Partners Group Private Equity Limited ($PEY)

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

Good morning, and thank you for joining us today. I'm Andreea Mateescu, Investor Relations responsible for PGP Limited, and I'm delighted to be here with my colleagues, Wolf Scheider, Partner and Head of Private Equity at Partners Group; Federica Cazzaniga, Senior Portfolio Manager responsible for PGP Limited; and Fiona Gillespie, our Senior Economist. Today, we will be sharing an update on the NAV development and portfolio highlights as of 31st of December. We will cover the highlights of the year, private equity environment and also the portfolio and performance update. 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. We will address questions at the end of the presentation and to ensure we cover as much as possible, we will group similar questions and respond to them in one go. If we run out of time or if you have additional questions afterwards, please feel free to reach out to us via e-mail or through the contact form on our website. With this, let's get started. 2025 was a complex environment to navigate for investment managers. For PGP Limited, the USD weakness dominated the scene, which mattered for a globally diversified portfolio like ours. Specifically, we closed the year at EUR 13 NAV per share, which means a total return of negative of 8.7%, including the dividends paid to shareholders. The currency headwind alone accounted for almost 6% of this. Underlying value creation was modestly positive, but was tempered by idiosyncratic challenges in a small number of companies. Several of the exits we announced through the year translated into substantial Q4 proceeds, and you now see in aggregate how strong the year was in terms of distributions. EUR 227 million were received in 2025, and this is the highest level received since 2021 and brings us in line with our long-term average of 20% of the NAV distributed per year. Also, we have invested EUR 102 million in 2025, again, bringing us closer to our long-term average of roughly 10% of the NAV per year. Now we also paid almost EUR 52 million in dividends to shareholders, which is in line with our 5% objective to distribute per year in semiannual payments. This was supplemented by almost EUR 6 million deployed into share buybacks as part of the EUR 50 million share buyback program announced towards the end of last year, more specifically in October, which was subsequently extended to April 2026. So in total, almost EUR 58 million returned to shareholders through dividends and buybacks. That said, the portfolio remains diversified and maintains a stable composition across vintages. Realization activity from mature assets and continued deployment support long-term positioning. And later in today's session, we will go into more detail on the underlying performance drivers and individual asset developments. Moving on to the next slide. Here, again, we report the EUR 227 million in realizations, and you can easily see the trend on the left-hand side of this slide. This contrasts sharply with the more muted exit environment across the broader private equity market. Now out of these listed holdings contributed roughly EUR 55 million, and those were driven primarily by Vishal, Galderma and Global Blue. Realization activity was anchored by 3 high-quality assets, which -- where we also retained participation in the next phase of growth. So PCI Pharma Services, and this is an investment which our Partners Group decade-long ownership journey transformed into a global CDMO or contract development and manufacturing organization with integrated capabilities in advanced drug delivery and biologics manufacturing. Then we have International Schools Partnership, or ISP, as we refer to it internally. This was founded in 2013 by Partners Group with an entrepreneurial vision of creating a leading K-12 group globally and has been scaled into a global K-12 education platform with 111 schools across 25 countries and here ISP remains positioned for further expansion and technology-enabled learning. Techem, this is a European leader in submetering, energy efficiency and building management technology, where we invested first in 2018. And this is a company which is benefiting from a growing focus on energy efficiency globally. On the deployment side, PGP Limited invested just above EUR 102 million in 2025, which is well above the amount reported in 2024 of almost EUR 31 million and again, returning to our long-term pace of investing roughly 10% of the NAV annually as market conditions stabilized in the second half of the year. Now here, key investments included also MPM Products, a premium pet food platform operating globally across over 50 markets, and also Infinity Fincorp Solutions, an Indian nonbank lender serving underbanked communities. And with this, I would like to hand over to Fiona for the private market overview.

