Eurazeo SE (RF) Earnings Call Transcript & Summary

Good morning. Thank you for joining this call. Christophe and I are pleased to welcome you to our 2024 Full Year Results Presentation. Our presentation will be in 3 parts. First, I will share with you the financial and non-financial highlights for the year. Second, Christophe will focus on fundraising, commercial dynamic and asset rotation. Third and last, I will detail our financial results. We will then be available to take questions. 2024 marks the first year of execution of the midterm plan we have presented to investors back in November 2023. We have made progress in the key pillars of the plan. First, asset management is growing dynamically. Fundraising is up 23% relative to 2023 at EUR 4.3 billion, which is above our guidance of EUR 4 billion. Fee-paying AUM from third parties are up 12% and management fees from third parties are up 14%. Second, we continue to improve operational efficiency as our FRE margin gained 110 basis points to reach 35.5%. We are already within our 35% to 40% medium-term guidance. As a result, contribution from the asset management activity is up 20%. Third, asset rotation has picked up as we announced. Asset management exits volumes overall tripled and more specifically, balance sheet realizations doubled to reach 17% of the prior year net asset value with an average upside of 10% compared to our last mark. Combined with a strict discipline in balance sheet allocation to the funds, as you can see in our numbers, this means that we are moving ahead towards transforming our business model. Fourth, our portfolio remains robust. We recorded another year of strong underlying performance of portfolio companies, which led to broad-based value creation in 2024. This has been nevertheless offset by the write-off of a limited number of legacy assets in buyout and further cleanup of the smaller lines in the growth equity portfolio. We should see an improving trend in balance sheet value creation going forward. As announced during our Capital Markets Day, we are committed to increase return to our shareholders through dividends and share buybacks. This is consistent with our commitment made back in November 2023. In 2024, we increased our ordinary dividend by 10% to EUR 2.42 per share and significantly increased our share buyback program that has reached EUR 210 million. In 2025, we proposed another 10% increase in the ordinary dividend, and we doubled today our share buyback program, which is set at EUR 400 million for the year. All in all, returns to shareholders will increase by 50% in 2025 relative to 2024 and will represent twice the amount we returned in 2023. As you know, we follow a 2-pronged strategy in sustainability, a mean at top rankings in sustainability and striving for leadership in impact investing. Eurazeo continued to be recognized as best-in-class on sustainability, maintaining top rankings in major benchmarks, MSCI ESG, UN PRI and Sustainalytics. In 2024, Eurazeo also strengthened its line of impact funds with the final closing of Eurazeo's transition infrastructure fund, 40% above its initial targets. The first closing of its fourth vintage in biotech at EUR 140 million and the launch of our eighth impact fund, Eurazeo Planetary Boundaries Fund, EPBF in buyout. PBF had a first closing last week at EUR 300 million and closed its first deal in biocontrol for crops.

