Tetragon Financial Group Limited

Good afternoon. Thank you for joining Tetragon's 2026 first half investor call. We are all in listen-only mode. The call will be accompanied by a live presentation, which can be viewed online by registering at the link provided in the company's conference call press release. This press release can be found on the homepage of the company's website, www.tetragoninv.com. In addition, questions can be submitted online while watching the presentation. As a reminder, this call is being recorded. I'll now turn you over to Paddy Deer to commence the presentation.

As one of the principals and founders of the investment manager of Texagon Financial Group Limited.

I'd like to welcome you to our investor call, where we will focus on the company's 2026 first half results.

Paul Gannon, our CFO and CEO, is actually unable to participate in today's call, so I will review the company's financial performance for the period, and then Steve Prince and I will talk you through some of the detail of the portfolio and performance. As usual, we'll conclude with questions, those taken electronically via our web-based system at the end of the presentation, as well as those received since the last update. The PDF of the slides is now available to download on our website, and if you're on the webcast, directly from the webcast portal. Before I go into the presentation, some reminders. First, Tetragon shares are subject to restrictions on ownership by U.S. persons. and are not intended for European retail investors and these are described on our website. TETRAGON anticipates that its typical investors will be institutional and professional investors who wish to invest for the long term and who have experience in investing in financial markets and collective investment undertakings, who are capable themselves of evaluating the merits and risks of TETRAGON shares and who have sufficient resources both to invest in potentially illiquid securities and to be able to bear any losses that may result from the investment, which may equal the whole amount invested. I would like to remind everyone that the following may contain forward-looking comments, including statements regarding the intentions, beliefs, or current expectations concerning performance and financial condition on the products and markets on which Tetragon invests. Our performance may change materially as a result of various possible events or factors,

and with that, let's look into the financial performance for the first half.

Tepcon continues to focus on three key metrics when addressing how value is being created for and delivered to Tepcon shareholders. First, how value is being created for our NAVs per share total return. Second, how investment returns are contributing to the value creation measured as return on equity. and third, have values being returned to shareholders through distributions, mainly in the form of dividends. So first, let's look at NAV per share. As you can see on the bar chart, the fully diluted NAV per share was $40.6 at 30th of June, 2026. So the NAV per share total return for the first half was a negative 2.5%. Second, looking at return on equity, for monitoring investment returns, we use the ROE calculation. And as you can see from the chart here, this was negative 4.5% for the first half in 2026, and that is net of all fees and expenses. And the third, dividends, TETSCON declared a dividend of 12 cents for the second quarter 2026. That is an unchanged dividend from Q1. and give the chairs an annualized yield of approximately 3.6%. This next slide shows what we call the NAV bridge, breaking down into its component part, the change in Tetragon's fully diluted NAV per share, which fell from 41.88 at the end of last year to 40.6 per share at the end of June this year. And that is made up as follows. Investment income and losses reduced the NAV per share by $1.47. Operating expenses, management and incentive fees reduced NAV per share by 35 cents. And a further 11 cents per share reduction due to interest expense incurred on the revolving credit facility. Moving to the capital side, cash dividends reduced the NAV per share by 24 cents. and in addition there was dilution of 24 cents per share here labeled as other dilution. And this primarily reflects the impact of dilution from dividends that investors take in stock plus additional recognition of equity-based compensation shares. And then the last column shows a positive increase of $1.13 per share and that is due to the share repurchases in the first half of the year. As on previous calls, before we delve into the details of our first half performance, I'd like to put the company's performance in the context of the long term. Tetragon began trading in 2005 and became a public company in April 2007. So the fund has 21 years of trading history. And this chart shows the NAV per share total return. That's the thick green line at the top. The share price total return. which is the Dash Green Line, and those are since IPO. The chart also includes two equity indices, the MSCI ACWI and the FTSE All Share. And the lastly, it shows the Tetragon hurdle rate of SOFA plus 2.75%. So as you can see in the graph over time that Tetragon has been trading as a publicly lifted company, I don't have a share total return is 612%. And we continue to believe that our somewhat idiosyncratic structure of a listed fund owning alternative assets, as well as a diversified alternative asset management platform, has enabled us to create an alpha-driven ecosystem of ideas, expertise, insights, and connections that help us to generate investment returns.

