ICG plc (ICG) Earnings Call Transcript & Summary

Good afternoon, and thank you for joining us today. First, a couple of housekeeping points. We will be sticking tightly to time wrapping up on the hour. There will be a good amount of opportunity for Q&A at the end, and we'll get through as many as we can. [Operator Instructions] As a reminder, unless otherwise stated, all financial information discussed today is based on alternative performance measures and more details during our half year and full year publications. And when we talk about vintages, for example, Strategic Equity IV or Strategic Equity V, we are referring to the total program, which includes the co-mingled fund, other associated vehicles such as SMAs and annexed side car vehicles and the GP and ICG plc commitments. Finally, all AUM figures have been updated to reflect the final close for SE V, but other than that, whereas at 31st of December '24. And with that, I am delighted to be joined today by Ricardo Lombardi. Global Head of ICG Strategic Equity. This strategy is a pioneer within the GP-led secondaries market and today is a leading franchise for single-asset continuation vehicles globally. As you may have seen, we have just held the final close of Strategic Equity 5 at $11 billion, and that is more than twice as large as the prior vintage. Today, we look forward to sharing with you an overview of the strategy, why we are confident that there is significant runway for the market to keep growing and why we believe we are well positioned to capture that growth in the coming years. The slides are available on our website where a recording of this session will also be available in the coming days. But before diving into strategic equity, a quick overview of ICG today. With almost $110 billion of AUM, ICG is a leading diversified alternative asset manager. And for more than 20 locations globally, we help over 750 institutional clients from around the world meet their private markets investment objectives. We operate across 3 broad asset classes as we set out here. Starting on the right of this chart, debt strategies accounts for about 44% of our fee earning AUM split between private debt and credit. Moving clockwise to real estate, real assets, which accounts for 10% of our fee earning AUM across infrastructure and real estate. And finally, structured capital and secondaries, which accounts for 46% of our fee earning AUM. They all benefit from and contribute to our powerful client franchise. And importantly, from a firm-wide perspective, each of them has a number of targeted scaled or scalable strategies, a track record of growing historically and clear roots for future growth. ICG strategic equity sits within private equity secondaries, an asset class that has $17 billion of fee-earning AUM in total today, which has grown at 5x in the last 5 years. We see private equity secondaries as a meaningful potential driver for future growth. The buildup of investments in capital over the last decade within private equity in the U.S. and Europe presents a significant investable market that is likely to grow. We have built our private equity secondaries franchise deliberately over the last decade. And today, we have dedicated strategies focusing on LP secondaries, which had the final close of its first fund at $1 billion in March '24. And a separate U.K. listed vehicle giving access to a diversified range of private equity funds and investments, including a number of SE funds and ICG Strategic Equity which focuses on GP-led secondaries on which today accounts for about 20% of ICG's fee earning AUM. As both GPs and LPs are increasingly focused on liquidity and as the buyout market continues to evolve, the solutions we offer across this part of our business are very valuable to our partners and generate attractive returns for our clients. Importantly, we have the people and platform to execute on that opportunity and to grow this business with investment teams based out of New York and London, a well-established operating platform and a global marketing team. Before passing to Ricardo, there are a few opening observations to set the scene. Firstly, the private equity secondary franchise I've just discussed, has grown organically over the last decade and today is, as you saw on the previous page, a material portion of ICG's business. Turning to strategic equity specifically. Having founded it a decade ago when we hired the team, including Ricardo, and $150 million of balance sheet for the first vintage it has grown to be the largest GP-led secondary specialist investor globally. It's differentiated market position, which Ricardo will go into has enabled it to scale materially while maintaining investment returns. Strategically, this is another clear example of how ICG uses its balance sheet and wider platform to hire teams with significant growth potential. For Strategic Equity 5, ICG plc committed $100 million of balance sheet, down from $200 million for the prior vintage despite doubling the client commitments. So today, it is very much a fee-centric strategy for shareholders. And those fees are particularly attractive for every dollar of capital we raise as we run management fees on committed capital, along with performance fees similar to that of a buyout fund. So as we look ahead, we are very excited by the potential here, and we see a long runway for the continued growth. And with that, I'll pass to Ricardo.

