ICG plc (ICG) Earnings Call Transcript & Summary

ICG's Capital Markets Day 2020. This is my third Capital Markets Day as Head of Investor Relations at ICG, and each event is getting bigger than the last. I'm delighted we have been joined by our new Chairman, Lord Davies, and some of his Board colleagues. And they'll be with us throughout most of the morning if you've got any questions that you'd like to ask them. Coffee will be served back in the library where we were a moment ago. One piece of housekeeping. There's no fire alarm test planned this morning. So if it does ring, please exit as directed. Our recent growth trajectory has been considerable. This has led to the inevitable question of how much further we can go. And over the course of the next few hours, we will set out how we plan to keep building on our established platform to ensure sustainable growth. Benoît, our CEO, will open proceedings, discussing how we are positioned for further growth by both establishing and growing our established strategies, developing our emerging strategies and adding value-enhancing strategies. Jens Tonn, Head of our DACH region for our European Corporate Strategy, will provide some further color on the growth potential of our more strategies; with Vijay Bharadia, our CFO, illustrating how this has a direct impact on the group's fee base. ESG is an increasing area of focus, and in our industry, we are one of the market leaders. So before the break, Eimear Palmer will detail some of the work she has been undertaking since joining us as our Responsible Investing Officer. After coffee, Vijay will be back and joined by our Head of HR, Antje Hensel-Roth, to discuss our success at innovating new strategies before we'd showcase 2 examples, sale and leaseback and infrastructure equity. There'll be time for questions, both before coffee and at the end of the morning. So without further ado, I'll hand over to Benoît, who will take us through the opening session. Thank you.

Thank you, Ian. And good morning and thank you all for making time and joining us for our Capital Markets Day. Two key themes that I would like to discuss with you this morning. One is growth, the other one is resilience. And to start with, who are we? There you go. And what do we do? ICG is a leading global alternative asset manager with over EUR 42 billion in AUM, close to 400 people now, presence in 13 different countries. We belong to a relatively small group of large international diversified alternative asset managers. We are, first and foremost, investors. And as such, we're a people business. It's all about talent and culture, everything flows from that. That's who we are. What do we do? We directly originate, select, structure and manage investments across geographies and across strategies, 21 to date, as you can see here. We also build on an exceptional 30-year track record to grow our assets under management. This growth in AUM, and importantly it's a controlled and coherent growth in AUM, is what drives the increase in long-term locked-in fees and in turn profits, dividends and, ultimately, shareholder value. Historically, ICG has delivered strong growth with a notable acceleration in recent years, and this has translated into an even greater growth in fund management company profits, as you could see here. The substantial part of that growth stems from a strategic decision to diversify into new geographies and new strategies with varying risk-return profiles. That's often a misconception about ICG because of our history, which is that we are only a debt manager. That is ignoring our diversification. Today, our investment strategies run the whole gamut of financial instruments from senior debt all the way to private equity. You could see from -- that change in these pie charts. A key question when you look at the growth that we have just experienced, and particularly in the past 2, 3 years, is how much is there to go for? Or putting it differently, what is the credible growth potential of the business? And to answer that question, first, let's look at the overall market. The alternative asset class has grown quite strongly over more than 10 years, but we have about 10 years of history here. And looking forward, PrEQIn forecast a total market size of $14 trillion by 2023. Many studies are even more bullish than that. They typically point to the relatively small size of the alternative asset space compared to the overall financial market. It's about 6%, 7%. And anticipating market share gains for alternatives, they forecast a potential quadrupling of the overall market by 2030. Irrespective of the varying degree of optimism, all the studies out there, without exception, anticipate a continued considerable growth of alternatives for the foreseeable future. If that's the case, where does demand come from? Well, first of all, it comes from existing investors. One, because a number of them are experiencing significant growth of their own asset base. That's particularly true for sovereign wealth funds. And two, because many of them are further increasing their relative allocation to alternatives. So there's a double effect there pushing growth and increasing demand. In addition, there are new investors coming into the space. I've mentioned before, during results presentation, Japan. Japanese investors are starting to invest into alternatives. And given their size, the potential demand they represent is quite significant. Likewise, I've mentioned before, Latin America. That's particularly for pension funds there. There are also new types of investors or new channels. Wealth management is one that is growing quite significantly. And we're also, interestingly, we're starting to see, through mutual funds, some insurance products and even new platforms that are being established. Access to alternative products starting to be provided to retail investors. Any one of these new investors or channel types of investors in itself potential demand that represent dwarfs the total size of the alternative market today. This is why -- we've discussed this before. This is why there's such a supply-demand imbalance in alternatives. And incidentally, this is why there is no fee pressure in our industry. Most investors will tell you that their biggest challenge is to deploy an alternative to meet their long-term allocation targets. So demand is not a constrained factor in our industry. But what about the investment opportunity? You can raise the capital, but can you invest it? Interestingly, the structural shift towards private markets has also been taking place on the investment side. So the addressable investment market has been growing in private markets. As fund raising increased for alternatives, so has the deployment pace of investment. You will regularly hear or read that we're reaching new highs in dry powder for private debt and for private equity, which is true. It's true in nominal terms. But when measured in number of years of investment based on the current pace of deployment, actually, it's remained remarkably stable at around 3 years. So that means there is no ballooning capacity glut being created in this industry. Yes, there is significantly increasing demand in the space, but there is also growing investment opportunity in the private space. There is another factor that is becoming more and more relevant for ICG and that is relevant when we're looking at growth overall, and that is the benefit of size and scale. There is a flight to quality. Not only are investors allocating more and more to alternatives, but they're allocating disproportionately to larger, more established investors who can absorb sizable commitments across a number of strategies. There's a staggering data point, which is, over the past couple of years, in each of private equity, private debt and real assets, if you take the top 10 managers, they've hoovered up 40% of the total amounts raised. Essentially, the bigger you are, the more you benefit from the market growth and the more you gain market share. And when we observe the growth trajectory of some of the established successful managers, and I've plotted a few, we can see that they all experience an inflection point after which the growths accelerate. And it so happens that this inflection point invariably happens when those managers hit $40 billion to $50 billion of AUM. I believe that this is what's happened to ICG over the past couple of years. I believe that we've just hit that inflection point. And what that would tend to indicate is not only are we nowhere near reaching a plateau, but that our growth is just getting started. And we're starting to see some evidence of that. This is the private debt investor league tables for private debt fundraising that's looking over the past 5 years. And as you can see, ICG is in the top 10 globally. So we're making it into this rather exclusive club of large, established alternative asset managers. Looking back as recently as maybe 4, 5 years ago, ICG was largely operating below the radar except maybe in a few narrow niches. Today, in our industry, ICG has become a global brand, which is all very positive. So what could derail that? And more specifically, what could be the impact of a downturn or a financial crisis on our industry and more specifically on ICG? When you look at historical data all the way back to the mid-'80s, which is when this asset class emerged, what you find is if you had picked the worst 5-year period, 5-year being the typical investment period in our world, you pick the worst 5-year period either in private equity or in private debt, you would still have generated positive return. Obviously, the same can be said for public markets. And this is an average. So if you were actually -- if you were going to look at the more established players, they kept on generating double-digit returns through those cycles, that's very powerful. There are many reasons for that. We could discuss it at length. Maybe we'll do that after the presentation. There is one, I think, main reason, which is that these strategies have time on their side. These are long-term strategies. They're 10 years or more, which means they can work through a cycle. And actually, even more fundamentally, because their lifespan is 10 years or more, they have to be designed, structured and invested assuming that there will be a downturn at some point during the fund life because it's such a long fund life. And also being able to take advantage of the opportunities that invariably arise in a downturn, which is another advantage of these strategies. Is -- there is no concept of redemption in our industry. And what that means is in a downturn, when most institutions are pulling back, those funds have dry powder. They have capacity to invest and take advantage of the market opportunities. Incidentally, that's exactly what ICG did in the previous financial crisis, and we did quite well. And what applies at fund level also applies for the firm as a whole. It applies to ICG as a whole because you can raise dedicated funds, dedicated strategies that are opportunistic strategies to take advantage of a market downturn, market dislocation. That's what the recovery fund that we raised in 2008, that's exactly what it was, and it was extremely successful. This time around, we could probably do even better and not wait for a downturn to raise, but raise ahead of a downturn. That's exactly what we're doing. We have one opportunistic product in market, and we could have another one in the not too distant future. And they're essentially -- they're rainy day funds or they're contingent funds, funds that you switch on when there is a downturn or a market dislocation. The implication for ICG is that in a downturn, not only are your fees remaining stable on existing strategies because there is no redemption, so the fees remain stable, but you might actually be able to increase the fee base by either turning on or launching opportunistic funds. An illustration of the resilience of the asset class is our own flagship European fund, its 30-year track record. And when you look at the performance in money multiple, you can't distinguish the cycles here. For a long-term investor, that's quite compelling. Regardless of the cycle, you're going to be generating 1.8x to 2x the money, and that's quite important. Investors are attracted to the asset class and to products such as our European fund not just because they generate higher returns and they outperform public markets, but also because they've proven to be quite resilient. Actually, when you think about it, all of our investors are highly sophisticated. They're sovereign wealth funds, they're pension funds, they're endowments, they're increasing their allocations to alternatives now at this point in the cycle. They are committing for 10 years with no redemption. They know full well that it's extremely likely there will be a downturn during the life of their investment by investing now, but they're investing more. And if they're investing more, it's not just because these strategies outperform, it's also because they are resilient. So there's strong demand and, as we've just seen, for a good reason. But how do you take advantage of the market opportunity? If you're ICG, how do you deliver on that growth? What are the key drivers? There are 3 main drivers, and they have a compounding effect. One is the growth in existing strategies -- the more established strategies. Two is the growth coming from newer strategies that are in ramp-up phase. And finally, growth coming from new developments, new strategies, new geographies, new products. So let's quickly look at each in turn. Our more established strategies have not -- as we've seen, they have not experienced the traditional product maturity curve. Actually, if anything, their growth has accelerated. We've seen that for the senior debt fund, and we've seen it with ICG Europe Fund VII. And because these strategies are well established, their cost base is relatively stable. So any growth has a very significant impact on profit, which is exactly what we experienced last year. You may remember, when we raised ICG Fund VII, it's 60% larger than the previous vintage, it created a step-up effect on fund management company profits. Newer strategies. So by that, I mean strategies are essentially in their first or second vintage. These newer strategies have something else going for them, which is that any new money raised, even if they do not increase the size of their fund from vintage to vintage, up until typically Fund III, any new money raised is accretive because you're not replacing older funds that are in realization mode. So the funds overlap. But of course, these newer strategies, as they become more established and have a longer track record, actually tend to raise more because it's easier to fundraise, and they tend to have a significant growth from vintage to vintage. So they have a double benefit. They're growing fast from vintage to vintage, and any new money raised is accretive. That is what we are experiencing right now with strategic equity. So strategic equity, we have closed the fundraise of Strategic Equity III a few weeks ago. I think we're coming out with a statement today to our LPs. We have hit $2.4 billion, which is well ahead of what we had initially targeted, which was $1.6 billion, $1.7 billion. More importantly, it's -- in terms of third-party assets under management, it's 2.5x larger than the previous vintage. And because we've also increased the fees on that fund, the impact on fee generation, as you can see here, is considerable. And to put things into perspective and illustrate how significant the impact of these new strategies can be, I've put it against what our flagship European fund was generating 5 years ago. So this was Fund V. At the time, ICG was not as diversified. So this was by far the biggest profit generator of the firm. If you look at it, strategic equity, which didn't exist there, was born 5 years ago, is now generating just as much. Thinking about some of the new products we've launched in recent years. If they're remotely as successful as strategic equity, you could see how significant the potential growth in AUM and profit can be from these more recent strategies. And finally, new developments. And Vijay will cover that in greater detail. But we have many opportunities. One, we can expand geographically. Yes, we have a global reach today. But when you break it down by strategy, actually, the geographic focus is relatively narrow. So take real estate, for instance. We're essentially just U.K., not entirely true because we now have sale and leaseback. Kevin will discuss that later. But we don't have a pan-European strategy yet. We're not present in the U.S. at all or elsewhere for that matter in real estate. You could take senior debt as well. We're one of the leaders, if not the leader, in direct lending in Europe. We're only starting to establish presence in the U.S., which is by far the largest market for direct lending. And we could take pretty much every strategy and follow the same logic or even more broadly, and even though there may not be immediately actionable opportunities there, at some point, in China, in India, in Africa, there will be opportunities. So the geographic opportunity of just rolling out our existing set of products is quite significant. And in addition, of course, there are brand new strategies, brand new products. Yesterday, that was strategic equity or direct lending in Europe, for that matter. More recently, it was the European mid-market fund or sale leaseback or Australian senior debt. Right now, it's infrastructure equity. Tomorrow, it could be U.S. mid-market private equity or traditional secondary or pan-European real estate, an opportunistic fund and so forth. There's no lack of good ideas and opportunities. For me, the most important thing here is that we have now demonstrated that we are able to successfully and repeatedly launch new strategies. We have the blueprint, if you will, to onboard team, establish a marketing strategy, structure the funds and fund raise. And that's very powerful. It's also making us attractive to new teams who view this platform as a great launchpad for their ambition and their funds. The key, obviously, here is execution. You can have all greatest ideas in the world for new strategies, you need an extremely strong execution platform, which is why this morning, you will hear about talent sourcing and retention, about the operating platform, about the strategic value of the balance sheet, particularly to launch a first-time fund. And about the growing importance, but also our leadership position in ESG, which is a competitive edge, but which we'll need to thrive to maintain. To conclude, we are fortunate enough to operate in an industry and an asset class that is very attractive because it's generating high returns, because it's consistently outperformed public markets, but also because it's proven to be resilient. And as a result, it's experiencing very significant increase in demand. We're very well positioned to not only take advantage of this market growth, but to continue to increase our market share. And for that, we can rely on our size, a 30-year track record and a brand. Of course, and as we will hear later, we will need to ensure that we keep an execution platform that is at the highest level to be able to continue to grow, to be able to continue to deliver these new strategies, which for us, preserving that diversification is key to sustainable growth. And finally, I think it's worth pointing out, by the very nature of our business and with fund cycles, our growth cannot be linear. There will be years of higher fundraising than others. There will be years when we raise a significant fund with fees on committed like last year and profits immediately step up and years when that is not the case. But the long-term growth prospects are quite material. On that, we have selected a number of case studies this morning, starting with the flagship European fund, Europe Fund VI, for 2 main reasons. One, it's a good illustration of what I was mentioning earlier, which is that even our more established strategies still have significant growth potential. And two, because at some point, we will eventually raise Fund VIII, and it is likely to have a material impact on AUM and particularly on profit. So on that note, I'd like to introduce Jens Tonn, who is a Senior Managing Director in the Strategy and a member of the investment committee. Jens?

