Release Date: July 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Tikehau Capital SCA (TKKHF, Financial) achieved a record EUR3.4 billion in net new money during the first half of 2024, demonstrating strong fundraising momentum.
- The company reported double-digit growth in management fee generation, indicating robust underlying financial performance.
- Sustainability-focused assets under management (AUM) grew by 11%, reaching EUR30 billion, reflecting the company's commitment to sustainable investment strategies.
- Tikehau Capital SCA expanded its international presence, with 75% of third-party net new money coming from non-domestic clients, highlighting successful global diversification.
- The firm maintained a high level of selectivity in investments, with a selectivity rate of 99%, ensuring quality asset acquisition and downside protection.
Negative Points
- The company faced cyclical impacts from a high basis of comparison in 2023, affecting upfront subscription fees and unrealized mark-to-market effects on listed REITs.
- Real estate strategies experienced net outflows, with over EUR100 million in unserved exits, indicating challenges in this sector.
- The weighted average management fee rate decreased to 88 bps from 97 bps a year ago, reflecting a shift in fundraising mix towards lower-fee strategies.
- Performance-related earnings remain uncertain, with realizations dependent on market conditions and fund exits, creating potential volatility in future earnings.
- The gearing ratio increased to 54% due to higher financial debt, which could pose risks if not managed carefully in a volatile market environment.
Q & A Highlights
Q: Can you provide more details on the expected fundraising contributions from the Nikko partnership and the Middle East and Asia clients in H2?
A: Frederic Giovansili, Deputy CEO, explained that the Nikko partnership is expected to gradually ramp up, with active engagement and meetings already underway. While they hope for contributions to the full-year 2024 AUM, it's too early for precise expectations. The strong client demand in Asia is promising, but exact timing remains uncertain.
Q: What is the outlook for real estate net outflows and the recovery in demand?
A: Henri Marcoux, Deputy CEO, noted that the worst period for real estate outflows was in late 2023, with signs of recovery in the first half of 2024. They have about EUR100 million of unserved exits, but the market is improving, and new investment opportunities are being pursued, which should help stabilize the situation.
Q: How do you assess the underlying risk in the private debt market, and could regulations impact its development?
A: Frederic Giovansili stated that Tikehau focuses on high-quality assets with strong EBITDA margins and low leverage, providing a fair level of protection. While acknowledging some tensions in the private debt market, he welcomed potential regulations that align interests between GPs and LPs, seeing it as supportive for the industry.
Q: What are the expectations for performance fees and their impact on future earnings?
A: Henri Marcoux mentioned that while it's difficult to provide specific data points, the TDL3 Vintage is expected to generate significant performance fees in the coming quarters. The realization pace within funds will influence the recognition of these fees.
Q: What is the anticipated pace of capital deployment for the second half of 2024?
A: Henri Marcoux highlighted a healthy deployment outlook across asset classes, with significant opportunities in credit, real estate, and private equity. The decarbonization fund and a new aerospace and defense fund are expected to contribute to a robust deployment in H2.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
