Tikehau Capital (TKO) Earnings Call Transcript & Summary

Good afternoon, everyone. Thank you very much for attending this 2020 annual results.

Good morning, Antoine. Good morning to all of you.

2020 at a glance. First of all, we had a very resilient fund performance. And as you know, Tikehau Capital, an alternative asset management company, enables its clients to get performance through our funds. We continue to maintain a close dialogue with portfolio companies and clients. Net new money have been close to historical high with a third year above EUR 4 billion of net new money. And finally, a strong profitability increase in our asset management, which is a key driver for our growth and valuation. If we look at our usual figures, first of all, we ended up the year at EUR 28.5 billion AuM, above EUR 1 billion of target. As mentioned, a EUR 4.2 billion AuM, following EUR 4.1 billion last year and EUR 4.3 billion 2 years ago. Very important, we maintain our management fee rate as 92 bps. Our profitability from the asset management FRE, fee-related earnings, stands at 72 -- EUR 70.2 million and our NOPAM at EUR 76.4 million, which is a strong increase in our profitability. Despite the very special environment, our realized investment portfolio revenue cash are up 29% at EUR 133.9 million. Our net income is EUR 207 million negative for the year being at EUR 250 million for the first half, mainly due to our hedging instruments we put in place at the heart of the pandemic in April 2020. Our shareholder equity stand at EUR 2.8 billion and enable us to continue to grow and develop the group. And finally, we state the dividend for the year, we proposed EUR 0.50 per share, similar to last year. Looking back at our AuM growth, as mentioned, we finished the year at EUR 28.5 million (sic) [ EUR 28.5 billion ]. It's a 30% growth CAGR in AuM since IPO. It's very strong organic growth and selective external growth. We exceed our target in 2020 and feel more than comfortable for our 2022 target. Looking at the usual KPI for our asset management activity, we decided to put the 6 usual KPI. So first of all, international AuM stands at EUR 9.3 billion and continue to grow. The fee-paying AuM at EUR 23.2 billion. It's a very relevant KPI because you know that we are receiving management fees on the fee paying AuM. As mentioned, management fee rate is at 92% and has been increasing since IPO. The growth in FRE, the profitability on the asset management, mainly solely based on management fees, continue to increase, 126% between 2016 and '20, clearly surpassing the industry. Our NOPAM, the asset management EBITDA, our NOPAM margin are trending clearly upwards with the scalability of our platform. And future carried interest are not fully contributing to profit. Once again, this track record demonstrate our capacity to deliver fast and profitable growth in the alternative space. This is the snapshot of Tikehau today, a comprehensive offering across asset classes, geographies and vehicle. As you know, we decide to develop closed-end funds, SMA and evergreen mandates, open-ended funds, but we continue to develop our permanent capital, which is, for instance, our 2 real estate REITs. And we launched in 2021 a SPAC, which will be the first of a series of SPAC. Only coming to Slide 11, ESG. But as you know, ESG is at the heart of Tikehau Capital strategy. We've got 4 pillars: exclusion of certain sector; integration of ESG criteria is 100% with green; ongoing engagement with portfolio companies; and last but not least, the development of an impact investing platform. We gave you 3 examples there. As you know, we launched our T2 Energy Transition Fund in 2018, and we just announced this year a closing above EUR 1 billion. We launched in 2020 our Tikehau Impact Lending, TIL. And finally, this year, we launched a High Yield Impact Strategy. This is part of our platform. We get external recognition from all the various agencies. And what matters, it's really at the heart of Tikehau. It's not a piece. It's not sustainable green washing. It's really at the heart of our strategy. As mentioned, we get recognition of our ESG effort by the major rating agency. And we can say that amongst peers and the financial sector, we are strongly positioned. Now starting operating review. Quick reminder of our 4 priority we set ourselves for 2020. Scale up and grow our existing and flagship strategy. As you know, we very often start a strategy. We hire a team, we develop, we generate return for our investor and we scale up the platform. Best example to date being our direct lending strategy. Expand our offering with the launch of new strategy. We used to say, create, don't compete. And we've been initiating new strategies that enable future growth and future profitability. Third, we leverage our acquisition to develop the platform. We've been doing that with Sofidy. Last year, we purchased Star Infrastructure to develop our infrastructure business in North America. And fourth, we continue to diversify and international our client base, which are representing more than EUR 9 billion AuM, which was close to EUR 1 billion when we did the IPO. If we go more deeply into this 4 pillar, scale up vintages of flagship and existing funds. We just launched, for instance, TDL V. And if you remember, TDL IV closed at EUR 2.1 billion. The predecessor from TDL III closed at EUR 630 million. So we continue to scale up and grow our flagship strategies. CLO VI is another good example. Private equity, which enjoy a strong growth this year, up 73%, continue to develop existing strategy and launch new strategy. The final closing for T2, above EUR 1 billion, is a great milestone for the firm, first, because, obviously, we are part of the leading crew in energy transition. But more important, it's the first time a fund closing above EUR 1 billion. Real assets, as you know, we manage a couple of real estate fund. This is the first closing and final closing of our TREO fund, Tikehau Real Estate Opportunity, above EUR 700 million. Finally, on the capital market strategy, we launched a dated high-yield fund, which is the Tikehau 2027. If we take this example of T2, and I think a lot of you are familiar and have been supportive, it's a very good example of a new strategy we initiated in 2018. We started in 2015 financing companies in the energy space transition. We lend money to direct energy. We financed quite well. We backed EREN. And then on the back of this success, we decided to launch, alongside shareholder, partner, an energy transition fund. It's really skin in the game as everything we do. We invested EUR 100 million in the fund. And subsequently, we've been able to raise more than EUR 900 million across a range of international and domestic investor. We already invested EUR 440 million on the 7 companies you see on the right, you've got 6 on the right, but there is a 7th coming. And all these companies are very successful. And for instance, GreenYellow, there were some news yesterday mentioning a potential IPO according to Bloomberg. So I think it's a promising company, promising asset class and it's helping the planet and the climate. It's a very important milestone on our impact investing platform. Second, enhance offerings for new strategy. As we say, it's very important to innovate. And we used to say, create, don't compete. So we start developing evergreen mandate. What is an evergreen mandate? It's an investor, an LP who give us money to manage with a very long evergreen maturity. So that will help stabilize our management fees. We launched in New York, in the U.S., TPDS, which is, again, a first-time fund, supported by Tikehau balance sheet. It's a secondary private debt fund. That's enabled us to buy LP interest in direct lending fund. Finally, we launched Tikehau Impact Lending, TIL. And all these 3 examples is really illustrating the way we develop our business and the way we've been developing Tikehau in the last 16 years, since inception. Three, past acquisitions are scaling up. We've been doing selective acquisition in the past. You've got, for example, there, Star America, Sofidy, IREIT, Ace in 4 different fields. As you know, we have a strong balance sheet, and we use that to invest in our fund and to do acquisition. We've been fairly selective on acquisition, fairly selective on price and platform we want to grow, sharing the same DNA. Starting with Star America, we decided to launch an infrastructure business, and we finally ended up buying Star America in the U.S. at a time whereby America, North America, the U.S. will invest massively in their infrastructure system. So we've got the platform. We're going to continue to raise money and invest on behalf of our clients. This is a super strong team, and fund 1 and fund 2 have a very good track record. Sofidy has been a pioneer in French real estate offering to retail investor. We continue to grow the platform, raise more money. We've been very successful at managing the rent collection despite a very specific environment. And the platform continue to grow, offering Tikehau product to retail investor. IREIT, an example of permanent capital vehicle. We've got 2 listed REITs, IREIT in Singapore and Sofidy -- and Selectirente in Paris. For us, it's a good way to develop our real estate business, managing permanent capital vehicle. We completed this year EUR 89 million share capital increase. Finally, Ace, another good example on a very specific focus. As you know, Ace is focusing on aerospace and cybersecurity. When we bought Ace, we were managing less than EUR 400 million. At year-end, this company is managing over EUR 1 billion. So it's been a key addition to our PE platform. After developing the T2 Energy Transition Fund, let me give us -- give you, sorry, an example of Ace. It's a very good example whereby we like partnering with people, with corporation. They bring money, but they bring more important added-value sector expertise. In this particular fund, we team up with Airbus, Dassault, Thales, Safran to develop an aerospace fund. Obviously, the sector is going to be very turbulent and has been turbulent because of the COVID. But we feel like it's a very good example whereby we took advantage of market dislocation. We raised money. We have a strong team. We have a very strong partner. Teaming up with these 4 corporates is fairly unique, and we're going to start investing. And we start doing a traditional fundraising. So Crédit Agricole just invested EUR 100 million in this fund. So it's another good example of Tikehau developing a platform. When we got listed 3 years ago, we mentioned that internalization of our client base is a key priority. As you see on this slide, in 2016, we had EUR 2.1 billion coming from nondomestic investor. That's standing now to EUR 9.3 billion. We are raising money from all around the world. We have now a strong platform in Asia. As you will see later, North America, we started 2 years ago, is managing over EUR 1 billion. So we continue to develop our international platform. We've been multiplying by 4.4x since 2016. We are now in 12 countries. We just announced that we are opening Germany a month ago. So global footprint, local presence and we need to stay close to deals and clients. Four, and I think we had the opportunity to discuss that, there is a big trend in collecting, managing money from private clients. To access private clients, you have multichannel. You can do it through open-ended funds; through SCPI; through your listed REITs; through Homunity, which is a very successful fintech that we bought 2 years ago, and it's a profitable fintech, which is very rare, making already EUR 1.5 million EBITDA. And also, we team up with partners to raise money. We've done that with Intesa who has been partnering with us through their private banking, Fideuram. And also, in 2020, we launched a dedicated ELTIF, which is a new format for raising private money, with Banca March, a private -- well-known private bank in Spain. So we have multichannel to raise money with private investor, retail investor. We've been innovative, we found local partners and we're going to add and develop this strategy. Good example of how do we ramp up our presence when we decide to launch a new local office. As you know, we started 7 years ago in Asia, opening an office in Singapore. 2 years after, Temasek became a shareholder and a strong supporter of the firm. We acquired IREIT, our listed REIT in Singapore. And subsequently, we developed. So we opened Seoul, we opened Tokyo. We welcomed in 2019, T&D Insurance, which is the 7th Japanese insurance company as a shareholder in Tikehau, and they start distributing some of our funds. And that's been part of the DNA, teaming up with partners. I mentioned partnership with corporations, Total in the energy transition, Dassault, Airbus, Thales, partnering up with Temasek or T&D in Asia, obviously, is helping us to grow. We're going to continue this strategy, leveraging local partner and key long-term shareholder. And we feel like it's enabled us to develop and expand the group at a quicker pace, but more important, in a very solid manner. North America, as mentioned, we opened 2 years ago. North America is the largest market by far for alternative investment. It's true on the fundraising. It's true on the investment. We opened 2 years ago. Mathieu, the Co-Founder of the firm, relocated to the U.S. since 2018. We've been very active both in organic, launching new initiatives. TPDS is a good example. External growth, Star America is another example. We are now managing over $1 billion from U.S. on behalf of North American clients, being U.S. and Canada with some very strong successes. NYCERS is a very good example. But we partner also with Churchill Asset Management and TIAA. So same idea, replicating local partners, and that will enable us to develop. As you know, we are raising money around the world, but we are also investing, and we decided to invest the balance sheet in the U.S. We invested so far EUR 350 million in the U.S. And we feel like it has been, especially 2020, a very good year to invest. As you see, probably the economic recovery in the U.S. will be much before Europe and probably stronger. The Fed mentioned yesterday a 6.5% target of growth in the U.S. We do all that keeping the same corporate culture and the same DNA. We put back our 9 mottos: think big; be on the ball; be contrarian; first always say yes; raise the standards; create, don't compete. And I think it's been critical for us to develop this firm, but keeping the same DNA and the same key principle. Let me just take one to illustrate that. Create, don't compete. A lot of people are involved, obviously, in the asset management, in financial services. We see a clear way at creating and not competing. When we decide to launch our T2 Energy Transition Fund 2 years ago, we must tell you there were not a lot of appetite, a lot of interest. Now it's becoming a hot topic. But we said we are a few years in advance. We closed over EUR 1 billion. We've got already 7 investments in this fund. We put together a super-strong team. We get internal recognition. So when it will be time to launch fund 2, our adjacent strategy in the energy, we feel like I've been in a creation mode and not in a competing mode is probably helping a lot. SPAC is a hot topic. Everybody is launching SPAC. The way we launch SPAC has been very different than traditional player. We team up with 2 outstanding Co-CEOs: Jean-Pierre Mustier, who has been a partner of the firm; and Diego De Giorgi, who is another well-known and successful specialist of the fixed sector in Europe and banker. And we partner with Financière Agache, a long-term Tikehau shareholder. And it's a very different setup than traditional setup. So we launched SPAC, which is an extension of our business, because a SPAC is about raising money and investing. But we partner, again, with talented strong partner. And we are going to develop that as a business and not just doing a one-off SPAC like 95% of the people. Launching an impact lending fund. If you remember, we developed our direct lending back in 2009 when banking monopoly changed in Europe and we've been able to lend money to companies. And we must tell you, in 2009, there were not so many people doing that in Europe. Part of the extension of this direct lending platform is launching an impact lending. Obviously, we will probably see more and more impact lending fund coming, and it's a good thing, again, for everybody. But that's the way we develop the business. Launching a private debt secondary fund. You've got a lot of secondary private equity fund, not so many private debt fund. So we continue to innovate. We create, we are not competing, and that's been a key to the drive, to the success and to the profitability of our asset management.

