Tikehau Capital (TKO) Earnings Call Transcript & Summary

Good evening, ladies and gentlemen. Thank you for joining us today for our H1 results. I will start with the first couple of slides -- 4 slides and hand over to Henri. First slide, market environment remain volatile and selective. Geopolitical development continue to weigh on visibility, financing conditions remain relatively tight and investors remain highly selective in their capital allocation decision. In that context, discipline matters more than ever, discipline in deployment, underwriting, capital allocation and cost management. This environment is challenging, but it also creates opportunities for experienced professionals. Importantly, we are also seeing encouraging signs of improvement in exit activity, particularly in part of private equity and real estate. So the environment remains challenging, but it is supportive of differentiated platform that can execute with discipline, innovation, entrepreneurship and agility. Next slide. H1 2026 marks a clear step-up for Tikehau and in our view, a major first step in our harvesting phase. What we are seeing now is the translation of execution into profitability and earnings. For Tikehau Asset Management, we delivered a strong increase in profitability, supported by continued operational momentum, client base expansion and strong operating leverage. On the investment portfolio side, we delivered active portfolio rotation and value crystallization as a consequence. The combination of these 2 enzymes results in a doubling of net results group share year-on-year. More fundamentally, this semester confirms that our model is becoming more scalable, more visible in its earnings power. Now a few key figures for H1. We reached EUR 53.5 billion of AUM, up 5% year-on-year, reflecting continued franchise momentum in a still selective fundraising environment. For Tikehau Asset Management, management fees increased by 13% and more important, core FRE increased by 32%, bringing core FRE margin above 40% to 42% -- this is an important milestone. It shows that the operating leverage embedded in the platform is now materializing clearly in our profitability. On the balance sheet, we generated EUR 310 million of realized revenue and EUR 220 million of total portfolio revenue in H1, reflecting active portfolio rotation and value crystallization in this challenging environment. All that translates into EUR 165 million of net results group share, which is double of H1 2025. So the key point here is that we are seeing both stronger recurring earnings from asset management profitability and meaningful contribution from the balance sheet. A few takeaway for today. First, on Tikehau Asset Management. Our first key takeaway is that the profitability inflection in Asset Management is now clearly visible and will accelerate. We now have a more focused, robust and streamlined platform, better positioned to convert operating leverage into earnings growth. At the same time, our franchise continues to demonstrate strong momentum as illustrated by the successful closing of the 6 direct lending vintage, for instance, at EUR 5.2 billion, around 60% larger than its predecessor. More broadly, we are pursuing a more selective approach to growth focused on strategies and initiatives that are scalable, profitable and aligned with our long-term model. Now on the balance sheet side, second takeaway is that the balance sheet is delivering value crystallization and benefits from greater financial flexibility. We have been actively rotating the portfolio in the first half. At the same time, we have materially strengthened our financial flexibility with now $1.6 billion of available short-term resources, EUR 500 million of cash and EUR 1.1 billion in our RCF and no debt maturity before 2029 following redemption that will take place in August. Our investment-grade rating was reaffirmed by both S&P Global and Fitch Rating. This stronger balance sheet provides both resilience and optionality as we move into the next phase of development. I'll now hand over to Henri for a detailed look at our operating highlights.