Good morning to everyone on the line also from my side. Now let me start by addressing the ongoing geopolitical events in the Middle East as we have seen continued news flow over the weekend, and this really remains top of mind for many. So we are now in the fourth week of the conflict in Iran, but before quickly touching on the possible implications for the investment backdrop, the humanitarian cost of the events in the Middle East cannot be ignored, and our thoughts are with friends and family who are affected by this. Now the war has moved into a phase of sustained uncertainty, particularly around the prices for both oil and natural gas. For the global economy, the Iran war is becoming the biggest disruption in history to oil and gas with nearly half of pre-war production from the Middle East region having been cut. This is especially important as before the war, oil and gas traveling through the Strait of Hormuz accounted for around 1/5 of global flows. What matters most now is what comes next, in particular, how quickly the Strait of Hormuz opens and oil starts flowing, -- in other words, the duration and also how quickly Gulf states can reestablish confidence in their security, in other words, how the war might be resolved. In terms of the economic implications of the energy shock so far, let me summarize our thinking on the impact for the U.S. and Europe. The U.S. is relatively insulated from a growth perspective given its status as a net energy exporter and also its reduced reliance on oil. This said, the primary transmission channel would likely be through consumer and market sentiment as higher gasoline prices represent a tax burden, while the potential for negative net wealth effects also risk intensifying. Instead, the euro [ area ] is far more vulnerable to an energy shock given its greater reliance on LNG and lower flexibility vis-a-vis the U.S. in terms of gas supply. This is particularly important during the current storage refill season given current storage levels remain historically low. This said, Europe sourcing of LNG from the Middle East is low with nearly 60% of imports coming from the U.S., while only around 8% comes from Qatar. Even so, a sustained disruption could result in a higher inflation pass-through, renewed pressure on energy-intensive industries and a challenge to the region's nascent 2026 growth recovery. Europe has, however, previously demonstrated a willingness to deploy subsidies and price caps to help dampen the impact of higher energy prices on households and businesses. From an inflation angle across the U.S. and Europe, a 10% increase in oil prices today is estimated to drive core CPI inflation up by roughly 5 basis points over the current -- over the following quarter. Current moves, therefore point to core inflation being about 25 to 30 basis points higher. In other words, the bar for oil prices to materially shift the policy trajectory of Central Bank from an inflation perspective is high. And while we have seen policymakers dialogue and tone shift alongside market repricing towards higher likelihood of rate hikes, -- we believe it would require a substantial and sustained surge in energy prices where inflation expectations become unanchored before policymakers need to hike. In summary, while markets seem increasingly convinced major central banks will hike in the face of energy -- higher energy prices, we are not as convinced. We believe there is a high chance for central banks to place greater emphasis on growth in the labor market despite the opposing impact of higher oil prices on Central Bank growth versus inflation mandates. In particular, we believe the growth headwind, especially in Europe, will be more prominent in magnitude than upward inflation pressure, especially for core inflation, and we therefore see risk for the ECB's outlook is still towards further easing. This is clearly a volatile environment. But despite the geopolitical headwinds, I want to talk about the tailwinds that we are seeing for private markets today. Now on the slide in front of you and before diving into the tailwinds for private equity, let's take a step back and look at where we come from. We don't need to go long through history, but the magnitude of the inflationary pressure and the resulting rate hike had a substantial impact on the industry. Rates went up, raised the cost of borrowing and slowed profit growth, which led to falling multiples. This resulted in an unprecedented slowdown in private equity exit activity and therefore, distribution activity. At the same time, when looking at public equity, the strong performance of the Mag 7 stocks has been the key driver of the outperformance of listed over private equity. Looking forward and moving on to the next slide, however. These developments have also led to the highest -- these developments have led to the highest discount of private equity valuations relative to public markets over the last 15 years. What we see here on the chart is a comparison of valuation multiples of public equity and private equity. We can see over the last 20 years, only during the dark episode of the global financial crisis where the discount of PE valuations higher than it is right now. What does this mean? We are now buying at attractive prices on a relative value basis. At the same time, we have seen another factor from a market perspective that has turned from being highly negative to a tailwind. Moving on to the next slide, please. We are all too well aware of how interest rates rose aggressively from 2022 and affected the financial world as we had gotten used to it. This was a headwind to PE-backed companies, specifically buyouts, but also more broadly across the economy. Borrowing costs, however, have been retreated over the last 2.5 years. This has made it to the headlines less than the surge as much of this was driven by the spread coming down and capital flowing into private credit. As an equity investor, this helps a lot with the cost of borrowing having retreated almost 80% of the increase we saw after COVID. It helps with free cash flows that are up, positively affects refinancing, allows us to pursue growth initiatives, but ultimately, it helps with the price a buyer is willing to pay for an asset with a higher positive cash flow. All of this has started to lead to a positive increase in distributions. Moving on to the next slide. We see that the rise in distribution has started, especially after the tariff-induced market jitters from April, May of last year. This has therefore been a story since around June or July of 2025 onwards. To conclude on the investment backdrop, near-term instability may continue, but private markets are quite resilient from it and relative to public markets offer the best value in 15 years. I will now hand over to Federica, who will walk us through the portfolio and performance update.

