Tikehau Capital SCA (Euronext:TKO) Q2 2026 Earnings Call

0:00 Good evening, ladies and gentlemen. Thank you for joining us today for H1 results. I will start with the first couple of slides four slides and hand over to Henri. First slide. Market environments remain volatile and selective. Geopolitical developments continue to wait on visibility, financing condition remain relatively tight and investor remain highly selective in their capital allocation decision. In that context, discipline matters more than ever. Discipline in deployment, underwriting, capital allocation and cost management. This environment is challenging, but it also creates opportunities for experienced professional. Importantly, we are also seeing encouraging sign of improvement in exit activity, particularly in part of Private Equity and Real Estate.

0:54 So the environment remains challenging, but it is supportive of differentiated platform that can execute with discipline, innovation, entrepreneurship and agility. Next slide. H1 twenty twenty six marks a clear step up for Tikehau and in our view, a major first step in our harvesting phase. What we are seeing now is the translation execution into profitability and earnings. For Tikehau Asset Management, we delivered a strong increase in profitability supported by continued operation momentum, client base expansion and strong operating leverage. Leverage.

1:40 On the investment portfolio side, we deliver active portfolio rotation and value create crystallization as a consequence. The combination of these two engines results in a doubling of net results group share year on year. More fundamentally, this semester confirms that our model is becoming more scalable, more visible in its earnings power. Now a few key figures for H1. We reached 53.5% of AUM, up 5% year on year, reflecting continued franchise momentum in a still selective fundraising environment. For Tikehau Asset Management, management fees increased by 13% and more important, core FRE increased by 32%, bringing core FRE margin percent.

2:40 This is an important milestone and shows that the operating leverage embedded in the platform is now materializing clearly in our profitability. On the balance sheet, we generated EUR310 10,000,000 of realized revenue and EUR $220,000,000 of total portfolio revenue in H1, reflecting active portfolio rotation and value crystallization in this challenging environment. All that translates into EUR 165,000,000 of net results group share, which is double of H1 twenty twenty five. So the key point here is that we are seeing both stronger recurring earnings from Asset Management profitability and meaningful contribution from the balance sheet.

3:29 Few takeaways for today. First, on Tikehau Asset Management. Our first key takeaway is that the profitability inflection in Asset Management is now clearly visible and will accelerate. We now have a more focused, robust and streamlined platform, better positioned to convert operating leverage into earnings growth. At the same time, our franchise continues to demonstrate strong momentum as illustrated by the successful closing of the six direct lending vintage, for instance, at at EUR5.2 billion, around 60% larger than its predecessor. More broadly, we are pursuing a more selective approach to growth, focus on strategies and initiatives that are scalable, profitable and aligned with our long term model.

4:24 Now on the balance sheet side. Second takeaway is that the balance sheet is delivering value crystallization and benefits from greater financial flexibility. We have been actively rotating the portfolio in the first half. At the same time, we have materially strengthened our financial flexibility with now EUR 1,600,000,000 of available short term resources, EUR 500,000,000 of cash and EUR 1,100,000,000 in our RCF and no debt maturity before 2029 following redemption that will take place in August. Our investment grade rating was reaffirmed by both S and P Global and Fitch Rating. This stronger balance sheet provides both resilience and optionality as we move into the next phase of development.

5:15 I'll now hand over to Henri for a detailed look at our operating highlights. Thanks, Antoine. Good evening, everyone. Nice to be here with you tonight for this H1 call. I'm now moving to page 10 and I'll start maybe with our transaction and commercial activity for the last twelve months end of June twenty six. So as said by Antoine, but I think that overall in market environment that remains highly selective, the Tikehau platform has continued to show resilience across deployment, realization and fundraising. So starting with deployment over the last twelve months to June 26, as you can see, deployment has reached EUR7 billion, moving from EUR5.7 billion to the last twelve months of June 25.

6:04 H1 twenty twenty six was marked by the slower pace of deployment in credit, mainly due to our CLO activity, translating once again here our cautious approach in the current context. As far as realization are concerned, so they rose to EUR3.7 billion from EUR2.7 billion euros last year, showing once again here our ability to crystallize value across all our strategies. This has actually translated into €3,300,000,000 of return of capital distribution to our LPs, reinforcing here the strength of our asset management flywheel. On the right part of the page, our commercial momentum translated into €5,700,000,000 of net inflows over the last twelve months.

