Bridgepoint Group Aktie

Good day, ladies and gentlemen, and welcome to the Bridgepoint Update Call. [Operator Instructions] Please note this call is being live streamed to a webcast for a wider audience and will be recorded. [Operator Instructions]

I would now like to hand the call over to Raoul Hughes, CEO, to open the presentation.

Good morning, and welcome. I'm Raoul, the Group's Chief Executive, and I'm joined this morning by Ruth, our CFO, and we're thrilled to welcome Al, Chief Executive of Kayne Anderson. As you have seen, today, we announced the coming together of 2 great firms through our acquisition of Kayne Anderson Real Estate, another major step forward in our plan to build the clear global leader in middle market value-added investing across all alternative asset classes.

I'll let Al take you through the brilliant business that he has founded and built into the powerhouse that it is today in a few moments. But first, a few points from me. The addition of Kayne Anderson Real Estate broadens our product suite and ensures that we now have category-killing products operating at scale across all 4 major private market asset classes as well as a growing secondaries pillar. This acquisition is bang on strategy. Kayne Anderson Real Estate is a $22 billion AUM scaled mid-market value-added investor, a true leader in medical offices, senior living, student and multifamily as well as light industrial. Sectors that benefit from what Al so perfectly describes as a silver tsunami.

But most importantly, it's an extremely strong cultural fit. The team are entrepreneurial, alpha-focused and humble. They are committed for the long term, taking nearly half of the consideration in long-term locked up stock, ensuring that we're all fully aligned from day one. I hope Al won't mind me saying this, but based on the day-one consideration, the acquisition is priced at an attractive sub-9x multiple on the midpoint of '27 EBITDA guidance and is highly accretive for our shareholders.

Now as you will have heard me say for a while, we've been looking at the real estate space, but I've always felt it particularly important to buy both the right asset in exactly the right part of the real estate market at the right time in the cycle. Al and I met several years ago, and it was clear back then that this was absolutely the right asset. Just like ECP isn't any old infrastructure play, Kayne is a specialist and sits in the growing part of the real estate space with a 19-year track record of strong returns.

The timing is now perfect for several reasons. Firstly, we've completed our successful integration of ECP and have the bandwidth and experience to do it again here. Secondly, the real estate market is at an inflection point and is taking off. And thirdly, the momentum in the business is undeniable, having just closed an oversubscribed latest flagship fund at $5.1 billion, double its previous predecessor.

We believe there is significant further growth potential in Kayne, driven not only by the underlying growth in its specialist markets, but also by the meaningful scale benefits of joining Bridgepoint's platform, including our strong IR capabilities, immediate cross-sell opportunities and the potential to launch incremental organic product initiatives.

Now the deal doesn't just add scale. It accelerates our growth and raises the quality of our earnings, improving our FRE centricity significantly from 50% to 60%. And it further diversifies our income streams, meaning that the fees from our largest fund now only account for 15% of our overall revenue.

Ruth will take you through the numbers in detail later. But ultimately, it's a highly accretive transaction, mid-single digit in 2027 and over 20% in '28 and a '27 multiple broadly comparable with the discounted multiple we've been trading on, a testament in many ways to the undervalue that Al and his colleagues see in our current share price. So accretive, high-quality, scaled, high-growth, well-priced. It ticks every box.

As I said at the very start, this is transformational for the group. It will take our overall AUM from $95 billion to $117 billion. It balances the business post-deal with 50% of our AUM in the U.S. and importantly, 50% in real assets. And it builds on what we do from independence in 2000 to Hermes, the EQT Credit to ECP, a proven disciplined track record of platform-enhancing M&A.

Kayne Bridgepoint as it will become is the next chapter. In fact, in autumn '23, I sat here and presented ECP, a combination that I hope you all now see as enormously successful. Well, today, I sit here just as excited to present Kayne and introduce you to Al as I was to introduce Doug back then. Kayne is the ECP of the real estate world. And that brings me briefly to our existing business, which continues to fire on all cylinders.

Since our last market update, fundraising has continued to exceed our expectations. BE VIII held its first close and now stands at EUR 6.7 billion with the fees having been turned on at the beginning of June. ECP VI is heading towards its hard cap and is expected to close in the coming weeks, and BDL V ((sic) [ BDL IV ]) should close at around EUR 5 billion, 25% above its cover number of 4. And our CLO XI has also now been priced. I'm therefore, able to go beyond confirming our fundraising guidance and instead raise it from EUR 24 billion to EUR 28 billion. These efforts are, of course, the result of continued performance across all our strategies.

Our deployment remains on track. We continue to drive value across our portfolios. And critically, we continue to return cash to our investors through delivering exits. ECP V is a particular standout and is now beginning to look very much like BDC III, thanks in no small measure to the brilliant Pro Energy deal, which if it maintains its current momentum, could result in a greater than 3x money multiple for that fund as a whole.

So to conclude, the group has never had more momentum with strong performance across all abroad and our IR machine really bearing fruit, both in cross-selling and strengthening our existing relationships with the world's leading LPs. And with that, I'll hand over to Al and take you through the Kayne Anderson business and explain why he thinks the Bridgepoint Group is such a natural home for the next chapter of growth. Al?

Thanks, Raoul. It's great to be here with you and Ruth, and we're incredibly excited to be partnering with you to create the premier global middle market investment platform across all alternative asset classes. In a minute, I'll take you through why we think we're heading into a super cycle for our real estate sectors and how we're different and a differentiated platform.

But first, let me quickly address why this transaction makes so much sense. From the moment I met Raoul and the team, it was clear to me that we belong together. We share a similar culture. There's no overlap of strategies, and Bridgepoint has a bigger platform with global distribution, and we can grow our business while not having to change anything in how we operate our business. In every single way, 1 plus 1 equals 3 or even 4.

So who are we? Kayne Anderson Real Estate is the category killer in the alternative sectors of real estate in the U.S. We are a vertically integrated operating platform focused on medical office, seniors housing, student housing and light industrial, all sectors with structural demand tailwinds, higher growth, supply constraints and underinvestment. We manage over $22 billion in AUM and approximately $38 billion in gross asset value. We have a strong track record over our last 19 years with our flagship equity funds generating a 15% net realized IRR since inception and our debt platform generating a 12% net IRR across all debt investments while only having a 2 basis point loss ratio.

Based on that track record, we have been able to take advantage of the most recent dislocation in commercial real estate and have raised approximately $10 billion across the platform since the beginning of 2024 and had our most active years of deployment.

Let me quickly unpack how we're built because those numbers come from a platform whose capabilities span the entire capital stack. We manage around $22 billion in total, roughly $17 billion in equity strategies and a little over $5 billion in debt, and we can move up and down the capital structure to stay relevant in every market. On the equity side, it starts with our flagship opportunistic and value-add strategy, where we develop and reposition assets across our specialist sectors, medical office, seniors housing, student housing, light industrial and multifamily. Alongside that, our core equity strategy holds stabilized income-producing assets in those same specialist sectors. And our attainable housing strategy is focused on multifamily at workforce-attainable rents, an area of deep structural demand in the U.S. today.

Then there is our debt platform, approximately $5 billion today and one of the most differentiated parts of what we do. It is fully integrated with our equity business. We only lend in the sectors where we already have deep operating expertise, which gives us a true edge in market knowledge, underwriting and the ability to step in operationally if we ever need to. We have originated or acquired more than 10,000 loans since inception with a realized loss rate of under 2 basis points.

And since 2015, we have invested more than $18 billion across direct originations, loan purchases, SASB CMBS and Freddie Mac structured products. That loss rate matters. It speaks to the same discipline you see right across the equity platform. Put it together and you have a single vertically integrated operating platform that can invest through the whole capital structure and across every part of the cycle.

I'll come back to Kayne Bridgepoint in a second, but let's quickly cover why real estate and why now for Bridgepoint shareholders. The sectors which we focus on are mission-critical asset classes. These are the best sectors within real estate and real estate as a whole is the third largest asset class after fixed income and equities. For investors around the globe, U.S. commercial real estate is an essential part of an allocation to alternatives. And as you can see on the chart, across all private real estate, allocations are up around 20% since 2013. Private real estate has consistently delivered attractive returns with lower volatility than public markets and with a much lower correlation to the broader macro environment. And our sectors have done even better as we essentially have the trifecta today, an attractive buying opportunity, limited new supply and strong rental growth.

I often say that I'm old enough to have lived through and worked through 1988, 1998, 2008 and the global pandemic for commercial real estate. And I can tell you hands down that the past 3 years and continuing today is the best buying opportunity for real estate that I've seen since the GFC and one of the 3 best that I've seen over my nearly 40-year career. There is no doubt real estate is at an inflection point, particularly in the alternative sectors in which we invest. I believe that we're entering a decade-plus long super cycle for our asset classes as real estate recovers and investors continue to rotate out of the more traditional sectors and into alternatives.

Essentially, what happened is we had the era of free money/quantitative easing from 2012 to 2022, which drove up prices for all assets, including U.S. commercial real estate. This peaked in early 2022. I will point out that while most real estate firms had their biggest allocation years in 2021 and 2022, we were very disciplined during that time period, believing that we were at or close to peak pricing. Then beginning in March of 2022 and continuing through May of 2023, you had rates move up 525 basis points. Obviously, cap rates expanded and pricing collapsed with most commercial real estate falling in value by 20% to 50% from the second half of '22 to the first half of 2024.

The good news is values have stabilized and started to recover, but interest rates have remained higher for longer, which has extended the buying opportunity. At the same time, equities and corporate bonds are at or near all-time highs. So on a relative basis, real estate looks very compelling. And on top of that, supply constraints are virtually certain to stay in place for the foreseeable future, making the investment case even more attractive.

Traditional real estate, often defined as office, retail, multifamily and large-bay industrial has been heavily invested in and in many cases, is facing a much more difficult outlook. This has forced capital to look elsewhere. The reason that we chose the sectors that we're in, medical office, student housing, seniors housing and light industrial is that you have demand tailwinds for the next 20-plus years that makes them incredibly resilient.

These asset classes are not highly correlated to the macro economy and do not require GDP growth to have rent growth. The demand is structural in nature, driven by both demographics and secular tailwinds. One of my favorite sayings is, find the demand and let it run you over. And that is exactly what Kayne offers to real estate in exactly the same way that you see ECP offering this to infrastructure. And just like ECP, we occupy a part of the market that has very high barriers to entry. Ownership is highly fragmented and operating expertise is extremely difficult to build.

There are very few qualified operating platforms in these sectors, and it takes years to develop the relationships, knowledge and credibility to invest well. So while more capital is coming into our verticals, most of it is not competing directly with us. Instead, much of it is looking to buy from us and/or partner with us to access the expertise we have spent more than 2 decades building. In our target sectors, medical office, seniors housing, student housing and light industrial, we focus only on the highest end of the asset classes, which is the most resilient part of already resilient sectors.

We are the largest operator of medical office in the U.S. now, managing over 50 million square feet or 5 million square meters across more than 1,000 properties in 45 states. We have relationships with over 211 hospital systems and large physician groups across the country. In student housing, these are all high-end purpose-built student accommodation at the Power 4 conference schools. Our assets are exclusively highly amenitized, best-in-class pedestrian to campus properties at the premier public state universities in the United States.

Our seniors housing is focused exclusively on the higher end of the market. Our properties are all private pay with a continuum of care consisting of approximately 2/3 independent living and 1/3 assisted living. The average entry age of our residents is 80 years old and the average age is 84 years old.

Our light industrial is focused on infill locations in urban markets where we cater to smaller tenants renting 5,000 to 10,000 square feet on average. Demand is driven by e-commerce and smaller businesses that account for close to 50% of U.S. GDP. In each of these sectors, we have a unique operating model where we retain all operational capabilities and control in-house, including a 14-person in-house construction management and design team.

But in addition to that, we have proactively aligned ourselves with the best operating partners in each respective asset class on either an exclusive or proprietary basis. This has led to both the majority of our portfolio being sourced on an off-market basis and superior operating performance.