Thank you, Fiona, and good morning, everyone, from my side also. Taking a look at our portfolio as it is today, the level of realizations experienced by PGP Limited in 2025 has been well ahead of that of the industry during the year, and this has really accelerated the portfolio repositioning as we knew it. While we remain fully focused on direct private equity investments in our core teams and geographies, the change in repositioning is visible in 2 aspects. First, looking here on the right-hand side of this slide, we now have a more diversified top 10 holdings, which now accounts for less than 40% of total portfolio NAV. During 2025, 5 of the 10 companies that were in our top 10 at the end of 2024 have experienced a liquidity event. PCI and ISP holdings have been now resized to less than 2% of portfolio NAV following partial realization, while continued strong performance has driven assets like DiversiTech, Foundation Risk Partners and also Forterro higher up the rank. We also see USIC and Allied Universal entering the top 10 this quarter at the bottom of the list. Both are essential service providers to the infrastructure industry that Partners Group knows very well, having invested for the first time in this company in 2017 and 2013, respectively. Importantly, looking ahead, we see continued reshaping in our top positions as the sale of Clario, a global provider of digital clinical trial technologies has been agreed and is expected to close in 2026 as well as a material block sale in Vishal stock has been executed already in 2026, both further shaping portfolio exposure towards younger assets. Another way the repositioning has been very clear on the next slide is the change in portfolio markup. Against the backdrop of increasing holding periods across the buyout industry at large, now reportedly approaching the 7-year mark, the weighted average holding period for PGP Limited in its own assets has now reduced to below 5 years and stands at 4.6 years at the end of 2025. This makes for an underlying portfolio that can be broadly seen as divided in 3 cohorts as we presented it on this page. A significant amount of performance in pre-2020 vintages has been realized and that these are what we call more mature vintages. We still hold approximately 40% of NAV in this cohort, and we see strong value creation still left in this asset. We also hold approximately 46% of NAV in assets that we now consider as an inflection point. We call them inflection assets. These are positioned to drive short- to medium-term performance. And finally, we are growing our exposure to younger assets, the fastest-growing part of this portfolio, well positioned to drive long-term value creation. Now before going deeper on each of these 3 cohorts and provide visibility on the outlook of each, let us first review 2025 performance, and I will hand it over to Wolf to do so.

