Navigator Global Investments Limited

Thank you for standing by and welcome to the Navigator Global Investments Limited FY26 Annual Results. All participants are in listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number 1 on your telephone keypad. I would now like to hand the conference over to Mr. Stephen Dark, CEO. Please go ahead.

Thank you, Ryan, and welcome to everyone joining the call this morning to discuss Navigator's full-year results for the 26th financial year. I'm Stephen Dark, Navigator's CEO. I'm joined today, as usual, by my colleagues, Rob Zachary, Navigator's CIO and Head of NGI Strategic Investments, dialing in from New York, and Amber Stoney, NGI Group's CFO. Turning to slide four, the company snapshot Navigator is the only ASX listed company focused exclusively on partnering with leading alternative investment managers. As of 30 June, Navigator provided growth capital and strategic engagement to a diverse portfolio of 12 partner firms. This was prior to the settlement of the acquisition of the NGI stable growth portfolio that closed on 2 July. At the partner firm level, Navigator's affiliates managed over $104 billion, up 24% over the past This AUM is managed across 42 investment strategies, invested via 242 products, with 19 new products launched during the period across our portfolio. These strategies typically have low correlation to global equity in 60 income markets and to one another. Turning to slide 5, financial year 26 was another year of building scale across the Navigator platform. We continued to grow ownership-adjusted AUMs, maintain diversified earning streams, and further strengthened our balance sheet. The FY26 results do not include any impact from the acquisition of the portfolio of 17 net revenue shares in asset managers from Staples. I'll now take you through the key operating drivers of the result, beginning with the assets under management. Turning to a summary of the financial results on slide 6. Navigator saw strong AUM growth but earnings lower than FY25 in line with expectations. Ownership adjusted AUM increased 21% during the period to $33.6 billion, driven by both net inflows and strong risk-adjusted investment performance across both business segments. Higher management fees with steady fee rates and higher performance fees from Lighthouse, offset by lower distribution from NGO expertise, generated $206.5 million revenues, up 1%. The Group's adjusted EBITDA was $101.9 million, a 10% decrease from last year's record result. This is at the midpoint of our May guidance, consistent with the market messaging over the last 15 months and following two exceptional years of NGI strategic distribution. On slide 7 you can see Navigator's ownership-adjusted AUM growth over the last 12 months and since 2022. The consistent AUM growth over the past five years continues but with accelerated momentum. Over the past 12 months we saw a 21% increase with an additional $5.9 billion added across the portfolio during the period. Post-reporting period, an additional $2 billion of AUM was acquired when the stable transaction It was pleasing to see the alien growth across both business segments being driven by net inflows and investment returns, with aggregate net inflows of $3.4 billion plus continued strong investment performance contributing $2.8 billion. Given calendar year 2026 investment performance, recent and prospective new product launches across the NGO portfolio, more positive sentiment from capital allocators and a generally improving fundraising environment across the liquid alternatives industry, we expect to see continued netting flows across our partner firms in FY27. Importantly, NGI continues to see minimal fee pressure in base management fee rates nor performance fee rates across our partner firms. On slide 8, alternative asset managers who aim to generate positive, absolute returns for their investors across all market cycles have a strong alignment of interest in the economic performance of their strategies and the returns they generate. For Navigator's portfolio of managers, this is typically reflected in higher and more sustainable fee yields. In calendar year 25, both underlying management fees and performance fees were higher than CY24 and consistent with historical ranges, although the performance fee yield was lower than prior year. Further, the ultimate distributions received by Navigator from these revenues were lower this year, given how partner firms operated different margins and due to a one-off item. Moving forward and based on sustained investment performance, steady fee rates and given the long-term track record of our partner firms, we think it's reasonable to expect performance fee revenues within this range but on elevated AUM, providing a resilient source of recurring income for Navigator. We expect the future underlying revenue competition for Navigator to be positively impacted by the inclusion of the NGI stable growth portfolio. Standing at slide 9, you can see the earnings power of the diversified Navigator portfolio over the longer term. Navigator's FY26 earnings of $101.9 million is at the midpoint of the guidance range we provided in May, and reflecting contrasting outcomes across our two divisions during the year. Lighthouse generated a record $45.2 million in EVSR, up 15% from prior corresponding period, driven by higher management and performance