Partners Group Private Equity Limited

Ladies and gentlemen, welcome to the Princess Private Equity Holding Q4 2021 Investor Conference Call and Live Webcast. I am Paul, the course call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. Webcast viewers may submit their questions or comments in writing via the relative field. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Felix Halder. Please go ahead, sir.

Thank you. Good morning. Good morning, ladies and gentlemen. Welcome to our Q4 presentation of Prince's Private Equity Holding. Following the presentation, we'll have a Q&A session. The presentation is based on unaudited figures. I'm pleased to be accompanied by a colleague of mine, Adrian Paul Lambion. He's a member of our ESG and sustainability team based in Zug in Switzerland, and the topic is going to be like a focus topic of today's call. Before discussing the quarterly figures, I'll provide a short introduction to Princes and its investment manager. Princess provides shareholders with exposure to Partners Group's direct private equity investments in transactions alongside our institutional investors. The investment strategy focuses on identification of transformative trends across sectors and then on investing into attractive companies with a clear development potential. As a group, we have defined a number of giga themes such as digitization automation, new living, decarbonization. Within these giga themes, at any time, we define probably about 40 to 60 investment themes and sub-themes across our full private equity sector verticals, be it the technology, goods and health and life, and services. Once we identify companies within these investment themes, we build leading companies through platform building and business transformation. And in this journey, we fully integrate ESG factors in the investment process, both to drive value creation and mitigate risk. Partners Group has deep resources. We are a leading global private market firm, and we have invested over $87 billion in private equity across a number of market cycles. 170 direct equity professionals supported by a global network of 360 and more industry experts and operating directors. with very deep industry expertise help them transform portfolio companies. Finally, Prince's objective is to generate long-term capital growth and an attractive dividend yield. And so the NAV total return stands at 11.4% per annum over the last 10 years. And even better, the share price total return of 16.6% per annum over the last 10 years. Dividend objective remains at 5% per annum of opening net asset value via the semi-annual payments. This brings me already to page 5, to the NAV and share price. So whilst we had a slight dip in the fourth quarter, which I'll comment on in a bit more detail in a minute, the whole year brought the total return of 19.4% and a share price total return of short of 30%. This compares with the MSCI world with year-to-date 21 performance of 31%. The year was very active for realizations and investments, and this also holds true for the fourth quarter, where in particular we had realizations of Foncia, and we call it here Foncia Roman One, because we reinvested, but then also Pacific Bells and Scrave, the former SPI Global. We invested in Diversity Tech, Breitling, and Blue Sky, And we also allocated some money to senior loans, basically bringing the total to about 135 million in that year. That's basically money parked to be invested in the midterm in private equity direct investments. And finally, we distributed the second interim dividend of 33.5 euro cents in December, which brought the total dividend in 2021 of 67 euro cents per share in line with the company's objective to distribute 5% of the opening net asset value. On the next page, number six, we observed that the Princess NAV and share price continued to perform positively and maintained the long-term outperformance of public markets. Whilst on the next page, seven, we observed that the discounts to net asset value opened from around 5% to 6% at year end to almost 17, 18% as we speak, as a consequence of the market volatility, which I'm sure we have all observed these days. This brings me to the key figures on page eight. The net asset value by now is well over 1 billion Euro. which brings the investment level, including the cash we deployed in the senior loans, to almost 100%. We actually, for technical reasons, drew on the credit line over the year end as we expected some distributions from some transactions that were then delayed. We just drew on the credit line, which is expected to be paid back in these days, actually. The commitment to underlying funds is basically to Partners Group flagship programs. However, as we have repeatedly said in these calls, technically you would only call about 72 million of them as really active unfunded commitments as they are anticipated to be called over the next couple of years whilst the balance is commitments to mature funds that are not anticipated to be called, certainly not in full. This already brings me to the portfolio review on the page 10, where you can see the revaluations for the 10 largest portfolio companies in the fourth quarter and in financial year 2021. The largest move, at least in the last quarter, on the positive side, was by SRS Distribution. This is the US-based company which distributes roofing products. and provides residential commercial roofing designs to roofing and building contractors. So this was valued upwards due to a very strong financial performance. A buy-in the US building market paired with a very strong management team that very actively acquired businesses in the last financial year. So there were about 17 acquisitions and 26 Greenfield branches opened compared to about 12 completed and 16 Greenfield the year before. The second company, Foncia, on this list, I'll cover in more detail a bit later in this presentation. Also, Amiga benefited from evaluation benefited from higher revenue and EPTI. There was a