Wendel

Good afternoon ladies and gentlemen, and thank you for standing by. Welcome to Vendel's H1 2024 Results Conference Call and Webcast. At this time, all participants are in a listen-only mode. There will be a presentation, followed by a question and answer session. If you wish to ask a question, you will need to press star 1, 1 on your telephone, and wait for your name to be announced. You can also ask your questions on the webcast. Olivier Allot, Director of Financial Communications and Data Intelligence, will read them. I must advise you that this conference is being recorded. I would now like to hand the conference over to your speaker today, Mr. Laurent Nino, Vendor Group Chief Executive Officer. Please go ahead, sir.

Thank you very much. Good morning to all of you. Thank you for being on that call on July 31st. I know there's a lot of other publications today, so we're very honored to have you there. I'm here with David Darmon, with Jérôme Michel, and Benoît Driot, as well as with Olivier Hallot, too. present you the half-year result of VADER and to answer any question you may have afterwards. So let me start with the first key highlights of the half-year. We have, as you know, two pillars of our strategy. One is the principal investment. The other one is the development of the asset management platform. If I start with the largest part of it, which is the principal investment, as you've seen, the listed portfolio has a pretty good momentum across the board, On the second quarter, compared to the first quarter, we've been active by selling some of our – through a forward sell, sorry, part of our shares, 6.7% of Bureau Veritas during this half year, which has generated 750 million of euros of proceeds. On the not listed portfolio, to be fair, it is a disappointing – quarter. We have value has been impacted by current trading and by peers multiple as well as FX. We'll come back on it. We think that we have taken action in order to make sure that we can have better situation in the quarters to come. I think on the two more disappointing companies have been Stahl and Scallion, but I think on both sides we've got good vision on how this will improve. David will come back on that in more detail later on. In term of management of this company, we have two new CEOs that have joined or will join. One for CPI where our existing CEO Tony Jase is retiring and he's been He will be in the transition with a new CEO, Andy Harris, will take place mid-August, so it's really ongoing and it's starting well. And this profile is, I think, a very good profile for putting CPI on a growth perspective, and she's got a very good background, which we think also is a very important element of the future of CPI. For Scallion, we have a new CEO that will join within the course of September. He's an experienced and highly recognized professional of the industry. He will succeed to Yvan. Yvan, as you know, has been the CEO of Scallion since we made the acquisition, and we had agreed at the time that he will – retired within a period of up to four to five years. And as we have a new chapter to open, we all agree that it was the right moment to do it. And we think it will – but David will come back also very much on that later on. On the asset management, there is no – significant news in terms of addition to the platform, but the platform is being put in place. Monroe Capital now is included in our account for the first time. It represents now 22% of the gross asset value of Vandell. The AUM globally, if we compare it to last year, is up 184%. Obviously, there's element of organic growth, but also inorganic growth. We'll come back to that. We have had a good fundraising quarter with a $4.3 billion raise during H1, both at Monroe and IKEA. and our total asset management on third-party now reached 39.1 billion euros. Overall, if we add all of it, it's 45 billion plus of assets that are managed now by Vendel, 6.2 on the principal investment, 39 for third-party clients. Our NAV, fully diluted NAV, is 167.7%. Euro per share. It has down compared to last quarter. It is down for two main reasons. One is the coupon, which was paid in May, 4.7 euros. And we also have a significant impact of the dollar depreciation. Dollars stand at 117 plus at the end of June compared to a dollar which was... around 111, I think, at the quarter, at the beginning of the quarter, 108, yeah, 108 at the beginning of the quarter. So it has been a significant shift in the dollar value, which had impact. on our asset which are denominated in dollars. Otherwise, the rest is pretty flat. Altogether, the gross value of the listed asset and asset management being compensated by the non-listed assets. New. And I think it's important that we have decided to move to a sort of semestral dividend policy. It means that we will serve an interim dividend now on a half-year basis. We've decided to set this half-year dividend, which will be paid in November at 1.5 euro per share, which is roughly a third of last year's dividend. And then we will put the rest of the dividend will be paid, as obvious, in May 26, based on the 25 numbers. I think it's important that we move to that because, as you know, we want to have a policy that is of significant return to our shareholders through increasing dividend and to have a regular payment of dividend, I think, is becoming a sort of benchmark of the way you should do when you pay significant dividends. If we move to the next page, 45 billion of assets. I'm going to be very quick on this one. 6.2 billion on direct assets, direct principal investment. You know the asset, no change in the asset base compared to where it was. Business services with Bureau Veritas and Scalion. 45% of the total, education, professional training and tech, CPI, global educates, ACAMs are here. And then we've got in industrial, STAL and Target. I don't go back on the performance of these assets. David will come back. On the third-party asset management, 60% now is coming from Monroe, 40% from IK, 480 professional in 11 countries, in the platform. Now, if we look to what has impact on the value creation on the NAV, as I mentioned, principal investment has been a decent bringing quarter, 1.5 euro negative, a positive impact of the value of listed asset plus 3.5 euro per share. On the other side, minus 5 from non-listed asset. As I mentioned, the main two disappointing things are Stahl and Scalion, but David mentioned We'll go back on it, but we are hopeful that we have now a much brighter future for all of those non-listed assets when we come back. Asset management has created 3.8 euros per share, good growth of the platform, metrics of each of the IK and manual has been better than expected over the previous years, plus a little bit of a multiple effect, but most of it is coming from the FRA grows, and this increase is despite, yeah. And then we have a Forex. Forex is 4.7. It has a significant impact, as I mentioned, at $1 at 1.17, what was it, 1.1711 or something like that, or 20, 1.1720 as of 30th of June. It is our dollar-denominated asset represents 33% of our GAV today. Altogether, we have down now, which is down 4.3 euro per share, including that 4.7 point on dollar. It could have been slightly up without it, but it doesn't mean that we're not disappointed by the principal investment performance. as all of us. Now, maybe I pass over to David on that so that we can give a clear view of where we are on the portfolio and what perspective we feel on each of the lines, and then I will take over on the asset management part.

