Wendel

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to Vanduul's Half-Year 2024 Results Conference Call. At this time, all participants are in listening-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask questions, you will need to press star 11 on your telephone and wait for your name to be announced. You can also ask questions on the webcast, Olivia Aloh, Director of Financial Communications and Data Intelligence, will read them out. I must advise you that this conference is being recorded today. I would now like to hand you over to the conference, over to Mr. Laurent Mignon, Group CEO. Please go ahead, sir.

Thank you very much. Afternoon to everybody. Thank you to be there on 1st of August for our first half result analysis conference. So I'm very pleased. I will be making this presentation together with David Darmon, who is there. So we will be, both of us, doing the presentation. And Jérôme Michel and Benoît Riau will also be there in case needed to answer the question you may have. So let's start on the key highlights of this first half 2024. I think if we go, Vandel Group is a permanent capital structure that now have a dual strategy with principal investment on one side and developing the asset management on the other one. while both activities generate some links between each other. In the first half, the contribution from portfolio companies has been up 9.4%, the contribution to net earning, at $365 million. This is the 9.4% growth is restated from Consolta Flexible that has been sold, as you know, at the very beginning of this year. So, restating from that is up 9.4%. which shows good resilience in an environment which is difficult. On the asset management, this is first-time consolidation of IK Partner, but still the fee-related earnings of IK during the first half is 29.5 million, very much in line with what we were expecting with the growth of the fee-paying IOM. of 16% since the beginning of the year, showing a very good development of the activity supported by close to 2 billion, 1.7 billion of fundraisers and very good perspective for the rest of the year. So we're very happy to be able, thanks to the quality of the performance of IKEA, being able to raise significant amount of capital and be in line with the growth we're expecting from that activity. All together, if we take principal investment and asset management today, Vandel Group is managing 20.4 billion of assets, but we will come back on the way it is split. Our fully diluted NAV, which is a new metric we're giving, which takes into account the Shared buyback, we've been going, is established at 175 euro, 175.2 euro per share at the end of June, which is up 7.9% year to date compared to the same aggregate, a fully diluted NAV as 31st December 23, which was 162.3 euro per share. Our loan-to-value pro forma of all the acquisitions and operations that we've announced, even if they are not realized at 30th of June, is 5.9%. If we take the loan-to-value at its 10 as of 30th of June, it is minus 6.2%. But, you know, we have announced Global Decades and so on. Net of that, it's 5.9%, which leave the company investment capacity of 1.4 billion to be able to work on our strategy and implement our strategy. Today, we finished the first share buyback that we've announced a few months ago, and we're announcing a new share buyback program, 100 million, that will go on starting today. If we go next slide, this is really to show you the links between the different assets and how it develops. And you see how our, I mean, the very important thing for us is how does our business model create value. On the principal investment, obviously, this is the value of the underlying asset. That will be the number one element. And the listed asset during the first half has increased in value by 9%. The unlisted asset has been slightly down to 1%, which is a pretty good performance when we look to the environment in which the assets are evolving. But we will come back with more detail on that. We've been very active on the principal investment part during this half year. We've had 2.3 billion of disposal and value crystallization thanks to both the sale of Constantia Flexible on one side at the beginning of the year and the divestment of 9% of Bureau Veritas during the first half too. We've been investing or committing close to 700 million euros during this period also. So a very active management of the portfolio. And as you've seen, the contribution to the net earnings is up at 388 million. And the net income group share is at 388 million with contributed sales, which are up 13%. during the period. Part of the profit is linked to the disposal of Constantia, which was realized at the beginning of January. On the other side, the asset management is developing itself uh gp the first time the gp value growth today is not