Tikehau Capital Sca · EURONEXT:TKO
Tikehau Capital Sca — Tikehau Capital — FY2023 Earnings Presentation
52 slides from Tikehau Capital Sca's earnings presentation, Mar 6, 2024
Slide 1: Tikehau Capital FY23 Earnings Presentation
TIKEHAU CAPITAL FY23 EARNINGS PRESENTATION 6 MARCH 2024
Slide 2: Agenda
1. Successful diversification 8 Agenda of capital formation 2. Investment discipline and sustainable value 18 creation 3. Strong financial performance 22 4. Outlook and key priorities 31 5. Q&A 35 6. Appendix 36
Slide 3: Evolving landscapes
Evolving landscapes 2009 2024 # of listed peers 2 in Europe 2 in North America 4 ~4x 15 8 in Europe 7 in North America Market capitalization ~$15bn ~$3bn ~$145bn ~$40bn (1) (1) (2) (2) evolution (1) At 31 December 2009, (2) At 23 February 2024. TIKEHAU CAPITAL FY23 EARNINGS PRESENTATION 3
Slide 4: Growth and profitable entrepreneurial journey
Growth and profitable entrepreneurial journey Asset Management AuM 43 >65 €bn 11 - 2004 2017 2023 2026 guidance >250 Fee-Related Earnings €m 12 107 - 2004 2017 2023 2026 guidance TIKEHAU CAPITAL FY23 EARNINGS PRESENTATION 4
Slide 5: Three growth engines supporting our business model
Three growth engines supporting our business model Investment FRE PRE portfolio generation generation returns >€250m ~€20bn Average 10-15% FRE target in 2026 of AuM eligible to carried interest(1) run rate returns Mid-teens ~€500m Return on Equity by 2026 Net Profit, Group share in 2026 (1) At 31 De
Slide 6: 2023 in a nutshell
2023 in a nutshell DELIVERING IN 2023 ON THE CORE PILLARS OF OUR STRATEGY 1 2 3 Successful diversification Focus on investment discipline, Financial performance driven by of capital formation across asset impact and sustainable value operating leverage and Tikehau classes, geographies creation Capit
Slide 7: Delivering solid growth in 2023
Delivering solid growth in 2023 Realized portfolio revenues Asset Management AuM AM revenues Core Fee-Related Earnings (1) from TKO strategies YoY growth +13% +6% +13% +20% 43 312 168 123 294 38 109 39% 139 37% Core FRE margin €bn €m €m €m 2022 2023 2022 2023 2022 2023 2022 2023 (1) Core FRE corresp
Slide 8: Successful diversification of capital formation
1. SUCCESSFUL DIVERSIFICATION OF CAPITAL FORMATION TIKEHAU CAPITAL FY23 EARNINGS PRESENTATION 8
Slide 9: Structural demand for alternatives remains solid
Structural demand for alternatives remains solid Investors allocation intentions remain highly supportive Market outlook is not deterring private capital investment Investors' alternative assets allocations intentions over the long term Investors were asked: 'Is your outlook on the market cycle impa
Slide 10: Capacity to serve a variety of evolving client needs and long-term investment themes
Capacity to serve a variety of evolving client needs and long-term investment themes Diversified and complementary asset classes Relevant value proposition Capital Markets Investment Activity Clients needs Long-term investment themes 0.3 Strategies 4.6 79% of AuM within Private Yield Strategies Prot
Slide 11: An increasingly global platform
An increasingly global platform 12% of FTEs in 26% of FTEs in 17 North America Europe(1) & Middle East Offices globally(2) Amsterdam 9% of FTEs in Asia Montreal London Luxembourg 48 New York Brussels Frankfurt Nationalities Seoul Tel Aviv Tokyo Milan Madrid 47% Abu Dhabi Zurich Hong Kong of AM profe
Slide 12: Record level of fundraising in 2023
Record level of fundraising in 2023 +37% growth in net new money in 2023 2023 achievements Complementary Strong demand for our products and relevant strategies +37% 6.5 €8.8bn €6.5bn Value-add 2023 gross inflows 2023 net inflows strategies 4.7 (20%) Active franchise expansion Progress in democratizi
Slide 13: Europe: platform delivers on all fronts
Europe: platform delivers on all fronts 20 years of presence in Europe Near-term priorities Key 2023 milestones Expand franchise in 9 European offices underserved regions 51% of inflows(1) raised from Deepen local sourcing European offices 26% AM professionals in Europe(2) capabilities Strong tracti
