Omni Bridgeway Limited (OBL) Earnings Call Transcript & Summary

Good morning, and thank you all for joining us at short notice for this call in what is typically the start of the summer holiday season in Australia. I am Raymond van Hulst, Omni Bridgeway's Managing Director and Chief Executive Officer. I am joined today by Guillaume Leger, Omni Bridgeway's Group CFO; and by Nathan Kandapper, Head of Corporate Development and Investor Relations. I am pleased to provide an overview of the transaction announced this morning, which the OBL team has been intensively working on for several months. It delivers on all of our stated strategic objectives outlined at the Investor Day and at our financial year '24 results. This transaction is transformative in nature for OBL's capital structure and profile going forward. I will first provide a high-level overview of the transaction. The transaction involves the establishment of a continuation fund to be known as Omni Bridgeway Fund 9. Fund 9 will acquire OBL's co-investment in over 150 investments across Funds 2 and 3, Funds 4 and 5 Series I, and includes remaining balance sheet investment. The transaction does not include OBL's management fees or performance fees on Funds 4 and 5 Series I, to which OBL will remain directly entitled, nor does it include OBL's interest in Funds 1, 4 and 5 Series II, Fund 6 and Fund 8. Ares Management, one of the leading global asset management firms, will subsequently acquire a 70% interest in Fund 9 for an upfront cash consideration of approximately AUD 310 million as OBL-only proceeds. This represents a day 1 MOIC of approximately 3.2x and a fair value conversion of approximately 80%. Ares will receive a preferred return on its 70% interest in Fund 9, whereas OBL will retain a 30% interest, which entitles it to further upside on the full portfolio. OBL will advise Fund 9 going forward as one of its funds, for which Fund 9 will pay OBL an additional annual management fee of 2% of gross outstanding investment commitments. The OBL-only proceeds will be used to repay in full the outstanding debt with the balance of proceeds providing additional liquidity to our balance sheet. The transaction has been signed today, which is also the risk transfer date for the Fund 9 assets. Financial close is anticipated shortly once regulatory approvals have been obtained. At financial close, an initial payment of AUD 275 million will be made. This will be used to repay in full the debt outstanding. Completion takes place once the fair values of the Fund 9 assets have been updated to the risk transfer date. And at completion, the true-up payment can be calculated, which is anticipated to be finalized during the next 3 months. Only at such time will the final transaction amounts and metrics be available. And for that reason, amounts and metrics in this announcement and the presentation are all approximations. As indicated, this truly novel transaction delivers on all our stated strategic objectives outlined at the Investor Day and at our financial year '24 results presentation. Firstly, in relation to our objective of reducing debt and improving our balance sheet. Post transaction completion, the company will be completely debt-free, interest-free and will have significant additional liquidity available. Secondly, as to our objective of fair value validation, the transaction provides for a strong third-party validation of our fair value framework and the resulting fair value of our portfolio. The transaction follows many months of extensive due diligence conducted by Ares and its legal and financial advisers on the company, but mostly on stress testing the robustness of our fair value methodology and its application to our investment portfolio. The excellent transaction metrics of approximately 3.2x day 1 cash MOIC and approximately 80% fair value conversion across more than 150 investments reflect the outcome of that due diligence. This strongly supports the fair value of our overall portfolio and the origination and underwriting capabilities on new investments. Thirdly, the transaction further improves our cost coverage. OBL will advise Fund 9, for which OBL will receive a management fee of 2% of gross outstanding investment commitments equating to approximately AUD 6 million in additional revenue in year 1, adding around 