significant because it's first consolidation of ik sponsor money invested is not yet invested not yet called so we cannot give you how it has evolved but it will we've committed as you see uh up to 400 million on ik10 and potentially the partnership fund three we've bought 51 of ik for um 383 million Euros, out of it 128 will be paid in 27 pending some conditions. We had some growth in fee-related earnings in the first half compared to last year. This is very much in line with what we expected, and I mentioned a good momentum in terms of fundraising that is continuing, and we are very optimistic for the end of the year. So all of that is giving an improved gross profile for the company with increased recurring cash flow generation thanks to the asset management development that is starting, and again, it's just the start. We've got a very strong cash position to fuel execution, and we have set a higher dividend yield profile. Four euros have been paid during the first half, and we are developing an opportunistic share buyback program, as you see with this renewed 100 million commitment to buy back shares. If we look to what all what we've done was perfectly aligned with our strategy, most of what you see on the slide here has been commented, like the sale of Consencia. We've sold 9% of Bureau Veritas for $1.1 billion. The internal rate of return for the investment in Bureau Veritas is 24.8% per year since investment, which is a pretty impressive one. We've made the investment on Global Decade, and we'll come back on this one. 625 million in equity to co-control the company and this company has a very good growth profile and hence the quality of our portfolio going forward. We've supported Scania in its M&A strategy, Bolton strategy by injecting an addition 44 million of equity into Scania to support the, not specifically the Maranino investment. CPI made a refinancing project during the year, and within this refinancing made a small dividend recap of $93 million that was distributed to Vandel, and Vandel Groups made the sale of Prelegent, which has been signed, will be realized, not yet, and we've invested $15 million on a very promising company called ESWEAC. Asset management, I don't come back on what has been said. We have made the acquisition with access to 20% of the SHIB future carried interest also from starting from IK10 fund, 1.7 billion of fundraisers, which is very favorably comparing to other and sponsor money will be not called yet, but will have been committed. Globe Educates, we mentioned increased recurring cash flow generation and supporting dividend yield growth, and dividend yield growth will continue to grow in the coming years thanks to the development of the asset management business. We have strong investment capability with 1.4 billion of sort of, I would call it some sort of dry powder of the principal, I mean, of not only the principal investment of Vandel per se, and we announced the new 100 million share buyback program. All of that is geared to value creation and increase our TSR and dividend profile and hopefully long term to reduce our discount to NAV. If I move to the next slide, I think it's the first time we present that because we have the consolidation of IK Partners. Vandell managed $20.4 billion of assets. $7.3 billion is in principal investment with 9% of the total $20 billion. but a significant portion of that being in the education with ACAM, CPI, and Global Educates. Now, a significant portion in the business services, which is the highest portion with Bureau Veritas and Scalion, a bit in industrial with Target and Stahl, and a very small portion in Vandelgrosse and in Telcos through IHS. On the other side, you have the 13.1 billion of IUM of IK. That includes close to 2 billion of dry powder, 15% of the total. of the total 15 billion. So it's even more. It's 3 billion, sorry, dry powder for IK, which is a significant amount to be invested and show the capacity of IK to both invest and divest, but we'll see that when we talk about IK platform during the first half. Maybe a little bit of a highlight on Global Decade, and I will share that with David. We've made the investment on this very great platform of K-12 education through a network of 65 premium bilingual and international schools. This is present in 11 countries, mostly in Europe, and it is a very attractive market, we think. We have 40,000 students in the schools with a world-class education, predominantly taught in English. Sales are 440 million in year 25 expected with 120 million of EBITDA. And we think it's a great business because it's a very stable, predictable, and strong double-digit growth expected together with potentially both organic and M&A. Strong cash flow generation, mostly invested in organic and external growth. David, you want to say? more on Global Educate.