Thank you very much, Benoît. Good morning, everyone. My name is Jens Tonn. I'm in charge of our DACH region, which is Germany, Austria and Switzerland. I've joined ICG from Vestar Capital, a U.S. private equity firm, about 7 years ago. But I do know ICG for more than 20 years, actually, because on the private equity side, I've been a regular client of the European corporate strategy. And when I got the call if I want to join, I jumped at the opportunity. And in the next few slides, I'll explain to you why. As we've just said, we're one of the very few firms in Europe that have a 30-year history of successfully investing and, more importantly, achieving reliable returns. Very few people have managed to do that over a 30-year period in Europe. So what's the secret sauce to our European corporate strategy? It is basically a very differentiated strategy, and it all starts with origination. If you want to see the right deals, if you want to have a high-quality deal flow, you have to be locally present. We have a well-established local network. We've got teams on the ground. We believe that you see that quality deal flow if you are local, if you are able to blend in, if you speak the language, if you can build relationships of trust with local business community, the company owners and the management teams. We've been able to achieve that. So ingredient one to the secret sauce, the network. Ingredient two of that secret sauce is the team itself. The team, as Benoît mentioned, is very senior heavy, a lot of people with -- the senior executives in our team with more than 20 years of European investment experience. 20 years means that we have all seen various cycles and not just one. And you want to know what to do if the cycle ever goes against you. We have the team that knows how to respond and how to react. And the third one, last but not least, is the mandate we have. And our mandate is a very flexible mandate. We can invest in every single tranche of a capital structure. We can pick and choose. We can decide which layer of the capital structure gives us the best risk-reward profile, and we put it into practice. So as a result of all this, we have been able to invest in 383 opportunities over the last 30 years. Along the way, we have been deploying 20 billion. And almost more importantly, we have been able to achieve a very reliable 1.8x our money on these investments. So what's the market like today? You've probably seen slides like this before. If you look at them, you think, "Oh, my god, rather mixed picture." You may have recently heard that Germany may not be in fine form, technically in recession, 6 out of the last 12 months. But if you look closely, this gray line almost dropping off the slide, that's the automotive industry. We are not involved. No exposure. More than 10 years ago, we took the deliberate decision to stay out of it. So if you take that automotive sector-specific issue out of the equation, what we're actually seeing through our local network is a very robust European economy. We're seeing the same quality deal flow like in previous years and actually looking forward to deploying. And if you look at the rate of our deployment, you can see that it doesn't hold us back from doing the right deals. Again, remember, we can pick and choose where we go. If we feel the market is too expensive, a case overpriced, we don't have to and/or we can go in a different layer of the capital structure. Very few people can do that. So sounds all very interesting. So maybe someone else might also want to do it. And the question, of course, who are we up against? And the honest answer is on the continent, very few, if any. There's a number of well-established debt providers, they can do more than one tranche of a capital structure, sure. And yes, there's a number of private equity colleagues of ours. They would do the equity, but they couldn't and wouldn't want to get involved in the debt structuring of the transaction. We can do everything across the whole range, and that is a big advantage. And if you see how we've been investing in recent years, we're working with families, management teams and PE colleagues still. They like the approach. We're different. What we bring to the party is clearly a differentiator. This strategy, as you know and have heard, it's been sort of with us for a while, and we have continuously developed it, organically growing it. And if you look at these circles, you could probably get the impression that we might have moved away from our core, but no, we haven't. What actually happened is we have grown with the companies we have been backing. We have been growing with the management teams we have been supporting. I'll give you a couple or maybe just one example out of sort of real life. We had a company in the German portfolio, nora systems, the world market leader in rubber flooring for hospitals. We got first involved in the business during the investment period of Fund V, just a mezzanine investment with a tiny equity contribution. Company, rough numbers, made 20 million profits. Two years later, the management team wanted to buy out the previous fund, stay in control of their own destiny. We supported them all the way through the commission. We underwrote the whole balance sheet, senior debt, mezz, private equity and some of the remaining core equity that they themselves couldn't provide. So it was a 20 million business, rough numbers, in the investment period of Fund V. It was a 40 million profit business during the investment period of Fund VI. We sold it last year to an American strategic. And if he didn't have his own American financing with him, we would probably have done it with the expectation that the business will eventually achieve 60 million. Point being, if you want to stay with the right companies, they are growing, you want to be ready, you want to have the funds to support them. Hence, in our view, this is a rather organic growth profile, well executed, and the market kind of needs and wants it. In order to do it well across all regions, with the increasing size, we have recently added to the team, in the last 12 to 15 months, a number of executives in basically every geography that we are currently covering just to make sure that we got the same quality, same base that we can deploy larger arrangements we have. But we have also, as Benoît just mentioned, started to basically bed-in the new colleagues for future fundraisings. A Fund VIII or Fund IX is likely to be bigger, as I just outlined on the previous chart. And we have gone, and again that might be different -- differentiating our strategy, we've gone for senior people. The majority of the new hires are managing directors. They all come with a relevant -- very relevant experience, some of them from KKR and from Carlyle. So well-known competitors on the equity side, and we're quite happy with our team. What we have pulled together for you, also in terms of market opportunity, what are we seeing? Where is the market heading? Is atypical, for us, typical. So the last 12-month snapshot of our funnel -- funnel from origination to getting the deal done. And if I'd shown you the year before that and the year before that, that will probably look almost identical. Point being, we're seeing over 300 investment opportunities through our network every year. That's what we originate. And we're talking real deals here. Proper discussions, first initial financials being exchanged. And then , as you can see just under 10%, make it into, through our funnel, the next diligence phase, discussion phase on the IC level. So very disciplined approach. Wrong sector, wrong size, can't agree on terms, we move on. If it's too complicated, we move on. We want to have a portfolio of companies we like. Managers we trust. 17 make it to the final stage. And then ultimately, and that's been the average for the recent years, we invest 4x a year into new transactions. You could now probably say, "Well, isn't that a rather small number before compared to the 17?" but please bear in mind that final decision-making stage could involve us supporting someone on an add-on, which he can't get done. This could involve a family situation, various tribes. They need a unanimous decision, they can't get to it, deal does not happen. So that wasn't waste of time then, but that was unfortunately a deal that didn't get through when we were planning to do it. As a result of this approach, the current Fund VII portfolio in Europe shows exactly what we want to get to, a very diversified portfolio. Diversified from an industry exposure as well as a geographical perspective. Two deals in the U.K. and Ireland, 3 deals in France, 1 deal in Germany, 1 in Italy and 1 in Spain. And if we were to look at each of these deals in detail, which we don't have time for today, you would see that in each and every deal, we did contribute at least 2 elements of the capital structure. In some cases, 3 or 4. So we're really making use of the flexibility of our mandate. We're also making sure it's going to prerequisite for us, but actually our partners like it, that we have full Board representation. Each and every case with full Board representation. And if the case, for example, were to involve early on a full potential program that could go as deep as weekly meetings with management, monthly operating committee sessions and definitely quarterly Board meetings, we are always heavily involved. We like to know from within what's going on. We don't want to be told by someone else. And it goes both ways, by the way. The most PE friends of ours, most families like us in the structure. They like to hear what's going on in the financial markets, pricing-wise. We help them with our local network origination to add-on acquisition targets. We evaluate CapEx projects. So it's a very mutual relationship. We like it that way in our clients too. And as a result of all this, this active portfolio management is rather rigid funnel management in the early stages of a deal. We've been able to achieve, what we believe is, a very impressive, a very reliable performance. You can see that we are very narrowly centered around 1.6x, 1.8x money mark, which is in line, by the way, with pure private equity. But we have a considerably lower standard deviation. It also shows you how resilient our portfolio is, and that goes back to the selection process. And finally, and I've mentioned it, it's obviously not only us, it is the partnership approach that we are practicing. If you're working with the right team, if you're working with the family that you know and you can trust, you'll get indifferent information. You're getting a lot more reasonable business planning assumptions. So it's kind of all thrown together, allowing us to show these returns. And there's one other aspect I should mention. So we're actively managing the portfolio, the cases as such, but we're also actively managing the fund. Another reason for this very narrow band of reliable returns is the moment we can refinance the tranche, the moment we have a window for an early exit that will give us the originally contemplated return, we do execute on it. The earlier you anchor, the more predictable and reliable you are to an outcome. And we do, do that on a regular basis. We do focus and look at the fund from that perspective. So let me summarize what we have achieved so far with our European corporate strategy. We've created this, what we believe is, clearly differentiated platform in Europe. We provide flexibility to capital structure and problems that no one else currently offers. We have delivered, on the back of that, a 30-year record of very consistent performance. And we do see, back to Benoît's point, a significant market opportunity out there. There's more and more private companies. The companies we are backing are growing and the teams that we're working with have ambitions, and it's just natural for us to take this model forward. In order to capture future growth, I just mentioned that we have built out the team. We have a deep origination capability, we've added to it. So we are ready for when it happens. And one thing that we don't really want to change is the final point, we will continue to be very disciplined on the investment decision process. So I hope that I've been able to demonstrate that we've created a very robust and scalable fees on committed business here in our European corporate strategy. And with that, I would like to hand over to Vijay, who has the next section. Thank you, Vijay.

Thank you, Jens. Good morning, all. My name is Vijay Bharadia, and I'm the CFO and COO of ICG. I joined ICG just over 8 months ago. Prior to ICG, I was at Blackstone. I was the International CFO of the firm responsible for finance and all of its operational requirements outside of the United States. I will now provide an overview of how a growing business like ours impacts the growth of our fee revenues. Growth drives fee revenues higher. The key components of the fee revenue growth are derived from larger sizes of our existing vintages, new strategies and stable case to fees or, in some cases, higher average fee rates. Coupled with -- this, coupled with the fact that, actually -- the 3 of these would result into higher management fees and higher performance fees. I will now illustrate what this means. If you take our European corporate business that Ian's touched on, our most recent fund, Fund VII, which had EUR 4 billion of capital, 60% higher than the previous vintage, this fund earns fees on committed capital. We were able to maintain the headline fee rates at 150 basis points. However, we were able to reduce the level of discounts we give to our clients. This resulted in average fee rates of 143 basis points or 9 basis points higher than the previous vintage. This translates into EUR 24 million of incremental revenues per annum. The same is similar for our direct lending strategy, senior debt partners. These are the bubbles at the bottom of that chart. Here, we were able to increase the fee rates by 10 basis points to 85 basis points and, importantly, not give any discounts. This has a significant impact on the profitability of the firm. This fund earns fees on invested capital. For this strategy, we announced at the half year that we're actually starting to raise the fund for the next vintage, SDP IV. We started the fund raise this financial year and we expect that to straddle into the next financial year. So to put this into perspective, this chart shows the cumulative fees of the 3 vintages of both of our flagship funds, Senior Debt Partners on the left-hand side and European Corporate on the right-hand side. For SDP III, our direct lending strategy, the existing fund is expected to more than double in fee revenues over the life of its cycle. For European Corporate, the story is similar with expected fees of over 70% over the life of its fund. Importantly, we have actually not increased the level of our teams, investment teams or operation teams, at the same rate. Therefore, driving operating margin growth. This demonstrates that larger funds and higher fees or stable fees can have a significant impact on our fee revenues. We have continued to grow the number of strategies that are earning fees on committed capital and also earning performance fees. In 2010, the first 2 bubbles on there on the left-hand side, we had only 2 strategies: European corporate and the Asia corporate fund. Today, we have 7 earning such fees. In addition, as we've mentioned in the past, given we have around 85% of our funds that are in closed-end funds, we have revenue visibility over a very long duration. As we continue to grow the number of funds, we expect the management fees to grow and the performance fees to grow in line. Looking at our fee profile, this chart shows the quantum of our performance fee revenues relative to third-party management fees. We recognize performance fees when the whole fund has passed its hurdle rate or is expected to pass its hurdle rate over the short term. Hurdle rates are typically 8%. As a proportion of management fees, performance fees in the last 3 years have been between 10% and 15%, as shown by the orange line in there. The right-hand side of this chart is showing the annualized revenues from the first half. Our current performance fee guideline is GBP 20 million to GBP 25 million per annum. As I mentioned earlier, we expect our performance fees to grow in line with our management fees. We are, therefore, updating our performance fee guidelines to represent 10% to 15% of our third-party fees, assuming current product mix. So to conclude, growth of fund strategies will accelerate the growth of high-quality earnings. Our model with a large proportion of fees being earned on capital that is tied up for long duration provides long-term visibility on our revenues. Performance fees are expected to grow in line with management fees, and as long as market fundamentals remain attractive. There is, therefore, a significant potential for increasing shareholder value. Thank you. I will now pass on to Eimear, who will talk about ESG.