Thank you, Federica. So my name is Wolf Scheider, Head of Private Equity at Partners Group. Let's take a look at 2025. It was a specifically challenging year with the macro headwinds in major economies with the tariffs and geopolitical tensions, and that was obviously impacting business environment. After a strong 2024, we realized 7.2% LTM EBITDA growth across the portfolio here. The multiples contracted a little bit to 16.6x. And with our portfolio, we feel comfortable with this multiple. And the net debt is at 6.1x, also a figure that we consider as absolutely reasonable for the portfolio that we are talking about here. So overall, the performance of 0.7% consists of 2 major pillars. You see here with the #2 that most of the portfolio was around 6%. And then there were 3 idiosyncratic companies, cases that I will highlight now on the next page in more detail to explain to you what happened with those. Let's go to next page. So KinderCare is a schooling company for children in the United States. And there was in the beginning of 2025, a very speculative investor reaction because the administration had shut down the Department of Education, and there was a speculation if the funding of that kind of companies would get a hit actually. And that was an overall sector-wide challenge. We also have a declining maternal workforce participation in the United States. And in that phase, not the strongest management configuration. So what did we do? We changed the leadership. Actually, the former very successful CEO, Tom Wyatt, who was on the Board, he stepped back in as CEO. And since many of this funding thing is more speculation than reality, we expect that Tom will bring KinderCare back to a better situation. The second one, AMMEGA and AMMEGA, we also had a multiple contraction. The background here is the overall industry weakness in North America and in Europe, where AMMEGA is particularly strong. And so that led to slow growth or no growth. And what we did is strengthening the go-to-market strategy. And from 2026 onwards, we expect that we will generate a further growth. Overall, AMMEGA remains a good contributor because overall, the performance before was on a good track, and that's what we are working on hard to get it back to that situation. Third company, Pharmathen is a very specific case. Pharmathen is an innovative research and manufacturing company for complex generics. And we knew that in the operations, it needed an upgrade. So we were working hard on upgrading that manufacturing space. When the FDA inspection came in and FDA inspections are without notice. So we were not yet ready in fully having the manufacturing on the level what the FDA expects. So the inspection gave us a lot of points to improve and led to a partial shutdown of the manufacturing in order to upgrade the facility. And that is right now leading to a loss of cash flows. We are upgrading and have a lot of experts in the manufacturing. We have a new leadership of very experienced people, our CEO, somebody who has worked in that space over 2 decades and leading that remediation plan now. So we expect that we will start relaunch of these muted products in the second half of this year and step-by-step coming back to cash flow and EBITDA development. So all these companies have a very hands-on leadership, not only from the management, also from the Board. For example, some of them, we brought in very strong Board members from that space, helping in that specific situation and also from operators from Partners Group. So if you go on the next page, looking at the strong historical track record that Partners Group has in private equity, -- and despite the recent weaknesses, our historical track record remains intact. You see that -- yes, we have grouped it here by vintage, similar to kind of closed-ended funds. And you see that 3 are in first quartile compared to the global buyout firms. 2015 to 2017, there were actually 2 assets, a company called Form and Curvature that were not performing to expectation and that led to this third quartile rank and '21 to '23 specifically was influenced by pandemic-induced influences. You see that in our latest period, we are back to the performance that Partners Group is standing for. What we have done in the last 3 years, and it's a little bit related to me personally coming to Partners Group, building a stronger business system, as we call it, Partners Group business system and adding very experienced C-level people internally that help the investment teams and our Boards to run the companies even stronger. Operational experience has become more and more important in recent years to run the portfolio. And you see, for example, we hired here an Executive Vice President who worked in ABB before from Eaton or a pharmaceutical expert with all of them over 20, sometimes 30 years of experience in these sectors where we are strong and have a lot of investments. With that, back to you, Federica.

Thank you, Wolf. As promised, let's now take a look at the various portfolio cohorts with the portfolio as it is today. And we start off with what we call our more mature assets, so those where we invested pre-2021. Assets in these vintages has been the key driver behind the strong realizations that we've seen in 2025 and arguably, those that are sustaining the momentum going into 2026. We realized that TOUS and Global Blue earlier in 2025 and then also PCI and Techem as examples here during the last quarter of the year. Importantly, across these assets, not only was the percentage of realization back on track with historical average, but also we realized a weighted average multiple close to 3x on 2025 exits. And we have also maintained a modest uplift in our realization in an environment that is arguably still see somewhat a gap in buyers and seller expectations. As we look ahead, we know that 45% of assets that are still in this cohort was listed or sold contractually at the end of the year. And that's expected to drive a material distributions very much aligned with what we've seen last year for the year that is now ongoing in 2026. And in fact, we've already monetized part of it during the first 3 months of the year. This provides a clear line of sight on continued ability to generate liquidity and also to redeploy in attractive assets as we will see, supporting both portfolio liquidity, but also future performance. And maybe to take a look at one of the assets that we realized during the past year, I'll hand it over back to Wolf to talk us through our investment in international schools partnership.

Yes. Thank you. ISP, actually, our first investment was in 2013, and we took the company from at that time, literally nothing, 7 schools to now more than 115 schools. So we built it out to a $7 billion company. And 2025, we did a partial realization of that value and brought in a new investment partner. So why are we so fond of ISP and continue to stay on board in this investment? It was -- in the first phase of value creation, it was mainly going for quality of schooling and that captured the attractiveness parents, and this is how this company could grow to over 115,000 students. So what we started in the last 2 years in investing a double-digit sum into artificial intelligence in teaching, we brought in newest technologies. So in the meantime, 95% of our teachers use AI-supported schooling and curriculum. And we're also building an AI-supported tutorial for students so that they can be trained individual to their personal skills and learning level. And this is only possible because it's quite an investment if you are a big organization. And this is why we expect that ISP can even accelerate the growth in getting new schools on board or building new schools from the ground because individual schools cannot afford that technological enhancements that we are doing with ISP. Federica?