6:54 H1 twenty twenty six fundraising activity at €1,700,000,000 as here to be compared to H1 twenty twenty five. As a reminder, H1 twenty twenty five benefited from a high comparison basis as it was notably linked to the Aegis continuation vehicle. And we also had for the first semester of last year, our master fund in credit, Tikehau Direct Lending six and Secondaries two. We are ending end of June with a position of EUR7.2 billion of dry powder giving us once again here flexibility entering into H2. So overall, despite I would say a more demanding market backdrop, last twelve months view shows continued scale, strong realization activity and solid capital formation.

7:47 We are now going to provide you a few explanation on our main business unit, starting by private credit, Page 11. Here, once again, the platform has remained both resilient and highly selective in the first half. Starting with a few data points on our portfolio quality first, our discipline has remained unchanged. For the direct lending funds, 100 of our investment are covenant attached and annualized devote rate has remained stable at 1.5%. We just announced that our sixth vintage of direct lending strategies at EUR5.2 billion. And here, average leverage at closing stood at EUR4.3 billion, so remaining quite secured.

8:33 At the same time, we have maintained a high very high degree of selectivity as you can see on this page with a 98% rejection rate for H1. Just a few data points on activity. We completed 43 investments in the first half, representing EUR 1,300,000,000 deployed. Around 50% of deployment came actually from add on financing in direct lending, which here reflects our focus on supporting existing portfolio company here once again in a more selective market. We remain also active but prudent in the CLO market, with issuance reflecting discipline pace in less clearly supportive environment than last year in 2025.

9:19 As far as exits are concerned, we completed 24 exits in H1 twenty twenty six, corresponding to EUR0.6 billion of realization and realized performance remains here once again solid with an average ROIC of 1.2 for direct lending and special opportunity. So overall, as far as private credit is concerned, I think that we are reflecting here what we've always been focusing on strong underwriting discipline, resilient portfolio quality and continued actively focused on attractive risk adjusted opportunities. Providing you now a few data points on our real estate business, Page 12. We have maintained a dynamic transaction activity in a market that has here once again remains relatively limited and muted.

10:10 We actually deployed EUR0.7 billion in H1 twenty twenty six, supported by attractive opportunities across our platform. To be noted, we completed two co investment transaction, representing an aggregate value of €400,000,000 alongside us to onboard here new clients, new funds and co investment opportunity. One of the key transaction in the period was actually the acquisition alongside co investors of the Spanish portfolio of around 5,000 residential units valued approximately €300,000,000 We have also remained focused on attractive entry condition and here specifically in our core and core plus strategies where we have the overall acquisition yield during the H1 has reached 9.6%.

11:03 On the portfolio quality side, a few data points, our real estate platform represent more than 9,000 units with an average LTV of around 30%. Here again, illustrating our conservative use of leverage on exits EUR0.3 billion during the first semester. These disposals were actually mainly primary granular assets in Spain, in Iberia, in France completed with an average ROIC of 2.2 for our value add strategies and 1.2 for core plus strategy. More broadly, as far as real estate is concerned as a conclusion, market backdrop remains selective, but we continue to see attractive deployment opportunities and we have a robust pipeline in term of identified exit opportunity for H2.

11:56 I will now move to Private Equity business, Page 13. Here, the first half was characterized by continued value crystallization, while deployment has remained deliberately selective. We have deployed EUR0.3 billion across three investments. The approach remains conviction led focused on dedicated vertical and also focusing on sourcing larger transactions, enabling us to generate co investment. That being said, the number of transactions have been signed at the end of June, not yet closed and they will benefit to our second half. A few data points on our portfolio quality side. Average leverage stood at three point x time and the average EV to EBITDA multiple at entry overall for all our strategy now stands at 11.3 times in the current environment.

12:54 As far as exits are concerned, we completed on private equity three exits for during the first semester, representing EUR0.3 billion realized and average MOIC of 1.7 times. This exit actually came from our cybersecurity, aerospace defense and growth equity strategies. Here, once again, we continue to benefit from a healthy pipeline in term of identified exits opportunity, which give us confidence in our ability to further crystallize value for our LP going forward during the second semester. Overall, I would tend to say that PE remains here a strategy where discipline on entry and strong thematic positioning continue to support the attractive exit outcomes.