Thank you, Vijay. Good morning. My name is Eimear Palmer, and I'm Responsible Investing Officer at ICG. So I joined over a year ago from the Carlyle Group, where I did a similar role. I spent 7 years working to integrate ESG into the investment process and also working directly with portfolio companies to improve their ESG performance. And my role has evolved, and that's partly been true to my own career -- personal career progression, but is also really reflective of the importance that ESG has taken on in the industry over the last few years. It's really moved from being nice to have, to being -- and a check the box to being an absolutely essential license to operate. Discussions at Davos last week were dominated by climate change and loss of biodiversity, and we are acutely aware that investment managers such as ourselves have a key role to play in building a more sustainable economy in an age of urgent transition. And as such, ESG is fully embedded within our investment process. I work very closely with the investment teams during initial screening and due diligence, and we have many examples of deals that we've turned down solely for ESG reasons. Firstly, I wanted to highlight our ESG priorities. And these reflect our key areas of focus and illustrate some of the material ESG topics that we consider when we engage directly with portfolio companies where we have significant influence. And these also help to define our own firm-level ESG priorities as well. Our ESG journey formally began 7 years ago when we became a signatory to the UN Principles of Responsible Investing, or the PRI, in 2013. That was the year we established our responsible investing policy, and we began to integrate ESG into the investment process strategy by strategy. And after considerable efforts, we are very pleased to report that our responsible investing policy now covers 100% of our AUM. Now this time line illustrates some of our key milestones over the past 6 years in terms of responsible investing, D&I and also our charitable initiatives. And as you can see, we've really been doing a lot. So I'm not going to talk through all the points on the slide, but I just wanted to highlight 2 or 3 achievements from an ESG perspective. So firstly, engagement and training; secondly, transparency; and thirdly, benchmarking. So in terms of training, it's so important that our investment team understands ESG issues because they are the ones who are responsible for the day-to-day implementation of our responsible investing policy. And since 2014, we provided ESG training every 2 years. So in 2018, we partnered with the PRI Academy to deliver a bespoke program, which was delivered to over 117 ICG professionals. And we are partnering with them again this year to launch our new training program in June. We also actively engaged with our portfolio companies, and we'll be talking a lot more about this later in our -- through our annual ESG survey and our ESG KPI process. And we collaborate and engage with peers in the industry. And one example of this is the new PRI working group to improve ESG reporting -- corporate reporting, which we're now a member of. And that's really one of the key challenges we face as an investor in private equity and private debt, it's the lack of consistent comparable ESG information. And that's why transparency in our own ESG efforts is really important. And we've been working over the last year to improve our ESG reporting and increased transparency to you and other stakeholders. So we released our enhanced annual ESG report in October, which for the first time included 10 case studies from across all our strategies. And in November, we released our first European fund ESG report, which is a fund-specific report for Fund VI and Fund VII, detailing, company by company, the targets that we've set in terms of ESG and the progress that we've made. And finally, benchmarking. So as you can see, we are constituents of the FTSE4Good, and we've just recently been reconfirmed. We also complete a PRI assessment and a CDP climate change assessment annually. And these are really important tools in terms of benchmarking our responsible investing practices. Last year, we achieved an AAB score for our PRI assessment, outperforming our peers in the private equity module. And we are very pleased to report that we recently achieved an A- score in our CDP assessment, and that was up 2 grades from our B score last year. And this is a result of our more recent climate change initiatives, which we'll discuss shortly. And to put that into context, our A- score puts us in the top 6% of all companies globally that are reporting under the CDP, and the average for financial services firms was a C. And now just to highlight some of our more recent achievements. So we've had a very successful year formalizing and deploying our enhanced responsible investing framework, and this framework sets out how we integrate ESG into the investment process from screening, due diligence and monitoring through to eventual exit. And each strategy incorporates the relevant elements of the framework depending on the nature of the strategy and the level of influence and access we have to management. So what have we done specifically over the last 12 months? Well, we have 3 new components. So firstly, we have our firm-wide exclusion list. And this ensures that we don't make direct investments in companies that are incompatible with our corporate values. Secondly, we developed and implemented an ESG screening checklist, which we use to assess every single investment opportunity. And this is a really comprehensive checklist which considered -- considers ESG risks such as sector and geography along with environmental, including climate change, corporate governance and also ethical concerns. And we attach this checklist to every single investment committee memo. And finally, we rolled out an online ESG screening tool called RepRisk. And this captures negative ESG news, which helps also to inform our investment decision-making. And now moving on to climate change. This has been a huge focus for us and has really been around 3 key themes. So firstly, understanding the risks; secondly, engaging with portfolio companies; and thirdly, setting our own targets. So in terms of understanding the risks. Firstly, we conducted a TCFD review. And so for those of you that aren't aware, the TCFD is the task force for climate-related financial disclosure. And this is a set of voluntary disclosures that help you, as investors, understand how we assess and manage climate risks. And these might be physical risks from flooding or drought or transition risks from changing policy or legislation and changing consumer behavior. All of these risks that might impact the valuation of the underlying assets in our portfolio. So we performed a GAAP analysis of our practices versus the TCFD recommendations, and we are pleased to report that we had our first TCFD disclosure in our annual ESG report, which was released in October. We also engage with portfolio companies on climate change. And we work with companies where we have access and influence to management to help to improve their energy efficiency and to reduce emissions, where this is a material issue for them. And finally, as a firm, we set our own targets. So as a company, we've committed to reducing the emissions from our own operations by 80% by 2030. And our move to our new London head office shortly will source 100% renewable energy, which will help us towards achieving this goal. And now moving on to engagement. Our annual ESG survey is one of the key tools we have in terms of engaging with our portfolio companies. We use this in our corporate strategies in our European fund, our Asia fund and in senior debt partners. We first circulated our annual ESG survey back in 2015 to understand how portfolio companies manage ESG issues. Initially, we sent it to about 40 portfolio companies and it had just 7 questions. So it was quite low-touch. And over the years, we've really enhanced and extended the survey. And this year, it included 27 questions. We circulated it to almost 70 companies and had a 93% response rate. And here, you can see a snapshot of results from our European fund portfolio companies. So just to clarify, achieving 100% on each target is not always possible, as this includes companies where we invest alongside a sponsor, and so ESG may not be as high on their agenda as it is on ours. As you can see, however, 80% have set environmental or social targets, which is up from 65% last year. And also, climate change has been a particular focus. So 1/4 of the questions in the survey now specifically address this topic, and we're starting to see some really good progress here with over 60% of the companies having set climate change or energy-related objectives and targets. A really significant engagement project, which we've rolled out over the last 12 months, has involved working directly with portfolio companies to improve their ESG performance. So over the last 12 months, we've conducted 19 ESG reviews across portfolio companies in our European fund where we have access and influence to management. And the purpose of these ESG reviews is to help us understand the company's ESG risks and opportunities. We then collaborate with management to set company-specific targets and KPIs, which we'll be monitoring annually. And as you'd expect, I mean, these companies vary a lot in terms of their ESG capability. Some are very sophisticated and have dedicated teams while others are in the much earlier stages and just recently started recruiting dedicated ESG professionals as a result of our engagement activities. And our objective through this engagement is really to drive meaningful progress from the date of our initial investment through to our eventual exit. And the results of these really extensive projects were summarized in our fund-specific report, which I mentioned, were sent to those investors in Fund VI and Fund VII in November. And just to give you an idea of the engagement that we do, this is one example, which is Euro Cater. The Euro Cater is a Scandinavian food service supplier to restaurants, hotels and caterers. So it's a B2B. ICG invested almost EUR 200 million in 2013. And since then, we've engaged with the company to structure and formalize their approach to sustainability. And we collaborated with them to launch a number of new initiatives. Responsible sourcing has been a key focus since we invested and purchasers received extensive training on sustainable procurement and Euro Cater have committed to phasing out cage eggs in their own production by 2020 and from across their supply chain by 2025. The web shop has also been redesigned to promote more sustainable products. For example, when a customer searches for cheese and the first options that come up are vegan cheese. If you search for fish, it comes up with line-caught fish. And they also really work to prevent food waste. So to put it into context, food waste in the U.K. was 9.5 million tonnes in 2018. It requires an area almost the size of Wales to produce the food and drink that we currently waste, which is frankly shocking. So this is a key priority for us and we worked with the Euro Cater to launch a new web shop initiatives where customers can choose to purchase food nearing its sell-by date at a discount. And as a result, Euro Cater prevented 284 tonnes of food waste in 2018. They also work with organizations to distribute surplus food to shelters and asylum centers, and from an environmental perspective, they're really focused on implementing more energy-efficient cooling and also lighting systems, which obviously helps to reduce costs and reduce corresponding emissions at the same time. And now to focus on our 2 new sustainable strategies. So we believe that the financial services industry really has a significant role to play in achieving the transition to a low-carbon economy. And we are committed to supporting this. And as such, we recently launched 2 new sustainable strategies: Sale and leaseback and infrastructure equity. So to give you some backgrounds to these lovely colored squares at the bottom, these are the 17 sustainable development goals, or the SDGs. And they were adopted in 2015 by all U.N. member states. And they are a blueprint for sustainable development to end poverty, protect the planet and to ensure prosperity for all. It's actually very clear now that progress is not occurring fast enough to achieve the SDGs by 2030, which is the deadline, and that urgent action is needed now to change the current trajectory. Between our 2 new strategies, we contributed to achieving 5 of the 17 SDGs. Sale and leaseback has a dedicated pool of capital to improve the sustainability of the fund's assets. And infra equity excludes high-emitting industry sectors such as coal, oil and gas, and it also excludes nuclear. And Kevin and Jerome will talk you through both strategies in more detail shortly. So in summary, we believe we've achieved a lot over the last few years and particularly over the last 12 months. We also have a lot of initiatives currently underway. Climate change remains high in our agenda. And we're standing on the brink of a decade that will be defined by our action or lack of action on climate change. So we will continue to prioritize this. We're excited to be kicking off the process to assess the carbon footprint of our 2 corporate funds, our European Fund VII and infrastructure equity. Transparency also remains high in our agenda, and we'll continue to update our website to ensure that you are fully up-to-date with all of our progress. Our responsible investing policy and our annual ESG report are already there. So please do take a look. And please feel free to reach out at any point if you have any questions or would like to hear more about any of our initiatives. So in summary, we are proud of our achievements to date but very conscious that there is more to do. Thank you very much. Now I'll hand you back to Benoît for a brief Q&A session.

Thanks, Emma. I've been surprised by how quickly our efforts in ESG have turned into a competitive advantage, and I think this is only the beginning. You will hear later about sale and leaseback, but it's really fascinating how, for sale and leaseback, we are showing ESG as a cost. Generally, what people are showing is, ESG as an opportunity saying, "invest in my green fund, it will magically create value." We are going out and we're saying, "actually, to make this fund ESG friendly, which essentially in certain leaseback means improving the insulation, lighting and so forth of building, it's going to be a cost. " I think Kevin will -- Kevin will go through that later. And this has really resonated with investors, so that's quite an important topic. And this -- we absolutely need to remain a leader in our industry, a leader on that front. But on that, we're all happy to answer first of question on what we've heard so far. We'll have another session at the end, of course, if you want. Go ahead.

It's Jens Ehrenberg from Citi. Two questions, if I may. I suppose the first one refers to what Jens said earlier, growing with the companies you invest in. Do you provide any split of how many a few investments actually kind of new investments in new companies and how many follow-on investments from previously invested companies?

We don't really -- it varies dramatically from strategy to strategy. The one where we probably have so far, it may also be linked to the maturity of the strategy. The one where so far we've had the greatest success in accompanying business is, but unsurprisingly, our oldest strategy, which is the -- which is that European fund. But if I look at, for instance, in senior direct lending, we're starting to see that as well. We are just in the process of exiting, although we'll keep a small piece, so it's not completely over. But we're in the process of exiting a transaction. It's a French business, flooring business called GerFlor in which we've been invested nonstop for 26 years, I think. And in the last iteration, that's an indication of why we quite like to do this, we really understand those businesses from the inside. In the last iteration, we've made 8x our money over the past 9 years so on that GerFlor business. Does that answer your question?

Yes. And on the other one for you, just to confirm, on year-on-year ESG efforts. So I think you mentioned your PRI score of A, A/B, tell you correctly that, that would be outperforming your private capital to --

Sure. But, Eimear, you may want to take this?

Yes, it outperforms the average of the peers in our industry, so then that we'll have an A score as opposed to B.

[indiscernible] so?

Yes. And within our size range as well. So with -- from the, I think, 30 million to 50 billion. And also just to clarify, that score was from last year. So it was about the result of efforts from the previous year. So we're now in the process of doing our current PRI assessment, which will reflect a lot of the new changes in the enhanced framework that we've put in place.

It's Gurjit Kambo, JPMorgan. Just 3 questions. So firstly, in terms of the sort of shift of public towards private we've seen quite prominently at the moment. Does that mean in terms of realization, I guess, the IPO was a good exit historically. I think that's changing now more towards trade buyers and maybe other people? Is that impacting the way you exit investments?

So what you're describing is right, but more so in the U.S. The IPO market in Europe was never really a big route of exits for transactions. So for Europe, that's not really changing much of anything. In the U.S., yes, that is clearly the case. I mean, if anything, it's making it easier. I mean, the biggest downside of an IPO exit for a private investor is that you're locked in for a period of time and then you're mark-to-market on your investment. A private equity owner will always prefer to do a private exit. It's cleaner. You have your full valuation immediately. So if anything, it's a positive development. But behind that, it's more the capacity that is meaningful than is it -- is it the public market versus the private market. The fact that there is so much capacity in private market, that's clearly helping the -- certainly exits, but it's helping the growth of the market as a whole. That is what we are experiencing today.

