Tikehau Capital

Good morning, ladies and gentlemen. Thank you for being with us today. Today is about three words, acceleration, profitability, and value creation. And everything we'll discuss this morning will connect back to these three priorities. I'm Theodore Aksu, head of investor relations for TKO Capital, and I'm delighted to be hosting today's full year results and strategic update. So today, you'll hear from our two co-founders, Antoine Flammarion and Mathieu Chabron, our deputy CEOs, Henri Marcoux Thomas Fribergé and Maxime Laurent Bellu, and our group CFO, Vincent Picot. So a little bit of housekeeping element on the flow of this session. So we'll first start with a look on TKO Capital key achievements for 2025, and then open the floor for a first session of Q&A dedicated to our annual results. We'll then take a short break to allow everybody to refresh, to grab a coffee, before moving into our strategic update. Then you'll hear first from Thomas, who will share his perspectives on opportunities shaping the next decade. Then we'll have Maxime hosting a fireside chat with our co-founders discussing accelerating profitability across asset management. Then we'll have our co-founders and Henri. provide insights on our evolving approach to balance sheet allocation before taking us through the harvesting phase TKO Capital is now entering and providing more details on profitability drivers and value creation framework. We'll then host a second session of Q&A dedicated to our strategic update. With that, it's my pleasure to welcome to the stage Mathieu Chabron, co-founder for Opening Remarks.

Thank you, thank you Theo. Welcome, welcome everyone here in London and welcome for all the people who dial in on the webinar, the webcast. I hope that you can hear us okay, you got all the documents and that you will be enjoying this presentation with us. So, very happy to be back in London, not only for our 2025 full year earnings, but also for this new Capital Market Day, as we call it, and very excited on behalf of the whole team to host you at TKO and give you a little bit of the forward-looking, which is really what we would like to focus on today. But first, let's start with our 25 earnings that were released this morning. I like to call it a record year because the numbers stand. But before we get into the numbers, I would like to tell you and witness how strongly the franchise has evolved over the past few years and the acceleration, as Theo was rightly saying, that we benefited from in 2025. It's been a record year on the deployment, despite, you know, if you look back and think about what 2025 was as a year and as markets to operate in, you know, that was a record year on the deployment. On the realization, you know, we come back to that on exiting some of our portfolio companies and distributing back to LPs. And as well as, you know, the fundraising, you know, the gross and net inflows will get back to that. We told you in 2022 that the focus was to develop, grow the profitability of the asset management. Remember that when we went public nine years ago, we were barely doing $5 million of EBIT. It's close to $150 million this year. And you will see that this growth and expansion in asset management profitability is here to stand and will give you some guidance where we think we can go. And then finally, you know, the portfolio, you know, we've got these two engines at TKO, right? The asset management, the principal, or a balance sheet. You know, we saw some strong, you know, contribution, albeit this year impacted by some forex, and we'll come back to that. So as I was saying, recording, deployment, realization, inflows. On the deployment, it's 7.6 billion euros that we put at work at TKO, which is an increase of 35% compared to 2024. On the realization, on the exit, we like to say at TKO that you have to give back so that people keep giving. And you keep hearing about investors not getting