Slide 14: Acceleration in North America
Acceleration in North America Strong development for Asset Management Near-term priorities Our ecosystem as growth driver 2018 New York office opening year Expand client base Ecosystem investments and strategic partnerships in: 4 strategies Enhance product offering CLOs, Credit secondaries, mid-mark
Slide 15: Further deepening of our presence in Asia
Further deepening of our presence in Asia Strategic partnerships Near-term priorities Key 2023 milestones Promote TKO franchise Leading Japanese institution as an in new areas anchor investor in European CLO XI Distribution agreement(1) Investment JV dedicated to Asian Execute strategic partnerships
Slide 16: Israel & Middle East: strong growth opportunities
Israel & Middle East: strong growth opportunities Solid achievements in Israel Near-term priorities Growing presence in the UAE c€1bn of AuM from Israeli investors Grow our franchise in MENA €200m multi-asset mandate from a major Emirati Sovereign Wealth Fund Blue-chip institutional Expand distribut
Slide 17: A pioneer in the democratization of private markets
A pioneer in the democratization of private markets Key innovative solutions dedicated to private investors developed since 2019 Dedicated mandate ELTIF 2 unit-linked solutions Distribution Strategic Innovative digital 2 unit-linked solutions partnership with partnership platform a leading bank in U
Slide 18: Investment discipline and sustainable value creation
2. INVESTMENT DISCIPLINE AND SUSTAINABLE VALUE CREATION TIKEHAU CAPITAL FY23 EARNINGS PRESENTATION 18
Slide 19: Sustained momentum in deployment and realizations in 2023
Sustained momentum in deployment and realizations in 2023 Solid and selective deployment level Robust level of value-creating exits 6.9 €5.9bn 5.5 +33% €2.4bn Value-add strategies Value-add 1.8 strategies (25%) 1.5 (25%) Yield Yield strategies strategies €bn (75%) €bn (75%) 2021 2022 2023 2023 2023
Slide 20: Portfolios with high-quality assets and embedded downside protection
Portfolios with high-quality assets and embedded downside protection DIRECT LENDING(1) PRIVATE EQUITY(2) REAL ESTATE(3) High level of granularity High-quality assets +22% +23% 25% LTM Revenue growth LTM EBITDA growth >9,000 Average EBITDA margin Units across RE platform Robust portfolio Healthy Inte
Slide 21: Assets quality is critical for our investment portfolio returns
Assets quality is critical for our investment portfolio returns Breakdown of investment portfolio by asset class 3,858 Ecosystem and direct 795 investments 3,063 Others(1) Capital Markets Strategies €3.1bn of our own capital is invested and at work in Real Assets our strategies at 31 Dec. 2023 3,063
Slide 22: Strong financial performance
3. STRONG FINANCIAL PERFORMANCE TIKEHAU CAPITAL FY23 EARNINGS PRESENTATION 22
Slide 23: Securing recurring long-term management fee generation
Securing recurring long-term management fee generation 11% YoY growth in Fee-Paying and Future Fee-Paying AuM Management fees represent 97% of AM revenues Average management 98 bps 94 bps fee rate 42.8 +11% 322 Non fee-paying 37.8 4.2 c.€42m 304 +6% Performance fees & carried interest Incremental ma
Slide 24: Solid operating leverage in 2023
Solid operating leverage in 2023 13% year-over-year growth in Core FRE H2 2023 Core FRE margin >40% Core FRE: relevant metric to assess underlying profitability and operating leverage Core FRE 37.0% 39.4% 42.6% margin +13% 123.0 123.0 56.5 €m FY 2022 FY 2023 % change Management fees & other revenues
Slide 25: Continued platform investing and disciplined cost management
Continued platform investing and disciplined cost management Personnel expenses account for Efficient cost management c.70% of AM operating costs(1) in H2 2023 184.9 189.3 189.3 99.6 • Selective hires in key functions and areas of growth Other operating 59.2 (6%) 55.5 costs • Continued geographic ex
Slide 26: Performance-related earnings, a material profit driver ahead