13:45 Jumping into page 14, I'm providing you a few data points on our capital market strategy. H1 twenty twenty six fundraising was slower than last year, but overall performance remains solid. Net inflows were clearly affected by outflows during the first quarter, but the picture improved in the second quarter with renewed positive net inflows. Investor demand has remained supported by the resilience of our short duration strategy in a context where clients continue to look differently for yield with controlled duration risk. The quality of the platform is also reflected in external recognition. And here we provided you a few data points on that. Several of our strategies continue to benefit from strong ratings from Morningstar, including notably TKO short duration, TKO Credit Corte, and TKO listed real estate.

14:42 We also continue to broaden on international distribution footprint with particular focus in The UK, Switzerland, Italy, and Germany, on which our team have been working strongly since the last quarter. So overall, while fundraising was slower in the first half, CMS remains an important contributor to diversification of the group, visibility and international reach of our platform. Now we've gone through the four business units, maybe one quick focus on Page 15 and the solid fundraising for our flagship strategies. In direct lending, we completed the fundraising of our sixth vintage with EUR 5,200,000,000 in H1 twenty twenty six, which is around 60% larger than the predecessor fund.

15:35 This is once again here a major milestone for our platform in a strong sign of continued investor confidence in our European mid market direct lending franchise. New LP coming from new geographies are benefiting and here demonstrating the track record that we've been building in direct lending now for more than fifteen years. In private equity, fundraising also continued to progress well. A few data points on our flagship thematics. First one on decarbonization strategy, which has now reached EUR 2,600,000,000 progressing towards a target of more than EUR 3,000,000,000 with a fundraising period that will end in Q4 twenty twenty six. On Aerospace and Defense strategy, overall has reached EUR700 million for Vintage number two and co investment vehicle.

16:26 So progressing toward here a target of EUR1.4 million and fundraising will be running until end of the year 2026. Across this strategy, we continue to see strong interest specifically in the current geopolitical and economical environment that we're going through since the beginning of the year. So taken together, I would say that these dynamics confirm the relevance of our flagship strategies and the continued depth of demand from our client base. That's it for Tikehau Asset Management optional KPI. I will now hand over the mic to Vincent for the financial highlights. Vincent, the floor is yours. Thank you, Henry. Good evening, everyone. Very happy to be here with you today.

17:11 So a few data points and metrics around our Tikehau Asset Management platform. So H1 twenty twenty six marked a clear step up in the profitability of Tikehau Asset Management. We delivered across all key operating metrics, reflecting clearly the embedded scalability of our model. First, fee paying AUM increased by 7% year over year, supporting the continued expansion of our recurring revenue base. As regard to management fees, they increased by 13% year on year, reflecting both asset growth and a resilient revenue margin. But most importantly, as disclosed on the right hand side, this growth translated into a significant increase in profitability. Core FRE increased by 32% year on year with a 42% core FRE margin.

18:04 As regard Asset Management EBIT, it grew by 22% year on year with a 39 EBIT margin. So this is exactly the operating leverage we have been building towards larger platform, disciplined cost management and a stronger conversion of revenues into earnings. So in short, H1 confirms that the Asset Management business is not only growing, it is becoming materially more profitable. On the next slide, a few data points on fee paying AUM. Fee paying AUM continued to grow, reaching €43,500,000,000 at end June twenty twenty six, which compares to €40,800,000,000 one year earlier. So that represents a 7% year on year growth.

18:50 This progression is significant because fee paying AUM is the foundation of our recurring management fee generation. And on the other side, in correlation, revenue increased in terms of management fees by 13% year on year from 169,000,000 to €190,000,000 So as a consequence, total Asset Management revenues reached €198,000,000 which includes €8,000,000 of performance related earnings. As regard to quality of these revenues, it remains pretty high. 96 of the H1 AIM revenues came from management fees with an average revenue margin, which remained resilient at at 90 bps, reinforcing the stability and predictability of our fee base.

