Tikehau Capital (TKO) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the Tikehau Capital Half Year 2021 Results Conference Call. Today, I am pleased to present Mathieu Chabran, Co-Founder; and Henri Marcoux, Deputy CEO. Gentlemen, the floor is yours.

Thank you, Dan. Good evening, ladies and gentlemen. Thank you very much for attending today's call. I'm Mathieu Chabran, Co-Founder of Tikehau, and I'm dialing today from New York. Joining me for this earnings call will be Henri Marcoux, Deputy CEO of Tikehau and Louis Igonet, Head of Investor Relations in Paris and joined by Antoine Flamarion as well. I'd like to start the presentation on Slide 3 with a quick snapshot of the key highlights from the first half of this year. Tikehau delivered a double-digit growth from top to bottom line over the period, demonstrating once again the relevance of our business model. H1 2021 was also marked by the acceleration of the deployment pace of our funds. We continue to play an active role of financing the real economy while remaining highly selective and disciplined in our investment approach. Our positioning makes us a partner of choice, notably for European governments to finance the economic recovery in the post-COVID-19 world. We will come back to that. One important milestone over the first month was the important and successful completion of the reorganization or C Corp moments as I had the opportunity to call it upon announcement a few months ago, which has been strongly supported by our stakeholders. This reorganization increases the level of alignment of interest with all the stakeholders of the firm, which is, as you know, the core value of our DNA. We remain very focused on long-term growth, which will be supported by our robust and liquid equity base. This is a key differentiating asset in our peer universe, as you all know by now. Last but not least, we strongly believe that profitable growth cannot go without sustainable growth. Over the first 6 months of the year, we further expanded our impact investing platform, launching new impact strategies across our asset classes, more specifically in private debt and fixed income. We will keep launching strategies that support and accelerate sustainable business models and the decarbonization of economies as we have committed to. Moving on to Slide 4. You can see here the main KPIs and highlights for the first half of 2021. As you may have seen in our AuM release in July, the net new money over the last 12 months reached a record high of EUR 5.5 billion, of which EUR 2.4 billion raised during H1 2021. This is twice the level of H1 2020 fundraising. Our closed-end funds deployed EUR 1.9 billion over the period. Again, this is more than twice the level investing during H1 2020. Now importantly, the average management fee rate, which measures the quality of our revenue generation, continued to increase, reaching 104 basis points or 1.04% as of June 30, reflecting the favorable evolution of our business mix. This is up from 94 basis points at the end of 2020 and 75 basis points at the time of the IPO in 2017. We demonstrated our ability to maintain a profitable growth trend with fee-related earnings, the FRE, increasing 62% year-on-year, reaching EUR 44.5 million at the end of June 2021. This represents a 36.7% FRE margin. As for our portfolio, performance was very solid over the period with realized portfolio revenue up 19% compared to last year. As a consequence, our net results at the end of June reached EUR 176 million. We will keep deploying selectively expanding our asset management platform and launching new initiatives over the second half of the year. For year-end, our target to reach at least EUR 33 billion of assets under management. Moving on now to Page 6. A quick reminder of our 4 priorities driving our strategy. Scale up and grow our exiting and flagship funds, expand our offering with the launch of new strategy, develop and grow the past acquisitions, which have been successfully integrated into our asset management platform; and last but not least, keep internationalizing and diversifying our client base. We have been delivering on each of them over the first half of 2021. Moving on to Slide 7 now. We detailed here the main moving parts driving the strong AuM growth we have been posting over the last 12 months. Our asset management AuM grew by 22.5% over the first half of the year, reaching EUR 29.4 billion as of June 2021. AuM growth was clearly led by the EUR 5.5 billion net new money raised over 12 months. This is a record high for Tikehau. And I would like to stress here our business development team, restless commitment in achieving these results despite historical headwinds. Congratulations to all of them. This achievement reflects the strong performance of Tikehau capital strategies and the continued interest of investors in our asset class. Taking into account EUR 1.5 billion of direct investment, Tikehau AuM reached EUR 31 billion, representing over 20% growth year-on-year. Digging a little bit more now on net new money on Page 8, which is a critical KPI for the group. Out of the EUR 5.5 billion of net new money added over the last 12 months, EUR 2.4 billion came in the first half of 2021, which is twice what we had raised during the first half of 2020, things are accelerating. More specifically, the second quarter of 2021 was an outstanding quarter, during which we raised EUR 1.9 billion, a quarterly record for the group. All asset classes contributed to this performance. Private debt was the leading contributor of fundraising in H1, representing close to 40% of net new money. Our direct lending flagship fund, TDL V, is currently under fundraising mode and reached over EUR 1 billion in AuM at the end of June. Fundraising for new strategies such as impact lending or secondaries are developing in line with our expectations. Real assets now. Real assets fund raising was driven by a pickup in fundraising at Sofidy. AuM for Sofidy reached actually EUR 7 billion at the end of June. And we also acquired a residential portfolio in Iberia through a dedicated co-investment vehicle. In private equity, we successfully closed our flagship Energy Transition Fund, T2, which exceeded our expectation. We also closed and here again, beyond target the second vintage of our special opportunities Fund earlier this year. And of note, we also held the first closing for the Spain focused aerospace and defense fund, I'll come back to that. Finally, our capital market strategy has benefited also from very positive demand from clients, driven by the fixed income strategies. In particular, the Tikehau Short Duration Fund, which has exceeded EUR 2 billion AuM mark. Following this strong H1, I would like to step back for a minute and look at where we stand and see how our asset management platform has expanded since the company got public in 2017, and I'm now on Slide 9. We had around 10 verticals across our asset classes when we listed, and we have already added 14 new strategies during the past 4 years. We have started with a solid base of European strategies and quickly expanded both geographically and across asset classes. That has been done either organically or through targeted M&A. In both cases, having a strong balance sheet is a key enabler of growth. We can sponsor the launch of new strategies organically while at the same time, keep looking for accretive addition to our platform. If I may, I would add that no wonder why so many peers are now looking at the IPO market in Europe to secure evergreen capital, and we actually welcome this new set of benchmark. Finally, we still have plans to add new promising verticals to the platform, like, for example, U.S. CLOs, which would be launched by the end of 2021 here in New York or a private equity fund dedicated to energy Transition in the U.S. to expand what we have successfully achieved with our European T2 fund. Let's focus a minute now on private debt secondary Page 10 to illustrate what I just mentioned about organic growth. This vertical within the private debt space is one of the most recent organic additions to our asset management platform. So why did we decide to launch this strategy? First, we see the market potential. Look at what happened in private equity, following many years of strong growth in the primary market, there has been a solid ramp-up of an increasingly active and structured secondary market. Why is that? Because LPs are more and more actively managing the portfolios and want to be able to reallocate and find liquidity for their investments. We see that happening in private debt as well. It is a more nascent market than it is in private equity because the primary market for that asset class has grown more recently. But we are anticipating that the trend we have seen in private equity secondary should find a nickel in the private credit space in the years to come. And given the relative maturity of the secondary private debt market, we can now benefit from attractive pricing conditions and build a strong track record. It is not -- to be clear, it is not an opportunistic move, it is a structural opportunity. Second, we have strong sourcing capacity. We have built a team based here in New York in place since the end of 2019 and actively sourcing and deploying capital. The team is made up of both long-term Tikehau colleagues and also dedicated new hires. 44% of the opportunities sourced to date have been originating on a proprietary basis. As always, this new strategy is strongly supported by the Tikehau Capital platform. We have built a strong track record in the private debt segment. We have been a pioneer in the space in Europe so we are definitely leveraging our strong and long-lasting experience within this credit space. But we have also been using our balance sheet to sponsor this first-time strategy because we are obsessed with this alignment of interest. So Tikehau Capital committed $200 million in the fund, which allowed the team to talk to LPs with investments already done and more in the pipeline. This is how we work to accelerate growth. In terms of return, the strategy is targeting a 15% gross IRR. And the first months of activity are very encouraging in that respect, with a gross multiple to date standing above 1.3x or a 30% performance. Quick snapshot now on Slide 11 on how our client base is evolving. First, and I already touched base on that. Our client base is increasingly global. The AuM coming from international clients have exceeded the EUR 10 billion mark at the end of June 2021. Just as a comparison, EUR 10 billion was actually the total AuM for the whole company at the time of the IPO. And back then, international AuM stood just above EUR 2 billion, meaning that we have grown fivefold international AuM in the meantime. In terms of flows, more than half of the money raised in H1 2021 came from international investors. That excludes Sofidy, given the very specific nature of their investment product, which is very much focused on French retail investors, but our expansion strategy is paying off. Looking at how our AuM or split by client category, retail investors are precisely contributing more and more to our AuM. Our client base remains very institutional, but we have been actively launching new strategies dedicated to private clients. This client base is actually increasingly looking to allocate capital to alternative asset classes. We've been designing tailor-made products across asset classes and geographies in France, in Italy, in Spain, and we want to keep finding ways to address the need of that promising category of investors. Moving on to deployment now Page 12. 