Good afternoon, and thank you for your introduction, Chris. We started ICG Strategic Equity in 2014, entirely from scratch and at a point where the vast majority of secondary volumes were in traditional LP-led transactions. GP-led transactions had not yet been established as an asset class. And as a result, there was little interest from existing players in this segment of the market. This dynamic created an opportunity for us to develop a business specializing exclusively in GP-led transactions. Our premise at the time, which is still the case today, is that to build a category leader in this market, we needed a specialized team with private equity backgrounds and a build-for-purpose investment mandate, specifically suited for these types of investments. We were fortunate to be first movers with this approach. And as the GP-led market has grown over the last 10 years, that has presented us with the opportunity to establish what is now a significant business within the ICG platform, with ICG strategic equity committing over $19 billion into transactions in the past decade with a strong track record of 25% net IRR in aggregate across all capital deployed. In terms of recent developments, earlier this week, we announced the closing of ICG Strategic Equity Fund V with $11 billion of capital commitments. Fund V will continue our investment strategy to back top private equity sponsors, pursuing single asset continuation vehicles for high-performing, proven assets. We focus on the larger end of the market with our sweet spot commitment per investment being in the $1 billion ballpark. We are seeing high-quality deal flow. And to date, Fund V has already made 6 investments and is over 40% committed. We have teams on the ground in London and New York, which enable us to deploy capital across our target geographies in North America and Western Europe. The strategic equity business has seen significant and steady AUM growth in the past 10 years. And today, we manage $14.3 billion of fee-earning AUM. This represents approximately 20% of ICG's total fee earning assets under management. Per my earlier comments, the GP market has seen significant growth over the past decade, with an eightfold increase in volumes since we started the business 10 years ago, culminating in record GP-led volumes of $71 billion in 2024. The overall secondaries market, including LP-led and GP-led volumes also had a record year in 2024 with $160 billion of aggregate transacted value. It is worth noting that GP-led transactions as a percentage of total secondary volumes has been steadily increasing and now sit at 44% of overall secondaries volumes. The most recent projections I've seen from advisers forecast that over the next 3 to 4 years, GP-led volumes will continue climbing and will represent at least half of all secondary volumes. In terms of what has been driving GP-led market volumes in recent years, broadly speaking, one can point to a large and growing addressable universe of underlying private equity assets, where investors welcome alternative roots for liquidity versus traditional exits and where innovations such as single-asset continuation vehicles, support sustained growth in volumes as they become more widely adopted. When thinking about the use cases for these transactions, and I will only refer to the GP-led market on this slide, there are principally 2 types of GP-led transactions, multi-asset continuation vehicles and single-asset continuation vehicles. It is important to draw a distinction between these two because they solve fundamentally different pain points for the sponsors pursuing them and because the supply and demand dynamics are very different for multi-asset versus single asset transactions. Beyond the number of assets involved, a key difference between a multi-asset and a single asset continuation vehicle is the objective and motivation of the sponsor pursuing these transactions. In a multi-asset deal, the perimeter typically involves a handful of portfolio companies that sit in a fund that is often at or approaching the end of its term and where the transaction provides a cleanup trade, which results in an accelerated liquidity option for investors in the selling funds. These transactions are typically conceived with IR-driven objectives in mind, such as managing DPI, but with the added benefit that the sponsor retains go-forward management of the assets. By definition, these transactions include a mixed bag of underlying assets that the secondary buyer cannot cherry pick from. And although the structure for single asset transactions is broadly the same, in that the sponsor retains management of the asset and investors get an option to sell for cash or roll over into the go-forward vehicle, the motivation for pursuing a single asset CV is for the sponsor to keep running with a winner that they don't wish to sell. In other words, create additional runway with the recent investment horizon for a portfolio company that has been identified as having significant and clear potential for further value creation after an already successful experience with the current being