7% to cost coverage during that year. It should be noted that this is an additional management fee stream on assets that were previously not yielding any management fee income. And finally, the transaction significantly accelerates our transition to a capital-light funds management model. The reduction of OBL's co-investment percentage from 20% to approximately 6% for Fund 9 assets significantly reduces the OBL-only capital requirement for ongoing deployments on the legacy portfolio. Fund 9 will not be consolidated and the transaction will lead to deconsolidation of Funds 2 and 3 and Funds 4 Series I and II, whereas Fund 5 Series I and II were already not consolidated. This will significantly simplify our statutory accounts going forward and be more aligned with the funds management business. The size and scope of the transaction and the addition of Ares as another blue-chip capital partner of our funds portfolio affirms our position as the leading institutional grade funds management platform for legal assets. As part of the transaction, Ares will take an OBL equity exposure up to AUD 35 million through long-term warrants with a strike price equal to the VWAP when the term sheet was signed and a 2-year lockup period. The warrants align Ares with our existing shareholders and reflect their confidence in the OBL origination platform, the underlying assets and the value appreciation potential of the shares. The addition of Ares to our share register will further strengthen the institutional character of our shareholder base. Turning to the accounting impact of this transaction, which is on Page 11 of the presentation. This transaction provides OBL with an immediate realization of investment return, which delivers a statutory net gain on an OBL-only basis of AUD 190 million pre-transaction costs. Notably, this transaction is not expected to require cash taxes to be paid with taxes associated with the transaction offset by existing OBL deferred tax assets. Whilst we have recently improved our reporting by presenting OBL-only financials on a non-IFRS basis, this transaction allows us to deconsolidate Funds 2 and 3 and Funds 4 Series I and II in our statutory accounts. Fund 9 will not be consolidated and Fund 5 Series I and II were already not consolidated, and this will, therefore, further simplify our statutory accounts. The transaction also takes us one step closer towards fair value accounting with OBL's interest in Fund 9 as well as OBL's co-investment in Funds 4 and 5 Series II accounted for at fair value going forward. I'm conscious that this is a complex transaction, which involves extensive new information. To summarize the key points, the transaction generates AUD 310 million in OBL-only proceeds at excellent MOIC and fair value conversion terms. The OBL-only proceeds will retire the existing debt in full and add liquidity of approximately AUD 60 million pre-transaction costs. The transaction will reduce our liquidity requirements going forward by eliminating close to AUD 30 million in annual interest expenses and reducing the OBL-only capital requirements for ongoing deployments on the Fund 9 legacy portfolio from 20% to approximately 6%. Gross coverage will increase in the order of 7% in year 1 on an annualized basis. The transaction strongly validates the fair value of the assets originated and underwritten by our platform and strengthens our position as the leading institutional grade funds management platform for legal assets. I'm truly excited and trust you share our enthusiasm for this novel transaction and the transformation it brings for OBL. It addresses the concerns raised by the market, derisks our balance sheet, and positions the business to focus on growing our asset base without distractions. At the first half '25 results release in February 2025, or at completion, when final proceeds and metrics will be available, we will provide a further transaction update, including an update on our cash flow and liquidity profile. Last but not least, I would like to thank the OBL team and all involved for their efforts in working around the clock to deliver on what is a complex transaction that delivers a truly positive outcome for all of OBL stakeholders. With that, I'm going to open up for questions. I will hand back to the operator now to manage that process. Thank you.