2021 is set to be a solid year in terms of investments from our closed-end funds. In H1, they have deployed a total of EUR 1.9 billion, which, as I said, is twice the amount deployed during the same period a year ago. To be fair, a year ago was obviously very atypical given circumstances, but still shows a continued increase since 2017. Private debt has led deployment during H1, in particularly within our direct lending business, where we are seeing a very attractive deal flow. Let me highlight that this is actually very positive for revenue generation since we are mainly charging fees on invested capital for this strategy, and Henri will get back to that in a minute. We have been very active in deployment while maintaining a strong focus on ESG as well as high level of selectivity and discipline across the board. This is evidenced by an average selectivity rate across our businesses of 98%. And even if year-after-year, and we are looking at more and more investment opportunities, this selectivity rate has remained very high over the years. The second half of the year remains very dynamic in terms of deployment for our funds with a healthy pipeline ahead. Last but not least, the level of dry powder at the end of June stands at EUR 6.4 billion, very close to the EUR 6.2 billion we had at the end of December, showing that we have been able to accelerate both the fundraising and the investment base. Turning to the next slide, Page 13. We wanted to pose on a significant milestone for Tikehau. As we just discussed, we are actively deploying capital across asset classes, especially in the mid-market space. Our job is to provide financing to corporates through debt or equity. That puts us in a critical position in the post-COVID context, and this key positioning has been increasingly recognized by European governments. Many in Europe have entrusted Tikehau Capital with the management of several recovery funds. We won the management of the French Aerospace Recovery Fund a bit more than a year ago, thanks to the amazing job from the teams at Ace Capital Partners. On the back of that milestone, we have now been selected by the Spanish government to manage comparable private equity funds, thanks to a very legitimate and growing presence in Spain. More recently, last week, we have been appointed by the Belgian federal government to manage the Belgian Recovery Fund, which will grant subordinated and convertible loans to companies active in Belgium and affected by the COVID pandemic. This is once again an outstanding result from our Brussels team who has led the foundation of a very strong presence locally. This recent success is added to the other state-led financing program that we are managing in France, which started in 2013 with the Novo and Novi programs in the corporate lending space. All of that to summarize demonstrate that thanks to our expertise, our platform and our track record, we are the partner of choice for European governments in providing financing to the real economy and support the post recovery -- the post-COVID recovery. We wanted to provide you with more color on how our funds are performing through the selected funds across our strategy, and I'm now on Page 14. This is an important point. We are building a strong track record of performance across asset classes and verticals, which not only bodes well for future fundraising, but also generates growing returns for our balance sheet. As an example, the performance of the vintage 3 and 4 of our flagship direct lending strategy is supporting the current fundraising for TDL V with gross IRRs on exited transaction that stand above 10%. Our Special Opportunities Fund, TSO II, which has finalized its fundraising earlier this year above initial target, has been performing very well as well. In private equity, we post a solid multiple for TGES, our secondary fund, in which we have contributed assets from our balance sheet. And finally, as you can see also that Star 1, our infrastructure program, is on track to deliver solid returns, which should support the last mile of the fundraising for Fund II. It is important that we communicate more on these topics because once again, performance is critical for both future fundraising and Tikehau Capital performance. Today's performance is definitely tomorrow's fundraising. So turning now into more detail to our investment portfolio, and I'm on page -- slide -- on Page 15 -- sorry, on Slide 15. As you know, our strong equity base is a key differentiator, which we use to invest across our strategies. Our alignment of interest is unique. Management is the number one shareholder of Tikehau and Tikehau invests it's equity in priority in its own funds. So at the end of the day, management, shareholders and LPs are fully aligned, which is a unique feature in our industry. As such, during the course of the first half, Tikehau has committed more than EUR 200 million in its asset management strategies alongside its clients. At the end of June, 64% of our portfolio is invested in our own funds, which represents EUR 1.8 billion of invested capital. To that amount, we have committed an extra EUR 1 billion, which has not yet been called by the fund, and that will be the case as they deploy the capital. So the total commitment that Tikehau's balance sheet has made in its own funds amounts to EUR 2.8 billion at the end of June, which is very material. Now let's be clear, we are very happy to invest in our funds. First, we trust our capacity to deliver performance and boost, allow our shareholders to benefit from the returns from our asset classes. And second, we know that by aligning our interest with our clients, we are able to accelerate fundraising and grow our AuM at a faster pace than competitors. In a nutshell, why not benefiting from the compounding effect of the underlying performance of our strategies when we are running the factory ourselves. We gave you the guidance to see our portfolio exposed that between 65% to 75% to our own funds in the midterm, and we are definitely on track. We were above 65% at the end of December. But since then, as Henri will show you, we have had solid positive mark-to-market effects on various parts of the portfolio. In any case, of course, we confirm the 65% to 75% guidance. Besides our fund investments, we have roughly EUR 1 billion invested in direct assets. Roughly half is invested in listed assets, and the other half is invested in non-listed assets, which I'm going to detail now. So moving on to Page 16, we thought it would make sense to provide you with more color on our unlisted investments on which we have never really put the spotlight. Those are investments made by the balance sheet in unlisted assets, which are serving one way or the other, our ecosystem as an asset manager and are opportunities of choice as a principal investor. You will have some legacy private equity assets from the day when Tikehau was not managing private equity fund. You can also find LP interest in all the managers' funds, in asset classes or geographies to which we are not exposed through our asset management strategies. And there are 3 main characteristic of this part of our portfolio I would like to highlight. First, it is very granular. We have 108 investment lines, of which 95 of less than EUR 10 million each. Second, it is well diversified and not massively overweighted in one single asset class, sector or geography. Third, it is very complementary to our asset management platform, be in terms of investment types, industry, but also geographical exposure, with, for example, a strong contribution from U.S. and Asian assets when our asset management platform is for the time being strongly exposed to Europe and so as a consequence, this portfolio benefits also from the various pace of recovery around the globe. Before I leave the floor to Henri, I would like to say a few words on how our ESG efforts have been recognized by external rating agencies, and I'm now on Page 17. We know how difficult it can be for analysts and investors to grasp the ESG performance of a company. So these ratings are definitely useful, and we are proud to have very favorable rankings. You can only assess what you measure, but that's not what we really look at. I mean the path we are following the ESG is to launch and deploy strategies that actually make a big difference to contribute to a low carbon economy. We now operate dedicated impact strategies across the majority of our asset classes. We discussed that. I already talked about the successful fundraising for T2, our private equity strategy focused fund on Energy Transition. In private debt, I remind you that we are currently raising capital for our impact lending strategy, which aims to provide favorable financing conditions to companies that meet their sustainability goals and extra financial crits. In July 2021, we launched Tikehau Impact Credit, pioneering an impact approach in the high-yield universe. As I said earlier, we need more common standards in order to help our stakeholders, LPs, shareholders, partners better understand where the asset management industry stands in terms of ESG integration and impact investing. In that respect, the European Union has issued a set of rules, which aim at making the sustainability profile of funds more comparable and better understood by end investors. This set of rule is known as the European Sustainable Finance Disclosure Regulation, SFDR. I will not draw you into details here, but the bottom line is that the 3 funds I just mentioned earlier fall into the most demanding category within this regulation and that's our priority is to continue to launch strategies that support and accelerate sustainable businesses and the decarbonization of economies. Let me now hand over to Henri Marcoux to focus on our financials.