Perfect. So we continued realizations in 2025, we are seeing a growing importance of what we call, again, inflection assets. So these are businesses '21, '22 and '23 that have been underwritten in an environment characterized by lower rates and a more benign macro backdrop. Some assets in this cohort have faced a number of headwinds from rising rates, labor costs and supply chain issues earlier in their lives that have, in some cases, softened revenues right at the time where investments in value creation initiatives were being made. And this has led in certain cases to slower growth trajectory versus original plan, giving uplift and in some cases, performance overall. However, we are today with a cohort that is very well diversified. And while earnings progression has temporarily slowed, most assets remains above cost and maintain positive EBITDA growth. We have realized some losses in this cohort. However, these remain well within the expected range, and we now see these assets at a real inflection point with many of the initiatives that we plan to seek for now coming to fruition. Over 20% of the current NAV in this vintages is now above our initial underwriting plan, performing above our initial underwriting plan, supporting a constructive mid- to long-term outlook on overall performance here. And I'll let Wolf elaborate a little bit more on some specific assets to give a very practical examples.

Yes, the 5 biggest here on the list, let me comment on Emeria. Emeria is a market leader and very strong real estate service company with a strong footprint in France and the U.K. amongst some other companies. Emeria had some difficult times in terms of growth in the last 2 years because the real estate market in both of the main countries wasn't going in the direction as it had gone before. However, Emeria launched a new IT tool that was built in-house in main parts, including artificial intelligence to identify customer opportunities, customer needs that is rolled out, and they are also doubling down on implementing technology and service to customers directly. So their interaction with customers. So we are confident that Emeria stays a strong asset in our portfolio. I will highlight 2 more DiversiTech here and Forterro. And for both of those, we have additional pages. So I will start with DiversiTech on the next page. DiversiTech is a leader -- market leader of parts and supplies for the HVAC industry in the United States. And when we bought DiversiTech in 2021, first, we needed to fix the foundation to kind of build world-class processes, build strong warehouses to serve the customers even better. And we pivoted in the last 24 months to a very professional and nimble pricing that actually led to an increase of gross margins. We also started to digitize the customer experience and also improved the supply chain so that customers have a very reliable shipment to the construction sites. And as a fourth element, we started to build a European platform with the skills and the strengths of that company. So we are 4 years in. It is a strong asset in our portfolio. We are preparing for an exit, not yet fully decided what the precise date is. There is a strong interest from strategics and from sponsors. So DiversiTech is a well-managed asset in the portfolio. The next one is Forterro. And obviously, I have chosen to talk about Forterro because I know that some of you will have questions around software. And first of all, if you look at our left side of that chart is Partners Group was always underexposed in Software as a Service, whereas the -- you see the dotted lines, Partners Group here, 13%, the industry is above 25%. And you see -- you have seen us even reducing that exposure in 2025 to below 10%, whereas the industry went to above 30%. And the reason is that with our thematic sourcing depth, we identified about 18 months ago that the artificial intelligence will bite into that space of software, and that's why we deliberately reduced that space. However, with Forterro, we have a very strong performing ERP company in our portfolio. Forterro is kind of the mid-market industrial ERP company. So below the ERPs, SAPs or Oracle for a smaller-sized company with a specific focus on manufacturing. So why are we confident that Forterro will continue its performance in spite of being in that software field. They have early on they have bought companies with artificial intelligence capabilities on the shop floor in manufacturing, for example, for predictive maintenance of the machinery and of connecting the whole workflow on a shop floor of a manufacturing site. And therefore, Forterro is already in this transformation using artificial intelligence next to the deep industrial expertise, serving those clients with a tool that they don't find somewhere else. So that makes us confident that Forterro stays a performer in spite of the overall industrial trend in Software-as-a Service companies.

