Partners Group Private Equity Limited (PEY.L) Q3 FY2025 Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the PGPE Limited Third Quarter 2025 Results Webcast. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to our first speaker today, Andreea Mateescu. Please go ahead.

Good morning, and thank you for joining us today. I'm Andreea Mateescu, and I'm delighted to be here with my colleagues, Dr. Cyrill Wipfli and Federica Cazzaniga. Today, we will be sharing an update on the NAV development and portfolio highlights as of 30th September. But before we get started, just a quick note on housekeeping. If you have any questions during the webcast, please use the Q&A tool available on your screen. As usual, we'll address questions at the end of the presentation. And to ensure we cover as much as possible, we'll group similar questions and respond to them in one go. If we run out of time or you have additional questions afterwards, please feel free to reach out to us via e-mail or through the contact form on our website. Let's get started. So, let's have a look at the big picture. Despite the challenging macro backdrop, PGPE Limited delivered solid results during the third quarter. NAV was up 2.1% and the share price gained 6%, continuing the positive momentum we saw in the second quarter. Now year-to-date NAV is still slightly negative, and that's mainly due to FX headwinds. The U.S. dollar weakened against major currencies like the Swiss franc, euro and pounds, driven by fiscal deficits and policy uncertainty. But the good news is at the portfolio level, we saw 2.6% value accretion in the third quarter, which shows the resilience of our portfolio. Moving on to the shareholder returns. We recently announced the second interim dividend of EUR 0.375 per share, which is payable on 19th of December. That brings the full year dividend yield well above 7% at current share price and over EUR 50 million return to shareholders as dividend for the full year. And importantly, the Board also approved up to EUR 15 million for the share buyback program which started in October upon receipt of proceeds from PCI Pharma Services. And this is a strong signal of our commitment to managing the discount and creating value for shareholders. In terms of portfolio activity, and more on this with the next slide, we have invested about EUR 42 million year-to-date, received EUR 65 million in distributions by the end of September and paid almost EUR 26 million with the first interim dividend. What is also important to note is that we have made a number of announcements regarding exit at our portfolio level, with proceeds anticipated to be received within the next 3 to 9 months. Liquidity remains robust with EUR 2 million in cash and cash equivalents and an undrawn credit facility of EUR 111 million, which has recently been renewed at better terms, as you may have seen in the announcement we made on 13th of November. Looking ahead, I would like to convey the following key messages. First, the progress on trade deals bring more clarity to an uncertain environment. Second, diversification across sectors and regions remains a cornerstone of our resilience. Our exposure spans health care, industrials, consumer discretionary and technology across Europe, North America and Asia Pacific. Third, M&A markets are normalizing, which means we can realize mature vintages and redeploy capital into high conviction opportunities. And finally, structural headwinds are easing, paving the way for sustained performance momentum. Now zooming in into the transaction activity. The first half of 2025 PGPE Limited received almost EUR 40 million in distributions, driven by the gradual sell-down of listed holdings like Vishal and Galderma. During the same period on the investment side, we deployed EUR 18 million and five smaller investments were added to the portfolio. Now Q3 really built on the momentum we've seen in the previous quarter. We invested over EUR 21 million into six new opportunities, which is more than the entire first half of the year. Two notable examples are MPM Products and restor3d. MPM is a U.K.-based global pet food company, known for its premium wet cat food brands like Applaws, Reveal and Encore, which are sold in over 50 countries through both e-commerce and retail channels. Partners Group will partner with MPM's management team to accelerate growth and transform the company into a global leader in premium wet cat food. The business plan focuses on expanding sales in core markets, entering new geographies, strengthening the brand development and building e-commerce capabilities, enhancing supply chain resilience. The second example, restor3d, which is a technology treatment orthopedic solution specialist in the U.S., which was founded in 2017. This company offers a full portfolio of implants across shoulder, hip, knee, foot and ankle. It also combines proprietary AI-driven design software, vertically integrated manufacturing and rated surgical planning. This is a company, which in 2024 partnered with more than 520 surgeons across 740 hospitals nationwide. On the distribution front in Q3, these were driven by the continued sell-down of Galderma and the exit from Global Blue. And even if not yet reflected in the distributions as of September, within the quarter, we have made several announcements regarding exit from our portfolio companies on which we will touch base on the next slide. Let me give you a quick snapshot of realizations over the past 12 months. We've partially or fully exited several investments. And on screen, you'll see some examples. For example, partial realizations to gradual sell-downs and dividend recaps like Rosen and also that we've completed full exit from TOUS, AAVAS, and Global Blue. What's even more encouraging is the momentum in the second half of 2025. The announced exit of PCI Pharma Services and Techem are clear evidence of our portfolio ability to generate liquidity and reinforce this positive trend. I'll leave this detailed discussion to Federica, who will address this later in the session. And with that, I'll hand over to Cyrill to take you through the next section.