money back. You know, what we tried to do last year is to demonstrate that, yes, you can exit some portfolio company, give back to your investors so that that keeps fueling the next cycle of growth. And that was twice what we did in 2024. On the capital formation... It's 10.5 billion of gross inflows, and that's the fourth consecutive year of record year in fundraising. It's 8 billion in net inflows. And what we are very... Encouraged by is that the whole investments we made in the platform of the past few years globally Remember we went public we had five offices when we saw you in 2022 for the capital market day. We had seven offices It's now, you know 17 offices. We've got you know across the world and from Asia including Japan, Middle East, across Europe today, North America, even South America now, we've got all these new customer base that are fueling the fundraising at TIKIO. And so 80% last year came from new customer base, new geographies outside of our domestic market, taking our overall AUM to 52.8 billion euros. So, as I was saying, you know, we've been focusing on larger transactions with a more global portfolio, not only in Europe, you know, domestic markets, but in Asia, in North America. And that has enabled us to raise additionally more than a billion, a billion two euros of co-investments on some of those larger transactions. You'll have some examples later on that you may have picked up over the past year, but that has been a strong driver. On the capital formation, as I was saying, a few elements. In Asia and Middle East, it's a billion euro that was contributed. We hit the billion euro of inventories of clients in Korea that we had open, you know, six years ago. And just I'll leave you an example that, you know, we kind of like. Just last year, out of the 10.5 gross info we had, you know, four investors, four new investors actually, accounted for 20% of our fundraising. And they were all new relationships of ours. Bigger commitment. I mean, they came from some very... complicated to penetrate markets. I'm thinking about Japan, I'm thinking about Germany, I'm thinking about the US, I'm thinking about Middle East, GCC, Abu Dhabi. This is a strong illustration that the investment we made in the platform is now paying off and we're harvesting all this investment that we had made. And so, as I was saying, giving back capital to your LP it's 4.1 billion that we returned to our LP last year and just as a data point because people have been talking a lot about private equity last year and I'm sure we'll have plenty of questions about private credit as well and we're looking forward to addressing them but it's a 2.6x that we return to our investors on the realized transaction so Where does that leave us on the financial? I mean, we issued this morning all the numbers in the details. We'll come back. But if I look at the first pillar of our business, our asset management business, it's an 8% growth of our revenues converting into 18% growth at the EBIT level. We grew by 12% of core FRE, these fee-related earnings. And for the first time, as we told you a few years ago, we passed the 40% core FRE margin. And you may have picked up, and we'll come back to that, that we're giving an improved guidance on this very important profitability element. On the second pillar, the portfolio, it's a 19% growth in our realized revenue for the balance sheet, our investment portfolios, and a 33% revenue growth if we exclude, once again, these currency effects that Vincent will be detailing. So finally, it's 136 million net income that we are reporting for 2025, which is 51% growth if you exclude this currency effect. And so we propose an 80 cents dividend that we'll be voting at the next AGM. So that's for the key element. There'll be plenty of details on the session. Once again, thank you very much. We look forward to an interactive session. Thank you. And I will hand over to Henry for more details.