Yes, thank you Laurent. Good afternoon everyone. So we announced on June 1st this acquisition of 50% alongside Providence. Providence is a global PE firm with a long track record in education. They've been successful in Galileo and obviously in Global Educate and they have other education companies in their portfolio. So we thought it was a great partner. We do intend to invest 625 million euros of equity upon closing. We expect this closing by the end of the year. And as Laurent was saying, we were very excited about this because one, there is a great mix of gross avenues, both organic with increased numbers of students, what we call semi-organic, which is basically opening new campuses, and M&A. It's a highly fragmented industry, and this is a great platform to buy rooms and pubs. We're also very excited because there is strong predictability of cash flows. At the beginning of the year, you have a good view on volumes and fee, which in LVO is very helpful. We look forward for the closing by the end of the year of this very interesting investment opportunity.

Next slide shows you something we will present to you now, which is really to show you how value creation has been done at Vandell. So you've got two, first bar is the principal investment. The second one will be asset management. Then you've got what potentially is a cost to that, which is cash operation costs and the net financing results. Then you have potentially any action we take on the buyback of the shares. That gives you the total value creation. So this, during the first half, principal investment has created 16 euro per share of value, 19% growth of the listed asset, mostly driven by Bureau Veritas growth. As I mentioned, the non-listed asset has been slightly down, but we'll make a zoom on each of those, and we'll make a zoom on that. Asset management, for the time being, it's first time, so the negative minus 0.1 euro is the transaction fee linked to the acquisition of IK Partner, but globally the fee payment is growing fast, so this will be a significant value creation driver in the future. The negative part of the cash operating costs and net financing result is minus 0.7 euro per share. We have a good cost control situation. We'll come back, we'll make a zoom on that, and we've got a positive carry because we're lending the money to a higher yield than we're borrowing it. So we'll make a little bit more of a zoom than that. And we've made share buyback, which have been relative of 1.3 euro per share during the period, which obviously makes sense. So total value creations on the fully diluted NAF per share has been 16.9 euro per share, 10.4% of the fully diluted net asset value as a return for the first half. Now, we go into the detail. David, do you want to go into the detail of it?

So moving to page 10, more specifically on principal investment, as Laurent was mentioning, the growth is €708 million plus 8.6% compared to last year. You can see on this slide that the lion share is coming from Bureau Veritas with an increase in €791 million of value creation from Bureau Veritas. This is obviously driven by the strong share price growth since the beginning of the year. I will come back in a minute on the reason for this growth. You can see that the rest of the portfolio in principal investment had a marginal impact, a marginal negative impact, because IHS and Target combined share price evolution led to a decrease of 56 million euros, and our four remaining unlisted assets plus bundle growth had a small decline of 28 million euros. So pretty marginal impact from those six companies compared to the major evolution of the Berovitas share price. Moving to slide 11, where you can see the operational performance of those assets. You can see that Bill Veritas had a strong growth, both organic and in terms of EBITDA, plus 4% in terms of sales and plus 4.1% for the EBIT. The share price grew more than that on the back of a very good reception of the new strategic plan, the LEED 28 plan, which was announced, and the company is starting to implement. And we can see here the early results of this plan. And we found the market some upgrades in terms of forecast, which drove nicely this share price. TARCAD had a mixed result about the H1 with a flatness to declining sales. You can see minus 3.1%, but at the same time, a very strong margin increase. as it was able to maintain some of its prices, while its cost base in terms of raw material remained pretty low. So with this increase in margin, you can see that this decline in sales did not reflect in EBITDA. EBITDA actually grew by 17.5%. iShares is going to publish over the month its results, so we are not going to comment on those today. but we can come back on the recent announcements in terms of change of governance. You probably saw that the resolution and changes we proposed to the shareholders meeting were voted by over 98% of the shareholders, so very well welcomed by the shareholders, and we do believe that those governance improvements is going to lead to better share price performance and better relationship in terms of stakeholders, which would be very beneficial to the company. Moving to slide 12 and reviewing now the performance of the other private assets we have in our portfolio. Starting with Stahl, you can see that Stahl had a good beginning of the year, both in terms of sales growth with an increase of 4.9% and in terms of EBITDA with an increase in margin. Like I mentioned on Target, Stahl was able to increase its margin because of a good price discipline. and enjoying some raw margin price decline. You can see the impact when you control your fixed cost and you benefit from a raw material decline, a very strong margin increase at H-TAL. We're getting CPI. CPI enjoy a very strong H-1 growth, especially in North America. The international was still growing, but at a lower pace. In terms of margin, you can see a small contraction because the EBITDA only grew by 9.2%. The company is making some significant investment in some IT and some processes and hiring some talents, which is marginally impacting the margin here, but it's still enjoying a very healthy margin. The net debt you see here is slightly impacted by the dividend that Laurent mentioned earlier. was able to go to the bank markets and the global syndicate. and distributed dividend to its shareholder, which obviously increased the net debt as a consequence. Acamps had a mixed result during H1. You can see that the sales were pretty flat during the first six months, with good growth from North America and the Yukon banking clients, but some disappointments in terms of sales in Asia. Some customers did delay some orders. So we call it a sort of transition year for ATEMS with a lot of work being done behind the scene, obviously starting with a change of CEO and the arrival of a new CFO and some important investment in learning management system as well. So you can see some impact on the margin as well. We are still confident on the long-term prospect of the company, but the first six months were really a bit disappointing. Scalion is navigating a top market. The global market for consulting in digital transition is seeing a slowdown, and you can see the minus 1% pro forma, the acquisitions of Manerino and Dulin, which is very different from the traction that we saw in the semester before, where we had a very strong growth. So Scalion is seeing similar headwind than the rest of its. In terms of margin, we mentioned that last time we talked, which is what we call the intercontract, the unbilled hours. Scania had some consultants on its payroll which were not staffed, and that did impact its margins. And so you can see that EBITDA actually declined by more than the 1% sales decline I mentioned earlier. Moving to page 14, Laurent, if you want to follow on.