19:42 The message here is really clear. Our platform is generating larger, more recurring and more resilient management fees, which create a strong base for long term earning growth. On Slide 19, let's now focus on high end profitability specifically. And as mentioned by important messages we have for H1 twenty twenty six as core FRE increased by 32% year on year from 60,000,000 to €80,000,000 At the same time, the core FRE margin in percentage point increased and expanded significantly from 36% to 42%, which is a six point improvement year on year. This shows clearly an operating leverage, which is embedded in our platform.

20:31 As revenues grows, a greater share is converting into earnings. As regards Asset Management EBIT, it also increased significantly, as I mentioned, 22% year on year to EUR 78,000,000. The EBIT margin also increased from 35% to 39%, which is a four point improvement year on year.

20:55 So overall, this performance was driven by solid revenue growth, disciplined execution and continued cost management. Moving now to Performance Related Earnings on Slide 20. Beyond recurring management fees, Performance Related Earnings represent a meaningful future profit driver for the group. As we disclosed it on the left hand side, AUM eligible to carried interest increased by 5% year on year to €25,200,000,000 Our approach remains the same. We are disciplined, shareholder friendly. We allocate carry in a way that aligns shareholders, teams and clients. We also apply cautious recognition.

21:41 And in addition, we view this performance related earnings as a material mid term profitability driver and clearly not a short term accounting exercise. On the right hand side, we show the Embedded and Realized Performance related revenues, which stands at approximately $2.00 €7,000,000 Out of this amount, around €160,000,000 is expected to mature by 2029. So this creates tangible visibility on potential future value crystallization in this regard. Our profitability is not only improving today as a platform has also clear embedded earnings potential for the coming years.

22:29 Slide 21, I move to our investment portfolio. So the investment portfolio remains a key pillar of our business model. We have at the end of June twenty twenty six a portfolio which remains granular with three eighteen positions and which stood at around €4,000,000,000 which compares to €4,400,000,000 at end twenty twenty five. The decrease is primarily attributable to an active rotation and also value crystallization, which includes €637,000,000 of exits and returns of capital. At the same time, we continue to invest selectively with €261,000,000 of new investments, which includes €218,000,000 invested in our Asset Management strategies.

23:24 Also, market effects reached minus EUR 61,000,000, mainly linked to the fair value changes related to some direct legacy and listed investments. And we also have some currency effects amounting to a positive EUR 10,000,000, which is linked to the appreciation of the U. S. Dollars against the euro. The portfolio remains strongly aligned with our Asset Management platform. 76% is invested in Tikehau Capital strategies and the remainder, 24%, relates to Ecosystem and Direct Investments. Our investment portfolio is an active growth company engine that supports our strategies, and it clearly reinforces the alignment with our clients and it creates value over time, which brings us on Slide 2022 to a snapshot on portfolio revenues.

24:20 So H1 twenty twenty six was a period of value crystallization for the investment portfolio. They stood and they doubled year on year, reaching EUR222 million. This performance was driven primarily by realized revenues and notably because of the disposal of the Schroders stake earlier this year. That transaction in particular with Schroders generated a EUR $270,000,000 capital gain with a 64% gross IRR and a 1.65x 1.65x gross ROIC, which is a clear example of our ability to create and crystallize value from the balance sheet. This period also included positive value changes in private equity strategies and also in our co investment in the leading U. S. Radiology service provider.

25:11 These positives were partly offset by negative fair value changes, which are linked to certain direct legacy and listed investments, which I just mentioned earlier. And in addition, currency effects were also favorable in H1 twenty twenty six, contributing to a positive €10,000,000 If we now turn on the P and L on the following slide. H1 twenty twenty six demonstrates the strength of Tikehau Capital's two growth engine, Asset Management and also of the investment portfolio. So CoIferi increased by 32%, reaching €80,000,000 with a Coifery margin of 42. Asset Management EBIT rose by 22%, €78,000,000 with a margin of 39%.

26:00 At the same time, Investment Portfolio revenues doubled to €222,000,000 This combination drove net results to €165,000,000 close to the double of the level of the H1 twenty twenty five. For the conclusion, profitability has materially increased, supported by a more efficient Asset Management platform and also balance sheet now actively crystallizing value. Last but not least, to finalize the financial review, a snapshot on the balance sheet before handing over to Antoine. So our model is supported by strong financial means with EUR 3,200,000,000 of shareholders' equity and short term financial resources of EUR 1,600,000,000.