Good morning, everyone. Thanks, Mathieu, for this introduction. So let's jump into our asset management flywheel. Maybe we'll start with deployment. As you have seen, deployment has clearly stepped up during the year 26. We've reached 7.6 billion euros of deployments, so that's an additional step. 2 billion, 35% compared to the year 24. Starting with private equity, maybe with a 2 billion compared to 600 million euro the year before. Clearly, we've accelerated deployment, notably on aerospace and defense, cybersecurity, decarbonization in Spain, Belgium, Germany, and in U.S. through our flagship strategy, but as well through our co-investment vehicle. Real assets represented 1.4 billion euros of investments compared to 1 billion euros during the year 24. Here again, you know, discipline has remained paramount. We continue to focus on high-quality, well-located assets, notably to be noticed during the year 24, big residential portfolio units in France, as well as a big investment, first investment in real estate in the US, and notably several additional investments in the Netherlands. As far as credit is concerned, so that's clearly a stable deployment versus 24. We are standing at 4 billion euro, very well diversified allocation through Spain, Italy, Netherlands, Belgium, UK, very strong momentum as well on our CLO issuance business. And so we are ending the year with more than 7.6 billion euro of dry powder and of 25 to be ready to capture new investment during the year 26. We've been talking about executing larger transactions. That's a very key important point that we wanted to mention today. So out of the 7.6 billion euros of deployment during the year, we had 1.2 billion that were deployed through dedicated co-investment vehicles. That has been the case on the private equity business, such as the Aegis transaction we've been commenting for a few months. EISA in Spain. That has been the case for, as well, Sciatech aerospace and defense deal in Belgium. That has been the case, as well, for real assets. through this residential deal. That has been the case as well for private debt, where we had several deals where we have welcomed co-investors. So that's clearly a new feature here, creating adjacencies, creating new funds alongside our flagship and welcoming co-investors. What does that mean? That means that through this creation of new vehicle, we are bringing into the platform additional fee paying. So management fees that are going to fuel our fee-related earnings and additional performance fees, which will depend on the exits, of course, but which will fuel as well our asset management EBIT. So looking at what happened in 2005. over those co-investments. That's roughly more than €1.2 billion of additional co-investment, bringing more than €150 million of asset management EBIT for the coming year. Realization, clearly here, once again, a strong increase. It's almost the double figure as what was exited in 24, so reaching 4 billion of exits. Here again, private equity has been increasing significantly. That's 1 billion euro of exits for five positions that were exiting during the year, reaching 2.6x of multiple, so clearly in line with our fund expectation. As far as real estate is concerned, we remain stable, €500 million of exits. Multiple on real estate achieved has been 1.6 times. That's at asset level, unlevered, and those exits are mainly residential and light industrial. As far as private credit is concerned here, clearly very strong increase. Realization has reached a record that's almost 2.7 billion euros. As far as direct lending and corporate lending are concerned, those are repayments. The average MYC reach has been 1.4. As far as our special ops business is concerned here, we've been exiting several positions as well at our initiative, achieving a gross MOIC of 1.6 times. I want to insist on that because clearly, you know, in 25, I think that the global macro environment, as far as exits is concerned, has been challenging. In that context, we've been able to deliver 4 billion euros of exits. So we are sending back money to our LPE, We are increasing the DPI, which is key. We are increasing the performance. And all the average growth MOIC that have been realized on all of our exits are clearly either in line or above our fund expectation. Fundraising. So here again, we've been mentioning 10.5 billion euros of gross inflows record year. As far as net inflows is concerned, that's 8 billion euros of net inflows, so a 13% increase during the year. Looking at this fundraising a little bit more in detail, you can see that as far as private equity is concerned, we've reached 2 billion euro. We'll come back on that. Those inflows have been driven by the cybersecurity, final close, regenerative agriculture as well. Our specialist fund being decarbonization fund number two, aerospace and defense fund number two have been benefiting obviously from strong inflows in the current environment. As far as real estate is concerned here, it's a performance of 1.3 billion