Thank you, Mathieu. Well, good evening, everyone. Thanks for attending this call. I will start maybe by Page 19 and say a quick word on our fee-paying AuM, which is, as you know, a critical KPI to consider when looking at our capacity to generate revenue for our asset management business on the long term. Fee-paying AuM at end of June stand at EUR 24.4 billion, posting a solid 20% increase year-over-year. This growth was actually driven first by fundraising within private equity, capital market strategy as well as Sofidy. In addition, as explained by Mathieu previously, we have been actively deploying capital for our private debt funds for which management fees are charged on invested capital. So these deployments have been incrementing our fee-paying AuM and reducing the future fee-paying AuM, which actually stood at EUR 3.6 billion at end June 21, still up 33% year-on-year. Those actually future fee-paying AuM represent more than EUR 30 million of potential additional management fees for the group that will actually come through our P&L in the coming years. As a consequence, we have quite a good visibility on our revenue and profit generation for the coming years. Turning now to the next slide, which -- Page 20, which shows how our management fee rate has been increasing over the past years. Well, I guess this graph is actually quite self-explanatory. The average management fee rate for the last 12 months ended in June '21 stands at 104 basis points. We are actually exceeding the 100 basis points for the first time. As you can see, our average fee margin has improved steadily since IPO and very sharply over the past 2 years, moving from 84 basis points to 104 basis points. To understand maybe this improvement has been driven first by the rebalancing of our business mix towards private equity and real assets, which actually charged management fees above the current group average. It has also been driven by the ongoing fundraising momentum for our Sofidy funds, with the ongoing contribution from subscription fees that are generated in line with Sofidy fundraising. Maybe looking at the plus 5.3 points improvement of the fee margin versus June 2020 on top of the positive effect I just mentioned, which is structural. It does actually include the positive contribution from the late management fees linked to the strong fundraising of our private equity funds T2 over the last 12 months. This is actually standard in the private equity industry to have an increasing contribution from management fees as the fundraising period is actually advancing. We are very happy with the way our management fee rate is actually progressing. Not only we are increasing the fee-paying nature of AuM, but we are also compounding that with our capacity to improve the average fee margin, which translates very positively on our revenue generation. Precisely, moving to Page 21 and looking at our asset management review, you will see the results of the effects I just described. Over the last 12 months, management fees and other revenue have increased to a total of EUR 121 million, representing 99% of our asset management revenue. These are very qualitative revenues since the majority of our funds are closed-end funds and very sticky strategies with long duration, which provides us a high level of visibility going forward. These revenues are not only qualitative, they are also growing at high double-digit rate, with an increase close to 40% over the last 12 months and a 60% evolution over the last 2 years, which is significantly material. The contribution of performance-related revenue such as performance fees and carried interest is still limited in our model which is normal and expected given, first, the relative use of our fund, and second, the cautious approach, we have to recognize carried interest in our financial statement. I will come back to that in a minute. So to sum up, clearly, we are delivering high growth rate in highly-qualitative revenues. Moving to the next slide, Page 22. Let's have a look at our fee-related earnings a very important KPI for the group, which actually shows the increased scalability of our platform. Our FRE has been growing by 62% year-on-year to reach EUR 44.5 million at end June '21. This is actually more than twice the FRE we have generated in H1 2 years ago. So our management fees are growing at close to 40% increase and our FRE are growing at more than 60%. That actually shows the strength and the relevance of our operating model. On the right part of the slide, you see that FRE margin keeps progressing as well on the back of the revenue increase that exceeds operating cost evolution. The last 2 years in a row, we have been able to increase our FRE margin by more than 5 basis points, which is a strong achievement. That FRE margin stood at 36.7% at end June '21. Going forward, we still have the capacity to increase our margin and to go beyond that level because our operating model is not yet had a full structural potential. Then most cyclically, of course, on some specific period, you might see us reinvest part of our profitability gains for future growth. Typically, H2 2021 could be one of these periods where we want to consolidate the platform to launch new business, such as the one Mathieu just described with U.S. CLO and to hire new talent. We have been generating huge profitability gains over the past year, and it is not over. Moving on to the next slide, Page 23. Maybe a word that on top of our operating leverage in fee-related earnings, performance fees and carried interest represents a key earnings generation engine for Tikehau Capital in the coming years. AuM eligible to carried interest keeps growing at a high pace, reaching EUR 12.5 billion at end June '21, showing a 39% increase year-on-year, and therefore, growing faster than asset management AuM. That means that we are actually raising capital in priority in strategies eligible to carry interest, which is a strong revenue and profit engine still marginal at this stage, but very promising. On the total of AuM eligible to carrying interest, we should mention that EUR 7.1 billion were already invested and EUR 3.9 billion have generated IRR above the hurdle rate, which is actually an increase of up 39% also versus June 2020. As I mentioned earlier, our revenue generation in asset management is today more geared towards management fees, given that our large funds are still on but we expect to start to generate more material performance-related revenues when our flagship fund will mature. Also keep in mind that we have a pretty cautious approach when it comes to recognizing performance fees. we only book them when we are certain that we are actually going to realize them. As such, we are not exposed, I would say, to any throwback risk or a negative performance fee contribution to our P&L. Finally, and I think we have already highlighted this before, but we have a shareholder-friendly approach in terms of allocating carried and performance fee, 100% of our performance fees are allocated to the company and so to the shareholder and 53% of our carried interest are -- as well allocated to the listed company. Turning to next slide, Page 24, which now relates to the performance of our investment portfolio over the first semester. Realized portfolio revenue amount to EUR 78 million in H1 '21. They are up 19% year-on-year. Within these revenues, I'd like to highlight that the contribution from Tikehau Capital Funds in which the firm has invested continues to increase amounting to EUR 40.6 million over the first half, and they are actually up 29% year-on-year. This actually further demonstrates the relevance of Tikehau Capital allocation policy and the solid performance of its asset management strategy as previously explained and illustrated with the examples that Mathieu has described. You can see that the realized portfolio revenue have been growing consistently over the past 3 years with a steadily increasing contribution from dividend, coupons and distribution. Moving now to Slide 25. On top of the realized portfolio -- realized portion of our revenue, we have also recorded significantly unrealized positive fair value changes across our investment portfolio during the first semester. They actually represent EUR 174 million over the first 6 months of the year. Of course, H1 2020 provides atypical comparison base given market condition in the context of the COVID-19 pandemic. Unrealized positive fair value changes over H1, mainly related to positive contribution from listed investment portfolio, of which EUR 93 million relates to Eurazeo. Unlisted investments and Tikehau Capital Funds respectively contributed EUR 38 million and EUR 25 million to unrealized portfolio revenue over the first half of 2021. So here again, Tikehau capital funds are contributing significantly positively also to the unrealized portfolio revenues. Maybe turning to the next page, Page 26, and a quick words on the profit and loss items and the net profit for the group in H1, which actually stands at EUR 176 million. I remind you that the simplification we have announced on May 15, '21, has been finalized on July 15, and it is actually retroactive to January 1, '21. So the H1 '21 figures that you can see actually on this slide are pro forma figures that include the impact of this reorganization simplification. All the details related to the impact of this process on our financial statements are actually available in the appendix of this presentation and, of course, in our half year financial report. I will not comment again the very positive KPI posted by our asset management activity and by the favorable portfolio revenue evolution. I would like maybe to highlight a few items. First, the EUR 27 million reduction of corporate expenses linked to the reorganization when comparing H1 '21 pro forma to H1 2020 figures published last year. Once again, here, you can see the benefits of the simplification we have announced in May and finalized in July. Second item, maybe to be mentioned here, the EUR 10 million decrease in our cost of financing, which is actually the result of our active debt management policy. And finally, the net result group share that actually reached EUR 176 million in H1, showing a material improvement compared to H1 2020, which once again has been atypical in many ways. I will finish maybe by Page 27 and providing you a few indicators on our balance sheet. Here, you can see that our financial structure is still very robust. As such, our investment grade BBB- credit rating has been confirmed by Fitch in May '21. Our model is supported by strong financial means with close to EUR 3 billion of equity, a high level of available cash and EUR 700 million of undrawn credit facilities to date. Finally, maybe a comment, additional comments. Tikehau Capital wants actually its ESG strategy, which is already deployed at the heart of its operation, to be reflected in its financing. And so consequently, the following the issuance of our Inaugural Sustainable bond as well as the refinancing of our bank loan facility, we have now around 60% of our debt which is linked to ESG criteria versus close to nil at end December 2020. And this is actually, this is the right way to go in that direction. Well, I will now turn back the mic to Mathieu for concluding remarks. Thank you.