Thank you, Antoine. Good morning to all of you. Thanks for being here again. We wanted to give you a bit more color on the way our AuM had been going through the year. You know that we've all been facing a very challenging health and economic backdrop during the year. But overall, we can say that global investors have continued to show very strong interest in all of our strategy. On our side, we have actually adapted our setup, and our teams have been outstanding. They have been outstanding in their relationship with our portfolio company to assess the consequences of the crisis. They have been outstanding in our -- the relationship with our customers, actually, to explain the way our portfolio were behaving. And they have been outstanding as well in the way talking to prospects and, consequently, to attract new customers, new clients during the year. As you can see here, the AuM growth in 2020 was clearly led by a strong net new money of EUR 4.2 billion, which is a level close to historical level. And this achievement actually reflects the investors' confidence in the ability of the group to generate performance on the long term through all the strategies we are proposing to our customers. The change in scope actually reflects the integration of Star America Infrastructure Partners. We finalized the integration of Star during the month of July, which is actually a new expertise we are adding to the Tikehau platform. Finally, our AuM grew by 15.7% in 2020, which we consider to be a very good year for Tikehau. A word on net new money, which is, as you know, a critical KPI to the group. In 2020, we actually surpassed the EUR 4 billion mark for the third year consecutive, which is actually an outstanding achievement, especially given the situation during the year. So that's a total of EUR 15.7 billion of net new money that were generated through our asset management business since the IPO in 2017. I'd just remind you that at the time of the IPO, less than 4 years ago, our total AuM were actually standing at EUR 10 billion and now standing at EUR 28.5 billion. Business mix rebalancing that we have announced as a strategic direction since the IPO in 2017 is continuing clearly towards higher fee-generating strategy. For the first time this year, private equity is the first contributor in fundraising in 2020, representing 38% of the net new money of the year. All the initiatives that have just been mentioned by Antoine have actually led to strong AuM growth all around our asset class. This growth has been organic for private equity, private debt, capital market strategy and a combination of organic and external growth for real assets. The performance of private equity was very strong. It was led by the momentum on T2, the achievement at Ace Capital Partners that were mentioned by Antoine and the solid fundraising trend for Tikehau Special Opportunities II, our special opportunity fund. Note that as well at the time of the IPO, if you remember well, the AuM of our private equity platform within our asset management business was standing at EUR 100 million. It is now exceeding EUR 3.5 billion. Just a word now on our open-ended fund as well, the capital market strategy that have shown strong resilience to the year 2020 with positive net new money and a solid AuM growth, and that, once again, with strong performance that were acknowledged by our customers. More than ever, we actually consider CMS as a scalable business where we are actually applying private market discipline to public market. Giving you a bit more color on fund deployment. So looking at those figures, we have remained very active during the year in investing in a very selective way around our fund capital through the year. That's a total of EUR 2.8 billion that was invested by our closed-end funds, which actually represent a decrease of 23% versus 2019. The decrease was mainly concentrated in H1, minus 50% in H1, and recovery of the investment with more and more opportunity and deal flow all around our asset class during the second semester. We have remained very disciplined, very cautious, and we have kept a very strong focus on ESG for 100% of the investment opportunity we've been screening during the year. Such level of deployment has led to actually a total of EUR 6.2 billion of dry powder at end of December, allowing us to seize any opportunities all around our asset class. These figures are actually here to illustrate what I was mentioning. The rejection rate is actually showing you the discipline we've had all around the year, all around our asset class. This ratio between the number of opportunities that we are screening and the ones we are effectively closing is demonstrating that the higher the rejection rate is, the more selective our team have been in investing during the year. Bear in mind as well that we are investing our own capital through our balance sheet in all of these strategies. So this is even more pushing us to remain very disciplined in the way we are deploying capital through our funds. We wanted to give you a bit more color on the way our funds are actually invested. In 2020, it's very important to keep in mind that our portfolio have been very resilient. The sectorial exposure is a new data point we wanted to introduce and to provide you to understand the content of our fund. But bottom line is that the low exposure -- we currently have low exposure to sectors which were actually the most impacted by the COVID-19 pandemic. Those sectors actually representing only 8% of our total AuM on the global basis. Just to mention as well an important point, which is related to our real asset business, we have a very granular exposure, especially with Sofidy, more than 4,000 assets being managed by Sofidy. We have high-quality tenants such as EDF, French electricity supplier, Deutsche Telekom or the French State administration, which make that our portfolio in real assets have been very resilient. Our dry powder in the fund are actually amounting to EUR 6.2 billion, as mentioned earlier. And this reflects, once again, our cautious, disciplined approach. We remain an active partner of the portfolio company across all of our strategy.

