further EUR 9.9 billion. Finally, FX was a headwind of $2.1 billion. And consequently, AUM finished 10% ahead of half 1 '24 at EUR 73.7 billion. Turning to fee-paying AUM. In the last year, we raised EUR 4.3 billion and deployed EUR 3.3 billion of new fee-paying capital across our credit strategies. Set against this, reductions in fee-paying assets from the sale of investments and return of capital totaled EUR 5.9 billion, and FX represented a headwind of a further EUR 1 billion. So by the end of June, fee-paying AUM had increased by 2% to EUR 37.5 billion. We've included constant currency reporting in the interim accounts for the first time so that you can track the underlying performance of the business, excluding the impact of currency swings. We enjoyed good deployment across all investment strategies since year-end. BE VII has committed 70% of its capital across 14 investments. 12 of these have been off-market or bilateral processes, drawing on our network of sector teams and local offices to identify and convert opportunities. The most recent investment was Safe Life, the global leader in the distribution of defibrillators based in Stockholm. BDC V started investing in Q4 2024 and is now 25% deployed, having bought 2 platform companies, Finzzle Groupe, a leading wealth management consultancy in France; and NMi Group, a pan-European provider of independent advisory, testing, inspection certification and calibration services. Credit has continued to deploy well, with EUR 2 billion deployed across direct lending, credit opportunities and the CLOs. With BDL III over 90% committed, we have now started to deploy and charge fees for BDL IV, where fundraising continues with good momentum. And lastly, in infrastructure, ECP V is now 75% deployed, the level which allowed ECP VI to become fee-paying in May 2025. As well as strong deployment, we have continued to return significant amounts of capital to our fund investors. In PE, we received competition clearance for the sale of Dorna and also agreed the sale of Kereis. EUR 1.1 billion was returned to BE VI investors by the half year and combined with a further distribution shortly, capital returned to them will be over EUR 2 billion so far this year. These returns of capital clearly position us well as we embark on the next cycle of fundraising in BE after the summer. ECP returned EUR 1 billion to its fund investors, while credit returned EUR 0.5 billion. The Calpine transaction remains subject to regulatory approval and is not included in these figures. Calpine would add a further $1.4 billion on completion and then an additional roughly $6 billion once the shares are out of lock-up and sold, subject, of course, to the share price at that time. Ultimately, fund performance underpins our business model and allows us to raise successor funds. And across our 3 verticals, our funds continue to perform strongly. Valuation uplifts in our private equity funds were trading driven, with 92% of unrealized valuation multiples either flat or reduced over the period, which really does underscore the strength of the earnings performance within our portfolio. Our management fees are stable. They're contracted locked-in revenues and our current portfolio has an average fee of 1.18% charged on funds with an average life of over 9 years. We currently have visibility over around 85% of fee income in '25 from funds already raised. Excluding catch-up fees, which were material at GBP 30.4 million in the first half of 2024, total management fees and other income increased by 11% and exceeded GBP 200 million in the half year for the first time. The exits and associated capital returns and fund performance I've just talked about, drove PRE of GBP 57.6 million. This positions us well to deliver our PRE guidance for the full year of around 25% of total income, subject, as always, to the recognition of further carry in BE VI and the closing of the Calpine exit. As Raoul mentioned earlier, given that we have not yet received all regulatory approvals, we have held the value of the Constellation shares at around the $255 per share level they were at, at the announcement of the transaction. Turning now to EBITDA. We are on track to deliver full-year EBITDA margin in line with our guidance of the lower end of the range of 52% to 55%, as we continue to expect PRE to be around 2/3 weighted to the second half of the year. Capital allocation for us is relatively straightforward. We support organic growth. We co-invest in our funds. M&A is on the agenda, and then there are capital distributions to shareholders. In the chart on the right-hand side, you can see how our dividend policy has resulted in a growing dividend per share each year. And in the table below, you can see the increase in the aggregate amount of capital returned to shareholders, with the increase in fully diluted share count when the ECP transaction closed in 2024. You will have seen that we have put a further buyback program in place last month. We continue to feel that the balance between attractive growth opportunities for that capital versus buybacks has moved in favor of growth opportunities. However, we want to have the flexibility to buy stock in the event of significant market dislocation as we saw with Liberation Day. Lastly, I've included a chart of the lock-up expiries relating to both pre-IPO shares and OP units issued as part of the ECP transaction. This assumes the maximum possible number of ECP-related restricted share units is issued and that the maximum possible earn-out is achieved at ECP, neither of which is yet certain. So, this is the fully diluted picture. As you can see, a further 81.3 million shares will unlock on the 26th of this month and then a further 250.2 million shares and share equivalents next year. This will, of course, be reflected in index weightings and in time as and when colleagues choose to sell in the free float. And by the end of 2029, the great majority of our share capital will be freely tradable. Finally, let me talk you through the guidance. We are increasingly confident in raising EUR 24 billion by the end of 2026. That will be split roughly evenly between strategies. And where previously, we had thought there might be slightly less in credit, recent fundraising experience suggests credit will play its full part. While we expect BE VIII to become fee paying in mid-'26, we expect fundraising for it to continue into 2027. So as Raoul said at the outset, the full amount for BE VIII will not count towards the EUR 24 billion target. Continued investment in the platform capabilities necessary for growth will result in expenses growing at a high single-digit percentage each year. We continue to expect PRE to be around 25% of total income in both '25 and '26. As always, this is a matter of timing, and there are exits, which may fall into Q4 of this year or Q1 next year, notably Calpine as well as the timing of further carry recognition for BE VI. We expect our EBITDA margin to be in the range of 52% to 55% in '25 and '26 before increasing to 55% to 60%, in line with industry peers by the time that we reach GBP 200 billion of AUM. And with that, let me hand you back to Raoul to conclude before we take questions.