Thank you, Henri, thanks for this overview, but I will be brief. I am on Page 29. Tikehau Capital has been firing on all cylinders during H1 2021. We are reaping the benefits of our unique and increasingly profitable growth model in the alternative space. We think our prospects are bright. We are positioned in a growing market and are well positioned to capture that growth. We have many projects in the pipeline in terms of new strategies, especially to further expand our impact investing platform and scale up our various verticals. So our target for full year 2021 is to reach over EUR 33 billion of AuM at year-end. And we are and remain on track to meet our targets to exceed EUR 35 billion of AuM and EUR 100 million of FRE at the end of 2022. So that concludes today's presentation, and we are now happy to take your questions.

[Operator Instructions] The first caller on the line is Tom Mills of Jefferies.

I just had a couple of questions, please. Firstly, just on the management fee margin that's come through very strongly, 104 bps. Did you suggest that maybe part of that increase in the first half is driven by kind of late management fees coming through from funds that you raised in prior periods and you're getting the catch-up effect of that? Just trying to work out what the sort of correct number to be using as we look forward into the second half and beyond ought to be or is 104 basis points actually a good run rate? Secondly, I think, Mathieu you alluded to quite a few of your peers IPO-ing at the moment. Clearly, there are liquidity reasons for that, but also firms are looking to accelerate that growth. I guess that might mean that you're also having more conversations with potential targets. So I just wondered if there's anything that you could say around that because, I guess, other firms are looking to try and boost their growth as well? And then finally, just on the finance costs. They, as you just said, came through quite a lot lower than prior period due to refinancing some things. Could you maybe give us a bit of guidance as to how you expect that number to look for the full year because I'm quite a bit above that on the run rate, that would be really helpful?