I think it was Slide 16, you gave the 3 different strategies. Just when you think about your business over the next sort of 5 years or so, how much do you sort of think about the existing strategies? I think it was Slide 16.

Well, it's going to be too much work then for the next question. So I won't do that.

The question, just really the existing strategies and your sort of follow-up and then the new strategy, how do you think about growth between the 3 different areas?

All of the -- all of them?

Yes.

Intuitively, when we started doing that, and actually, if you go back to some of our presentations from several years ago, our anticipation was that -- and we're actually -- we're still using that slide, which I think is not a great slide because it's doing the more traditional maturity curve of a product, which is not what we're experiencing. So the more established strategies keep on growing, and they keep on growing quite significantly. So you can't -- there is no rule. And we've -- because the private market has been growing, we've been surprised by the growth of the market. 5 years ago, if you'd ask, okay, what is the market potential for direct lending in Europe, for instance. We probably would have said, well, we might be able to invest the fund of $2 billion, $3 billion, which is pretty much what we did because that was our estimate of the market opportunity. And the market is run well ahead of us. We raised more less time and the market kept on growing, so we're raising more now. So it's a difficult one because the whole market is growing. And so it's impacting both the well-established strategies, the more recent strategies. The one where there was a question mark because it required quite a lot of execution capability and marketing is newer strategies. That's a lot more difficult. But the price is quite big as well, which is why we need to keep coming up with these new strategies and making the effort rather than milking what we have. We could easily, easily grow for the next 10 years and more just milking all the strategies that we have launched. There is very significant growth potential there. But if we're thinking further out, then you need the brand-new strategies today. They take a long time to bed-in.

Yes. And just a final one. In terms of the proportion of investments that you actually do versus what you actually look at, I think it's remained relatively consistent. Your fund sizes are clearly getting larger. So how much bigger are the deals becoming in terms of you're doing it same investing with fewer same level of deals?

Yes, they tend -- I mean, the size, the average size tends to follow the growth of the funds. And there are differences strategy by strategy, but essentially, that's what you're seeing. Putting it differently, you're not seeing necessarily many more deals in a vintage because the vintage has increased. You're just doing bigger deals. Incidentally, that is one of the reasons why we launched last year the European mid-market fund because suddenly we had started to no longer look at or do the more mid-market investments, which was a missed opportunity because it's a sizable part of the market. So we've raised the fund dedicated to that part of the market. Sure.

[Sandon] from Lloyds Bank. Eimear mentioned in a ESG presentation that sometimes ICG partners with sponsors that have less of an ESG focus than you do. What's the approach for that going forward? Are you going to work with them less to make sure that you stay on top of the ESG priorities?

That's a very good question. It's quite difficult to do when you are essentially leading the field. So I mean, Eimear is right. I mean, there are different sensitivities. And by the way, they could be very different geography by geography. So we have to work with them. There's only so much you can do. If you're purely in a debt instruments, for instance, it's very difficult to have an influence. You can ask for the information, but it's very difficult to have influence. If you want to set up KPIs for instance, for management, it's very difficult if the private equity sponsor doesn't feel that this is top of their agenda. What we do, do, however, systematically is screen at due diligence level. So where we will decide not to do a transaction is if we feel that clearly, there's no focus at all. On ESG matters upfront. But once you're in the transaction, depending on our involvement, we may have more or less influence.

I'm Liz Miliatis from Merrill Lynch or Bank of America now. Firstly, you guys obviously dominate the European market and have some presence in the U.S. and Asia. How do you feel you're able to invest in the U.S., which is obviously very competitive, and Asia, which is obviously a very, very different market from the other 2? Secondly, I was hoping for or perhaps a revision to your AUM guidance actually, given we've got the senior debt partners being launched -- or being fundraised soon and the Europe Fund VIII, and if both are going to be quite large funds from my estimates. Why didn't you revise the guidance? And then finally is...

You've got to wrap the question.

Three questions. And then finally --

You'll get another shot at the end of the --

I have more. On ESG --

I'll remember them all. Okay.

On ESG, is it safe to assume that you won't launch an ESG specific fund because they're all sort of ESG approved?

Okay. U.S., Asia, yes, you're right. I mean, we are a European manager. And the U.S. market is quite a protected market, actually, and very few European in alternatives managers have done well there, which is why we've taken our time. We've been in the U.S. for quite some time now. And we always apply the same recipe, if you will, is we launched one strategy. We bed it in. We wait for that strategy to be established, and we build on that to raise another one. We don't want to get carried away. So that's what we've done, and we've done it quite successfully. So now we have a profitable franchise in the U.S., we have about $10 billion of AUM in the U.S., which for a European manager isn't bad. So it's quite good in our industry. So there is more to be done, but we're adding those pieces progressively. You will later see a video of H. Alan Jones. We've hired out of Morgan Stanley to launch a mid-market private equity business in the U.S. But again, we haven't brought in an entire team. We brought him in. He's building a team around him. We're going to progressively during the course of this year probably make a few investment out of our own balance sheet, get comfortable with the risk-taking the approach of the team and then fundraise. So we're doing it step by step. I think my answer to you for the U.S., it's a great market, but you have to be a careful European manager. So we're doing it step by step but so far with reasonably good success. Asia, it's a different environment. We've been in Asia for a long time, 17, 18 years. The difficulty in Asia is it's a collection of relatively small markets for alternatives. And so the difficulty there is managing teams that are spread apart with a market opportunity that is not as deep yet as it is in Europe or the U.S. But you need to have presence there because this market is growing. It will continue to grow, so you have to be there and continue to grow with that market. There's also an added benefit, which we've already seen is the fact that we've been present investing in the region for so long is very beneficial when we're fundraising because we are known. We're recognized by the investors there. That's true for the Southern wealth funds, in particular. But for instance, it's true in Japan. I mean, Andreas, who's leading our marketing effort, is here, and he was fortunate enough not to have to speak to that, but I'm sure he'll be happy to answer questions. And Japan, for instance, that's had an impact. The fact that we've had a presence there and we've been marketing there now for years, were recognized. And as this market grows, I think we should benefit. Your second question is on AUM guidance, right? This is not an easy one. You're right to point out that if you look at what we've delivered on AUM growth, the guidance that we gave actually not that long ago. It's -- we adjusted that guidance about 1.5 years ago, so we already increased it by 50% 1.5 years ago. We far exceeded it. The difficulty with it is that it's a rolling target, which is not necessarily always understood. And by nature, our fundraising cycle will -- is a cycle. And so this year, we had wrongly anticipated to be a low year in our fundraising cycle. But that's before we brought forward the fundraising of SDP 4. Now it looks as though it's going to be a high year. But next year then is likely then to be the low year. So it's very difficult to anticipate. And I think we'll see. But I think for now, we're trying to give better guidance for the year, for the medium-term rather than try to work through an entire cycle, which I think is actually quite difficult to do. Last question was on ESG, which I think is -- that's another one for you. Quite popular, Eimear.

ESG fund. So yes, I think -- so we have our 2 sustainable strategies, but I think there is definitely the opportunity to go further and something we're considering possibly impact in the near future.

Yes, absolutely. So that's on Eimear's to-do list. We will be careful. We do not want to fall into the greenwashing trial. So we will not launch a fund if we don't believe there's an investment case for it, but I think there might be. So, so far, we've launched strategies that are essentially made green by our approach to them, but a pure impact fund, where the very nature of the investments are impactful. That's a possibility. There is not a great history of it, but there's no doubt there's an opportunity there, and we want to. So that's one we're looking at. We still need to establish where can we defend there is a proper investment case beyond the fact that its impact. Great. I think we could -- well, one more question, but I think then we need to resume the presentation and we'll take more at the end.

[indiscernible] from Sterling Investments. I was a happy shareholder this morning. You also made me proud with a very good show. I've got 2 questions on this slide. One is balance sheet and one is off-balance sheet. One is that --

Can you show the slide again? Move it quick for me. Okay.

I'm focusing on 100 billion.

Yes. Wonder why.

I think it's an absolute achievable target under your leadership. The question or rather a concern from the market perception side is how much of our own balance sheet will be deployed as we head towards 100 billion.

Well, I think that's one for Vijay.

Yes. Well, actually, if you don't mind waiting, I'll actually be touching on that very briefly.

Okay. Good. And the second question is, I think, Ian referred to saying that you can recruit people, the senior MD, et cetera. So the question is that how much would the cost increase? And how much of new talent is yet to come and join the team to get to 100 million (sic) [ billion ]?

Well, I don't know. That's too broad of a question. There are many ways to get to $100 billion. But I think what you were referring to what Jens was mentioning, I think Jens was also mentioning the fact that we were technically recruiting because we're thinking of subsequent vintages. And it's actually an opportunity for us. Not so long ago we would not have been able to hire that quality of talent. We weren't as visible. And so we had to essentially homegrown the talent, which works but to an extent, so the fact that we're now able to attract people from the best players out there is clear. Plus it means, essentially, we can accelerate our growth. That's what this means. Because at the end of the day, I mentioned in my very first slide, that it's a people business. It's all about talent. You can't originate the deals if you don't have the senior people with that ability. So that should enable us to accelerate. You're mentioning cost. I mean, I think we need to bring it back to what it means. When Jens has dramatically increased the size of his team in Germany, it's doubled, which means he's hired 2 people. This is what we're talking about in our industry. And so I wouldn't worry too much about cost running out of control. It's not exactly our style. Thanks. Thank you for all your questions. We'll resume the presentation, and we'll have another session in the end. So don't feel too frustrated if you still have many questions to ask. And we have a coffee break. Yes, I think we well deserve a coffee break. [Break]

Thank you all, and welcome back. I will now provide you an overview of how we think about new strategies. As you saw earlier in Benoît's presentation, there are 3 key drivers to growing our business. Benoît talked about the first 2 of these, growing established strategies and developing emerging strategies. I will now give you an overview of how adding new strategies is important and why that plays a critical role in our objective to diversify and create long-term shareholder value. Examples of current new strategies, which we touched on earlier, are the sale-and-leaseback front and the infrastructure equity. And my colleagues, Kevin and Jerome, will talk about those a little bit more in detail later on. Adding new strategies to complement our existing offering is key to growing our client base. But there are 3 key dependencies to this: one, attracting and retaining talent; two, ensuring we have a scalable operating platform; and three, having the capital to invest. And I'll touch on all of these 3 later on. So what is our track record in adding new strategies? The left-hand side of this shows the strategies we had only 10 years ago. We only had 4 strategies 10 years ago. Since then, we've launched 17 successful strategies. We now have 21. The breadth of our capabilities enables us to continue to innovate. So what lies ahead? There are a number of strategies that are in development. A few of the more advanced ideas are shown on here on the most right-hand side with the 4 strategies that are still being worked on. While there's no guarantee, given our track record, we are optimistic that these will be successful additions to our offering. In addition, as Benoît showed in his matrix of our current capabilities across geographies and products, there are many gaps. But we remain selective and continue to explore opportunities depending on client appetite and our ability to attract talent. I will now explain the process that we follow in considering new strategies, which typically follows a 4-phase cycle. During the first phase, ideas are sourced by a various combination of our investment teams, our marketing teams or our CEO. Sometimes we get inbounds on opportunities as well. Once we get an opportunity that we think is interesting, we will test that by soundboarding with some of our investors and also assessing the market dynamics. If we think an idea is worth developing, we'll explore the options of entering the market and how we would be able to differentiate ourselves from our competitors. We also seek to look for talent. This is the most challenging part. Talent in our industry is tied over a long term to the funds they manage. Typically, there are significant levels of unvested carry that are expensive to buy out. We therefore have to be very selective in choosing and picking the talent that we pick. I will touch on the forms of talent onboarding that we take later on. Once we have a team in place, the team will explore investment opportunities as well as work with our marketing and our legal teams to develop the fund. During this phase, the investment process that we apply is the same as our existing strategies. The same level of rigor and the same level of discipline is applied in looking at investments that will then be warehoused on our balance sheet. This is where our balance sheet plays a key role. We will use the balance sheet capital to invest selectively and create a proof of concept. Finally, if successful, we will begin fundraising and generating fees. And that depends obviously if the fund is paying fees on committed capital or on an invested basis. Creating strategies is a long and time-consuming journey in our industry. It can take many years. So as I mentioned earlier, there are 3 factors that are dependent in our ability to launch new strategies. One of them is predicated on the ability to attract new talent. Sometimes our efforts pay off, and we're able to find whole teams. This was the case in case of infrastructure equity and our strategic equity business. Mostly, we tend to find an individual. We then mandate that individual to build a team and develop a strategy. This was the case in the case of North America Private Debt Fund where in 2012, we hired an individual in New York. That strategy now has over 80 investment professionals. And as Benoît touched on, we now have a very large office with nearly 50 people and $10 billion in AUM. Antje, our Head of HR, will touch on later on our talent sourcing capabilities and the process we follow. Occasionally, we may acquire a business as was the case in our U.K. real estate business when we acquired Longbow. M&A in our industry is extremely challenging. There are different cultures, and as I mentioned earlier, people are tied for a long term on their funds. Whilst we never say never, we don't actively pursue M&A. And if we did, it would have to be meaningfully accretive to shareholder value. And we believe at current point in time, there isn't that much value active in our industry. The second factor in adding value-enhancing strategies and growing our business is the ability of our operating platform. New products, funds or segregated mandates, together with increasingly bespoke client reporting requirements, create a lot of complexity for our industry and ICG. We therefore continually assess the capability of our platform, focusing on the following key components. Organization. As we grow, we want to ensure that we don't become fragmented. We are nimble. We want to remain nimble and entrepreneurial. We therefore have to ensure that we can figure out a way that we can functionalize some of the services that we provide to our clients and our businesses. This entails attracting and retaining talent, operational capabilities that are very significantly difficult to find in our industry. The other component in assessing our operating platform is sourcing. As we get bigger, we continue to think about whether we carry out processes in house, through our third-party administrators or create centers of excellence that can actually support our businesses and our clients on a 24/7 basis. We apply a smart approach to sourcing. Smart sourcing, if structured and managed well, can create significant capacity and productivity. Process. This is an area that requires ongoing assessment. As we become more complex, business processes can become disparate and duplicative. We therefore need to figure out how we can implement process standardization. This will improve and streamline workflows. We can then introduce digital workflows to systemize complex processes further. And finally, technology and data. These can be game changers. Having the ability to store data in one place, which the whole organization is able to utilize and apply, is valuable. Having a single source of truth can be transformational for any organization. We continue to look for opportunities like that across our organization. These 4 components form the basis of assessing our platform and our execution capabilities. I have found our operating platform to be impressive since I joined 8 months ago. We've been able to grow the revenues and improve operating margins. As we look towards longer-term sustainable growth, we expect to continue to invest in our operating platform selectively as well as create sustainability and ensure that our platform is fit for the future and therefore take a competitive advantage against our competitors whilst maintaining operating leverage. The third factor in growing new strategies is having access to capital. This is where we have a differentiation. Our balance sheet is a differentiator in that regard. It plays an important role throughout the growth of the strategy. During development, we use the balance sheet to hire teams as well as seed and warehouse investments. In respect of strategies that we haven't launched yet, this allows us to take advantage of making investments and creating value for our future clients. It also enables us to develop a track record. Our balance sheet is also an accelerator. Once we launch a new strategy, we are the anchor investor, which is pivotal for our marketing efforts. Finally, once the strategy is established and mature, our balance sheet supports the fund by co-investing in our funds, demonstrating strong alignment with our clients. We believe our balance sheet is an enabler and an accelerator for our long-term growth and shareholder value creation. Just to give you some perspective, looking at what our balance sheet has committed over the years, over the last 7 years, we have committed GBP 1.4 billion across all of our 4 businesses. This excludes capital that we have to put aside for regulatory purposes for our CLO business. In this financial year, we've committed over GBP 350 million in 3 strategies to date. This is a significant commitment that few of our competitors can match. This is our advantage. There was a question earlier about the size of our balance sheet. So what has been the profile of our balance sheet relative to our AUM? In 2010, our total AUM was EUR 11 billion, and our balance sheet was EUR 3 billion or 27% of total AUM. We gave a trading statement update today. Our total AUM is just under EUR 43 billion, and our balance sheet is EUR 2.7 billion. As we continue to grow, we expect our balance sheet to remain around EUR 3 billion. So if hypothetically, we had EUR 100 billion, that translates into 3% of total AUM. We expect our balance sheet to be a relatively small but a very important component of our long-term growth. So to conclude, we have an unrivaled record of successfully adding new strategies. Our brand is becoming more prominent, and that is helping to attract talent. As we grow, we will continue to invest in our operating platform to ensure it's fit for the future as well as use our balance sheet to invest in that growth. We believe we have a significant growth potential whilst ensuring we maintain our operating leverage. Thank you. I will now pass on to Antje, our Head of HR.