Thanks, Henri. A few slides on fund performance. The 4 next slides are dedicated to fund performance across our 4 strategies. As you know, developing our alternative asset management business is based on delivering strong performance across our funds, across our strategies. We start with a quick snapshot on fund performance with direct lending. You've got the 4 latest vintage of direct lending starting in 2010. As you can see, as we expand and develop the size of the fund growth, but more important, the fund performance, which are growth rate pre-management fees, are pretty strong for direct lending, bearing in mind that the company we find have little leverage, and we publish statistics on that. So we finance company with less leverage than the sector average. The funds are highly granular, as you can see by sector. So we deliver performance with a strong granularity. It's important for our investor in the fund. It's also important for the balance sheet because the balance sheet is a large investor in the fund. For instance, in TDL IV, the balance sheet invested EUR 210 million out of the EUR 2.1 billion in the fund. So we continue to deliver strong performances. And despite this unusual 2020 year, performances of the fund portfolio remain high. Obviously, we help our portfolio companies to navigate the crisis, manage liquidity, implement specific measure. But I think what's important is that we've been delivering a very strong performance across our funds, i.e., 10-year track record in Europe, which is fairly unique because it's been, as all you know, new businesses in Europe. So that's really the basis for us to develop more funds and generate more return for our LPs and, subsequently, more management fees and more carried interest for Tikehau. When we look at real estate, we started this firm back in 2004, investing in real estate. So our real estate platform is managing more than EUR 10 billion of assets across various geographies, various asset classes. We put few examples. On the left side, you've got 2 historical vehicle of Sofidy: Immorente and Efimmo. And it's fairly unique to see a 9.4% IRR in the last 30 years for Immorente with limited leverage, 32 years. On the right side, you've got a few examples of Tikehau real estate investment vehicle. And as you can see, we are mentioning return in multiple and not in IRR, which is unique. And I think the track record of our real estate platform is strong again, and that will be the basis for growing this business, generating more revenue for asset management activities. And last but not least, generating return for the balance sheet because the balance sheet is invested in our fund. Private equity. As you know, we are only doing minority private equity for the time being. This business has been started later. We enjoy a 73% growth in our pay strategies this year, thanks to fundraising in energy transition, in aerospace and in our traditional private equity. It's important to notice that on the performance side, on average, we generate a 2.4 multiple. As we expand, we invest more money in our funds. The size of the fund are bigger. As you can see, the 3 best multiple, we sold companies to very large and successful operators: GIC, Ardian or Hellman & Friedman. We're going to continue to grow our private equity business that enable us to offer to our LPs more investment solution. We think that the minority theme is very relevant in Europe. There are not so many investors investing in minority. We mentioned earlier GreenYellow, a casino owned 65%, and we put together a consortium owning 35%. And when you invest in minority, you bring additional new equity to help the company to develop, and we try to bring expertise as well. So you will see us developing in the coming years our private equity business. Finally, as you know, we've got our capital market strategies, which are liquid fund. We've got currently 4 flagship. As you see, the performance in 2020, in a very special year, has been correct. Only one fund has a negative performance of 1.9%, which is a balanced equity fund owning equity. But overall, the performance of the listed strategy have been good in this particular year and will grow close to 10% in terms of AuM this year. I'll let Henri comment on the financial review.