I thought I'd bring the demographic story to life a bit more here. Across student housing, medical office, seniors housing and light industrial, demand is compounding at the same time that new supply has fallen from 24% to 77% from recent peaks. In student housing, Power-4 enrollment continues to grow, while deliveries declined sharply this past academic year. In medical office, the 65-year-old population is growing significantly with 11,000 Americans turning 65 every day for the next 20 years. Outpatient care continues to be the wave of the present and the future, yet new supply is down 33% from recent highs.

In seniors housing, the 80-plus-year-old population is surging with the 80 and over population in the U.S. set to double over the next 10 years, yet starts are down 77%. And in light industrial, e-commerce and last mile logistics continue to drive escalating demand, while well-located infill supply remains highly constrained.

None of this works without the team, and that's by far our proudest achievement, and our culture is a major part of our success, which I would sum up as a gritty and team-oriented culture. We call it one team, one dream. We've grown from 5 people when I rolled my own firm into Kayne Anderson to launch the real estate platform in 2007 to 128 team members today, with more than 100 of them focused on our investments and operations. We have deep expertise across the capital stack with David Selznick and me leading the platform and senior sector heads who have delivered through multiple cycles. This is a specialist team made up of the leading experts in each of the sectors in which we focus.

Each of us lives, eats and breathes our asset classes and teamwork-oriented culture. This is a true differentiator. We believe that grit, discipline, and operating knowledge matter as much, if not more, than IQ, and this team brings all 4. So when we look at the opportunity today, as I said, it's a trifecta. First, demand tailwinds; second, supply tailwinds; and third, a buyer's market for which we are uniquely positioned. That positioning is why we have had access to both equity and debt capital in a liquidity-constrained environment.

We are known as a certainty-of-close buyer, and that reputation matters and it earns us proprietary sourcing. The numbers on this slide show the momentum. Our flagship equity fund grew almost 2x to $5.12 billion from $2.75 billion in the prior vintage, and we achieved that in the most challenging fundraising environment since the GFC. That growth is a powerful proof point in itself. It reflects the opportunity of our investment pipeline, the depth of investor confidence in the platform, and it is supported by our long track record of top quartile equity performance through cycles.

So this is not just fundraising momentum, it's further evidence of the expertise, discipline and capabilities that have made Kayne Anderson Real Estate one of the leading specialist real estate platforms in the U.S. Since 2020, we have deployed around $40 billion across the platform. This also speaks to the discipline of Kayne Anderson Real Estate's deployment model. From 2020 to 2022, the platform deployed around $7 billion in equity and $7 billion in debt, using its debt strategies to lean into dislocation during COVID and the rate-hiking cycle while remaining more selective on equity deployment.

As equity market conditions improved in 2023 to 2025, our deployment accelerated materially with almost $16 billion deployed across equity strategies, more than 2x the 2020 to 2022 level, while total Kayne Anderson Real Estate platform deployment continued to compound at a mid-teens compound annual growth rate since 2020. We have also distributed over $12 billion since 2020. So this is not just a story about institutionalizing these alternative verticals. It's a story about discipline, differentiated access and consistent execution as well as growth. Said simply, Kayne Anderson Real Estate is the ECP of real estate for Bridgepoint. We represent a fifth pillar with strong alignment to Bridgepoint's strategic priorities.

Let me show you what that track record actually looks like across our flagship value-added equity series. We have raised 7 flagship funds since 2007, and the story is one of unbroken growth from $136 million in our first fund to $5.12 billion in our latest vintage. That is almost 40x growth in fund size over the series, and we've grown through every market environment along the way. And the returns have been every bit as consistent, a 15% realized net IRR across the flagship funds since inception with net multiples in the 1.3 to 1.6x range. Fund after fund through multiple cycles, we have delivered first or second quartile performance. That kind of consistency is very rare in our industry.

Growth in scale, consistency of returns and top quartile performance. That is the foundation of everything we do. And it's not just a flagship series. That same discipline runs right through the rest of the platform across our core open-ended funds and our debt strategies. On the open-ended side, both of our core vehicles have consistently beaten their benchmarks. KACORE, our core equity fund now at around $3.3 billion of NAV and KCRED, our core debt fund at roughly $1.9 billion of NAV. In closed-ended debt, our KARED funds have delivered net IRRs of between 10% and 12% with strong multiples and a steady return of capital to investors. And our opportunistic credit strategy, KAROD, has performed even more strongly at around a 17% net IRR.

What ties all of this together is that same discipline, directly originated sector-focused credit, top quartile returns and a loss ratio of under 2 basis points across the debt platform since inception. Whether it's equity or debt, core or opportunistic, the message is the same: consistent top quartile performance built on specialist expertise.

In summary, we are thrilled to be joining the Bridgepoint family. We're excited about the growth ahead for Kayne Bridgepoint Real Estate and equally excited to contribute to the next phase of growth for the Bridgepoint platform itself. This combination makes both businesses stronger and gives us a much bigger opportunity set for our investors, our people and the platform. We're joining from a position of real momentum. We've just closed our latest flagship fund at $5.12 billion, surpassing our $3 billion target and our initial $4 billion hard cap handily. And we believe the real estate market is at a true inflection point, offering tremendous opportunity in our sectors.

We have spent almost 20 years building a specialist operator-oriented real estate platform, and we are excited about how Bridgepoint accelerates what we can do next. Bridgepoint partnership gives us global reach, deeper relationships and real scale benefits without changing what makes Kayne Anderson Real Estate special. And together with ECP, we believe Bridgepoint has the best-in-class real assets platform in America, focused on 2 of the most powerful structural trends in the market, power and AI on the one side and mission-critical demographics-driven real estate on the other. That is a very exciting place to be.

Thanks, Al. I agree. It's really exciting. Look, I'm going to take a few minutes to run through the details of the transaction, its impact on the group and our guidance. Turning first to the transaction structure. We are buying all of Kayne's FRE, 15% of the carry in historic funds and up to 35% of the carry in future funds, starting with KAREP VIII. The consideration is 55% in cash and 45% in stock. The cash component will be funded by a combination of existing cash on the balance sheet and a new bridge facility, which we will refinance with the new USPP.

Our leverage will increase to around 2x net debt to EBITDA by the end of this year and quickly delever to return to less than 1 turn of leverage by mid-2028. As we did for the ECP transaction, we will issue most of the stock component through our Up-C structure to be held in the form of OP units until exchanged into London listed shares. On closing, shares and OP units equivalent to 189 million shares will be issued. There's a staggered lockup, which will expire in third over 3 years on the anniversary of closing each year from '27 to '29. Additionally, up to 102.5 million shares may be issued in 2030, depending on the quantum of run rate fees achieved by the end of 2029.

Delivering the midpoint of the guidance case would trigger the earn-out award in full. And as with ECP, a proportion of both the initial consideration and the earn-out will be used to incentivize members of the broader team at Kayne Bridgepoint who will become shareholders for the first time. We are paying less than 9x EBITDA for mid-single-digit EPS accretion in 2027 and a mid-single-digit EBITDA multiple for EPS accretion of over 20% in '28.

Now today, we have shared many metrics to showcase the strength of the Kayne Bridgepoint business and explain why it warrants becoming our fifth pillar. Consistent with the other verticals in the group, Kayne Bridgepoint's excellent track record of fund performance has resulted in material growth in the size of their funds across both equity and debt, with the most recent fund in each increasing by over 80% compared to their predecessors, with KAREP VII closing recently on June 15. For us, the best proof point of a strong performing business.

And with that, we are confident this transaction will add to our track record of successful and accretive M&A. This is the latest in a series of transactions through which we have successfully grown the platform and diversified into private credit, infrastructure and secondaries. Since acquisition, Credit has almost doubled its EBITDA margin and increased the size of its flagship fund by 117% from Direct Lending II to Direct Lending IV. ECP has delivered a 12-point increase in EBITDA margins to 64%, while the flagship fund growth from EC IV to the hard cap for ECP VI would represent growth of 126%. And additionally, actual EPS accretion from ECP has been more than double what we told you to expect at announcement.

With this transaction and the organic growth being delivered across the platform, we are well on our way towards achieving the next growth milestone of $200 billion of AUM by 2029 or 2030 as set out at our 2024 Capital Markets Day.

The enlarged group will be even better diversified across product, geography and sectors, offering our LPs 13 strategies across our 5 investment verticals. The investment teams across the group will total over 350 professionals and our office network will grow to 18 offices around the world. And in an environment of higher inflation, it increases the proportion of real assets in our AUM to almost 50% and balances our geographic footprint with nearly half of AUM in the U.S. and half across Europe. Quality of earnings will be further enhanced with the largest vertical, private equity at just over 1/3 of combined AUM and the largest single fund at 16% of total management fees, a number which will decrease further over time.

Now turning to the breadth of product. We now have 4 of 5 flagships at or above $5 billion in size. In addition to our closed-ended funds, we also raised additional capital from evergreen vehicles in wealth, infrastructure and real estate and the continuous warehousing and issuance of CLOs. Our exposure to the wealth channel is currently small but offers long-term upside. The addition of Kayne Bridgepoint to the group gives us a platform, which can support sustained growth through the next fundraising cycle and beyond.

In a world where fundraising generally has been tough, we are doing well across all our strategies. As our performance, particularly DPI, middle-market focus and disciplined investment approach resonates with the world's largest LPs. Our IR platform has delivered impressive flagship fundraises across all strategies simultaneously with new investors and cross-sell within the current group accounting for roughly 1/3 to 1/2 of the capital raised. With less than 20% overlap between our LP basis, there is lots of potential to cross-sell as we share just 5 of the top 50 LPs globally, and Kayne Bridgepoint brings over 115 LP relationships, which are new to the group.

So in the near term, the clearest opportunity is to cross-sell into LPs who have an allocation to real assets, which is split between infrastructure and real estate, but currently only invest in one or the other and to develop ancillary funds in each strategy and between strategies.

So what does the combination do for our financial profile? If we combine our financial results for 2025 as the latest available full year, the enlarged group would have generated management fees nearly 1/4 larger at over GBP 0.5 billion. Fee-paying AUM and the management fees they generate would have been more diversified and more balanced geographically with the share of fees coming from funds domiciled in the U.S. increasing from 28% to 43%. Together, we grow faster and with a higher quality of earnings, greater FRE centricity and increasing margins.

So turning to guidance, first to the detailed guidance for Kayne Bridgepoint and then an update on the existing perimeter. Without going through every line, the key guidance points are Fund VII was raised at $5.1 billion closing on June 15 this year, and we expect Kayne Bridgepoint to raise over $15 billion over the next 3 years with an average fund cycle of 2 to 3 years. Management fees in 2025 totaled $141 million with fees expected to grow between 20% and 30% per year in the medium term. The catch-up fees for Fund VII will be paid before the transaction closes. We expect the average fee rate on capital raised in the next 3 years to average just over 1%.

Fee income from Evergreen and open-ended vehicles is expected to be approximately 30% of total fees. We expect PRE to represent 5% to 10% of total income in 2027 and then to grow to 20% to 30% of total income in the medium term. The operating leverage from increasing fund sizes is expected to drive FRE margin to between 60% and 70% in the medium term, resulting in an EBITDA margin of around 65% to 70% in '27 and then growing further to 70%-plus in the medium term. And as ever, Adam will be very happy to talk you through any of the assumptions over the next week.

Turning to the existing perimeter of the group. As Raoul said earlier, we are increasing our fundraising guidance again from EUR 24 billion by the end of the year to EUR 28 billion. This is now 40% higher than our initial guidance of EUR 20 billion for this round of fundraising. BE VIII activated on the 9th of June and has currently closed EUR 6.7 billion. Final close will be by Q1 '27, and we think the right fund size is somewhere between EUR 8 billion and EUR 8.5 billion. BDL IV has closed EUR 4.8 billion and is expected to close next month around EUR 5 billion. And CLO XI priced last week.