Yeah, maybe a word now on IKEA because it's the first consideration. So IKEA has a great first half with very strong, very good growth momentum and significant ability to generate value to its LPs. Liquidity for LP, this is a very important element because They have generated a billion of proceeds by more than five exits, and I will make a little bit of a highlight on that on the next slide. Those sales were done in very good condition with an average 2.8 times multiple of money. a very good return for the LPs on the sales, and it's a very important element. The development, they've been very consistent in investing. They've invested $870 million, nine transactions across all IK strategies, 145 of co-investments were offered, by the way, to LPs on four of these investments. Fundraising is going very well. Strong momentum for the flagship IK10. We're close to 80% of the 3.25 IK10 hard cap, and we will reach the objective, so we're very confident on that. The first reinvestment on IK10 has been done with Curie, Eurofeu, and Boma, so starting to invest the money of our clients. And in terms of innovation and new strategy, they've been the first continuation vehicle that has been done on Yellow Hive, a continuation vehicle which was very largely oversubscribed at an equity value of Enterprise value of 505 million euros. And then the IK10 has been classified as Article 8+, and we are launching the IK Partnership Fund 3 now. Next slide shows you what is very important in the asset management is the ability to give back money to the LPs, which is one of the issues for some of the funds where LPs don't have any So DPI is one of the key ratio that is very well and looked at by LPs in order to reinvest and it's very high at at IK, IK always have been returning more money than it has drawn from its LPs. You see that there've been five exits that have been done during the first half, Mapbet, ERS, YellowHive, Mademoiselle Dessert and CarSpec. Globally 2.8 times money, 21% realized RR on those exits. 41 add-on has been executed across the portfolio today. And there has been an average EBITDA increase of 140% since entry on those companies. So all those metrics rely on the five, but just explain how this 2.8 times money has been relied, the 21% ROI. So very successful sales, and that results in a very ongoing and good fundraising activity. You see that the fund... Fee-paying IOM were $7.5 billion at the end of December. They upped $1.7 billion thanks to fundraising. There have been five exits for $500 million, so they are now at $8.7 billion. Up 16%. Global asset under management, including NAV and co-investment that is given by the LPs, is move up from 11.1 to 13.1 billion, which is up 8%. So very good momentum. The H1 fees globally were 79 million. The fee-related earnings were 30 million. All of that very much in line. with our forecast when we presented the transaction in October 23. The dried powder is significant, is close to 3 billion. Cash operating, the other element of value creation was CND, was the cash operation and net financing results, which was a negative impact of 0.7 per share with a very good control of the cost to less than 1% of the total GAV on an annual basis to 0.9 euro per share. There will be, we've made some work in order to reduce our cost, but there's some timeline between the action we're taking and the realization to that, but we will see more to come in that. And the net financing result has been positive thanks to the positive carriage situation, as you know. Share buyback. that have been done, 100 million have been done, 100 million program, which had 1.3 euro per share impact on a fully dated basis as of June 2024. It was not fully done, by the way. I'm saying 100 million. That's the situation of the 30th of June. Since then, the program has been finalized, and a new one will start today.

Thank you, Laurent. I'm moving now. Yes? Yeah.

Moving now to slide 18, you have here an overview of the IFRS P&L, which does not really reflect all the capital gain and inflows generated by our investment activity. Our mission is to deliver performance, but you can't always see this performance directly in our P&L. For instance, the close to 8 million euros capital gain made on Bureau Veritas shares in April does not appear here, as well as the change in fair value of the IHS share. And the dividends, for instance, as well, received are eliminated during the consolidation process. But let's move to the most important KPI, which is the NAV on slide 19. We already commented extensively the performance triggers earlier, so I'm going just to highlight what is new here. We have added a section for asset management activity. You will there see the valuation of our GP. Today, it's only the 50% stake we own in IK. Tomorrow, it will be all the other GPs and sponsor money we invest as NLP. We will value the GPs with market multiples and the sponsor money according to the valuation provided by our asset managers. It is worth to be noted that below the bond deadline, you have a new section as well to reflect the deferred payment in IK, the 51% capital share. So it's 128 million plus the taking fees plus the interest that you will find there. In addition, you have at the bottom of the table the fully diluted NAE to take into account the share buybacks fully in the NAEV. Moving now to slide 20, Laurent, you want to describe the debt profile?