Thanks, Antoine. We wanted to give you maybe a snapshot on our operating model in asset management, which we think is key to better understand the business model of Tikehau. First, management fees. With continued strong fundraising, we have been able to further grow our fee-paying AuM base. Adding to that the improvement of the business mix that I was mentioning a minute ago with higher fee-generating asset class, as we stated since the IPO, we are, therefore, increasing our management fee generation. That level of management fee is actually an essential component of our operating model, which enables us to generate predictable and recurring revenues, thanks to the long-term, closed-end structure of our funds. Our ability to control operating costs while we are as well investing in the platform and the 12 geographies of Tikehau is actually leading us to increased scalability of our asset management platform, enabling us to grow what we call our fee-related earnings, which is once again our management fees minus our operating costs. On top of that predictable and recurring layer, we are and we will generate additional carried interest from our closed-end funds and performance fees from our open-ended funds. That is what we are calling the performance-related earnings or PRE. Keep in mind that our PRE is equal to what some call actually realized PRE as we have actually a shareholder-friendly way to account those performance fees. We do not accrue them. We only wait the end of the life of the fund to take into consideration those revenue. Material PRE should actually kick in, in the medium-term years. Naturally, that will boost our net operating profit of asset management. That being said, let me walk you through maybe the main metrics of our consolidated P&L. Management fees have grown by 19% to reach EUR 198 million. Our fee-related earnings amounted to EUR 70.2 million, which represents actually a robust 40% increase compared to the year 2019. FRE margin stood at 35.3%. And our asset management profitability keeps on rising, and that is reflecting actually our operating leverage which is increasing year-after-year. Performance fees and carried interest amount to EUR 6.3 million. They are mainly driven by our capital market strategy during the year 2020. Overall, the net operating profit of our asset management business grew by 31% for the year to EUR 76.4 million, which actually represents a margin of EUR 37.3 million (sic) [ 37.3% ]. The realized investment revenue, representing capital gain, dividends, coupon and distribution, have actually grown by 29% to reach EUR 133 million. The unrealized change in fair value was a negative EUR 49 million, which was due actually to the volatile market backdrop that we had to face, especially in Q1 and at the end of Q1. And given the exceptional and actually unprecedented situation that we had to face, we took the decision to implement financial instruments as part of our risk management policy in order to protect our portfolio from a major market downturn when we could see specifically the credit indices going down significantly. Those instruments have generated a loss of EUR 286 million during the year. The financial results amounted to a negative EUR 36 million, in line with 2019 level. Tax stood at EUR 58 million, mainly actually relating to deferred tax in connection with the capitalization of our tax deficit. Looking at the overall P&L, our net result is negative by EUR 206 million, which is actually a EUR 35 million improvement versus the figures of H1. And excluding the financial instruments impact, the net result is a positive EUR 13 million for the full year 2020. Our asset management activity and specifically the fee-paying AuM, which is, as I mentioned earlier, actually a key driver of our asset management business, at end of December, we had EUR 23.2 billion of fee-paying AuM, representing a 17% growth versus the previous year. It's worth noting actually that our fee-paying base has been growing faster than the overall asset management AuM over the past 2 years, which is extremely positive. Over the year 2017 to 2020, our fee-paying AuM has been increasing by 36% CAGR per year. Consequently, 85% of our asset management AuM is fee-generating, steadily improving since our IPO in 2017 and demonstrating once again our ability to fundraise in our strategies with fees on committed capital. If you exclude the open-ended funds from our capital market strategy, our funds are mainly closed-end funds with long duration. Our solutions are, therefore, very sticky, meaning that our clients are committed with us for the long term. If you look more specifically into the closed-end funds, 96% of AuM in closed-end funds have duration over 3 years, which gives us, once again, a strong visibility on our capacity to generate revenue. Thanks, Antoine. One of the key metrics as well to actually measure the quality of our revenue generation is the weighted average management fee rate, which is calculated by dividing the management fees we are generating by our average fee-paying AuM. At end December 2020, the weighted average management fee has remained at 92 basis points, which is up by 21 basis points compared to the level of 2017 at the time of the IPO. This increase is actually reflecting the accretive evolution of the group business mix, once again, towards higher fee-generating strategy such as private equity and real assets, as described earlier. Our objective is clearly to maintain such level of management fee rate over the time. Now having a look at the revenue of our asset management. Our management fees, I was mentioning that, have reached EUR 198 million. They were up 27% compared to 2019. That was driven actually by the fee-paying AuM growth. Note that since 2018, the management fees have been increasing at a solid 27% CAGR. Management fees actually are accounting for 97% of total asset management revenues in 2020, which is in line with previous year. It's worth noting, actually, that the breakdown of the management fees by asset class has been strongly diversifying since 2017 at the time of the IPO. Private equity, real assets are now representing 12% and 40% of management fees, respectively, reflecting our business mix rebalancing towards higher fee-generating strategy. As for the performance fees and carry interest, they amount to EUR 6.3 million for the year, and they are mainly driven by our capital market strategy. As a reminder, in 2019, carried interest and performance fees were boosted by the disposal of a sale and leaseback portfolio to Blackstone, which took place in H2 2019. The profitability of our asset management business. The net operating profit of asset management reached EUR 76.4 million, which is actually up 31% compared to 2019. That was effectively driven by net revenue growth, coupled with a good operating cost control over the year with 7 -- with 37.3% of NOPAM margin. Tikehau Capital has definitely reached a record high profitability margin level that represents a 4-points growth compared to 2019 and a 10-points growth compared to 2017 at the time of the IPO. This margin improvement of our NOPAM since IPO clearly demonstrates the relevance of Tikehau Capital business model in asset management even in time of uncertainty, such as the year 2020, and the group ability to actually maintain a profitable and sustainable growth. Our platform is becoming more and more scalable. That leaves our revenue to grow faster than all of our operating costs. Our objective is to increasingly benefit from that scalability, notably in private equity, which is the most recent strategy which we have launched through our platform since 2017. I'd like maybe now to focus just a minute on one of the main component and the main -- one of the main driver of our NOPAM growth, what I was mentioning earlier, which is our fee-related earning. While NOPAM has increased at a 75% CAGR since 2016, the fee-related earnings has grew by 126% over the same period for the -- which is actually to be compared to a 36% CAGR for the peer group average in Europe. So clearly, a growth at a much quicker pace than our peer group. This is once again a very good and very strong achievement, and we are clearly on track to reach our target, which is actually to achieve more than EUR 100 million of fee-related earnings at the end of the year 2022. Looking now at the evolution of our FRE and NOPAM margin. The FRE margin stood at 35.3%, which represents a 5% growth compared to 2019. Again, increased scalability, business mix improvement should definitely drive the FRE margin close to industry standards at over 40%. As for our NOPAM margin, it is definitely intended to exceed the FRE margin since it is also including all the impact of the performance-related earnings driven by carried interest. Let's have a look now maybe effectively at this performance-related earnings potential. It's important to understand actually that the AuM eligible to carried interest have been multiplied by 3.7x since 2016, and they grew by 30% versus 2019 to reach actually more than EUR 11 billion. So the AuM eligible to carried interest are actually growing at a faster pace than our asset management, AuM. We are consequently managing increasing number of strategies that are eligible to carried interest. And this is a strong revenue and profit engine, which is, for the time being, still marginal, but very promising. Out of the total of EUR 11 billion of AuM eligible to carried interest, EUR 6.3 billion are actually already invested, and EUR 3 billion have generated an IRR above the hurdle rate, which is actually up by 10% versus the year 2019. As I mentioned earlier, our revenue generation in asset management today is more geared towards management fees rather than carried, given that we have quite young sizable funds which we have launched in recent year. Also keep in mind that we have a very cautious approach when it comes to recognizing revenue and performance fees. We only book them when we are certain that we are actually going to receive them. And we are not consequently exposed to any clawback risk or negative revenue within our profit and loss. I would like to add on top of that, that we have highlighted before, but we have a very shareholder-friendly approach in terms of allocating, carried interest and performance fees. 100% of performance fees are actually allocated to the balance sheet to the shareholder, and 53% of carried interest as well to the balance sheet to the shareholder of Tikehau Capital. I wanted -- we wanted actually to show you these main figures because this is highlighting actually the group's largest flagship funds eligible to carried interest. Out of those 10 flagship funds, 9 of them have been launched in 2017, so quite recently, and 4 of them are still in a fundraising month. So definitely, the PRE potential is here, and material PRE should kick in. One of the first largest flagship fund will be mature in the coming years. So having a look at our investment activity, and more specifically, our investment portfolio at end of December 2020. As you can see, our portfolio is very granular. We have more than 211 underlying assets, which are representing a total of EUR 2.4 billion. During the year 2020, we have been keeping on investing through our asset management strategy, in line with our alignment of interest approach. And as such, at the end of the year, more than 66% of our portfolio was invested in our own funds compared to 61% at the end of December 2019. In addition to the EUR 1.6 billion already invested in our strategy, we have also committed a further EUR 1 billion, which will be drawn when the capital of the funds will be deployed. At end of December 2020, the group has, therefore, committed a total of EUR 2.6 billion in our own asset management strategy. We are, therefore, ahead of our objective to increase to between 65% to 75% the exposure of our portfolio to the funds we are managing. Through 2020, we have continued actually to actively manage our direct investment portfolio. We notably disposed 83% of our stake in DWS, which has generated proceeds by EUR 168 million and a capital gain over EUR 16 million. At end of December, our stake in DWS remain at 0.5%. The realized investment revenue is a critical KPI because it's actually demonstrating our capacity to generate revenue. The realized investment revenues have grown by 29% from 2019 to reach EUR 140 million in 2020. This growth was particularly driven by the sharp increase in realized capital gain, reaching EUR 36 million, up 144% compared to 2019. The second component being dividend, coupon and distribution have grown by 9%, and they are amounting to EUR 97 million. Overall, the cash realized component of our portfolio revenue has been definitely increasing steadily since 2018, which is seen as extremely positive. We wanted to also give you a snapshot of the previous figures, but by giving you exactly what happened between Q1 and Q4. So here is a breakdown of the total portfolio revenue between the realized components between Q1 and the other quarter. So on the left part of this slide, you can see what happened during the full year, the negative EUR 49 million of unrealized mark-to-market adjustment that was recording during the full year is actually reflecting a loss accounted in Q1, which has actually offset by the positive evolution from Q2 to Q4 period after markets have rebounded significantly, helped by the action implemented by the central bank around the world. It was precisely at the end of Q1 when global markets have dropped sharply, when credit indices have dropped significantly, that we decided actually to take action to protect our investment portfolio. We have, therefore, implemented a number of financial instruments as part of our risk management policy to mitigate the impact of any market correction further that may affect our investment portfolio. In light definitely of the massive central bank intervention, derivative instruments played out negatively during the year 2020, especially from Q2 to Q4, offsetting the positive unrealized change in fair value over the same period. This impact has to be seen, actually, as a one-off effect. Those instruments were implemented in a time where the global economy was facing a major systemic risk, and no one could have foreseen the reversal of global markets. To date, 100% of the position related to these financial instruments were unwound, leading to a cost of EUR 71 million, which will affect the P&L in 2021. Just a quick snapshot on our balance sheet, which remains very robust at the end of the year. On the asset side, you will find the EUR 2.4 billion of investment portfolio as well as the solid cash position of more than EUR 800 million. Our shareholders' equity remains solid with EUR 2.8 billion of equity, a level of financial debt stable at EUR 1 billion. Overall, our net debt is quite limited at EUR 154 million. Keep in mind, we also have a EUR 500 million of undrawn committed facilities, and our gearing ratio is under control at 36%. Our strong balance sheet is a key differentiator and an accelerator of growth, which is actually definitely enabling us to support our asset management platform and also to complete selective and accretive external growth transaction. Tikehau Capital remains committed to actively manage its balance sheet by both rotating the portfolio, as we have been doing during the previous year, and focus on the level and structure of the debt. In particular, the group wants actually its ESG strategy, which is already deployed at the heart of the operation, to be reflected in its financing strategy.