euros of net inflows, focusing on value-add and core plus. This is including the previous transaction I was mentioning, notably residential in France, the one in the Netherlands as well. Strong contribution from credit, 4.4 billion euros, stable versus last year. As we've just announced a few days ago, we've been closing our credit secondary fund number two, $1 billion, which is almost double the size versus previous vintage. As far as direct lending, vintage number six is concerned, which is still open as we speak. We are close to 5 billion euros. And here we have secured the two largest individual LP commitments in our history from Germany and in the U.S. Demand as far as direct lending is concerned remains quite strong. So as you can see over here, diversified strategy. Larger tickets, co-investment, client convictions, bringing us into this record 8 billion euros for the year 2025. So just a snapshot here on where we stand on our flagship. So I was mentioning special opportunity fund number, vintage number three, 1.2 billion, which is almost, you know, the double versus the previous vintage. Credit secondary, $1 billion. As far as private equity is concerned, regenerative agriculture, vintage number one, 600 million euro. Cyber security, fourth vintage, almost doubling the size versus the previous vintage. As far as 26 is concerned, lots of ongoing fundraising as we speak. Obviously, direct lending number six. Can you hear me like that? Okay. Obviously, direct lending number six, still open as we speak and benefiting from strong inflows. This year will be as well a strong year as far as private equity. As far as private equity is concerned, we are still open during all the year, aerospace and defense fund number two, and decarbonization fund number two. So you have here on the screen the evolution of our AUM during the year. So it started at end December 24 at 49 billion euro, ending at 52.8 billion euro. Different movements of the year have been impacted by the inflows I was mentioning, 8 billion euro, and the distribution standing at 4.1 billion euro. You have on the right side of the page, you know, the diversified and the complementary asset class, the split. by business unit. Thank you. We'll do like that. It will be a bit easier. As far as client base is concerned, one important feature, Matthew was mentioning the number of offices we are operating, namely 17 offices as we speak. Important to notice that as far as inflows are concerned, that's more than 80% of net new money that has actually been raised from international clients. You have here the biggest contributors for the year 2025 being U.S. investors, U.K., Spain, Germany. To be noticed during the year 2025, strong contribution from Asia, namely from Korea and Japan. Korea has gone over the $2 billion mark for the year 2025. Contribution as well from Israel, where we are approaching the $2 billion mark. euro mark as far as LP commitment are concerned. So those are the most represented nationalities in 25. On the right part of the page, you do have actually the split, which means that international clients have increased from 44%, 24, to 46%. So that's a 13% increase representing 24 billion euro at end of 25. Private marketing is important feature. We've been focusing significantly over the past year over the strong growth era of growth. That has been the case as well for 25. That's 25% of third-party inflows that were raised through private clients. That's actually notably all the initiatives we've been launching on private debt, private credit, unit link product have now reached more than $1.5 billion at the end of December. As far as AUM are concerned, that means private customer clients are now representing more than 34% of IUM, that's actually more than 18 billion euros. Two dedicated initiatives that have been launched during the year 25. One on private credit, namely TEPC, TKO, European Private Credit, semi-liquid fund, focusing on mid-size European company. And second important initiative that was launched during the summer, which is a unit link dedicated to defense, security, aerospace. This unit link is currently distributed through partnership that we're having with a big insurance company. We are currently standing over 200 million euros for this product, where the distribution has started, and of 25, focusing on our aerospace and defense practice. and notably the track record that we are benefiting on that practice, aerospace and defense practice that was launched back in 2018. Last point on sustainability. You know, a few years ago, we had a set, a target on AUM dedicated to climate and biodiversity. Our target was to achieve at least 5 billion euros of AUM dedicated to that practice. And of 25, we are standing at 5.8 billion euros, notably thanks to our decarbonization practice, fund number two. So that means continued sustainability integration across the several pillars that we are benefiting through the whole platform. I will now leave the floor to Vincent for the financial review. Thanks.