Thank you, William. I invite you now to focus on operational performance of our asset management, starting with fundraising. As William mentioned, we raised EUR 4.3 billion from clients in 2024, above our guidance of about EUR 4 billion. This represents another 23% increase year-on-year after a 21% increase in 2023. So this strong performance is very encouraging given a gradually improving but still challenging environment for fundraising in 2024. No doubt, this highlights the quality of our franchises as well as the relevance of Eurazeo's positioning as a European mid-market growth and impact focused investment firm. This is also broad-based. Let me give you a few examples of this. First, our private debt fund recorded high inflows, thanks to the attractive risk-reward profile for clients. We have demonstrated this with already 6 successful vintages in direct lending. In 2024, we nearly doubled our inflows in this asset class with notably the successful first closing of our new direct lending flagship EPD VII, Eurazeo Private Debt VII. Second, in private equity, we announced the successful closing of the mid-large buyout program at more than EUR 3 billion, above expectation. This success is led by a new management team, and it underlines the quality of our franchise and the appeal of our mid-market positioning in an otherwise complex market for buyout. Still in PE, we have a good momentum in our GP-led secondary programs, and we continue to raise funds in our venture digital program. Finally, in real assets, our sustainable infrastructure fund, you remember, announced a final closing of EUR 700 million, 40% above its initial target of EUR 500 million, which is remarkable for a first-time fund and showcasing how impact can be a strong business driver. To start off 2025, we have announced this week a very encouraging first closing for our impact buyout fund, EPBF, for EUR 300 million. A few words on our debt franchise, which now represents EUR 9 billion of AUM and is a major growth driver for the group. Our new vintage of direct lending, EPD VII was off to a good start in 2024 with EUR 2.5 billion of third-party money collected, attracting more international LPs, notably from Southeast Asia. What are the key pillars for continued success? These key pillars of our direct lending franchise are very clear. First, the differentiating positioning on the lower mid-market, which is a deep and attractive market with lower competition from banks and higher returns for investors. Second, it's a true pan-European footprint with an international team based in 5 key geographies, which is deploying across the entire European market. Third, last but not least, a strong and consistent track record over a long period of time with default rates close to 0. You will recall from our Capital Markets Day that we outlined our ambition to further expand our client franchise through the internationalization of our institutional LP base and through the development of our wealth channel in France and abroad. Well, we made progress in both directions in 2024. We signed 31 new institutional clients in 2024 for a total of 440 institutional clients at the end of 2024. These new clients represented 1/3 of Eurazeo's annual fundraising. In 2 years, we doubled our inflows coming from international institutional LPs, which now represent more than 60% of our inflows compared to less than 40% a few years ago. To support the extension of our reach, we've made senior appointments in our coverage team in key geographies such as the Nordics, the Middle East, the DACH region and in Japan with the opening of an office in Tokyo. Our wealth solution franchise is pretty unique in our industry, and it is the other key engine of fundraising with steady and growing flows. We collected more than EUR 900 million or more than 20% of our total fundraising from wealth in 2024. We now have more than EUR 5 billion coming from individual clients, representing more than 19% of our third-party AUM. This success is notably supported by our blockbuster evergreen fund, EPVE 3, which has more than EUR 2.6 billion in AUM, has won the award for the best mass affluent product at IPEM just last month. EPVE 3 now ranks among the top 3 evergreen private market funds in Europe. But we also have started to expand our wealth franchise outside of France with early success in key countries such as Belgium, where we already have significant flows. And we've signed agreements with distributors in Italy, Switzerland and Germany. To serve this market international better, we are launching 2 new evergreen funds dedicated to international distributors in what we will call the prime line, a prime product focused on private credit, a prime product focused on private equity, mainly through secondary transaction. So these initiatives will enable Eurazeo to accelerate in this very promising space. Turning now to 2025. As you can see, we have a solid and diversified pipeline of fundraising, both on the institutional side as well as on the wealth segment. Our funds are at different stages. In flagships, we will benefit from the ongoing momentum in our direct lending and secondaries program. We expect a first closing for Eurazeo Growth IV in H1 and the launch of our fifth program in the lower end of mid-market buyout, PME V later this year. We have 3 Article 9 funds, which should be launched as well. We already talked about EPBF, which already has had a promising first closing. ESMI II in shipping decarbonation financing and a second vintage in sustainable infrastructure. We also expect the launch of Eurazeo Operational Real Estate Fund, EZORE, and we will continue to raise in venture. On Wealth Solutions, I already talked about the launch of 2 new evergreen products, and we are initiating another growth fund for wealth investors. I've mentioned it before, you have perceived it an obsession of William and I share throughout Eurazeo. Expected performance is a key driver for fundraising, the driver for fundraising. In this respect, our 2025 fundraising pipeline is underpinned by strong ongoing performance of our strategies with all recent vintages, in particular, showing top-notch track record. We have a top quartile performance in direct lending with a best-in-class low default rate, again, close to 0. Our secondary strategy can boost more than 20% gross IRR on the last 2 vintages. In growth, we have a very solid start for Eurazeo Growth IV with the current investment position in AI and Deep Tech performing well. Our PME team, which focuses on the lower end of mid-market buyout, has an excellent track record. Its latest vintage delivers a 33% gross IRR and a top decile DPI of 50%. Real estate team launching its first third-party fund, EZORE, can rely on a top quartile performance for its first 2 balance sheet vintages on all metrics, TPI, IRR and DPI. And finally, the first vintage of sustainable infrastructure, so still very long, has an IRR in excess of 15% and strong tailwinds. So let me now turn to deployments and realization. As you know, 2023 was a low tide for M&A across the board with Eurazeo faring better than the market overall. We were optimistic, and we saw a gradual improvement in 2024 in the market. There are more people willing to trade and funding is available. This is particularly true for the mid-market segment. So we've had a sharp pickup in realization, which tripled year-on-year to reach EUR 3.4 billion. Again, this highlights Eurazeo's ability to monetize its assets and generate distribution for its clients across all strategies. As you can see, Eurazeo's exits were executed in good terms, which reflects again the quality of our investment strategies translating in strong returns for clients and our balance sheet. On average, the transaction have been concluded with high cash-on-cash multiples and good IRRs with on average 2.3x on buyout, 4x in tech and 1.6x in hospitality. Deployment. We continue to deploy capital actively in our preferred sector across all asset categories. In total, we deployed EUR 4.6 billion. It's a 19% increase year-on-year. Deployment continue to be healthy in private debt in line with the success of fundraising. And we've continued to grab interesting opportunities with companies like eres and rydoo in financial services, ImoOne and Pantera in healthcare, EcoVadis, Mistral and Cognigy in the tech and AI space. And as we have mentioned, new investment in Environmental Solutions. Of note, we have historically high level of dry powder at EUR 7.4 billion. I will now hand over to William, who will present financial results.