Thank you, Henri. A few slides on outlook 2021 and further. First of all, a confirmation of the group guidance: EUR 35 billion of AuM by 2022, EUR 100 million of fee-related earnings by 2022, 65% to 75% of investment portfolio from the balance sheet. And remember, we're at 45% when we did the IPO, and we announced a guidance of 65% to 75%. We are already at 66%. And a run rate of our capital invested by the group in our own fund between 10% and 15%. As Henri mentioned, we've got a very strong balance sheet. We know that we deliver a good return in the past, in the past 16 years. And we have, today, EUR 2.3 billion invested from the balance sheet. Few fundraising priority. I think what matters is that we are launching new vintages, new initiative and the Tikehau growth engine will be delivered through various channels, various strategies, various geographies, various investors from retail to supranational investor. And I think the mix of all that start producing good return, as you see previously in our profitability in the asset management, which is going to be the key driver of the growth and, we think, our stock price. We're seeing -- despite the pandemic, which is unfortunately not over yet, we are starting 2021 in a strong position, a very seasoned and experienced team with 600 people. And our people is a people business, and we rely on them. And they've been fairly efficient during 2020 despite working from home. As you see, it's almost a record year in fundraising. So the entire team is on top of everything. We have now more than 25 different nationalities across the world, a very strong gender equality inclusion, a very strong diversity. So we feel like it's a unique team that's enabled us to continue to grow and deliver return for our investors and for our shareholders. Our multi-local footprint in 12 countries with the recent addition of Germany continue to be at the heart of our development. And obviously, that will help us scale the business in a very strong manner. The balance sheet, and we have discussion in the past on balance sheet, does it make sense to have a balance sheet to develop asset management business. We've been able to achieve what we've achieved in 15 years, thanks to our balance sheet. We have a very strong liquidity with more than EUR 850 million of cash at year-end, plus, as Henri mentioned, a EUR 500 million credit facility. So it's EUR 1.3 billion of cash, plus some liquid investments as well. So we're going to continue to use this balance sheet to expand and develop the group and new initiatives. And the SPAC, the series -- the first of series of SPAC we announced, thanks to the balance sheet, we can achieve that probably at a quicker pace. I think we had the opportunity to discuss in the past our new initiative in the SPAC dedicated to the European financial services sector. It's an example of our capacity to innovate, rely on our existing historical partner and it's an extension of what we do as an alternative asset manager. We raise money and we invest. And the structure, the key sponsor with long-term size to Tikehau is fairly unique as well. We decided to put a quick valuation framework just to give a sense of Tikehau share. First of all, the fee-related earnings. As you know, we have now 16 alternative asset managers listed in the world, and they are all trading north of 25x FRE multiple. If we took our 2022 guidance over EUR 100 million, that gives you a EUR 2.5 billion valuation, i.e., EUR 18 per share for our asset management. On top of that, you've got the balance sheet, which is EUR 17 per share. So it's our investment in our own fund for EUR 1.6 billion and in direct investments. As we said, we've got a good track record for the last 16 years to deliver a return. So we feel like the EUR 2.3 billion portfolio is probably -- should have a higher valuation. But we took, for the sake of it, a onetime book. So that gives you a EUR 4.8 billion valuation without taking into account what we put here, number three, the PRE, i.e., the performance fees and the carry interest coming from our fund. And as you saw, as Henri described, we've got more and more fund eligible to carry interest. So we are strongly working on that. And for us, unlocking the value for our shareholder is very critical. We had a 16.7% performance for year 2020. But we feel like that the re-rating, thanks to the profitability of the asset management, is underway. We've been quick. So we are now moving to the Q&A session, and I'm happy to answer your questions. Thanks for your time and patience, and we look forward to answer to your question.