ECP VI has closed $4.8 billion with a further large close of up to $2 billion expected sometime this week. So its impact may or may not be in the first half. It is expected to conclude its fundraising in the second half of the year and is moving towards the hard cap of $7.5 billion. If it reaches its hard cap, the successor fund, ECP VII, is likely to start paying fees in 2029 as a larger fund will take longer to deploy well. We expect consistent growth in management fees, inclusive of inorganic growth initiatives of 13% to 16% on a rolling 3-year basis.

FRE margin is expected to be 40% to 45% in '26 and '27, depending on when BE VIII holds its final close. So on PRE, we now expect to be at the top end of the guided range of 20% to 25% of total income in '26 and '27, with the phasing in '26 moving to 2/3 in the first half and 1/3 in the second half, driven by the early start of accruing carry from ECP V. The ECP funds sold some Constellation shares at the start of the month, having agreed an accelerated lockup. The shares which were sold represented 70% of the shares, which were due to be unlocked in July this year and were placed at a price of $281 per share.

Cash proceeds to us were just over GBP 28 million. It is worth remembering that the proceeds flow through to us from a number of vehicles, some of which are already paying carry and some of which are not yet paying carry. So the net impact is that this has derisked our PRE guidance for 2026.

In addition, we had the completion of the sale of Cornerstone earlier this month, which resulted in $1.5 billion being returned to fund investors. Given that standout result as well as the continued strong performance of Pro Energy, ECP V has the potential to be a 3x money multiple fund, an outstanding result in the infrastructure vertical.

So the business has performed well year-to-date. Fee-related earnings for the first half of the year are expected to be broadly in line with the company compiled consensus, which we published this morning with potential upside if ECP VI next close falls in this quarter.

Guidance for performance-related earnings remains at the top of the range of 20% to 25% of total income. But as I've just said, with PRE phasing now expected to be around 2/3 in the first half of the year. Together, this is expected to result in first half 2026 EBITDA above the current consensus. All other guidance remains unchanged from March this year. So bringing that all together, here is an illustrative view of 2027 based on the ranges in our guidance, including the contribution we expect Kayne Bridgepoint to make to the group in '27 in dollars in the right-hand column.

Bridgepoint's current perimeter achieved a 33% EBITDA CAGR from 2018 to 2025 and grew its EBITDA margin to 53%. Kayne Bridgepoint is expected to achieve a similar EBITDA CAGR of over 30%, while increasing its EBITDA margin towards 60%. With guidance for management fee growth of 20% to 25%, we expect management fees in '27 of $200 million to $220 million. If you then add PRE of $10 million to $20 million, we come to an expected '27 EBITDA in the range of between $130 million and $160 million. If you then take an exchange rate of $1.35 to the pound, we expect EBITDA for the combined group to be in the range of GBP 475 million to GBP 570 million.

With all flagship funds materially raised this year, 2027 FRE is locked in with a strong PRE pipeline. And as you've heard me say before, we are becoming very cash generative over the next 5 years. And as a result, we will delever quickly back to below 1x net debt to EBITDA by mid-'28. And as such, we will have the capacity to do further M&A and to enhance distributions to shareholders in line with the broader growth of the business in the short to medium term.

In conclusion, the business is in really good shape and continues to deliver both operationally and strategically. Over the last 3 years, we have successfully expanded into new verticals of infrastructure, secondaries and now real estate. The flywheel of capital deployment and realizations continues to turn in the middle market with EUR 17.8 billion invested in '24 and '25 and EUR 16.6 billion of capital returned to fund investors, both record amounts for the group. The operational leverage in the business has allowed us to grow management fees by 13% in '24 and '25 while increasing FRE by 21%. And we are guiding to future management fee growth of between 13% and 16% over a rolling 3-year period.

We continue to take share in fundraising and as a result, have today increased our fundraising guidance for the cycle to the end of this year from EUR 24 billion to EUR 28 billion. And lastly, our trading liquidity has improved materially over the last year with the trailing 3-month average daily traded volume increasing from GBP 2.6 million to GBP 7.2 million or from 25 to 77 basis points of free float. And with that, I'll hand back to Raoul.

That's great. Thank you, Ruth, and thanks, Al. It's amazing. Okay. Following the unanimous recommendation of the Board and with the support of insider shareholders and including where they can Blue Owl, 36% of the share capital have provided irrevocable undertakings to vote in favor of the transaction. And we will now seek full shareholder approval at a general meeting in September and a circular will be released in due course.

There are some other conditions to the transaction in addition to shareholder approval, including typical antitrust clearances, consents from investors in certain KARE funds and a reorganization to separate KARE from the wider Kayne Anderson mothership. Subject to satisfying these conditions, we expect the transaction to complete at the end of this year.

So a quick reminder on why this and why now. For a truly global mid-market alternatives manager, real estate is an important part of the product suite. It is the third largest asset class after equities and fixed income and a critical allocation for our core investor base, the world's largest institutional investors. As Al outlined, we are entering a once-in-a-cycle moment at Kayne and benefiting from what we see as a super cycle. Ultimately, if we're going to move into value-added real estate, you want to be in the U.S. first as it's a scaled market with deep opportunities.

And why Kayne? Well, because we believe it is the best platform in the best part of the U.S. real estate market. It targets specialist real estate with a true middle market DNA and a strong track record of delivering value-added returns, a category killer in its sectors, just like the rest of the Bridgepoint Group and a strong cultural fit and a highly complementary set of LP relationships, the case is compelling, the right business at the right time with the right team.

Finally, before taking questions, I wanted to conclude with what this transaction means for the enlarged group. We've always been clear about our ambition to build the leading global mid-market alternatives platform focused on value-added investing diversified across all major private asset classes and geographies and united by a high-performance entrepreneurial culture. As we've demonstrated before, whether with EQT Credit, ECP or Newbury, we have a strong track record of identifying great businesses, partnering with their management teams and creating value for all in the process, and I see the same opportunity here with Kayne.

The result is a stronger, more diversified and more resilient Bridgepoint Group, now equally balanced across Europe and the United States and with 50% of AUM in real asset investing and a group that is uniquely positioned to capture the opportunities we see across the alternatives landscape.

Financial performance for shareholders remains compelling. Our earnings are growing materially while becoming increasingly FRE-centric with high cash generation and our EBITDA margin continues to trend above 60%. We have simple values at the firm. We do what we say we're going to do.

And that's exactly what today's announcement represents, building the platform we said we will build, growing in line with a clear strategy and doing so while preserving the high-performing and entrepreneurial culture has underpinned our success from the very beginning. And I'm absolutely thrilled to welcome Al and the Kayne team to Bridgepoint and incredibly excited about what we can do together.

And with that, we'll open for questions.

[Operator Instructions]

Our first question comes from Arnaud Giblat from BNP Paribas.

I've got 3 questions, please. If you can start with the fundraising schedule at Kayne Anderson. I mean you talked about $15 billion. I'm just wondering what we should pencil in, in terms of timing and potential sizing of funds. Equally, does that include fundraising from the wealth platform? Or could this come on top?

The second question is on KAREP expectations. There's a clear step-up between carried interest, I think, from '27 to '28. Could you perhaps run through which funds into carry mode and so we can better understand that mechanism of carried interest step-up? And finally, on Bridgepoint ECP, Fund seems to be doing extremely well. You're talking about potentially 3x more income. I'm just wondering when we should be thinking about the ECP V entering carry mode?

Okay. Thanks, Arnaud. I guess Al should do the first one and certainly and then Ruth, second one or Al second one. I'll do the third, I guess.

Yes.

Good morning, Arnaud and everyone else. From a fundraising timing perspective, we are well along on investing Fund VII, which we just closed at $5.12 billion. So we're about 60% allocated. We would expect to start initial fundraising for KAREP VIII, which is likely to be a $7.5 billion plus or minus fund early next year with a close sometime in 2028.

On the -- so that's a closed-end fund.

On the open-ended side, we are currently bringing in approximately $300 million to $350 million per quarter. We expect to bring in probably about $1.5 billion per annum for KACORE. So that is the open-ended equity fund, core equity fund that we have that currently sits at about $4 billion of net asset value.

On the debt side, we have an open-ended fund that's approximately $2 billion of NAV, and we expect to add approximately $200 million per quarter to that fund. And we also have a number of other funds that are pending, which I'm not really at liberty to speak about at the moment. But there will be additional funds that will be part of the platform going forward.

I mean touching on the start of that comment, one of the things that perhaps we didn't bring -- we haven't brought out enough in our materials is the timing of KAREP VII and KAREP VIII and the nature of the opportunity in the market means that you -- at the point you've reached the final close of KAREP VII, you're actually already 60-odd percent committed within the fund. So it's already a pretty sort of well invested and built portfolio sitting within it. So when you're thinking and modeling the likely sequencing of funds, I think KAREP VIII will probably be a shorter period from 7 to 8 than you might have anticipated in some of our existing ECP and Bridgepoint. But whether KAREP IX will be quite as quick is another matter, but that's certainly within the shorter term.

And it also, Arnaud, that also explains the -- your second question. So we get 15% of carry from all of the historic KAREP funds. So we don't get the 35% until KAREP VIII. Clearly, KAREP VII is double the size of KAREP VI. So that's the first bit of carry you see in '27 and VII starts to kick in, in '28. And that's what the step-up is because actually the fund is so much bigger and...

ECP, I think we've sort of alluded to this in the -- I think I made some comment in the presentation about ECP V is showing some of the hallmarks of BDC III and BDC III as was the standout fund for its type in the whole market in its vintage. That's just the point. Phenomenally, long may it continue. It's performing really, really well. And I think it will accelerate some of the carry recognition from it. Ruth, do you want to give any information about when?

In terms of...

When the ECP V carry might start getting.

So ECP V carry will start being recognized this year. And I think it will clearly build from there into next year as well.

I mean we're sort of intimating again this morning that fund may be a 3x your money fund as a whole plus, which for an infrastructure fund is just astonishing. It's tremendous.

Perfect. Just can I get you to repeat the size of Fund VIII, please? I didn't catch that.

I think he said $7.5 billion.

$7.5 billion.

U.S. dollars.

[Operator Instructions]

Our next question comes from Nicholas Herman from Citi. Nick appears to have lowered his hand. One second, please.

I raised my hand too quickly. I actually got a bunch of questions. I'll start with three, please. Congrats on the deal, first of all, because this is -- it seems like really compelling. Track record of the business is clearly very strong. And as you said yourself, the real estate cycle does appear to have turned, and I think Al said he's expecting a 10-year super cycle. I guess just why were the sellers willing to sell at such multiples, especially as this business comprises -- or comprise half of their AUM and the '28 multiple is even lower than Bridgepoint's own valuation. And I think we'd all agree that your shares are pretty discounted. So just if you can help me to rationalize that, please.

Second question on the growth. What is the usual deployment cycle for the KAREP funds? And from the growth profile that you've guided to, what is it that drives the range in the management fee revenue growth profile? And also just talk a little bit more about the growth profile between like initial commitments for KAREP VIII and thereafter?

And then finally, are you planning platform expansion as a result of this deal? You referenced the cross-sell opportunity with -- which is pretty clear, but just wondering if you see any other synergies with this deal such as adjacencies. And I'll stop there for now.

Okay. Well, I think the first one is obviously for you, Al.

Yes. So -- as I've noted and as you noted, we think we're in front of a 10-year super cycle in our asset classes, and that is going to require a significant amount of incremental capital. And so we're thrilled to be joining with Bridgepoint, who has a global distribution network. I think we are arguably together forming the best-in-class real assets platform in the U.S. with ECP and Kayne Anderson Real Estate. And I think it positions us for growth going forward. We also have a very strong expectation that Bridgepoint's stock is going to rise materially in the future. And our view is that it is materially undervalued today even before this transaction, but we have a ton of synergies with the broader platform. And I think this positions us to really take advantage of what we see going forward.

There was just 2 seconds on following that logic about why, about the structure of real estate within -- you are the Chief Executive of the wider Kayne Group, and you're coming across into this. And maybe it's worth a minute on why from the rest of the group.

