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.

Let's move on to slide 16.

What is true for asset classes is also true in terms of customers and their psychologies. and territories at the end of June 2020, 32% of assets under management for that business are international investors, twice as many at the end of 2015. When you develop a company in various countries, well, you have to re-explain your brand, your know-how, your DNA every time. And we have to say that we're pretty pleased with our international development We have a number of achievements in Asia, in Europe now, but also the North American market is very promising indeed. After all, it is the largest such market, the U.S. and Canada, and a few successes also in Canada and in the U.S. already. Let's move on to slide number 17. For an alternative asset manager such as TKO, what is essential is to be able to, of course, to raise funds, but it is just as important to invest this capital properly, these funds properly, and deploy funds in a disciplined fashion. At the end of June 2020, we deployed upwards of 800 million euros within our closed-ended funds, which is significantly down compared with H1 2019. We've mentioned this several times, but we are very vigilant on these upside-down elements. You look at the number of deals on the table, those that we signed a letter of confidentiality in the one that we actually closed. We are very selective indeed, and this is why we have such robust performances across our funds, and we keep raising significant funds. And that trend, if anything, has accelerated in H1 because, of course, in the context of COVID, we had to be extremely cautious indeed, and we slowed down investment. All in all, we financed as many as 108 companies and or assets, so private equity, private debt, and real assets. So you have 108 companies. We have a very fine granularity on slide 18 there you have these upside down pyramids so you start you can see that screened as many as 177 deals in private debt and ended up with nine firm offers and in the end we closed only eight deals so what you can see on this slide is that not only did we reduce the size of investments a number of but also were very selective if you look at real estate now or real assets. We closed a large number of small operations with SOPD, and there were no real estate investments in H1, and the amount invested in real assets stands at about 115 million euros, which is rather modest. in view of how much dry powder we have in real estate, but there were effects of COVID in real estate. We had to be careful. It's too early days to know exactly what the effects will be and we'll be able to adjust this during the Q&A. Let's move on to slide number 19.

and look at private debt.

Age one was rather untypical in many respects. The European companies and economies were badly hit by the lockdown brought about by governments. During that period, we played our role as a committed and active investor to support these companies and advise them In private debt, in particular, we have a close dialogue with the companies in our portfolio. We supported them on several levels, and in particular, in some cases, we helped them obtain state-guaranteed loans. Well, there may not be that many of them, but if you look at our portfolio, this is significant. But we had no default since the beginning of the year 2020. Now, there were cases where we had talks, and... try to adjust some reimbursement timetables, but no defaults, and the idea was to help companies keep their cash position. At the end of the day, if you look at the TDL4, which is a flagship private debt portfolio, the average leverage of companies remain modest, about four times net debt on EBITDA, well below the European average.

Let's move on to slide number 20.

A few words about our private equity approach, which is a differentiating approach in many respects. Number one, our core business consists in providing growth capital or growth equity to help grain companies achieve additional equity to finance their oil expanding. We don't conduct a majority LBOs. We stand by companies, entrepreneurs, and founders as partners over and beyond financial aspects. So we are indeed active investors, and what we hope is that our companies and our portfolios can take advantage of the wealth and depth of TKO Capital's platform. Our companies can take advantage of our 11 offices around the world our international advisory boards for their international development. And so this is what all our companies can have as part of our service. Our private equity approach is based on strong themes and beliefs. For instance, the belief that economic stimulus must involve new equity, new funds for companies. And so the idea is, so you have these state-guaranteed loans, and it's all very well, but companies need equity in their own funds. And that's the whole business of particular equity business. And companies should be the first actors in the energy transition. For a number of years, we've introduced a number of initiatives with our general purpose growth capital with energy transitions and other goals. This is nothing new for us, but at TKO we keep innovating and we are doers.

This is not just theoretical.