Good morning. If Partners Group were a car, I would like to give you a look under the hood, how the engine works at the Partners Group. Partners Group will celebrate next year, actually, it's 30th birthday and has today 2,000 employees and 24 offices around the world, who manage over USD 170 billion of assets under management in five asset classes, but the oldest and largest is private equity, roughly half of assets under management. Partners Group Private Equity Limited is with its EUR 1 billion of NAV, around 1% of private equity AUM. Some potential new shareholders in first-time meetings say they are afraid we don't devote enough love in a product, which is only 1% of AUM. But the exact opposite is the case. Typical clients in the private wealth side invest EUR 10,000 to EUR 1 million with Partners Group. Typical institutional clients, primarily pension plans, invest EUR 10 million, EUR 20 million, EUR 50 million with us. Larger pension plans prefer not to invest into a commingled fund, but they want a tailor-made mandate, which typically is EUR 200 million to EUR 500 million in size. Thus PGPE Limited with EUR 1 billion is actually a very important client for us. And Partners Group mentions over 350 products and mandates, but PGPE Limited is the only product which is listed at stock exchange. So, we ask the shareholders actually in the past at an AGM, whether they would like us to take the product private, but the answer is no. The answer is no, because shareholders said, if they wanted the private product, they would have invested in one of the 350-plus products, which are private. But they want the product which is listed and thus they invested in this product, which is the only one which is listed and thus they do not want this product to be taken private. Most of the larger shareholders back then are still as of today, the largest shareholders, so their opinion has not changed. Another question I hear often in first-time meetings with potential new shareholders is that they fear we don't devote enough on the investment side for a product, which is only 1% of AUM. Again, the exact opposite is true. At Partners Group, we have specialized investment committees and above then the global investment committee. If the global investment committee approves a new investment, then portfolio management ensures that all products and mandates get their fair pro rata allocation, because all Partners Group clients who ask for 100% private equity direct portfolio is allocated to the same private equity direct investments regardless of the size of their investments with Partners Group. Now we call our investment approach transformational investing, because we are not happy with an increase of net profit of just 10% or 20%, but we want to double or triple the profits during our ownership, which is typically a holding period of 4 to 8 years. Transformational investing consists of two elements: thematic sourcing and entrepreneurial governance. Thematic sourcing means that on the sourcing side of investing, we are not passively waiting for investment opportunities to find us. But on the contrary, we actively want to find them. So thus, we define themes which we want to invest in. And then our investment professionals around the world hunt for the best investment opportunities in these themes, meaning winning business models. Already at sourcing stage, we begin building a value creation plan, which will further refine with the portfolio companies' management. Entrepreneurial governance means that after we have taken control of the business, our culture is to run that business with the mindset of a founder, the mindset of an entrepreneur to drive fundamental value creation as opposed to purely financial-oriented capital provider. Now PG as a firm is not specialized, because we want to build diversified portfolios across many industries. But of course, our investment professionals, they are specialized. So for example, 25 years ago, Dr. Remy Hauser joined Partners Group together with me. My PhD was in valuations of private equity companies, but Remy's PhD was in molecular biology and biochemistry. And of course, Remy is now a Managing Director in our Health and Life vertical. Partners Group's deep thematic research enables the firm to identify high conviction subsectors supported by resilient long-term global trends across four industry verticals: Technology, Health & Life, Goods & Products and Services. One example in Health & Life in a theme called Pharma Discovery Services is Fair Journey Biologics, a leading company in antibody research offering services for the discovery, production and characterization of antibodies. The company supports over 250 clients worldwide and has developed more than 4,000 unique screening libraries used to identify antibodies. Another example in services is Rosen in the theme called enhancing quality and safety standards. We have talked about Rosen in the past. Rosen Group is a leading global data-enabled provider of cutting-edge solutions and services in all areas of the integrity process chain. Since its beginning as I won my business in 1981, Rosen has grown rapidly and is today a technology group that operates in more than 110 countries with over 4,000 highly qualified employees. Or maybe a little bit easier to explain. For example, they send robots called PIX through pipelines to inspect for preventive maintenance, so they try to repair a pipeline before they break or before they leak. On the next slide, I wanted to show you how we create value once we own an asset. So as mentioned, our approach is very hands-on and entrepreneurial. We don't just invest. We want to transform businesses. We typically deploy three main levers: operational improvements, platform building and sustainability initiatives. Let me give you three examples, one of each. Operational improvements. At PCI Pharma Services, our largest portfolio company, we have achieved a 40% plus capacity increase and 97% on-time delivery, driving efficiency and growth. Platform building for Foundation Risk Partners, a U.S.-based insurance broker, we've executed over 70 add-on acquisitions, expanding scale and capabilities. Sustainability, at international school partnerships, we rolled out green campus initiatives, improving energy efficiency and water and waste management across 111 schools in 25 countries. Now we covered the theory, but now let's bring to Life with more examples from our goods and products vertical. So, on this slide, you see 3 of our top 10 portfolio companies represented. In this vertical, we focus on two broad sectors, consumers and industrials. Our investment thesis here is driven by long-term structural trends that are reshaping demand and creating opportunities for value creation such as supply chain, onshoring and reshoring and industrial digitization and automation. First, Vishal Mega Mart, leading retailer in India, which we call internally the action of India. Since its last listing in December, Vishal has delivered strong share price performance and is now included in the FTSE Global Mid-Cap Index. In its latest quarter results ended in June, revenue grew 21% year-on-year, supported by 11% adjusted same-store sales growth, while adjusted EBITDA increased by 34%. The company's quick commercial initiative now spans 670 stores across 445 cities, serving a 10 million registered user base. Overall, Vishal's store network has expanded to 717 stores in 472 cities, with nearly 150 million loyalty customers. Next, DiversiTech, a leading manufacturer of components and supplies for the U.S. residential HVAC market. I mentioned on the last call what the HVAC exactly means, it's these machines, which the U.S. population loves, which cool in summer and heat in winter. Despite tariff-related cost pressures, DiversiTech maintained strong performance through margin expansion, cost optimization and proactive sourcing strategies. Recently, DiversiTech acquired Cielo Thermostats, adding ENERGY STAR certified Smart Technology to its portfolio and strengthening its position on the connected HVAC and smart home market. Partners Group continues to work closely with the Board and management to transform DiversiTech from a U.S.-focused leader into a global HVAC champion. Near-term priorities include scaling supply chain capabilities and accelerating acquisitions to broaden the product portfolio, position the company to capture incremental wallet share and reinforce leadership in a fragmented aftermarket. Finally, Ammega, a global leader in lightweight conveyor and power transmission solutions serving over 50 markets worldwide. While the company is navigating soft trading conditions in global distribution channels and moderate demand in the U.S., it has demonstrated resilience through direct consumer sales and improved delivery performance across its 170 service centers globally. With a strong global footprint and the ongoing focus on commercial excellence and cost leadership, Ammega is well positioned to regain momentum and capture market share as industry conditions improve, providing a solid foundation for long-term value creation. So that's in a nutshell, my message was that much more activities were going on this year in the 70 portfolio companies than the NAV performance shows so far. With this, I would like to hand over to Federica.