Thank you, Laurent, and good afternoon, everyone. So I'm now on slide eight, and we're going to discuss the performance of the listed assets. During H1, the operational performances of the three investments in listed assets were actually good. Starting with BV, BV had a plus 5.7% sales increase during H1. That does include an organic growth of plus 6.7%, driven by two reporting lines growing double digits. The industry lines and marine and offshore were particularly strong. FX had a negative impact of minus 2.3% on BV during H1, which slightly reduced this organic growth. BV also announced the completion of six small bolt-on acquisitions, so there were a very slight and small change in scope. And the company did confirm its 2025 outlook, so a good start of the year for Bureau Veritas. StarCats had mixed performance during H1, with some very positive results in EMEA, but to be opposed to low performance in North America, where the company had an operational issue in its warehouse, which did disrupt the deliveries. IHS will publish its number in August, but we understand that the operational performance are going well on that front. I'm moving now to slide nine to show and discuss the performance of the unlisted assets. Starting with Stahl, Stahl had a soft H1 sales with weak performance in leather, both in the wet end and the finish sales. The underlying market, which are the footwear and the automotive industries, were impacted by the noise of the tariff discussion. And hopefully with better clarity that we have now on that front, we shall see a recovery of those markets by year end. Margins have been partially impacted as well by this slowdown in the letter and also with the integration of Weiburger Graphics, which pre-synergies had margins below 20%, so slightly dilutive pre-synergies. The company is still making progress on the carve-out, which we hope to conclude by year-end. By this prevention institute, H1 sales were growing only by 4%, which is lower than the pace that we were used to for this company. The new U.S. administration policy did create a bit of noise on the budget of some school districts, and we saw some customers pushing back some orders. We expect some sales acceleration in H2 and see better numbers by year-end, but the beginning of the year was slow, as you can see, with this plus 4% in terms of sales. The EBITDA growth is slightly higher. There was a small margin expansion due to some delays in hiring and some cost savings initiatives. As Laurel mentioned, a new CEO is about to join in August, Andy Harris. She's the former CEO of High Ground Software. She has a very strong digital and IT background, and she will help the digital transformation of CPI. So we are pretty excited with this new hiring. I'm moving now to ACAMS. As you can see, ACAMS had a very strong H1 performance with strong results in the Americas, in their conference businesses, and in APAC. Europe was slower compared to those business units. You can see that the new leadership is driving a lot of Salesforce effectiveness, and we can see some good results showing up. The margins have been particularly strong during this semester. We expect those margins levels to normalize during H2, first because the Vegas conference has a lower margin and it's happening in Q3. We also have some hiring that we need to make in H2, which will drive the margin back to close to 25%. So don't get too excited with this 54% growth. It is good, but it will stabilize at the recurring level by your end. On Scania, as Laurent was mentioning, the company and its peers is facing tough market conditions. The company is especially impacted for the service it provides to small French IT customers. and in the automotive sectors in particular. There is a strong resilience in the engineering services and in the international part of the activity, so it balances those headwinds in the franchise business. The company, Vendel invested 41 million euros in the company since the beginning of the year, both to finance an acquisition called skills and affinity and also to strengthen the balance sheet. And last, as Laurent was mentioning, we can see some early signs, anecdotal signs of a stabilization of the performance with some new contracts of wings, which are very encouraging, and a growth in the number of bill consultants, which are also a good sign. So as we say in France, les hirondelles ne font pas le printemps, But we can see some positive signs, and hopefully we are reaching and close to the bottom now. Last, as Laurent was mentioning, a new CEO will join the firm starting in September. It's a very strong professional coming with a background very similar to Scania, so someone very experienced who is going to bring his experience in international background and international in a very dynamic firm. So we are very excited as well with this hiring. And we will introduce him to you during our investor day by year-end. Last, Globe Educate, some good growth coming both from growth in terms of enrollment in number of students and also good growth in tuition fees. And this is combined as well with some strong M&A. We believe that since our acquisition last October, we have close to 5 million EBITDA from acquisition, which is a good pace. The company is actually accelerating on that front, and we believe that next year we will outgrow this M&A number quite significantly. There is a lot of opportunities for consolidation in this industry.