[Operator Instructions] The first question comes from the line of Mandeep Jagpal from RBC Capital Markets.

Two questions from me, please. The first is on investment activity where you have a target of 65% to 75% investment in Tikehau funds by 2022. At December 31, you reported 66%. So really helpful to have an update on your thinking about pulling down of the listed and unlisted direct investments now that you're within the target range. And then the second question is on the broader strategy. Tikehau has expanded its product offering and geographic footprint in recent years by launching private equity strategies and a number of acquisitions. Looking forward, what are now the target asset classes or geographic regions for Tikehau? And how do you think about doing it organically versus bolt-on acquisitions?

Thanks, Mandeep. First of all, your second question, on acquisition versus organic, as you know, we are contemplating all the time new initiatives, new developments. We can use the balance sheet to do acquisition. We've done a few in the past. Star, Sofidy, Ace are very good example whereby we do acquisition of very strong platforms, strong track record, strong team, and we are able to grow that. Overall, it's -- that's 3 acquisitions, let's call it, a EUR 300 million more or less acquisition. So we can do more. It will really depend on opportunities we'll find. As everybody knows, valuation in the alternative space are increasing at a very quick pace. So for us, it's always a question between organic and acquisition. When we decide to launch a direct lending secondary, we -- it's been purely a creation. We hire a strong seasoned team. Same thing for energy transition, we hire a team. Back on our historical track record, we did not acquire anything. And on the back of that, we raised a first-time fund of EUR 1 billion. So short answer, we continue to contemplate acquisition. They need to be accretive. They need to have -- share the same DNA as us. We are looking at various things. We are doing a small acquisition in Asia in secondary private equity. It's a small platform that will be able to grow. So we continue to do both, look at acquisitions around the world, across asset classes, across geographies. So it's a pretty large spectrum, but we'll continue in parallel to seed new initiative and new businesses. To your first question, on balance sheet and target between 65% and 75% of the balance sheet invested in the fund, we made significant progress. So as a consequence, the volatility of the P&L will be lower. We continue to cement our partnership with a super-strong management team at DWS where they are doing a great job at developing their company, but also continue to cement the partnership with us. Also, we mentioned that we reduced our stake to 0.5% during the year. We took advantage of a strong rebound of their share price. So that's answer your question on reducing our liquid investments. But the balance sheet continue to be highly granular because of the fund investment and because of the diversity of the non-fund investment. We are on track to be between 65% and 75%. And I suspect we continue to increase that over time, this percentage. Does that answer your question, Mandeep?

Great.

Yes. And maybe one additional point is that you cannot -- I mean you need to see both the balance sheet and effectively M&A, meanwhile, because on each of the last acquisition we've made, whether that be actually Ace infrastructure or Star infrastructure, are made in the U.S. We've been acting, meanwhile, through the balance sheet to actually invest in the funds of the asset management of the GP we were buying to actually accelerate the pace of their AuM.

The next question comes from the line of Mr. Arnaud Giblat from Exane.

Thanks for the presentation, and thank you for the performance disclosures on the funds. I think it's quite useful. I notice the performance on divested assets. Could I ask how this performance would look like on a multiple invested capital, including non-divested assets, perhaps in private equity? So what does it might look like on the entire portfolio, including non-divested assets? My second question is on the hedge. I'm wondering how this works in regards to the performance fees paid to the GP. You earn 12.5% performance fee on gains realized on the balance sheet. Will this be offset by the loss in the hedge? Or do you just look at the assets separately to the hedge fall for the calculation of that performance fee going to TCA GP? And thirdly, I'm wondering, in terms of costs, clearly, 2020 probably generated some savings, maybe less travel, less T&E. I'm wondering if these savings are expected to reverse out or stay immaterial in any way.

Thanks, Arnaud, for your question. I start with #2. We decided to hedge our investment portfolio at the end of the Q1 because we all have to remember where indices were, liquidity were. Huge institutions have massive liquidity problem. That's why large intervention from the central banks occur, both in Europe and in the U.S. So we decided to put this hedging strategy in place. As you know, we are the largest shareholder, and we had a lot of discussion. It was really unprecedented time, so we decided to hedge. We decided, as Henri mentioned, to take off this hedge earlier in the year because we feel like -- and again, we are not a vaccine or pandemic specialist, but we feel like the worst of the pandemic is over, and interest rate for the time being are very low. So we took off this hedge. As you all see, we continue to have a very strong balance sheet with our EUR 2.8 billion of equity, a very strong liquidity. So we feel like 2020 has not been a great year from the balance sheet point of view, but the asset management remain fairly strong. On your question on the TCA GP, as we know, TCA is managing TCE, and that's been the case since 2004 with the same economics. I think some of you ask question on the corporate structure and the complexity. It's been the same structure from day 1. We have discussion, and we may, in the future, look at changing the structure if that help unlock value for the stock price. And I think TCA, for the time being, continue to have close to 70 people managing TCE and getting compensated for that, the historical 2% plus 12.5% of the net income. But I think what matter most is that we control 45% of the company, and I think our skill in the game is more aligned on that. Can you repeat your first question, Arnaud, on the fund performance? I think we are grateful that we put fund performance for the first time, and I think we're going to provide more performances on our funds. Obviously, we continue to raise a significant amount of money because we have strong performances in our fund. But I think I missed your first question.