[Operator Instructions] Your first question comes from Kevin Ong with Amitell Capital.

Congrats on the deal. I think it's pretty amazing. Just one question from me. The fair value conversion of 80% seems reasonably high. Can you just give some background or some color around that?

Thanks, Kevin. Well, yes, we're very pleased with the 80% fair value conversion. It's a significant premium to what I think the market was valuing our book on. And so that's a real positive. Some people may say that 80% is not 100%. A few things on that. I still think that on a hold to completion basis, the company will be realizing close to 100% fair value conversion, and we've been tracking that over the last year, and we, for the moment, see that continuing. And no reasons to expect that will be different. The difference between 100% and 80% is linked to our discount rate. So in our fair value methodology, we use 12% as a discount rate, which is the weighted average cost of capital. In the secondary market and private investors that discount rate would be slightly higher, and that reflects the discount from 100% to 80%. Maybe to add to that, the transaction involves mature assets, but also assets that we originated and have underwritten as recently as 3 months ago. So that 80% also applies to those very young assets on which we have deployed very little so far. So I think it's a pretty positive outcome.

Your next question comes from Jason Palmer with Taylor Collison.

On Slide 8, there's a tax footnote that you've kind of referenced between the Fund 9 gross of tax fair value and the Fund 9 net of fund level tax. What was that number? And why is the fair value conversion taken off the net of fund level taxes and not the gross number?

Thanks, Jason. Good question. So the tax refers to pre-corporate taxes that happen lower in our funds structure. And those taxes are typically -- can typically be offset by corporate taxes ultimately. And we've always said that the OBL-only fair value and the gross fair value is on a pre-tax basis and what we are -- and the fair value conversions when we complete matters is also on a gross basis. What we are transferring to Fund 9 is on a net basis. So we transfer the assets to 9 on a net basis. And so in order to do it on a like-for-like basis, that tax needs to be deducted. The taxes -- we'll provide the number once we are at completion. It depends on which assets complete in which jurisdiction. Some jurisdictions will have some fund level tax and other jurisdictions will not have any fund level tax. It's a fairly technical topic and I hope that somewhat answers the question.

Yes, it does, thanks. So essentially, if I reverse engineer that, the fair value transferred to OBL, which is the total amount implied sort of the gross transaction is about AUD 0.5 billion net of taxes, which means about a 15% tax leakage, which implies the discount rate is closer to 30% rather than 20%. Is that correct?

No, I think you're overstating it there. I think the way that percentage is likely going to be closer to 10%, but all these percentages are on a provisional basis. The way to look at it is that the portfolio is on a gross basis. So in order to put the whole portfolio to a net basis, you would probably have to apply a 10% discount to the portfolio, then you have it on a net basis, and then look at what the fair value conversion is. It would be not -- it would be similar to what it would be if an asset would complete through regular completion rather than a secondary market sale.

Okay. And then to be clear, on top of that, there will be corporate taxes once those tax losses are absorbed at the corporate level?

Correct. But the corporate taxes can typically be offset with the fund level taxes that have been paid. So those are connected. But for this transaction, we have enough deferred tax assets available that no cash taxes will likely be paid.

Yes. That makes a lot of sense. And then I have 2 more questions. Just in terms of the timing now of cash flows going forward. So the timing of when the AUD 275 million of AUD 310 million is paid, that's going to be in roughly 3 months' time. Is that correct?

No. So the AUD 275 million will be paid within the next kind of weeks and it's going to be very, very quick. And then during the following period, we will be updating all the fair values of the assets that are moving into Fund 9. And once that is completed, each true-up payment can be calculated and the final payment will be made. And that will take, I would say, about 8 weeks to potentially 12 weeks maximum to complete, but more likely somewhere in February.

And then on that cash flow, then you've got -- correct me if I'm wrong, you've got AUD 100 million of preferred returns in Fund 2, 3 on the original co-investors. And then you've got effectively now a AUD 300 million European waterfall applied to Fund 9 that's been put through. So that means you have to kind of repay AUD 400 million really before you get cash flows on much of the book. What am I missing there?

No. So you're double counting there. The Fund 2 and 3 assets are moved into Fund 9, meaning that what we have essentially done is accelerated the cash flows in Funds 2 and 3 that would come after the AUD 100 million preferred. We've moved those forward and those are part of the AUD 310 million that the company now receives immediately. And after this transaction, it is the AUD 310 million preferred return on the Fund 9 assets that needs to be repaid.

Okay. So the AUD 100 million of preferred return is now repaid, is it?

No. So this doesn't repay the preferred return of the LPs in Funds 2 and 3, but we have monetized the OBL share that comes after the AUD 100 million. We brought that forward through this transaction in Fund 9.

Yes, that makes sense. I guess what I'm getting at is you have to kind of get to -- you have to now pay back AUD 400 million before you receive any cash flows that relate to Funds 2/3 or Series I of Funds 4/5. Is that correct?