Thank you, and to have For that, David, a little bit of a highlight on the asset management platform. We can now talk about a platform because there's two asset managers into it. It's still on the building, so there's more to do, but it's still pretty good today. Asset management are reaching $39 billion plus. We were at zero 18 months ago. Fundraising has been successful, and I will come back to that. If you look to the asset and management by activities already mentioned, 40% is buyout, 60% is U.S. private credit. By investor type, you see that it's a pretty diversified type of investors that are giving their money to Monroe or to IKA to be managed, whether this is retail and high net worth individuals with 20%, pension fund, 23%. insurance company, 20%, and so on. So a very good diversified base of investors. And also in terms of geography, with North America representing 50% of the total investors into IK and Monroe products, Europe, 33%, and APAC, MENA, and others, a small 16%. AUM, December, last December, we had close to 14 billion of AUM, 13.8 only on IK. Since then, and fee-paying AUM, which was of 10 billion, you have to get used to both things, AUM by that one side, fee-paying AUM on the other one. If we make the bridge to the – we'll make the bridge for the fee-paying AUM, and then you'll see the end result. of the AUM itself. We could have made the bridge on two, but we thought it was too complex to make on the same slide the same. But you'll see the detail also for IK and Monroe. So Toulouse, which was 10 billion of fee-paying AUM as of 31st of December. To that, we have the addition of Monroe. As of 31st of December, Monroe was 19.5%. billion euros of AUM, so the conversion of those funds at the dollar-euro rate at 31st of December. Then we add the new fee-paying AUM that were either raised or invested because the fee-paying AUM doesn't have the same status being private equity or private credit. Just one minute for the specialist. you have fee-paying AUM on private credit when you've raised fund on the committed fund, while in the private credit, you've got, it's becoming fee-paying AUM once you've invested the fund. So the undeployed raised money doesn't generate revenue in the private credit. It's an element of margin to get higher fee-paying AUM in the future. New FAPing during the semester was $5 billion. Exit and pay off were $3 billion negative, so it's either reimbursement or payback from existing product managements by IK and by Monroe. And then we have the impact of dollar. As I say, we've taken the conversion of 19.5 based on the dollar as it was at the 31st of December. Based on today, it's 2.4 negative compared to where it was. So altogether, we end up with 29 billion of euros of fee-paying AUM at the basis of 117.20 euros per dollar. Well, dollar per euro, in fact. In terms of asset under management, and it's an important notice, it's 39.1, with a significant amount of dry powder and undeployed amount of capital, specifically at Monroe, which means that whenever it is invested, then it starts its fuel back in the fee-paying area. Global management fee... For this first half is $152 million. This is the reported number, so it just includes one quarter of Monroe and two quarters of IK. In terms of fee-related earnings, again, one quarter for Monroe, two quarters for IK is close to $60 million. And the profit before tax is also close to $60 billion. They're virtually at this quarter no PRE because we made the first integration of Monroe today, and Monroe value most of the NAV is made on the 31st of March, so we don't include yet the PRE for that quarter. If we move to IK to highlight, The very good capital raising momentum of IK. IK have moved from 13.8 of AUM to 15.5, with fee-paying AUM moving close to a billion up, 1 billion of fundraising, which is the end of the fundraising cycle that they've started in 24, a boost on IK small cap fund, and they finished also the IK mid-cap 10 plus the IK development cap 2. Altogether, so it's $1 billion additional. Both mid-cap and small cap has closed, and DC has closed to their hard cap, so maximum of what we could have. So we're very pleased with that fundraising cycle. There was a few exits. during the period, 500 million of value of exit, which goes away from the fee-paying room. That leads to the 10.6. If we look to the liquidity for LPs, there was 260 million of sales that were made. during the quarter with a 2.6. It's still a small number. It will increase during the second half. And last year, as you remember, we've made above a billion of sales. Fundraising, I've mentioned it, $1 billion during the first half, $6 billion during the vintage. We've invested $800 million in eight deals during the first half. And the portfolio... is on average developed by an average deployment per year per fund of 25%. 3% of valuation increase of all funds since the 1st of December. No material impact on the companies within the fund of the tariff very much. We have a portfolio which is very much Europe-focused, so has been really not much impacted. If we look to Monroe, very good dynamic at Monroe. AUM reached $27.8 billion. Here we're talking about dollars so that you see the dynamic of Monroe itself. Free-paying AUM has gone from 20.3 to 21.6. 6% growth in the free-paying AUM. You see that deployed capital has moved $4.2 billion. Payoff, 2.6 negative. The rest is negative. so that leads to 21.6. As you see, the average fee-paying AUM per year have grown by 20% on the last five years, and we're still on that trend, and we expect that also this year. So a very good dynamic at Monroe today. If we look to now, because the complexity is that we still have only one quarter of Monroe, so if we want to have a vision of what is our platform in terms of asset under management and that will start to generate earnings and cash flow throughout our P&L, we have a pro forma six-month period. of Monroe plus IK of 200 million of management fee for the first six months, 135 basis point margin. Carried interest is 4 million, but as I mentioned, it's based on, in fact, one quarter compared to our expectation for the full year. that give total revenues for the first half of 204, expenses 123, negative pre-tax profit, PRE and FRE, 81 million, margin 40%, of which FRE is 77, and our performer expectation per year is 166, and we are confirming that with a share of Vandel of 100, which we also confirmed. So we're well on track to deliver on our asset management platform, and we think it is really starting to become a real growth and profitability engine for Vendel. This is really new, but it's started. Now let's move to the financial impact, and I will pass over to Benoit.

