Tikehau Capital

Ladies and gentlemen, and welcome to the presentation of the half-year results of Tikahau Capital in the presence of Antoine Flammarion, the co-founder of the group, and Henri Marcot, Deputy CEO. You have the floor. Thank you very much. Good morning, everyone, and welcome to this presentation of the H1 2020 uh results of cko capital let's start with the key figures of this half here as we told you at the end of july we have 25.7 billion uh in assets under management up 9.8 percent over the last 12 months stable compared to the end of 2019 in spite of an unprecedented context in times in terms of uncertainty we raised 1.1 billion for our asset management business over the six first months of the year carried by the dynamic business of real assets and private equity. Cheaping assets under management are worth 20.3 billion euros, up 17% over the last 12 months and up 2% over the half year, mostly with fundraising on private equity in real estate and deployments in private debt and real assets. The income from AUM is up at 88.3 million euros, up 16% over the one year. The management fees, the average is still up at 94 basis points compared to 84 basis points at 8th and June 2019. Operating income for our asset management business, NOPAM, is up almost 40% at $28.6 million, thanks to growth in our income combined with the strict control of operating costs with a margin of 32.4% compared to a 27% one year earlier. As to our direct investment business, this was impacted by the volatile market in the other half year. Operating income is a loss of 293.2%. 290.3 million because of adjustments in the fair value of some of our assets, especially those that are listed, and costs related to those financial instruments that we introduced in the hub here to manage our risk. The net income stands at minus 240.9 million euros, including financial income and taxes. The group has a differentiating asset, especially in the present context, which is a sound asset balance sheet. At the end of June 2020 we had €2.8 billion in equity and €900 million in cash and €500 million in Androm credit lines and we have also cash in asset management. In a few years, a few days ago our efforts were recognized by the ratings as one of the one of the best asset management companies in a non-financial rating. And we started the second half of the year dynamically adding 1.6 billion euros in assets under management in July alone with certain key successes which we will address later on, and in particular, in a context of COVID, where of course, business has deteriorated across the board. With that success and other initiatives that we will be starting in H2, our objective is to reach at least 27.5 billion euros in assets under management at the end of the year. keeping our CMS business equal. We move on to slide seven. You can see here the development of our main numbers over the last 12 months. Assets and management are up 9.8% to $25.7 billion, mostly with our AUM, our asset management business. As we told you, the scope of asset management was below $9 billion when we started off, $8.6 billion. Fee-paying assets under management are up significantly at plus 16.7%, and that is what will make a big difference in increasing our income in the years to come. You have to keep in mind that These fee-paying assets are mostly in closed-ended funds on long durations, which means that we have excellent visibility on future cash generation. We will get into the details of that, but for H1, we have a €150 million mandate from Evergreen, and that extends the duration of our funds and therefore of our income, of our revenue. The key item I would like to emphasize at the bottom left corner on the slide is the growth in operating income in our asset management business up 39.5% over the past 12 months, which confirms that our development strategy is profitable for the group. And finally, the net income attributable to the group stands at minus 240 million euros. It reflects the complex market, the complex and voluntary context that we had in H1, which has, of course, a negative impact on our direct investment business as well, at the cost of financial instruments used as part of our risk management instruments. We move on to slide 8, and on that slide you can see how far we've come since the IPO. Six indicated that we monitor and we always look at them carefully. Three years after the IPO, how capital improved its profile on all its key figures. You can see that we have 25.7 billion euros in assets under management, 2.6 times more than at the time of the IPO. And you may remember that in our guidance during the IPO, we were hoping for 20 billion only. in 2020 international development has worked well for us because we multiplied by 3.7 the share of international investors that stand now 7.8 billion euros and initially at the we only had 2 billion euros when we had the IPO on management fee rate is up 23 basis points since the end 2016, at 94 basis points. And this is important because in asset management, people believe that as a rule, management fees are low. In traditional asset management, this is true, but in alternative asset management, this is not the case. And what we've seen over the past three years, we have significantly increased that rate. Our NOPAM is up 39.5% over the past 12 months at 28.6 million euros. You may remember that when we started off in 2016, it was only 3.5 million. We have improved our infrastructure and we have kept costs under control around the world, although we have expanded our We have 570 people working in 11 offices around the world. Initially, we only had five offices at the time of the IPO. So to sum up, we've made headway since the IPO. We are more dynamic. Our strategy is bearing fruit. We are delivering on our commitments, and we're doing everything to continue this momentum thanks to our very motivated teams. but also we have partners around the world.