sponsor. These assets are by definition cherrypicked and therefore, benefit from a strong positive selection bias and these transactions are typically driven by the deal partner managing the asset, who sees an opportunity to keep compounding value on a proven investment. At ICG Strategic Equity we focus exclusively on single asset continuation vehicles. This is important not just for the dynamics I've just covered, which affect the risk return profile of these investments, but because the supply/demand dynamics. In other words, the transaction volumes versus the competition pursuing those volumes are quite different between single asset and multi-asset submarkets within GP-led secondaries. So what do we look for in a single asset continuation vehicle? Well, it's the typical profile of a successful buyout. We look for market-leading businesses with high profit margins and limited CapEx which are enjoying strong organic growth and operating in resilient industries with recurring revenues into noncyclical markets and, of course, with strong and proven management teams. These are the same elements that a PE sponsor would look for in a buyout, but a key difference between a continuation vehicle and a buyout is that in a continuation vehicle, the incumbent sponsor is making a decision to effectively reinvest into such assets from a position of knowledge, not as an outsider coming in. This is a key dynamic to understand as it explains why continuation vehicles should have significantly lower risk of surprise for a new investor like ourselves, especially when complemented by new underwriting done by our team with buyout like due diligence. To give you some additional color in terms of how we think about our investment criteria, we look for situations where the go-forward value creation plan relies on relatively low need to believe assumptions that are mostly a continuation of what has already been working through their original hold period. We are focused on the subset of the market where we believe we can find the intersection of asset quality and attractive returns, combined with strong economic alignment with the sponsor and underlying management team. By following this criteria, we believe that our investment strategy can deliver buyout levels of net returns, but with relatively lower risk and a tighter dispersion of outcomes. And what we have observed so far is that the opportunity set has gotten more attractive as we have been able to scale and effectively pursue what I think of as white space and larger continuation vehicle transactions that were previously unfeasible given funding constraints. So how do we win when we identify an opportunity that is a good fit? It has become clear to us that the key criteria for sponsors selecting who to work with is certainty and speed of execution. And given the capital constraints for single asset transactions, we are in a unique position to deliver on this criteria. We are set up to provide the entirety of the capital required for transactions in the $1 billion ballpark. And this approach eliminates the need for syndication which is a real pain point for counterparties. Providing the entirety of the capital required a sole buyer has proven to be a very strong value proposition and key differentiator, giving us a right to win in the most sort after situations in the market. And beyond scale, we also benefit from having developed a strong brand in the market with a reputation for delivering and being the partner of choice for large transactions. It would be fair to ask how long and sustainable is our scale advantage. And to answer that question, it may be helpful to frame the competitive dynamics in our market and give you a sense of how large the current gap is between us and the competition today. Let's start by looking at Strategic Equity Fund V and where it sits against the 10 largest secondaries funds ever raised. We are clearly far from the largest pools of capital that you see at the top of this list, but we are the only fund that is exclusively focused on GP-led transactions. This is a fundamental difference as our mandate explicitly supports a more concentrated approach to investing, which means that despite our relatively modest size in absolute capital terms, we can write checks into single asset continuation vehicles that are 4 to 5x what even the largest players on this list can do, which all comes down to relative differences in concentration limits and investment mandates. These dynamics support the idea that secondary buyers will face pressures to become more specialized as the asset class continues to mature. On this chart, you can visualize the current state of the market as it relates to single asset underwriting capacity. In the bottom left corner, you see the large traditional secondary players who are commonly taking a so-called co-mingled GP-lead and LP-led approach to the market. These are the established players that you saw in the previous slide. What we've seen is that given concentration and mandate constraints, this group has settled around check sizes in the $100 million to $400 million