Great. Thank you very much, Ruth. Briefly then to wrap up, the business has continued to deliver strong financial performance in the first half, achieving what we said we would do, a trend we expect to continue. As we speak to you today, we expect investment activity to continue to be robust across deployment, realizations and PRE in the second half of the year. And in an uncertain world, our fundraising is on track, and this reinforces our confidence in achieving the target of EUR 24 billion by the end of '26. Our product set, market-leading European PE, credit and value-added U.S. energy transition positions us well to benefit from the opportunities in the middle market as we continue on our journey to the $200 billion of AUM I've outlined in the past. And now with that, we'll go to Q&A.

[Operator Instructions] We'll take our first question from Arnaud Giblat of BNP Paribas Exane.

Great. I've got 3 quick questions, please. If you could start with the exit of Kereis. I was wondering, given you're quite far up the process, what should we be thinking in terms of uplifts on carrying value? And generally, if you could expand that question to your broader exit pipeline. Are you expecting to see some decent uplifts as you have had in the past? My second question is on value creation. So, MOICs are up 0.1, 0.2x over the period. I heard you on the -- on new holding multiples flat, I was just wondering if you could quantify the value creation in percentage terms of the portfolios and how the EBITDA growth in the underlying portfolio companies are moving? And my final question is on BDC V, a 25% deployment in the space of 6 months. I'm wondering how we should be thinking about the pace of deployment there? Is there a [ sourcing ] scenario where you could have a very fast deployment and come back quicker with the [ BDC V ]?

Okay. I think I got all of those. It wasn't the best sound. Let me just answer the third one first, BDC. I wouldn't assume that we invest that fund quicker than we have alluded to in the past. We're very careful in our sort of pace of deployment. I mean, it's reasonable to assume that the BDC V fundraise has got off to a very good start, but it's lumpy. Deployment in our industry is very lumpy. And I wouldn't assume that the fact we've committed 25% relatively quickly means that we want to accelerate the pace. I think that wouldn't be worth assuming. Exits, if you take the 5-year view of the increase in multiple on exit versus latest holding valuation, the valuation is about -- it's in the 30% increase. Some assets are a lot higher than that. Some assets are lower, and that partly depends upon the nature of the exit. It also depends on how long it's taken to get through competition clearance and various other things. I don't think we would assume looking ahead, that sort of 30-odd percent increase will be maintained, but it depends on it. It's asset by asset. Value creation, I think we've said historically that the material component of the return that we deliver in our fund comes through EBITDA growth as opposed to deleveraging and what have you. But we also do benefit on exits, as you've seen from the chart that I showed in elements of EBITDA multiple increases on exit. And that's a function, as I've said, of us taking a business and making that business better and more valuable during the time of our ownership. If you look at the underlying valuations in our portfolio, we tend to be more conservative on multiples that we used to value in the portfolio as opposed to what we then end up achieving when we exit, and that's part of the reason for this sort of delta on exits of the 30-odd percent. So, I think the growth in valuation and value accretion tends to come from EBITDA or more than anything else within our sort of unrealized portfolio, but we do tend to get multiple increases on exit.

We'll take our next question from Nicholas Herman of Citi.

I hope you can hear me okay. It's better this time.

Yes.

Yes.