No. Yes, so clearly, the 2.4x on divested assets in private equity looks great. I'm just wondering how it looks like on the entire portfolio, including assets that are still in portfolio. That is kind of what a number of your peers are doing. They report on multiple invested capital on a divested and on a holistic basis. So I'm just wondering how it looks like on a holistic basis.

Well, Arnaud, I mean the valuation of all the assets being carried out by the funds we are managing are actually under IPEV rules. So we are effectively marking all of our stake within our funds at the fair market value. So some of them, given the performance of the underlying, have gone up; some have been stable. It's very difficult until you dispose the stake to know exactly what's the value of the underlying assets. For example, our investment within our energy transition fund, T2, our investment in GreenYellow has been marked close to the usual, call it, view of investment. How do we assess the value of that investment? We try through the IPEV valuation rules to assess that, but very difficult until we effectively dispose the 2 assets at level of value. To come back to your third question on effectively kind of savings that happened during the year 2020, it is effectively the case. People have less travel, but we are talking about something close to EUR 1 million, so not significant. And the level of fee-related earnings that we have achieved at 35% is clearly now a new kind of floor that we think we can achieve.

Maybe one last thing on your first question on asset carried by the balance sheet. Historically, over 16 years, including the 2008 crisis, the 2012 crisis and the recent pandemic, we feel fairly comfortable with our valuation. And I think we've been having very often, very good surprise on our balance sheet investments. And we feel it's more than comfortable. We continue to deliver strong return from the balance sheet investment. That's how we've been building the group. If everybody recollect, we started as an investment firm, and we migrate to an alternative asset management firm. But our job is to source a good investment, and I think we've been ahead of the curve there. So we probably will expect a good surprise on the balance sheet.

If I may just come back to my performance fee question. Does the loss of the hedge offset the gains made on the individual assets with regards to the calculation of the performance fees in the future?

No. I mean the performance fees, and I think we discussed that in the past, it's -- we are entitled to 12.5% of the net income. And obviously, this year, we realized EUR 133 million of gain. So it's already offset, if I may say, because you are selling assets, making gains, making loss, but that's the case each single year.

Arnaud, you are correct. You know that effectively, this GP compensation, the 12.5% of net result is on French GAAP. So it takes into consideration the revenue and the cost. Definitely, the hedge is a cost that is affecting the net result of our statutory account in French GAAP. So yes, that is the case, to answer your question.

The next question comes from the line of Nicolas Payen, Kepler Cheuvreux.

I have a first question on the SPAC business. You actually said that it could be the first one of a series of SPACs. So I wanted to see if we could have a bit of color regarding this future business. How could it be structured? Would it be an investment from the balance sheet? And if yes, what kind of revenue contribution we can expect from this? And then also, maybe a quick word on the acquisition, the small acquisition you announced in AP. Maybe some info regarding the size, perhaps? And finally, just perhaps a quick question. You developed quite an interesting strategy regarding retail investors. I wanted to know what is the share of retail investor within your investor base. That's it for me.

Thank you for your 3 questions. So on the SPAC, we see that as an extension, fairly similar to what Ares has done in the U.S. And KKR just announced their first SPAC yesterday evening, for those of you who are following. So a SPAC is a way to raise money in the public market to enable private companies to get listed. So we see that as an extension of our business, raising money, strong track record in investment, finding the right target to get listed, help them to grow. So that's why we said it's an extension of our business. How does that impact Tikehau? Well, 2 things. One, we'll invest in the SPAC some of our balance sheet. So we can expect capital gain or dividend, first leg. And the second leg, as the promoter of the SPAC, we are entitled to part of the promote. And as you know, it's fairly similar to a carried interest. It's a 20%. So we'll get a share of that. So it will be 2 leg of revenue in the SPAC business, if I may say. We said when we launched this initiative that we will probably do a series of SPACs. So we are contemplating new extension and new development in sector we know quite well, we being Financière Agache, Jean-Pierre, Diego and Tikehau. So we will probably launch SPAC later in the year. Size of -- your second question is on size of acquisition. We are contemplating acquisition in various parts of the world. We've been active by doing small acquisitions because we feel like valuations are very often high. So we'd rather do small acquisition, and Ace is a very good example. When we acquired them, they were managing less than EUR 400 million. They are managing now over EUR 1 billion. And I think that that's really the way we're going to develop and use acquisition. Your third question, on retail, let me get back to this slide. There is a big trend from around the world with retail investors trying to get more and more access to alternative investments, alternative asset classes. There are some regulatory threshold, but they are moving from time to time. So you probably all noticed that in the U.S., now you can do from your 401(k) investments in private equity and private debt. And I think this trend is moving forward fast. So our approach -- and our approach could be very different in various geographies. For instance, in France, savings are within insurance company. In Canada, savings are in retirement system, fairly similar to the U.S. You've got area of the world whereby you've got fairly large private bank. So we decided to structure our offering with multi-channel. For instance, if you look at Sofidy, they've got close to 100,000 retail investors who have been investing in their funds. So the challenge for us, we'll have to migrate or offer to this investor new investment opportunities. Mentioned Homunity, we bring on board this fintech 2 years ago. They've got an -- Homunity is a platform, an online platform to raise money online and invest in 3 different ways: one is providing financing to real estate project; two is buying real estate fund; and three is buying brand-new flat being sold by developer. We've got more than 40,000 people registered on the platform. When we did Fideuram, Intesa, it's a 300 -- 3,300 investor investing through Fideuram to our various funds. So it's a big trend. It's becoming more digital. So that's why we have Homunity, and we're going to leverage that. You probably all noticed that Fidelity took a 20% stake with a distribution agreement yesterday on Moonfare, which is one of the most advanced platform in Europe, German-based. So we're going to tackle the retail. We have already a strong retail client base, and we're going to continue to grow that in the coming years and probably accelerate.

The next question comes from the line of Geoffroy Michalet, ODDO.

Two questions for me. The first one is on Eurazeo, and actually, that's 2 questions. First, what do you think of the share price development of Eurazeo, their recent uplift in NAV and their actual discount? So just to have your thoughts on the share price and a potential disposal. Of course, this is a tricky one, I know. The second question is on what is embedded for your EUR 100 million guidance of NOPAM with your current fund?