Let's move on to slide number nine.

As we like to say, we operate in what is known as a people business. Our main asset is our human capital. We keep beefing up our teams with people that are experts in each asset class in each territory, and we pay great importance to diversification in terms of human capital. We have as many as 27 nationalities with an average experience of 14 years. And what is unique in this industry, we keep lining up the interests of the various stakeholders with a capital with 44% held by TKO's management. This key component will guarantee selectivity and discipline in asset management. And this trust has been proven by our clients and investors ever since we started off. We also have strong governance, and recently we were rewarded, as I just mentioned, by the extra financial rating agency, Vigeo. And we are one of the best companies in Europe in terms of governance in this industry. We have a supervisory board with 50% of the members independent, and we completed our platform with an international advisory board created in 2019, which brings together complementary and diversified profiles, which enables us to have an international network of experts. The regular exchanges that we have with IAB, the International Advisory Board during the lockdown, has enabled us to monitor in real time the developments of the COVID crisis and propose customized solutions to our customers and have adapted solutions for our own workers, our own people. We had two people from Singapore, two people from Japan. We had one Filipino and the secretary of the group, Alaya. And as we know that the COVID crisis started off in Asia, very early on we had a Good vision of what was going on and we have to remain humble in this in this crisis, of course But we had a good idea of what was going on and that enabled us to remain very effective keep our eyes on the ball and And that's why we were able to have a very good fundraising business in the first half year. We've raised significant funds at the time where run across the board and business was very, very slow indeed. Let's move on to slide number 10. In terms of ESG, Tickahoe was a pioneer ever since its inception. We didn't emphasize this as much as other players in the field, but we were pioneers as asset managers and as investors. Our performance horizon is the long term. And when we commit to generate sustainable performance, we cannot dissociate financial criteria from extra financial criteria. And that is why the ESG issues are at the heart of our process and our fundamental analysis and 100% of our investment opportunities. Of course, we have an ESG teams, but in each of our four businesses, business areas, each investor has to apply an ESG criteria. So whenever an investment application arrives, we look at these ESG criteria. So as to be straight on the line, we have developed strategies with a positive impact on climate change. We are keeping on that track, and we have innovated. In fact, the energy transition business, we have a good example with Alex Breem in Singapore, where we were looking at the healthcare business, but this ESG approach was rewarded at mid-September by one of the main extra financial rating agencies, which gave us a rate of 66 out of 100. Those familiar with that rating system know that this is an outstanding score, which shows our commitment to ESG. And also for the second year running, we got an A-plus rating for PRI, for the UN PRI for our strategy and governance module. And in 2020, we were also ranked number two out of 246 asset management and asset depositories by the extra financial agencies system analytics so very proud of our ESG approach and we will continue to pursue efforts to generate sustainable and profitable growth and of course ESG is not something that we have to cope with CSG is at the very heart of our of our drive, and we are actually being proactive. We generate positive investments. It's not just a matter of having a sort of plain ESG performance. We want to have a positive performance. Slide number 11, to conclude on this first part, I would like to emphasize the four indicators that are our main commitments. 