Good morning, everyone, on my side also. As usual, I will take you through portfolio composition as well as notable activity and performance drivers. You might be forgiven for feeling a sense of deja vu on this slide as the pie chart and top 10 companies have not changed much quarter-on-quarter versus last quarterly call. And long-held names in the top 10 will be familiar to their current listeners of our quarterly update. Indeed, optically, the portfolio appears very similar to the end of Q2. The reality, however, tells a very different story. With sales agreed for 4 of our top 10 portfolio companies, there is significant movement going on beyond the quarter end reporting date. And amongst our top 10, just as a reminder, we have agreed sales for PCI, ISP, Techem and Clario. Indeed, I will expect PCI and Techem to leave the top 10 by the end of Q4 with ISP and Clario likely following in the coming quarters. And based on current portfolio composition, I'd anticipate these four companies will be largely replaced in our top 10 by 2021 and 2022 vintage companies where our value creation is now fully underway. If we look at performance, our top 10 also remain drivers of returns within the portfolio, and Vishal was the main contributor to Q3 performance as well as the largest year-to-date value driver. The company continues to report solid operating results for the second quarter of '25 and stock price was up over 40% during the first 3 quarters of the year, also as Cyrill just mentioned. Importantly, beyond Vishal, younger assets like Emeria, DiversiTech, Foundation Risk Partners, and Forterro also contributed to performance with positive revaluations in Q3. Cyrill just touched on strong performance from DiversiTech despite tariff-related cost pressures. But one I'd like to mention also is Emeria, our French real estate services company, which contributed strongly to Q3 returns for PGPE Limited. And its performance is also expected to continue to benefit from recovery in the French real estate brokerage market more broadly as well as turnaround initiatives in the business in Switzerland and Germany. Notably, during the quarter, Emeria also appointed a new CEO, and Partners Group remains closely engaged with the leadership team of this company on strategic initiatives to further strengthen the company leadership as well as technology position to continue to drive returns in this very important position within our portfolio. I will definitely spend more time discussing portfolio changes during our next call. But for now, we can turn to the next slide and take a look at the performance. With overall stable portfolio composition, operating metrics also remained largely unchanged quarter-on-quarter. As a reminder, the metrics you see at the top of this slide are reported on top 20 holdings that represents closely to 80% of the portfolio NAV, and we continue to exclude listed holdings to provide a better picture of our privately held assets. This overall results in valuations that are stable, just below the 18x mark and leverage that is also stable, just below the 6x net debt-to-EBITDA. Last 12 months EBITDA growth also remains stable at 10% as companies continue to successfully protect their profitability while navigating more turbulent and uncertain markets. This translates in contribution to portfolio performance that remains very similar again to what we have observed in previous quarter. Notably, EBITDA growth remains the main contributor to overall portfolio returns, partly offset by net debt change, which, however, mostly took place in late 2024 and early 2025 and effectively remained flat over the past 2 quarters. The main change in this picture is indeed the increase in the overall last 12-month performance if we exclude the currency effects. And this you can see in the brown bar in the chart as performance continues to tick up from 6% in Q1 to 8% in Q2 and now over 10% on a last 12-month basis. Specifically, the quarter-on-quarter increase in Q3 is driven by a broad recovery in multiples with a more positive market sentiment and lower rates supporting broader valuations. And this you can really see also in the EV EBITDA change column. Public market re-rating also supported performance for Vishal and Galderma, who continue to report solid financial and operational results and whose stock price drives the listed holding contribution in column #4. Talking about our listed holdings on the next slide, I take this time a different look at our vintage portfolio composition, tying it to the portfolio liquidity profile. I talked about vintage composition in the past and how a mature portfolio was supportive to realization, and we're now seeing this really coming to fruition. While not visible just yet in the chart on the left, the pie chart on the right shows the percentage of September NAV, which was held in assets that were either listed or for which the sale has been now agreed and not yet executed. And you will see this amounts to roughly 1/3 of portfolio NAV as of September, which coincidentally is also the amount held in assets that have been in the portfolio for