Performance-related earnings, a material profit driver ahead 16% yoy increase in AuM eligible to carried interest Our approach to carried interest 48% yoy increase in unrealized carried interest(1) +16% 19.6 +48% 182 Shareholder-friendly 16.9 allocation 14.0 123 Cautious P&L recognition 81 7.1 7.3 5
Slide 27: Increasing contribution from Tikehau Capital strategies to realized portfolio revenues
Increasing contribution from Tikehau Capital strategies to realized portfolio revenues High basis of comparison in 2022 298 (Univision co-investment and 2023 highlights currency effects(1)) Unrealized portfolio H1: €84m 104 Revenues H2: €95m • Acceleration of revenue generation in H2 2023 179 (x2.4
Slide 28: Active portfolio rotation
Active portfolio rotation PORTFOLIO REVENUES AND CASH GENERATION ARE ON THE RIGHT TRACK Strong ramp-up from TKO strategies Substantial cash flow generation Embedded long-term value-creation The contribution of TKO strategies • IFRS revenues only capture a portion x2 to realised revenues has doubled
Slide 29: Profit generation accelerated in H2 2023
Profit generation accelerated in H2 2023 Solid net profit generation in H2 2023 Continued increase in ordinary (+144% yoy) dividend since 2020 €m FY 2022 FY 2023 % change AM EBIT 107.0 116.8 +9.2% 176.7 72.0 Investment portfolio revenues 298.4 179.2 (40.0%) 0.40 0.75 (1) Corporate expenses (63.5) (6
Slide 30: Robust financial structure supporting our business model
Robust financial structure supporting our business model Simplified balance sheet at 31 Dec. 2023 Total €4.9bn €4.9bn €0.2bn Other €3.2bn €1.0bn 78% Other assets €0.8bn liabilities Shareholders’ Equity, Short-term financial ESG-linked debt Group share resources Cash €1.5bn €0.2bn Financial & equival
Slide 31: Outlook and key priorities
4. OUTLOOK AND KEY PRIORITIES TIKEHAU CAPITAL FY23 EARNINGS PRESENTATION 31
Slide 32: We are ideally positioned to benefit from current market trends
We are ideally positioned to benefit from current market trends Private Credit Impact Liquidity Solutions Infrastructure Democratization Permanent Capital Consolidation TIKEHAU CAPITAL FY23 EARNINGS PRESENTATION 32
Slide 33: Disciplined cost optimization
Disciplined cost optimization ENHANCING AGILITY AND VALUE CREATION THROUGH DISCIPLINED COST MA NAGEMENT Starting point Key priorities • Focus on International Expansion: • Tight cost management in 2023 resulted in Prioritizing markets and asset classes for stable AM and corporate expenses strategic
Slide 34: Key value-creation levers
Key value-creation levers Our growth playbook 2024 Action Mid-term targets Expand flagship strategies ✓ Scalability >€65bn 2026 AM AuM Operating leverage >€250m Scale up innovation ✓ 2026 FRE Mid-teens Return on Equity by 2026, driven by Enhance international development Value creation and partnersh
Slide 35: Q&A
5. Q&A TIKEHAU CAPITAL FY23 EARNINGS PRESENTATION 35
Slide 36: Appendix
6. APPENDIX TIKEHAU CAPITAL FY23 EARNINGS PRESENTATION 36
Slide 37: A model on its way to deliver full potential
A model on its way to deliver full potential Fee-related earnings Performance-related earnings Investment returns Platform investments ahead of Large flagship funds still in ~50% of investments maturing Current features management fees generation J-curve effect + investment phase Conservative P&L ac
Slide 38: Deployment & realizations examples
Deployment & realizations examples Private Debt Real Assets Private Equity Investment Hotel California Investment Investment Q1 2024 Jan. 2023 Dec. 2023 Value-add Real Estate Direct Lending Private Equity (Decarbonization Strategy) • Asset: Prime hotel located in Paris • Industry: Temporary staffing
Slide 39: Our sustainability-themed & impact platform: fit to address transition and resilience
Our sustainability-themed & impact platform: fit to address transition and resilience Decarbonization Nature & Biodiversity Resilient Cities Low carbon cities Promoting energy efficiency, renewable energy Rebuild soil organic matter and restore Energy efficiency improvement, renewable supply and low
Slide 40: Granular and diversified exposure by sector and geography