range per single asset transaction and very rarely go above $500 million. The behavior from these players over the past few years indicate that direct competition from these specific pools of capital is unlikely to ramp up materially from current levels. This goes back to the structural constraints I mentioned earlier. However, if you look at the bottom right-hand side of the chart, we see new entrants being set up with a model that looks closer to ours from the point of view of being pure-play GP-led strategies. Our expectation is that some players within this group will succeed in ramping up over time and a few will eventually scale to become direct competitors to us. What's important to note here is that the gap between us and everyone else at least for the time being, it's quite material and that the barriers to scale a new fund and team are significant, as evidenced by some of the fall starts that we've already seen with some of these new entrants. And just to further bring home the point on scale, this table gives you a snapshot of the 10 largest commitments ever written by any secondary buyer into single-asset continuation vehicles. ICG Strategic Equity occupies every spot on this list, and the average ticket size on this table is $1 billion and trending upwards. So as competition ramps up, we are clearly not static. And what we have observed in the past few years is that the gap between us and the competition is actually getting bigger, not smaller. It is also worth noting that in 9 out of these 10 transactions, we have been sole buyers. In other words, we've provided the entirety of the capital as a one-stop solution to the sponsor. This underlines our value proposition to counterparties, which I discussed earlier, but also creates a dynamic where these investments are exclusive to strategic equity and therefore, make our track record uniquely differentiated. We've spent some time establishing that scale is one of our key competitive advantages, but I want to highlight that there are also other elements that give us an edge. First off is the team, which are 25 dedicated professionals across London and New York is the most established and long-standing team dedicated exclusively to GP-led transactions. We have been at ICG for 10 years, and have proven to be a good fit within the organization. That may sound like a given, but it's a question mark for platforms who are hiring teams externally and building from scratch. There is also a very strong culture and cohesion within the strategic equity team arising from the fact that we fine-tuned the composition of this group over a decade. Then we have our track record, where we have delivered strong returns over multiple vintages and where we have been able to learn from prior mistakes and sharpen our investment processes such that we now have a clear playbook that can deliver consistent outcomes. And finally, with all of the above comes a strong market reputation that gives us significant origination advantages as we are broadly recognized as the partner of choice for single asset transactions, especially the large ones. I hope I've given you a sense of how to think about our moat and the durability of our competitive advantages as well as the barriers that exist for capital formation and new entrants. In a nutshell, we are of the view that competition is definitely coming, but it will take some time until it ramps up and becomes a measurable threat to our business model. What I mean by that is getting to the point where we are losing deals that we want to do to competitors or experience an erosion to returns. We are not feeling any of those competitive pressures today. And part of the reason also has to do with growth in supply of deal flow, which, as you saw in the previous slide, has been growing steadily for 10 years and where the consensus forecast is for continued go-forward growth. Advisers see the market for GP-led transactions growing from $71 billion last year to $124 billion in the next 4 years. That growth is underpinned by the expanding addressable universe of PE assets that are candidates for continuation vehicles, combined with increased penetration across sponsors that either use these transactions for the first time or use it on a recurring basis, as part of their portfolio management toolkit. In summary, ICG Strategic Equity is now established as a leading manager in single asset continuation vehicles, having built a highly differentiated business with a proven track record. We are seeing the benefits of these first-mover advantages through our ability to scale our fundraising, having recently closed our latest vintage at $11 billion, which is by far the largest pool of capital dedicated to this strategy. And despite this significant growth in fund size, we have been able to maintain our underwriting standards and deployment pace, having already committed just over 40% of the fund. And finally, we believe that the strong tailwinds driving volumes will support continued growth and fund sizes for the future vintages. Thank you for listening, and I believe we will open it for questions now.