Thank you, Christophe. I will now take you through the financial results for 2024. Let me start with the asset management activity. As a reminder, we decided to exit noncore GPs and sold our stake in Rhone Capital in 2023 and our stake in MCH in 2024. So the figures that have been presented to you are pro forma of both GPs. Overall, AUM growth and particularly fee-paying AUM growth illustrate the dynamism of our asset management business. Total assets under management were up 4% in 2024, reaching EUR 36.1 billion with third-party AUM up 10% and balance sheet-related AUM down 7% as we execute our plan towards an asset-lighter model. Fee-paying AUM were up 8% at EUR 27 billion, with third-party fee-paying AUM growing 12%. Recurring revenues from asset management posted solid growth. Management fees stood at EUR 421 million in 2024, up 7% from previous year on a comparable basis with third-party management fees up 14%, excluding catch-up fees, in line with our long-term guidance, and balance sheet management fees down 3% as we voluntarily limit our new commitments. FRE-related earnings for 2024 are up strongly. 2024 FREs amounted to EUR 150 million, up 11%. FRE margin is up 110 basis points and reached 35.5% in 2024, which is already in the 35% to 40% range we announced during our Capital Markets Day. We continue to benefit from a positive geo effect while investing in our future growth. Christophe highlighted earlier, senior hires to strengthen our senior client coverage in key geographies. In addition, we also made some hires in specific investment teams, yet have remained very disciplined on costs overall. In a nutshell, the contribution of the asset management activity amounted to EUR 153 million in 2024, which is up 20% year-on-year. As said, recurring operating income is up strongly with FREs up 11% at EUR 115 million. Performance fees are up, thanks to a higher level of realizations. As our funds are maturing and we return more capital to LPs, performance fees from third parties are due to increase significantly in the next years to represent up to 10% of our third-party revenues over the cycle. This is what we said during the Capital Markets Day. Let's now turn to the investment activity, starting with portfolio value creation. The main driver of the P&L of the investment activity is indeed the portfolio change in fair value. As you can see, the net value of our portfolio was EUR 7.9 billion at the end of 2024, down 5%, with scope contributing minus EUR 60 million, minus 1% due to the completed exits combined with disciplined investments and the change in fair value contributing minus EUR 323 million or minus 4%. The per share value of the portfolio amounted to EUR 107.8 at the end of 2024, down 2% only given the positive offsetting impact of the execution of our share buyback program. 2024 value creation reflects 2 fundamental facts. First, solid value creation in buyout, private debt and real assets across the board for plus 9%, driven by strong performance across the portfolio of underlying assets and exits realized at a premium to net asset value, yet offset by the write-down of a very limited number of legacy assets. Second, we continued to adjust valuations in gross equity. Let me stress again that value creation of any portfolio is not linear. There were significant markups in 2021 and '22, and value creation of the portfolio remains 10% per annum over the last 5 years, consistent with our 10-year average. Let me now run you through more details, starting with operational performance of underlying assets. Overall, 2024 was another illustration of the quality of the underlying assets in spite of still mixed macro environment. Let's start with buyout, which represents more than 60% of the total value of the portfolio, 61% in fact, revenues and EBITDA were up, respectively, 9% and 27% in 2024. Second, companies in our growth portfolio, which represent roughly 21% of the total portfolio value, posted an aggregated revenue growth of 14%. Our top holdings like Doctolib or BackMarket continue to perform very strongly with revenues up 20% to 30% and are trending towards profitability. In addition, the 5 companies in our most recent vintage, EGF IV that Christophe alluded to, have a strong growth pattern, above 50% revenue growth in 2024 and 2 out of 5 of these companies are already profitable, which reflects a new approach to investing in growth equity at our level. Third, in our real assets portfolio, which accounts for 12% of Eurazeo portfolio value, we recorded a strong year-on-year operational performance with an increase in EBITDA of 11% for our hospitality business. This performance reflects the specificities of our exposure in real assets. We are talking about operational real estate and hospitality represents more than 50% of the total with a diversified geographic exposure. Let's dive a little deeper into our buyout portfolio. Again, this represents 61% of the balance sheet, which is invested. This EUR 5 billion portfolio is very granular with 50 holdings and had an overall strong performance across the board in 2024, as you can see on the slide. This performance is nevertheless largely offset by the write-off of 2 legacy assets, which are WorldStrides, a U.S.