Sure. Thanks, Tom, for this question. I might take the first one and leave Henri address the financing cost. On the management fee, yes, you've got essentially a bit of both. I mean remember that if you take, let's say, gross number, we've got EUR 10 billion of private debt, EUR 10 billion of real assets, EUR 5 billion of private equity, EUR 5 billion of capital market strategies. That is the consequence of us rebalancing the business mix, let's say, since we went public 4 years ago, and that had been stated as a key objective and a key element of this strategy. So effectively, you've got a little bit of business mix and you've got more high-margin businesses growing faster and private equity is one of them. Obviously, we alluded to that at the end of last year -- or sorry, at June 30, when we announced the AuM. We've got all the funds in the working of the special ops, but as well on the real assets. So effectively, it's increasing the top line, the gross margin, the gross fee margin relative to maybe what was on the private credit or on the leverage loan, the CLO, some lower margins. So you got a bit of that and effectively also a catch-up effect. Because as you know, if you get late into as an investor or if you get late into a fundraising, you've got a catch-up mechanism whereby you have to pay back to make whole as if you had been invested earlier with some fee penalties. Now there is also another element that Henri alluded to that our private credit or private debt, which the bulk of the funds we managed its charge on invested capital, I mean we've been investing significantly. So you've got a catch-up effect also here. So is 104 a normative number you should take? I would not comment on that, but you can certainly sensitize the fact that we have -- we are committed in growing much higher margin businesses. And as I said, we went public at the time, 50% of our business was private credit, and the margin was 75 basis points. In a matter of 4 years, we managed to increase that by, let's say, 25 or 29 basis points. And if you benchmark to some of our peers, I mean, there's certainly some room to grow. And if I may say, which is not a question you asked, but that has obviously net effect on the -- on your operating margin because on all these strategies, you have to front load your expenses. So the more you raise, the higher your operating margin improves. So that's for one and happy to follow up into more details with Louis after this call. Now onto the target or the competitive landscape universe effectively a lot of new IPOs. I mean all of you guys have been busy with many of our peers, taking their -- the company public in Europe. As I said earlier, we welcome that. We think that the more data points we put on the map, the better it is for the industry. You'll see in the appendix, Page 32 in the deck, we try to benchmark ourselves to what we think how the European peer universe to try to position on a relative basis our recent growth. Now on the M&A and target, as you know, I mean -- and we showed that over the past few years, we've been very selective in the acquisition. As you said, ironically, valuation nowadays are extremely high on the public market, but also the private market. I mean, you saw here in the U.S. the listing of, let's say, I don't know, Bluehole, for example, the merger between Owl Rock and Dyal. Dyal is only doing minority stake investment in private GP. So reading through all their docs and you can get a sense of the pricing here. So you have some -- on the one hand, people taking advantage of this high valuation. You know that we'll always be selective and disciplined in pricing. Now having said that, we remain always alert to opportunities particularly in opportunities that would complement our product offering, our geography -- geographical presence and our investors footprint. So when you take all that into consideration that you also had this disciplined pricing element. And last but not least, if you start with that, it's a people business, right? We're not just buying assets. We have to make sure that, culturally, there is a fit and that sometimes is the biggest challenge. But we are constantly effectively looking at opportunity. And you might see us in the short to medium term, taking advantage of opportunity if we can tick all those boxes. Henri, maybe on the financing cost?

Yes, Mathieu. Tom, thanks for the question. Well, the cost of debt on a yearly basis is roughly equal to EUR 30 million, which is actually on a half year basis close to EUR 15 million. So we've been benefiting in H1 roughly from a bit more than EUR 5 million of positive impact from our swap into the cost of our debt. So that's -- we are impacted by this positive effect, EUR 5 million positive effect. And once again, cost of debt on a yearly basis is close to EUR 30 million.

And the next caller on the line is Mandeep Jagpal.

Just two for me, please. Looking at Slide 9, you presented an impressive range of impact investing signs across the various asset classes, which are classified as Article 9. Please could you provide any further details of how many Article 8 strategies are offered at the moment and what's the plan is to launch or convert further strategies into Article 8 or 9 across the various verticals? I think it would be interesting to hear about what your clients are focusing on with respect to ESG and SFDR there? And then the second question is on NOPAM margin. Good progression year-on-year, increasing by 5 percentage points. But I noticed it's down slightly on H2 last year, which I have at 41%, despite an increase in revenue. So I was just interested to know what's driving the cost growth in asset management since H2? Is it just seasonality? Or is there something else?

Thanks, Mandeep. I might start with the ESG and here again, Henri will comment on the margin. Just to step back, and you've been following us for quite some time. I mean you know that at Tikehau, we've been -- you've been, I think, early on this strategy way beyond we get into rightly so, the big focus that we can see nowadays from asset managers. So as much, I can think of on the real estate, for example, we were maybe 10 years ago in 2012, 2013, developing with some real estate developers, partners, some grid building, HQE partners. So we've been very, very active here. And if you look at the few milestone of flagship funds, the private equity Transition Energy Fund T2 is obviously real milestone for '21 with EUR 1.1 billion. We announced that we were expanding that into the U.S. here and announced some first commitment of $300 million to focus on this strategy. But likewise, on the private credit, which sometimes is less of a focus, again, here, we've been very early beyond the Tikehau Impact Lending fund, where we've introduced the concept of having some positive ratchet margins for borrowers reaching and delivering on some criteria goals, some extra financial goals. And this is getting a lot of momentum with obviously investors who are increasingly focusing on that, but also on borrowers. Now interestingly enough, also, we expanded into our capital market strategies by launching our Tikehau Impact Credit fund in July, which is investing in publicly traded securities, bonds, but also with this ESG focus. And most of the recovery plan that we've been awarded and that I detailed earlier on also obviously have a component of that. So as much as -- and I'm sure, let me step back, Mandeep, I mean, I think that when we talk next year on this call, this very concept will have disappeared because that will have to be incorporated in everything you do. Any stakeholders today for an asset manager and even most of our publicly traded asset manager like Tikehau will expect that. And that will be shareholders, investors, employees, or banks, anyone you're dealing with, that will be part of the to do list, if I may say. So that's why we are in the [ PD9 ] it's critical. We've tried to be creative here to use that also to target new type of investors. We mentioned that briefly going beyond the institutionals. There is a huge demand from private investors, either family offices, organized, but also retail investors to accept this market. And we're really trying to stay ahead of the curve on those strategies. Henri, maybe on the margin?

Yes, yes. Just maybe on the fee-related earnings margin, well, having a look at 2020, obviously, what we said last year in the context of the COVID crisis is that our H2 was standing at a very high level. H2 last year, we were at 38.4%. Here, we are posting H1 at 36.7%. What we have said last year is that we had postponed significant costs. And consequently, this year, we are reinvesting in the platform. Would that be opening new offices like Germany, we opened during the first semester. Would that be in the launch of new strategy? We did mention T2 in North America. We did mention CLO. So we are investing in the platform. And as such, you should not see H2 at the level of H2 last year definitely.

And the next caller on the line is Arnaud Giblat of Exane.