Thank you, Wolf. And now we take a look at our younger assets. These are companies that we've invested in during 2024 and 2025, acquired at a more attractive entry multiple. And we -- on average, we can say approximately 1 to 3x lower than peak. These assets are showing strong out-of-the gate performance, growing at double-digit EBITDA over the past year and compounding a strong investment returns, making up an increasing part of the portfolio, as I mentioned, as we continue to redeploy proceeds from realization. And one of the oldest assets in this youngest cohort is Velvet Care, which is now about to cross the 2-year hold period mark. And Wolf is going to talk a little bit about this company.

Yes. Thank you. I mean when we invested into hygiene paper, toilet paper, some people were smiling, but it is a very robust business field that we identified and monitored over many years with our thematic thinking. And this company is specifically strong in operations. And you see here the team in this revised new setup that I explained earlier. We have the investment leader, a very experienced private equity investor. We have a senior operator from Partners Group there, and we have our Chairman, of course, not pictured here is the management. So that was the first thing we formed this strong team. We onboarded the company within 3 months with what we call our hub days and meetings where we built the strategy. So we built this strategy to expand the operational capabilities. This company is by far outpacing the competitors in terms of manufacturing efficiency. They have perfectly run manufacturing sites with a world-class cost level and improving that plus expanding that. So one initiative is that we are building a greenfield plant to serve Germany, Austria and Switzerland. We are building the go-to-market strategy for these countries that is a little bit different to Eastern Europe where they are. And with that, having a strong value creation plan for the next 3 years. But what you see is that only being 2 years in the investment, we have already realized a 1.7x gross TVPI due to the superior performance of that company in their existing markets. So with that, I would like to wrap it up. Following the more positive 2024 and 2025, the returns are below target and certainly below our own ambitions. -- the macro environment, some specific company issues and challenges, the foreign exchange moves, they led to that result that we presented. We will -- we stick to our long-standing track record, and we could show you with our younger assets also that we can catch up with the performance that Partners Group had also in earlier vintages, specifically acceleration in value creation using what I call the Partners Group Business System and the strengthening of operational capabilities in handling our companies. So overall, a good year actually 2025 in realizations, 20% of the net asset value could be realized and redeployed in new fields, in attractive fields that we partially did present to you. So we have an overall good portfolio distribution now and with that, a good expectation for future returns. I hand it back to Andreea.

Thank you, Wolf. So let me take a moment to highlight why we believe PGPE is well positioned for the period ahead. So the company was incorporated more than 25 years ago and has been listed on the London Stock Exchange since 2007 and recently joining the FTSE 50 Index in September 2025. Over this time, we've navigated multiple market cycles. And today, our portfolio spans over 70 direct investments diversified by industry, geography and vintage, an important strength in the current macro environment. You also see here on this slide on the top corner that from a 10-year perspective, we have reported in average 8% on the NAV total return and roughly 9% on the share price total return during this period in average. Now also important to note that through PGP Limited, shareholders access a portfolio of investments that is not otherwise available in public markets. Now also back on the shareholder returns, our 5% dividend policy continues to be a defining feature. At today's share price, this translates into a prospective dividend yield above 7%, making PGPE one of the most attractive income propositions in the European listed private equity peer group. PGPE delivered EUR 227 million in proceeds. Again, repeating right that it's the highest level we have reported since 2021 and is again in line with our long-term average of receiving roughly 20% of the NAV per year. And on the investment side, we deployed EUR 102 million in businesses, which we think are attractive in value, but also in organic growth perspective. And we're excited about those younger vintages and their promise is already visible. These investments are already performing ahead of expectations, driven by strong earnings growth. Now our mature assets, those vintages prior to 2021, they support ongoing realization and redeployment and this part of the portfolio is positioned to contribute incremental value as operating performance normalizes. While our youngest vintages, the 2024, 2025 vintages, they show strong early performance. Meanwhile, our balance sheet remains healthy with EUR 8 million in cash and cash equivalents as of 31st of December and a fully undrawn credit facility of EUR 150 million, which was also renewed on improved terms during the second half of the year. Now if we look ahead to 2026 and beyond, we're seeing strong relative value in private equity compared to public equity. We believe we're at an exceptional entry point for private equity right now. The valuation gap talked about between private and public markets is at the widest we've seen since the global financial crisis. And when this gap closes, and we believe it will, we'll experience a tailwind across the industry, and we're already seeing encouraging signs. Borrowing costs have retreated about 80% from the highs and will continue to fuel the exit market, which will benefit PGP Limited. With this, I would like to open for the Q&A.