Well, for the rest of the group, I mean, I think it's really just singling out real estate and the opportunities in front of it. And obviously, you and I have known each other for 3 years. This has obviously been in process for quite a while. I think beyond the economic synergies, there are incredible cultural synergies. So it is -- I don't think it's an overstatement to say it's a unique opportunity to join 2 great platforms that are very synergistic economically and culturally, maybe not in that order.

But I think that there are huge benefits going forward. The rest of the Kayne platform, which is private credit and energy, obviously, private credit and energy are in very different places today than real estate. And so those businesses will continue operating as they have on a going-forward basis. But as I stated before, real estate is really in a position that we are desirous and need incremental capital. And I also think that the synergies between the platforms, which we really haven't addressed in our opening remarks, et cetera, I think there really are true synergies with the platform, particularly on the real asset side that will benefit us in ways that are not actually put forward in the numbers today.

I think, Nick, it comes back to what we've been saying for a long time, really, which is in an industry like ours, it's -- and in a consolidating industry like ours, it's a function of -- there are advantages in being a diversified platform that enables you to offer a range of different products to your institutional investors to just -- they can pick what they want to invest in, obviously, a range of products, enables you to invest in the sales force and a sales structure that gives you the ability to go out and sell to those investors.

But ultimately, these -- we're all people businesses, and we've all come from small cottage industries, and we've developed in a way. And so the culture and being part of the team together is a fundamental part of everything we do. And so when you think about doing transactions like this one, and I've said this consistently, it's finding people that you want to work with. It's finding you get on with, but you find businesses with a similar culture. And that accounts for an awful lot really in the choice of where you want to be, which home you want to be part of.

And this worked beautifully with ECP. And you think you talk to Doug and you talk to the wider ECP team, they've been able to come into Bridgepoint, but they'd be absolutely part of the Bridgepoint story. They've not just been lost in a room and forgotten about. And that's absolutely the same with Al. Al is joining our management committee, part of the leadership team and the business going forward. It's a completely different offering for anybody wanting to join a wider platform. You get the benefit of diversification, the benefit of the sales force and the benefit of the scale, but you're not lost and you're an integral part of the story and the family. I think that's really quite -- I think it's quite compelling.

But we are also the beneficiaries of having the case study of ECP and obviously, Doug and Pete and the entire -- Tyler and the entire team being thrilled with being part of Bridgepoint. And so that -- and seeing how that's functioned has made it, I would say, materially easier for us to understand how this is going to work. And I think it will be a seamless integration and incredibly exciting.

Yes. Deployment cycle was the second question.

Yes. So I'm not sure what additional we're looking for. As I said, we're 60% deployed on KAREP VII. And typically, we start fundraising at 75% deployment, which we will hit this year. So we will be launching KAREP VIII in the first half of 2027. As I said, I think that will be a $7.5 billion plus or minus fund. The -- what has transpired in our business is that we've been working in the verticals in which we invest for close to 20 years and have developed a best-in-class operating platform as well as having unfettered access to capital, both equity and debt. And so while more money is coming into alternatives, our strategic advantages have actually gotten bigger and bigger. And so our deal sizes have gotten bigger, just referenced the $7 billion plus-or-minus Welltower deal on the medical office side.

We also just acquired close to $1.4 billion seniors housing. And so the deal sizes are bigger because we become a first call and most of our sourcing has truly been done on a proprietary basis. And so the capital requirements as alternatives become a bigger and bigger piece of the real estate industry have gotten bigger and bigger, and we're going to be the beneficiaries of a broader global distribution platform.

And so our deployment, we don't have deployment targets. We've been judicious when times have been difficult. We've leaned in when there have been big buying opportunities, and we've done that throughout our close to 20-year history. But as I've said and has been noted, we do think that we're in the very early innings of a 10-year super cycle in these alternative asset classes because demand is not -- is really not ending, in fact, escalating dramatically over the next 20 years, and we are either uniquely positioned or an incredibly rarefied air where we sit in terms of our operating capabilities, our access to capital, our knowledge and our relationships in these asset classes. So we're very bullish about very strong deployment -- very strong fundraising and also very strong deployment over the next 3 to 5 years.

Platform expansion, Nick, is that a sort of group question or a real estate question? or both.

Well, particularly on the real estate side.

Are you talking about going into Europe, Nick?

Well, I mean, I was partly that, I guess, also combining it with secondaries, et cetera.

I think in terms of Europe, I think what Raoul just -- Al has just said in terms of what the team in the U.S. have ahead of them. I think Europe would clearly make sense to have real estate. I think they're going to be a little bit like ECP. The U.S. has got such growth ahead of it. It may be that Europe won't come along as quickly as you might anticipate just because Doug's got the same issue. He's got so much demand in the U.S. And then, of course, across the rest of the platform, absolutely all of our strategies are linking up with the Newbury team now, looking at how we can sort of develop that business.

I mean this acquisition gives us -- gives the group scale position in private equity, private credit, infrastructure and now real estate sitting across a thematic of however you define it, middle market type investing. Of those product sets, 2 of them are predominantly European and 2 of them are predominantly U.S.

And I think -- we think there's still significant growth opportunities within each of the 4 legs across the group. And with Newbury, we had -- and Newbury isn't yet scaled. It's a -- we found a different way into secondaries, but we do now have a secondaries platform. And strategically, over the next few years, we're going to be building out that secondaries platform, so it can sit as a sort of as a sort of as a horizontal across the 4 verticals. And in an ideal world, we'll have secondaries playing in all 4 of the main verticals that we're in. And there's plenty of room to continue to grow within these verticals within the business.

We said we had a Capital Markets Day, it's now probably sort of 18 months or so ago where we came up with this sort of $200 billion AUM number. I think we were around about 50 to 70 about then, $70-odd billion AUM at the time we sort of stood up and said that. This takes us to $120 billion. And we've sort of -- we've not talked about the $200 billion quite as much as we did in '24, and that's partly because that was always only ever a staging post. It was never an ultimate end game or an ultimate target. And I think there is whilst remaining true to the sort of thematics of middle market value-added investing, there's plenty of scope for this group to continue to grow and to go well beyond the $200 billion in time.

Our next question comes from David McCann from Deutsche Bank.

Congratulations on the deal. Yes, just 2 questions for me. A couple have already been answered already. But -- as you mentioned in the prepared remarks there, obviously, this does take the nexus of the group more towards a U.S. biased than you've had before. Question really is, was that a conscious decision? So how much of this was driven by you just wanted to have a bigger U.S. presence as a business versus the actual product and the capabilities you're acquiring? Sort of what took precedence there? Related to that, is the U.K. still the right place for this group to be listed if you are sort of more consciously going the other side of the pond?

And the second question, again, you touched on this in one of the prior questions, but you've obviously filled the main 4, arguably 5 buckets within private markets. If you were to do something else, is it fair to say M&A-wise, is it fair to say that, that would be adding to an existing bucket perhaps in a different geography or a different capability? Or is there some other asset class you'd like to move into beyond what you've already now got?

Okay. So I'll start with the U.S. I think if you -- we spent quite a lot of time -- we've been talking about -- well, we've had a strategy to be in all the verticals across alternatives. We've been thinking for a while that real estate is an obvious place for us to go. And we have -- we spent quite a lot of time looking at various different opportunities to move into real estate. One thing that became quite clear to us a while ago is if you want to move into the added value real estate world, investing alternatives world, and you want to do it at scale, which you need to do at scale. There's no point in us, second is different. There's no point entering one of the main verticals unless you can enter it at scale. And if you're going to do that, you need to look into the U.S. because the opportunity set just doesn't exist for scaled really players in Europe materially really.

So it was a logical place to look. I think actually -- and then we found the best business. So in a sense, it's because there's more likely to be the right businesses in the U.S. And then we found the best business that was and it was in the U.S. rather than I think there was a very helpful byproduct for us of this in balancing out the group's positioning between the U.S. and Europe.

One of my sort of sayings that I think I said to Al when we were first together is that I want the group to be more American without being less European which is a complete oxymoron, but it's one of those sort of statements that I come out with every now and then. And I think that is the case. We want to -- we see a real advantage and we want to be more balanced across the transatlantic balance, but we want the can-do go get American feel within the business, which has definitely come with ECP and will continue to come now.

But we are at a loss of Bridgepoint its heritage is European. We don't lose the European nexus to it. Listing venue, we are a British headquartered business, and we took a decision when we IPO-ed in 2021 that as a British business, we ought to be listed in London, and we remain a British business. That's the first one. I didn't write the second question.

M&A.

M&A.

Geography...

Yes, geography. So we now have the -- we do have the 4 pillars. I think -- therefore, I don't think there's anything outside what you define as one of those 4 pillars or secondaries that we want to go into. But within the 4 pillars that we've got, I think there's significant room to expand the opportunity set and the offering that we have. And that will be a combination of organic launches of new products. There's -- we're having a conversation at the moment with investors in the early stages of effectively across ECP Bridgepoint product, a business called connectivity -- a product called connectivity, which will invest in sort of infrastructure energy transition from a services lens rather than a hard asset lens.

So we're talking to LPs about that at the moment. So there will be product extensions within the geographies. We are actively looking at further M&A opportunities to build out each of those verticals and whether that is ancillary products within them or in different geographies. And I think there's still plenty of opportunity to do that.

We have one final question from Nicholas Herman from Citi.

Two more for Al, please, and then one for Raoul or Ruth. On growth, first of all, I mean, Al, could you please talk about and contrast the opportunities to grow across real estate equity and debt? And I guess more broadly, given Kayne's clear active approach, can you just talk about the bottlenecks of scaling these strategies, particularly from a deployment perspective? And I guess, conceptually, how we should think about scaling these funds beyond KAREP VIII?

Second one, on the open-ended vehicles, just a quick clarification. Do these vehicles fully or do those now fully translate into fee-paying AUM? Or is there a difference between what's fee-paying and NAVs?

And then a final one on ECP. So ECP VI is going to be now be invested over 4 years by the looks of it. While that deployment, I guess, cycle would make sense normally, we've obviously talked in the past about how you would scale the deployment into the data center opportunities that you have through your joint ventures with the size of the fund. So given that opportunity as well, it seems like you're not scaling the deployment into the data center opportunity that you have through your joint ventures. Is that correct? Because otherwise, I would it seem that the 4-year deployment cycle seems somewhat slower than what we would have expected, size notwithstanding.

Well, I do the third one first. I think what we -- so -- we've been cautious about how much capital we raise in ECP VI. It's a material -- the market opportunity is fantastic. It's -- but the hard cap is a material step-up from the previous fund size. And we -- as you probably know about us by now, we like to sort of underpromise and over deliver. So we've been deliberately cautious about the scaling of it. They are -- we are absolutely confident now they're going to hit the hard cap of $7.5 billion.

And I think we're just -- what we're basically thinking is that this is a materially bigger fund than the previous one, and it's a bigger fund than we were intimating to the market we would be raising. And therefore, we're being a bit more prudent about the assumptions of when the next fund after this starts. I don't think there's any statement about lack of investable opportunities and the pipeline of things they're doing. We just think it's a bigger fund, we should be a bit more conservative about the time frame.

Alongside the $7.5 billion, of course, there's a large SMA coinvest that is separate. And therefore, the deployment has to be around $12 billion. So I don't think we're saying it's -- deployment is any slower. I just think we've got more to deploy.

We felt certain analysts have got slightly over their skis on the timing of the next fund.

Yes.

In their models. Should we go to the other questions...

Continuing the last question first. I'll go to question 2, which was fee-paying AUM, I think, on the open-ended side. When I'm referencing NAV, that is fee-paying AUM. So we have a queue for both of our funds, the open-ended debt fund as well as the open-ended equity fund, which I will note is quite the exception, generally speaking, today, and that's been the case historically as well. So there is more capital desirous of coming in, and we will deploy that capital, but fee-paying AUM in the open-ended funds. So when I'm referencing NAV, it's all fee-paying AUM.