Hello, everyone. I'm Antje Hensel-Roth. I'm the Head of HR. I've joined ICG in 2018. Prior to that, I spent 15 years in consulting, most recently running the global asset management practice at Russell Reynolds, the executive search firm. And in that capacity, I have actually worked with ICG since 2011 and been an external adviser on succession planning, on diversification strategies as well as on senior hiring more broadly. So we've heard a lot about growth strategies and diversification today. And when we look at the people who underpin this, what do we actually look for? I think by way of background, ICG's success is built on a culture of entrepreneurialism, of business building and of innovation. At the same time, our background is very much, certainly from an investment perspective, in downside protection and risk-adjusted returns. And that fits us through the organization as well. So therefore, the kinds of people who we look for and the kinds of people who do best at the firm tend to be the ones who are very proactive, very ambitious, want to make a mark, want to build the business. But crucially, they have their risk management and you need their egos quite well under control. In return, we offer them a multitude of opportunities to make this impact. And as a result, the turnover tends to be very well adjusted at about 8% to 10% in total. This is geared predominantly towards the more junior end of the spectrum. And we believe that's actually quite healthy to ensure that both we get new impulses from fresh blood, but we also retain stability across the firm. Undoubtedly, the talent market has become a lot more competitive in recent years. And that also holds true particularly when looking at attracting people from rival asset management businesses rather than necessarily from banks or consulting firms. And therefore, we've revamped our recruitment approach slightly. And we believe very much in a holistic strategy, which both incorporates intermediaries and [ planful ] hiring, but it also incorporates more opportunistic recruitment with an "always on" mindset. And what that means is the best people when we are ready and when they become available, we will find ways to work together. And it also is predicated on a proactive outreach culture, meaning we've built relationships over many years. We cultivate them. We ensure that we're forefront of mind. And that has enabled us, particularly in the last 3, 4 years, to hire some significant heavy hitters across the investment side and fundraising as well as in terms of the operational infrastructure of the business. When we look at staff growth, we've seen earlier AUM have quadrupled over the past decade. Staff numbers have tripled in the same period. The U.K. remains by far our biggest location, but we steadily diversified geographically into new areas. The U.S. now has almost 60 people and is rising. But we're also augmenting in Continental Europe and indeed in Asia Pac. It's important for us clearly to ensure that across both private and public debt as well as in private equity, the U.S. remains a big growth market. Real estate is probably slightly further out but certainly on the radar screen. And in Europe, our local-for-local model, meaning deal executives and indeed fundraisers originating from local markets sourcing and originating money from local markets as well, has served us incredibly well. And to Jens Tonn's earlier point, the fact that we've been able to create proprietary deals in many geographies across Europe and also in Asia Pac is very much due to the fact that we have presence and that we have shown commitment to those regions for many, many years and, in some cases, indeed for a couple of decades. When we then look at the shape that our hiring has taken over the last few years and will likely continue to take, there are team hires. We heard some of this from Vijay just now, and you will hear from J?r?me in our infrastructure private equity team in a moment, infrastructure being a prime example. We've hired a 7-strong team in Paris. We've just augmented this with an additional hire in Frankfurt. And we continue to keep our eyes very much open and build relationships with interesting teams all across the markets globally. Team building is equally important. And we'll hear in a moment via a video from Alan Jones, AJ, our most recent recruit in the U.S. He is someone who's first been on my radar about 10 years ago. We've known each other a long time. And clearly, having looked at the U.S. for a very long time, we wanted to be absolutely sure that we hire the right person who can attract the right people, who can do great deals, who can have an impact in the market, who is a cultural fit as well and can make this a sustainable business rather than, as some of our European cousins, charging into what is the world's largest market and not necessarily taking the longer-term view. So we're delighted to have AJ on board. And lastly, we still continue to practice team augmentation particularly in the European corporate business. We've made over the last year 3 significant hires: Zeina Bain from Carlyle, whom we very long admired for her exceptional deal doing in the U.K. and Northern Europe. Jamie Rivers from BC Partners is another example who did great work in U.K. private equity but really wanted to come to a firm that allowed him to go up and down the capital structure and take advantage of opportunities more broadly rather than purely in the buyout market. Another example being Thierry Beliard, who joined us from ADIA and therefore brings both the asset owner mindset but also a lot of experience working previously for a third-party asset manager. So let me hand over to a little video of...

I've spent a little more than 3 decades in the industry, and the last 25 of those years had been at Morgan Stanley, where I was fortunate enough to have been given the opportunity to build and lead a number of the firm's businesses. Most recently, I spent the last 12 years rebuilding the firm's alternative investment platform. And that's an opportunity that I really enjoyed and really stands me in good stead for the opportunity that I have now in ICG. I've known ICG for more than 20 years. In the late 1990s, I was given the opportunity to relocate to London to build Morgan Stanley's European leveraged finance business. Then at that time, ICG was already an important leader in the European credit markets. And so for me -- and I got to know them originally as a very tough and very disciplined competitor. And I was very impressed by that. And what struck me about ICG at the time was their well-deserved reputation for pragmatic creativity. And what I mean by that was, they're very good at looking at the specific needs of their clients and working very creatively to bring them the best possible solution. So I knew them originally as a competitor, but I came to follow them over the years as they continued to grow in the asset management business. I think what attracted me to ICG was really the excellence across what I regard as the 3 important pillars of strength in the asset management business. To succeed in asset management, you really need to be excellent in 3 important areas: One, of course, is investing excellence. And ICG has an extraordinary and sustained track record for investing excellence across a broad number of funds. The other 2 areas are equally important, however, fundraising and fund administration. ICG has really built a fundraising machine that has continued year in and year out to deliver extraordinary results, and that's critically important for someone like me who's setting up a new fund. And the third leg -- the third pillar is really fund administration. And fund administration we can occasionally take for granted. But having the excellent fund administration that ICG has built over many years is critically important because it's often the point of interaction between our limited partners and ICG, where people assume that everything is going to go perfectly. And the good news is at ICG, it typically does, and having all 3 of those pillars be equally strong was really what attracted me to ICG. It's interesting, my -- what I've found exceeded my original expectations. I really had very high expectations coming into ICG. And inevitably, when you start at a new firm, you expect to discover things that are not quite what you'd hope they would be, and the opposite has been true at ICG. And it's really been about the people. Importantly, as I've spent more time here and get to interact directly with more and more of the people at ICG, I'm daily reminded of the exceptional quality of the people and the excellence that they all bring to bear on their opportunities. I think, if I could characterize it simply, it's the level of entrepreneurial energy. The people at ICG just get up every morning, eager to innovate, eager to do good work and eager to perform in really outstanding ways. And so if anything, the actual results have exceeded the expectations that I brought to ICG.

So we've heard a bit about talent attraction and seen an example. I think really what underpins our growth more broadly is the retention of great people, and we focus on 3 elements in order to achieve that. The first is to offer outstanding career opportunities. The second is strong levels of engagement, which includes diversity and inclusion strategies; and thirdly, economic alignment of interest. And when we talk about career opportunities, this is not really about accumulation of titles and how to get promoted every other year, et cetera. Our focus is really all about how can people bring best ideas to the firm. How can they develop new initiatives, how can they be at the forefront of the market, whether that's an investment strategy, whether it's a fund administrative process, whether it's fundraising where we've perfected, dare I say it, the first-time fundraise, for example; and ensuring that we enable people to really make the most of their skills and experiences. We are probably one of the very, very few firms in our industry in alternative investments to have a proper and a developed learning and development offering. We have an in-house coach who is a clinical psychologist and works both one-on-one with individuals but also with teams to help them in their evolution. And I think that really impacts culture quite sustainably, but it also ties us together because we look at more than just the immediate deliverable. On the engagement front, we have placed particular emphasis in the past couple of years on diversity and inclusion but also on ensuring that the different parts of our firm come together and collaborate effectively. We've just, hot off the press, concluded our employee engagement survey globally. Mercer, the -- our leadership consulting firm, has helped us with the conduction and the analysis of this. And we're quite proud to say that we are well ahead in terms of overall engagement levels, in terms of collaboration, in terms of thriving at the firm, both of the overall financial services industry, and we have been compared to 1.4 million data sets, but also very comfortably in the top quartile compared to over 6 million data sets across all industries globally. And I think that really makes an enormous difference to the retention of talent and also to their flourishing within the firm. Lastly, economic alignment. We commit to each other over a very long time, whether that's through co-invest, whether that's through the long-term incentive plans. And as a result, "bad leaver" rates, which is individuals who leave us to go and compete somewhere else immediately, are exceptionally low, at less than 3%. Just to give you a little bit of color around the focus on diversity and inclusion, and here, there are clearly 2 elements at play. One is diversity. And for ICG, commensurate with many of our peers and indeed the wider financial services industry, the real issue here is around gender. And the second part is inclusion more broadly and enabling people to be themselves, bring the best of themselves to the firm and achieve their goals. So in order to address the first point around gender diversity, we have signed up to the Women in Finance Charter. We have committed ourselves to achieving 30% of female representation at the senior level by 2023. We did this last year. And in order to achieve that, clearly, there was an element of hiring, and then there was an element of retaining and developing women within the firm. And on the hiring front, we are challenging ourselves enormously in terms of are we dealing with preconceived ideas, are we dealing with unbiased -- excuse me, unconscious bias even properly, are we doing the best we can on the hiring front in terms of balanced shortlists, attracting women through the language we use, et cetera. And as a result, last year, and this may not be the case every year, we have achieved a 50-50 split of senior hires in the sum. And that has brought us up from 23% to almost 28% of female representation within one year. We hope that, that will continue. It may not be linear, but it's certainly something that we take incredibly seriously. The second is development, and that includes coaching. It includes mentoring from the senior management team to help women make their way through the firm and flourish. And then thirdly, it's engagement, and that really cuts across the diversity agenda and the broader inclusivity agenda. This includes a committee that takes best ideas, filters them up and ensures they are put into action. It's networking opportunities for specific areas. It's a well-being program that covers everything from elderly care to IVF to mental health. And it is also engagement with our corporate PLC board, both in an informal way through lunches, et cetera, but also formally in focus groups to ensure that all sides really learn how we can do better and how we can get the most out of each other. So in summary, the point around people being key to the sustainable growth of the business is really much more than just a clich?. We are investing in our most valuable assets significantly. We're taking it incredibly seriously. We're creating opportunities for our people, and we're enabling them to create their own opportunities. We do it inclusively and collaboratively. And we align our interests across the board. And I think that has led to an exceptional brand of employment for ICG in the last few years. And I think if we couple this with a more holistic approach to talent attraction, I think we have something quite special here. And we are fast becoming the place to be in global alternatives. Thank you. I will hand over to Kevin now who will tell you a bit more about sale and leaseback.