So first of all, on Eurazeo, you're right, the stock price has been up 20% year-to-date and enjoy a strong recovery from March low. They have been trading at EUR 36, and now they are trading at EUR 66. So it's a pretty good performance. And as you know, we own 6.5% of this company. So we are obviously happy with the recent performance of the stock price. Number two, on your disposal, I think they are listed. We are listed, so we are not commenting further on any particular action there. Your second question, on the EUR 100 million FRE target, we are adding new strategies, new geography, new distribution channel. If you remember, the initial target we gave when we got listed, we've been achieving that at a quicker pace. As you see, our FRE this year is EUR 70 million. Our NOPAM is EUR 76 million. We have EUR 100 million FRE target for 2022. Are we achieving that with existing fund and fund on the road? That's the idea. But as I said, we've been good, if I may say, at initiating new strategy, new businesses. Aerospace is a good example. Energy transition is a good example. We've got also one of the largest cybersecurity fund in Europe. And I think we're going to continue to create, continue to launch new initiatives and hopefully deliver more growth and more profitability than anticipated. I mean we remain entrepreneur. Our goal is to expand the platform. As you get bigger, the size and the brands are probably helping you. As you see, we've got EUR 1.5 billion coming from Asia. We've got already EUR 1 billion coming from North America. So we've got multi-option to grow the assets. We need to continue to deliver performances, and that's why we put these 4 slides on performances because performances of our fund are very robust. That's why we are able to grow the firm. So we feel fairly comfortable with this target. And obviously, we like doing a better job than what is anticipated, and that's how we've been building this group.

On top of that, maybe one more comment, Geoffroy. Effectively, you know that the FRE of over EUR 100 million will be driven effectively by net new money, by new geography, by the accretive mix within our asset class. But you should also consider that we have EUR 3 billion of AuM, which we call future fee paying, which for the time being are not generating any management fees. When those AuM will be invested, will be deployed by our funds, they will generate additional management fees. That's between EUR 25 million to EUR 30 million of additional management fees that will fly through the profit and loss.

The next question comes from the line of Mr. Christoph Greulich from Berenberg.

It's 3 questions from my side, please. The first one is with regards to your 2022 targets. So obviously, we're now 2 years away, basically, from the numbers that you reported today. So could you give us any color on how the growth, both with regard to the AuM and the FRE target, how this is likely to be split between 2021 and 2022? Should that be rather equally split or almost skewed to one of those years? The next question is regard to the carried interest. You showed a quite nice slide about the major funds, which should generate carried interest in the coming years. So the first fund to generate carried interest should be the TDL III one. And yes, this is a fund that should expire or has an expiry date in 2022. I know you have 2 extension options. But just wondering if you already have a good visibility on when you expect this fund to generate the carry interest. And if you could give us any ballpark figure, how much carried interest we can expect based on the current fund performance? And then the last question is on your new office in Germany. So just wondering here, is this purely for fund distribution? Or do you also intend to source deals from that office?

Henri?

Thanks, Christoph. Well, as regards to your first question, effectively, we report on a yearly basis. So at some -- we are not measuring on a permanent basis the FRE. And for the last 12 months and being able to tell you well at 15th of April '22, we are at EUR 100 million. So at some stage, possibly, we will see how this will go, depending once again on the net new money, on the duration of cost, on deployment of the EUR 3 billion of future fee paying. But as mentioned by Antoine, definitely, we are confident on achieving the guidance we had given a few years ago to reach at least EUR 35 billion of AuM at the end of 2022 and this EUR 100 million of fee-related earnings. And that will come, once again, from all the initiatives that we have listed today in terms of geography, in terms of businesses. To come back in terms of geography, by the way, Germany is a strong addition to our platform. Dominik actually joined us ago -- joined us 10 days ago. So he's now taking head -- Dominik Felsmann is taking the head of the office in Germany. He will have responsibility as all of our head of office for actually being close to our customers, to generate additional discussion with customers, to find a proper solution for them to invest. But as well, he will have the responsibility to deploy our asset class in private debt. He has a strong experience in private debt, more than 15 years in the leveraged loan and private debt business, in real estate as well in private equity. So we are currently effectively recruiting some investment professional. We are transferring some professional from the platform to Germany, some German-speaking team that we currently have within our team. So as all of our offices in Europe, effectively, it will rely on 2 legs: investing all of our funds to further source some good investment opportunity and to generate some performance for our funds for LP and as well being close to our customer. To come back on your question on the carried, you do have -- actually, you were mentioning TDL III. We currently have some carries that we have -- that will be generated also by the previous generation, which was TDL II. It was called TPC at the time. So I think the next generation of carried will come from private debt funds and real estate funds. We have started -- as far as private debt is concerned, it will come from the end of the life of the product business or refinancing opportunities by the company's business. As far as real estate is concerned, we have started on some of our assets strong program of disposal. Last year, we have disposed more than EUR 100 million within our real estate platform. And this will definitely -- with very strong performance, as described by Antoine previously, and this will generate definitely a significant carried interest as well.

[Operator Instructions] We have no more questions coming from the line.

Okay. So we have a couple of questions here on the webcast that I will read out loud. The first one is linked to the macro perception. The question is about the cautious stance that Tikehau has adopted in 2020. Now that the derivative position have been unwinding, we are talking about good recovery in the U.S., though the question is about the outlook for the macro. The second question is all about the Brexit and how that can impact our U.K. operations. So that's for the webcast.

Thanks, Louis. I mean, first of all, when the pandemic hit initially in Asia and then in Europe and after that in the U.S., we took a fairly pessimistic approach where we're too pessimistic. But we decided, for instance, and I think there was a question on the cost, we put a hiring freeze in February. So our mode was really fairly defensive. We invested less this year than last year. We decided to put the hedge against our listed portfolio, which is more or less EUR 1.2 billion. Central Bank did massive intervention, as we said. So our hedging strategy has been wrong. We decided to un-hedge that because we consider that the vaccine, also there are tons of polemics on the vaccine, but I think the vaccine are clearly helping the pandemic. And obviously, we all get out of that. So we decided to took the hedge off. We decided to reinvest during the year, the second half and also in 2021. As you see, for instance, we've got more than EUR 350 million investing in the U.S. We are fairly optimistic on the U.S. So we see ourselves in a more optimistic mood, which, by the way, is always for entrepreneur. So we're going to probably invest more in the U.S. in the coming weeks and months. And we continue to deploy also in Europe at a strong pace, but we continue to be granular in our investments. And as I said, we feel like our portfolio of investment is pretty strong. And that's true for the balance sheet, but that's also true for the fund performance. And ultimately, it's underway to generate carried interest, to follow on, on Christoph's question. When it comes to Brexit, London is an important office for us. We have more than 40 people. We have limited historical client there. So we are trying to spend more time on fundraising in the U.K. What we've been doing is that we start investing in the U.K. midyear 2020. For instance, we did 3 real estate mezzanine, very protected with warrants. So we probably consider that U.K. will benefit similar to the U.S. of the vaccine. Then when it comes to your question on Brexit, it's not really affecting us per se. The only business could be affected is our CLO business, but we already took action. So that means that we are in a fully operational mode in the U.K., and we think that Brexit is probably generating opportunities for us.

We've only made a few adjustments, notably on the investment committee following the Brexit issue, but we are fully operational in the U.K..

Thanks, everybody, for your time, for your support. We look forward to continue to expand Tikehau with your support. I think 2020 has been challenging, but now we are moving forward, and 2021 is already well engaged. We are fairly optimistic on the perspective, on our development, on the profitability and on the fund performance. So we look forward to see you in person for the next annual results. Thanks, everybody.

Thanks for your time. Bye-bye.