-based company specialized in students travels acquired in 2016, and 2RH, a global player in sports equipment acquired in 2017. The 2 combined have a negative impact of EUR 320 million. We also adjusted down our brands U.S. portfolio for about EUR 60 million across 3 assets. This portfolio has had a mixed performance since its inception in 2019, and we are in the process of exiting from this noncore strategy. Bar these 3 specific cases, value creation in the portfolio was a strong and broad-based plus 9%. And let me stress again that our most recent vintages, as Christophe mentioned, have strong performance, which is very encouraging looking forward. EC V in mid-large had a 10% value creation in '24. PME IV in lower mid-market had a 39% value creation and ESF V secondaries had a stunning 33% growth in value creation. Turning to growth equity. We made further adjustment in the growth equity portfolio, which is made of 33 investments and represent 21% of the on-balance sheet portfolio value. On our top 3 lines, which represent close to 60% of our portfolio, we made only marginal changes. We are talking about strong companies such as Doctolib, BackMarket and ContentSquare. Overall, discount to last round of fundraising for these lines is about 27%. We have had a more drastic approach on our smaller legacy lines with an average 70% discount now on their latest round financing. They are thus more marginal in our portfolio. And some indeed present some upside potential in our view, such as United, which is now well capitalized and operate in a more favorable environment for consumer credit. Despite significant adjustments in '23 and '24 made to this portfolio, let me remind everyone that we still sit as an LP as a balance sheet on an average cash-on-cash multiple of 1.3 for the historical portfolio. In addition, we recorded a slight positive value creation in our most recent vintage, EGF IV, reflecting the quality of the new investment made by our growth equity team, as I mentioned. Lastly, a word on real estate, which represents 16 lines and 12% of the value of the balance sheet portfolio. Real estate value creation is 1% in 2024. We continue to have a strong performance in our operational real estate, mostly hotels. We adjusted down valuation in other real estate assets, particularly in the office segment. Value creation in sustainable infrastructure is strong with a 12% value creation recorded in 2024. Let me now comment on asset rotation pertaining to the balance sheet, which is a key driver, as you know, of the transformation of our business model towards an asset-lighter business model. Realizations doubled in 2024 at more than EUR 1 billion compared to EUR 500 million in 2023. As Christophe highlighted already, realization crystallized strong returns for the balance sheet as well as for LPs for the balance sheet is 2.3x in buyout, 1.6x in partial exits for hospitality. The aggregate upside to the net asset value we achieved in selling our portfolio was plus 10%. This is the best back testing of how serious we are in valuing our portfolio, and it highlights a strong long-term track record in exiting in good conditions. Let me now turn to the percentage of asset rotation. We had a 17% pace of asset rotation in 2024, 13% realized, 4% in addition linked to announced deals such as Albingia. Considering our rich pipeline of exits for the year, we expect to trend back towards our historical 20% to 25% of net asset value going forward, assuming the environment, of course, continues to improve gradually. Turning to the P&L of the investment activity overall, contribution of the investment company was a negative EUR 544 million in 2024 with the following main drivers: a noncash change in fair value of the portfolio for EUR 323 million. Intercompany management fees and performance fees paid to the asset management amounted to EUR 131 million. They are, as you know, considered as a cost for the investment company. And steering costs were down slightly year-on-year, which reflects our strong commitment to tight cost management at all levels. In a nutshell, at group level, net results group share for 2024 stood at minus EUR 430 million for the year. This reflects again a strong contribution from the asset management activity and a noncash negative contribution of the investment activity. To recap, we've made good progress towards our strategic goals in 2024, both on the growth and on the transformation pillar of our plan. We are building a leader in private markets with a clear and relevant positioning on European mid market, growth and impact. We are delivering steady earnings growth, thanks to revenue growth and cost management. And finally, we are increasing capital return to shareholders, which we doubled over 2 years. Thank you for your attention. We can now open the Q&A session.