This is an illustration on slide 21, a few examples of the way in which we support the companies on portfolio. We have what are known as the five pillars of TKO. value creation for Green Yellow, which is a very dynamic company. It offers innovative solutions to achieve energy savings. We worked with Bouygues Immobilier because Green Yellow initially installed solar panels in supermarkets. Now, thanks to that, they had a contract with a number of real estate portfolios, especially in Spain and Italy. Nextteam and another private equity partner, which specializes in complex mechanics, we improved their operational performance and we supported them in accelerating the digitalization of its processes. Since TKO is investing funds to develop companies, what we try and do is to play our role as active shareholders standing by these partners to help them grow and this is not just a financial investment and this is very important because we try to imprint our own entrepreneurial DNA to these companies and it's a win-win deal as far as that is concerned. Let me just say one word about the following slide and I think For the first time, some of you will be discovering this for the first time, we have two slides and we move on to slide 22 on initiative entitled TKS, TKO SPRM. As we mentioned this, we want to create, not compete. TKO is very much involved in alternative asset management and is an innovator in terms of company development. Let's look at that partnership that we have with SPRIM. SPRIM is an international expert in medical and healthcare advice. It has as many as 450 customers serving pharma, medtech. We have 600 colleagues and experts there. So this is a partnership with a company in the healthcare business. In March 2018, we announced its initial closing called TKS1, which was looking at venture capital in medtech and life science companies. The first vintage was very successful, and now we are in the process of marketing the second generation of the SalesSame Fund, The first fund had 56 million euros in it, and that reflects TKO's strategy. We start things in nursery because 56 million is not a lot. But as you can see in the following slide, on slide 23, we invested in a number of companies, BioHealth, Fibronostics, Antares. These are highly innovative companies, and I'll give you an example on the Opio Health. Opio Health is a digital healthcare company, digital apps to monitor a number of diseases. And in COVID, Opio Health was one of the first companies allowed by the American FDA to monitor patients with COVID or post-COVID patients. And in parallel, Acquia, which has 30 billion in market capitalization has a stake in our pure health and has offices around the world. Now, because of the COVID crisis, a number of investors are saying, oh, we have to invest in health, in healthcare. What should we do? Where should we go? Well, we started an initiative in healthcare as early as 2018. We raised initial funds. We raised a second fund. and we have dedicated teams and now we are stepping up this healthcare business and likewise with the energy transition. Everybody wants to engage in energy transition and we started more than two years ago our partnership with Totalian Energy Transition. TKO will continue innovating and we will be now producing new profitability for the group and growth opportunity. I would like to give the floor to Henri Marcoux who will tell you about the financial performance.