Thank you. Good afternoon. the net income for the period. The revenues have reached 4.2 billion euros, that is 7% above the same period in 2024. That is a result from the good Bolton activity of the principal investment portfolio, the development of the asset management platform, and the organic growth that is 3.9%. of the principal investment portfolio that has been described by David a few minutes ago. The contribution to the net recurring income from the asset management is 49 million euros with only two months from Monroe. The net income from the principal investment is 354 million euros. We have no capital gain booked through the P&L in 2025 because the capital gain on the forward sale of Bureau Veritas shares has been booked through the equity in accordance with IFRS. This amounts to 582 million euros. We have also the change in fair value on our stake in IHS that has been booked for 121 million euros in the equity. After the depreciation and the entries that relate to the purchase price allocation, and the non-recurring items, the net income for the period is €268 million, and in group shares, it's €4 million. The difference comes from the minority interest on Bureau Veritas. But once again, this €4 million is excluding the capital gain on Bureau Veritas and the positive change in fair value on our stake in IHS. If we turn to the following page, you can see that we have a very strong financial structure. with a huge amount of cash, 1.8 billion euros, and an undrawn credit facility that is 875 million euros with maturity in 2029. The 2.4 billion of bond debt includes the exchangeable bond in Bureau Veritas that can be settled in shares. It amounts to 750 million euros. And the other bonds mature between 2026 and 2034. The LTV ratio is below the S&P ceiling. It's 18.5%. But if you look at the detail of this ratio, it's only 10% coming from the ratio between the net debt and the value of our assets. And then we take into account our commitment not called in the funds managed by IK and Monroe. and we have to take to be in accordance with the methodology of the credit agency. We also take into account the put granted to the minority shareholder of Monroe. We don't take into account the put for IK's manager because it can be settled in shares. The credit rating agency has confirmed our rating at BBB with a stable outlook.

Thank you, Benoit. And just to ramp up, asset management, again, is ramping up with very good organic growth, successful fundraising in the market, which is not an easy one, but I think we've got great managers, both IK and Monroe, and they're doing boost very well. The platform is starting to create the synergies. We have had ample discussion between the different teams, and we're starting to see how we can leverage the position both in Europe and the U.S. from both and develop new products, develop Monroe in Europe, develop further product at IK, and I think it's well on the way. So we are very, very positive, and we're still looking to new verticals that we can add to that platform in order to create one of the, I think, mostly high-value products mid-cap platform with great teams in Europe. So we're still on the way to create that. It's starting well, but it's a journey, but it's well on the way. On principal investment, as you've seen, strong rebound from ACAM, good growth from Global Decade. I think we have had a difficult period for Scalion and Stahl, but we are – hopeful in the fact that the second half will bring much better news onto that. And from what we've seen in July, I think it's on its way. There's a new commerce in the show, the new CEO from CPI and Scalino, which is always a way to have a new look to some companies and to put up a new chapter, which we think is very good. And we think that, you know, some of our companies have suffered from not the tariffs themselves, but the sort of, yeah, the noise of the charge, the fact that people were, you know, waiting before they make acquisition or the fact that in the supply chain there was, a lot of perturbation, and there was inventories, sales, which has had impact specifically for a company like Stahl. So we feel that despite the fact that you can appreciate or not the way the tariffs are being settled, at least uncertainty is going away, and we think it will be good for this company to rebound. So we're pretty confident on that. We had the temporary adverse FX impact. The dollar was 117.20 when we closed the account on the 30th of June. But we are happy to have company in the US because we still think that the US is a very dynamic market and we still need to have investment there. So sometimes you have to suffer from the movement on the currency, but long-term we think it's a, great thing to do. And as we mentioned, we're becoming a company that will serve significant dividend, more predictable, higher dividend, and we think it's the right moment to turn into a more regular payment of the yen, like many companies are doing in the U.S., and some companies are coming in Europe. So we move to a sort of semestral half-year dividend dividend policy through interim dividend policy starting payment in November 2025 that is for this presentation good news bad news but overall we think we are firm on our direction and we are very we are all optimistic for the future so let's take your question now thank you