I've got three questions, please. Firstly, on your performance in secondaries. Thanks for disclosure. I'm wondering, 1.34x MOIC which has happened very quickly actually. Is this a case where you're buying at a substantial discount and then just marking up to previous valuation? Or has there been other drivers behind that performance? That's my first question. Secondly, could you quantify for us the subscription fees at Sofidy in H1? What sort of contribution has that been to management fees? And is there like any seasonality or any launches or anything to be aware of there? And my final question is on your targets. So you're saying more than EUR 33 billion of AuM in 2021. You're targeting EUR 35 billion in '22, implying just EUR 2 billion in '22. At what point should we expect a revision of the '22 targets?

Thank you, Arnaud. I may start with the TPDS. So effectively -- so that it's clear for everyone, I'm sure it is for you. I mean this strategy, it's aiming at buying fund interest, LP interest. So you're an insurance company, you committed to a private credit manager. You invested 105 years ago, you've been keeping your coupon at, let's say, 8% to 10% and because you are reallocating your portfolio and because it's private assets, you're looking at selling and monetizing those private investment. As I said earlier in the presentation, that's not dissimilar to what has happened in private equity. But effectively, to your point, the fact that we are buying an underlying credit basket, private credit basket, you're buying a NAV, let's say that the NAV is at, I don't know, $0.98 a dollar, okay, on the fund. And it becomes a negotiation between seller and buyer, and so you would trade maybe, I don't know, at $0.95 a dollar, okay, for the benefit of illustration. So what we are marking at is we started investing early 2020. So we started investing in very diversified, I mean we seem to give you an example. I mean the team is based here in New York, it's global, but the reality that 80% of the portfolio -- of the pipeline, sorry, comes from the U.S., 20% from Europe. It's a more liquid market here in the U.S. We've seen close to EUR 10 billion in opportunity, right? So not everything trades because the seller and the buyer would not agree on price or we may have lost some transaction to some competitors. And so the mark we are then marking out, let's say, that we bought at 95 January 1, in the June 30 NAV that the manager is reflecting is 100 or it's 90, we will market at the NAV, okay, that we are reflecting. So effectively like you would do on the public market where effectively you're buying a bond at a discount and you're effectively betting on the get to par type of pricing, here, you're still dependent on the NAV of the underlying manager. So what you're seeing in this performance that we wanted to externalize because since it's a relatively new strategy, although we see a lot of competitors getting into that space, rightly so, and there is room for competition. We wanted to demonstrate that normally the opportunity is not purely based on, oh there's been a COVID sell-off, there's nothing to do with that. It's a structural play that we are entering into. Some of our competitors may take that from a very top-down approach. We are taking very much bottom-up because our skill sets at Tikehau is effectively to do private credit and underwrite that. So that's effectively the approach, and you've got the coupon that you are getting on the portfolio and effectively, the NAV evolution. And obviously, and hopefully, what we're hoping is that whenever we buy something at, let's say, $0.90, obviously, not only it can get to $100, but beyond with the component of the carrier of the embedded carry of the portfolio. So that's the TPDS strategy. Maybe, Henri, you want to comment on Sofidy?

Well, we are effectively disclosing the average revenue compared to our AuM. So having a look at our real assets revenue, they have moved from 96 basis point at end December to 105 basis point. Part of this increase is actually linked to the increase in management fees and average fee paying AuM. On top of that, there is an effect also coming from the subscription fees. But I would say it's part embedded in the model. Sofidy has decreased in net new money in the context of the COVID-19 notably during the year 2020. Now it starts a strong recovery in net new money. So we are benefiting from this recovery, not only on our AuM, but as well within our P&L, where we are benefiting from the subscription fees. I would like maybe to highlight on that, that there is a very strong demand from the product at Sofidy. So Sofidy is actually very dynamic. They have launched recently a specific new fund called Europe Invest, which is benefiting from strong demand and actually adding a new fund to our overall global platform. Maybe Arnaud to come back on your third question, we had announced back in 2019, actually, the guidance in terms of AuM, which is once again to be above EUR 35 billion at the year of 2022. Here, we are providing, I would say, a more shorter guidance and saying that we will be above EUR 33 billion by the end of the year. We will -- we would think we will finish actually the year and soon, we will provide a new guidance to upgrade the existing one. But once again, the one existing currently is to be above EUR 35 billion.

And the next caller on the line is Nicolas Payen of Kepler Chevreaux.

I have two questions, please -- two more general questions. The first one is on the state of the competition because you mentioned increased competition, but at the same time increased demand for private markets in alternative asset management. So I was wondering to what extent do you see more perhaps difficulty to actually deploy your cash on dry powder? And at the same time, maintaining your selectivity, which is still high. So do you witness any kind of tension on that front? And the second one is perhaps you could update us on your SPAC plans and in particular, if you intend to issue a new SPAC in Asia, please?

Sure, Nicolas. Maybe I can start. I mean the competition has always been there. I mean it's becoming maybe more visible because, effectively, there is a lot of, let's say, people going public, and we see a lot of attention around that, but the competition has always been there in terms of the number of managers. What is increasing is the demand from the investor part. And that's where the opportunity lies in our view and then certainly, it's good for everyone including the competition. I mean there are many industry reports. I'm sure you're -- you've seen showing the forecasted increased allocation by global investors worldwide, insurance companies, pension funds, you name it sovereign wealth fund into private assets. There are many reasons to that. I mean the lower for longer environment, so people have to diversify and find some yields when it comes to private credit assets and the like. And the fact also that there is some real need to inject money into the real economy and not only in the public market. So we're trying to grab share of that. And if you look at the Tikehau recent history over the past 4 years, I think we've demonstrated we were able to grow. And now your question about deploying and being under pressure to deploy, I think I had the opportunity in the past to flag that, and we keep on demonstrating our willingness to invest and we alluded on that. If you're only sitting in London, Paris, New York and you're managing zillions or tens of billions with the team trying to find opportunities in the private market, it doesn't work because we're not just sitting watching at a Bloomberg screen with our phones to reach out to the sell side. So we need and you need to have boots on the ground, people with some real hedge locally, some networks and that's why Tikehau been investing a lot first in Europe by being present across the relevant European countries for us. And we just added at the beginning of the year a presence in Germany where we had no local presence. So we opened an office in Frankfurt, and we now have some partners there. And as we've been doing elsewhere very successfully across Europe, when we are local in the country, it's not only to invest and to find opportunities across our strategies, but also to develop business relationship with all the various stakeholders. I mean, first and foremost, investors because it's great when you're local. And I will tell you basic things like effectively being able to speak the same language and spending time with the -- with investors. And that has been extremely important to the Tikehau growth. So the difficulty to deploy is one challenge. One, if you are effectively raising multibillion funds and have limited resources, which is not Tikehau case. I mean we're focusing on mid-market across what we do. And also we try as much as possible, and I try to remain humble on that Nicolas as we try to anticipate the growth by adding some origination capacity. So today, we've got a very nicely mapped a presence across Western Europe, which has been our major playground. And obviously, London is part of that. There might be opportunities to add other presence. But remember that last year, we added Amsterdam, for example, it's Frankfurt this year, each time with some locals, but also making sure that you always anticipate in terms of offshore investment team. So it's -- I wouldn't say that competition has increased. I'm saying that -- I would say that because people are locating more to the asset class, you need to make sure that in order to serve them properly, you've got the proper resources upfront. And at Tikehau once again, our best -- we could do mistake, but our -- the best backstop to that is the fact that we remain, first and foremost, the largest investor here. So that's how we are approaching. Now on the SPAC, that's a good point. As you know, we launched and raised our first SPAC during H1. Pegasus, a EUR 500 million SPAC listed on Euronext Amsterdam. We co-sponsored that with Financière Agache, Groupe Arnault and it's operated by 2 operating partners, Jean-Pierre Mustier, Former UniCredit CEO; and Diego De Giorgi, who was the Chairman of Investment Banking at Bank of America Merrill Lynch. I mean this one is focusing on the financial services, asset management, insurance, insurtech and diversified financials. What we stated upfront is that we wanted to develop a family of SPACs, meaning that he was not just about doing a crew if I may say. So you might see us effectively filing further SPACs and raising further SPACs. As you may have picked up, the market has been somehow challenged a little bit over the past few weeks, and there were certainly some excesses, particularly here in the U.S. that had to be rebalanced, but the European market remains a market that we intend to tackle, and we have a very legitimate proposal to be a partner of on choice on SPAC. As to the Asian SPAC, there's been some press article about our interest to potentially list over there. I cannot comment further. But as you know, we've always tried to be Tikehau curious as to what were the new technologies developing. And as you know, we've been having a presence in Singapore for the past 7 years. So if the market was to open there, that's certainly a market that we will be monitoring.