Thank you Antoine. Good morning everyone. I'm on page 25. Let's look at the key figures for the first half of 2020. On the top of the slide in dark blue you've got what's related to the asset management scope, the first driver of our model. you can see that business generated 88.3 million euros in revenues for the first half or an increase, a high, big increase, slightly more than 16% compared to the same half year last year. Thanks to a cost reduction policy, we were able to limit the increase in our operating costs to 7.7%, so they now stand at 59.7 million euros for the first half. Consequently, Operating income from asset management is posted at 28.6 million euros, a growth of a bit less than 40% or an operating margin of 32.4%, which was at a level of 27% for H119. This growth proves how relevant our model is and how able we are to generate steady growth, profitable growth in asset management. At the center of the page, in the gray part, you've got the figures related to our investment activities, which were impacted by the volatile market context that we experienced in the first six months. Thus, given the negative change in fair value for some assets, the revenue from investment activities were minus 77.2 million euros. After including operating costs, the operating result from the portfolio was minus 124.5 million euros. Well, given the complex context in the first half that we went through, we've decided at the beginning of Q2, given the exceptional circumstances that we were going through with all the uncertainties, we decided to implement some financial instruments as part of our risk management policy in order to protect our portfolio from an important market reversal. These financial instruments generated a cost, minus €165 million over the six months. So after including these effects, the operating income from investment activities was a total of minus €219 million. At the bottom of the P&L, you've got the financial income, a negative income of minus €19 million, an improvement compared to 2019, especially with a lesser impact compared to the previous year of the fair value adjustment of our interest rate hedges on our syndicated bank loan. Taxes were proceeded at 41 million euros, mostly related to deferred taxes and the capitalization of tax deficits after including financial income and tax credits. The net income group share was minus 240 million euros at the end of June. Regarding our AUM, we've talked about it earlier. In order to measure performance in our business lines, we group assets within two scopes of business. First of all, the first one on the left-hand side of 27, where you can see the AUM for asset management, 24 million euros, distributed into four asset classes that you all know, that you've heard about from customers. Antoine, private debt, real assets, capital market strategies, and private equity. For each of these asset classes, you can see the split of AUM between what was entrusted to us by our investor clients, the blue part, and the amounts committed from our balance sheet, TKO Capital, which is in orange. Thus, at the end of June 2020, a total of 2.2 billion euros were committed from TKO's balance sheet and invested in our own strategies, which is fully in line with with our policy of aligned interests with those of our investor clients and you can see that the amount is equitably split between all of our strategies. Assets under management and investment are listed in grey on the right at 1.7 billion euros at the end of June. This part matches with the direct investments from the TKO portfolio outside which is invested in its own funds as well as the group's cash. Then, here we've given you details about the change in AUM in our asset management scope by separating the share of AUM coming from investor clients, third parties, and what's committed from the balance sheet. You can see that with a total commitment of 2.2 billion euros, or 400 million euros more than a year ago. TKO has investments also from third-party investors for 21.8 billion, so 2.4 billion more than a year ago. This shows the multiplier effect of TKO balance sheet commitments in its own balance sheet, in its own funds, and also the trust shown to us by our client investors because of these aligned interests. We'll remind you once again that this is a key aspect that we care particularly about and which is a differentiator in our model. We wish via our balance sheet commitments in our own strategies to create conditions for a clear alignment of interests between the balance sheet of the group on the one hand and on the other hand the investments made by our clients. This is a central approach which has remained the same since the IPO. It's also unique in the establishment of a trust-based relationship for the long term with our investor clients. On the right-hand side of the slide, you can see that out of 2.2 billion euros committed from the balance sheet, one and a half million were already drawn from our funds, so invested in this in a fairly balanced way between all four asset classes. As we said earlier in our previous conference calls, we want to actively carry on investing in our own strategies because that helps us guarantee the launch and marketing of our vehicles thanks to this multiplier effect. Also to create an alignment of interests that's clear with our investors and also leverage the yield of these vehicles which generates a recurrent source of income which matters a lot for our P&L.

Let's look at the analysis of our AUM on page 29.