As a reminder, to ask a question, you will need to press star 1, 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1, 1 again. If you wish to ask a question via the webcast, please type it in the box and click Submit. We will take our first question, and the question comes from the line of Joran van Ecken from De Groot-Pieterkamp, Please go ahead. Your line is open.

Good afternoon, everyone. Just one question from my side. Given the capital injection of 41 million at Scallion, does that mean that your stake in the firm has increased, or did the minority shareholders also match the injection? Thanks.

The other shareholders have invested, but not exactly their Paris-Parsu stake, so we have a slight relution on the capital increase. But part of this investment was made under the form of prep shares, which is not a dilutive instrument. So I would say the percentages have very marginally changed.

So we can still use the 82%?

Yes.

Okay, thanks. Thank you. We will take our next question. Your next question comes from the line of Jeffrey Michelet from Oddo BHS. Please go ahead. Your line is open. Yes, thank you for taking my question.

I have one regarding the exchangeable bond you have in Bureau Veritas maturing in March 2026. Given the fact that currently we are not at the strike level, can you remind us what is at your hand and what is not at your hand in case BVI share is not reaching the strike price in March 2026? Thank you very much.

Yes, we can deliver shares instead of cash up to a number of shares that is 150% of the underlying shares and the underlying shares are about 23 million shares.

But does that mean that you would have to complement by cash?

It depends because today's share price... is not low enough to put more than 150% of the underlying shares. But we could decide to put cash as well. It's very flexible, and the value of the share is the average of a few days before the maturity of the bond.

So it's in our hands, and we can decide. By the way, to date, it's not considered as being... It's considered as being a debt, and we're very cash-rich. So should we repay by shares, we will reduce our LTV, and the part we will pay by cash will make the LTV not to move. We have plenty of cash, so it's not an issue of cash. It will be us to decide whether we do, but today, given the current price of BV, we can do it all share, all cash, mix of both.

Okay. Thank you very much. Thank you. We will take our next question. Your next question comes from the line of Anord Palis from CIC Market Solutions. Please go ahead. Your line is open.

Good afternoon. Thank you for the presentation. I have two questions, if I may. The first one is regarding the accounting of the sponsor money with IT and Monroe. I would like to know where is accounted in your NAV calculation the uncalled sponsor money. Is it in the cash position? or not. And then my second question is about your gross debt. I would like to know what share of this debt is denominated in US dollars.

So the uncalled commitment in the fund, as it's uncalled, the money is still in cash. So in the balance sheet, it's cash. Okay. It is, however, taken into account on the LTV. So we take it as a commitment, but it's not on balance sheet. But when we calculate our LTV, we take that as a commitment. So we include it in the LTV, but it's still in cash in our balance sheet. Okay. We are talking today, the total, we're talking about... on cold commitment of a total of 600, potentially. And the cold is 35 million, something like that. Yeah, yeah, yeah.

49 euros.

Yeah. Part of the dollar denominated, the debt is zero.

Okay.

We are fully euro debt denominated.

Okay, thank you.

Just one point coming back to the LTV. The net debt of Vandel is low compared to the portfolio, the value of the assets. It's only 10% of the value of the assets. Yes.

Yes, and that's because you add the commitments to it that you end up with 18%. So in reality, our net debt position is low.

Okay. Sure. Thank you.

Thank you. We will take our next question. And the question comes from the line of David Thurden from Kepler. Please go ahead. Your line is open.

Good afternoon, thank you. I have a couple of questions regarding the, I would say, the asset management environment. Do you see any change in the trend? Some operators are facing some tougher conditions regarding the fundraising, the deal flow. So do you see the same for your Monro and Ikea partners? And globally speaking, are you aligned with this kind of wording?