Can I just interject you. So Jason, you can't really add up these 2 things, because the Funds 2/3 waterfall only applies to completions in Funds 2/3. If there are completions in Fund 4/5, then they're not subject to that AUD 100 million in Funds 2/3.

Yes, that makes sense. Okay. And just the last question, if I can, is just around what the co-commitments are likely to fall to now. So if I look at what you've got rid of or sort of monetized earlier, it's a good portion of your book. And so your co-investments were looking like around that AUD 60 million to AUD 70 million a year. Does that sort of go down by sort of half now?

Yes. I would say slightly -- this is all provisional, but I would say slightly more than that and more aiming in the -- reducing it by AUD 40 million to AUD 45 million or AUD 40 million to AUD 50 million in co-invest obligations. So reducing it by AUD 40 million to AUD 50 million.

Okay. So that means that your co-investment shortfall is going to be somewhere between AUD 15 million and AUD 25 million a year that you're going to have to make, and then you're going to have cost coverage on roughly 50% or 40% of your business. So your net outflow program probably halves?

If you take on the -- you've taken the debt into account or the interest payments into account there?

Yes.

So Jason, we're going to provide... Sorry, you go.

No, sorry, go ahead Guillaume. Please finish the answer.

Sorry, I was just going to add, Jason, we'll provide more information on this later when we have better numbers. We're working with approximations now.

Yes. Just on that, Jason, and the others in the call as well. This is -- we've been transacting on a live portfolio. So over the last months, we've been working hard on the transaction itself. Risk transfer happens today, but we need to now first update all the values before we can really finalize the numbers and update the valid questions that are asked. But you'll have to bear with us until January before we can give those numbers.

Your next question comes from Nick Caley with Henslow.

So just to clarify in my own mind, Fund 9 will be closed, a closed fund, and any new business from here will be written through 4/5 Series II, 6 and 8. Is that right, or?

Yes, that is correct. 6 is also in harvesting. So no new investments go into Fund 6. So new investments go into Funds 4 and 5 Series II. We are currently having the last investments going into Fund 5 Series I, but that fund will also shortly go into harvesting. Fund 9 is in principle a closed fund, although it is open for additional assets that can go in, but with the mutual consent of the party. So it's intended to be closed, but it has the possibility to add some assets to it.

Your next question comes from Kevin Ong with Amitell Capital.

Two more questions from me. First one a bit more housekeeping. I understand that Fund 9 is going to be deconsolidated. Just want to understand what kind of reporting will you be providing? Will you at least report fair value of OBL interest in Fund 9 during the quarters?

Thank you, Kevin. Yes. So different from prior secondary market transactions, we will be reporting the fair value of OBL's interest in Fund 9 on a fair value basis periodically, so that we can track how the performance goes.

Got it. Okay. And second question is just I want to make sure I get this right. So you're selling 70% of your interest in Funds 2/3, Series I of Funds 4 and 5 for day 1 MOIC of 3.2x. And this 3.2x is only based on that AUD 310 million of cash from Ares and does not include the additional upside from your entitlement of the profit share? Is there any way you can help to quantify or give us some color around if this portfolio would perform in line with expectations, what would the MOIC be like?

Thanks, Kevin. Yes, you're right. The 3.2x is the day 1 MOIC. The ultimate MOIC will go up or has the potential to go up significantly, but it depends on the deployment profile. So in Fund 9, deployments are in principle funded 100% by the proceeds of Fund 9 in any period. So if in any period there are completions and there are proceeds, any deployments will be funded out of those proceeds and the further deployments by OBL will be 0. Only if there are no proceeds in that particular period will Fund 9 call on OBL for its 30% interest, and there will be further deployments by OBL. So the actual MOIC on the overall transaction depends on exactly how many of the further deployments will be funded through completions and how many will be funded through further deployments by OBL. So it's too early or too difficult to state what the MOIC will ultimately be. But based on the way it is structured, it is likely to -- or it has the potential to go up significantly.