Sorry, I've become disenfranchised with my microphone. I've made it. Sorry. I'm Kevin Cooper, Cohead, Cofounder of the Real Estate business at ICG. Sale and leaseback is an initiative that I've led since inception. It's an initiative that's been strongly sponsored by senior management since its inception, particularly Benoît. In this short presentation, I'm going to walk you through the sale-and-leaseback journey. Why we picked sale and leaseback as a value-enhancing strategy, which with Slide 16, far right in one of -- in Benoît's earlier presentation, and why the investment thesis has been well received by our clients. The context setting, I'd like to remind people there has been a first close, and strategy is very much up and running. So we started on this journey 3 years ago. At that point, the firm had a very strong private debt real estate business in the U.K., and the broader firm was very strong across the whole Continental Europe. So expanding real estate into Continental Europe seemed the natural and low-risk growth option for the firm. But rather than just assume that what we did already in the U.K. could be exported to the rest of Europe, we did a far more fundamental bottom-up market opportunity analysis, over here, to find a compelling investment opportunity because investors want to invest in compelling investment opportunities. That thesis needed to be strong from a risk-adjusted basis. You've heard earlier about the firm's very focused on risk-adjusted returns. That's something that the real estate business is also very focused on. Our investors, middle column, don't just want something that works for Fund I, they also want something that's enduring. So we were looking for an opportunity set that was going to have multiple fund vintages as its potential. The firm needed to be credible from an investor perspective, i.e., something where they thought we had existing expertise and would be well-placed to execute the strategy. And lastly, per Vijay's earlier comments, we wanted a strategy where investors would pay fees on committed capital. So our search covered office development in Germany; nonperforming loans in Italy, that was quite a contrast in those few months, looking at those 2 markets; debt/equity hybrid and everything in between and above geographically. So where we landed was sale and leaseback. So what is sale and leaseback? Far right of the slide where we're on now. So we acquire, and it is an equity strategy, mission-critical real estate from corporates in sale-and-leaseback transactions. The leases are long, and they normally are PI-linked. What's key to our investment approach is that those real estate assets need to be critical to the operational success of the business. More simply, paying the rent needs to be of utmost importance to the tenant. The aggregate outcome of multiple sale-and-leaseback transactions is a diversified pool of highly predictable real return income that we distribute to investors. And quarterly income targets are in the 7% to 8% range. To deliver on the strategy's objectives, there are 2 key components and competencies that a manager has to have. The first is real estate origination and underwriting. We are acquiring real estate. But the second, and very importantly, is corporate credit. These leases are long. The creditworthiness of the tenant in paying the rent for over that long period and the industry it's in and the likely success of the industry over the long term are very important underwriting aspects. So in response to those 2 key requirements, we formed a collaboration between the real estate business and SDP, which is our corporate lending business. It's a genuine deep collaboration. Half of the Investment Committee is real estate-based, and the other half is corporate credit-based. That collaboration has been well received by our investor clients. They see the joint approach as a key differentiator for the firm and a key driver of investment returns going forward. So turning to the scale of the SLB opportunity. The line in red here is the proportion of real estate transactions, which are sale and leaseback in the U.S. And the lower line here is the proportion of sale-and-leaseback transactions as a proportion of the total real estate market turnover in Europe. You can see there's a substantial difference. One is 4, one is 15. There is no cause or reason for that gap. Sale-and-leaseback transactions are undertaken mostly for cost of capital efficiency reasons. And the businesses in Europe run for the same profit methodology as the businesses in the States. At the moment, this 5% is around EUR 13 billion per annum of annual sale-and-leaseback turnover that we can invest into. That works for the strategy, but we also think that this gap's going to get closed as European corporates operate a more efficient capital model and that, that EUR 13 billion will grow over time and provide a great environment for the strategy to invest into. Also important in terms of scale in the market is how long is this going to go on for. So at the moment, in the States, only 30% of the real estate is now owned by corporates. They've been sale-and-leasebacking for quite a while. In Europe, 50% of the opportunity set is still owned by corporates. Closing that gap of 20% is EUR 1.1 trillion of transactions. Or to put it another way, we're all going to be long retired before the sale-and leaseback opportunity set is played out. So within that steady volume and what we see as growing volume of deal opportunity, we have to compete with other investors and managers to win the deals we like. Competition is relatively limited, and it's predominantly U.S. anchored. All these are U.S. entities. The only manager -- European multi-strat manager targeting this space in Europe is ICG. Worth noting as well that the largest manager in this space, which has been doing it the longest,, W.P. Carey, which is a U.S. REIT with a market cap of around $14 billion, is a public vehicle. If -- and they acquire assets in Europe, and it goes into the U.S. vehicle. If you invest in the shares at the moment in W.P. Carey, for every dollar you put in, you'll get $0.70 of net asset value. The shares have had a really strong run, and net lease REITs, as they call them in the States, have been one of the best performers for years. If you invest with ICG through its private market strategy, for every euro you invest in our private markets funds, you get EUR 1 of NAV. So if you're an institutional investor, and as they do, they look at "can I access this opportunity set publicly or privately?" There's a significant private market advantage from working with ICG to target this space. The aggregate effect for us of the competitive set, the depth of the opportunity, is that we think we can establish a leadership position in this space in the relatively short term. So pipeline and winning deals isn't anything unless you can source investor capital. The value proposition that our investors have bought into is actually correlated with our rationale, of course, for getting into the space. They see the strong market opportunity. Almost all our investors that we speak to are multi-strategy. They understand the rationale for corporates from a cost of capital basis to sale and leaseback their property. They think the opportunity set is going to be enduring. They think there's going to be Fund I, Fund II, Fund III. Basically, the strategy is defensive. The leases are long, income streams are very predictable and they get the mission-critical element of the real estate. And they believe, as has been our experience, that in adversity, if you do have operationally critical real estate -- mission-critical real estate, that rent is paid in preference to finance obligations. Finance obligations are paid from trading profits. You need to operate from real estate for many companies to generate those trading profits. And lastly, in terms of the value proposition, what's been key is the way we have combined our in-house existing real estate and credit skills and added a direct European investment experience of Chris Nichols who joined us as part of our talent recruitment, talked about earlier by Antje, to lead the strategy. I think you've already heard from Eimear on ESG, and Benoît kindly gave us another heads-up in terms of the fact that we are investing part of the fund not for IRR but actually for ESG outcomes. So within the fund, and this has been very well received by investors, there's a EUR 20 million allocation to generate positive ESG outcomes. Investors recognize and we recognize that the real estate environment or what's known as the built environment is a big contributor to greenhouse gases. I think in Europe, it's around 40%. So actions you take in real estate can have a big impact in terms of ESG. That EUR 20 million is focused in 3 areas. And most likely, the top one, climate action, where energy is a key component, is where we're going to be investing most of the capital. To give you an example of what we're doing at the moment is the first transaction we did, which is a portfolio of supermarkets in the Basque region of Northern Spain, we are working with the tenant to install solar panels on the largely flat roofs of our estate in what is an extremely sunny climate to create clean energy. So that's all the theory. What's the reality on the ground? So in 2018, Jones Lang LaSalle said that the primary sale-and-leaseback market in Europe is EUR 13 billion a year. Our experience on pipeline for the past 12 months is that we saw EUR 13 billion. So we've either got the best team in the world or the stats aren't very good. By the way, imperfect stats are great for us as a private market investor. It means the fact that we're in the market and we have proprietary data that we believe is true is an advantage. So 2019, we looked at 394 deals, 110 made the pipeline, and we closed on 3. Importantly, those deals were proof-of-concept that created the momentum for the successful first close and the level of interest we have going forward. Those were funded by the balance sheet under the strategy that Vijay identified earlier. But pipeline is great, but you've got to win the ones you like. What's been key to vendors choosing us to leaseback their property to rather than the competition has been the ICG brand recognition and the fact that many of the advisers already know the real estate franchise of ICG or its broader corporate private credit or corporate credit -- private equity franchise. Our local geographic footprint has also been very valuable. We are able to tap into a very fluent speaking, very fluent in Spanish speaking executive in SDP to help us win the Eroski deal, and that deal was agreed in the ICG Madrid office. So that deal that was agreed in our Madrid office is our case study. It's Eroski. It's 6 supermarkets across the Basque country in Northern Spain. It's Spain's fourth largest supermarket retailer, but is effectively the largest retailer in the region that it serves. In the analysis that we undertook, we focused on 2 areas: the ability of the tenant to pay rent sustainably; and in adversity, the alternative users that would take occupation and pay us rent if, for some reason, Eroski had an unexpected failure. Our assets are in Eroski's top quartile in terms of supermarket EBITDA generation per square meter. Where they're located are supported by strong local brand loyalty, and it's prosperous there. The Basque region has GDP per head about 33% higher than the national average of Spain. It's an attractive place to have supermarkets. The EBITDA margin, which we had full transparency on before we made the acquisitions and was a key part of our underwriting, is 8.9% in the assets that we're supporting, which is double the industry average and very high in Eroski's own portfolio. All of this contributing to our belief that these assets are key operationally to the tenant and its generation of profits for its investors. What that all added up to is that the EBITDA generated within our assets covered the rent 2.7x, which, in industry norms for supermarkets, which is a fairly steady business, is a strong level. From a real estate perspective, the most important thing was that the assets are well located. Eroski has been in the Basque country for decades. They are a first mover. They got the best locations on their home turf. That was supported by the alternative user work that we did. So we interviewed, in direct conversation, Carrefour and Alcampo to ask them, would they like to let our units? They didn't actually know we're undertaking the sale-and-leaseback transaction. They thought there might be an earlier opportunity for them to take ownership or tenancy. Both of them were extremely interested at the rents that we've set with Eroski. Indeed, if they were operating these supermarkets, the yield on the real estate would be significantly tighter given their significant scale. Lastly, the business plan on this case study, a simple one: leverage the rental income 1:1 to create that quarterly dividend stream that our investors like. That's rising by CPI. Secondly, detailed asset management in each location. We're looking at putting a Costa Coffee and a McDonald's in one of the carparks. But also, one of the assets is extremely centrally located and surrounded by residential towers, and our asset is single-story. We're looking at a planning permission for residential there, which will create significant additional value. And lastly, from a business plan perspective, we're monitoring the performance of the tenant. And we do think there's going to be an opportunity in the future due to its improving performance and deleveraging that we will be able to sell our investment for a tighter real estate yield because the covenant has materially improved from a credit perspective. So summing up, it's a scalable strategy with a large and enduring opportunity set. It's been well received by investors. We're in the market executing the strategy today. We believe we're uniquely placed to establish a leadership position in Europe. And on the earlier subject where Benoît touched on the cumulative effect of growing strategies, we think this strategy is particularly well-placed. The average hold period here is in excess of 8 years, expected. So there won't be any attrition from disposals, we think, until at least Fund III. That's going to have quite a big cumulative effect on growth. And lastly, just worth mentioning, I think acknowledging the tools in the ICG platform that this strategy is used. Investment insight has driven the thesis. The balance sheet has funded seed assets. HR has helped us recruit a new team and talent. And the ICG brand and fundraising team has given us the ability to reach and to secure investments from a diversified pool of international institutional investors. That's the end of my presentation. Thanks for listening. I'm going to hand over to Guillaume on the infrastructure side.