Thanks, Antoine. Good evening, everyone. Nice to be here with you tonight for this H1 call. I'm now moving to Page 10, and I'll start maybe with our transaction and commercial activity for the last 12 months end of June 26. So as said by Antoine, but I think that overall, in a market environment that remains highly selective. The Tikehau platform has continued to show resilience across deployment, realization and fundraising. So starting with deployment over the last 12 months to June 26, as you can see, deployment has reached EUR 7 billion, moving from EUR 5.7 billion to the last 12 months of June '25. H1 '26 was marked by the slower pace of deployment in credit, mainly due to our CLO activity, translating once again here our cautious approach in the current context. As far as realizations are concerned, so they rose to EUR 3.7 billion from EUR 2.7 billion last year, showing once again here our ability to crystallize value across all our strategies. This has actually translated into EUR 3.3 billion of return of capital distribution to our LPs, reinforcing here the strength of our asset management flywheel. On the right part of the page, our commercial momentum translated into EUR 5.7 billion of net inflows over the last 12 months. H1 '26 fundraising activity at EUR 1.7 billion as here to be compared to H1 '25. As a reminder, H1 '25 benefited from a high comparison basis as it was notably linked to the [ Aegis ] continuation vehicle, and we also had for the first semester of last year, our master fund in credit, Tikehau Direct Lending #6; and secondaries #2. We are ending end of June with a position of EUR 7.2 billion of dry powder, giving us once again here flexibility entering into H2. So overall, despite, I would say, a more demanding market backdrop, last 12 months view shows continued scale, strong realization activity and solid capital formation. We are now going to provide you a few explanation on our main business unit, starting by private credit, Page 11. Here, once again, the platform has remained both resilient and highly selective in the first half. Starting with a few data points on our portfolio quality. First, our discipline has remained unchanged. For the direct lending funds, 100% of our investments are covenant attached and annualized default rate has remained stable at 1.5%. We just announced that our sixth vintage of direct lending strategies at EUR 5.2 billion. And here, average leverage at closing stood at 4.3%, so remaining quite secured. At the same time, we have maintained a high very high degree of selectivity, as you can see on this page, with a 98% rejection rate for H1. Just a few data points on activity. We completed 43 investments in the first half, representing EUR 1.3 billion deployed. Around 50% of deployment came actually from add-on financing in direct lending, which reflects our focus on supporting existing portfolio company here once again in a more selective market. We remain also active but prudent in the CLO market with issuance reflecting a disciplined pace and less clearly supportive environment than last year in '25. As far as the exits are concerned, we completed 24 exits in H1 '26, corresponding to EUR 0.6 billion of realization and realized performance remains here, once again solid with an average MOIC of 1.2 for direct lending and special opportunity. So overall, as far as private credit is concerned, I think that we are reflecting here what we've always been focusing on strong underwriting discipline, resilient portfolio quality and continued actively focused on attractive risk-adjusted opportunities. Providing you now a few data points on our real estate business, Page 12. We have maintained a dynamic transaction activity in a market that has here once again remains relatively limited and muted -- we actually deployed EUR 0.7 billion in H1 '26, supported by attractive opportunities across our platform. To be noted, we completed 2 co-investment transactions, representing an aggregate value of EUR 400 million, allowing us to onboard here new clients, new funds and co-investment opportunity. One of the key transaction in the period was actually the acquisition alongside co-investors of the Spanish portfolio of around 5,000 residential units valued approximately EUR 300 million. We have also remained focused on attractive entry condition and here specifically in our core and core+ strategies, where we have the overall acquisition yield during the H1 has reached 9.6%. On the portfolio quality side, a few data points. Our real estate platform represent more than 9,000 units with an average LTV of around 30% here, again, illustrating our conservative use of leverage. On exits, EUR 0.3 billion during the first semester. This disposal were actually mainly primary granular assets in Spain, in Iberia, in France completed with an average MOIC of 2.2% for our value-add strategies and 1.2 for our core plus strategy. More broadly, as far as real estate is concerned, as a conclusion, market backdrop remains selective, but we continue to see attractive deployment opportunities, and we have a robust pipeline in terms of identified exit opportunity for H2. I will now move to private equity business, Page 13. Here, the first half was characterized by continued value crystallization while deployment has remained deliberately selective. We have deployed EUR 0.3 billion across 3 investments. The approach remains conviction-led focused on dedicated vertical and also focusing on sourcing larger transactions, enabling us to generate co-investment. That being said, the number of transactions have been signed at the end of June, not yet closed, and they will benefit to our second half. A few data points on our portfolio quality side. Average leverage stood at 3.xx and the average EV to EBITDA multiple at entry overall for all our strategy now stands at 11.3x in the current environment. As far as exits are concerned, we completed on private equity 3 exits during the first semester, representing EUR 0.3 billion realized an average MOIC of 1.7x. This exit actually came from our cybersecurity, aerospace, defense and growth equity strategies. Here, once again, we continue to benefit from a healthy pipeline in terms of identified exits opportunity, which give us confidence in our ability to further crystallize value for our LP going forward during the second semester. Overall, I would tend to say that PE remains a clear strategy where discipline on entry and strong thematic positioning continue to support the attractive exit outcomes. Jumping into Page 14 and providing you a few data points on our capital market strategy. '26 fundraising was slower than last year, but overall performance remains solid. Net inflows were clearly affected by outflows during the first quarter, but the picture improved in the second quarter with renewed positive net inflows. Investor demand has remained supported by the resilience of our short duration strategy in a context where clients continue to look definitely for yield with controlled duration risk. The quality of the platform is also reflected in external recognition. And here, we have provided you a few data points on that. Several of our strategies continue to benefit from strong ratings from Morningstar, including notably Tikehau Short Duration, Tikehau Credit Court Theme, Tikehau Listed Real Estate. We also continue to broaden our international distribution footprint with particular focus in the U.K., Switzerland, Italy and Germany, on which our team have been working strongly since the last quarter. So overall, while fundraising was slower in the first half, CMS remains an important contributor to the diversification of the group, visibility and international reach of our platform. Now we've gone through the 4 business units. Maybe one quick focus on Page 15 and the solid fundraising for our flagship strategies. In direct lending, we completed the fundraising of our sixth vintage with EUR 5.2 billion in H1 '26, which is around 60% larger than the predecessor fund. This is once again here, a major milestone for our platform and a strong sign of continued investor confidence in our European mid-market direct lending franchise, new LP coming from new geographies, so benefiting and here demonstrating the track record that we've been building in direct lending now for more than 15 years. In private equity fundraising also continued to progress well. A few data points on our flagship thematics. First one on decarbonization strategy, which has now reached EUR 2.6 billion, progressing towards a target of more than EUR 3 billion with a fundraising period that will end in Q4 2026. On aerospace and defense strategy overall has reached EUR 700 million for Vintage #2 and co-investment vehicle. So progressing towards here a target of EUR 1.4 billion and fundraising will be running until end of the year 2026. Across this strategy, we continue to see strong interest, specifically in the current geopolitical and economical environment that we're going through since the beginning of the year. So taken together, I would say that these dynamics confirm the relevance of our flagship strategies and the continued depth of demand from our client base. That's it for Tikehau Asset Management optional KPI. I will now hand over the mic to Vincent for the financial highlights. Vincent, the floor is yours.