Thank you, Henry. So I'll start the financial highlights with our fee-paying AUM and the revenue generation in terms of revenues. So first, fee-paying AUM grew by 6% compared to 2024. It was driven by inflation. net money on our private equity practice, capital markets, and also by a very dynamic fundraising and deployment activity for direct lending and CLO business. In addition, it's worth mentioning that future of HIPPING AUM grew by 24%, and it was supported by solid net money in direct lending strategies, which charge management fees on invested capital. So together, fee-paying IUM and future fee-paying IUM increased by 8% year-on-year. So that's a sign of securing future management fee generation. Also, and the impact it has on management fees, is that management fees increased by 8%, reaching 358 million euros. That's an acceleration that we have noticed specifically in H2. Average revenue margin stood at 88 bps, which remains resilient. And worth noting that we record a peer performance-related earning level of 22 million euros, which is a record. On the following slides, a few data points on performance-related earnings. So at end 2025, AUM eligible to carried interest grew by 10% to €24.8 billion. In addition, at end September 2025, we had €220 million increase of unrealized performance-related revenues, which are actually accrued at fund level, and such level is based on the current performance at portfolio level. This amount is not crystallized yet. It is not yet accounted for in our P&L, and it will be recognized as funds approach maturity. In terms of asset management profitability, and as Mathieu mentioned, we grew our asset management EBIT by 18% year-over-year, reaching, for the first time, €150 million. This growth reflects specifically the increase in the core fee-related earnings, with a notable acceleration in H2. This is mostly due to an increase in management fees in this period. Overall, core theory-related earnings increased to 41% in terms of margin, exceeding, so for the first time, to 40%, and it reached exactly 46% in H2. Overall, and looking now at the cost base, we remained very disciplined because the operating cost base only grew by a mere 3% year over year. So that's a testament of an efficient resource allocation. Moving now to our investment portfolio. So at end 2025, the total fair value reached 4.4 billion euros, and still very granular, with a bit more than 300 investments. Approximately 3 billion of this amount is invested in our own management strategies, so it ensures an alignment of interest with our client investors. The remainder of this amount, 1.3 billion euros, is invested in our direct investment ecosystem. As you can see on the right-hand side, we've got a pretty well-diversified portfolio in terms of asset classes. Now, looking at the flows and what happened over the year, investments reached €1.3 billion, of which €951 million of capital calls in our own strategies, CLO, credit signatories, private equity strategies mostly. But we also invested 370 million euros in our ecosystem, and it was mostly driven last year by our investment in Schroders. Over 2025, so we carried out close to 800 million euros of exits. Returns of capital were from various asset classes, CLOs, special opportunities, but also decarbonization and aerospace strategies that Henry mentioned when talking about distributions to RLPs. Market effects, minus 18 million euros reflecting mixed effects, positive fair value changes for our shorter stake, also positive regulations in some of our private equity strategies, mostly aerospace and defense, and also decarbonization, but it was offset by negative market effects in some very specific credit and real estate situations. And finally... Currency effects amounted to minus 161 million euros, and it's mostly linked to the sterling euro exchange rate. Next slide. So in terms of portfolio revenues. So in 2025, portfolio revenues reached 166 million euros. That compares to 207 million euros in 2024. But as mentioned also by Mathieu, realized revenues actually grew very significantly by 19% year over year, reaching 239 million euros. So that's worth highlighting. It's composed primarily of coupon, dividend, and distribution from a whole spectrum of credit strategies, listed rates, and also ecosystem investments. As regards unrealized revenue of minus 73 million euros, we've got a P&L impact of foreign exchange for minus 52 million euros, mostly linked to the euro sterling exchange rate. And as I explained in the slide earlier, also around minus 20 million euros of unrealized negative changes in fair value. So excluding... currency effect, our portfolio revenues grew by 33% year over year. If I have to wrap up our 2025 financial performance, strong performance in our asset management platform. as explained on the asset management EBIT growth. It was offset to some extent by currency effects and also by unrealized fair value changes on our investment portfolio. Looking now in a bit more detail, non-recurring item and order of 13 million euros, it's mostly linked to positive Forex impacts on our U.S. financings. Tax expenses, 51 million euros in 2025, in line with our net result before tax. and a tax rate of around 25%. So overall, our net result group share amounts to 136 million euros, and if we include main currency effects, our net result grew by 51% year over year. In terms of balance sheet metrics, our model is strong, supported by means of 3.1 billion euros of shareholders' equity, group share, and also by short-term financial resources of 1.2 billion euros. As regards our financial debt, which stood at 1.9 billion euros, it encompasses a 500 million euros new bond issue, a renewed and upsized RCF line of 1.15 billion euros. And at the end of December 2025, we had drawn 150 million euros of our revolving credit facility. And as of today, we have fully reimbursed our RCF. In terms of, so based on this, sorry. So building on what I disclosed and building on our 2025 performance, we are also pleased to formulate a new 2026 vision that is disclosed on the screen. We will be focused on reaching an AUM of at least 60 billion euros by end 2026. reaching FRE between 175 and 225 million euros, and the net result group share between 420 million euros and 520 million euros, excluding forex effect. Worth noting that approximately 180 million euros of net result comes from the full disposal of our stake insurers that happened earlier this year. And also, we also disclosed a return on equity between 13% and 16%. So all those metrics show improvement compared to 2025 and are above market expectations. 2026 has to be seen as a major step in our journey towards a long-term profitable growth that will be disclosed and presented just after. And we will be providing, of course, more details on our targets later this morning. Thank you very much for your attention. I will let Antoine for the concluding remarks.