26:51 Our financial debt reached EUR 1,500,000,000 at the end of June twenty twenty six. And we've got an early redemption of our 2026 bonds, which is expected in August 2026, and it will further simplify that profile, giving us greater financial flexibility to pursue our growth. FEATURE ratings reaffirms our investment grade BBB minus rating with a stable outlook earlier this month in addition to S and P Global, who also confirmed it earlier in Q2. Overall, we have the financial resources, flexibility and credit profile needed to support disciplined growth and continued value creation. Thank you for your attention, and I will hand over to Antoine for the concluding remarks and outlook.

27:42 Thank you, Vincent. A few slides to conclude. First of all, as you noticed, a key priority for us has been to simplify and streamline the organization to concentrate concentrate resources on our core growth platform. We have successfully rebuilt our real estate activity into one unified platform, and we are very enthusiastic about the growth and the profitability in this real estate market. It's an important step for us in terms of scalability and operating efficiency and asset sourcing. We have also announced the disposal of 80% stake in Oberniti and Opel, our digital subsidiary, while remaining an encore shareholder in order to give these businesses greater autonomy after helping M reach profitability and scale.

28:38 In parallel, we signed a separation agreement with Duke Street, a 2013 investment consistent with our focus on simplifying the group structure and concentrating resources and core activities. The logic behind all this action is clear. We are sharpening the focus of the platform to support the continued growth and more important, the profitability of our Asset Management. In an entrepreneurial journey, it takes time to build, to scale, and we're seeing that now it's time to harvest and be much more efficient if we can say that. Moving now to the next and last slide. Looking ahead, we enter the next stage of our development with confidence, focus and ambition.

29:30 On Tikehau Asset Management, we now benefit from a more streamlined organization, a more integrated integrated operating model, which would continue to support profitability and earning growth. As in prior years, FRE generation is expected to be more weighted toward the second half, and private equity fundraising could reinforce this pattern in 2026 with potential catch up fees. We also have a healthy private equity and real estate exit pipeline, which support visibility on future value crystallization and monetization for our LPs. The balance sheet is stronger than ever with the 1,600,000,000, as Vincent highlighted, of short term resources and more debt maturity before 2029.

30:20 Taken together, this element give us a strong confidence in our ability to accelerate profitability growth while continuing to create long term value for our shareholders and also for our LP and investor. As you know, we are an investment firm and our core focus is to deliver strong and robust performances across the cycle for investor NLP and that would translate into more shareholder value creation. Thank you for your attention. I would be happy now to take your The first question is from David Peek of RBC.

31:40 Hi, thank you for taking my question. David Peek, RBC Capital Markets. The first one on the net new money slowdown drivers. While you have cited a high comparison base, I guess stripping the positive one offs out, the underlying run rate also appears to be slowing. I guess how much of that reflects softer LP appetite versus simply just digest Shimpyre following some of the twenty twenty five closings? And with the decarbonization, IFRS, recent defense flagships still in fundraising mode, how confident are you in the last twelve months run rate being the reasonable anchor going forward? And then second question on the capital deployment and some of the strategic priorities. With the available resources that you've got and no debt maturities until 2029 and healthy leverage ratio as well, I guess, how are you thinking about further balance sheet reductions and also returning more capital to shareholders potentially through some buyback programs?

32:37 Thank you. Thanks for your question. So maybe on the first part of your question on the run rate on fundraising. Well, as just explained, I mean 2025, we had a finalization of secondaries number two in private credit and then direct lending, number six, which affected mostly H2 twenty twenty five and the beginning of twenty twenty six. Then as we said on the CLO business, we have clearly and voluntarily reduced the pace of launching a new CLO vehicle. So this is roughly the main effect that we've gone through over the first semester.