Continuing the theme of looking at the long term, here are a few more performance metrics.

Our ROE, or investment return for the first half, as stated, was negative 4.5%. And our target return is 10% to 15% per annum over the cycles. And our average since IPO is 11.5%. So obviously the first half performance was somewhat below both the target range and our average since IPO. Second thing I would highlight from this table is that 42.2% of the public shares are owned by the principals of the investment manager and employees of TetraCom partners. And that is up from 39.4% at the end of last year. We continue to believe this is an important metric as it demonstrates a strong belief in what we do, as well as a strong alignment of interest between the manager, our employees, and other Tetragon shareholders.

The next slide shows a breakdown of the 3.6 billion of NAV by asset class.

So these colored disks show the percentage breakdown of our asset classes and strategies at the end of June this year on the left, and compares them with the end of December last year on the right. So just to highlight a couple of changes. TETRACON's investment in private equity stakes in asset management companies, so GP stakes and collectively known as TETRACON partners, is down from 42% to 35%. And this is mainly driven by the sale of BGO and to a less extent, the sale of LCMs, CLO management contracts. Second, Private equity and venture capital decreased slightly to 20% and 21%, primarily driven by the decline in the Ripple share price. And the third thing I'd point out is equity funds, which comprise investments managed by Hawks Point, Westbourne River, and Tetragon Life Sciences. These increased to 26% from 22%, and that's mainly increased due to allocations to the life sciences business.

Now let's move on to discuss the first half performance in more detail.

The NAV region that I talked about was a high-level overview of NAV per share. And what this table does is shows a breakdown of performance by asset classes and the factors contributing to the changes in NAV. So this table shows investment performance plus capital flows, and thus that ties back to the change in NAV. So as you can see from the bottom row of the table, Petricon's aggregate investment performance during the first half was a net loss of $131.4 million. And this was driven by a small number of significant idiosyncratic positions, both positive and negative. At first, the private equity asset management companies, also known as Petricon Partners, gained $120.2 million during the first half, of which the largest contributor was our GP stake in BGO. a real estate-focused principal investing lending and advisory firm. Second, private equity and venture capital investments had a loss of 138.9 million, mainly driven by Ripple, as the price of Ripple stock observed in the private market reduced from $150 a share to $109 a share. Third, other equities had a loss of $69.2 million, and that loss was driven predominantly by mark-to-market losses in UiPath and Steve will cover that in more detail in a moment. Fourth, equity funds had a loss of 39.8 million as the investment in Hawkes Point funds and co-investments were down 51.2 million driven by mark-to-market losses followed by the metal sector sell-off during the first half. So now let's get into a little more detail on each category.

and to start that off, I'm going to hand over to Steve. Thanks, Patty.

I'm now going to discuss the performance of Tetragon Partners. Our private equity investments and asset management companies through Tetragon Partners recorded an investment gain of $120.2 million during the first half of 2026, driven by our investments in BGL and Equitex. Equitex is a leading international investor, developer, and fund manager in infrastructure. Tetragon's investment in Equitex made a gain of $34.4 million in the first half of the year. The valuation increased by 1% due to an increase in the EBITDA used in the market multiples valuation approach. Tetragon also received a dividend of $17.9 million from Equitex during the period. Our investment in BGO, a real estate-focused principal investing, lending, and advisory firm, generated an investment gain in the first half of $191 million. At the end of last year, December 31, 2025, Tetragon Partners held approximately a 13% interest in BGO, which was subject to a call-put agreement. The valuation of $325.1 million consisted of $258.5 million of expected value to be received from the exercise of the call optioned by Sun Life and related payments and $66.6 million of carried interest. On the 27th of February of this year, 2026, the call was exercised by Sun Life and Tetragon received $294.5 million in the first half of the year in relation to the call option and related payments, net of taxes. And that was 36 million higher than where the position was marked at the end of 2025. In February, 2026, Thatcher and Partners also agreed with Sun Life Financial to relinquish certain ongoing rights held in BGO in return for a payment of $155 million. which produced a gain of the same amount as those rights had previously been valued at zero. These proceeds are separate from and additional to the call exercise proceeds. Tetragon routines its ownership of carried interest in certain Green Oak and BGO real estate funds. This carried interest valued at 66.5%. has been transferred from BGO within private equity and asset management companies to BGO funds and co-investments within our real estate category. Moving on to LCM, our bank loan asset management company, that generated a loss of $63.8 million during the first half of 2026. Following a strategic review of that business, Tetra and Partners made the decision to exit the CLO management space entirely. In June 2026, LCM's collateral management contracts were sold to Clearlight Capital Group for an upfront consideration of $40.5 million net of transaction fees, which we received those proceeds in June of 2026. We also have future contingent payments that we're valuing at $2.8 million at the end of June or the end of the first half of the year. Tetraon Partners' other asset managers consist of eight diversified alternative asset managers, Westbourne River Partners, Acosta Partners, Tetraon Global Equities, Tetraon Credit Partners, Foxpoint, Banyan Square, Contingency Capital, and Tetraon Life Sciences. Details of each of these can be found on our website. The collective loss on Tetraon's investments in these managers and the platform was $41.4 million during the first half of the year, owing to the working capital support provided to some of the relatively nascent businesses. Paddy is now going to go over our fund investments.