Good morning. I'm Jerome Sousselier. I'm the Managing Director in infrastructure equity, and today, I'm here to detail this new strategy for ICG. I arrived at ICG 20 months ago now with a team that came from EDF Invest. And basically, I have a 20-year background in infrastructure and also working at some leading European corporates in the energy and transport sectors, which are 2 of the main subsectors in the infrastructure world. So ICG has been -- had been looking for about 4 to 5 years to enter an established asset class, infrastructure equity. And it actually fits well, infrastructure with ICG's DNA, which is really focused on downside protection because this is what infrastructure is all about. It's providing resilient returns with a lot of downside protection for investors. It also offers long-term growth potential. It's a scalable strategy, fees uncommitted and also with 7- to 8-year investment horizon. More specifically, so what is the market opportunity in infrastructure? Infrastructure asset class is about, today, $500 billion worth of deals annually. It's about 2,000 transactions, primarily in Europe, North America. It's actually still relatively young compared to private equity, but it's maturing fast. And what we've seen is that some of the traditional infrastructure measures have scaled up quite massively, and this has opened up a new space in the mid-market segment. And this is how we differentiate ourselves. First, we focus on the mid-market. We also have the ability to invest across the capital structure, you have heard that this morning from Jens. We invest in equity, but also quasi-equity, which has mezzanine instruments. We think this is a sourcing advantage and it also offers downside protection for our investors. Finally, we have designed, from the start, a sustainable strategy. You've heard from Eimear, we have actually excluded some sectors altogether. We will not invest in coal, oil and gas or nuclear projects. And our clients list, this is quite unique compared to some of our peers. We are fully integrated in a platform using the distribution teams. And more broadly, again, a continent is enough. We're really focused on downside protection and resilience, which is very well with what ICG has been doing for 30 years. So to launch the strategy, ICG decided to onboard a team; 7 of us now in Paris, and the 8th member in Frankfurt. And so ICG brought that team from the outside. What that meant is that ICG looked for a team that had a proven and established track record. As a team, we had invested -- we have invested now EUR 1.8 billion across 10 transactions. We have been working for 6 years together. This should provide a clear track record as we're fundraising for our first fund to investors. We also have all, as a team, industrial backgrounds. It's important because we primarily -- we source our deals from corporates, primary transactions, whether it's in energy, transport or telecom world. And we think that this corporate background allows us to find, I've mentioned primary deals, but also some financial situations, as I'll show you in the case a bit later. What attracted us to ICG? And so we thank Benoît for his support. It's really the platform, a Pan-European platform with a network of offices across Europe. It's a mid-market focus. Its balance sheet capital has led us to already to 2 transactions on the balance sheet of ICG, which are seed assets that will be transferred to the first close. That offers proof-of-concept to clients. And it's also ESG. It's not like work for us in infrastructure. We have designed a sustainable strategy with the help of Eimear, and I'll touch base specifically on that. Maybe touching a bit more on the market opportunity. I mentioned it's about $500 billion worth of deals annually. And the asset cost is actually maturing fairly quickly when you compare it to what happened to private equity 20 years ago. It's about 2,000 deals really concentrated in North America and Europe, which are the 2 largest infrastructure markets. What's interesting is what you see on the right, when we see that there's a space that has opened up in the mid-market. The reason for that is at or below the $1 billion-size mark is where about 90% of deals happen. And at the same time, you can see that as the traditional funds have scaled up. You actually see that a lot of the dry powder that has been accumulated the last few years has been concentrated for the very large deals. And so maybe to illustrate that graphically. This shows you a bit the landscape of some of the infrastructure asset managers. You can see that some of the large ones have been raising multibillion funds. This is where the dry powder is concentrated, and they're all now deploying in large transactions. We're also -- they're competing against some of the direct investors, such as the big Canadian pension plans, sovereign wealth funds, or even the large insurance companies that are going direct. So we think that this has opened up the space in the mid-market for new managers, such as ICG. And the way that we think that we can offer a differentiated proposition to clients is the following. Within the mid-market, we have people on the ground within each of the geographies. That means that we're not all London-based, as some of our infrastructure peers are. We have a Pan-European team based across the offices. That means that we can source deals locally in each of the markets, understanding the different regulations. It's also, as a team, we have a proven track record. I mentioned that we deployed EUR 1.8 billion in 10 transactions since 2013. This shows visibility to clients, as we are fundraising. And maybe more importantly, the way we focus to deliver returns, it's really a combination of returns and downside protection. And the way we can offer that is really threefold. I haven't commented a lot on what is infrastructure, so you should bear with me. What I mean by critical infrastructure, the easy way to characterize it, I call it the 3 Ps. First, it's physical assets. We're talking electricity networks. We're talking roads. We're saying telecom networks, but it has to be physical assets. Second, they have to be protected assets, either they have some type of monopoly feature, very long-term contracts concessions; and finally, they have to be predictable assets. Predictable also because of these monopoly or long-term contracts. But typically, you have cash yield. So we offer to clients annual cash yield year-by-year. We are also active investors. That means that whether we invest as a majority shareholder or as minority, we always have Board seats. We have veto rights, and we have very strong governance and liquidity rights throughout our investments. The way we also look at operational accretion is that we have buy and build strategies. We typically put the money that we invest goes to do capital expenditures in the companies in which we invest. We also have buy and build and we do small M&A, small add-ons. And last, in terms of how we differentiate our proposition is when we said that we're fully integrated in the ICG platform, it means that we have access to different teams, whether it's on the financing side, basically to raise new debt for our portfolio companies. It's also leveraging the distribution platform. Obviously, we are doing all the fundraising internally with Andreas' team. And we have the balance sheet that has allowed us to already 2 deals, and I'll touch base on the first case a little bit better. Another way that we differentiate ourselves is that sustainable strategy, which kind of tell us -- have told us it's fairly unique. And we have actually focused -- you've heard Eimear a bit earlier today, we are focused on 4 of the UN's development goals. First one is about climate change energy. There's actually one that is about affordable and clean energy. That's the easy one. So here, we have actually decided to exclude some sectors altogether. We will not do oil, coal, nuclear, gas. And we actively look at opportunities to finance the energy transition. That means that we look -- at the moment, we're looking at a [ soft AA ] opportunity across Europe. Another ICG ,#9, it's actually linked to infrastructure. That's an easy one for us. And it has to do about, what they call, building resilient infrastructure. This is typically financing telecom networks to promote inclusiveness to connect, to bring high-speed Internet to communities. This is the first investment we have made. We have -- we took an equity -- an -- a mezzanine instrument in fiber optics companies that basically provides ultrafast Internet. And last one, about waste. And here, allow me, I just want to focus on one. It's actually is the 12, that's my personal favorite. It's about responsible consumption and production because if you want to have an impact in terms of energy transition, you should only focus, for example, in doing renewables and financing wind or solar farms. But you can actually play more at the consumption side, and this is what we have done. So we have invested late last year in a company called OCEA Smart Building. What it does is it buys submeters that you install in people's homes to measure heat and water consumption. The impact of that, once they are installed in people's home, is that energy use and water use declines by 15%. So this is what we call having really an easy impact and still delivering the returns. More broadly, Eimear commented, we have integrated ESG throughout our investment process. And we look, right from the start, every yield, whether it fits our ESG criteria. We also work with Eimear extensively at the portfolio company level, where we set KPIs to the managers of the companies, and some of their incentive compensation is actually linked to ESG -- to respecting ESG KPIs. So it's quite powerful. And that's also how you deliver ESGs that you incentivize people to act on that. And we will do GRESB rating. I don't know if you're familiar, but GRESB is basically a leading benchmark in ESG field. It's worldwide. And effectively, it's a way to compare how companies perform based on a different set of KPIs ESG-related. Pipeline. So we think that there's a compelling market opportunity with a team with a track record with the support that ICG to do that. The question is, can we deliver on that? Do we have the pipeline to do that? The answer is yes. And we actually show a lot of deals. The reason for that is, as I mentioned, the focus on the mid-market, where, as you've seen, 90% of the deals are where the action is. Since we joined 20 months ago, we have seen broadly about 200 opportunities after different filters in terms of looking at risk-return, competitive dynamics. About 1/4 of that went to our pipeline. That's the 44 that we are -- which we're working now. And we have closed, as I mentioned, 2 transactions. One in fiber optics, the other one in the energy submeters that I mentioned. Both transactions are sitting on the ICG balance sheet. They're, for us, proof-of-concept deals. They are being warehoused, as we speak. And as we're in the midst of the fundraising, they will be transferred to the fund at the first close. To ensure this very high selectivity, we have also a very heavy involvement of senior ICG leadership. That means that we have Benoît, who chairs the investment committee. We also have Max Mitchell, who heads the direct lending fund and 2 members of infrastructure, Guillaume d?Engremont and myself. Maybe I'd like to take you through our first investment, which is, for us, for you, a proof-of-concept here. The company is called Oc?inde Communications, and we invested last year about EUR 50 million. This is a company that was, until we arrived, 100% owned. It's a family-owned business by a founder manager who is looking for capital to grow his business and to put more money, basically, more cables in the ground and more fiber. This was a bilateral deal for us. We can still get these deals in the lower mid-market segment on which we focus. The reason for that is we invested through a mix of equity and mezzanine. Benefit of that for us is we have strong liquidity rights. We have upside to the equity, and the mezzanine offers a lot of downside protection for the founder. Why we accept to do that with us? He's looking for someone that can provide him with capital, that notes -- that knows the fiber space. And more broadly, the mezzanine avoids dilution for him. So he sees all the upside, but didn't want get diluted. What we like about the business is it's -- it operates in a favorable regulatory environment. Infrastructure is typically often about regulations. And so here, this company is based in France. It's one of the leading regional networks. And basically, the way the French regulatory regime works is that the operator that built the network has a monopoly in the zones where it operates. That means that we do not have a market share risk, which we love. In effect, it means that the only risk that we have is how fast the clients shift from the slow ADSL to copper, a few megabits by second compared to the fiber, which is a gigabyte by second. So if you want to download Netflix in 5 seconds, you need fiber as opposed to 1 or 2 hours with a slower Internet. This is a mid-market company, very entrepreneur management with add-on opportunities, and that's what we like. I think you heard earlier, Jens say that. We like to find companies where we can continue to put capital later on. There are further opportunities within that company, looking to roll out fiber. They're also building a network of mobile towers to sustain data needs in the switch to a digital world. So we think that, in addition to this initial investment, we have further add-on opportunities. So it's really a proof of concept, ability to invest in equity, mezzanine and follow-up investments. To conclude, I'd like to remind, we only focus on the European infrastructure market. We focus on mid-market because we see that the traditional infra managers has scaled up significantly and have left quite a big part of the market underserved. This is where we will be active. We have a track record. As a team, I mentioned, we deployed EUR 1.8 billion. This is what investors want to see when they look at a first-time fund. They want to see, does the team have the track record of deploying funds successfully. They want to see that we're also fully integrated in platform, have the backup of the ICG balance sheet to do proof-of-concept deals, which we have done. Finally, this is a scalable strategy. As a team, we are committed to being very active investors. We have a sustainable strategy, and we think that this provides the solid basis to create long-term sustainable growth and shareholder value. Thank you.

Thank you, Jerome. So a lot of information this morning. I hope it has given you a better feel for the industry and for our business. Before we take some more questions, key takeaways of what we've heard this morning, ICG is a leading player in an attractive and quite resilient asset class that is enjoying increasing demand and growing investment opportunities. We are very well positioned to not only take advantage of our market growth, but to continue to increase our market share. For that, we can rely on our size, we can rely on an exceptionally strong 30-year track record and on what has now been established as a global brand. We must, however, preserve our competitive edge in ESG. You've seen throughout all this presentation how prevalent that has become. Keep the focus on talent and culture, which you've heard from Antje. And more generally, keep investing to maintain a high level of quality of our execution platform. We -- to reflect the growth we've been experiencing, and we're likely to continue to experience, we've updated, as you've heard from Vijay, our guidance on performance fees. And finally, although as I pointed out earlier, by the very nature of our business, our growth in AUM, in fees and profit cannot be linear. The mid- to long-term prospects are very exciting. So on that note, well, all of us, we're happy to take some more of your questions. And we thank you for your attention through the morning.

Ian, no. No, I don't think you're eligible.

Gary Greenwood from Shore Capital, [ as said ] through the following 2 questions. Talking about the investor base in funds at the moment is mainly institutional and high net worth. Are there any plans to open more broad retail investors? And how would this work? And secondly, about the performance fee guidance, does all the revenue drop -- uplift drop straight to the bottom line? Or will you reinvest some in the business?

So on our investor base, so actually, there's not all that much of wealth management. I think you mentioned wealth management in the question. That's not really the case today. There is some, but it's not that significant. We're mostly sovereign wealth funds and pension funds, if you want to break it down. Andreas can give you some more detail. There is growth in wealth management. But if we look at the split today, it's not a significant part of our investor base. On the retail, as I mentioned earlier, we're starting to see things happening. There are a number of hurdles, including regulatory hurdles. There are some changes in the U.S., interestingly as we speak, in regulation, which could open up the space more to retail, even potentially, which is the -- certainly, for U.S. managers, the [ holy grail, 401ks. ] But we're not there yet, and you need to create feeder funds. I mean, there are a number of difficulties. Structurally, these asset classes are not liquid, so that's also something that needs to be understood and accepted if it is to go into the more retail space. What is true is everybody is reaching the same conclusion, which is a typical retail investors will have a significant proportion of their investment in bonds, which, today, is a problem because, as you know, it's not generating anything. So that's probably -- that's creating a problem for the banks, for anybody who's catering to these retail investors because it's hard to charge fees if you're not generating anything in the portfolio. So everybody is working on this. How do we give access to alternatives? There's no reason why all institutional investors should have a growing allocation to alternatives and not retail, but there are hurdles. I don't think it's going to happen overnight, but it's a significant potential in the future. Remind me the second question.

How much of the performance, the revenue uplift will drop to the bottom line?

All of it. I mean, the -- all of it. Do we then use part of our profits, but it's all fungible, to keep on further growing the business? Yes, but performance fee flows straight through to the bottom line, unless our CFO has a different view.

No. Just to the [ second bit we talked about this morning, the dividend policy ] [indiscernible] driving that valuation for the shareholders as well in respect of that quantities, in the 85% to 100% in -- under our policy.

Question over there, several.

It's Luke Mason from Exane BNP. Just a couple of questions, please. Just going back to the senior debt partners. Just wondering whether you think there's a ceiling for fundraising in Europe. I think the largest fund to date has been kind of EUR 6.5 billion. Wondering what restraints are to go past there. So that's the first question.

So the largest, to my knowledge, is EUR 10 billion. And that's Ares a few years ago. And when they did, we thought they were mad. And actually, they were proven right because the market has grown. So I don't know. I mean, the largest fund that has been raised is significantly larger than ours has been so far. Is there room for the market to grow further? So far, we've been quite surprised by the growth of that market. And particularly at the higher end, what's quite interesting is that market is more attractive as you go in size. There is less competition in the larger deals. And again, a few years ago, if you told us that there would be private debt deals at several hundred million, we would not have believed it because, typically, these deals went to, at least, the syndicated market and perhaps even the public market. But actually, what we're finding is more and more are going to the private debt market.

And then just secondly, there's clearly a lot of demand for alternatives, I guess. As you're going out, speaking to investors, what's the main concern that they're flagging up? Or what questions keep coming up when you're speaking to investors?

Just generally?

Yes, just generally across the market.

I mean, they're all thinking about the cycle. But to my earlier point, alternatives suits that concern quite well just because it's how long the investment periods are and the strategies are. Many of them are thinking about, and I mentioned, opportunistic funds, when is the right time to start investing into optimistic funds to take advantage of some market dislocations. Of course, there is no right time because nobody knows, but that's some of the questions that they are grappling with. And -- but then, it's very different by geography, the level of preoccupation. ESG and climate change is coming back more and more. Next?

It's Jens Ehrenberg from Citi again. Just one quick question and that refers back to the first half of the presentation previous to the break. You touched on new activities in the U.S. and I appreciate that it's quite a competitive market over there and that your presence there has been growing. Correct me if I'm wrong. I think, so far, the only geographic presence over there is in New York. If I look at that as compared to, I think, what Jens has referred to earlier, the boots on the ground, the projects that you really want to be where your investments are, how does that fit together? And what are your plans going forward? Do you consider opening new offices somewhere across the U.S.? Or do you really focus on New York as a key hub?