significant pickup in sales in all relevant regions, including in EMEA, Americas, and China. PCI was slightly declined in the fourth quarter due to technical reasons, had a good year, particularly increased its reach by a landmark acquisition in the last quarter. Lyophilization Services of New England was closed, another premier contract development and manufacturing organization. Vishal benefited from reopening and particularly from sales strong same-store sales growth, particularly during the festive month of October and November, supplemented by the launch of new stores. So, as of the end of December last year, the company has opened 62 new franchises in the fiscal year, despite some restrictions owing to COVID-19 in India. Vishal actually is part of its strategic initiative to increase its share of private label brands and general merchandise sales, continues actively to source suitable vendors in countries other than China, including Vietnam and India, and also has been able actually to build up its fabric consolidation and garmenting capacity as a part of its apparel diversification efforts. Civica increased in valuation again due to strong increase in revenue at EVTA. Civica, this UK-based, I would say critical software solution provider, increased in tandem with its strong financial performance. Civica has also made progress on extending its platform and completed actually four acquisitions in 2021, including Doc Software, a digital medical records specialist in Australia, which was added just in December last year. The next on the list is iCare Partners, the largest vertically integrated medical vision services provider in the U.S. that offers patients kind of medical optometry, ophthalmology, and certain subspecialties. So both revenue and EPTA over the last 12-month period increased year and year as the business continued to develop well. In November, eye care partners closed the acquisition of CEI Vision Partners, a network of ophthalmology practices in the Midwest and Mid-Atlantic. And the addition actually will result now really in eye care being the largest combined group in this clinically integrated eye care field in the U.S. The marker is on the negative side, particularly in the last quarter, but also Q3. This has mainly to do with delays, basically. It's basically a revised midterm outlook that drove valuations downwards. We suffered delays in certain government permits, but also delays in construction. We very much hope this is going to revert in due course, but as we are swift in adjusting the evaluations for changes in EBTA expectations, there was this downward evaluation. Noteworthy to say that we're still well on track to exceed our underwriting assumptions in this transaction. Noteworthy to see that the top 10 companies are just about 33%, which compares to maybe closer to 50% in maybe as little as a year ago where we had some larger positions and by that, a bit more of concentration. So by that, we need to go to the next 10 to reach more than 50% or to a total of 25 to be at about 60% of the energy of the total portfolio. brings us well into the next page where you can also see how well diversified the portfolio is by now across investments by sectors, across investments by region and by vintage years. So by that, investors in Princess Private Equity have a kind of an all-weather direct private equity portfolio that distinguishes also against some of the peers in the market. If you look at the portfolio metrics, we can observe a significant increase in revenue growth over the last 12 months. and in actually in EBTA growth. So, which basically is part of the reason or the most important reason probably for the total NAV, the increase in total NAV for the company. The EBTA margins are at solid around 18.9% and valuation and debt metrics only slightly changed. Noteworthy also a very sustainable capital structure comprising on average of more than 60% of equity across the portfolio. This brings me more generally on how we invest and I would bring it or shorten it here into a very short formula that we start with our thematic sourcing. Again, the overarching GIGA themes and then the definition of sub-themes and sectors at any time between 40 and 60 of them, which is a result of deep, dramatic research to then ultimately identify high conviction subsectors. Typically, this is well in advance of investing in specific companies. And we then, by that, send our troops, so to speak, to search for the gems or for the middle market or upper middle market companies that are active in these themes and sub themes. And we need this time to familiarize ourselves with the asset, with the management team, with the current owners and so on. Once we Own them, our entrepreneurial ownership and governance playbook comes into the game. So we run our businesses as entrepreneurs and we drive fundamental value creation. And by that, we want to achieve sustainable EBITDA growth in our portfolios, including by factoring in strategically are ESG factors. And by that, ultimately lead to a kind of a transformational investing as we have seen, for example, in GlobalLogic, which we exited last year. Foncia, again, we exited in this last quarter and then re-entered, or PCI, similarly, that we exited last year and then re-entered in one way, and all of them actually resulted in gross total value over paid-in, or gross multiples between three and a bit more than five. This brings me to maybe a more specific example as we just talked about the fonciancy. How does this transformational investing than really look like in a bit more detail. So Foncia, as investors, long-standing investors will know, is by now a European leader in property management and services. It's actually the market leader in France. It's by now the market leader actually in Germany, in Belgium, and the number two in Switzerland. And it provides just joint property and lease management, letting services, some brokerage and some complimentary services. By now, it actually employs