And next on the line, we have Christoph Greulich of Berenberg.

Three questions from my side, please. The first one, a quick follow-up on the late fees in private equity. Could you give us any indication on the size of the contribution from those catch-up fees for the management fee revenues in H1? The second one is regarding the investment activities and more specifically with regard to the investments in funds. So if I take the realized and unrealized returns together, I get to an annualized return rate of about 8% in H1. Back in 2019, you've given out the midterm target for a run rate return of 10% to 15%. So just wondering if you could give us an idea when you are planning to achieve or land in that range? And then last question. You made a comment in the press release that you would like to see a higher free float and liquidity. If you could maybe provide a bit more color on how you plan to achieve this?

Thanks, Christoph nice speaking. Well, the late management fees on private equity is actually totally market practice because when investors are joining the fund at the end of the fund, they are paying since the first day you've been raising the fund. So the effects on the first semester is roughly EUR 4 million as far as this late management fees. Obviously, we won't have that contribution. We will not have that contribution in H2, but we have other private equity funds currently in fundraising. For example, our aero funds actually being fundraised either on the France space or on the Spain space, they will actually benefit from this specific scheme. So it will become somehow more recurrent. Now coming back to your second question on the investment. The figure you have mentioned is right, the contribution from Tikehau funds taking into contribution, the results are actually amounting to EUR 65 million. So it's a bit above 8% of contribution. We did mention that on a run rate basis, we will be between 10% to 15% [Technical Difficulty]

Pardon the interruption there. Let me try and reconnect the speaker line.

Have we just lost Paris or...

Yes, Mathieu, we can hear you. I'll try and recall Henri now.

Can you hear?

Yes, you're back. You're back, yes, yes.

Okay. Sorry. So I will start maybe again on your second question, Christoph, EUR 65 million contribution from Tikehau funds for the first semester, so a bit more than 8.2%. Definitely, the run rate contribution we did disclose as a guidance run rate in 2019 between 10% to 15% is fully confirmed. But keep in mind that this needs to take into consideration the ramp-up of our private equity practice and some of our real estate funds as well. So it's a run rate that we should expect to have in the coming years.

Maybe just to add on to that what Henri covered, Christoph, obviously, the business mix that has always been a return on capital employed. So you've got a drag effect as you commit to the fund and you only invest as you get called. And our investment targets range from senior debt at 5% to special opps or private equity at 25%. So that's how the portfolio is constructed. So as we have today, as I said earlier, EUR 6.1 billion, EUR 6.2 billion in dry powder across the funds, you've got a little bit of this dilution. Now maybe I can start on free float and Henri will certainly add. I mean, as you know, the reorganization, the reset, the regroup and reset transaction that we announced in July between TC and TC was a necessary step for us to address the second phase of broadening the free float. You've heard on the road like many of your colleagues on the call that sometimes there has been a pushback from investors. So it was important for us to take one step at a time and that was effectively step one. In parallel to that, to a certain extent, I would say that we're lucky to see that many new data points coming to the European market, which will be also a great, great way to benchmark the various business models. And our intention effectively remains to broaden the free float and the liquidity, which somehow has been relatively muted for this -- for a market cap that size and that we are obviously tackling. Henri, do you want to add maybe?

No, no, no further comments on that. Fully agreed.

Yes. That's all very clear. Maybe just to quickly follow-up on the last one. Can you give any color or provide any comments on how you're planning to increase the free flow? Is it -- basically, should we expect new shares coming to the market? Or is it more that existing shareholders might sell some shares?

Well, the -- I can start. I mean, first of all, there is an average traded volume that has been increasing. There's been -- as you know, we've been increasing the partners management stake into the company. And as much as I may have seen in the recent days or weeks that some funding partners have been monetizing their stake. That has never been the intention on our part. As you know, quite the contrary, you've been following the way how partners -- working partners have been reducing themselves here. Now they could be, as we were discussing earlier with Tom's question, there could be some external events such as potential M&A, triggering primary needs. There could be historical and a long time shareholders getting to some point where they could monetize. So there's not a -- I would not comment further here, but I would say that the alternatives and the options are many and they're not mutually exclusive. But first things first, we had to do the reorganization step in July, and now we are certainly in a much better place to address that. And as I said, once again, in a wider comparable universe, that should also help favorably our public equity story.

Maybe as a conclusion on that, Christoph, that I mean through the regroup and reset simplification, TCA is further investing into TC, clearly, at a premium to what was the current stock price. So TCA, Tikehau Capital advisers long-term minded. We do not exclude, I mean, TCA ownership dilution should it result in value creation, but we do not have such plans, I would say, in the near term. Obviously, we strongly believe that the TC shares are undervalued, and we are committed to unlocking our share price performance.

And I believe, Christoph, to because it's important point that the set of results that we are detailing today which comes now it's been, what, 5 years, 4 years that we've been a publicly traded company, people have been expecting Tikehau to effectively demonstrate that we could increase, gear up the asset management contribution to the overall balance of the business because we were overweighted balance sheet when we went public, remember our numbers. And I think that all that effectively bodes fairly well to demonstrate that we've been outperforming what we have been saying and in the context of more structural tailwind and the asset class, we should keep on benefiting from that.