No, you can go.

Oh, yeah, okay. We have, as you know, we have no... We're fully funded and we've got a low LTV ratio today, which will allow us to have some significant headroom in terms of investment. Our average maturity of debt is 4.1 years. The average cost of our debt is 2.4%. The return that we have on our cash is 4%, hence our positive carry. We have made during the year some, so next, the next debt coming is March 27, 2026, which is the convertible bond on Bureau Veritas. at 32 euro per share. Then we've got some debt in 26. We have reinstalled the Android credit facility to 875 million, which is due to July 29. Now, and so, yeah, so we have no, we've got a very good liquidity situation, as you can see on that slide. Next slide, maybe. With a 2.4% average cost. Return to shareholder, 4 euro per share. It's up 25% compared to last year. It's a yield average yield of 4.8% on the share price and 2.5% on NAV. We've bought back 1.2 million Vandel shares during the, since the program launched in October 23. We'll do another program of 100 million today, starting today. And maybe I go to the key takeaways. During, we're acting on all the levels in order to increase value creation. That's taking time, but it's ongoing with investment in B2B services, education and energy traction and principal investment. Our equity check sweet spot, as you know, is between 500 to 800 million per investment, exactly what we've done for We aim to, you know, geographically diversify our portfolio today. France, by the way, represents 15% of the group exposure, so we're a very small exposure to the French. It's a very wide exposure globally, and we aim at further growing exposure to the dollar assets. On the asset management, we believe that the benefit of a private asset management platformization is important, and I think many people now are viewing that as a very positive thing to create platform in this field. IK is the first step, and we're looking to other steps going forward. Our priority is to grow new verticals. We've done the Buyout, we're looking potentially to private debt, private infra, or secondary. Permanent capital is a very strong envelope to develop a Dell asset management platform because it helps you seeding the capital and allowing to a much more and potentially making acquisition to add and to help growing those different verticals. Our target, as you know, is to grow the FRE with an interim target in 27 to 150 million and create potentially, thanks also to that development, potential performance-related earnings, thanks to the part of the carried interest we're getting in these different asset management companies. So our mid-term upside to net asset value and share price is really, well, we've got a new share buyback, and we've got asset management, real estate boost, and organic growth, and IK is really starting, as you see, with very good numbers, M&A potentially, and the development of synergy between different platforms, specifically in the, well, there will be some in the back office part, but there will be Significant one also on the distribution, which is the main benefit of the platformization. On the principal investment performance growth, both organic and bolt-on M&A, we are working on all our companies to improve the operational situation, and having an active management of our portfolio is also a key element of value creation. So I'm finishing here, and David, Jérôme, Benoit, and I are here to answer any questions you may have.

Thank you. At this time, we will conduct a question and answer session. As a reminder, to ask a question from the phone, you'll need to press star 11 on your telephone keypad and wait for your name to be announced. To withdraw your question, please press star 11 again. If you wish to ask questions from the web, please do so now. And we... Okay, we're going to take our first question from the phone conference. And the first question is coming from Joran van Aken from G Group Peterkamp. You're live, please go ahead.

Yeah, good afternoon. First, I have a question on the asset management business, and I heard you talk about growing new verticals, but the line was very bad on my end, so apologies, I couldn't hear that part. So I'm just wondering, could you remind us a bit about the long-term vision for the asset management business? Is the idea to acquire new verticals or specialists in verticals, like, for example, Antin is a specialist in infrastructure and that you built this business with specialists in each segment or would you also be open to, for example, buy another private equity asset manager, for example? Just your idea there. And then a second question would be, because you have, of course, plenty of liquidity available to do something, should we expect then that the next investment would be an investment in the asset management business? Or are you looking at, for example, another private company? Because I think most people really liked the Global Medicaid acquisition. So any insights or your thought process there would be helpful. Thank you.