So let me just answer to this one first. Well, I think we've tried to explain it, but maybe we've not been good, that we've been very pleased by the fundraising of IKEA and Monroe, despite the fact that the environment is tough. I think that IKEA has made the maximum possible They have fulfilled the maximum they could raise for all funds they've raised. So they've been very successful in doing it, which is, I think, a tribute to the quality of the teams and the fact that the LPs are very happy about the performance they are generating and want to commit more money to them. So the environment, and it is tough, I can confirm, but we've been able to raise, exactly what we wanted to raise, and we've reached the hard cap on all the funds, small cap and mid-cap funds. You've seen the last one was two weeks ago, which was a week ago, the announcement of IK on small cap. Mid-cap was closed, I think, end of January or beginning of February, and the small cap was just closed – mid-July and we've made a communique or IK made a communique on that. So we've been very, very happy about it. Monroe, I think we've got a strong fundraising activity during the first half. Again, the environment is also more difficult on debt, despite the fact that it's probably more easy for the funding on debt and the market is hotter on debt than on PE. But nevertheless, in that environment, the performance of Monroe I think also the positioning of both Monroe and IK on MidCap is a very good one, and that's where we are, I think, seeing that the performance we're generating are good, and that helps our ability to raise funds. So my answer to your question is, are you in the environment more difficult? It's two years, and the environment is more difficult in fundraising, yeah? specifically for companies in the private equity that have low DPI. I think we've tried to explain that to you during the last presentation on IK. IK has a good DPI, strong DPI, and that's why I think IK has been successful in raising funds despite a very difficult environment. Same for Monroe, good quality of portfolio, good returns. high amount of fundraise, and we expect that to continue in the second half. But it doesn't mean it doesn't mean, don't quote me wrong, it doesn't mean it's an easy journey, but I think it really illustrates the quality of both Monroe and IK.

And to continue this discussion, regarding AKR, is it correct that roughly the fundraising is over for the next quarters because they have raised so much money and now it's time to deploy?

Yes. They won't raise money in the third quarter because they've reached the hard cap on those. They are starting to invest the money for their investors. We have a few small – there is still one fund which is under fundraising, which is a small fund with a potential hard cap of $500 million, and we are on to it. But it's still a marginal one. And on the other side, we have – We're thinking about a new initiative that will come by the end of the year. But globally, most of the fundraising for 2025 has been done in line with our plans.

And for Monroe, is the fundraising activity quite, I would say, regular, recurring?

Yes. It's much different because we have a much larger number of products at Monroe And on private credit, so it's much more regular. There's less vintage onto that. So, yes, we expect to have, as I mentioned a few minutes ago, significant fundraise during second half at Monroe.

And in terms of deployment, this is the same for both operators or?

Deployment is, as you see, we have significant margin from moving funds AUM to fee-paying AUM at Monroe, because we have a significant amount of money to deploy, which will come, and we have a regular basis of doing so. So, no, we're very confident that fee-paying AUM will grow in line with the growth that we do on AUM during the second half of this year.

Last question is regarding your ambition to further develop this platform. So have you still the same objective interest for acquisition? No, exactly the same.

And we have pretty good targets in mind, and I think it's a question of making sure that Everything we're looking at, we want to make sure that we've got great quality teams, that they are compatible with the rest of the platform, that the culture is fine, that the alignment of interest is done, and that we can use them and create synergies with the rest of the platform. So, yes, that's our criteria. So we're still looking to further expand that platform. But today we also put a lot of – energy on the organic growth of the platform by creating cross-selling between IKEA and Monroe, starting to develop Monroe in Europe, starting to develop new products on both sides, having a retail initiative in Europe, which we've been starting to work since the beginning of the year, which will be probably ready by the end of this year and start to raise next year. Yeah, we have a lot of initiative in order to grow organically the platform, and also we look to some inorganic growth opportunities, but as I say, on a careful basis to make sure that it does fit with the platform philosophy.

Okay. This is Erica. Thank you.

Thank you. We will take our next question. Your next question comes from the line of Alexandre Gerard from CIC. Please go ahead. Your line is open.

Yes, good afternoon and thank you for the presentation. Two questions on my side. The first one is related to Shtal. Could you maybe give us some more color on how you see the second half of the year? And I had in mind that you had a project of disposing of that asset. Is it still on track or is it on pause? that this is my first question. And second question is related to the sensitivity of the group's NAV to the Euro-USD exchange rate. Could you maybe tell us what is the sensitivity of the growth asset value, let's say, to 1% depreciation of the exchange rate? And to come back to a question that has been asked by Arnaud a few minutes ago, don't you think that given the fact that a non-negligible part of your NAV is derived from USD, having part of your debt in USD might also help you offset any variations in the exchange rate? Thank you.