You, Ricardo. And now we turn to questions. We've got a good amount -- we purposely set aside a good amount of time for Q&A. [Operator Instructions]. The first question online Ricardo. As you look ahead, multiple vintages, how big could this strategy be?

It's a little early to tell, having just closed Fund V, but I would point you to the trajectory of growth over the past few vintages, and we've been roughly doubling every fund. Of course, that gets harder as you get bigger. But I would expect the fund to continue growing at least in line with the market, and therefore, you can extrapolate against our current size and compared to the projections on market growth. My sense is that we will at least grow in line with the market. We have been growing significantly faster than the market over the last 10 years.

And actually linked to that before we go to the phones. You talk a lot about scale being a competitive advantage. Does that mean that as you're getting bigger, you're seeing your competitive position get stronger? Or is it that you're just doing bigger deals that other folks can't do?

Well, it's both. The competitive position has been getting stronger. And the larger deals that we're doing are of the highest quality that we've ever done. It's the intersection of the best GPs, the best sponsors with their best assets. So -- and it's early days on the investments for Fund V, but comparably at this point versus prior vintages, these are the best returns and the best underwriters that we've ever done. So yes, the position is strengthening.

Thank you. And turning to some questions on the phone now. And the first question, Oliver Carruthers from Goldman.

Just one question for me on competition as the first question. So some of the large alternative asset managers with buyout capabilities, are talking about, over time, being able to be competitive in single asset, GP-led secondaries by essentially offering insight to mid-market PE firms that they would partner with in these deals as a way to win deal flow. Just interested, Ricardo, what do you make of that ambition? Or what do you make of this potential competitive ambition in the context of what you're seeing and how you expect this market to evolve?

I think it's a unique angle. Time will tell whether that is a real value proposition to sponsors. I wonder whether the flip side of being already a buyout firm offering a secondary offering to what is effectively a competitor even if it's a different size, whether that could cause some friction and could raise some questions on the sponsor trying to do the continuation vehicle. But I think it's just a question of time before other people ramp up. That's an interesting theory in terms of an idea to pursue as a strategy. But we just haven't seen anyone ramp up yet with that strategy in place.

Thank you. A couple of questions online about the sort of the mechanics of strategy, Ricardo. First of all, in terms of how leverage is used at the strategy in and this market more broadly, could you talk a little bit about that?

Well, there is no portfolio level leverage if you are comparing to LP-led transactions where there's hundreds or thousands of underlying companies and those strategies lend themselves to a level of leverage between the assets and the fund, we don't use leverage. The leverage is at the asset level. And if you look at our portfolio, when you look at the underlying asset level leverage, our companies at entry tend to have a couple of turns lower leverage than a typical buyout. And that has to do with the fact that these transactions, they do not trigger a change of control because this is the same sponsor managing the asset on a go-forward basis. And therefore, the company's you're not levering them up as you would in a buyout. The companies have already delevered and there's no need to relever them. So we observed that our leverage level at the asset is lower than your average buyout. And of course, if you compare it to a traditional secondary strategy, there's less system leverage because we don't use portfolio level leverage.

And on a similar theme of sort of the mechanics of how the strategy works, do the -- you talk about alignment of interest, specifically someone has asked whether the investment professionals of the partner GP typically roll their carried interest into the continuation vehicle or are you cashing people out? And maybe that's a good segue to talk briefly about this alignment of interest point that you referenced.

Yes. The answer is that there's a spectrum of quality valuations and alignment in the transactions that hit the market. If you think about those criteria, we are laser-focused on just very few investments a year that -- with a very high bar. So we're doing 3 to 4 investments a year where you can -- I think most people on the call would agree that the assets are of high quality and the devaluations are interesting. And then on alignment, the stat for our portfolio is that across the continuous vehicles that we pursue, the sponsors are rolling over the entirety of their carry. So there's no money being taken off the table. Now that's an average, in some cases, it's more than 100%. In some cases, it's near 100%. But fundamentally, what we look for is that the sponsor is signaling that they are a buyer, not a seller that they want to double down on this asset because they see upside and they see more limited risk than in a new buyout. So that's where they want to put their money. And we ensure that for our transactions, alignment is turbocharge. Now you won't be able to say that about every continuation vehicle in the market, and it's one of the reasons why I think you need to be specialized. Some of these nuances are quite important in asset selection.

You spoke towards the beginning about having dedicated separate LP-led and GP-led secondary strategies, which other players are beginning to do as well. When you're talking to LPs or invest in new fund, do you -- are investors clearly beginning to differentiate between LP-led and GP-led strategies? Do you think that differentiation is an important competitive positioning for us?