Well, on the asset management, we want to create a true platform that will allow us to provide to LPs different strategies so that you can have a real complementarity of the different teams that we're building up. So the idea is certainly not to buy another buyout companies. We've made an acquisition of IK. We think IK is a great team, and we're going to use IK and to help IK growing itself on the buyout. And I don't want to have, and we don't want to have competing teams within the same thing. Maybe we can help some if IK find a good opportunity to grow faster in some region or area with making a small bottom acquisition, we can help IK to do so, but the priority for IK will be to be developing organically, grow its business, and we think we can grow it and help it. And the numbers we've shown is showing how much successful it is. And not to have at all of a competing team. So the objective is to have complementary teams. So you mentioned infrastructure is one. We could add some debt funds on the other side. So that's really to have different verticals in terms of expertise that have a very strong complementarity in terms of distribution after that. So the value added to that is that you are providing a complete offer to LPs. You can have a much deeper relationship with the LPs because you are talking about different strategies with them rather than having a monoline activity, which is only one strategy. So we want to support the teams to develop themselves. We want to avoid to have any competing teams so that we end up in a situation where you have two teams running for chasing the same type of assets. And yeah, so that's the strategy. I think it's really what we've tried to explain since the beginning. But to be more clear, so we will not buy another key private equity buyout firm. IT is really the one. I mean, we can think about one day having one in the U.S., but it's not a top priority today on the list. Number two is where do we want to invest our money next time? Well, it's, again, where we have to be opportunistic. If we get a great private investment, we'll do it. If we find the right asset management company, we will do it. Our strategy is still to grow the asset management platform. So it's obviously a strategic objective. And should we find the right team, then it may be that will be what we want to do. But we need really to make sure that we have the right team because to create a platform, you need to have a team that can work together. So we're paying a lot of attention to the quality of the teams we're buying. So there is no clear answer to your question, but clearly developing the asset management is a clear priority to us in order to develop that platform, IK being the first pillar to that strategy.

That's very clear and makes a lot of sense.

Thank you.

Thank you. We're now going to take the next call, question from the call. And the next question is coming from Gregoire Herman from Berenberg. You're live. Please go ahead.

Hello, everyone. Thanks for taking my questions. The first one would be on IK Partners. When we look at the figures you've shown today, it looks like the asset management fee that you're actually charging is in the very high top range of what we're seeing in the industry so i was just wondering here if you could give us a bit of information on the dynamic that you that you're seeing there um and especially on the new funds raised recently uh whether it's uh pretty much at the the kind of the average rate that we can accurately calculate or if there is any change in here. And maybe the second one would be on the share buyback program. It's maybe obvious, but just trying to clarify. If I remember correctly, at Q1, you briefly touched upon that and you somehow said that you were ruling out any additional shareholder distributions. You were really happy with the increase in dividend targets. You were already having a share buyback program. And so I'm just wondering whether here anything has changed or you just basically want to take advantage of the share price weakness that we've seen right after the situation in France. Thank you.

Well, I'll start with the second one is really there's no change in our view, and we don't want to make a – but we think that the discount is very high, so it's a good, I think, to allow the part of our capital to do some – Buy back for that makes sense and create some value as long as these leave us enough room in order to make acquisition and deliver the strategy. So it's part of the value creation strategy that have significant pillar, not only one. Long-term perspective is to create a great principal investment portfolio, to create a great asset management platform that will generate recurring revenue. But also you have some financial opportunities. Tricks to do which is to buy back some shares whenever you see that the discount is too high So it's part of it as long as it's not becoming all of it. So that's that's really it we've defined a clear dividend strategy and that is not going to change and and that dividend will grow within the development of the asset management platform as a significant portion of the fee-related earnings will be distributed on addition to the 2.5% return on NAV that we've defined for our given policy. So that's giving, I think, a clear view of where we want to go. So no change of strategy, and we've stayed, by the way, opportunistic. share buy back program because the conditions give us, I think, this opportunity. It's part of a value creation plan, not all of it. Number two is on the asset management. Now, I think we're, by the way, we're a pure private equity fund. So we're charging private equity fees. And when you relate that to, often it's, you have to, part of the, on the other side, if you look to, Some of the big LP, they pay the fees, but they don't pay fees on co-investment. So you have to look to the mix between fee-paying AUM and global AUM in order to get a good view of the average fee. But we're in the market. We're talking about a one – yeah, I mean, we don't give the – but if you make the math, you will see. We are in the market of the private equity. We're not higher, but we don't have to make discount. This is a good quality fund, and we've got good money coming. and we have big LP that are willing to come, put significant amount of money, and being offered also the capacity to make some co-investment, hence the co-investment part of our asset under management.

That's clear. Thank you.