over 5 years. So really, we're talking about realization of our more mature positions. This hopefully gives you a glimpse of the portfolio changes that are to come. As more mature assets get realized, we expect a more balanced vintage exposure towards younger growing assets. Notably, as average holding periods continue to extend across the private equity industry, PGPE Limited's average holding period has remained stable overall, just over the 5-year mark through Q3 2025 and anticipated to move down more towards the 4.5 years in the coming months as some of these exits that are now signed gets fully executed. Looking at this in historical context on the next slide, we announced exits and gradual monetization of listed holdings reinforce the positive trend in distribution that we've seen starting earlier this year. The trailing 12-month distribution rate as a percentage of NAV has picked up to circa 10% as of the end of the quarter. And this figure is anticipated to double in coming months, realigning us with our long-run average of approximately 18% to 20%. Importantly, this is not based on sales processes that are still open and ongoing, but on signed and agreed exits for which, in some cases, proceeds have been already received after the end of the Q3 reporting period. Amongst the four signed exit expected to close in Q4, I'd like to flag Apex Logistics, an integrated global logistics solution provider, which PGPE Limited invested in, in 2021. During the hold period, Apex EBITDA increased over 150% and PGPE Limited already received significant distributions from these assets by means of dividends over the holding period. Now a full sale of Partners Group stake was agreed in October 2025, valuing the company at approximately $4 billion and anticipated to bring total distribution from Apex Logistics to PGPE Limited to over EUR 25 million, driving total 2025 realization proceeds for the company closer to EUR 200 million. Importantly, beyond Apex, we see continued monetization of listed holdings, most recently, for example, another sale in Galderma as well as a number of additional sales whose closing is anticipated in the early months of 2026, subject to the usual regulatory approval. This provides us clear visibility on future valuation -- sorry, future distribution drivers further underpinned by new exit processes that are now currently underway. This is really material for two reasons. On the one hand, it allows us to realize performance, reinforcing confidence in our assets and in the valuation process we hold at Partners Group. On the other hand, it also allows us to reinvest these proceeds, continue to get exposure to new vintages, strengthening portfolio construction for the company and planting the seeds for future performance. As we talk about new assets, we also stand ready to execute and onboard new companies to maintain the investment level we promise our shareholders. We do so by leveraging the Partners Group sourcing and underwriting processes, which currently have an approximately $50 billion in first screening pipeline. I just list here the more actionable opportunities we see in the pipeline. And some of them, as you can see, have already been executed during Q4 2025, with others in very advanced stages of the underwriting processes. These opportunities are anticipated to realign our annual investment levels with historical averages of approximately 10% of NAV per annum. Notably, our pipeline remains anchored in our long-term thematic research process, which guides our sourcing and due diligence. And here, a great recent example is our investment in Infinity Fincorp, which will enter the portfolio during the last quarter of 2025. This is a non-bank lending institution, which provides form of financial access to underserved micro enterprises in unbanked and underbanked communities across India. With over 30,000 customers serving across 125 branches, Infinity enables small businesses and entrepreneurs to unlock their growth potential, supports the highly underserved in access to credit with 35% of Infinity's customers being first-time formal borrowers. This investment fits really into our strong thematic focus on non-bank lending in India and will leverage our expertise working with Aavas Financiers, a market-leading affordable housing finance provider in India, the Partners Group acquired in 2016 and was fully exited in 2025. We will use this experience to implement transformational value creation initiatives at Infinity, working to accelerate the branch rollout to reach more customers, investing in technology to enhance customer experience and improve operational efficiencies. While today, we paid a lot of attention to realizations as the industry has been rightly focused on liquidity generation and DPI, rest assured, we continue to work on sourcing, screening, and diligence in new assets with renewed focus on quality of earnings as well as clear and actionable transformational business plan. We look forward to telling you more about these new investments in coming quarters. But for the time being, I'll hand it back over to Andreea to summarize.