33:22 Now as you said, obviously, on private equity, we have our two flagship on the road. They are currently investing, divesting. We will be fundraising. So Vintage number two for decarbonization and natural transition and Vintage number two for aerospace and defense. Defense. We think that more than ever these two thematics are clearly in the center of what's going on as we speak. We've been talking about geopolitical tension, economical tension. These two Temaxes are clearly now at the center of what's going on all over the world. And to illustrate that and to as well to illustrate our confidence in the coming fundraising, we've just announced on our Aerospace and Defense Vintage one our fifth exit, which means that with an average duration of roughly four years, we have a DPI which is close to one. So we've been able to create value to bring back capital to our LP. And as a consequence of that, our new vintage on Aerospace and Defense is currently in fundraising mode, deployment mode as well. As far as your question on deployment is concerned as well, We've been announcing significant investments notably on our space and defense front recently.

34:39 These deployments are currently signed, but not yet closed. This is why we actually see for H2 as well a strong deployment pace in the context of a strong fundraising for PE. You had a second question on our capacity to enhance shareholder return. I think that what is key here is that as we said back in February during our Capital Market Day in London, we are clearly now entering this harvesting mode, accelerating our portfolio rotation notably accelerating on this several pillars, key driver of value creation. On one side, our asset management business, FRE capacity to generate more carried interest. And then the second leg with the portfolio accelerating the rotation of our portfolio.

35:36 And obviously effectively this potential acceleration and value creation from our portfolio will drive dividend wise for the coming years. As far I think you had also a question on the share buyback. Our share buyback is still active with a size of 190,000,000,000 We still have a capacity of close to €50,000,000,000 still open. So, still very active in the market. Great. Thank you. The next question is from Nicolas Herman, Citi. Yes. Good evening. Thanks for taking my questions. A couple, please. Firstly, I've not seen any mention of the targets you've set at the start of this year for 2026, FRE net profit and AUM targets. So where are we on those, please?

36:40 Secondly, could you just talk about what you're seeing in terms of retail appetite for real estate? Certainly, it seems like on the institutional side, that demand has notably picked up. Are you starting to see that turn on the retail side? And then finally, on Geek Street, what proportion of your management fees is that? Would about 15% be a reasonable proxy and also proportion of FRE? Thank you. Thanks your question. So maybe I will start with question number three about Duke Street. We were not consolidating Duke Street neither in our AUM, neither in our FRE, neither in our management fees.

37:31 It was consolidated by specific mean within the line of our profit and loss. So it will not and below our FRE, below result of the portfolio. So the fact that we are exiting Duke Street will not affect our AUM. We were not we had a minority stake in Duke Street. So this will not affect our AUM and this will not neither affect our FRE or performance related earnings. Coming back to your question number one on our target. Well, clearly here we see the path to this milestone as being driven by the trends that we have already seen visible in H1. As we said in our press release, FRE generation is typically more weighted towards the second half and that could be reinforced this year by our private equity fund. So the main building blocks for FRE are really continued growth fee growth on our larger base combined with a more integrated and streamlined platform notably from our real estate business. On the net results to come back to your question on target, beyond FRE, key driver here is once again value crystallization from our investment portfolio.

38:41 Here once again I think that in H1, we already saw active portfolio reticions, strong realized revenue, significant contribution from exits. Looking ahead, we clearly have a healthy private equity and real estate pipeline, which here once again gives us further visibility on value creation. So I think that combined with enhanced financial flexibility and stronger balance sheet, these elements support confidence on our ability here once again to progress towards continued earning growth. And I would tend maybe also to come back. But since February, clearly, global backdrop has become more uncertain, greater macro, fiscal, geopolitical volatility, environment.

39:27 Some discussion may clearly take longer. But from a long term business like ours, this may create timing effects, but it does not change our trajectory. And clearly, what remains crucial is once again our ability to keep accelerating profitability generation as reflected in the 2020 guidance we gave. We are not once again important to hear, but we are not pursuing growth for growth sake. We remain highly selective across deployment, realization, AUM growth with a clear focus on profitable AUM. You had a question on retail and real estate. Antoine, you may want to come back on this question. But clearly here, real estate retail market has been suffering now for quite a few years. We still see this market as quite muted us as far as investment. Now it's been eighteen months to two years that we came back on deployment on real estate. We see more and more good investment opportunity.