more than 12,000 people. And it has the sales figures as depicted on this slide. Now, If you come to the sourcing, so the thematic sourcing, I mean, we were certainly attracted by this stable, resilient services business for a number of reasons. It fits very well in our digitization and business efficiency theme. It fits into kind of a theme that There's an increasing regulation in the market, and it fits into the theme of environmental sustainability. The addressable market in terms of dwellings, for example, in France alone, is steadily growing, and Foncia's dwellings under management have reached close to 2 million out of them. So we tracked this asset for quite some time from 2015 onwards. We developed actively a relationship with the CEO in the year to process launch. We developed a relationship with the then owner, Bridgepoint, Eurasio. And then we also were investor actually in Foncia's debt. between 2011 and 2016, and by that, have a very profound and deep insight. Regulation, as I said, is a major driver for outsourcing in this market. There are a number of laws, which I can't even spell, but ultimately drove people to outsourcing. which you can see then in the lease management, the private landlords figures that steadily go up. Once owning the asset, one of the landmark projects apart from the M&A activity where we added more than 260 smaller property managers, we actually went into a digital transformation project So we established the team, the strategy. We actually employed software engineers. We developed partially in-house our own software. That's not because we like to develop software. It's just because there's nothing else on the market that was suitable. we are now in the midst of actually implementing a new organization and rolling out the software. So we continued the journey with Foncia as we reinvested the junk of our proceeds out of a third-party transaction where we welcomed the TA Associates, a renowned fund with 25% in equity. Then other realization activities in the fourth quarter, and we're now on page 18, is Pacific Bells. That's the kind of a franchisee of Taco Bell's brand, of the Taco Bell's brand in the U.S. Terms were not disclosed, but exit is very much in line with our underwriting assumptions. What we did in brief in the six to seven years is we engaged in tuck-on acquisition, so M&A activity, and then in integrating the new businesses. We invested in technology, particularly to fasten the delivery times and to increase customer satisfaction. Another exit in this period was STRAFE. This formerly also known as SPI Global, a leading independent content and data solutions providers whose clients are basically publishing houses and similar organizations. Relation to STRAFE, we transformed it into a technology-driven business with strong positions in the research content and in the edtech and data solutions market. And finally, Hortifruti, Brazil's largest fresh food retail chain, was sold. And during our holding period, what we did is basically we doubled the store base. We created and expanded Holy Fruity's online capabilities. We optimized its delivery of fresh products to homes and so on. In relation to investments in the last quarter, we invested in diversity tech, which I'll cover in a minute. We invested in Breitling alongside actually CBC, the leading Swiss watchmaker. What do we want to add? We want to help management team to further accelerate growth, for example, in the direct-to-consumer space, but also to build an own retail network, particularly in Asia and the U.S., In this period, we also experienced an add-on, a follow-on investment in PCI, which I mentioned before, and we added or closed on Blue Sky. Blue Sky is a provider of remediation and restoration service for commercial industrial healthcare multifamily real estate. hence probably the name Blue Sky. So after some rain and hazards and wind and emergencies, you want to see the blue sky. So this is a company with almost 1,000 employees serving more than 5,000 customers across the U.S. Many of the customers are insurance companies actually and landlords. with multi-site buildings. What we want to achieve with them, certainly enter new markets, expand on the services capabilities, and partnering with customers on certain ESG and workplace safety measures. With that, maybe a focus on diversity tech. Diversity tech is a manufacturer of equipment pads and air conditioning condenser pads. You may remember we acquired Reedy some quarters ago, which is more a services provider in the HVAC space, which we like particularly. Now, this is a manufacturer with over 6,000 customers, with 30,000 storekeeping units, with 1,250 employees in 20 locations in the US, in Canada, and UK. And what we would like to achieve with Diversity Tech and its management team is certainly we want to transform sales and marketing through new product development, digital platform enablement, pricing optimization, and so on, some operational expansion, and certainly scale the M&A capabilities and velocities. There's also a plan. to expand in European markets. This brings me to the near-term pipeline. So the next, let's say, six months, particularly for investors who may fear that we can't deploy the money, that's all on the contrary, whilst we are very disciplined, There are a number of transactions actually in final stages. Actually, one of them here on the right-hand side, upper end, the dermatology practice that is basically now acquired. It's a forefront dermatology. I will be happy then to expand on that story next time in May probably. There's also actually in all of our vertical sectors, we've got very promising acquisition targets, which we will then certainly be commenting on in the next quarters to come. With that, I'll hand over to my colleague, Adrian Paul, As we have in last quarters only briefly touched on what we're doing in relation to ESG and its integration, we want to give you some more meat to the bone and expand on some examples. So please, Adrian.