So before we wrap up, let me highlight a few things about PGPE Limited. We've been around for quite some time, listed on the London Stock Exchange since 2007 and recently included in the FTSE 250. So it's fair to say we've navigated multiple market cycles. Today, our portfolio includes over 70 direct investments diversified across industries, geographies and vintages, which I believe is a key strength in today's environment. Backing all of this is Partners Group, one of the world's largest private market firms, which manages more than USD 174 billion in assets, of which $83 billion is in private equity. And so, an investment in PGPE Limited means investing alongside Partners Group global client base and gaining access to private companies that aren't available in public markets. This year, we expect to distribute around EUR 52 million to shareholders through dividends, translating into a prospective dividend yield of about 7.5%, and that's a strong differentiator in the European listed private equity space. Now 2025 hasn't been without challenges. Trade tensions, fiscal shifts and geopolitical uncertainty weighed on markets and contributed to a weaker U.S. dollar. But despite those headwinds, PGPE Limited has delivered consistent long-term performance with an average annual NAV and share price total returns of over 9% for the past decade. And looking ahead, while as of 30th of September, these distributions haven't been yet received, we've been very active in the second half of the year. We've announced the exit of 4 of our top 10 investments, PCI, Techem, Clario and ISP. These transactions are expected to drive significant distributions over the next 3 to 9 months, which is great news for liquidity. So in short, we have strong visibility on liquidity, M&A markets are normalizing, and we're well positioned to capture compelling opportunities as the global economy reshapes. Now over the years, we've experienced both bull and bear markets. Historically, during bull market, our discount to NAV range from 0% to 10% and in more stable years between 10% to 20%. Now today, the discount is around 25% to 26% compared to a 10-year average of 19%. And this is a notable deviation from historical levels. From a historical perspective, this level of discount is unusual and may be of interest to investors evaluating long-term opportunities. What's also important is how the portfolio has evolved over the last decade. 10 years ago, about 1/3 consisted of fund of fund investments. Today, 99% are direct investments where we have more control, better transparency and stronger value creation levers. That context matters when considering the company's current market valuation. And we're not standing still. Our capital allocation policy prioritizes dividends and share buybacks under specific terms linked to the discount and available free cash flow. With portfolio activity increasing and 2025 distributions expected to exceed last year's EUR 140 million and also noting that the shares still trade at a discount, the Board has raised the buyback limit from EUR 2.7 million up to EUR 50 million. The program is already underway following proceeds from the PCI Pharma transaction. With that, I would like to open the floor for your questions.