Thanks, Steve. The TETLGON investment equities, primarily through funds managed by Hawkes Point, Westbourne River Partners, and TETLGON Life Sciences, and all of these are part of TETLGON Partners. As mentioned earlier, Tepcon's resource finance investments managed by Hawkes Point generated a loss of $61.2 million during the first half, and that was driven mainly by mark-to-market losses, as discussed. Second, our investments in Westbourne River European event-driven strategies had a loss of $29 million during the first half, and these losses were driven by weaknesses in dislocation and corporate restructuring grades in Europe. as well as losses from the portfolio hedges. Third, Tezcon Life Sciences Fund which invests in both public and private markets targeting opportunities throughout the drug development cycle. The investment strategy is focused on high impact therapeutic areas such as immune mediated diseases, cardiometabolic and renal conditions, neurological disorders, rare diseases and precision oncology. In the first half, Teprecon invested $141 million of capital and received $115 million of capital from sale of investments, with it generating a gain for the third half of $46.2 million. And finally, investments in other focused equity funds had a gain of $3.9 million. So now moving on to credit funds. TedCon invests in credit primarily through contingency capital funds, Acasta partner funds, and TedCon credit partner funds. Again, all part of TedCon partners. So first, in contingency capital funds, these funds combine credit structuring and legal underwriting, the idea being to create pools of legal assets and lend against them in a manner consistent with how traditional asset-based lender would lend against receivables or inventory. Petragon has committed capital of $74.5 million to contingently capital vehicles, 55.2 of which has been called to date, and a gain of $9.6 million was generated in the first half. Acasta Partner Funds, or the Acasta Global Fund, invests opportunistically across the credit universe, with a particular emphasis on convertible securities, distressed instruments, metals and mining, and volatility-driven strategies. Acasta Partners also manages the Acasta Energy Evolution Fund, a portfolio targeted at opportunities driven by the transition of energy to renewable resources. TETRAGON's investment in Acasta Funds generated a gain of 3.7 million during the first half. Thirdly, TETRAGON Credit Partners Funds. TETRAGON invests in bank loans indirectly through the TETRAGON Credit Partners Funds, TCI2, TCI3, TCI4 and TCI5 are CLO investment vehicles established by Tectagon Credit Partners. During the first half, Tectagon's investments in funds managed by TCP generated a loss of 2.1 million. And finally, US CLOs. These are directly owned US CLOs and they generated a loss of 11.7 million during the first half. Performance here was negatively impacted by realized and unrealized losses on certain older vintage loan exposures.

Next, I'm going to move to real estate.

TETRACOM's real estate investments are primarily through principal investment vehicles managed by BGO. And these investments are geographically focused and include investments in the US, Canada, Europe, and Asia, generally taking an opportunistic, private equity style investment approach. Over the first half, these BGO funds and co-investments had a net loss of $3.8 million. As discussed earlier, this category now includes $66.6 million of carried interest in the BGO real estate vehicles, and that was previously held in our private equity and asset management company section. Other real estate, Tetragon holds investments in commercial farmland in Paraguay, managed by a specialist third-party manager. and performance in this investment was flat during the first half of 2026. And with that, I'll hand you back to Steve.