[Operator Instructions] We will take the first question from line of Nicolas Vaysselier from BNP Paribas.

Hopefully, you can hear me well. I just had 3 questions, please. The first one would be on the portfolio returns for full year '24. It seems like the earnings growth dynamics are pretty good, but you still had compression of valuation multiples at some assets in H2, which is a bit in contrast to what we have seen at peers that have reported. So could you elaborate a bit more on what has driven those multiple compression in H2? And more particularly, could you elaborate a bit more on Worldstrides, what's happening at that company that made you adjust lower the valuation? My second question would be on fundraising. It seems that you have a pretty busy pipeline for 2025. I would like to have a bit your thinking on the quantum of that fundraising. Do you think the pipeline underpins a continued progression in gross fundraising versus 2024? And my third question, a bit more specifically on that pipeline. It's more some confirmation, but I understand the real estate strategy used to be a portfolio strategy on your balance sheet. How much could we expect for this fund?

I will take the first question, and Christophe will comment on fundraising. Just maybe on the third question, we are in the process of launching the fundraising of our real estate fund. And so at this stage, we haven't communicated on the target. But earnings growth was effectively strong across buyouts and in fact, across the board. And it did not translate into value creation at the portfolio level for the reasons I've mentioned and you highlighted, which is that we benefited from this earnings growth with relatively stable multiples across the board for most of the companies that we consider in the portfolio, yet we had, again, a few limited adjustments. Sticking to buyout. There are 2 assets I mentioned, Worldstrides, 2RH, and there are 3 much smaller assets within the Brands portfolio. This is what we're talking about in a portfolio of 50 assets. Worldstrides is effectively the more significant. So this is where we have adjusted significantly the multiple. In fact, the operational performance in Worldstrides is okay. It is disappointing relative to its initial business plan. This company has been affected significantly by the COVID, recovered thereafter, but not to the point that it has reached the business plan. And what this does translate into is not per se an operational issue, it translated into a capital structure issue because this company has been levered. And as you would imagine, at some point, you may be ending with a rather tense capital situation unless your earnings picked up. And this is where we are. The company has reached a number of its liquidity covenants. We are in the process of renegotiating the total capital structure. And it was only fair according to the IFRS 10 rules and the IP rules to consider that we needed to value this company for the risk that potentially we go into a distressed sales process. That's why we did a EUR 275 million markdown, which explains the bulk of what we've done through the buyout. So it's really an asset that was a legacy asset, invested at the wrong time, but nobody could potentially foresee the COVID, which is faced with a capital structure issue and for which we adjusted markedly the multiples resulting in what I've said. Now there is a case where should we exit favorably from these negotiations, maybe there is a bit of value increase to be expected, but we are cautious people, and we don't want to bet on it.