Thank you, Henri. Good evening, everyone. Very happy to be here with you today. So a few data points and metrics around our Tikehau Asset Management platform. So H1 2026 marked a clear step-up in the profitability of Tikehau Asset Management. We delivered across all key operating metrics, reflecting clearly the embedded scalability of our model. First, fee-paying AUM increased by 7% year-over-year, supporting the continued expansion of our recurring revenue base. As regards management fees, they increased by 13% year-on-year, reflecting both asset growth and a resilient revenue margin. But most importantly, as disclosed on the right-hand side, this growth translated into a significant increase in profitability. Core FRE increased by 32% year-on-year with a 42% core FRE margin. As regards Asset Management EBIT, it grew by 22% year-on-year with a 39% EBIT margin. So this is exactly the operating leverage we have been building towards larger platform, disciplined cost management and a stronger conversion of revenues into earnings. So in short, H1 confirms that the Asset Management business is not only growing, it is becoming materially more profitable. On the next slide, a few data points on fee-paying AUM. Fee paying AUM continued to grow, reaching EUR 43.5 billion at end June 2026, which compares to EUR 40.8 billion 1 year earlier. So that represents a 7% year-on-year growth. This progression is significant because fee-paying AUM is the foundation of our recurring management fee generation. And on the other side, in correlation, revenue increased in terms of management fees by 13% year-on-year from EUR 169 million to EUR 190 million. So as a consequence, total asset management revenues reached EUR 198 million, which includes EUR 8 million of performance-related earnings. As regard the quality of these revenues, it remains pretty high, 96% of the H1 AM revenues came from management fees. with an average revenue margin, which remained resilient at 90 bps, reinforcing the stability and predictability of our fee base. The message here is really clear. Our platform is generating larger, more recurring and more resilient management fees, which creates a strong base for long-term earnings growth. On Slide 19, let's now focus on profitability specifically. And as mentioned by Antoine, this is one of the most important messages we have for H1 2026 as core FRE increased by 32% year-on-year from EUR 60 million to EUR 80 million. At the same time, the core FRE margin in percentage points increased and expanded significantly from 36% to 42%, which is a 6-point improvement year-on-year. This shows clearly an operating leverage, which is embedded in our platform as revenue grows, a greater share is converting into earnings. As regards Asset Management EBIT, it also increased significantly, as I mentioned, 22% year-on-year to EUR 78 million. The EBIT margin also increased from 35% to 39%, which is a 4-point improvement year-on-year. So overall, this performance was driven by solid revenue growth, disciplined execution and continued cost management. Moving now to performance-related earnings on Slide 20. Beyond recurring management fees, performance-related earnings represent a meaningful future profit driver for the group. As we disclosed it on the left-hand side, AUM eligible to carried interest increased by 5% year-on-year to EUR 25.2 billion. Our approach remains the same. We are disciplined, shareholder-friendly. We allocate carry in a way that aligns shareholders, teams and clients. We also apply cautious P&L recognition. And in addition, we view this performance-related earnings as a material midterm profitability driver and carry not a short-term accounting exercise. On the right-hand side, we show the embedded unrealized performance-related revenues, which stands at approximately EUR 207 million. Out of this amount, around EUR 160 million is expected to mature by 2029. So this creates tangible visibility on potential future value crystallization in this regard. Our profitability is not only improving today as a platform has also clear embedded earnings potential for the coming years. Slide 21, I move to our investment portfolio. So the investment portfolio remains a key pillar of our business model. We have at the end of June 2026, a portfolio which remains granular with 318 positions and which stood at around EUR 4 billion, which compares to EUR 4.4 billion at end 2025. The decrease is primarily attributable to an active rotation and also value crystallization, which includes EUR 637 million of exits and return of capital. At the same time, we continue to invest selectively with EUR 261 million of new investments, which includes EUR 218 million invested in our asset management strategies. Also, market effects reached minus EUR 61 million, mainly linked to the fair value changes related to some direct legacy and listed investments, and we also have some currency effects amounting to a positive EUR 10 million, which is linked to the appreciation of the U.S. dollars against the euro. The portfolio remains strongly aligned with our asset management platform. 76% is invested in secure capital strategies and the remainder, 24% relates to ecosystem and direct investments. Our investment portfolio is an active growth compounding engine that supports our strategies, and it clearly reinforces the alignment with our clients, and it creates value over time, which brings us on Slide 20 --22 to a snapshot on portfolio revenues. So H1 2026 was a period of value crystallization for the investment portfolio. They stood and they doubled year-on-year, reaching EUR 222 million. This performance was driven primarily by realized revenues and notably because of the disposal of the Schroder stake earlier this year. That transaction, in particular, with Schroder generated a EUR 217 million capital gain with a 64% gross IRR and a 1.65x gross MOIC, which is a clear example of our ability to create and crystallize value from the balance sheet. This period also included positive value changes in private equity strategies and also in our co-investment in a leading U.S. radiology service provider. These positives were partly offset by negative fair value changes, which are linked to certain direct legacy and listed investments, which I just mentioned earlier. And in addition, currency effects were also favorable in H1 2026, contributing to a positive EUR 10 million. If we now turn on the P&L. On the following slide, H1 2026 demonstrates the strength of Tikehau Capital's 2 growth engines, asset management and also of the investment portfolio. The core FRE increased by 32%, reaching EUR 80 million with a core FRE margin of 42%. Asset Management EBIT rose by 22%, reaching EUR 78 million with a margin of 39%. At the same time, investment portfolio revenues doubled to EUR 222 million. This combination drove net results to EUR 165 million, close to the double of the level of the H1 2025. So as a conclusion, profitability has materially increased, supported by a more efficient asset management platform and also a balance sheet now actively crystallizing value. Last but not least, to finalize this financial review, a snapshot on the balance sheet before handing over to Antoine. So our model is supported by strong financial means with EUR 3.2 billion of shareholders' equity and short-term financial resources of EUR 1.6 billion. Our financial debt reached EUR 1.5 billion at the end of June 2026. And we've got an early redemption of our 2026 bonds, which is expected in August '26, and it will further simplify debt profile, giving us greater financial flexibility to pursue our growth. Fitch ratings reaffirmed our investment grade, BBB- rating with a stable outlook earlier this month in addition to S&P Global, who also confirmed it earlier in Q2. Overall, we have the financial resources, flexibility and credit profile needed to support disciplined growth and continued value creation. Thank you for your attention, and I will hand over to Antoine for the concluding remarks and outlook.