Got it. And I guess one other thing I'm just curious on. So past [ secondary ] transactions from Omni has been selling to specialists in legal assets or other legal fund base. Ares has a different profile. They're known to be one of the best credit investors. How is the negotiation with Ares like versus the past buyers?

Okay. That's an interesting question. So indeed, Ares has a different profile. I mean they're one of the top 5 asset management platforms globally. We're very excited. This is one of the first times that one of the top 5 really get into the legal asset class and they have used us as the contract, so that's positive. They have focused -- the key difference, I think, is that they have really focused on our process of origination underwriting and how the fair value is established and have been really doing a deep dive into that. There's been significant diligence into the assets as well, but I think the focus area has been on process and platform and how the fair value is established and the robustness of that process, whereas the other secondary market transactions were very focused on the individual legal assets that were part of that transaction. So this had a little bit of a different approach, and that's also why it's taken a bit longer. This has been a process that's taken many months and was quite intensive as a result of that different approach to due diligence. Does that answer your question?

Yes. I've got a follow-up there. Do you think that this potentially opens up more chances or opportunities to work with Ares or other credit managers in future deals or maybe even raise AUM from them?

Well, potentially. I think the large asset management platforms have been looking at legal assets given its profile of non-correlated returns and the relatively high returns that the assets can realize. The specific challenge with legal assets is that it requires a dedicated origination and underwriting capability, and in that sense, slightly difficult to either build or scale. And so they would typically have to go through a more dedicated platform like ours to do that. So I do think this is a start of more parties looking at legal assets, but it will probably always go through dedicated origination platforms like Omni Bridgeway to originate and underwrite them, because it's a very specific capability and expertise to manage these assets. So they're taking a backseat approach and they're not involved in the origination or underwriting or management of the assets.

Got it. Okay. And if you don't mind, one final one for me before I get back into the queue. How do you think about capital allocation from here on out? Because with this transaction, your debts repaid, you have lowered OBL share in future fund deals given that now you're like 6% of Fund 9. So you're even more capital light. Fair value marks for your portfolio has more or less been validated by Ares. You have a ton of cash on hand post transaction. So how would you think about potentially capital allocation, share buybacks, especially given the large discount your shares are trading versus book?

Logical question. It's a little bit early to make any firm statements on that. But having cleared the debt certainly helps and puts shareholder returns to the top of the agenda. I think we would like to first digest this transaction, make sure that we get the transaction amounts and metrics clear and look at where we are then, and then we'll be looking at that in the course of the year and when the opportunity is there. But having the debt out of the way is a big step forward to getting to shareholder returns. That is for sure.

Your next question comes from Charlie Kingston with K Capital.

Well done. It's a great deal. So congratulations to all for executing this. But just a question on the pro forma balance sheet, just to make sure I'm thinking about it clearly. So all the debt is repaid. There's going to be an additional AUD 60 million of cash. And I think prior to this deal or at your September update, you had AUD 90 million or thereabouts of cash and AUD 20 million of receivables. So am I right in thinking that the pro forma net cash of Omni is AUD 160 million, AUD 170 million, is that fair? Because again, I suppose, to the previous question, the resulting EV on Omni, especially now that you've validated a good proportion of your book and the existing book, it does seem still pretty cheap even notwithstanding the big share price rally today. So could you give any clarity around that? Am I thinking about that right, the pro forma balance sheet for Omni-only, please?

Guillaume, do you want to take this question?

Thanks, Charlie, for the question. And as I said before, we're still working through all the numbers. If you use the June 30, I think you were using, right, pro forma, I think you're in the right direction, the right ballpark.

Okay. So that AUD 100 million preferred return on 2 and 3, that's -- sorry, the debt gets repaid and the AUD 60 million of additional cash, that is net of any sort of that Fund 2 and 3 preferred return. Is that right? So you've got the AUD 110 million pre this September that I was looking at cash and receivables plus the additional AUD 60 million. I mean there are no other adjustments that I should be making, I mean, tax and -- the warrants for Ares, not going to touch those, but yes, there are no other adjustments that I need to make from the additional AUD 60 million net of debt repayments and then the AUD 110 million?