3 questions from my side as well, please. So the first question is on M&A. I guess, given you opened your comments on growing the platform, I'll start there as well. It sounds like you're incrementally more optimistic on doing deals now. And so I guess, is that true? Is that a correct interpretation? And which asset classes look most interesting at present? Second question. You've been very comprehensive on the guidance, but I think there's one thing missing here from my perspective, which is partnerships. It's been almost a year since you announced the EUR 50 billion partnership with KKR. And I think you more recently announced a EUR 25 billion partnership with ADQ as well. So, can you please give us a sense now how you expect those partnerships to translate into fund deployment for ECP VI, as well as fee-paying SMAs, co-investments and the like, please, for the business? And then finally, I guess, a related -- somewhat related question on ECP. I guess the perception in the market is that the $5 billion cover figure is conservative, especially given ECP is in clearly a very attractive spot and with prior funds performing very strongly. Equally, on the flip side, investors appear to be reducing their U.S. overweight positions as well. So, I guess in that context, how has fundraising progressed versus your expectations? And are you and Doug still as optimistic on ECP VI as you were previously? And I guess, finally, when do you expect to announce a hard cap?

Right. Shall I tackle the first and the third, and you do the partnership one in the middle?

Yes.

So, I'll do the third one. I mean, Doug is not here. So, I'm not going to get the exuberance. I think we feel very confident about ECP and where their fundraise is sitting. Within a world where there has been an element of shift with investors looking to deploy capital outside the U.S. I think that doesn't mean there isn't an awful lot of capital wanting to be deployed in the U.S. and ECP and in the energy space, in particular, and everything to do with electricity in the States in particular, it is still a very attractive space. They've closed on or will relatively imminently have closed on half of the cover number. I think that is on track or perhaps slightly ahead of where we had anticipated being at this point in time on that fundraise. And there is a very strong pipeline of interest that they're talking to, which will be closed during the second half of 2025 and into 2026. So, this fundraising will go through until probably this time next year. As you'd expect, there is a varying degree of excess optimism around the organization about where it's going to land at the end. We are being relatively cautious within the business about where it ends up, but we are confident that it will be a very successful fundraising. M&A, I mean, I think we've always been pretty -- I've been pretty confident for a while. And I think I said this in the Capital Markets Day in October. I'm confident that if you take the medium-term view and you look at what's happening in our industry and you look at where our business is placed within that industry and the story that we have around being the sort of added value alternative player and with a very collaborative embracing culture, as evidenced by the ECP transaction, how those guys have come together with Bridgepoint and we're now as one. I think this is a very attractive home for other alternatives -- added value alternative platforms to want to join as our industry consolidates and grows. So am I more confident than I was? I wouldn't have said so because I was pretty confident before. Where would we look? Well, there are areas around expanding the existing platform that we have. So we're in private equity and private debt and infrastructure, changing the geographies that we're in, infrastructure in Europe, whether we do anything in private equity in the U.S. at some point in the future. Our credit business has got plenty of scope. I mentioned, I think in my sort of introduction just now that asset-backed lending is an interesting place for us to go. So, I think there's plenty of places to both geographically and expanding the product within the existing 3 verticals. And as we said consistently, if we could find the right platform to go into real estate or secondaries, we'd be very keen to do it. So hopefully, that answers that one. Partnerships, Ruth?

Partnerships, yes. So the way that we think of the 2 partnerships that have been announced are as origination vehicles really. So let's take the KKR example. KKR have experience around data centers. We have the infrastructure experience, and we go to market together to source really interesting large projects, particularly with the hyperscalers. We then fund those projects through a combination of KKR, ourselves and our part of the funding will be through, as you understand, the flagship fund and SMAs. Now the reason it's not yet really clear in guidance is that I would call this the year of developing those partnerships, developing those projects. These are big, big projects. They're billions of pounds. They take time to put together. They take time to really understand the regulatory environment that they're in. So, I would imagine that by the end of next -- the next time we speak to you, we will be clearer, but it is -- we will fund them through the flagship with a number of SMAs. I guess your question to me is when, how many and what size? And clearly, we will give you more as we get a little bit more clarity ourselves. Just to say or to note, the ECP team announced the early stage of a project. Tuesday, wasn't it in Pennsylvania? And the first sort of KKR-related project will be announced imminently. So, we will start to be able to give you more flavor around this shortly.

That's helpful. I mean just -- obviously, sorry, just to say on M&A, you talked about infrastructure in Europe, asset backed. I mean, some of this stuff, I guess, could also be done organically as well, whereas clearly, you're not in secondaries, you're not in real estate. It seems like the real estate cycle is starting to turn as well. So, does that make those -- I guess -- so presumably, some of the -- I guess, infrastructure in Europe could be more of an organic action. So is that fair? Is that kind of the right interpretation? And therefore, if you're going to be buying more the real estate or secondaries part with white space? Or is that the wrong interpretation of your comments?