Thank you, Vincent. A few slides to conclude. First of all, as you noticed, a key priority for us has been to simplify and streamline the organization to concentrate resources on our core growth platform. We have successfully grouped our real estate activity into one unified platform, and we are very enthusiastic about the growth and the profitability in this real estate market. It's an important step for us in terms of scalability and operating efficiency and asset sourcing. We also announced the disposal of 80% stake in Homunity and Opale, our digital subsidiary, while remaining a noncore shareholder in order to give these businesses greater autonomy after helping them reach profitability and scale. In parallel, we signed a separation agreement with Duke Street, 2013 investment, consistent with our focus on simplifying the group structure and concentrating resources on core activities. The logic behind all this action is clear. We are sharpening the focus of the platform to support the continued growth and more important, the profitability of our asset management. In an entrepreneurial journey, it takes time to build, to scale, and we think that now it's time to harvest and be much more efficient if we can say that. Moving now to the next and last slide. Looking ahead, we enter the next stage of our development with confidence, focus and ambition. On Tikehau Asset Management, we now benefit from a more streamlined organization, a more integrated operating model, which should continue to support profitability and earnings growth. As in prior years, FRE generation is expected to be more weighted towards the second half and private equity fundraising could reinforce this pattern in 2026 with potential catch-up fees. We also have a healthy private equity and real estate exit pipeline, which supports visibility on future value crystallization and monetization for our LP. The balance sheet is stronger than ever with EUR 1.6 billion, as Vincent highlighted, of short-term resources and no debt maturity before 2029. Taken together, this element give us a strong confidence in our ability to accelerate profitability growth while continuing to create long-term value for our shareholders and also for our LP and investor. As you know, we are an investment firm and our core focus is to deliver strong and robust performances across the cycle for investor and LP, and that would translate into more shareholder value creation. Thank you for your attention. We'll be happy now to take your questions.