Thank you, Felix. Yes, thank you very much. Hello from my side, and thank you for joining today's session. In the next couple of minutes, I really want to give an overview of our experience in the ESG and sustainability space, our governance and partners group, and really explain how our ESG approach is strategic and really focuses on value creation within our portfolio companies. So, if we turn to slide, page 23, what you can see is our experience as a responsible investor. And while ESG and sustainability has become a very trendy topic in the past two to three years, while we have been implementing and considering ESG within our investment approach for almost 15 years. We have been, in 2008, one of the first private market investors signing the UN's principles for responsible investment. And over the past six years, we've consistently earned the highest rating on their annual benchmarking for our ESG strategy and governance, but also for our direct private equity approach. We have developed internal tools, ESG due diligence tools, based on industry-leading frameworks, such as the SASB, the Sustainability Account accounting standards board and really integrated these industry-leading frameworks and standards into our processes. In 2020, as you can see, we launched our climate change strategy, which is also aligned with the industry-leading task force on climate-related financial disclosure. So it's really, we align with industry standards for the financial industry in terms of climate change. One achievement from 2021, which we are very proud of, is that Partners Group Holding has been included in the Dow Jones Sustainability Index. So we are the only global private market firm to be part of this index, which includes the most sustainable 320 firms worldwide. And this really confirms our position as a corporate sustainability leader in private markets and really allows us to lead by example for our portfolio companies. Because we can only drive change within our portfolio companies if we ourselves commit to the highest ESG standards, right? So we cannot expect anything from our companies that we ourselves do not implement. So this was a big achievement and helps us really work along with our portfolio companies and share the know-how that we have gained in the past years to become such a corporate sustainability deal. If we turn to the next slide, you see an overview of our governance of ESG and sustainability within our company because we believe, basically, We need to drive ESG within a firm. We need a clear governance, clear ownership of sustainability topics at each level of decision making. So what you might have read last year is that our former co-CEO, Andre Frey, who has led Partners Group for eight years, has transitioned into a role of Chairman of Sustainability. So he is now leading with the same passion and drive our overall sustainability strategy for partners group holding, so the corporate and our portfolio, and working together with the executive team and the board of directors on improving sustainability at our firm and that portfolio. Furthermore, you see on the right, we have a dedicated ESG and sustainability team headed by Camilla Montino, which I'm part of. It's a global team and we are basically in daily interaction with our portfolio companies and our focus is to design the processes that our investment professionals use when doing due diligence on investment opportunities and then supporting them in cases of material ESG risks or opportunities they have identified and then driving ESG value creation as soon as we've acquired a company. The page 25 really aims to summarize our approach, our strategic ESG approach based on active ownership and put it a bit into perspective into what we know or what the market knows from public markets or traditional fund investments. So on the left, you see what public markets commonly refer to as stewardship with terms such as ESG integration or engagement. And these are processes or approaches which are very much focused on risk mitigation, right? So investors in this space try to avoid certain investments, screen investments for ESG risks, pre-investment, and then when they're invested, they engage with these companies, so they try to challenge them on certain ESG risks. But at Partners Group, since we're active owners, we have the governance rights and we are in the driver's seat, we have not only the possibility, but also the responsibility to drive change and improvement within our portfolio. So we go beyond this risk mitigation approach, commonly referred to as stewardship in public markets, and really focus on creating value by enhancing and transforming our portfolio companies so what do we do well we have on the one side a top-down approach where we impose and implement minimum esg standards across our entire portfolio so we want there to be a clear esg governance clear esg responsibility at every level of decision making just as it is the case uh within our own firm right so we we lead by example with our esg governance and help the companies implement the same governance within their company and then we look with the management of these firms to develop tailored esg journeys so really strategic esg initiatives which address the topics that are material for the specific company, because obviously the topics relevant for each firm differ depending on the firm and the industry. In some cases, we even try to really transform the company to best-in-class companies within their industry, within their sector. So, these are then strategic ESG priorities owned by the board and advised continuously by the ESG team. So, if we turn to the next page, you see how this, our approach translates into the ESG, the investment process for how ESG considerations are really part of every single step of the investment process. So, on the pre-investment