Thank you, Alexandre. So on Stahl, as you know, we don't give guidance. So like I did on Scalier, I will give you some anecdotes. But as Laurent was mentioning, we see a lot of disruption in the supply chain and destocking and some customers using their inventory rather than making some orders, which has impacted Stahl during H1. Our feeling and Stahl's management feeling is that this destocking is moving and reducing. and H2 looks better than H1. So I know it's not very helpful in terms of guidance, in terms of number. But when we do re-forecast for the year, we are revising up our numbers rather than revising down. On Stahl, you're absolutely right. On the wetland business, which is the historical business of Stahl, we are working actively on carving out this business. We were initially hoping to finish this work over summer. It's probably going to be more like by year-end. but we are still putting a lot of energy to carve out this business.

And for the rest of the group, for the rest of Stahl, I mean, my question was related to the rest of the business, not the wet end.

Oh, yeah. So my comment on H2 being better than H1 was on the new Stahl, but then you asked about the wet end business, and I was saying that you're right. The wet end business is still being carved out.

I was mentioning the fact that you might, I mean, we read in the financial press that you had mandated J.P. Morgan to dispose of not the wet end, but the group itself, the new staff.

Thank you for presiding the question. I missed that. Sorry.

Well, let's say that we think that when the carve-out is done, we've got a new staff that is, I think, a company that is – a leader in that sector with attractive margin, attractive positioning, and then it's an asset where we can open a new chapter. Okay, thanks. The sensitivity to the dollar, I think I mentioned during the call, that 33% of our net asset value is sensitive to the dollar. So for one euro change in, how do you express it, for 1% change, it's a 0.3% change for us, 33%. Okay. It's pretty simple. The reality is that our... First of all, as we mentioned, our debt globally, if we put debt to net asset value, is 10%. So it's not a big amount of leverage because the rest of the LTV is future commitments that have not been committed. So you don't have an exchange risk to that. So we don't have much of debt in reality, apart from the commitment to come, which are included in the LTV. So, but... What we've done in order to cover ourselves, rather than being putting some debt in dollars, is that we've put some tunnels to cover edging, to cover roughly, well, exactly what a third of the, yeah, 25% potentially of the net asset value of the firm, which I cannot give you where are the, but we have that in order to cover not an average movement, but an excessive movement in the dollar. So it's ups and down. It has a, so as it's tunnel, so it covers an upward move on the dollar. give you an excessive, what we feel excessive would be above $120 for a euro. And in the other side, we would give up a little bit of the value if it were to go down below 104, 105.

But for the moment, that hedging mechanism has not been activated.

Well, it is there, but we've not gone through the barriers. So it has a margin. It's a sort of insurance policy rather than a full edging.

Okay. And I would just add, so for Alexandre, just to set the obvious, we have a few companies in the portfolio who use the dollar as functional currency, as CPI, ACAMS, or IHS, for instance. And to state the obvious, their own debt is dollar denominated. Of course.

Yes, the debt of CPI in dollar, the debt of... Okay, thank you. Thank you. May I come back one minute on the philosophy of that? For example, we own now an asset which is not for sale. which is an asset which is part of our business, which is Monroe Capital. Monroe, we don't want to sell Monroe one day. And Monroe business, Monroe value is denominated in dollars. Monroe business is in dollars. Do we want to edge the value of an asset that we don't want to sell while the business and its development is linked to the U.S. economy I think it's a question. When you have an activity, I mean, you don't edge the value of your subsidiary in dollars. So implicitly it means that we have a operationally, we are in part a dollar currency. that's why your question about debt is relevant. However, the debt level, in fact, when you look at it compared to that business, is not much. We can say that the debt level is more on the other side of the business. But we're managing that carefully. You're right. If we had more debt to that, it could be a question in putting some dollar into our debt situation.

Thank you. Thank you. There are no further questions from the phone lines. I would like to hand back for any webcast questions.

Thank you. So the first question from the web, do you have a share repurchase program for 2025? Even NEV is almost double of the current share price. Don't you think it would be a natural and easy way to grow NEV and drive the share price higher?

I always say that we will be opportunistic into that. So I still stay opportunistic into it. And we've done share buyback last year, so it illustrates the fact that we are.

Thank you. What other verticals do you think would be most attractive to add to your third-party asset management platform? Is it realistic to think you may do this in the next one or two years, or you will instead prioritize organic growth? What does the fundraising and product pipeline look like for IK and Monroe?