Here we have split it into three categories. AUM that generates fees, future fee-paying AUM and non-fee-paying AUM. Fee-paying AUM grew faster than total AUM for the group which is a relatively positive indicator now standing at 20.3 billion euros at the end of June 2020 with an increase of 17% compared to June 19 which was mostly driven by steady inflows in capital investments as well private equity and real estate also combined with steady growth in our funds in private debt and real estate. As I was mentioning, we also benefited from 2.7 billion in AUM that will generate fees in the future. This is a reflection of our private debt strategies and partially of our real estate strategies, especially via the trade-off funds that Antoine talked about earlier, where the management fees are paid based on the capital deployed and not the capital committed by investors. This is important to understand because these 2.7 billion euros will be converted into investments income as the funds are deployed and so it's not yet reflected into our P&L. We're talking about 20 to 25 million extra in management fees that will reach our P&L because of that. You also know that we usually look at the duration of the AUM. As you can see on page 30, we've just noted that the share of fee-generating AUM is 85% of total AUM for asset management, so three percentage points more than in June 2019, and the level has remained steady versus December 2019. Please note that excluding open-ended funds within capital market strategies, our funds are mostly closed-ended for long durations. For CFIDI funds, You can't really talk about closed-ended funds, but the average holding duration is higher than 12 years. Therefore, we have products that are very sticky, very long, so our clients are committed for the long term with us. If you look more precisely at the closed-ended funds, you'll see that over 90% of fee-paying AUM has a duration higher than three years, which gives TKO very good visibility of our fee generating ability, which is key in our business model. Now, regarding more precisely the income, the revenues from the first half of 2020, you'll see that revenues grew by over 16% over the last 12 months. This strong growth should be compared with the growth in AUM that pays fees that I explained a minute ago. revenues from asset management made up of management fees for the first half to the tune of 87.1 million euros. Regarding carried interest and performance fees, well, their contribution to income was 1.2 million euros for the half year, and the carried interest is coming from our private equity business. Note also that regarding revenues, we have good diversification. Antoine talked about diversification in our AUM in the last three years since the IPO, but you can also see at the bottom right of the slide that over the last three years, we've also had very good diversification in our revenues, which is very good if you want to grasp the risk within TKO. And you can see that private equity and real assets account respectively for 15 and 42% of revenues, which is once again fully in line with the rebalancing of the product mix towards higher yielding strategies. One of the indicators that we put in place after the IPO in 2017 is important because it measures the ratio between revenues and AUM. For the 12 months ending 30 June, the average fee rate was 94 basis points, which is a strong increase, over 10 basis points more than June 2019. And if you compare revenues to AUM, that shows how relevant our model is, and that shows that the product mix has become more diversified with higher paying strategies since the IPO started. So revenues related to performance fees account for five basis points over the half year. Keep in mind that most of the funds developed by the group are young, and our model does not depend on generation of carried interest in the short term. And in this respect, we are certainly less mature than our peers, and so we have a lot of growth potential for our revenues and profitability in the future. Now regarding more precisely carried interest, Every six months we give you an update on the AUM eligible to carried interest, and you'll see that the AUM eligible to carried interest keeps increasing. It's now 9 billion euros at the end of June 2020, so over 4% growth, plus 20% for the last 12 months, and this growth is higher than the growth in AUM overall for the group. The carried interest is triggered on fund maturity as soon as a target yield rate, a hurdle rate, is reached. Our ability to generate revenues will, of course, depend on our ability to invest the funds that we are entrusted with and generate performance, and that's what we've been able to do for 16 years since the creation of TKO. I'll also remind you that the listed company, TKO Capital, as part of its... alignment of interest concepts will receive 53% of carried interest on all of the closed-end funds for the group. And now the flip side of all that, revenues and the key elements that I mentioned a minute ago, of course all that results into the operating income from asset management. you can see that there's been significant growth, almost 40% for H119 compared to H120 versus H119, over three times more than what we generated two years ago. That's related to the growth in revenues from the asset management scope, but also allied to very good control over operating costs for the first half. The change in operating margin, as you can see from Our operating margin from asset management, as you can see on the right, shows how relevant TKO's model is in asset management, even during crises, major crises as the one we had in the first half, and also proves how able the group is to maintain profitable and lasting growth. We've mentioned it time and time again. We wanted to remind you that our platform is leveraging more and more effective skill it's now more scalable, and so our revenues can grow more than our costs. For instance, we haven't yet reached the full capacity for a certain number of business lines, but revenues are growing very favorably compared to our level of business, and that's very clear to see in the figures of H1.