[Operator Instructions] The first question is from Dawid Pych of RBC.

Dawid Pych, RBC Capital Markets. The first one on the net new [indiscernible]. While you have cited a high comparison base, I guess, stripping the positive one-offs out, the underlying run rate also appears to be slowing. I guess how much of that reflects softer LP appetite versus simply just digestion period following some of the 2025 closings? And with the decarbonization [ RFPs ] and defense flagship still in fundraising mode, how confident are you in the last 12 month run rate being the reasonable anchor going forward? And then second question on capital deployment and some of the strategic priorities. With the available resources that you've got and no debt maturities until 2029 and healthy leverage ratio as well, I guess, how are you thinking about further balance sheet reductions and also returning more capital to shareholders potentially through some buyback programs?

So maybe on the first part of your question on the run rate on fundraising. Well, as just explained, I mean, 2025, we had a finalization of secondaries # 2 in private credit and then direct planning #6, which affected mostly H2 '25 and the beginning of 2026. Then as we said, on our CLO business, we have clearly and voluntarily reduced the pace of launching new you say CLO vehicles. So this is roughly the main effect that we've gone through over the first semester. Now as you said, obviously, on private equity, we have our 2 flagship on the road. They are currently investing, divesting. We will be fundraising. So Vintage #2 for decarbonization and energy transition and Vintage #2 for aerospace and defense. We think that more than ever, these 2 thematics are clearly in the center of what's going on as we speak. We've been talking about the geopolitical tension, economical tension. And these 2 thematics are clearly at the center of what's going on all over the world. And to illustrate that and as well to illustrate our confidence in the coming fundraising, we've just announced on our Aerospace and Defense Vintage #1, our fifth exit, which means that with an average duration of roughly 4 years, we have a DPI, which is close to 1. So we've been able to create value to bring back capital to our LP. And as a consequence of that, our new vintage on aerospace and defense is currently in fundraising mode, deployment mode as well. As far as your question on deployment is concerned as well, we've been announcing significant investments, notably on our aerospace and defense recently. These deployments are currently signed, but not yet closed. This is why we actually see for H2 as well a strong deployment pace in the context of a strong fundraising for RFP. You had a second question on our capacity to enhance shareholder return. I think that what is key here is that, as we said back in February during our Capital Market Day in London, we are clearly now entering this harvesting mode, accelerating our portfolio rotation, notably accelerating on this several pillars, key driver of value creation. On one side, our asset management business, increasing FRE capacity to generate more carried interest. And then the second leg with the portfolio, accelerating the rotation of our portfolio. And obviously, effectively, this potential acceleration and value creation from our portfolio will drive dividend-wise for the coming years. As far I think you had also a question on the share buyback. Our share buyback is still active with a size of EUR 190 billion. We still have a capacity of close to EUR 50 billion still open. So still very active in the market.

The next question is from Nicholas Herman, Citi.

A couple, please. Firstly, I've not seen any mention of the targets you set at the start of this year for 2026 in the FRE, net profit and AUM target. So where are we on those, please? Secondly, could you just talk about what you're seeing in terms of retail appetite for real estate? Certainly, it seems like on the institutional side, that demand has notably picked up. Are you starting to see that turn on the retail side? And then finally, on Duke Street, what proportion of your management fees is that with about 15% be a reasonable proxy and also a proportion of FRE?