So thick. Thank you, gentlemen, for this very thorough presentation. We'll now open the floor to questions. So if you'd like to ask a question, please raise your hand. So we'll give you a mic. And we will address in priority questions from the room, obviously, and also take questions from the webcast. So one question from Sharath Kumar from Deutsche Bank.

Good morning, all. Very impressive presentation, so congratulations. I have two questions, if that is okay. So first one is, while I totally understand your investment story, but I think it will be much slimbler with an asset-light business, although I kind of understand where you're coming from in terms of your balance sheet. Funding your strategies, but ultimately I think it is very hard to deny that this has been hugely dilutive to your valuation. So has there been discussions to eye off the investment activity outside the listed entity so that it can improve your valuation? So that is the first one. And I want to come back to the usual topic on your share price valuation, low free float. A couple of years ago is when you disclosed your 2026 targets. At least on the asset management side, you have been mostly on track, while on the investment activity side is where I think consensus is widely divergent from your targets. It's just been a very painful wait for the sector to re-rate, and you have not been alone in that. So But when it comes to increasing the free float, what is the latest update that can give you? I know it's been a chicken and egg situation for the valuation to increase, for the free float to increase, but what is the latest update that we can get? Thank you.

Thank you for your question. That's a usual relevant question we had on balance sheet and asset light. As you all know, we started the firm just as an investment company in 2004. In 2007, we launched the asset management. So our asset management is 19 years old. We are celebrating next year our 20-year anniversary for the asset management. So we decided from day one that having a balance sheet will help us fuel, grow the asset management. And as we discussed a little bit later during our strategic update, we'll be more precise into that, but the truth is that we've been using the balance sheet to seed, sponsor new initiative. Without the balance sheet, it would have been impossible to launch CLO in 2012, Direct Landing in 2009, DCARB in 2018, Aerospace and Defense in 2020. Needless to say that nobody will even answer our phone, so we used the balance sheet to seed sponsor that. As a result, we have this balance sheet, a $5 billion balance sheet, and now a $53 billion AUM business. We are clearly unhappy with the valuation. The sum of the part is miles away of what we should be. So clearly, we don't get the credit of having both the balance sheet and the asset management. For all of you who are very familiar, you just saw the latest M&A transaction announced, which is the color purchase for 3.2 billion. Color is making 145 million of EBIT, let's say, so we just announced 150. So that tells you more or less the valuation we should get on the asset management. And on top of that, we've got 3.1 billion of equity. We've been growing the firm using the balance sheet to seed, sponsor, launch new initiative. As we enter now a new chapter, and we'll discuss that during the strategic updates, we are committing less amounts to our funds. We don't really need now to seed, sponsor with large amount of money. And as you see, for the first year in 2015, The commitment we had in our fund declined. So we started the year with 1.6 billion of commitment in our fund. At the end of the year, it's 1.3 billion. So that's telling you that we don't really need as much capital as we needed before. So moving forward, we'll have really the two businesses, the principal investing, which will still remain invested in our funds. Skin in the game is critical for us. We have the asset management business, which is now profitable. When we lease the firm, if you remember, we are making 4 million EBITs, so no profitability at all. In nine years, we grew from 4 million to 150. As you saw in the 2026 guidance and vision, we are targeting between 175 and 225 million of FRE. So now asset management is profitable. The balance sheet, we think, is really back on track to be profitable. Vincent mentioned, for instance, Schroder. We will detail that. But Schroder has been a 64% IRR and a 240 million net income. So that's why we are highly confident on the 2026 net income. So it's a very long answer to your question. People are very clear view on asset light versus non-asset light. Blackstone is really asset-light. KKR is not asset-light. KKR is now compounding as a strong base the balance sheet. And at the end of the day, for the shareholder, I think what matters the most is the net income. And to increase the net income, having the two engines, the balance sheet and the asset management, will probably lead into more net income, more dividend, and share price appreciation at the end.

Thank you. Two more questions in the room from Arnaud from CIC.

Thank you. Three questions related to currency impact. The first one is, can you give us the breakdown of your AUM by currency in order to forecast what could be currency impact on these assets? Then do you intend to put in place any edging policy? I think all your debt is in euros, so do you intend also on the liability side to have a diversification by currencies? And the last one is regarding the net profit guidance for 2026. Is it at constant currency or do you make any assumption at this level?