Now let's look at

a review of our investment activities on page 36. Revenues from investment activities stood at minus 77.2 million euros for the first six months. You can separate three components in these revenues. The first effect is that of unrealized fair value changes. That's in light blue on the slide. minus 143 million euros for these effects. This is the fair value adjustment of underlying assets that are within the portfolio, minus 143 million euros for the first half, with two noteworthy effects. First, the effect of the Euro-EU line, minus 61 million, and also minus 24 million for our listed realistic company that we have in the portfolio, Selectirante. And since then, the share price has gone back up. The second effect is that of realized fair value changes. So the underlying assets have been divested from the investment portfolio. There we leveraged a fairly chaotic first half to make a number of arbitrages within the portfolio. And that translated into revenues of 23.8 million euros. That's the dark blue part on the slide. in the center of the slide, so a number of disposals of assets that helped us leverage major revenues. And so the third effect, which is also high, is the orange bar on the slide, 42.3 million euros for dividends, coupons, and as well as payouts received by TKO because of these investments in funds, which is a slight decrease compared to H119. We had 49 million the decrease is because of the absence of dividends for the two listed lines that we have on the balance sheet, Eurozeo and DWS. Please note one major thing. These 42 million euros, these revenues remained high. It's mostly made up of revenues related to Holdings in TKO funds, it's important. We talked about aligned interest. We talked about investing from the balance sheet into our funds. Well, with that, we can have steady recurring income, even growing income for the first half. Please note also that the realized effects, so the orange and dark blue parts on the slide, increased compared to June 19. Thus, revenues from investment activities, as I said earlier, were mostly impacted by changes in fair value from unrealized investments in the first half, so those decreases could be reversed in the future. I'd also like to draw your attention to the right-hand side of the slide, the splits of revenues between the first and the second quarter, as you can see on the screen, whereas unrealized fair value changes were highly negative in the first quarter because of the extremely volatile market context, talking about minus 287.5 million. This turned into a positive in Q2 with 147. Regarding the financial instruments that are here to hedge the listed assets, they were put in place at the beginning of Q2 when the markets were not very favorable and as the global economy was facing major systemic risk, And so that's offset the positive market impact of the second quarter.

So now let's review the balance sheet.

I'm on page 38. As you can see, our balance sheet structure remains robust, which is an essential asset in a deeply changing environment, especially with such an uncertain and volatile market context as we experienced in the first half and that we're still experiencing. On the asset side, you can see mostly our investment portfolio standing at 2.4 billion euros. I'll get back to it in a minute. Our consolidated cash is a bit less than 900 million euros and a certain number of asset aspects with, in particular, the goodwill. Our equity is still high at 2.8 billion and financial debt is stable at 1 billion euros per We also have 500 million in undrawn credit lines and our gearing ratio is still under control at 36%. Let me remind you that Fitch had given TKO its first financial rating in January 2019 with an investment grade BBB minus level and this rating was confirmed this year in January. As we mentioned earlier, we are going to carry on harnessing our balance sheets for the development of our business in particular by investing more in our own strategies and also by using external growth operations. Our investment portfolio of 2.4 billion is of course a major component to be analyzed within our balance sheets. This portfolio is still as granular with 210 underlying assets for a total of €2.4 billion at the end of June 2020. Moreover, as we said earlier, we carried on investing in our own strategies. Therefore, the share of investments from TKO's balance sheet in its own funds is now 65% versus 49% just a year ago. This is fully in line with our goal to raise the exposure of TKO's balance sheet in its own funds to 65% to 75% by 2020. With the complex market context that we've had since the 1st of January, we've also had some important rotation in our assets. Therefore, in April, we increased our stake in iREIT, a listed real estate company in Singapore focusing on the European property market. As Antoine said, we raised our stake from 16.6% to 29.2%. We also leveraged market conditions to dispose of 64% of our share in DWS, helping us generate some proceeds of 110 million euros. And as we said in January, well, more recently, we got the reimbursement of the 115 million loan that was given in early 2018 to Conforama. this loan was partly financed from our balance sheet and also financed by some of the funds managed by our subsidiaries. More precisely here, we put together a focus on page 40 on the granularity of the €2.4 billion in investments carried by the balance sheet. You can see here the split between the direct assets, €823 million, and investments made through our funds at the bottom of the chart. You can also see strong diversification between all four asset classes when it comes to investments within our balance sheet. Let me remind you that the direct investment component is relatively well balanced between listed and non-listed investments. Now, I'll throw it back over to Antoine for the outlook.

Thank you, Henri.

On slide 42, over the last 16 years, ever since the company was created, we've built up a global resilient platform, especially given the current context. It's even a bit more visible. First of all, we've built up a platform with a very robust balance sheet. As Henri reminded you of, it's fairly rare to have a robust balance sheet with a lot of equity in asset management. We have 2.8 billion in equity, shareholders' equity. As Henri reminded you, we have 900 million in cash and under-owned credit lines of 500 million so that we can leverage selective external growth as we did in the past, or we can even launch new initiatives