Regarding fundraising, you will not be surprised with the first part of our answer, which is to say we don't give guidance at the beginning of the year. But your question was more on, can we keep a good momentum on this. As we covered, when you look at 2025, we have a robust and diversified and solid pipeline of fundraising. It's a good combination of flagships and thematic funds. And please keep in mind that the funds we are currently fundraising are benefiting from a very good track record, a very robust track record on latest vintages. And we also benefit at Eurazeo from the fact that we are running on 2 legs. The first one is that, yes, we continue to internationalize our institutional LP base. We gained market shares in specific regions, and we have momentum to continue. And the second leg is that, yes, the wealth market is still underpenetrated. And we have here again a good combination of blockbusters on one side with EPVE 3, which should be soon reaching EUR 3 billion and also some new products that will be better adapted with a Luxembourg legal structure that will be better adapted to continue to accelerate the Europeanization, the internationalization of our wealth distribution.

We will take the next question from line Joren Van Aken from Degroof.

A couple of questions. First, it was mentioned that Brands was being divested. So does that mean that this strategy will not have a follow-up vintage going forward? Similar question, I think, for Venture, I don't see Digital 5 in the pipeline. So will there be a next vintage for that one? And then on growth vintage #4, which is in the pipeline, what is the target size there?

Okay. I'll take the first question, and maybe Christophe will tell you about the venture and the growth fundraising. As we said, I think a couple of quarters ago, we consider that there is limited scope for a successful fundraising on the back of the U.S. brands so-called strategy. Consumer is not exactly the topic of the day. As you see in our buyout, but also in infra, in debt, in secondaries, we are a firm that invests mostly in B2B sectors across the board, including in health care and environmental solutions on top of tech-enabled services or specialty financial services as a case in point. So we've refocused really the investment approach somewhat away from consumer. But on top of that, I mean, the investment we've made in the U.S. on this strategy, which was very U.S. focused, do not completely reflect our ambition to be more relevant to our clients in terms of value proposition. We want to be seen as a leading European investor with in certain sectors where we are strong, of course, capacities to invest in the U.S. or Asia, but mostly we have European-centric strategy. And lastly, there was a mixed performance. So what we had said is that portfolio, we want to protect its value for the balance sheet, for the balance sheet owners, or the shareholders. And so we have a team that is dedicated to managing the assets there and gradually exit from these assets.

Regarding tech as a whole, and you mentioned, yes, we are currently finalizing the fundraising of what is called Eurazeo Digital Fund #4. So we are close to EUR 300 million already raised. And please keep in mind that in this activity, it's a total program because we also have dedicated mandates, for example, in fintech and [ insurtech ] that are also that you need to aggregate in our venture activity. And yes, we are preparing the first closing of Eurazeo Growth # 4. First, we have a very good start due to the fact that the existing investments that are already made are showing very good performance, as William mentioned. But also, our goal is to reach robust first closing in H1. And based on that, we expect to reach something that will be similar in terms of size of the previous fund, Eurazeo Growth III, which has reached EUR 1 billion. Keep in mind that regarding the tech activities, investors really look at the quality and the disruption of innovation. You remember that there has been a strong wave in favor of digitalization. There has been a strong wave in favor of [ i-phonization ] of business model. the new wave we are currently facing is called AI. And the ability of entrepreneurs today to capture very interesting business model, business model that are delivering value creation very fast is definitely what investors are looking for right now.