Now I see quite a number of questions. I can also mention that they seem to be clustered actually in very few recurring themes. As I mentioned in the beginning, we will group those questions and answer in one go. And in case we did not manage to take your -- to answer your question now in the interest of time, we will come back to you shortly afterwards. So again, clustering the questions actually, a very clear one for you, Fiona, would be actually on how do you comment on the current situation in the Middle East and potential impact on the portfolio.

Sure. Thank you, Andreea. I mean here, long story short is we have very limited exposure to the Middle East with no direct investments in private equity made in the region historically. Some of our portfolio companies may have exposure from operations in the region, but this is very small and estimated at less than 0.5% of AUM. However, with energy price volatility now proving persistent, especially in light of the damage being incurred by energy infrastructure assets in the region, the key question is how sustained oil and gas disruption transmits through to portfolio companies. Here, we find only a small minimal impact across 8 of our 65 direct companies with none of our private equity direct portfolio companies being heavy industry or high energy demand companies. Overall, portfolio fundamentals remain intact with pricing pass-throughs, we have contractual protections and timing effects that absorb near-term cost pressures. To make this more concrete, we can maybe just provide an example here. So Rovensa is a developer, manufacturing and also supplier of biological inputs for agriculture and therefore, has, by nature, a very minimal exposure to energy prices at only roughly 1% of the cost of goods sold. The company is further shielded from surging energy prices despite its small exposure, thanks to several fixed price contracts. Now longer term, the events reinforce our core private markets investment themes such as energy security and efficiency and also critical infrastructure strength that supports a resilient and well-positioned portfolio to capture long-term upside potential. PremiStar, a leading aftermarket commercial HVAC services company that provides mission-critical maintenance, repair and also replacement is a good example here. The value proposition of the company is to improve the operational efficiency of HVAC systems, and this increases an importance in the current environment, as you can imagine, of high and/or even volatile energy prices. Now we also got a question on this regarding the impact of Middle East events on transaction activity. As we highlighted during the presentation, we see multiple tailwinds that support the outlook for private equity. Yes, the Middle East events bring renewed heightened uncertainty to the outlook, but it also highlights some structural investment themes that will drive momentum in activity. Central Bank's reaction function will be key to watch, but we remain constructive that the borrowing costs will not return to levels we have just come from.

Thank you very much, Fiona, for this detailed answer. Now also, I see a number of questions regarding our listed exposures, in particular, can you comment on the listed exposure, mainly also in the current market environment? Federica, would you like to bring some color on this?

Yes, I can start on this one, then I can also give the floor to Wolf from his perspective as well. But within the portfolio, we entered 2025 with an exposure in sort of mid-teens when it comes to listed holdings. And this has come down throughout the year as we have monetized and in some cases, fully divested all the listed holdings. We fully sold our stake in Global Blue earlier in the year. And in August, last year midyear, realizing a very strong multiples on those 2 transactions in case of August was above 5x being the invested capital. And we have continued to monetize these companies, most recently with the full exit of our stake in Galderma in 2026 and a block sale for Vishal. So long story short, from my perspective, we can expect volatility in listed holdings, right, when a stock is listed, there are market forces and dynamics that are driving prices in many cases. However, if I look at the outcomes realized for the portfolio in this listed asset has been particularly strong in the past 12 to 18 months. So taking comfort from that perspective.

Yes, we will always consider public listing as one of the exit opportunities. And companies like Galderma, Vishal have performed extraordinary well. Yes, of course, there is a risk and specifically with that policy shift last year that affected KinderCare and also some market weakness. So that is an example that is more difficult. But overall, that is clearly the exception to high-performing assets, as we have mentioned.

Perfect. Thank you very much for, Wolf. Actually, one more question also on this theme regarding the future growth, right, at the portfolio level, in particular, referencing the 7% figure for the top 20 mentioned. Is there a lot of work that we're doing to cut costs? Or is Partners Group working to integrate AI to do so?