Well, I've never done an LP-led deal, no one in my team has, and we never will. We come from buyer backgrounds. We think that's fundamental to the skill set required to execute on these type of transactions. And to a comment I made earlier, sophisticated LPs that are evolving their portfolio construction for secondaries are specializing more in terms of the managers that they choose. And that's because the underlying managers are specializing themselves and because the supply-demand dynamics are different in the LP-led world than in the GP-led world. So that is -- that trend is very well established and very clear. So I would say, absolutely, the more sophisticated investors are creating a distinction between GP-leds and LP-leds almost as two separate sub-asset classes within secondaries.

Another question on the phone from Haley Tam at UBS.

Could I ask you a very boring one, I'm afraid? What is the typical fee rate for your co-mingled funds on the strategic equity side? Yes, how should we think about -- given the growing size of AUM would be really interesting to find out and the dynamics with say your co-investors and the GPs who stay invested, how we should think about the fee rates going from here. And has there been any margin pressure since 2014 at all?

Yes. So we don't disclose a specific fee rates, but I can tell you just a couple of things. First is that it's broadly in line with what we disclosed for the structured capital and secondaries bucket in our reporting. So I would refer you to that. And secondly, we have not seen any fee degradation despite the growth in fund sizes.

And actually, maybe linked to that, Ricardo, there's been another question online, around why we think that fee rate is defensible as we're getting bigger and bigger funds. Do You want to talk a little bit about the supply-demand dynamic that you see from an LP perspective why we think that fee rate is defensible going forward?

Well, there's many ways to answer that question. The first one is just point to the fund that was just raised and the fact that we have not seen fee degradation. I think LPs are looking at our net returns and the net returns are very strong, 25% net across all the capital we've ever deployed. So if you are delivering those kinds of returns, you can absorb market leading fees. If the returns come down, there would be some pressure on the fees. That has not happened. And if competitors were able to actually provide a direct value proposition that is similar to ours, then the market would become more competitive, not only in terms of our counterparties, but also as it relates to LPs. If LPs want to write big ticket into the category killer today, it's only us.

A couple of questions on the current market environment. First of all, could you talk a bit about the typical discounts you'll be -- you're seeing for transactions today? And importantly, how that's evolved over time, if at all?

Well I think we need to make a distinction between the LP-led world that thrives and emphasizes on discounts to net asset value. And then the GP-led world, there's multi-asset deals and then single asset deals. In the single asset world, the way that we think about discounts is, really, in terms of value relative to comps. So the way that you would look at a buyout. So discounts are more around the fundamentals and whether we think that we're getting an attractive valuation relative to the comps. You might think of that as an implicit discount. And that's quite different from an explicit discount where you are buying below the NAV. For us, it's not so much a question of the numerical discount. It's a question of whether we're getting fundamental value. And that's why you need to know what you're doing. You need to have a buyer background to really understand the earnings of the business, the quality of earnings, any adjustments that the earnings might have and ultimately take a view as to whether you're finding value. And by the way, you might be finding very good value even if you're paying par and there is no explicit discount.

Moving to clients briefly. Could you talk a bit about the client base that's attracted to this strategy? Anything notable from a client type or from a geographic perspective that you want to comment on?

Well, it's evolved over time. And as we become more established and the fund has gotten bigger, that aperture has opened, of course, and we've now raised funds globally. If you look at -- we're not going to disclose specific names, but if you look at our main regions in the U.S. you'd be talking about the top pension funds in the U.S., very blue chip LPs. Same would apply to Asia, multiple blue chip names that people on the call would recognize in the last couple of vintages that we've made really, really strong inroads into the Middle East. So I would say the same, the most blue-chip LPs in that region as well. And Europe is our home market where actually we ramped up initially, the majority of LPs were in Europe. But 10 years in, it's a balanced global group of LPs that most people on this call would recognize.

And then there's been a question specifically on the wealth channel and whether we see the strategies being attractive for the wealth channel.

Yes. We raised about 15% of our capital from the wealth channel. So we saw almost a 3x increase versus the prior vintage. So that is a trend that it generally applies to alternatives. Simplistically, I think the reason why this is a good strategy for private wealth and through banks that make that offering is because it's really easy to understand. This is -- these are proven derisked buyouts. And although the strategy is fairly complex to execute on and fairly difficult to replicate, you could explain it to someone in 5 minutes, and I think they would get the gist of it. So that is helpful for the wealth channel. It's not a strategy that you need to speak for 2 hours and massively complex. So I think that has made a difference.