side, the sourcing and the due diligence, you see that on the sourcing side, we've developed a responsible investment framework for our investment professionals guide them into which investment opportunities we like and which ones we want to avoid. And what I mentioned before, we have developed proprietary ESG due diligence tools to support our investment professionals in their analysis of material ESG topics for the company. But the real angle where we really drive change within companies is during ownership. And our strategic ESG approach during ownership is based on two pillars, which is the ESG journey, so our initiatives within the companies, and the ESG dashboard, which is our approach to measuring the ESG progress and identifying further areas of improvement. So, this has been a lot of theory. Let's turn to the practical side and to So, over the next two pages, we have included two examples of companies that we've invested in 2017 and 2018, respectively, which you should all know. I'm sure Felix has told you about them. So, the first company is Tekken. It's a German company. It's a leading provider of submetering services. an energy efficiency solution. And there we have, let me start with the G component because that's the one that really allows for improvements in the environmental and the social dimension. As I mentioned, the first step of the ESG journey is really to roll out partners groups ESG governance framework within TechEN so that we assign a board director executive committee member and we hire at management level an ESG or corporate sustainability responsible which owns the sustainability strategy on a daily level and we have successfully done this we've hired a sustainability manager which is really in charge of driving this sustainability strategy which does workshops with senior management and We've done the first workshops when we onboarded the company. But now this sustainability manager works with us on a daily basis to really implement what we have identified. What have we identified? Well, at the beginning, already during the due diligence process, we knew we have to focus on climate change. So the company, when we invested, did not know how much it emitted. So we conducted what we call our climate change sweep, which is a systematic approach to identifying and managing climate-related risks and really helping the company to measure its carbon footprint and define specific actions to reduce their carbon emissions and also fortify their business model against climate-related risks. So we've done this with the company over the past three years. We've measured the scope one, two, and three emissions. The company has published its first corporate sustainability report last year, showing its emissions and showing really in detail all the work we've done with them. And they've committed to defining a climate roadmap this year and setting a target date. Supply and neutrality. Health and safety was also an important topic, which we've improved at the company, especially on the supply side. Let me turn to the next example, which is an American leader or leading provider of infrastructure locating services. It's an investment we've done in 2017. It should be well known by our investors by now. And there, the focus, obviously the first step was also establishing the governance, but the key focus on this side was really employee health and safety, given the nature of the business. This is the key topic we had identified during due diligence, and it's where we started our ESG journey. The company had grown through a lot of M&A in the years before we acquired it. So there was no harmonized health and safety protocols across offices and sites. So this was the first thing that we established. We held over 140 interviews with senior management, field technicians, supervisors to harmonize them, to improve them, to establish and adopt a zero-tolerance safety program for the 9,000 field technicians. And this successfully then eliminated also over one-third of motor vehicle accidents and reduced the injuries rate by 50%. So, these two examples really highlight how during the ESG journey, we focus on the topics that are most material to each business. And it is really a tailored strategic approach that we do at every company within our portfolio. These are all nice words, but we're a data-driven society. We want to see achievements, improvements. And if we turn to the next page, you see our second pillar of our strategic ESG approach, which is our dashboard. Our dashboard basically consists of 12 KPIs, which we publish in our corporate sustainability report every year for every direct portfolio company. It's the 12 most material ESG KPIs in the environmental, social, and governance dimension across all industries based on the SASB standards. The key aspect is that we send out an annual ESG KPI survey to our portfolio companies to really monitor, track, and measure each of these dimensions that we show there. So this is, as compared to public markets where you can just get data from MSCI or Sustainalytics, this is really an operational work that we do where we work with our portfolio companies, helping them to measure each of these dimensions, each of these KPIs, and identify together where we improved and where we still need to work more and focus more, which you see by the different colors in the dashboard, which are focus areas, priority topics, which need to be improved. And if we turn to the left, the last page of my section, basically, We aim to be very transparent and held accountable for what we do with our portfolio companies. We publish ESG case studies as the one we've described here and the dashboard in our client communication and are always happy also to set up bilateral calls with investors who are interested to know more about our approach. So, Felix, I'm handing that to you.