fees across the platform with consistent operating margins, whilst earnings from NGI Strategic was 24% lower following two exceptionally strong years. Despite most partner firms generating strong risk-adjusted results in calendar year 25, it was mixed with subdued results from our credit and commodities managers, meaning that across the NGI Strategic segment, the portfolio had a comparatively lower investment performance relative to the prior year. Along with the impact of one-off items, this led to reduced contributions received from certain managers, which resulted in lower profit distributions, compared with a strong FY25 and a strong FY24, as you can see on the longer-term graph on the left. Pleasingly, Navigator's private markets partner firm profit distributions were up 44% year-on-year to $20.8 million. The indigar excludes the gain of $2.8 million received from the Barton Hill sale during the year. Further, the results do not include any impact from the acquisition of the portfolio of 17 net revenue shares in asset managers from the stable transaction. This portfolio is expected to bring meaningful scale, diversification and growth this year. This result is in line with our expectations as communicated from May. Over the past five years, Navigator has grown from owning only Lighthouse partners to now a portfolio of 29 asset managers. During that period earnings CAGR has been 22% and manager concentration risk continues to be mitigated with deliberate, carefully diligence and selected partner firm investments. We are very pleased with the recent and long-term investment performance, management, AUM growth and earnings generation by our partner firms which continue to be some of the leading alternative asset managers globally in their respective areas of specialty. Now I'll hand over to Ross to present the NGI Business Update.

Thank you, Stephen, and thank you very much to everyone on the line for joining us today. Let's turn to slide 11, where I'm proud to highlight the truly differentiated breadth and diversification of the NGI business. At our core, Navigator partners with scaled, established, but growing alternative asset management firms who are leaders across a diverse range of specialized alternative investment strategies. Today, we have 12 partner firms as well as 17 in the NGI stable growth portfolio that deploy over $120 billion in time-tested strategies across global markets, designed and refined over long and prudent track records to generate strong risk-adjusted returns. It has never been clearer that scale, proven investment edge, and deep resources are table stakes that determine success in our industry. Lighthouse and our partner firms all benefit from these attributes. In addition, NGI and our partner firms have a clear competitive advantage through our partnership with Blue Owl GP Strategic Capital. who provides access to NGI to their value creation group, the global industry leader in providing strategic support and advice across such verticals as capital strategies, operational and technology best practices, as well as human capital advisory. Let's continue on to slide 12, which illustrates this diversification by partner firm and investment strategy. The charts on slide 12 are remarkable. NGI provides our shareholders with access to earnings and enterprise value growth across a broad and diversified range of alternative investment businesses. These institutional quality leading partner firms span quantitative strategies, global macro, commodities, structured credit, private healthcare and artificial intelligence growth, specialized real estate, and differentiated private credit. creating both a high-quality and long-term growth profile and a very resilient nature of earnings and cash flow. Not only is our company highly diversified by asset class, but it also spans the globe across broad and unique client segments and generates revenue through a wide variety of fee terms and structures. The AUM of Process Platform is long-term oriented, and our earnings aren't riding on any one market cycle. In fact, we should benefit in times of market volatility or following broad market downturns. Please flip to slide 13 and we'll provide a few select highlights of activity throughout this period. You'll see on slide 13 that our partner firms continue to be at the forefront of their respective strategies and continuously prove out why they are leaders in the alternative asset management industry globally. During the period, we have seen our partners at 1315 Capital successfully realize assets, producing strong results for their clients, while also deploying capital into innovative, growing healthcare companies in a challenging but exciting market. In addition, Marvel Capital continues to illustrate their leadership position in their asset class. They have been continuously expanding their capabilities by adding high-quality talent and strategic client relationships to expand their reach and grow their platform over time. And just four months ago, we were to announce our partnership with Georgian, a leader in the AI investment space, which continues to grow in terms of its investment opportunity set and substantial client demand. We'll cover that transaction in more detail shortly. CFM, one of the partner firms acquired in the NGI strategic portfolio in 2021, has demonstrated their clear leadership position