So as I mentioned, we will group similar questions. And I have to say there is one recurring theme to all your questions. Thank you very much for having asked them. And that would be Cyrill for you. This is around the uplift and the valuation uplift in particular, with a decrease in the expected uplift than in the last years. How can you comment on this? Could you please provide a bit more information on your view?

Yes. Thanks for that question. So you all know I really love the valuation topics. I think this is actually a good thing. Nowadays, you really try hard to be true and fair value. I think it is -- it makes no sense to under promise and over deliver kind of, so that whenever you have an exit, you have an uplift. Because nowadays, Partners Group has over EUR 50 billion in evergreens. And if you have a semi-liquid fund, for example, a Luxembourg SICAV structure, which has a monthly liquidity and every month, you can go in and out in the same companies which we have in PGPE Limited, which is listed at the London Stock Exchange, the same investments we also have in our Luxembourg SICAV structures. And of course, if you are redeeming in September and then somebody is buying in September, then it's not good if in September, we publish an NAV and then we sell a company in October for 30% higher. So that's why we really try hard to have a valuation approach, which looks at the last 12 months EBITDA multiplied by a multiple, which is benchmarked by a dozen of public comparables and so that we try hard to be as close to the correct value as possible. Now a lot of times, the exits are a process which takes 6 months or longer. A lot of times, other general partners approach us already 1 or 2 years ago before we want to sell an asset about that they would like to buy an asset. And of course, these factors also go into the valuations. So in other words, whenever we have prepared an exit for longer term, then we are even better. And this year, if I look at the last 10 exits year-to-date, all have been at NAV or at a 5% to 10% premium to NAV, which I think is actually a good thing. I mean, we trade at a 25% discount to NAV. And I clearly can say that's not when we sell our assets, sell the assets at NAV or 5% to 10% above NAV. But there is also a question saying why it was higher last year. I think last year, we had three IPOs, of which Vishal, which doubled actually after the IPO. Of course, IPO is more difficult to then estimate how the share price will develop. And we also had SRS Distribution, which was bought by Home Depot, a 30% uplift, which was honestly a surprise for us. Because we were expecting this asset to sell only 1 or 2 years later. But for me, in short, the message is, if we sell at NAV, that's actually a good thing. That's a complement to our valuation guys.