So, as I mentioned, what are the verticals? We've mentioned since the beginning the type of vertical we want to be in. PE and buyout, private credit, infrastructure, secondaries. We filled the first two ones, so obviously the two others are secondaries and infra. Will we fill them in the next two years? Probably. I don't know who will fill both of them, but one of them, probably. But again, I don't want to put any pressure onto that. Today, my priority is making sure that we develop organically Monroe NIK, which we are doing. As I mentioned during the call, the pipe is good. IKEA has fulfilled its objective already in terms of fundraising because the fundraising cycle of their products is done. They will restart another one afterwards, but for the time being, a big part of it has been done. Monroe, which is a more regular one, has still a very good pipe, and the pipe boost of deployment and the pipe of fundraising is very good. Again, it will depend on the environment, but we are optimistic on that. So will we feel it within the next two years? Our objective is to continue building the platform. Again, we'll do that only if we find the right solution. the right opportunity so we're constantly scanning the market we have multiple discussions with people where many of them were just dropping because they're not part of what we want to do but you know out of that there's a few of them that are interesting and can fit our strategy mid-cap a good quality team that can be integrated, that answer to our willingness to have long-term commitment, alignment of interest, good diversified LP base. Yeah, that's the thing we're looking at. And I can never bet on an opportunity. I don't want to commit myself on doing something, but we're looking.

Thank you. You seemed confident in achieving your full year 25 pre-tax FRA guidance of 160 million pro forma on the full year basis. You reported 77.

Yes.

Which do you expect to reach this mostly through additional fundraising or margin improvement?

not margin improvement because the margin is already embedded. So it's through fundraising, yes, but it's from all the, I mean, very close to just what we have. We're very close to it by doubling it. So with no additional or low additional fundraising and we just have to deploy money from Monroe, the reality is that, yeah, we are very optimistic that we'll reach the 160, yeah.

Thank you. Under what conditions would you consider disposing of STAO given the strong IR generated? Should we assume you are ready to sell it as soon as possible as you can secure a price in line or you can secure a price in line with your NEV valuation or are you waiting for improved market conditions and IR multiples?

David, may I take that one? I think that No stage what we want is to, there's no, we have no obligation to sell any asset. No obligation to sell any asset. What we want to do it is good conditions. Doesn't mean that we have to wait and say we want the best condition in the world. We want to have good conditions. We think that the work that has been done by the current management of Stahl, by repositioning Stahl, making the different two main acquisitions that have been done over the last two years, integrating those companies, carrying out the wet end, make that Stahl, new Stahl has become, I think, an asset that is potentially of interest for other parties and that can, you know, take over that and create a new chapter for Stahl. However, we are in no hurry. We want to make sure that we are in good condition to do it, and we'll do it this way. It doesn't mean that we want to keep it for the next five years. It means that we are. We think that now the work has been done to put us in the best condition to sell it at a price which is a reasonable price, and that's how we look at it. If we want to sell, but we can keep it. I mean, it's a cash-generative asset. We can get a dividend out of it if we want. So we can have boosts. But again, I think that the work in order to reposition Stahl has been done largely, and now it's a leader in its market segment. A lot of, I think, industrial companies are looking at it as being a great company, a great addition to their potential business. So I think it's a – David, am I overstating what I'm saying? No, I'm fine? Okay, good.

Thank you. Mandel has grown annually at 4 to 5% level over the last 10, 15 years. In light of this track record, would it have more sense to externalize all the investment decisions or dismantle the investment teams within Mandel?

I will pass this message to them. Thank you.

Regarding Scallion, do you think it was a wrong timing, a wrong price? What are the lessons that you learned about this investment?

Well, definitely, Scallion is a great company in a good industry, but as we all know, it's a cyclical industry, so it's a very fair point to say that the timing was far from ideal. I think we invested mid-2023 and as early as end-23 or early-24, We saw the trends going south, so there was a question of timing for sure. Now, we have had a lot of investment in the past where we did not time perfectly our entry. We remember for dirt, even for style, where we had in the following two or three years some difficult time because the cycles actually went down. But when you're a long-term investor, it actually brings you a lot of opportunities for consolidation or for investment. So it's not a place where we are very happy. We prefer to have better market conditions. But with our type of capital, we can go through the cycle and make it actually a good time to grow, for instance, in terms of M&A.

Thank you. And the last question, how would you describe the levels your operating partners focus on when it comes to value creation in your main portfolio companies? What is the role of your operating partners?

Yes. So as the name says, they are partners, partners with the management team to create value. So their key work is to design a value creation plan with the management team. and to make sure there is some cadence, some momentum to deliver on this plan. So it's really a partnership, and then to work in a sort of project management office to make sure that every initiative is delivered. It's really like a free resource for the development teams.

Thank you. This was the last question, so we can close the call. Thank you, everyone.

Thank you very much, and I wish you a great month of August, and hopefully some of you will take some time to rest and benefit from this summer break. Thank you. Goodbye.

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