with extraordinary growth in the hedge fund industry. With $30 billion of firm-level AUM today, their investment results have remained exceptionally strong, which you can see here continue to result in winning several industry awards this past year. We see this recognition as a strong indication of further growth. If we turn to slide 14, we can review the components of the strong AUM growth NGI delivered shareholders this year. On slide 14, you'll see that even after accounting for the sale of Barton Hill, both NGI Strategic and Lighthouse segments generated strong organic growth within the period. We're pleased to report 21% overall AUM growth in adjusted AUM. Over 12% organic growth has occurred in a year, which has been one of the most challenging capital-raising environments in the history of the alternative asset management sector. This is a true testament to the quality and the differentiated nature of our partner firms and Lighthouse's products, capabilities, and operating infrastructure. Lighthouse continues to demonstrate their long-term proven track record of innovation by creating and offering new hedge fund products which leveraged the breadth and sophistication of their platform, meeting both existing and new institutional client demand. It is important to remember that the underlying returns of Lighthouse, our partner firms, and the public markets show little correlation to one another. And therefore, not only are we excited about the continued organic growth profile of the business, but we also continue to see the potential for the strong contribution of investment returns to our revenue and earnings growth at Navigator. Please turn to slide 15, and we can turn our attention to the acquisition activity during the year, which further enhances this growth in the years to come. Slide 15 provides an overview of our partnership with Georgian. On March 30th, we announced the purchase of a 4.5% ownership interest and preferred economic interest in a $6 billion AUM leading artificial intelligence focused private equity investor for $100 million of consideration to be paid over three years. Georgian was established in 2008 and since inception has always been focused on the application of artificial intelligence in specific business-to-business software subsectors such as cybersecurity and application infrastructure. Through their own in-house AI lab and long-term track record of supporting some of the world's most successful founders, they have a true edge in a very competitive but important sector. This partnership represented an exciting opportunity to add additional exposure to a growth-oriented private markets business with a growing investment opportunity set and strong investor demand. Through the transaction structure, we have structured a strong alignment of interests to provide $100 million of capital, all of which will be used to fund Georgian's future growth initiatives. If we go to the next slide, slide 16, we can cover the addition of the NGI Stable growth portfolio. On slide 16, we have summarized the recent transaction with Stable that is financially and strategically compelling. further enhancing NGI's unique value proposition to our shareholders. On July 2nd, we closed the $190 million acquisition of a diversified portfolio of net revenue share interests in alternative asset management firms that specialize in both liquid and illiquid private market strategies. Through this transaction, we have added $2 billion of ownership-adjusted AUM to start fiscal 27 that is highly cash flow generative and further diversifying. In addition, our long-term strategic partnership with Stable strengthens NGI's business. This strategic acquisition was funded by a mix of cash and script funded through an entitlement offer, also increasing our share liquidity and increasing our market cap. The NGI Stable Growth Portfolio's cash flow profile immediately improves our broader diversification and our quality of earnings. One of the things we're most excited about today is that following this meaningful acquisition activity in the second half of fiscal 26, NDI remains well positioned to capitalize on additional opportunities in our pipeline. Please turn to slide 17 and we can provide a quick refresher on our approach to adding new partner firms. Today, we are completely focused on using the scale and resources of the current business to execute on future growth opportunities. We continue to look for compelling opportunities where we can provide growth capital and other partnership solutions to help scaled but growing firms capitalize on a clear and well-considered strategic growth plan. In the alternative asset management sector, we believe minority ownership interests remain the most proven mechanism to align interests and partner in a successful and lasting manner for all stakeholders. The criteria you see here on slide 17 is informed by our deep experience in partnering with, investing in, and operating alternative investment management firms for over 20 years. When evaluating new opportunities, our primary goal is to continue to increase the durability and growth profile of NGI's earnings, which in turn strengthens our competitive position to make further acquisitions over time. Thank you. Fiscal 2020, excuse me, thank you. Fiscal 27 could not be more exciting to be here at NGI. Amber, over to you for the financial results.