It is a very good question. That really depends on the strategy we deploy. If you look at the strategies we have today, they're centralized in New York for all the market participants. As we start moving towards, for instance, more mid-market private equity, then that becomes a real point. And actually, if you were to ask A.J., who you saw on screen earlier, as he's building his team now, he's thinking about a matrix and he's thinking industry specialization because the U.S. market is so big that, actually, you need to have industry specialization to originate. So he's thinking of people who have that expertise, but also he's thinking geographic map out. So he's thinking about individual who has really strong background in the Midwest, for instance, because he's thinking about him to source in the Midwest. When we look at that person there will -- they keep flying all the time. I don't know. We'll see. I mean, there's a critical mass aspect to that as well. But yes, you're right. That depends on the strategy. If you're doing the standard mezz products that we have been doing so far, you could do that at New York. If you're doing strategic equity, which is the GP-led secondary play, that could be done out of New York. Actually, it's a global strategy. It's not just U.S. But yes, if we start drilling down to more equity led mid-market strategies, then the local piece will become more important. And incidentally, on your point, we don't put them on map because we don't have proper offices there. But we do have marketers in San Francisco and Boston, Miami, yes, exactly. So we have presence, so it doesn't really count as proper offices, but yes.

And so can I just quickly follow-on, on that. When you say market, does that focus on fundraising?

Fundraising. It's fundraising. Yes, sorry. Yes, this is pure fundraising. The U.S. market is so large that in fundraising, actually, you do need to have some -- where it's preferable to have some local presence.

It's Dave McCann from Numis. Just taking a step back. And we heard a lot today about how -- a lot more capital is coming into the alternatives industry, generally. And I guess, the comment thread there is why are people allocating more money. You made reference to that actually about 5, 10 minutes ago, the context of fixed income offering no return. I guess, as people are seeing private market offerings -- offering superior returns to what they're getting at public markets. So with all this new money coming into the alternatives industry, how confident are you for ICG and, I guess, for the alternatives industry as a whole that those kind of returns are actually sustainable because that seems to be the common thread, which is pulling people in. So if that relationship stops, that may not necessarily happen.

Sure. I mean, we can only look at history through cycles. And those returns have withheld quite well through various cycles. They haven't -- they also haven't -- they haven't come down with the increasing size of the market. That's one of the typical question. And you can boil it down to a single fund saying, if your fund suddenly doubles in size, can you actually maintain the returns? And the evidence has shown that there's no correlation. I mean, the returns will be maintained. I mean, there are players that have done better than others, but there's no correlation between size and returns. You can grow and maintain very high returns. The other point perhaps to point to is, I mean, there are many reasons that we've discussed before why the alternative asset space is so attractive. But one of them is that the -- I mean, the return premium that you are gaining for a supposed illiquidity, which is a whole other debate, is very, very large. So even if you had a down vintage for private equity or private debt that you'd still be generating returns that far exceed anything you can achieve anywhere else. I think there was another question. Yes.

George Luckraft, AXA Framlington. Can you just say something on how you incentivize sales forces, not just to sell the easiest product?

You've just opened Pandora's box. Do you want to give us a 1-minute primer on your matrix? I told you.

Okay. So that -- so we're trying to -- we designed the system and we don't list the reward quantum because a lot of our competitors do it. We raise billion in [ ways that the guy who has raised 100 has not raised. ] What we do is -- it's a 4-dimensional metrics program that's in sales force. Thank you. So the selling point is can you source new investors because we're growing the investor base? Can you source capital for a new strategy, sell and leaseback infrastructure, difficult rates funds because not all funds are easy to raise. Are you bringing money into the first close, which is super critical, because that's the hardest part. First-time fund first close, that's really, really difficult. Most funds failed in that state. Or are you the guy who does bring money into final close, which is usually quite easy when it's established and running? And so let's assume 2 market has raised EUR 100 million each. The market who does final close, existing clients, not really the hunter type, actually, we don't have many of these because they usually don't stay with us. But let's say, you would get 200 sales points. Factor of 2. The guy who brings the new clients can do the first close. Difficult to rate strategy. First time strategy can get up to 1,500 points. So there's a huge difference in the way the points you're getting and that's programmed in the sales force so they can see it any time. And we are very transparent. Everybody can see everything. So that's a nice little feature. They can see all the sales. The call notes are published every morning, so everybody can see them. The PMs can see them as well. And then basically, the way we remunerate is, simply, we look at how these people performed, not just in quantum, as I said, but according to the points. And then we look at how do -- let's say, you're a top quartile marketer, how does this market get paid in their region? That's the other thing because the organization I joined from 8 years ago, they were just averaging everything. And that's a problem because you paid too little in U.S., but you paid too much in European countries, for example. And we're trying to overcome that by really figuring out, okay, are you a top quartile marketer within ICG, but in your peer group? And if you are, then we'll make sure that you're paid in that. But at the same time, if you do not have such a good year, we don't mind bringing the bonus down a lot. So good people can make a lot of money. But if they're in a bad year, they also make much less money, which allows us to spread that bonus pool further. And everybody joins us, we spend lifetime explaining this to them when they join, so that they understand what they're setting up for. And so far, the turnover is very, very low. Most people are with us for several years. I mean, 5, 6 years and more. And they quite like the system even in times when their bonus comes down a lot because they haven't had a great deal, because they understand what it's all about and how the principles work. And I would argue, I mean, in our peer group, we have the most successful first-time fundraiser there is out there. Nobody has delivered this. We have 4 first-time funds in the market right now. I mean, most of my peers have met a couple of them this week. They're like, well, with even 1 or 3, it's very difficult. How can you perform in 1 year? And just like, how do you do this? And there's an art to it. There's a science to it. But part of it is also the people you hire and how you measure them. You get what you measure. Sorry.

Excellent. Thank you, Andreas. For those who haven't been introduced, Andreas Mondovits, who's running our own marketing and sales effort.

It's Gurjit again from JPMorgan. Just a few questions. Firstly, in terms of the balance sheet intensity, so a lot of the new strategy you've got, clearly, are more balance sheet intensive and, certainly, it's by infrastructure. So I guess, the plan is that the balance sheet remains broadly stable. Where are you recycling that from? What is the sort of coming out? So that's the first question. The second one is on the infrastructure, the track record in terms of deploying -- you gave us some numbers there. Is there anything into the track record of performance of the infrastructure team that's come? And then finally -- the performance of the infrastructure team because I think you've talked about the deployment track record right now has been good. And then finally, just on the investing across the capital structure. How do you differentiate yourself, because if I think about Blackstone, Apollo, KKR, these guys, are they not doing that? Or why can they not do that versus ICG?

Okay. Okay. So many, very different questions. You may want to take the first one, although as a preamble to the first one, we're not investing more. They are not more capital-intensive, infra and sale and leaseback. We're not investing more than we have in other strategies when we launched them. We're typically between EUR 100 million to EUR 200 million. But what happens is how we manage it over time. But on the recycling, maybe you want to comment..

Yes. To answer your question, first of all, a lot of the seeded strategies, seeded assets for the newer strategies, both Kevin and Jerome talked about fundraising. We've had a first close on sale and leaseback. So we are already in the process of transferring all of the sale and leaseback assets on to the fund. And the same will apply for the infrastructure equity fund. It will create more capacity of the balance sheet. We talked about raising SDP IV, so we'll put some capital for that. It's not going to be as big anyway. But generally, we would have that. But as we continue to raise more funds, we will look, too. You saw 3 new -- or 4 new strategies potentially in the future. We will commit more capital to those kinds of strategies if we think they're going to actually be marketable. So that's how we see the balance sheet going.

The second question, I think that's for you, Jerome. So great track record in deploying, but what's your performance?

Sure, thanks. So it's actually quite -- the metric is -- we take from EFS, which is a public entity, so there are no annual reports, but it's about 11% returns, 7% cash yield. So very high cash yielding. There's a predictability that I commented about.

That's why these strategies are in high demand because you're getting quite a high cash coupon, and they're still generating double digit. So to the earlier question about people worried about the cycle, that is one of the strategies where they like to invest more. They like the downside protection and the yield. And your final question was about investing across the capital structure. So you'd be surprised. So this is referring to just one of our strategies, which is the -- today, Europe Fund VII. You'd be surprised, actually, no? And as Jens described, what you have in the market is you have people who are highly specialized. And if they're doing a pure private equity fund, they'll never consider investing in debt instrument because in -- their money dilutes their return, which actually it does. It changes the risk-return profile. We just happen to think that you can get a better risk-return profile if you play well around that capital structure, but that's not the way it's perceived. So very few, I mean, I can't think of any, actually, of example off the top of my mind, of the private equity sponsors do any debt. They actually tend to do the contrary is, they put as much debt as possible on the company to push the leverage and push their IRR. And likewise, debt funds are pure debt funds. And there, it's not just a question that they don't want it. One, it's not their mandate. And two, they just don't have the capability because that's a different set of expertise to source those deals, to sit on the Board, to help the company. You can't do it if you have a pure debt team. So that hybrid approach actually doesn't really exist. You have some opportunistic funds that can resemble it. So there are some tack-ups, for instance, funds that have that flexibility, but they tend to be more distressed focused than what the strategy does.

Portia Patel from Canaccord. I was just hoping you could talk a bit about the fee structure. So specifically, what determines your ability to charge on committed versus deployed in certain instances? And where you do charge on committed, is that industry standard? And do you expect that to change at any point in the future?

So in most instances, we are following the industry practice. If it's an established strategy, there are -- there's an established practice if you're in private equity. Anything that's higher yielding will typically charge fees on committed. Anything that is low yielding, certainly single digit, will tend to charge fees on invested. There are situations where it's not so obvious. And we're -- it's more art than science. And I did mention, I think it must have been a year ago, so when we were thinking about launching sale and leaseback and infrastructure that we were going to try to go with fees on committed because these strategies are on the margin. They're generally -- they're generating double digit, but it's low double digit. So it's not so obvious. Now in the case of infrastructure, it's easier because there's a market practice. All of our peers are charging fees on committed, so that was easier. In sale and leaseback, there was no real precedent in Europe, so we created our own. And then it just becomes a question of how much appetite is there for that asset class, how much do people view the risk-return, the downside protection. In the case of sale and leaseback, that combination of corporate risk and real asset protection proved to be quite powerful, and people were willing to pay for that. Could it change? We've never seen it change. It's -- things tend to stick to where they are. We've never seen a shift. And as I said, this -- given the amount of demand in the market, if fees is not the number one item on the -- on people's agenda, it's deploying. Does that answer your question?

Yes. Could you just remind me what percentage [ of -- from ] earns fees on committed?

That's a good question. I don't have the answer top of mind. Vijay, do you know?

It's just over 30% of our total currently.

With sale and leaseback and infra?

Yes. Yes.

Because that's [ what I deemed.] Both are useful -- and so I've made this comment before. Both are useful, particularly in -- if -- as we are, you're a public company because fees on committed are quite attractive. You get all the fees day 1. They have one downside is your fees jump up the year you've raised the fund and then they keep going down for that strategy because you have older vintages that are running off at the same time. So for that one strategy with fees on committed, the fees goes up in the year you raise the fund and they come down over time until you raise the next fund. And therefore, it's quite useful to have a mix of strategies with fees on committed and fees on invested because the strategies with fees on invested do exactly the opposite is you don't start with a fee base, but the fee increases as you deploy your fund. So the mix of having a Fund VII, for instance, with SDP is quite useful. Otherwise, we'd have to manage the messaging of why we have fees that come down and then go back up and come down. It's providing a smoother transition.

Liz Miliatis from Bank of America, again. Two questions. I know you're fundraising currently for SDP IV. Can you give us an update on how that's going currently and the potential size? And secondly, on staff and carry, when -- at what point in a typical investment professional's career would carry really start to kick in? And when does it become an impediment to moving and, therefore, quite expensive to hire those kinds of people?

On the first point, I'm limited in what I can comment on for market reasons. But I mean, it's no secret that it's a strategy. I mean, the asset class is in very high demand. Direct lending is in very high demand. And ICG's fund is one of the leading funds in Europe, so it's doing well. It's more of a question for us. So where do we want to set the bar? To an earlier question, it's how big can it grow, it's not a game. At the end of the day, we want to make sure that we can deploy it well because that's more long-term value than shooting for defenses on a massive fund and then struggling to deploy. So that's the equilibrium we need to find with that fund. And as we've pointed out before, because it just physically takes time to onboard investors, the fund raise for SDP IV will straddle both this financial year and next. On your question on carried interest, it's -- I mean, it very much depends when people join because it's a duration play. But typically, carried interest starts to make a real difference when people are in their late 30s. It depends on this. It depends on many things. It depends on the size of the fund, how successful it's been. But call it, late 30s, early 40s, and that's when people are really locked in. But they're not just locked in. I mean, that's an important point. We probably don't make it enough. They're not just locked in because they have value in carried interest. They're also locked in because they are investing in their funds. They're co-investing, and that triggers a lot earlier. I mean, it triggers day 1. Now of course, we're asking people to invest proportionately to what they can. But even the most junior people invest a significant part of their wealth into their funds, and that is locked. So it's not just the carried interest. It's also what they're investing of their own money in their own strategy that's locking them into our strategies. The reverse means to you -- I think, what was part of your question is, that's why it's very difficult to unlock people from other funds. Typically, something has to happen, change in leadership or there's been an underperforming. But something has to happen for someone to become -- someone good to become unlocked. One more question, perhaps. We'll obviously be happy to take more questions downstairs with a coffee. Okay. Well, thank you very much. Very much enjoyed this. Thanks for your attention today.