I think your comments about ability to do things organically and inorganically is true. There's always an issue in our industry, we are doing something organically is the pace at which you can grow something. It tends to take longer. And it also -- but the inorganic becomes a function of the availability of really interesting platforms in which to partner with. And I think the way we look at it is we have an open mind about what's the best way to deliver. And it can range from an inorganic acquisition, if we find a really interesting platform through to a team lift through to just recruiting individuals and doing it organically. So, perhaps I wouldn't be quite as black and white as you've sort of alluded to in terms of which bit you do, which bit you could do either in anything.

We'll take our next question from Angeliki Bairaktari of JPMorgan.

Just 3 for me, please. So first of all, you sounded quite optimistic about the pre-marketing phase for Bridgepoint Europe VIII. With Bridgepoint Europe VII at EUR 7 billion last year, what is the aspiration for the size of BE VIII? Then secondly, can you please quantify the extra carry you would recognize today if you were to account for Constellation's current share price, which I think is about $300. And lastly, with regards to BE VIII again, I noticed that one of your competitors, CVC in the large cap space, obviously, but they have repositioned their growth funds to now focus on European mid-market. Is that at all a concern for you in terms of sort of competition, both for fundraising and also in terms of origination opportunities?

Okay. We're glad you asked that one. So let's take the third one first. I mean, I think the mid-market is a very large part of the private equity market. I think, as I said 90% of transactions sit within that EV range that we cover. We've been doing it for 30 years plus. And one of the stats that Ruth also mentioned in her piece was that sort of 12 of the 16 transactions in the latest fund have been off-market. So, you can only achieve that if you've got deep expertise across Europe on the ground and expertise specifically in the middle market because it is a different origination structure than it would be in the larger buyout space. And that's why our industry tends to be structured with these differentials based on size. The routes to market are different and the assessment of businesses is different. So, we've got the best origination platform across Europe, specializing in the space. And it's a very deep market, and we're an individual stock picker. So, I think I would look at it more the other way around that actually there is real investor appetite to want to invest in the European middle market, and we're the natural place to come. The other thing I would say in our -- there have always been tourists entering our space. It's been going on for years and years and years, and they tend to come and go. The other interesting bit is although -- and I'll talk about BE VIII in a minute. We're feeling reasonably confident about where we sit and reasonably confident in our fundraising. But the fundraising world is still really difficult. There hasn't been a sudden turning on and off the tap. It is still a difficult market to raise capital. And whereas there may be people entering our market, there are also quite a few funds who are really struggling to raise capital. And so as well as people coming into the market, I think over the next year or 2 years, we are going to see various GPs coming out of the market because they're unable to raise capital. So it's not just a question of who comes in, it's also who comes out. But either way, we feel we're really well established as the go-to place in that market. BE VIII, we're feeling confident, but I'm also -- the confidence also makes me slightly that we get overly confident in it. As I said, the fundraising market is still. We're exceptionally well placed. And there is a real feeling that -- and I think one of the other questions came out earlier about the move away from the U.S. We're definitely seeing appetite to invest across from sort of global LPs to want to commit capital into Europe and into the mid-market. So, we're feeling quietly confident about where we are in that fundraise. But we've got -- it's ahead of us, and we haven't started. I'm not going to be drawn on at this point on where we think it's going to end up. It's too early. I don't want to create a sense of hubris in the organization, to be perfectly honest. As I said in my introduction earlier, we'll be in a much better place to talk to you about how it's going and where it is when we come back for the full-year results. Third question, do you want to?

The third question?

The Constellation shares. That's definitely in your capital mind.

I might just expand a little bit rather than give a completely short answer. Just as a reminder for those listening that the Constellation deal was clearly huge, but the exposure of the PLC to Constellation, we were only exposed to 10% of the carry across Funds IV and Constellation co-invest. So it's not as big for us as -- I mean, it is big, but it's not as big as it could have been. But in terms of your direct question, how much more PRE, if we took the valuation up to $300 per share, it would be $20 million roughly.

[Operator Instructions] We'll take our next question from Nicholas Herman of Citi.

I just had 2 further questions, but I wanted to leave in late...

I thought you would sneak in before. Go on. Go on.