Your first question, I wasn't exactly clear on context, but I think you were talking about debt and equity and barriers to entry possibly or maybe you can give me some more context. Are you talking about fundraising or deployment or both and what that looks like?

Can you hear me?

Yes.

Okay. Yes, sure. I was just asking about the opportunity to grow these funds across the equity and debt sides and how you kind of compare those? And then I was just wondering about how you think about the opportunity to scale the deployment and therefore, conceptually. So how we should think about -- because clearly, a 50% step-up in vintage between 7 and 8 is quite large. So I guess just more broadly, should we be thinking about 20%, 25% thereafter, if that's kind of what I was trying to get at.

No. If you look at us historically, we've had a history of going 50% to 100% bigger on subsequent funds on our opportunistic equity side. And I think the fact that we were massively oversubscribed and raised $5.12 billion speaks to our historical discipline and track record, but it also is, in large part, the fact that 60% of that fund is deployed shows you the opportunity set.

And what has happened and what I said earlier is that the opportunity set has continued to get bigger and bigger for us because while not casting aspersions, let's just say the majority of our competitors are not having the same kind of fundraising success that we have and also don't have the same access to debt capital that we have. So we've been able to set ourselves apart over the last 3 years, not just from a performance perspective in terms of returns, but also as a certainty of closed buyer and a go-to player where -- which has led to a significant amount of proprietary sourcing, including the Welltower deal, which was close to a $7 billion deal from a publicly traded company on a proprietary basis, almost unheard of. So the majority of that 60% allocation has been done on a proprietary basis.

So we are not AUM gatherers. We do not seek to take all of the capital that we can garner. We've actually been oversubscribed on every fund that we've raised since our first fund on the opportunistic equity side. So every single -- we have turned away a significant amount of capital. What we see going forward and the estimate on $7.5 billion is a guesstimate on the opportunity set in front of us. And I think we're incredibly well positioned to raise that capital and to deploy that capital very efficiently because despite the fact that there's more money coming into alternatives, we are getting more and more phone calls and are one of the very few that have the size, scale, certainty of close capabilities, equity and debt capabilities. And when I say equity and debt capabilities, I'm talking about debt procurement on the equity side to close transactions of size and scale very quickly and very efficiently.

So we see massive deployment opportunities in front of us and actually -- and I think what you've seen historically is really the tip of the iceberg in terms of where this goes. So on the equity side, we are very sanguine about being able to both raise adequate capital as well as the deployment dynamics.

On the debt side, we see a similar dynamic. The debt side is interesting. It is scalable quickly. And while we've had bouts of illiquidity on the debt side, it has been a highly competitive market. We do think that the wall of maturities that we're looking at today and some of the dynamics in the overall economy present opportunities for us. We're currently investing an opportunistic closed-end debt fund, which is close to $1.7 billion. We expect to have that deployed over the next 12 months. And our open-ended fund continues to see opportunities and has an inbound queue.

So we think that the deployment for both of those funds is going to accelerate over the next 12 months and probably over the next 3 years. But I think a hallmark of both sides, equity and debt and Bridgepoint as well, and this is where there are philosophical similarities has been to be disciplined in our investment approach.

So as I said, we are judicious in times of liquidity or where pricing is close to peak pricing, and we lean in very significantly when we see closer to trough pricing or opportunities. We do see on the debt side, that opportunity coming to us, but we are a top 5% performer on the debt side of the business over the last decade plus. We expect that to continue. So while we are incredibly bullish about deployment opportunities, both equity and debt, it's always in the context of investor returns and making sure that we are disciplined and that we are investing from the perspective of outsized or asymmetric return risk dynamics instead of asymmetric risk return dynamics.

That was our final question. I will hand back now to the management team for closing remarks.

Okay. Well, thank you very much. Hopefully, you've got the impression that we're all very excited about this and looking forward to the future. And with that, thank you very much for your time.

Thank you.

Good day, ladies and gentlemen. And welcome to Bridgepoint Group plc 2025 Full Year Results. The presentation will commence shortly. [Operator Instructions] Please note that this call is being live streamed to a webcast for a wider audience and will be recorded. [Operator Instructions]

I would now like to hand over to Raoul Hughes, Chief Executive to open the presentation.

Thank you, Luke. Good morning, everybody and welcome to Bridgepoint's 2025 results. I'm Raoul, Bridgepoint's Chief Executive, and I'm joined today by Ruth, our CFO. As you'll hear throughout the presentation, 2025 is yet another impressive year for the Bridgepoint Group, both in terms of our fund performance and indeed the management company's performance. But before we dive into the detail, I wanted to start with a quick word on the current geopolitical context.

The world is facing yet another period of increased uncertainty with the war and corresponding human agony ongoing. As we navigate this, I'm pleased to say that we have a business that is structurally very well positioned and will remain so, particularly given our long-term locked-in fund capital and continued support from our world-leading institutional client base.

So turning back, 2025 was another impressive year for the group with funds across the entirety of our platform continuing to deliver leading returns. That performance, along with our differentiated position as the global diversified leader in mid-market investing has meant that we've been seeing a further acceleration in interest and allocation from the world's top institutional investors. As a reminder, Bridgepoint today benefits from the support of 38 of the world's top 50 LPs.

Last year, you may remember that we upgraded our fundraising guidance from EUR 20 billion by the end of '26 to EUR 24 billion. Given fundraising success to date, I remain confident in hitting this current guidance. All being well, once finalized, probably in early '27, we anticipate that we will have raised in the region of EUR 20 billion for the next investment cycle of our 3 flagship funds, an increase of over 40% compared to the EUR 14 billion in the current cycle.

Consistent with our historic track record, 2025 was another strong year for capital deployment and exits across the group with a good pipeline in place as we look ahead to '26 and beyond. We also made further progress in diversifying and growing our platform by both entering the fast-growing secondary space in a really efficient way and by launching our wealth platform, Bridgepoint Generations. And I'm confident there'll be more diversification to come.

Importantly, for all of us as shareholders, this performance flows through to our company's 2025 financial results, which exceeded market expectations. First, and without wishing to stay too much into Ruth's area, one slide on financial performance. 2025 saw us beat market expectations across FRE, PRE and EBITDA. AUM grew by 24% in U.S. dollar terms. Excluding catch-up fees in both '24 and '25, management fees grew by 13%, FRE by 21% and EBITDA by 14%. And 2026 looks to be equally strong for a number of reasons, the first of which is fundraising.

We are an entrepreneurial investment business. We pride ourselves in being the partner of choice in our verticals of expertise for the world's leading investors, trusting us to invest their capital diligently and well. I'm thrilled that with a combination of the attractions of the middle market, Europe, US energy transition and the strength of our investment performance together with the investment we've made in our investor services team, that trust is increasing. In excess of 30% of the capital so far raised in ECP VI and BE VIII is from investors either new to that vertical or indeed new to the Bridgepoint group.

Additionally, we're seeing increased commitments from returning LPs on average around 20% increase in BE VIII to date. Raising money has always been hard. LPs have a choice and we are consistently grateful for their support and think that we continue to value our commitment to only ever raise the correct amount of capital for each fund that we are confident in deploying well over the optimal investment period. The trust they have in us together with our consistent performance has positioned us well in what is undoubtedly a bifurcating market.

Diversified platforms that have invested well in the value creation resources needed for this market cycle are continuing to attract a greater proportion of capital, particularly in added value verticals like ours. A key driver of our success is our 40-year track record of consistently delivering returns for fund investors. This consistency which is really acting as a differentiator in a market of 2 halves. Our flagship private equity and infrastructure funds are all ranked highly while our credit funds are delivering resilient risk-adjusted returns across our 3 strategies.

And importantly, in the current market, this is not just the money multiples which are top ranked, we also have a strong track record of cash returns with leading DPI multiples for their vintages with a total of EUR 26 billion returned to fund investors in the last 5 years. At 80% DPI, both BE VI and ECP IV were among the leaders for their vintages while ECP V is in an outstanding position of having returned half of investors' capital even before completing its investment period. Now let's turn to the investing activity which underpins fund performance.

Deployment continued on plan in '25 with our PE funds on track to deploy over a 4-year investment period and infrastructure given the size of capital needs in the sector on track to deploy over a slightly more accelerated 3-year period. In total we deployed EUR 7.8 billion in '25. Critically we delivered a stream of important exits across our private equity business with 6 investments realized through the year including a standout return for Brevo and a great result for Vermaat. As some of you will have heard me say previously.

It's a similar story in our infrastructure vertical with a couple of exits which are nothing short of outstanding with Symmetry exit at over 6x money multiple and Cornerstone at 4.4x, the latter after just 1 year of ownership and that is before we come to Calpine which is the Wall Street Journal called it is likely the most profitable private equity deal ever. Calpine closed in January and will deliver cash returns in '26 and '27 as we sell Constellation Energy shares. In total in 2025 we returned EUR 8.1 billion to our fund investors following the EUR 8.5 billion returned in '24.

So why are we able to deploy and return capital so consistently? It's a product of our long-standing position in the global middle market. Our deep origination engine feels a really broad range of opportunities and allows us to be selective. The authority derived from expertise across specific sectors and geographies helps us to invest well. On top of that, we have a large number of proven value creation levers at our disposal to drive growth. And when it's time to realize investments, we have the ability in the middle market to exit through cycles because we're not dependent on the IPO market, instead selling regularly to trade buyers and large cap sponsors. When you get all these pieces right, the flywheel of fundraising continues, particularly in a more selective market.

In Europe, we have 150 people across our network of offices. Each of them sits in a 3-dimensional matrix of a sector team as well as a geographic team and a product. Similarly, in the US we have an investment team which covers the electricity and sustainable infrastructure market across North America. The teams are totally immersed in their sectors and geographies with track records to match. We are sector specialists, but we are also individual stock pickers. Our origination funnel means that we see plenty of opportunities to deploy capital and we are really disciplined about buying businesses at good prices.

This slide shows the 10-year sector multiple range for each realized platform investment across BE V and VI as well as ECP IV and V. You can see from the green and light blue horizontal lines that we buy in the bottom third of the vertical line which shows the long term valuation range. We can step away from moments of overheated markets in a way that less diversified businesses can't. But also we can seek to benefit from pricing opportunities caused by periods of volatility. Having worked hard at creating value during our ownership, the result is that we exit at higher multiples shown in the red and dark blue horizontal lines. Overall, the average multiple uplift achieved by this consistent and disciplined approach is 4x.

As well as being able to deploy capital within the existing business, we've also grown by diversifying new verticals and strategies. Having started as a monoline PE manager with a single flagship strategy, today we have 9 strategies across 4 verticals. As a result, our largest fund currently generates only 20% of our management fee income, a figure that is set to decline further into the low-teens by the end of the next fund cycle even without the benefit of the further diversification M&A will bring.

Our growth is not capped by remaining in the middle market as the definition is not static. It grows over time and that allows us to significantly scale existing funds without losing the middle market ethos. And as flagship funds scale, that creates room to add additional strategies alongside them and through ancillary vehicles such as SMAs. If we take a 2 investment cycle view, our 3 flagship fund strategies will have together scaled around 75% and our total capital by circa 4x.

Now, not least to save a few questions later, I thought I'd say a few words about the current market focus areas and the portfolio health across our group. Firstly on the conflict in the Middle East. Across our portfolio the aggregated revenues generated in the region are tiny and while capital we manage from the region represents 9% of total AUM, we've continued to close new capital commitments from the region into our current fundraisings. So whilst there will inevitably some [Technical Difficulty].

[Technical Difficulty] 2 more investments to make until it is fully deployed. 13 of its investments have been off market or through bilateral processes, drawing on our network of sector teams and local offices to identify and convert opportunities. BDC V is now 45% deployed and credit has continued to deploy well with BDL III fully deployed and BDL IV now 34% committed. And lastly, in infrastructure, ECP V is 85% deployed with ECP VI having become fee-paying in May '25 and reaching 5% deployed by year-end with a strong pipeline for the year ahead.