35 billion this is a total AUM by 2022 profitability of operating profit should be above 100 million euros and that is what will make a determination of our market value looking at the multiples of other alternative asset management companies when we introduced the company when we had the IPO we were sending at 3.5 million euros in asset management and in profits, and so we are researching this objective of above 100 million by 2022. We are investing in our own funds. This is what is known as having skin in the game. Not only that, it generates more finer granularity because we have anywhere between 65% and 75% of our own funds invested by our own balance sheet, our own funds. And we are looking at a return capital of about 10 to 15 percent. Again, looking at the funds, our own funds invested by the group. Moving on to the following slide, slide number 13. In operating terms, we have been proactive in all our business areas, in private debt, in the absence of any flagship fundraising on H1. We focus mostly on our institutional customers and retail customers. We raised upwards of 40 million euros as part of the second closing through the initiative, started with a private bank in Italy called Figuram. For those of you who remember, we had a partnership with Figuram, which is a sort of fund of funds, a TTO fund of funds, that is marketed in VDRM private business. It's an Italian bank, and we had already raised 400 million euros at the end of 2019. So the idea is to have retail investors. That trend is being confirmed, and you will see that that also applies to private equity later on. Regarding real assets, at the beginning of 2020, we finalized The raising about this creationary fund for our value-added strategy, that's the first such fund, $560 million, is pretty good for the first such fund. Sotify, which is our management for investment and savings products, had a good performance. We also beefed up our stake in iRate, which is a listed company in Singapore focusing on the European property business, mostly in Germany with corporate and state clients. We increased our stake from 16.6% to 29.2%. We took advantage of the breakdown in the market in March to strengthen our stake. That was a good business because we got about $49 Singapore dollar per share. Now it's back up to $70 per share. After the acquisition of Star America Infrastructure Partners that was finalized in July, we decided to rename our asset class from real estate to real assets. Well, you have to recognize, because we include infrastructure and property, this is a tricky business. The cost of infrastructure is high, so you have to be cautious, but each territory has its own momentum, and the American infrastructure market, for those of you familiar with it, especially small infrastructure, that business, that market is not doing very well, and so all the stimulus plans are there to help, and so we believe that we're in a good position to take advantage of the American aspect of infrastructure. The upskilling of the private equity business has continued over the six first months of the year with sustained fundraising, especially with successful second generation funds for special situations of PE fund for the energy transition continued It's fundraising and is now eligible for the TB label, and that should enable us to raise even more funds, to collect even more funds. And as I mentioned earlier on, we started in the spring a long-term investment fund on the LTF format with the Banca March in Spain. It's a private bank that enabled us to collect as much as €60 million in only in our energy transition funds. So two-thirds in one still, A, we raise funds, but also we speed up the private equity business. And then our CMS capital market strategy, that was particularly resilient in H1. I'll give you one example. As you know, we had five funds. The biggest fund was called TKO1K. had make the positive collection of 200 million euros, whereas it's mostly shares in it. And whereas the performance, yes, it was minus 0.7. That is negative, but compared to the other equity business, it's pretty good. Let's move on to slide 14. Group-wise, our assets under management stand at 25.7 billion euros, up 10% since end June 2019. The asset management business itself has assets up more than 30% over the past 12 months at 24 billion euros, which is a unique in this business. It should be pointed out that we raised $1.1 billion over the six first months of the year for the asset management business, and we have continued on that trend. I should like to thank the TKO teams that were extremely motivated and very active, enabled us to achieve that extremely satisfactory performance. Let's move on to slide 15 on the granularity of fundraising. If you look at the two pie charts at the bottom of the slide, at the time of the IPO, we stood at 8.6 billion on three business areas in asset management. Now we have 24 billion euros and we multiply by 2.5 in fundraising and asset management. We have four business areas and It should be pointed out that in H1, we collected mostly in real assets and private equity, so we strengthened the diversification. We have a finer granularity, but that also meant that we were able to improve our income in terms of basis points. In terms of profitability, real assets and private equity enjoy good management fees. It should be also, for growth to continue, it has to be profitable. And as we improve the business mix in asset classes, this means that we can improve short-term profitability, but also long-term profitability.