Obviously, fees on AUM is not everything. Fee in private equity is higher than fees on debt or fees on infra. Each AUM has its own dynamics.

Thank you very much for your question. We have another question from the film conference. And this next question is coming from Alexandra Gerard from CIC Market Solutions. You're live. Please go ahead.

Well, good afternoon and thank you for that presentation. Three questions on my side, if I may. The first one is related to the change in value of your unlisted asset, which is more or less slightly negative. Can we have a feel of what was the change in value for each of the five assets? I'm not asking for a number, but more of the direction and the magnitude for each of these five assets. Second question regarding Scallion, so the operating margin was down, so I understand the cyclical impact. But I mean that company was, is at the very high end of its industry in terms of profitability. Don't you feel that this might be more than a cyclical impact? And the third question, sorry to be playing on that subject, the asset management business. When you mentioned that 150 million euros target for 2027 in terms of fee-related earnings, is it your share of that, or is it on a consolidated basis? And a question on the AM basis. On private debt, I mean, private debt is, if I am not wrong, a segment that is of interest to you, and currently one of the large European players is about to be acquired by Arctos. I'm talking about Hayfin. Is it a company that you have looked at? Thank you.

So just a quick answer to the 150 is our shares. So it's not the consolidated, so it's our shares. Now, going to just a quick word. I'm not commenting on any transaction. AFIN is a great company. companies. We know them well. I think their willingness was for the management to keep the majority of their operation. So obviously that was not in line with the objective to join a platform. So we have high respect for the team, but they had different views and that's why they've made this transaction with us. So a very great team, very good business, but we fully understand that the willingness of the founders to have a fully independent platform supported by some financial help, but not. not to join a platform like ours um now on the where does the value of the assets private assets obviously um uh well it has the the movements is following the movement of the uh that's that's a clear where the value is moving up or down, and even if the multiple may change. But, you know, we're using to value our assets the on listed companies applied to the aggregates of our companies. And whenever you see some companies that has negative movement on margin, well, that has an impact on their value. a good way for you to have a sort of, but you know that. So implicitly that had an impact on that. And that was the main driver of the values during the period.

David, do you want to comment on that? Yes, please. Yeah. So you saw that the margin on the last quarter is slightly under 10% EBITDA margin, which is actually not on the high end of the industry. So we don't think this is like a permanent contraction. And, well, almost the contrary because this contraction, as I mentioned, is mainly due to a lot of unbilled hours and because we actually built with the anticipation of a very high growth. So we were caught a bit by surprise by this contraction of the market. So we need to fix this unbuild hours issue, which will increase the margin from the level where it is today. But in addition, we also have plans to increase the offshore of the company, which today is really minimal. We are talking about a few hundred employees in offshore countries, and there is a midterm plan to increase that significantly, and that should have an impact on more. And last, we also mentioned that we want to rebalance the geographic exposure of Scania, which is today many exposed to France, international at higher margin in terms of business mix, and by shifting to a company with a higher share of international revenues, we do believe it's going to have an impact on margin as well. So a long and square to basically say that we believe that the current level is not the long-term sustainable level, and we see mid-term recovery of margins.

All right. Thank you very much. That's clear.

of top line is resisting well in its environment. So we're pretty, we think it's a difficult environment today, but the company is resisting well and taking action in order to increase margin, as you mentioned. So yeah, we see a good future for that.

On the fee-related earnings, you said that was your share. Sorry to make you repeat the line as well.

Oh, sorry, sorry. Our shares. Did you get it?

What did you say, sorry?

I say, yes, it is our shares.

Yeah, all right, your share. Understood. Thank you.

Okay, thank you very much. At this stage, there's no more questions on the phone conference. So I'm now going to hand you over to Olivier Allot for any questions on the web.

Thank you. So we have two questions from Arnaud Pagliese. Bureau Veritas was the main contributor to your value creation in H1. If you want to reduce your shielding, what would be, according to you, the optimal vendor's participation rate and exposure to the company?

Well, I think that today we have a good share.

We have a 27% share. We already have made a convertible bond that will potentially dilute us when it will be exercised. So we're happy with the situation. We think that We were needing to reduce slightly our exposure in order to have a better capital allocation, not because we don't believe in Bureau of Etats, but because we saw it was a better capital allocation altogether. Today, it represents a portion which is more reasonable of our global NAV, and we have the convertible bonds. On top of that, as we are very optimistic on the ability of Bureau Veritas to deliver value, we're pretty happy about the situation as we are.