Thanks, Paddy. Tetragon's private equity and venture capital investments were the largest detractor from performance during the first half, generating a loss of $138.9 million. Investments in this category are split into the following subcategories. The first one, the direct private equity bucket, which was the largest detractor, produced a loss of $125.5 million, primarily related to Tetragon's investment in the Series A and B preferred stock of Ripple Labs, which is a top U.S. enterprise blockchain company underpinned by the XRP token and the XRPL cryptocurrency ledger. The loss was driven by a decrease in the price of Ripple shares observed in the private market from $150 per share at the end of 2025 to $109 per share at the end of June. Secondly, PE investments and externally managed private equity funds to co-investment vehicles in Europe and North America made a loss of 5.5 million spread across 44 different positions. Lastly, investments in Banding Square's portfolio companies generated a loss of 7.9 million. Banding Square had 18 positions across its two funds, at the end of June, which includes investments across application software, infrastructure software, and cybersecurity. Next, I'm going to cover our other equities and credit segments. We make direct investments from our balance sheet targeting idiosyncratic opportunities that are typically single strategy ideas, opportunistic, and catalyst-driven. These range from listed instruments to private instruments and cover a broad range of assets. The breadth and diversity of our LP investments and managed funds, including through TetraGem partners, also creates co-investment opportunities and ideas which we may develop as direct investments. This segment generated a loss of $69.2 million during the first half of the year, and the segment comprises 15 positions at the end of June. The performance was driven by an unrealized loss in the shares of UiPath, an equity position that was tested on its fifth largest holding at the reporting date, and about 70% of the total value of this segment. UiPath is a global leader in agentic automation, which helps enterprises to harness the full potential of AIG agents to autonomously execute and optimize complex business processes. Multiple broadly compressed across the software sector during the first half of the year, driven by fears of AI driven displacement. We continue to believe, however, that UiPath's agentic solutions will be a beneficiary of broader AI adoption. There were no other credit positions at the end of the first half of the year. Finally, let's look at Tetragon's cash balances. Tetragon's net cash balance is comprised of the following. TETRAGON's cash bank was $43.6 million at the end of June. TETRAGON has in place a $500 million revolving credit facility with a maturity date in December 2034, and $185 million was drawn at the end of June. The net amount due from brokers was $5 million. This includes one excess margin held by brokers. to Prime Broker Borrowing, and three, Revenue Assets and Liabilities. Net of receivables and payables, that was 0.6 million. Therefore, the net cash figure is negative 135.8 million. So essentially, it's 43.6 million less 185 million plus 5 million plus 0.6 million. gives you net cash of negative $135.8 million. The company actively manages its cash levels to cover future commitments and to enable it to capitalize on opportunistic investments and new business opportunities. During the first half of the year, Tetragon used $558.2 million of cash to make investments, $10.4 million to pay dividends, and $71.8 million to repurchase shares. $863.7 million of cash was received as distributions and proceeds from the sale of investments. Future cash commitments are $87.9 million and they comprise commitments to private equity funds of $23.7 million, contingency capital fund commitments of $19.2 million, BGO funds commitments of $20.1 million, Tetragon partner funds of $15 million, and Hawks Point funds of $9.9 million. I am now going to hand it back to Paddy.