Charlie, one thing on the preferred. It's completely separate from this. So the AUD 60 million is the OBL-only proceeds and is part of what we have brought forward of our entitlement that we have after having repaid the AUD 100 million preferred. So without this transaction, we would have to further repay the AUD 100 million in preferred before we would get to our entitlement. What we have done in this transaction is brought that forward. And that's part of the AUD 310 million and therefore off that AUD 60 million. So these are 2 different concepts. There is no further -- so from Funds 2 and 3, after this transaction, OBL will not have a direct entitlement to proceeds from Funds 2 and 3 anymore. The Fund 2/3 entitlements of OBL will go through Fund 9 and will be used to first repay that AUD 310 million preferred return in Fund 9.

Okay. That's clear. So it's literally just your cash at September 30 and receivables of AUD 110 million plus the AUD 60 million additional that you've announced today, and there are no other adjustments that I need to be thinking of aside from the warrants. I think you said there's no cash tax, et cetera. So is that fair?

So there's unlikely to be cash tax. There will be some transaction costs involved. And then between September and today, we'll have completion that will have happened in the meantime and operational costs that have gone out. But those are the key items of adjustment.

Your next question comes from Peter Meichelboeck with Select Equities.

Just a few things. I'm going to ask around probably the same sort of similar questions. There's a few others around the Funds 2/3, the external investors, but also sort of 4 and 5, the external investors. I'm assuming from this that today's deal doesn't actually impact those external investors in those funds. Is that correct?

Yes, that's correct. This transaction is separate from the LPs. We did inform them beforehand and they are aware, they support this transaction. They really like the fair value validation that it also brings to their investment in the funds, but it doesn't impact them. Their entitlements remain unchanged.

Yes. And then apologies because I'm sure others have asked sort of a similar question. But post this deal, those guys have still owed that AUD 100 million, AUD 110 million or whatever it is in Fund 2/3 that hasn't been paid out as part of this deal, has it?

No, that's correct. That has not been paid out. And so that's still outstanding for them.

Yes. Just on Fund 9, the preferred return, are you able to give us some indication of the size of that preferred return to Ares?

Sure. Well, first of all, in line with the other secondary market transactions, the complete waterfall, we won't disclose. That's commercially sensitive. But we will be disclosing the fair value of our interest in it. But the preferred return, you should think of it to be in the range of 10%.

Right. Okay. And your OBL's profit share for Fund 9, how do we think about that in terms of the percentage that, that is? Because the 30% refers to sort of the commitments essentially, doesn't it? So what's the profit share for OBL there?

Well, I think you should look at the OBL share or the fair value of OBL in Fund 9 to be in that same ballpark of 30%. That's the way it's structured. So the 30-70 split is indeed on an upfront basis, on a deployment basis, but also on a current fair value basis.

Right. Can I just ask -- obviously, the debt repayments would be part of today's announcement. Is the debt facility still going to remain as such? Or is there going to be a new facility as opposed to the actual repayment of the debt? Just trying to get my hand around what would be the facility going forward.

Yes. No, that's a good question. The facility will end with the repayment, and we will not have a -- we will not be able to redraw under that facility. The facility will end, and we will not have another debt facility in place of it after this repayment.

Right. Okay.

We would be able to do it, but we don't intend or anticipate to do that.

Right. Okay. And just from what I understand, you've got the investments for the going in and include the Series I for Funds 4 and 5. But I think you said you'd be consolidating also Series II. Is that correct?

Yes, that's correct. Yes. Going forward, Funds 1, 2, 3, 4, 5, Series I and II will not be consolidated in OBL's balance sheet.

Right. Okay. So that Series II is also not being consolidated for...

I should have put, 9 will also not be consolidated.