Okay. Thank you for your question. So as regards assets under management and the part of the share in foreign currency, so it's about 10%, and mostly in U.S. dollars. We're exposed to the U.S. dollars around and through our U.S. CLO and private debt strategies mostly. Okay. As we got your question around hedging, so we've got a hybrid approach at TKO. Like other actors in the sector, we have decided to put in place a natural hedging with a financing in dollars. So it's $180 million US private placement put in place in 2022, and we also put in place some forward contracts on some sterling exposure to some extent. So we've got this hybrid approach using these options at our hands. And regarding your last question around our 2026 guidance in terms of net results, which we mentioned is between 420 to 550 million euros. We mentioned very specifically that it's excluding foreign impacts. So basically at constant currency versus December 2025.

And what we'll do moving forward when it comes to currency, when we have been issuing bonds, we've been initially only raising money denominated in euro. A few years ago, three years ago, we raised for the first time a USPP, dollar denominated. So moving forward, we will probably match our... non-European currency exposure matching with the right liabilities, so probably issuing more USPP rather than euro if we need. We consider that it's probably the best way to hedge, having a proper asset and liability match. It costs less money, it's much more efficient, and these hedging currencies are always complex because you can hedge the amount of money you invest. So let's say you invest $100 million, £100 million, you edge that. But if you end up making three times multiple, having just the nominal edge, your capital gain is not edged. So we think that moving forward, we're going to issue more in other currency, if I may say.

One question from Nicolas Vesulier from Exxon BNP.

Good morning. Thank you for taking my question. The first one is on Shores. I mean, you have a big windfall coming your way. That's a great problem to have, right? I'd like to know how you think about reallocating those proceeds between reinvestments or potentially payout to shareholders who share buybacks, exceptional dividends. Second question on your 2026 new FRA guidance. I'd like you to help us understand a bit how we bridge from where we are in 25 to get to the bottom end or even the top end of this guidance. So I'm wondering... Um, if you bake in some lumpier, uh, items like catch-up fees that you're expecting for this year, expecting, uh, some recovery at SOFID in the subscription fees because you're meaningfully accretive to the margin, and what you expect in terms of evolution of the cost base next year. And then finally, my third question. You mentioned some negative mark-to-market effects on the credit portfolio. We've seen some of your peers actually suffering quite a bit. So I'm interested in any comments about your credit portfolio, balance sheet exposure, how it's performing, and on the equity CLOs, notably. Thank you very much.

Thank you for your question. Maybe I take the first one. On reallocation or reinvestment, as mentioned before, we still have 1.3 billion of commitment into our funds. So first of all, for instance, the Schroeder proceeds is close to 600 million. As Vincent mentioned, we reimbursed already our RCF, which was 150 million drawn. So that means that we have excess cash on the balance sheet. We're going to probably use that for our capital call, 1.3 billion. Also, it's over the next few years, so it takes time. We're going to continue to invest the balance sheet further. alongside our strategies. So we have commitment in our funds, but the balance sheet is not doing two things. Co-investing within our strategy. So I suspect we're going to probably deploy more money into aerospace and defense where we are clearly ahead of the curve. Same thing for DCARB. and we start seeing more and more credit opportunities as the cycle is becoming more complex. You probably read a few days ago that we closed our second vintage of private debt above $1 billion, so twice the previous vintage. We are the only firm having... such track record when it comes to secondary private debt. So I suspect that we're going to allocate the balance sheet more into secondary private credit. Maybe I start on your question on 2026 and I will let Henri comment. So we have four metrics in our 2026. One is our return on equity between 13 and 16, which is mid-teen double digits, as mentioned before. We are fairly convinced that we should reach between 420 and 520 million of net income for 2026. Part of that is obviously the shorter disposal. And as disclosed in the market, we decided to sell in the market our stake rather than waiting the end of the offer, which could happen in Q4, but could happen maybe in Q1 2027. You never know. So we are fairly convinced that we're going to reach this level of net income and, as a consequence, this return on equity. Your question specifically on catch-up fees and FRE, we have several vintage of private equity currently raised, namely AAP2, which is Aerospace and Defense, and DCARB2. there is potentially a very large amount of catch-up fees, as stated in the bylaws. So within this range of 175 to 225, there is some amount of catch-up fees, and we are fairly convinced of, you know, when we look at our pipeline right now coming from LP, there is a very strong demand, obviously, for aerospace and defense, and there is still many European appetite for DECARB.