In addition to this strong deployment, we have continued to return significant amounts of capital to our fund investors, a precondition currently for successful fundraising with LPs so focused on the distributed to paid-in ratio or DPI. We returned EUR 8.1 billion to investors across all strategies in 2025, bringing the total capital return to EUR 16.6 billion over the last 2 years. Note that the Calpine transaction closed in January of this year, so it is not included in the '25 figure. To date, in 2026, $4.1 billion has been returned to investors from this close, and I'll say more about this when I come to guidance.

Ultimately, strong fund performance underpins our business model and allows us to raise successor funds. I'm pleased to say that across our 3 verticals, our funds continue to be top performers. Valuation uplifts in our private equity funds were trading driven with 88% of unrealized valuation multiples either flat or reduced over the period, which underscores the strength of earnings growth within the portfolio companies. And thinking about valuation, it is also worth remembering that over the last 5 years, a 30% step-up in value has been achieved on exit, demonstrating the appropriate and prudent nature of our fund valuations.

Now I will reiterate that over the longer term, there is no FRE without PRE. Our fund performance is underpinning successful fundraising. We are confident of delivering the remaining EUR 10 billion in order to achieve our target of EUR 24 billion by the end of this year. In total, we raised EUR 8 billion last year, which combined with the EUR 6 billion we raised in 2024 means we have now raised a total of EUR 14 billion towards the target. BE VIII has strong momentum. And since the year-end, commitments closed and IC approved totaled EUR 5.4 billion and a formal first close is expected in Q2 before it becomes fee-paying midyear.

Fundraising for Generations is ongoing, and the team has made excellent progress with ECP's next flagship fund against the backdrop of continued strong investor appetite for exposure to the growth in U.S. electricity demand. ECP VI became fee-paying in May, made its first investment in November and has raised $3.7 billion of commitments to date compared to its cover number of $5 billion and a hard cap of $7.5 billion. Given the strength of appetite for ECP VI, we now expect it to conclude fundraising by the end of this year rather than keeping it open into the first half of '27.

ECP Evergreen Yield is expected to deploy $500 million from its anchor investor in the first half and then begin fundraising from other institutions in the second half before subsequently entering the wealth channel. In credit, BDL IV had closed EUR 4.2 billion by year-end, and BCO V has started fundraising with the first close expected in mid-'26. In our syndicated debt strategy, we raised over EUR 2 billion from issuing 2 new CLOs and repricing a further 3. And as Raoul said, this has continued. We repriced CLO X 2 weeks ago and expect to price 1 further CLO later this year. And lastly, we will begin raising capital for Newbury Bridgepoint VI in the next few months.

In 2025, we delivered growth on both AUM and fee-paying AUM. Assets under management grew by 25% to $94.1 billion. Over the last 12 months, we raised a total of $8.7 billion across our strategies and delivered $8.5 billion of divestments. Valuation gains in our funds added a further $12.1 billion. And finally, FX was a tailwind of $6.2 billion. And consequently, AUM finished 25% ahead of 2024 at $94.1 billion.

Turning to fee-paying AUM. In the last year, we raised $4.3 billion and deployed $4.2 billion of new fee-paying capital across our credit strategies. Set against this, the reduction in fee-paying assets from divestments was $3.7 billion and step-downs came to another $3.2 billion. Lastly, FX represented a tailwind of a further $3.8 billion. So by the end of December, fee-paying AUM was 14% higher at $45.5 billion. This will step up in '26 with ECP VI completing its fundraising, BE VIII becoming fee-paying and with further deployment in our credit strategies.

So turning now to financial performance. In addition to the growth in management fees of 13%, excluding catch-up fees, which were material at GBP 30.4 million in '24, our current portfolio had an average management fee margin, which remained stable at 118 basis points. PRE in '25 of GBP 151.6 million was slightly above our guidance of 25% of total income. This is driven by strong growth in co-investment profits, thanks to further value creation in our funds as well as the recognition of further carry. Despite where we are in the fundraising cycle with ECP VI partially fee-paying and BE VIII not yet fee-paying in '25, we maintained our EBITDA margin for the full year in the target range of 52% to 55%. And we are well on track to meet the target of 55% to 60% EBITDA margin on conclusion of the current fundraising cycle through improvements in FRE margin.

Turning to our capital allocation policy. To recap, it is firstly, to support organic growth; secondly, to invest in our funds through GP commitments and seeding new funds and strategies; thirdly, to invest in inorganic growth and then return capital to shareholders. Between dividends and the share buyback, we will have returned GBP 95 million to shareholders in the 2025 financial year.

Now as Raoul indicated, we are pregnant with cash. We are at the start of a period of significant cash generation. Cash generation improved materially in 2025 and will continue to do so in the next few years as we benefit from co-investments in our funds and begin to realize the increased share of carry from more recent funds. After operating cash flows and distributions to shareholders through dividends and buybacks, co-investment drawdowns by funds were comfortably exceeded by cash returns from carry and from co-investment distributions totaling GBP 125 million. And I'll come back to that number on the next slide.

So following on the theme of cash on this slide, I wanted to give you more of an insight into the future cash flows embedded in the balance sheet from our existing funds. At the December 2025 fund valuations and releasing the prudent discount we apply to carry recognition, the value of co-investments and carry on the balance sheet amounts to almost GBP 1.1 billion. So if all we did was realize our existing investments at current value, we would generate GBP 1.1 billion of cash.

Now in reality, over the next 5 years, we expect to generate a further GBP 0.9 billion of value from the maturation of the existing portfolio, value which will be received as cash as those funds divest. So the total cash expected from existing investments is GBP 2 billion. And then on the far right-hand side, it's a bit more blue sky, but we would also expect to deliver in the order of GBP 1.1 billion of further value and cash from investments we will be making in the next vintage of funds, which we are currently fundraising for.

In a second, I'll come on to guidance. But before that, I wanted to update you on some positive changes in our share register, free float and trading liquidity. Over the last 12 months, our register has become increasingly diversified with the addition of over 50 new institutional shareholders. There has also been a noticeable improvement in our average daily trading volumes, which have increased 4.1x year-to-date compared to the full year average for '25. ADTV is now 6.9 million shares per day across all venues. And this year, we'll see the final unlock of IPO shares, which are held in the same proportions by the same group of individuals whose holdings have unlocked in each of the last 2 years, and they still hold almost 80% of them. Our colleague shareholders are investment professionals, and they are well aware of the intrinsic value of the shares, given the growth prospects for the business over the next few years.

So finally, to guidance. We remain confident in our fundraising target for the end of this year. We expect to hold a formal first close for BE VIII in Q2. And to date, EUR 5.4 billion has closed or been IC approved. No hard cap has yet been agreed, and we expect BE VIII to become fee-paying in mid-'26. The current consensus estimate for fund size looks reasonable to me. Based on closed and IC approved commitments of EUR 4.2 billion, BDL IV has exceeded its cover number of EUR 4 billion, and we anticipate achieving a 20% to 25% uplift to that.

BCO V is in the market, and we intend to price 1 more CLO this year. ECP VI has raised $3.7 billion to date and is now expected to complete its fundraising in the second half of the year, has a cover number of $5 billion and a hard cap of $7.5 billion. The addition of Newbury Bridgepoint closed in February, and the strategy is expected to be breakeven for the first 2 years. We expect consistent revenue growth of between 13% and 16% through the next cycle. And there will be continued investment in platform capabilities necessary for growth, and this will result in expenses growing at a high single-digit percentage each year. We expect PRE to be 20% to 25% of total income in '26 and '27. And given the current exit pipeline weighted to the second half of the year in '26. As always, the exact profile within and between years will be subject to the timing of further carry recognition, in particular for BE VI as well as the timing of the sale of Constellation Energy shares.

To give you a bit more detail on the Calpine exit, following completion, cash consideration of $4.5 billion was paid and 50 million Constellation Energy shares were received, which were worth $17 billion based on the share price at that time of $338. As a reminder, the plc only has investment exposure to ECP IV and the Calpine Continuation Fund, where it owns around 5% and 24%, respectively. In terms of further PRE recognition in the P&L, around $12 million was recognized upon the initial receipt of cash on completion in January, which derisks the first half PRE delivery. Recognition of the remaining PRE will be subject to the timing of the sale of Constellation shares, 50% of which are locked up until the end of June '26 and 50% until the end of June '27, plus, of course, the share price on sale. And selling these shares underpins our confidence in delivering our 20% to 25% PRE guidance in '26 and '27.

While some PRE has already been recognized because of the super Calpine result, there is a material cash benefit to the group following the sale. To illustrate, if the Constellation shares were sold at $300 per share, the total cash received by the group from carry and co-investment would be more than $150 million. And to be clear, we will sell the shares when it is right to do so. We won't simply place them the day after the lockups expire. AUM has stepped down in the first half of this year by $4.1 billion due to the sale of Calpine and will step down again as and when the shares are sold. The fee-paying AUM of $3.1 billion has decreased by $0.3 billion in this half, and the great majority of the balance will remain fee-paying until the final shares are sold. And finally, we expect our EBITDA margin to be in the range of 55% to 60% in '26, '27 on conclusion of the current fundraising cycle.

Now we are not usually this front-footed, but we saw this chart recently and had to share it. This is calculated using consensus estimates for us and our listed European peers. Clearly, this is beginning to be well understood by some of our shareholders as our register diversifies.

And with that, let me hand back to Raoul to conclude before we take your questions.

Thanks, Ruth. Well, that was a great slide to finish on, which really does demonstrate to me that the growth opportunity in the business continues to be undervalued by the wider market. That said, actually, I'm firmly of the view that the recent macro industry noise that has weighed indiscriminately on share prices throughout our sector now significantly undervalues the strength of private market fundamentals more generally.

So to wrap up, Bridgepoint enjoys superior positioning in the attractive middle market in Europe and the U.S. and is delivering market-leading returns for the world's leading fund investors. The combination of our middle market positioning and compelling fund performance has resulted in strong progress against our fundraising target of EUR 24 billion, which we still expect to hit by the end of '26. In line with our strong historic trend, we continue to deploy capital and exit investments in 2025 and have a good pipeline for '26. We continue to deliver on our growth strategy, most recently by adding secondaries and generations, and I remain convinced that there will be more diversification to come. Lastly, once again, we delivered financial performance in 2025 ahead of market expectations. Taken together, I strongly believe that we are well positioned to deliver sustainable value creation for shareholders.

So now let's go to Q&A.

[Operator Instructions] Our first question comes from Arnaud Giblat with BNP Paribas.

I've got 3 questions, please. If I can start with Newbury. So you've taken on the track record. You've got the data. I'm just wondering how fast or what sort of sizing do you envisage for the first round of fundraising? Historically, Newbury has had multibillion dollars size funds. Do you get that in the first leg? Or does that take several funds to get back to where they were? And within that, do you plug Newbury into the Generations product?

My second question is with regards to exits and deployment. You talked about a strong pipeline. I mean you're making these comments cognizant of the fact that there's quite a lot of macro instability. So I assume that those comments are valid given the volatility. I'm just wondering if there are any other risks we should be aware of that could derail that? And my third question is on ECP VI. I mean, clearly, there's a lot of demand for energy infrastructure from the LP side. And it doesn't seem like there's any shortage of investment opportunities. So I'm just wondering why are we talking about reaching the hard cap yet.

Right. Thank you very much. In order, let's start with Newbury. Newbury, we think, is a really -- I think it hopefully came across in the presentation. We think Newbury is a really interesting way for us to enter a high-growth secondary space, which we've done in a capital-efficient manner. The intention is absolutely that we plug Newbury into both the Generations product and also into our sort of global sales force. So the plan will be during the sort of -- at some point during the first half of the year, we will launch the next fundraising for Newbury. It will benefit from the wider relationships of the Bridgepoint Group and the global sales force that we have.

At the moment, there's a lot of conversations going on with the Newbury team and our sales team about the tactics and the process of doing it. As far as the quantum of the fund, I think their previous funds were a couple of billion dollar type range. I think it would be overoptimistic to assume that we raised that much in the first fund -- sorry, it will be Newbury Bridgepoint VI, but the first fund post them joining the Bridgepoint family. So I think if you're putting a number in your model, Arnaud, I'd be a bit more cautious than that, I would have said. But we'll see how it goes.