We will take the next question from the line Alexandre Gerard from CIC Market Solutions.

Three quick questions on my side. So the first question is related to performance fees in 2025. So you said that exit should come back to 25%, close to the historical average. What does that mean for performance fees and from third-party performance fees in particular? So that's my first question. Second question, you said that you, of course, you reminded us that you exited Rhone and MCH recently. So what about IMGP, IM Global, which seems to be performing well. Can you comment on your willingness to retain 50% stake in that company? And can you also remind us the valuation of that stake? And my last question is related to the ongoing industry consolidation, of course. Are there any corporate development initiatives that you might take in 2025? And can you remind us also your financial flexibility to do these types of small bolt-on M&As?

So I'll take those ones. First on performance fees, we should see an increase in the performance fees going forward given the strong pipeline of exits we have. But let me say that it is not exactly going in sync with the amount of assets sold in a given year because to recognize from an accounting standpoint, the performance fees from third party, you need to have funds which have reached a certain threshold, the threshold being distribution plus hurdle already paid to your LPs, to the third-party LPs. So generally speaking, we are talking about crossing rule of thumb, 1.3x cash on cash in a fund. So if you take for example, EC IV, where we are in the process of completing the sale of Albingia. Post this one, we'll be at 1.1. So it will take probably 1 or 2 more assets so that we can recognize the full backlog of performance fees. Overall, given the volumes and given that the pace of exits have accelerated in '24 and should be sustained in '25, we should see another increase in third-party performance fees, but maybe not to the extent that we reach already the midterm target. IMGP, very good asset, very good management, very good return for Eurazeo. Eurazeo did not acquire this company, Eurazeo accompanied the greenfield development of this company, and it was a wise move made by the team, and we continue to support the development of IMGP. As you can see, we benefit from it. So for us, it's very different from Rhone and MCH. First of all, we are a controlling shareholder. Second, it performed very well. And yes, you may debate whether this is absolutely core to private markets. We're not talking about private markets. We're talking about high alpha generating asset management, but more on liquid underlying. U.S., Europe, credit rates and equities. What we like about IMGP beyond its performance is the fact that it also gives an option for both the management of IMGP and for the management of Eurazeo to think through what type of products may emerge at some point between combining some liquid and less liquid underlying, particularly for the wealth segment. So right now, I mean, it's a bit of a kick start of this type of discussions. It's too early to say. At the end of the day, we'll see how it develops, but we keep the 2 options of remaining a shareholder and developing IMGP benefiting from it or potentially realizing that asset at some point if we are not convinced about the synergies. Right now, we are very happy. Valuation, I mean, the best thing you can do is take the metric and apply a multiple. We don't give you the multiple you should apply to Eurazeo FRE overall. But I think it's fair to say that this is probably the best way. You have the pattern of growth in revenues. You have the pattern of growth in margin and FRE. So I think we give you the keys to value that asset. And there are some benchmarks also in the industry of listed comparables for specifically this type of business models. And I think your third question was more on M&A. First of all, you said bolt-on. If we were to do M&A, let's be clear, we will not go back to buy minorities unsignificant businesses that do not move the needle, but yet are associated with a lot of hassle and integration issues. And so if we do something, it would be material to at least one strategy of the group. As we said with Christophe many times, our plan is an organic plan, but we accept that the industry is now consolidating and that in the story of building a leading platform across mid-market in Europe, maybe we could accelerate the pace at which we reach a certain scale in some strategies by acquisitions. So that's the type of things that we're evaluating with Christophe, with our Board and shareholders. But should there be anything imminent, of course, we would be talking about that rather than commenting it in general terms.