Granular and diversified exposure by sector and geography AM AuM breakdown by sector AM Assets breakdown by geography RoW Other North America 1% 8% 9% Dry Powder Dry Powder UK 16% 3% 16% €42.8bn Continental Europe(1) €42.8bn of AM AuM at 31.12.23 of AM AuM at 31.12.23 Real Estate 28% Top 15 30% sect
Slide 41: Continued expansion of our client base globally
Continued expansion of our client base globally AM AuM breakdown by investors nationalities at 31 Dec. 2023 Most represented nationalities in AuM at 31 Dec. 2023(2) 1% Office Opening Year Non-domestic investors(1) €16.9bn 8% 10% 1 United States 2018 8% 2 Italy 2015 +19% 3 United Kingdom 2013 Non-dom
Slide 42: Continued progress in the democratization of private markets
Continued progress in the democratization of private markets AM AuM breakdown by client type at 31 Dec. 2023 Key partners Insurance Private banks Distribution Private investors companies platform €11.4bn 6% 2% 10% 27% 21% of AM AuM at 31 December 2023 €42.8bn AM AuM at 31 December 2023 29% Opale Cap
Slide 43: Using our balance sheet as an accelerator of growth
Using our balance sheet as an accelerator of growth Tikehau Capital strategies Innovate Support Scale up through new strategies growing strategies established strategies Regenerative Agriculture Decarbonization Direct Lending Real Estate Debt Special Opportunities Cybersecurity PE fund of funds Debt
Slide 44: Financial indebtedness and amortization plan
Financial indebtedness and amortization plan 5.0 years of average debt maturity (1) 0.8 0.5 0.5 0.3 0.1 0.1 2019 Bond - €0.5bn 2021 Sustainable Bond - €0.5bn RCF - €0.8bn - Undrawn (2) 2023 Sustainable Bond - €0.3bn (3) USPP - 10 Y - $115m USPP - 12Y - $65m (1) As of 31 December 2023. (2) Tikehau Ca
Slide 45: Healthy LTV and Gearing ratios
Healthy LTV and Gearing ratios LTV Covenant: <47.5% (1) Minimum liquidity ratio : > €150m (2) 3,500 3,139 3,144 3,184 3,040 3,000 2,797 2,500 47% 46% 43% 26% 2,000 32% 36% 20% 1,432 1,472 1,469 1,500 1,292 2% 1,254 993 1,051 1,000 997 -1% 626 -15% 500 317 0 2019 2020 2021 2022 2023 (3) (4) Covenant
Slide 46: Robust skin in the game with management owning 55% of the capital
Robust skin in the game with management owing 55% of the capital Share capital ownership at 31 December 2023 Other shareholders and free float 1 Including Tikehau Capital Advisors(1) and other Management 21% entities(2) 2 Shareholders which are also shareholders of Tikehau Capital Fonds Stratégique
Slide 47: Simplified consolidated P&L and balance sheet
Simplified consolidated P&L and balance sheet Simplified consolidated P&L Simplified consolidated balance sheet €m FY 2022 FY 2023 €m FY 2022 FY 2023 Management fees & other revenues(1) 293.5 312.3 Investment portfolio 3,526 3,858 Operating costs(2) (184.9) (189.3) Cash & cash equivalents 522 228 Co
Slide 48: Investment portfolio evolution
Investment portfolio evolution +€924m €(565)m €(29)m €3,858m €3,527m 795 (21%) Ecosystem & 726 direct invest. Of which €808m Including returns of Solid performance invested into the capital for the firm’s Group’s own Asset Private Equity Management strategies offset by strategies market effects TKO
Slide 49: Portfolio revenues breakdown
Portfolio revenues breakdown in €m 31-Dec-2022 31-Dec-2023 in €m 31-Dec-2022 31-Dec-2023 Tikehau Capital funds 161.3 168.9 Dividends, coupons & distributions 182.2 189.5 SPACs 2.3 (3.3) Realized change in fair value 12.2 (0.2) Investments alongside Tikehau Capital funds 8.2 13.1 Realized portfolio r
Slide 50: Disclaimer
Disclaimer By viewing or receiving or reading this Presentation (as such term is defined herein) or attending any This Presentation contains forward looking statements about the Group and its subsidiaries. These meeting where this Presentation is made, you agree to be bound by the limitations, quali
Slide 51: Disclaimer
Disclaimer This Presentation includes certain pro forma financial information about the Group. This pro forma a revolving credit facility to be subsequently repaid with investor contributions. financial information has been prepared on the basis of historical financial statements of the Calculations
Slide 52: Slide 52