So maybe I will start with question #3 about Duke Street. We were not consolidating Duke Street neither in our AUM, neither in our FRE, neither in our management fees. It was consolidated by specific means within the line of our profit and loss. So it will not below our FRE, below result of the portfolio. So the fact that we are exiting Duke Street will not affect our AUM. We were not -- we had a minority stake in Duke Street. So this will not affect our AM, and this will not neither affect our FRE or performance related earnings. Coming back to your question #1 on our target. Well, clearly, here, we see that we see the path to this milestone as being driven by the trend that we have already seen visible in H1. As we said in our press release, FRE generation is typically more weighted towards the second half, and that could be reinforced this year by our private equity fund. So the main building blocks for FRE are really continued growth fee growth on our larger base, combined with a more integrated and streamlined platform, notably from our real estate business. On the net results, to come back to your question on targets, beyond FRE, key driver here is once again value crystallization from our investment portfolio. Here, once again, I think that in H1, we already saw active portfolio rotation, strong realized revenue, significant contribution from exits. Looking ahead, we clearly have a healthy private equity and real estate pipeline, which here once again gives us further visibility on value creation. So I think that combined with enhanced financial flexibility and stronger balance sheet, these elements support confidence on our ability here once again to progress towards continued earnings growth. And I will turn maybe also to come back. But since February, clearly, a global backdrop has become more uncertain, weaker macro, fiscal, geopolitical volatility, slower fundraising environment. Some discussion may clearly take longer. But from a long-term business like ours, this may create timing effects, but it does not change our trajectory. And clearly, what remains crucial is once again our ability to keep accelerating profitability generation as reflected in the 2029 guidance we gave. We are not -- once again, important to hear, but we are not pursuing growth for growth's sake. We remain highly selective across deployment, realization, AUM growth with a clear focus on profitable AUM. You had a question on retail and real estate. Antoine, you may want to come back on this question. But clearly, here, real estate, retail market has been suffering now for quite a few years. We still see this market as quite muted us as far as investment now it's been 18 months to 2 years that we came back on deployment on real estate. We see more and more good investment opportunity, and we provide the opportunity to our LP to come back in the real estate market through this transaction. We mentioned residential opportunity in Spain. We have similar one in France recently. And through co-investment vehicle, we've been able to attract new co-investors. But as far as retail is concerned on real estate, we still see the market quite muted.

And maybe if I add one thing on that. As you know, we have 34% of our AUM is coming from what we call retail, but it's really several components into that. We have, on one hand, high net worth and ultra-high net worth individual, which has been clearly the DNA of Tikehau back 20 years ago. And we add, thanks to Sofidy, more retail channel through IFAs, unit-linked product in France. And we have really these 2 components. What we can say is that in the U.S. the market probably retrenched a little bit and you see all the noise with private credit and all that. But thanks to our 2 components, we are still very active on one of them, which is ultra-high net worth and high net worth individual. And by the way, it's for real estate, but not only for real estate. And then it's probably much more calm when it comes to pure retail. But despite that, we continue to fundraise in our real estate, probably less spectacular than in the year 2020. But the 2 engine within the retail are still working.

The next question is from Philippe [indiscernible].

Maria, we have some questions that came through the webcast. So if I'm regrouping some of them, maybe on the investment portfolio side of things. How should investors think about the revenues for our investment portfolio? And also how to think about the future value crystallization from the remaining EUR 4 billion of investment portfolio going forward?

Okay. I will take this one. So first, just to reiterate what we said at the strategic update. Portfolio rotation is a clear part of how we want to manage the balance sheet going forward, and that's what we did with the exit of Schroders in H1. So the overall idea is to be more active to increase the portfolio velocity and to crystallize value. So overall, we are taking a very pragmatic approach, including, of course, in H2 with one key objective in mind, which is to improve profitability generation. So that said, we have a granular more than 300 investment lines, which is well diversified across asset classes, which helps mitigate the impact of isolated valuation movements. I think it's worth mentioning that we see some positive contributions from our aerospace and defense strategy as well as decarbonization, where portfolio companies have delivered very strong profitability growth over the past quarters, and we hope it will continue to do so in the next quarters. So on H2, to answer specifically the question, I would be a little bit cautious about guiding specifically on marks because it depends upon market conditions and company level developments. But more broadly, and as we said in the press release, we do have a healthy private equity and real estate exit pipeline, which supports visibility on future value crystallization.