Yeah, maybe in summary on that, there are many three drivers on that. First of all, you may have seen that future fee paying have been increasing significantly, end of 25. So all this future fee paying will obviously be transformed into fee paying when we will be deploying these funds. So this is the first driver for evolution of fee-related earnings in 26. Second one is a mixed effect. Obviously, as just described, you know, on the pipeline within our funds, we are now on the road, you know, investing and fundraising on our two bigger platform PE funds, namely Decarbonization Fund No. 2, Aerospace and Defense Fund No. 2. Yes, there will be catch-up fees, but, you know, namely, out of the maybe excluding even these catch-up fees, you know, there's a mixed effect with these two private equity funds and the track record we have been inflicting on these two areas. And maybe the third drivers to increase effectively the FRA in 26 is obviously cost control. We started to be more, you know, to take carefully more of the issue around cost already back in 25, and we will be keeping in that area for 26.

I just wanted to address the third question on private credit. I wish we had two hours to discuss private credit since so many things have been written over the past few weeks or few months. But more specifically, we happen to have a CLO business within private credit. So just to answer specifically on the U.S. side beyond the Forex that Vincent elaborated on, obviously last year was a volatile year. And as you know, the CLOs are some... arbitrage in a vehicle with some liabilities issued and that can be reset. And so what we had last year was effectively on this specific part some kind of a lag between the end of September, end of December valuation at the asset side and the reset on the refinancing. So we're expecting to catch up on this side when we reprice and reset the CLO. Now, more specifically on the private credit, I think there are, as Antoine said, that's a big opportunity for secondary private debt, but we've never been as bullish on the opportunities to keep deploying with the same underwriting discipline when it comes to direct lending. The issue we've been facing, there are two comments. One is cyclical, the other is structural. On the cyclical aspect, what we've experienced, particularly in the U.S., is this massive growth and fundraise on credit where many managers, and not being judgmental whatsoever, have started to have to deploy zillions raised. And as you know, when some of our competitors raise $50 billion a quarter, it takes some time to keep the same discipline underwriting. We're still, I think, and our partner Cecilia is in the room, I think we're 5% to 7% selection rate on our private credit deployment. So that has been driven effectively a lot of talk around the direct lending. The other thing that in the U.S., the bulk of all the noise you've been hearing was coming from the U.S., you've got the mid-market direct lending, which is on average six to seven times now levered. In Europe, it's more like five to five and a half. Our portfolio is 4.4. So as always, on credit, because the only thing you're getting is par, it's how do you underwrite and how do you structure, you know, going in. So it's a much more defensive portfolio that we've been having. And we just closed, you know, the sixth vintage of our strategy. We started in 2007. So it's a 19-year track record when, as I'm sure you know, 92% of the private credit managers were launched post-GFC. So... I think that here it's important to... I mean, we have our share of situation of negative watch where we're working. A lot of the cyclical aspect is effectively all the credits that were originated in 2021, the zero interest rate environments, the central bank, very accommodating policy. And when people, you had a base rate at zero and some spreads at 300, obviously fast forward five years and go to base rate at four or five and the spreads maybe at four or five. Obviously, your cost of refinancing is much higher, and then you have to effectively recapitalize part of them. Now, the silver lining, as Antoine alluded to, is that we're entering the golden age of the secondary private credit, and we're best positioned to tackle that.

Well, thank you so much. I'm sorry, I'm conscious of time. We'll address more questions later on during the second Q&A session. So let's take a short break. We'll resume in 10 minutes. Thank you very much.