2 more technical questions, please. On Page 42 of your deck, it suggests that BE V is no longer fee paying. And I guess, can I just ask why? Because I appreciate every fund is on a case-by-case basis. But I noted that BE IV, I think, was fee paying until 2023, and that was a much earlier vintage. So, 10 years or thereabouts didn't seem like -- I guess, that seems it's a fund maturity, but I guess I would have thought that you would continue to charge fees a little bit longer with -- given some extensions and so on. So, just kind of curious about that and what we should read into future -- into other funds that also extend beyond 10 years? And then the second question was, I was just looking at your MOIC progression across your strategies, and it looked like -- and if I got it right, that the strongest value creation came from the ECP funds. And I guess I was just kind of curious if you could elaborate what parts of the portfolios drove that, please? I mean, I guess I appreciate that things have not been as bad as feared in renewables. Clearly, ECP is not just renewables. But I guess it just seemed a bit -- I was a little bit surprised that given at the time that when U.S. valuations have been a little bit more under pressure. And so just kind of curious on your thoughts of why -- yes, what has driven such strong increases in MOICs there and the outlook, please?

Yes. I think on the fees, I think it's probably reasonable to assume that fees cease to be charged once a fund gets to its 10th anniversary of its final close. If you go back -- and these are all very long vehicles, aren't it, because they're obviously 10-year vehicles. They're all 10-year vehicles. You have extensions. You can run things into liquidation rather than extending them. If you roll back pre-GFC, funds had much more flexibility about the length of time they could charge. I'm not just talking about our funds, funds generally in our industry had much more flexibility around what you did and how you charged fees once you got to the end of the 10-year life of a fund. As with all commercial negotiations, things change over time and ability to charge fees at the back end of a fund has become much more of a focus or became much more of a focus for LPs in the discussions and the negotiations post the GFC and as you look through the previous decade. So, I think it's a reasonable -- across the industry, it's a reasonable assumption that once you get beyond 10 years, the probability is that you won't be charging fees as a general principle. What tends to happen when you get to that point as well, though, is that you are likely to have a fund if you've been successful at least, that is pregnant with carry and is exceptionally pregnant with carry. And therefore, there's still a real alignment and motivation on the part of the manager to continue to maximize the value of those funds and LPs realize that, and that tends to be what the commercial negotiation is.

And just to clarify, that's across your private equity funds, all the private equity funds, so from BE down to BDC and BG as well as ECP and...

It will depend on individual fund-by-fund negotiations and discussions. My comment is more aimed at the wider industry, to be perfectly honest, as well as us.

Okay.

Value creation in ECP.

In ECP.

I suspect the chunk of that is going to be the recognition of the Calpine exit as a sort of a material number within it. Where do they sit in their valuations? I think they are a diversified portfolio. Renewables is a part of it, but it's a reasonable part of it, but it's by no means the majority of what they do. There has been some element of valuation compression because of perceptions about renewables in the U.S. have brought multiples of renewables assets down a bit. And so within -- if you look within ECP, there will be an element of valuation multiples coming off in the part of their portfolio that's really part of renewables. It's interesting. And if you look at the -- now that the great big bill or whatever it's called, has actually been announced, the worries that people had about renewables have not quite manifested themselves in it. And there is -- and any -- the existing subsidies will be maintained for any project that is sort of started before some point in 2027. So, there is a sort of quite a material off-ramp. And then once you get beyond that, I think the market will recalibrate in pricing. And our ECP friends feel that looking forward, there are real opportunities now to invest in the renewable space. So, I think there's been some element of -- there will be some element of multiples coming off of it in that, but it's been more than compensated by other bits. And what you'll also see what's happening in the U.S. and the valuation of electricity assets and power generation assets have gone up. And you talked to Doug about it. He said he spent 40 years in his career without any base growth in electricity. And all of a sudden, electricity demand is going through the roof in the U.S. and that's manifested itself in the investing opportunity. It also manifests itself in the pricing of energy assets, and they're benefiting from part of that in their portfolio, too.

There are no further questions on the Zoom webinar. We will now address the questions submitted via the webcast page. I will now hand over to Adam Key to read out the written questions.

The question comes from Smaranda Morosanu of JPMorgan. Can you provide some color on the potential avenues you're exploring to improve the liquidity of the shares?

Okay. Do you want to do that one, Ruth?

Yes. I think since IPO, we've consistently overdelivered what we said we were going to do. I think we look at our share price and we hear a number of concerns from our investors around the level of our share price and also the volatility in it, which is due to, we believe, the very thin free float that we've got. Clearly, as we unlock, there are more shares coming into the market. I think at the moment, we feel it would be a good time to talk to all of our shareholder groups to figure out what they would like us to do. And that's all that we're really announcing at this moment. We haven't got a particular plan. But over the next few months, we will talk to our shareholder groups about trying to resolve this particular issue.

Adam, anything else? No? That's it. Okay. Well, thank you very much, everybody, and we'll see you in a few months' time. Thanks.