And it is a really interesting space. It's a space that we think you can scale very quickly with the right sales team, the right opportunity and the right relationships with investors. So we're excited about it. But I think you know what we like, we want to be slightly cautious until we've delivered. So I'll be a bit more cautious about the number to start with. We're on fundraising, so you do the third question next. ECP VI.

We thought this might be your first question, actually Arnaud. Look, ECP VI is going extremely well. We closed -- first close was pre-Christmas, as you know, at $3.7 billion. I think we're now into the tactics of how we close the fund during this year and at what level. And you will have heard from Doug himself that he is absolutely at the $7.5 billion...

which is the hard cap.

Which is the hard cap. I think you will have also heard from us over the years how important it is to size the funds correctly so that you can deploy well. So I think that's the conversation we're having at the moment internally. Would you say that's fair?

That's fair. Yes. I mean I wouldn't read into anything into the fact we're at $3.7 billion at the end of the year rather than more than $3.7 billion. I mean $3.7 billion is a really good number in the context of a first close for the fund. Having had the first close, having locked that in and the first close being a material proportion of the cover number of the fund, the process now is a corralling people and landing on what ultimately we want to raise. So we're highly confident about ECP VI.

The ECP business, our infrastructure business is absolutely flying. I mean the investment opportunities for them and also the exits that they are achieving is nothing sort of outstanding. So I think that part of our business is in -- well, the whole of our business is in a great shape. That part of our business is in a particularly great shape, and we're very, very confident about the fundraise of ECP VI.

Exits and deployments, I think there's always a difference. And I'm sure you've heard this from sort of fellow peers of ours in our space. There's also a difference in the alternatives world and the public market world. We -- as I said in the presentation, we are very much stock pickers. We buy individual assets. We buy individual assets that have characteristics that sit within a thematic of a fund and a product. And we -- as you also sort of seen in our presentation, tend to buy businesses well within sort of average long-term pricing metrics. And so we have the ability to step away from periods of overexcitement and bubbles in pricing.

And so when you look at the nature of our businesses and the valuations that we're holding them at and the prices that we paid for them and the trading performance of those businesses, it tends to be much smoother than you'd expect in a public market environment. And so undoubtedly, we are in uncertain times. As I said at the start, there's likely to be sort of -- we're assuming some secondary impacts of what's going on in the Gulf, implications for sort of oil prices and sort of inflation or everything else. And we will navigate that through. The best way of navigating it through is having a diversified portfolio of really good businesses sitting in interesting places.

And you look within our equity business, you've got -- we are buying businesses that are high EBITDA, repeatable revenues, good cash generation. They are businesses that typically can withstand periods of volatility and continue to grow. And in our infra business, we are really benefiting from the AI, the positives. And so you look at it on a balanced basis, I think we feel in what is an uncertain world, we still feel as confident as we did before that -- as Bridgepoint as a group has got the right assets in the right place to withstand it.

I mean the software sell-off and software, if I'm looking a bit too much, we bought our software businesses well. And so the extent to which there's been some element of sell-off in multiples across the software space, what that's probably done is just dampened some of the buffer between the market prices and the prices that we bought the businesses at. So I think that answers the question.

The next question comes from Nicholas Herman with Citi.

Just a couple of -- 3 questions from my side as well. You said scope for SMAs and co-investments. I'd be grateful if you could provide some more quantitative guidance on expectations there, please. On activity and PRE, I appreciate that the Calpine exit has partly derisked the PRE guidance here. But what further exit volumes and I guess, number of exits kind of underpin that guidance? If you could -- if you could give us some color there, that would be helpful.

And then finally, on cash and M&A or cash and cash optionality. Presumably, those cash receipts will be used to support inorganic growth rather than capital return. Is that fair? And I guess I appreciate that there's the deal that you would like to do and the deal that you can do now. So the Slide 14, is that the rank order of expansion of preference or likelihood, please?

Right.

That's that one.

That one. Yes. Sorry...

It's a colorful one.

We had to find Slide 14. Right. Yes, do you want to go?

Yes. So cash, yes, it will be -- M&A will be the preference for the utilization of the cash, so inorganic growth. You want to say which.

I'm a big believer, and this may not sit with a business school logic, but I'm a big believer that in looking at M&A and how we grow this group, you set out the parameters of the things that we're interested in doing, and then you are very opportunistic about which ones come along. In the same way as within our investing activity, again, unlike the public markets, within our investing activity, we can only buy what people are prepared to sell.

From a sort of group management perspective, we can only partner with, merge with, bring in founders and/or businesses that are really excited about the prospect of joining this family and this group. And therefore, our strategy for M&A is we are very, very clear about the areas that we want to move into. And then we are opportunistic about the timing and the size and the scope and the method of getting into those sort of areas.

And so if you look at Slide 14, I think that -- it's now on the screen. So Slide 14 effectively gives you the parameters of the sort of things that we are interested in doing and looking at. And what we try to do here is differentiate between which ones are more likely to be done through organic team lift in infills, which are the ones on the left and which ones are probably more likely to be more material inorganic M&A. But I wouldn't have said either of the 2 are mutually exclusive.

And I think the messaging that we're getting across on the left-hand side of the slide here is one very much is the diversity that we now have, and we're going to continue to build diversity if we're successful on moving into the other areas on the right, particularly sort of real estate is the obvious one that we're not in now that we're in secondaries. But the interesting thing is as we become more diversified, so the opportunity for infill and inorganic development and inorganic development of products that sit across a couple of our strategies is increasing. And that is the message that we want people to take away from the left-hand side of this slide, which is we feel we're now in the position with the sales force that we have, the diversification we have, the structure we've got as a business that we -- as well as focusing on material inorganic M&A and inorganic stuff and moving into new verticals, there's a great opportunity across the platform to bring in additional products.

PRE guidance, I think was...

Yes, Calpine.

Next one. So in terms of PRE, the guidance we've given is 20% to 25% of income. That will be at the top end of the range, I think, for the next 2 years. It is underpinned, as you say, by the exit of Calpine and the sale of the Constellation shares. We've also got a strong exit pipeline in both our infrastructure business and private equity. We've already seen a Cornerstone exit in Q1, which is another large, very, very successful exit through our infrastructure team. We've also got the carry recognition of BE VI and potentially, if you noted, ECP V is going to be, we believe, one of the standout funds ever. So we've got a lot that underpins that guidance for this year and next year.

And maybe one other way to answer the question. So Calpine is an outlier. As I said, it's probably the most profitable private equity deal ever done by anybody. And the vast majority of that sits within the funds, obviously, and in the co-invested vehicles, not the management company. But nonetheless, because it is so large and so successful, the proportion of that sits in the management company is still quite a large number. There isn't another Calpine in the organization that sort of size or quantum. So when you think about the progression of Ruth's guidance of PRE, Calpine absolutely underpins it for the next -- for '26, '27, hence the confidence about being at the top end of the range. But the range and then the long-term range is a function of multiple individual exits and multiple individual transactions and individual funds.

Yes. And also the carry percentages to the plc increases from '27, '28, '29.

We've got bigger shares of stuff that's sitting within it. And if you think about it logically, our private equity funds typically invest in sort of 16 to 20 platform investments in the fund. So I think 18, 19 on average. We've got 3 funds. The growth fund does a bit more concentrated. ECP probably invests in -- so our infrastructure probably invests in 12 or 13 funds in a fund. And so -- and if you think about fund cycle being sort of 4 years and you're investing that you're buying those, you should also be selling them in a similar sort of number in a similar sort of time frame. So there are multiple assets that will come and will be sold that build up into the number rather than reliance on any one individual other than Calpine as an outlier.

That's helpful. If I could just follow up on that quickly. I mean you've returned GBP 8 billion to GBP 8.5 billion of capital to LPs. I don't -- [indiscernible] what the gross exit is relating to that. But just given that the Calpine underpin, does the volume of exits that needs to be completed from here need to therefore be significantly below what you've kind of done in the last year in order to hit that 25%? I guess that's the way to kind of ask the question.

Do we need to do less exits than we have done in order to hit the guidance given that Calpine is going to be in the next couple of years? Again intuitively, the answer is probably yes.

We've got lots of new funds to deploy. So...

Okay.

And then SMAs and co-invest. I think the way to think about this and the reason we've kind of given the revenue guidance for the first time is our flagship funds would give us 10% to 12% revenue growth and the rest will come from SMAs, co-invest and the new sort of product strategies that we're talking about on this slide on the left-hand side.

[Operator Instructions] We have another question from Nicholas Herman.

Are you allowed to come back again? Is there some protocol in this.

Not that I'm aware of it. I wanted to give my colleagues another chance but since there doesn't feel anyone asking questions, I thought I'd give another go. Just I'm not aware of any specific guidance from the KKR and ADQ partnerships. And is there anything you can say now, provide terms of proper color to give -- help investors and ourselves understand the impact of some of those larger partnerships.

And I guess a related question, would you expect ECP VI to be equally kind of deployed to the data center or partnership opportunity regardless of whether that fund is at the cover figure or at the hard cap, i.e., you can scale that part of that investment accordingly. And I totally -- and then on ECP V, I can understand the enthusiasm and the high level of strong performance in light of very strong appetite and demand for AI assets, assets to support the AI boom. But I guess when you see a fund markup its positions by almost 80% in a year, it does kind of stand out. So just what can you say to reassure investors that these marks are indeed prudent?

Yes. So ECP V, the DPIs -- so effectively, the -- we've returned half of the fund, which is the DPI 50% before the fund has finished investing. And that is predominantly on the back of a phenomenal return from the Cornerstone investment. So the -- and the Cornerstone investment was a portfolio of 3 gas-fired power stations. And for reasons that we don't need to go into on this call, ECP, we're able to buy those assets at a very attractive moment in time at a very attractive price. And so confidence in that fund and that return is partly a function of that. The reason it's being marked up -- or 2 reasons being marked up so successfully.

The first one is because of Cornerstone, which is now fully realized. So that seem absolutely done and is embedded. The second one is that they also have an asset in the fund called ProEnergy. And ProEnergy was also -- it was a hybrid business between a business that made turbines or turbines, as they call them over there, the turbines, we call them. And they do modular turbines for sort of power plants. And they do that, and they also had some sort of gas-fired power stations plants as well. The business is bought for about $1.2 billion. The strategy was to separate the 2 parts of the business. They have sold the power plants for the same consideration they bought the whole for and now own the turbine business effectively without any cost against it. And that business has grown tenfold in the first year of ownership.

So when you think about that, those 2 assets on their own have -- one of them is completely exited at that value. The second one has been completely derisked already and is sitting in a significant value. So when you unpick that performance and the confidence in the fund, I think the total fund under performance has been pretty much baked in already. Does that answer your question?

ECP VI. Yes. So the concept of the data center partnership with KKR, and we said this in -- Ruth said this quite a lot in various meetings. It's very much a marketing approach where we and KKR go to market together to both commit capital to the projects for hyperscalers in data centers. The first one has been done and announced. I am led to believe there's a second one that's relatively imminent, but these things do take quite a while to put together and to organize.

The rationale for us is that this provides a great opportunity to deploy capital in ECP VI, but the capital opportunity -- the opportunity to deploy capital in this space, we believe, is greater than the capacity to want to commit to it within the main fund. And that comes back to this thing that was talking earlier about the importance of diversification across the business and across the funds. So we don't want to put more than a certain percentage of that fund into these sort of assets. And so that provides the opportunity alongside the fund investing in one of these assets for us to raise an estimate to go alongside it. So that's the sort of the structure of it.

I think, Nick, you're absolutely right. If we raise more capital for the main fund between the $5 billion and the $7.5 billion, and it's going to raise more than $5 billion. It's where it sits within that range between $5 billion and $7.5 billion. I think you probably will find you can put more capital into the data center projects from the fund because it's a function of not wanting to put more than a certain percentage of the fund. I think that probably answers your first question as well, actually.