Moving on to a bit about the transaction dynamics at the moment. There's a question around the deployment for strategic equity and whether that becomes more challenging in a better realization market generally for private equity buyouts. How do you see that working?

It's a natural instinct to think that lower exit activity drives need for liquidity at the LP level, which drives secondary. So I think that's accurate. And that's why M&A and exit activity is suffering today in the traditional sense, but you've had record volumes, both for GP-leds and LP-leds. So volume growth could see a slowdown when that dynamic changes. But we need to remember, and this is the fundamental point. Our strategy is very specific in what we look for. We are not looking for assets where the sponsor has an appetite to sell. And therefore, whether it's a good exit environment or a bad exit environment, the assets that we look for that we target are assets where the sponsor is not interested in selling. They're interested in keeping the asset, regardless of whether there is a good exit or a bad exit environment. The pain point that we're solving for is this desire to keep compounding on a winner and we can deliver on that objective, while delivering liquidity to LPs through a continuation vehicle.

And that links to the next question around sourcing transaction. Could you talk a bit about your -- how you source some of your origination model. Do you go proactively and find assets? Is it more imbalanced from GPs?

Yes. So we have a traditional origination model where we do direct outreach to sponsors in the geographies where we operate. But in practice, what we have been observing more and more is that we have a value proposition that is unique. Nobody writes $1 billion tickets and sponsors really value that because it reduces the risk around execution, it reduces the friction around doing a syndication, the distractions to the management team. So we tend to be the first call when it's a large transaction. And that dynamic has particularly accelerated as we have scaled in the last 18 months. And so it's a powerful element of our origination model.

And then as we look forward, we've obviously just closed SE 5, but we're being asked already, how should we think about the timing of fundraising for the next vintage. And any comments you might have to make on that?

All I always say is that the fund is just over 40% committed. So you can figure out if we continue at the current pace, when we'll get to a threshold rates where it's interesting to go out again. I would say it's not in the next 12 months, but it's also not in the next 24 months. So probably somewhere in between.

And then as we look at the client return profile, we speak a lot about the IRR with the absolute returns. Could you talk a bit about the DPI characteristics of this strategy as well, please?

Yes. So our track record in terms of mature vintages on DPI is still quarter So the strategy has proven itself across various KPIs, DPI, IRR, money multiple. And of course, that's the main underpinning of why people are investing in our fund. But the simplest way to think about this is that these are buyouts with lower risk of surprise less leverage and usually slightly shorter duration than a typical buyer. And the reason why you have slightly shorter duration is because first of all, these are assets that have multiple vectors for growth. So they are already in a trajectory of enjoying organic growth. They are typically market leaders in fragmented industries where they can -- and they have been consolidating through M&A. They're highly cash-generative company. So the machine is already working and the management team is working, which means that this is not like a new buyout where the sponsor might come in and might need to do some changes and there might be some teething problems. And all of that takes time. And when you compare it to a contingent vehicle, it's just a very streamlined execution that, on average, is shaving a few months to a year versus the traditional hold period for a buyout. And that's why if you think about that against our 25% net IRR, I think it triangulates because it's a higher IRR strategy than you are seeing in the typical buyout today, and that is as a result of slightly shorter duration in whole periods. And we should not also forget the very strong incentives that the sponsors have on these specific transactions because they've rolled their carry, they have orders of magnitude more skin in the game into these assets than they would have into a typical buyout that sits in a co-mingled fund.

Well, thank you very much. And just before we wrap up, a quick nod to one of the attendees on the call who is actually a research analyst who worked on ICG's original IPO in 1994, who's covered us at a number of institutions since then who's retiring from the industry at the end of this month after 40 years. So Robert Sage, we wish you a very happy retirement and thank you for your support over the last 30 years. With that, Ricardo, thank you so much. Thank you so much for joining us. And as we say, there will be a recording available on this on our website in the coming days. Thanks very much, everyone.