40:30 And we provide the opportunity to our LP to come back in the real estate market through this transaction. We mentioned a residential opportunity in Spain. We had similar one in France recently. And through co investment vehicle, we've been able to attract new co investors. But as far as retail is concerned on real estate, we still see the market quite muted. Maybe if I add As one thing on you know, we have 34% of our AUM is coming from what we call retail, but it's really several components into that. We have, on one hand, high net worth and ultra high net worth in video, which has been clearly the DNA of Tikehau back twenty years ago.

41:16 And we add, thanks to Soffidi, a more retail channel through IFAs, unit linked products in France. And we have really these two components. What we can say is that in The U. S, the market probably retrenched a little bit and you see all the noise with private credit and all that. But thanks to our two components, we are still very active on one of them, which is high net worth, high net worth individual. And by the way, it's for real estate, but not only for real estate. And then it's probably much more calm when it comes to pure retail. But despite that, we continue to fundraise in our real estate, probably less spectacular than the year 2020.

42:05 But the two engines in the retail are still working. Helpful. Thank you very much. The next question is from Philippe Goussaint, Deverett, Petitkin. Mr. Goussaint, your line is open. Philippe Goussaint, your line is open. Please go ahead. Maria, we have some questions that came through the webcast. So if I'm regrouping some of them, maybe on the investment portfolio side of things, how should investors think about the revenues for our investment portfolio?

43:04 And also how to think about the future value crystallization from the remaining EUR4 billion of investment portfolio going forward? Okay. Thank you, Theodora. I will take this one. So first, just to reiterate what we said at the strategic update. Portfolio rotation is a clear part of how we want to manage the balance sheet going forward, and that's what we did with the exit of Schroders in H1. So the overall idea is to be more active, to increase the portfolio velocity and to price to less value. So overall, we are taking a very pragmatic approach, including, of course, in H2, with one key objective in mind, which is to improve profitability generation.

43:51 So that said, we have a granular, more than 300 investment lines, which is well diversified across asset classes, which helps mitigate the impact of isolated valuation movements. I think it's worth mentioning that we see some positive contributions from our Aerospace and Defense strategy as well as decarbonization, where portfolio companies have delivered very strong profitability growth over the past quarters, and we hope it will continue to do so in the next quarters. So on H2, to answer specifically the question, I would be a little bit cautious about guiding specifically on unrealized marks because it depends upon market condition and company level developments.

44:38 But more broadly, and as we said in the press release, we do have a healthy private equity and real estate exit pipeline, which supports visibility on future value crystallization. Thank you so much. Maria, do you want to try again with Degroof Bericam on the line? Sure. The next question is from Philippe Gussens. Please go ahead. Yes, good afternoon. Sorry, I had my headset on mute. Three questions, if I may, this afternoon. The first one, there was a few days ago an announcement from Revolut that they had struck a deal with a couple of private equity and private credit funds in The U. S. To try to kind of kick start the democratization of private equity and private credit.

45:39 Do you expect that could have an impact over time on your platform as well? Do you have any ideas to participate in a potential democratization of the private asset class in Europe? Any initial thoughts maybe? Thank you for your question. We think there is a big trend there coming from various player. It's probably started, to be frank, in The U. S. With iCapital, and we are a small shareholder alongside a large alternative U. S. Manager into iCapital, and they build a platform to democratize that. It's been much more active in The U. S, if I may say. It's close to €200,000,000,000 at iCapital.

46:30 You had initiatives in Europe, which are between EUR 1,000,000,000 and EUR 3,000,000,000, let's say. So Revolut announced an agreement to commercialize six alternative asset managers, mainly US one plus one in Europe. We are obviously talking to them. This trend will probably take some time, but private assets will be democratized. There is no doubt about that. But as you know, we are a little bit cautious overall, especially on the liquidity side. We did not build private debt ever agreeing with mostly liquidity funds because we feel like it's probably a little bit early for pure retail investor to access that because the liquidity is not there yet.

47:25 But going back to your question, it's a long term trend. It's happening. Tikehau will take share of that. We have various initiatives, I may say. So everybody should expect that there will be some democratization around private market and it will be probably private equity, private debt, infrastructure, because on the real estate side, we can say that in Europe, it's already democratized. For instance, some of our funds are accessible on Boursorama for a few €100 So the trend is there, and we want to make sure we have our share into that. Is that answering your Okay. Absolutely. Thank you for that clarification.