Well, thank you, Adrian, Paul. This brings me already to the summary and then to the Q&A. On the page 32, you will reckon we have a very established strategy based on our thematic investment approach. We build companies once we own it through platform building, through business transformation, and as we now heard in more detail, we fully integrate ESG factors. We have the deep resources that are required, that are necessary for these transformations. We work with these companies, with the management teams, bringing in our resources, our network, And then by that, we built actually a very diversified global private equity portfolio, providing exposure to thematic growth trends. So it's a well-balanced across investments in value creation mode. There are mature investments where we seek to crystallize value and in the ongoing supportive exit environment. As I also showed, there are attractive near-term, there's an attractive near-term pipeline, investment pipeline across regions and all of our sectors, vertical sectors. And so by that, this all should support the redeployment of capital and then also, of course, to drive the net asset value in future. By that, this is the end of my presentation. and I would give back to Chorus.

So, yes, I think we have some questions.

We'll now begin the question and answer session. Webcast viewers may submit their questions or comments in writing field.

Okay, so I am I'm reading the questions we've received. So, I think the first question I can take, Felix, it's about SFDR regulation of print sets. Yes, in the U, we currently have the upcoming Sustainable Finance Disclosure Regulation, which classifies funds into Articles 6, 8, and 9. And basically, all partners groups investment solutions and Princess as well are classified as Article 8. So, they really integrate sustainability considerations throughout the entire investment process and can therefore be classified as Article 8. The next question I think that's for you, Felix. Do you expect significant exit activities in 2022?

Well, given the maturity of the portfolio, I do expect exit activities this year. They are most likely not as active as we have experienced in 2021. and part of the reason is also 21 basically experienced well in 21 basically we exited investments we wanted to exit in 20. so by that it was a bit of an extraordinary year so i expected more to come back to normal levels there's actually a next question maybe related given the current market volatility is it possible to achieve more attractive prices Look, we can't observe this right now. We can't observe it as of yet. Typically, it takes a bit longer until market corrections tickle down to valuations. So we still observe high valuations. particularly in the sectors we are, because there are sectors, sub-sectors, the themes, where there's tailwind and where we basically go for attractive companies, and so we fully pay the price. As I mentioned in earlier calls, probably the most important remedy then over time is basically the password value creation. We need to create the value once we own the asset.

The next question I think I can take, it's also ESG related. And it's can you walk us through the onboarding of the investment from perspective? And so. As I, as I've shown in in the 2 examples to take them and us, I see we, the journey and partners group starts with what we call a hub day. So our ESG and sustainability team with our investment professionals meet the senior management of our portfolio company. We onboard them to Partners Group's platform. We show them our strategic ESG approach, what we have realized within our past portfolio companies, examples of what we're working on. And we really show them again, what are material risks and opportunities that we have identified during the due diligence process and that we would like to work on with them. But then we really leave the company and our team six to nine months of time to reflect on what are the priorities for the portfolio companies, which ones do we want to address first in the ESG journey, while also already establishing the ESG governance, so really defining sustainability, responsibility at every level of decision-making at the board, the management, and the executive committee level.

i think there's an easy question this is for me then that how much is invested in senior loans currently it's 135 million maybe i take another one there was a liquidity shortage end of the year that caused us to draw partially on the credit line this was as i mentioned this was a technical issue we expected certain proceeds from the sale of voyage care which was published and this has for whatever reason i don't know exactly has been delayed to to january another question how do you we find our portfolio companies are coping with unexpected inflation increases. This is certainly an issue for portfolio companies. Having said so, I would just say that most of our companies are middle market companies that enjoy healthy growth that are in sectors with tailwind. So there is quite a bit of price setting power. And so by that, I expect our portfolio to be way less affected by potential inflation increases than maybe the general economy.