The next caller on the line is Joren Van Aken.

I have one, and it's a bit more macro focused. You had a very impressive H1 fundraising. But now with increasing rumors about tapering from the Fed and the ECB, do you expect this will impact fundraising momentum in the coming years or months? Or how is your view on the impact on liquidity of the market?

I'm happy to give you a try here. I mean I'm not a macroeconomist, but we were certainly -- we're certainly trying to follow the -- what is structural from what is very much a contractual. But I would not expect the tapering to have an impact short term on what is a much more structural trend to allocate to, let's say, private markets as a whole. And once again, private markets have to be approached differently across the asset classes. But what we are experiencing and again, evidenced by some industry reports very much top-down in terms of investors is that there is this intention to keep deploying more to the asset class because it's diversification, because it's long term, because it's higher yielding, you name it. So as much as we would be or we could be impacted by obviously any monetary policy that would be the contrary of what we've been experiencing. The -- if you look at the portfolios, everything we do in private credit is floating rate, it's variable. So basically, you would benefit from an increase in -- benefit in increasing interest rates. What we do on the private equity is only minority. We don't do control buyout. We don't have fully levered company that could face some refinancing risk. I mean, quite the contrary, that would certainly offer some opportunity for our private equity business to become minority shareholders of a highly levered company that would have to reinforce their equity base. If you look on the real estate, what we tend to do is long-term back sale and leaseback. Very often, the leases are inflation indexed so we would also benefit from that. So for the existing stocks, if I may say, we could be somehow protected there. Now in terms of new flows, I don't -- I would not expect and certainly in the short to medium term, a real slowdown on allocation by global investors to the asset class as a consequence of a tapering policy of Central Bank because once again, the trend is much more structural.

And we have one more caller on the phone lines. Next up is Nicolas Vaysselier of Exane.

I have, yes, a couple of questions. The first one is more on fundraising. Do you have any more events to flag to us for fundraising ongoing at your next direct lending flagship since the last event reported in July? And related to that, I was wondering in terms of the next flagship coming on your private equity and private real assets platform, what can we see coming in 2022, 2023 there? And then another -- on another topic, Slide 14 is quite an interesting slide showing your growth rate around range of funds. I understand that it's unrealized. I was wondering if you could give us some indications on what it is in terms of unrealized returns? And related to that, I am wondering what could be the pace of performance-related earnings growth over the next couple of years, 2020 to 2023. How would you see that in terms of the mix of performance revenues and the total mix of asset management revenues?

Yes. Well, thanks. Maybe I will start with your first question in term of fundraising. So if you -- we go maybe business line by business line. As far as private debt is concerned, we are actually fundraising our flagship Tikehau Direct Lending #5. The launch of that fundraising was done in mid-2020. So we have another -- a bit less than a year in the fundraising period. So we will continue on the success that we've had on TDL V so far, a very strong demand. As well on private debt, we have the Tikehau Impact Lending and Tikehau Private Debt Secondaries. Keep in mind as well that we have ongoing CLO initiative would that be in Europe with CLO #6 before the end of the year and the first CLO coming from the U.S. Meanwhile, on private debt as well, we are currently discussion on dedicated mandates, SMA or other initiatives going through Europe that we will actually benefit during the second semester. As far as real assets is concerned, obviously, we have -- we are on fundraising on a regular basis as far as Sofidy is concerned. And notably Mathieu mentioned previously, Sofidy Europe Invest, which was launched this year are listed in Singapore actually as well has been benefiting from the acquisition of the portfolio from Decathlon this year and has made a capital increase recently. We should see as well in the near future, some -- hopefully, some new capital increase. And we still have the contribution from Star America. The fundraising period of Star Infrastructure America will end in December. So we will have contribution in the second semester. As far as private equity is concerned, we did mention Ace Aero Partners, which is still fundraising over the second semester as well as Spain Focused Aerospace Fund and the U.S. Decarbonization Fund, which Mathieu said on previously. Finally, maybe talking about CMS, where we did mention Tikehau Impact Credit, which is a very pioneer and innovative product on high-yield markets, which will benefit the fundraising in the coming months. Yes. As far maybe the performance-related earnings are concerned, obviously, we think this performance related earnings are made of 2 components. The first one, which are actually performance fees on our CMS business. 100% of these performance fees are going to the listed company. We had some last year. Depending on market condition, we should as well have a contribution from this performance fees this year, once again, depending on market condition. As far as carried interest, the next carried interest, we will benefit will actually come from our real assets business, where we have dedicated OPCI, which are actually in disposal mode on some of their assets. So they should benefit the year -- next year actually, and next carried interest we will have as well, we'll benefit from our vintage #3 in private debt and vintage #2 as well also on private debt that will benefit the year 2022. It's a bit difficult to provide you a bit more color maybe on the next year. Louis, you want to say a word on that?

Yes. And to your point about the -- what the gross MOIC can unrealize transactions in the fund, I mean, for our point of view, what is interesting ensuring the gross MOIC on invested...

Operator, looks like we have a new technical issues with Paris.

Can you hear?

Now we can.

Okay. Sorry, I was just mentioning that the gross MOIC can exit the transaction is actually the relevant metric to assess the quality of the assets you are investing in the funds. And so if you're -- and especially because when we are, as Henri mentioned, talking about potential carried interest, we do not compute unrealized performance when it comes to the carried interest generation. So we figure in our model, it makes more sense. And so we don't provide the unrealized gains, but clearly, it's above the -- what you can see on the slide here.

And Nicole, if I may, without too being technical, but there's also another aspect to mention. As we said, we do not accrued potential carried interest. But more importantly, the funds we managed the underlying private funds, I'm talking only private funds, okay, they are what we call European style, meaning that there is no carried interest, which would be recognized deal by deal. But it's really once you have hit the hurdle at the front level and that the fund you liquidate, then you get the performance fee. And that's important because many of the European -- sorry, the U.S. managers, they've got more the U.S. style type of underlying funds where they recognize carried on a deal-by-deal and for those of them who are listed, obviously, that impacts your P&L. So it's also important that it also go at the fund level where we are extremely conservative in the approach.

That's all the questions we have on the phone. I'll turn the call back to your hosts.

I don't think we have any questions on the webcast. So Mathieu, if you want just to conclude.

Thank you all. We are available, as always, for a follow-up one on ones with the team, Louis, Théodora and all of us. Thank you for your interest and for joining, and we look forward to catching up when we release the Q3 AuM in 2 weeks. Thanks so much. Have a good night.

Thanks. Bye-bye.

Bye-bye.

Thank you all for joining today's conference. You may now disconnect your lines.