Right. Okay. I mean just a general sort of question then going forward, given that Fund 1 has been deconsolidated now since that transaction, sort of the visibility that we have in terms of the performance of the underlying assets, et cetera. What sort of reporting metrics are you envisaging that you'll be doing now going forward given that so much of the business is going to be deconsolidated in that sense?

Yes. So we haven't -- so on Fund 9, we've indicated that we will report the fair value separately with the difficulty with smaller funds, where there might be only a few investments left, is that reporting on that separately would give away potentially commercial sensitive information to the defendants if our involvement in those cases is known. So that's the difficulty with reporting on a very granular basis. So we haven't decided yet on the granularity of our fair value reporting on a fund-by-fund basis going forward, but it's certainly something we'll be considering.

Right. Okay. Look, 2 last quick ones, if I can. The cost base, the AUD 90-odd million operating sort of cost base for OBL, do you see any changes in -- given this transaction, do you see any change in that level of cost base?

So this transaction itself won't change the cost base. We continue to manage the same assets. However, the AUD 90 million is we've gone out with AUD 85 million as our anticipated OpEx for FY '25, and we're tracking well to hit that AUD 85 million or to end up below the AUD 85 million. So that's going well. But that in itself is unconnected to this Fund 9 transaction.

Right. Okay. Understood. And the last one I had was transaction costs. So obviously, this is all pre-transaction costs. Can you give us an indication of the likely number for that?

Sure. It's not -- we don't have the full overview yet, but I think you'll have to think in the magnitude of, I would say, 3.5%, 4% of transaction size.

[Operator Instructions] Your next question comes from Jason Palmer with Taylor Collison.

Just one more for me. Just on from Peter's question. where you talked about the preferred return on Fund 9 being a 10% type hurdle, is that on the gross amount? So on the 100% fair value conversion? Or is that on an 80% fair value conversion because it probably adds another AUD 100 million of hurdle to it?

I'm not completely sure I follow your question. The preferred is independent from the fair value. The preferred is on the principal amount of Fund 9. But I think if I understand your question well, it would be on the 80%.

Sure. So the preferred return is on the AUD 310 million, and you're saying that they're looking for a 10% return on that. So you're saying the preferred return is AUD 340 million or is the preferred return closer to AUD 400 million?

I've indicated the preferred return is in the range of 10%, and that would apply to the AUD 310 million principal involved in this transaction by Ares. Does that answer the question, Jason?

It does answer the question. I was just trying to work out like how much cash had to come in across the business in Funds 2/3 and Series I of 4/5 before OBL received more inflows outside of Fund 6 and Fund 8. And I think what you're saying is that AUD 100 million has to be paid in Funds 2/3, and then somewhere between AUD 340 million and AUD 350 million that has to be paid in Fund 9. So AUD 450 million in total across the group. But on your balance sheet, you've got AUD 150 million, correct me if I'm wrong, on a pro forma basis or thereabouts. And your deployments are coming down a lot and your cost coverage is going up. So you've probably got a number of years of coverage in terms of cash flow before you need to go back to debt markets.

Yes. No, that -- so maybe first to add to the start of this, we haven't -- so the Fund 9 assets do not include our carried interest on Funds 4 and 5 Series I. We still continue to receive the full carried interest on those assets, which is still the majority of the assets in Fund 9. So that's also an ongoing cash flow coming from Funds 4 and 5 directly. That doesn't flow through Fund 9. So we continue to have that direct interest in Funds 4 and 5. We have the indirect interest in Funds 4 and 5 through Fund 9 on the co-invest. Only for the Fund 2 and 3 we don't have a direct interest in proceeds anymore.

There are no further questions at this time. I'll now hand back to Raymond van Hulst for closing remarks.

Thank you, actually. Well, thank you all for attending. I hope you share with us the enthusiasm for this deal. We're really happy with it. If you have any further questions, please reach out to Nathan or myself and we'll be happy to organize a call to talk to those questions on a one-on-one basis. Thank you all, and I look forward to speaking shortly.