And maybe 2 additional comments here. The first one is that we have done it successfully in the past. I mentioned the fact that Eurazeo PME V is promising. It is based initially on the acquisition of private equity. And I can elaborate on that if you want. But obviously, you can perceive that the full integration of Idinvest inside Eurazeo is quite a success. So again, we have done it, and we are integrating our acquisition now. And the second comment is that we mentioned it during the Capital Markets Day. Our goal is first to be an attractive platform to be an organically growing platform, and we are. So we don't only rely on this idea of external growth to be successful. As we have mentioned, it's an acceleration. It's a complementary option.

Okay. But can you just maybe remind us your financial flexibility, how much money to be raised for that?

That was part of the question. We have ample financial flexibility. If you look at the net debt at the end of 2024, we're talking about a gearing ratio of 17%. So if you may look at it in different ways, but it is an implicit strong investment-grade ratings. We're not rated, but with that type of gearing, which is very reasonable, it gives us ample flexibility. On top of it, let me remind you that our plan is to generate excess cap over through the period of 2024, 2027, we said EUR 4 billion, EUR 7 billion exits, EUR 3 billion reinvestment, EUR 4 billion is the excess cap, of which priority is to distribute back EUR 2.3 billion to shareholders. I mentioned earlier the increase in dividend as well as the share buyback program, but that leaves a buffer of cash we will be able to recycle through M&A should we find the appropriate target. Again, financial flexibility wouldn't be the problem. The question is more, as Christophe highlighted, are there a platform that we are happy and confident we can integrate for a successful growth together.

There's no further question over the phone. I'll hand it back over to your host for the web questions.

So I have a few questions from the webcast. Maybe first one for Christophe. What is the potential of the new funds that you are launching in Wealth Management, I guess, he is talking about the prime line that we announced.

Our idea, again, is to replicate what has been the success of what we call the blockbuster today. So the idea is definitely that the mass market is requesting more and more evergreen vehicles. We serve very well the upper end of the wealth market, family offices that have institutional behavior. We serve them very well with our current institutional product offering. But our idea is to cover an unpenetrated underpenetrated market, which is the mass affluent. So wealth management, not really retail, but not people that are organized with huge family offices. This is what we are talking about. This market is requesting evergreen vehicles that are much easier to use. And so our idea with what we call the prime line, our current blockbuster is doing very well, but it has a French legal structure. As you know, to entirely cover the European market, the name of the game today is to have a Luxembourg structure. And so yes, we are launching 2 prime product offering, one dedicated to private debt, one dedicated to private equity, will continue to have a strong component of secondary transaction. So the idea is to replicate blockbusters. It takes time, but the idea is to replicate what is today still a relatively French blockbuster into pure pan-European ones.

Great. Maybe one last question from the web. I have some more technical that we answer directly through the webcast. But I have a question here still on asset rotation. What makes you confident that you can grow your realizations in 2025? And should we expect to come back to your historical average of 20% to 25%?

We were [indiscernible] start, but we didn't complete. But remember that last year, we were asked the same question, and we mentioned the fact that we were quite optimistic based on a good pipeline. Today, we face a similar situation where we have today a good pipeline of potential exit. And again, and we'll let William complete, but keep in mind that the core of our strategy is in the mid-market buyout in Europe, where you rely much less on the quality of the debt market, the quality of the financing, which is very true for the large cap component. So we are really confident that this component of the market is very active.

Listen, as I said, it's based on the pipeline we have and what we observed. First of all, there are a few things which will come to fruition most likely in H1, which I will obviously not comment upon. There are also processes that have been launched in the past weeks. So we should have some visibility on these processes. And then we have others that we intend to launch in the second half of the year based on the operational performance of the companies that I highlighted before, plus the fact that there is dry powder, generally availability of financing. Yes, we operate in an uncertain environment. There are still a number of risks that we are mindful of. That's why I mentioned also that it takes as a view that we continue to have a gradually improving environment. But clearly, we have strong assets on the block. Let me remind you to your question on the 20%, 25%. To get to 13%, we need EUR 1 billion program. And so we are reasonably confident we should break the 20% in 2025, again, absent a major systemic crisis, but I think we would have different discussions in that context. Great. Thank you. That's it for the questions. Thank you very much to you all, and have a good day.

Thank you. Bye-bye.