Thank you, Cyrill. Federica, I see also a question for you, and that is about Vishal. Do you plan to sell more and when?

Yes. I mean, good segue to Cyrill's point here, right? This listing has been incredibly successful. The stock is up approximately 35% year-to-date. Just as a reminder, we executed already a block sale in June 2025. And upon that block sale, we have agreed to a 150-day commercial lockup, which will expire in coming weeks. So up until then, we cannot execute any more sales. Should stock performance remain where it is or even continue this strongly? I do see a case for more realizations coming from this position. I cannot comment on timing or on quantum, but I would expect this to remain a distribution driver for the portfolio into 2026.

Thank you. Then maybe also on this note, Federica, what about the distributions you expect for next year? Maybe also if you can touch base on the pipeline of new investments.

Yes, sure. Well, on distributions, as I mentioned, we expect to revert to our sort of 20% NAV run rate by the end of 2025. So, we're talking approximately EUR 200 million in total. And current guidance points to achieving a very, very similar number in 2026 as well. And again, part of this EUR 200 million have already been contracted with announced sale plus, for example, again, going back to potential realization of listed holdings. Just as a reminder, we still hold over EUR 70 million in Vishal stock and also Galderma, another position that we can monetize over 2026. So, I would very much guide towards sort of the 20% annualized run rate on current conditions. And on pipeline, I would also guide to a more normalized environment coming in 2026. So, roughly 10% to maximum 15% new investments in percentage of NAV, again, that will bring us very much in line with what we've observed historically.

Thank you. So we have another question in the webcast and that is about having done very well on the exits. Thank you for this. However, macro specifically has acted as a headwind on the NAV. And through this cycle and considering those challenges, what kind of NAV return per annum should investors expect from such a product? Maybe Cyrill, this is something you would like to answer?

Yes. I mean, this year was very unusual with the FX impact. I mean, that the U.S. dollar crashes so much against the euro. So if we exclude this year, and we just look a little bit across the cycle last 6 years, last 10 years, I mean, the last 6 years and the last 10 years were actually 10% net of fees, total return, so double digit. And if we look at 10 years ago, the portfolio was different. 10 years ago, we still have a significant share of the portfolio in funded funds and the direct includes also infrastructure, real estate and debt, which actually come at a lower return. If we look at the private equity direct investments only at the last 10 years, then they were at a 15% net return, which is actually in line with the expectations our clients have to invest in our closed-ended limited partnership structures. So in the long run, this product targets double-digit returns.

Thank you. So we thank you also you, the participants for having joined our call today and also to the ones who will be listening to the recording. And as mentioned in the beginning, if we didn't manage to answer your questions, so you have follow-up questions, please reach out to us. We're more than happy to continue the discussion. And this being said, we wish you a wonderful rest of the day. Thank you for joining us.

This concludes today's conference call. Thank you for participating. You may now all disconnect.