48:12 My second question is, you sounded cautiously optimistic that we might see a little bit of a pickup in terms of exits on the private equity side. To really kick it off, what would be required according to you? Is it a more robust IPO market? Is it more visibility in terms of or a more stable geopolitical environment? And then the types of exits that you're seeing right now, in what type of form are you seeing them? Is it IPOs? Is it industrial players that are picking up assets? Or is it sales amongst private equity firms in the form of secondary trades? Well, thanks for that. Clearly, overall exits depend on portfolio performance.

49:04 So if you have a company on which you've been building the performance, starting with the top line, EBITDA evolution, gain of market share during many years, you do have a good portfolio company. So now it's about a question of valuation. And as far as you remain highly confident on the portfolio performance of your company, you can obviously see some exits coming. IPO could we could have some IPO opportunities. It's a question of size. We've seen that obviously mid market remains quite blocked for IPOs. But clearly, we see is strong appetite on decarbonization, on aerospace and defense from all the deployment.

49:49 We've been investing in decarbonization and aerospace and defense since 2018, 2019. So all our vintage number one for these two strategies are seeing good pipeline of exits, once again focusing on the underlying performance. And as of such, we've chosen since 2020 to be not to be an LBO generalist, but to be focused with too clearly a dedicated thematics. And we have a strong backbone setup, teams, dedicated operating partners, which have helped us to on value creation focusing. We see appetite for exits, most coming from industrial, most coming from funds, which actually during many years have not we are not investing in aerospace and defense. Things have changed. Now we see also on top of that new generalist fund coming to invest in aerospace and defense.

50:39 Okay. Thank you very much. And then my final question, if I may, a follow-up on the earlier question from Nicolas. For the outlook 2026, I was reading Page eight again of your press release. I did not see a reiteration of the earlier objectives to reach $60,000,000,000 AEM and FRE of between 175,000,000 and $225,000,000 Are you not restating or reiterating that? Or you're a little bit more cautious given the uncertain geopolitical environment? I will I can just repeat the answer I provided earlier is that clearly we see the path to these milestones as being driven by the trends we've seen during H1 and that we think will continue in H2 with one caveat, which is we want a profitable AUM and we are pursuing growth. We are not pursuing growth for growth sake. We actually we want to accelerate profitability generation both on our FRE and the figures we provided you earlier this year, both on net results.

51:46 Okay, great. Thank you so much for the clarification. Very helpful. Thank you. And maybe to summarize and to conclude, it's very clear that our two priorities are: one, profitability of both Engine, the asset management and the balance sheet. So when it comes to Asset Management, as already stated, we want to protect our margin. And then we see our management fees on average is increasing a little bit, and we are back at 94 bps when it comes to management fees plus performance fees, and it's critical to us. The profitability of the balance sheet will come with some exits. And as I already said, if you have a good portfolio company, you will have good exits, and we have a very healthy pipeline, especially when it comes to Aerospace and Defense.

52:36 So our two priorities are: one, profitability of the Asset Management and the balance sheet and two, performance of the funds because all these businesses, traditional Asset Management or Alternative Asset Management, you can scale, develop, expand if you deliver robust performances across cycle, across vintages to your investor. To raise money, you need to make sure you deliver the right performance. And it's clearly for us our priority moving forward. Thank you very much everybody. There's no additional questions neither on the line or on the webcast.

53:24 Antoine, over to you to concluding remarks. Thank you, Theo. Thanks all of you for attending attending this H1 results pre summer break for some of you, I guess. We are very enthusiastic about the milestone we reached in terms of profitability of our Asset Management. Overall, income has been multiplied by two. We are very enthusiastic despite the challenging geopolitical, political, monetary environment that will continue to scale, upgrade the platform, continue to streamline, and some of you had questions on streamlining and simplification.

54:11 For the first twenty years as an entrepreneurial journey, we put the foundation, we innovate, we put it piece by piece, and now it's really the time of harvesting, streamlining and accelerating profitability. Thanks for all of you, and we look forward to in person meetings or calls or discussion. Thanks to all of you. Have a good night. Thanks, bye.