Thank you. Is there any restructuring program to implement in Scallion, or it's APDA recovery only relies on a better market environment?

I think I covered that previously. So it's mainly making sure that people are not on the bench, so it's basically winning new businesses and working towards more higher exposure to offshore and international. So, no, we're not talking about restructuring. We're talking about increasing sales, operational leverage, and going abroad.

Thank you. We have a question from Samar Sagrawal. Question on sponsor commitment. Can you share expected timelines when the sponsor money would be called? And just to confirm, what would be the term of management and performance fees on vented sponsor money to IK Partners?

The sponsor money will be called It's difficult to say, but it will start to be called probably the half of this year, and fully for what we have.

It's difficult to give it more than .

We have the same term as being an LP, so exactly the one that,

And there's no on the he has the is for the team. Okay.

So maybe I'm going just to summarize what you just said. So we have the same condition as other LPs. We have very significant LP in those funds, but we don't benefit from different terms. And regarding the deployment of the fund, it's difficult to give timeline. It's going to start now because as you saw, IK10 has already three investment made. and it's going to be deployed over the life of the fund. So a contract deploying on the speed of making the investment, two, three, four years. But the regular timeline you expect for a PE fund to deploy capital.

Yeah, and in terms of condition, it's really good. So there's no on investment. The performance fee, we have 20% of the fees as a firm.

Thank you. The sound is not very good. So next question is, again, regarding IK partners. Following the acquisition of IK partners, which are the key segments within private markets that you are looking to diversify or enhance your third-party asset management portfolio, How should we envision the asset management to look within the next three to five years?

I think it's too, I won't really express on that, but the segment are debt, infra and secondary. And I think a clear sign is really to look to the fact that we are aiming to have 150 million of assets E-related earnings in 2027.

That's really the goal.

Thank you. Last question from Samarth. I want you to understand the drivers of valuation within unlisted assets in the second quarter of 2024. My calculation indicate I single-digit to double-digit organic growth across style CPI and ACAMs. So what has driven lower valuations? Is there any specific asset where profitability has presented the valuation drag during the quarter, or is it just pure multiples?

David, do you want to take this one?

Yes, well if you go on slide 12 you can see the EBITDA growth of the private asset and basically the good indicators of which one saw its valuation going up and which one saw its valuation going down. And as we mentioned on slide, I think it was slide 10, you can see that overall the decline is only 28 million. So you're probably not off. Overall, those five companies had a marginal or no negative impact on the NAV, and it's a combination of a few assets going up and a few assets going down.

But it's a combination of EBITDA, as you see, so as I say, it's a good driver, and also some peers' PE going down.

Thank you. I have no more questions on the web. I think we have an additional question by phone.

Thank you. Yes, we have one more question from the phone conference. And this question is coming from Alexandra Gerard from CIC Market Solution. Please go ahead.

Thank you. Three quick ones on my side. We didn't ask you the question regarding the deal flow and whether you see any significant sign in pickup of the global M&A activity or the market is still frozen. What's your point at the moment? Second question regarding its financial leverage is not that high at 1.4 times. Would you be ready to consider, as you did in the past, a leverage recap for a dividend coming from Stahl. And if you could remind us finally the date at which ends your lockup on your Bureau Veritas stake following the recent placement. Thank you.

So on the last one, Alexandre, this is Jérôme speaking. I don't know if you can hear me. On the lockup of BV, we have an undertaking of six months following the block which was carried out early April. So the lockup expires early October this year.

Thank you. On the market, Alexandre, I would say that you probably saw in the press A few recent announcements, Tea Associates invested in Harvest, Orisha Traders, Alia invested in Maginix. Obviously, we invested in Global Decade. So it is definitely a better market right now. There are still some situations which are not going through up to the end. So buyers and sellers are not talking the same language. But it is a market where... transactions are actually happening. So it's not frozen anymore. It's a difficult market, but it's not what we had six or nine months ago.

So thank you.

I think we... I think there was another question. How can we do a dividend recap? Obviously, we have the ability to do a dividend recap. We'll accept it, but yes, we have the ability to do it.

So there's no more questions on the phone conference at this point.

So thank you very much. So I think we can close this conference call. Many thanks to everybody for attending to this H1 result call and talk to you soon. Bye-bye.

Thank you. And this concludes today's conference call. Thank you for participating. You may now disconnect.