Thank you, Steve. We're now going to move to answer some of the questions that we've received over the previous few weeks and indeed today. And as in previous calls, I'm going to sort of group some questions together. There have been a few questions on valuation or valuations of our assets. and to give you a flavor for the types of questions, I quote, the company needs to achieve evidence that the valuations are reasonable. Would the board consider selling stakes, possibly 20 to 30% in four or five of the companies, which would completely convince the market that the valuations are real? A second question, I'm just going to refer to a bit of a question and I quote, it's reference to what appears to be a fictitious NAV. So I think there are quite a lot of questions, as I say, about the NAV. And I get the sense that some investors looking at the discount and they see that the discount is so wide, they're leaping to a conclusion that the NAV itself must be questionable. Now, I don't intend to use this call to defend the NAV in any way, and it wouldn't be my place to do so. But there is a lot of information in the annual report. The independent directors go through a very robust process, and for those that are interested, I would recommend you going to the annual report. But I would make a few points, and these are very rough numbers, but I wanted to give you a sort of flavor. If we think of Tetragon's assets in terms of the accounting methodology of level one, level two, and level three assets, to give you a very high level, approximately 40% of Tetragon's assets, and therefore NAV, are what are referred to as level one and level two, and 60% are level three. But of those level three assets, half of that is Equitix, where we had an external buyer last year and then we have an external process or price. And so together that's about 70% of Tetragon's NAV. And of the balance, about 15% of the level three is Ripple where although it's a private company, it does trade in the private market and anyone can actually go and buy and sell shares and certainly see where the price is. So the point of all this is that therefore roughly 80% of the NAV can be seen to be either level one, level two, or indeed equity for Ripple, which leaves a balance of about 20% as being level three assets that don't have a recent transaction to help with the valuation. The second thing I wanted to address is the question as to could we sell 20% of each asset. I think, well, firstly, that would be very difficult to do. But the second thing is I'm not entirely sure it would make any difference. And to give you some context, we have done several sales over the last few years. To give you a bit of history on BGO, we sold 50% of our position in 2018. And very approximately, our valuation that we'd held at $100 million on that sale was worth about $200 million and I don't think the market moved at all. And then this year we sold the second half of our BGO stake for approximately 450 million, whereas previously it had been marked at about 260 million. And again, with Equitix, we had a valuation, an enterprise value last year pre the sale of about a billion pounds. and probably the enterprise value post the sale was about 1.3 billion pounds, so a 30% increase. And my point is not that these things are always worth more than we have them in the books at, because indeed we've had the experience with LCM that has been written down through last year and sold for 44 million. But where we have sold above our marks, the market hasn't taken any notice, which is really the point of the question. So difficult to do, and we're not entirely sure that the premise is a valid one anyway. But I would say with asset management businesses, at the risk of stating the obvious, their valuation should track the growth in AUM, which will drive management fees, and should track their growth in performance, which should track the performance fees. obviously what we're looking to do is drive performance and in turn AUM at these underlying asset management businesses. So that was what I wanted to say about valuations. The second topic and again this is one not surprisingly we think about a lot and we get questions on the whole time and that is the discount to NAV. I've tackled in some way at least the question about valuation But if the valuation is there, then there's a very real discount to that valuation, and that has been there for some time. And a couple of questions here just to read out. When will the directors take action to ensure that the NAV is reflected in the share price? And the second one, what is your action plan to narrow the gap between the equity share and the NAV? So I've said a lot of this before, and apologies if people have heard it before, but it won't come as a great surprise that there's nothing new in this area. The most frustrating thing, despite some people's views, is that there is no simple answer. There's no one answer. The industry as a whole has been plagued by discount to NAVs, but that's no excuse for us. but the point is there is no single or simple answer and so the things that we are doing are broadly the same as we've discussed in the past but unless things change dramatically I expect them to continue to be the same and as I've said in the past the most obvious thing is to attract more buyers for the shares than there are sellers and to that end we need to attract investors who believe the shares will go up. Not only does one need to therefore have belief in the NAV, which we've discussed, which is very relevant, but also people need to see performance and compounding of positive returns, which we strongly believe we'll be able to continue to do, notwithstanding that we haven't done it in the first half. So it's driving value in performance, but also the belief in the ability to generate future performance. And we think that is is a very real and important part of what we do. So it's not just about what the performance is, but it's how we create what we've described previously as an engine that drives performance, i.e. the ability of having teams of people, idea generation, idea sourcing, and our ability to underwrite that, to scale our investments and to risk manage it, that matters intensely. I think we continue to have an obligation to give people not just confidence in that process, but to educate the market on what we do. I think those of you that know us well know that we are very complex. We've talked today about legal assets, we've talked about structured credit, infrastructure, technology, crypto, critical metals, Convertible Bonds. I mean, we do have a lot of complex investments, and we need to educate the market and continue to do so. And lastly, in terms of cash distributions, both dividends and buybacks are important. We don't think they're the sole solution, but we do think they are relevant. And obviously, we've announced another buyback today. So those are the things we're doing. And I think that summarizes the questions because those were the two themes that we had most questions on. So with that, I wish you a very good summer and look forward to talking to many of you over the coming weeks.

Thank you.

This now concludes our presentation. Thank you all for attending. You may now disconnect.