Yes, the 7% is certainly not our ambition and the expectation, and it was an exceptional year. So we are working very hard on our portfolio to turn that to different figures back to double digit. And what are the elements? Yes, artificial intelligence and technology is among others, but it is probably the most important driver at this moment. Actually, 90% of our companies have implemented an AI initiative in the core of their business models. So I'm not talking about using artificial a little bit like a copilot or so, but really going into vertical or horizontal process work and rebuilding it with technology. We even have the first companies that have multi-agent deployment of AI. So it's not only for efficiency, it is also to build stronger service levels, for example, for customers of these portfolio companies. So that is a big driver. But as I mentioned, in the case of Velvet Care, sometimes it's not only artificial intelligence, it's just strong work strategically and operationally with our senior operators, with our hands-on boards, the boards of companies and Partners Group. They work 1, 2, 3 days a week on the company. So they're very hands-on model that we have. And that has become even more important in that situation where we cannot be satisfied with the 2025 year.

Thank you. Now there is also a question on the share buyback program and where we are as of today with it. Now here, right, just to quickly recap. So in October, we have announced, right, a roughly EUR 15 million to be used for the share buyback. And it's also maybe important to note that the last time the company undertook such activity in the share buyback was in 2014. Now I already mentioned at the beginning of this webcast that during the fourth quarter, right, we have used roughly EUR 6 million, EUR 5.8 million to be more precise for the share buybacks out of this program. And then we also continued through the first quarter with a further EUR 6 more million used for the share buyback. Now maybe also just to mention here that we have made an announcement that this program was extended until 30th of April. Also on the software, which I see is quite a dominant theme at the moment. And I also want to draw the attention to the comprehensive overview, which Wolf already provided, right, and we have also gone through the slide. But maybe also from you, Fiona and Federica, is there perhaps more color that you could bring around the software exposure?

Sure. Thank you, Andreea. I can start and let Federica add any details specific to PGP Limited. But there are 2 main points that are worth raising on software. It's a sentiment-driven sell-off, not fundamental driven. Software earnings remain solid with strong beat rates and really no signs of revenue or EPS cliff. AI disruption is real, but concentrated in our size of legacy Software-as-a-Service category. Now how does this translate to private markets? Most private market software is structurally insulated. Private markets are more weighted towards vertical and increasingly AI-first software, precisely the areas more insulated from agentic AI disruption and better aligned with enterprise adoption trends. For Partners Group specifically, Wolf has already addressed the comments, as you've mentioned, but we have intentionally limited and rightsized direct exposure to technology companies and focused on differentiating between companies that will benefit from AI adoption versus those that may face pressure and aligned our capital accordingly.

Thank you, Fiona. And also I guess not much to add from my perspective, maybe just the specific percentage exposure to software in the portfolio. was approximately 13% of total NAV as of the end of December, and this is fully aligned with Partners Group Private Equity Direct platform. So again, very much representative of all the teams and of the approach that Wolf talked at length about earlier on today to fully align and we're very comfortable with the current exposure we have, both in terms of portfolio sizing, but also in the way it is implemented and executed.

We didn't start with AI now. We started actually more than 3 years ago in building an in-house on the investment platform in private equity in building an in-house AI team of very high-level skilled people. So people we got from the IT industry that were on Executive Vice President level, and they have built with our portfolio company, the [indiscernible] angle. So going forward, every investment we do is today a tech investment, even if it's a consumer goods or whatever or a health care thing, everything is touched by technology. And we have started, as I mentioned already 3 years ago to bring in those teams that they work across all our investments to identifying the opportunities of AI and also the threats in case we decline.

Thank you very much for this. I see that we are already running out of time. So that said, I would like to thank you for joining today's webcast. For the ones which are also existing shareholders, of course, I would like to thank you for the continued trust. And as mentioned, we try to group and answer as many questions as possible. And for the ones which we didn't manage to answer on this call, rest assured we will come back to you. With this, I would like to conclude the webcast today. I would like to wish you a wonderful rest of the day, and I'm looking forward to meeting with you whenever possible or if you have any other questions, please feel free to reach out to us. Thank you very much.