Yes, it does. I won't circle back.

Don't worry. That's fine.

At this time, there are no further questions on the Zoom webinar. So I will now pass back to Raoul and Ruth for closing remarks.

Right. Well, you go then. Thank you very much, everybody, and onwards.

[Audio Gap] CEO, to open the presentation.

[Audio Gap] before spending more time on our existing business, with a particular focus on our leading European mid-market private equity platform. Ruth will then walk you through our financial performance and update on guidance in detail before we open for Q&A.

Back in March, when we presented our full-year results, I said that we were increasingly confident in the outlook for 2025 and beyond. I'm really pleased to be able to report that we continued this trend of strong financial performance throughout H1 despite continuing geopolitical and economic volatility. Both FRE and PRE are on track with a decent pipeline of exits in the next 18 months across the business, which should allow us to keep returning capital to our fund investors in addition to the EUR 2.6 billion returned in the first half of this year.

Importantly, we're increasingly confident on delivering our fundraising target of EUR 24 billion by the end of '26 as a result of strong fund performance, product diversification and the investments we have made in our investor services team, together with a further strengthening of inbound LP interest in the newly fashionable European middle market. Now while today, we're specifically focused on current trading and an update on our existing business, one quick word on the inorganic strategy, not least to save a question later. Although I don't have anything specific to report on in the 4 months since our full-year results, we continue to explore multiple options to develop the business, and I remain highly confident in our ability to deliver the inorganic component of our journey to $200 billion of AUM.

So now on to performance. AUM at the end of June stood at $87 billion, 20% higher than a year ago, with fee-paying AUM of EUR 37.5 billion. This drove 11% growth in management and other fees and 22% growth in fee-related earnings once catch-up fees, which were material last year at GBP 30 million are excluded. EBITDA increased by 7% due to the relative timing of PRE recognition and perhaps an overly cautious decision we took to not reflect the uplift in the Constellation share price since the announcement of the Calpine sale.

Looking on a 12-month basis, though, PRE is up 40%. In terms of fundraising, overall, we have now raised over 1/3 of our EUR 24 billion target. Having closed BDC V and BG II earlier this year, we have now started the pre-marketing phase for BE VIII, with a formal launch to follow post the summer break. We continue to expect it to become fee-paying in the second half of '26, but not be fully raised until '27. And so a full fund is not included in the EUR 24 billion. I'll update you more on progress at the full year.

Diversifying sources of capital beyond the institutional LP investor base is a key opportunity, and we expect to launch our wealth product generations on the 1st of October. As a reminder, this will be an open-ended evergreen private equity vehicle that will deliver our flagship strategies to individual investors and will be distributed principally through regionally focused private banks. We've made good progress with fundraising for ECP VI, which became fee-paying in May and has already received closed or fully approved capital of around half its cover number.

ECP is also raising its core plus Evergreen product, which closed on the significant anchor investor announced in March and will initially attract further institutional capital before entering the wealth market. In credit, BDL IV has made strong progress, and we've commenced fundraising for Credit Opportunities V, which is expected to start investing and charging fees shortly.

In our syndicated debt strategy, having priced CLO VIII in March, CLO IX is now in warehousing and is expected to price later this quarter. I've talked previously about the investment we've made in our investor services team, our fund investor services, that is. Scale has enabled us to do this, and we have resources to afford the investment in the sales team. But importantly, we now have the diversification of product to keep them all busy.

Since IPO, our client services team has more than doubled, with 30 new people joining, including 16 senior colleagues focused solely on coverage. Perhaps more strikingly, where not too long ago, the team was based in 3 locations, it is now in 11 globally. The impact of that growth is best illustrated by the fact that the number of meetings we held with LPs in the first half of '25 was 6x the number in the first half of 2022.

Looking at the most recent fund from each of our business units, we're beginning to see the benefits of this investment in sales coverage, not just accelerating the number of meetings held, but converting those meetings, too, with a significant uptick in both the number of new investors to the platform and the number of existing investors coming into a new strategy, a trend that given the current pipeline is set to continue as we build out ECP VI and then launch BE VII after the summer break. So, I do feel we are in good shape, both strategically and from a fundraising perspective. Not a surprise as we have 3 great businesses. So, I wanted to take a bit of time now to look at each of them in turn.

Let's start with credit. Four years ago at IPO, the credit business had 2 strategies and AUM of just over GBP 7 billion. Since then, we've doubled AUM to over GBP 14 billion as a result of launching and scaling the CLO business to over GBP 3 billion and increasing deployment and fund sizes in direct lending. As a result of operating leverage, EBITDA has increased 7x and EBITDA margin more than tripled over this period. The credit team of 70 operates at scale and is based across 7 local offices in Europe, plus our office in New York.

The team is part of and so draws on the industry knowledge and network of our firm-wide sector teams and benefit significantly from our on-the-ground origination capabilities across Europe. That scale is reflected in the growth of the number of portfolio companies in which the credit business has invested, which now stands over 260. As part of the continued diversification of our credit investments as the business grows, the credit opportunity strategy has been looking for uncorrelated credits. And in the first half, it made our first asset-backed lending commitments, an area we'll be looking to grow further going forward.

Importantly, the credit team has established a strong track record of performance, with the direct lending strategy having invested around EUR 9 billion so far in middle-market European companies and delivered targeted performance across its first 3 funds. Now, some of you will know, I'm always slightly hesitant about the next stat, but it continues to be true. The strategy has experienced 0 losses to date. This backdrop has set the team up well to raise our fourth direct lending fund, which now stands at EUR 2.2 billion and is on track to very comfortably exceed the EUR 2.9 billion size of the predecessor fund.

Turning to ECP, our infrastructure business. It is in a sweet spot given the continued strong investor demand for exposure to a sector whose growth trajectory is underpinned by several megatrends, most noticeably electricity demand growth and a corresponding shortage of power generation supply in the U.S. Aggregate demand growth is expected to increase by 1.5 to 2x by 2040 due to the onshoring of manufacturing, electrification of transportation and additional data centers.

The extra capacity is expected to come from a mixture of natural gas and renewables, driving corresponding investments in carbon capture of gas storage. I've said a lot about ECP since the transaction, and the summary today is that the business is doing exactly what it should be doing, making good progress in fundraising for ECP VI and preparing to invest a significant proportion of the anchor capital for the Evergreen product. There is a strong pipeline of deployment, multiple exit processes targeted over the next 18 months, and we expect to close the Calpine exit later this year.

There's been a lot of talk about the impact of the recent U.S. budget on renewables. Now it has passed, the impact is less than feared and there is no impact on renewables, which are already operating or on new developments started pre-2027. Given this and the diversified nature of investments across energy transition, we believe ECP's overall portfolio remains well positioned in the new environment.

Now, I thought I'd take a few minutes to talk about the fundamentals underpinning our private equity strategy and why we can build resilient portfolios, which deliver strong returns through cycles. I thought I'd use the next series of slides, which are taken from our fund marketing deck to illustrate the story. There are 3 elements to our strategy: disciplined investment, creating value and then exiting. And in each of them, the middle-market offers the opportunity to drive returns through cycles.

In short, we use our market position to buy well, create value and then sell well. And I'll talk to each of them in turn in a minute. But before I do, a quick recap on where we are today. With the transactions we've recently announced, BE VI is at 70% DPI, which puts us in a standout market position ahead of the launch of BE VIII fundraising. BE VII is 70% deployed, right on track with 1 year to go until we expect to transition to BE VIII and a strong near-term pipeline of opportunities.

Now, I know there's been a lot of chatter in the public equity market about the performance of the '21 and '22 vintages in the wider PE industry. So, I'd like to address that here. Clearly, a lot of capital was raised and deployed at pace in those 2 years, but we are careful not to buy at prices where good companies cease to be good investments. As a result, I'm pleased to say that across our PE funds, BE, BDC and BG, these 2 vintages are currently held at average money multiples of 2.1 and 1.5x, in line or perhaps slightly ahead of the value creation profile you would expect to see at this stage of their investment cycle. And importantly, we maintained our vintage discipline in BE VI as deployment was broadly evenly spread across the 3.5-year investment period.

Okay. So with that established, I'll now turn to why you should be excited about the middle market. If you look at the global private equity market, almost 90% of the deals are below EUR 1.5 billion of enterprise value, the part of the market that we cover. We track all the opportunities we generate, and we look at around 3,300 private equity deals per year across the 3 platforms. The scale and depth of our origination machine, which is one of our key strengths, is very difficult to replicate. This scale of opportunity gives us the optionality, and it also means that deployment is not a limiting factor as we continue to grow our fund sizes.

We use the origination process to develop real conviction about the assets that we want to bring into our funds and make sure that we're acquiring them at fair prices. The evidence of this can be seen when you compare our entry multiples in our equity business, with those of the relevant transactions over the previous decade. As an example, this slide shows Bridgepoint Europe VI. Firstly, we're consistently buying in the bottom 1/3 of the long-term sector valuation ranges, as shown by the blue lines over the shaded multiple range. And you can see how these investments are well spread across the vintage years over the deployment period.

It's also worth noting that we're doing this with relatively low leverage for the private equity market at least. In this fund, the average leverage on entry was 4.9x, meaning that revenue and EBITDA growth are key to driving overall returns. Operating in the middle market, once we've bought well, we typically have more levers for value creation. When we invest in a business, we have good products, good services, and it will be in a high-growth niche, but it won't be perfect. And as we scale them, we bring best-in-class capabilities, and we do that in collaboration with the company and its management team.

Usually, on entry, a portfolio company would have a leading position in 1 or 2 countries, and we can then expand the business into other European countries or we can take it to the U.S. or to Asia, with help from our offices in New York and Shanghai. We do a lot of bolt-on acquisitions for our portfolio companies. In Bridgepoint Europe VI, there were 18 platform investments, but we've done add-ons worth EUR 3.6 billion, often using our low-entry leverage to fund these through incremental debt, further enhancing equity returns. Overall, this increased control over value creation means that fund performance is more driven by microeconomics than by macro, which leads to consistent performance through cycles.

So turning to exits. Here is a version of the chart you saw for BE VI. This shows the outcomes for our 2 most recent mature funds, BE IV and V, plus those exits from BE VI, which have already closed. This chart shows exit multiples as red lines. You can see that we are almost exclusively exiting at a higher multiple, reflecting value creation in the business through growth in revenue and margins and largely independent of cycles. It's a function of our added value, not luck.

Coming full circle on the depth and resilience of transaction volumes in the middle market, we have a track record of delivering exits through cycles. And we are really seeing the benefit of that at the moment as we're able to carry on returning capital to our fund investors. When it comes to exiting, because of the size of our companies, we're not dependent on the IPO market. Actually, aside from a couple of reverses during the short-lived SPAC boom, we've done only one IPO in the last 20 years, and that was back in 2007. We sell to trade buyers, to larger PE funds and sometimes to trade buyers backed by large PE funds.

As an example, let's look at our most recent sale, Kereis, which we have sold to a large cap sponsor. We invested well at an entry multiple of 9.3x EV at an enterprise value of EUR 1.3 billion. Successful value creation, notably from 25 bolt-on acquisitions, resulted in a 9% EBITDA CAGR during our ownership. This is actually lower than our average. We still exited at 2.2x money multiple for a fund with a capital return of going on for EUR 1 billion to fund investors. This is just the most recent example of our ability to exit through cycles.

And with that, I'll hand over to Ruth. Ruth?

Thank you, Raoul. Good morning.

I will take you through our financial performance in the first half of '25 and then the guidance for the full year, which we are reaffirming this morning. I'll present underlying results for the group as a whole, assuming ECP had been in the group for the full 6 months of the first half of last year.

Fee-paying AUM increased by 2% on a reported basis, which would have been 5% without the headwinds of FX when converting ECP's fee-paying AUM into euros. Fundraising of EUR 8 billion since mid-'24 leaves us well placed to reach our target of EUR 24 billion by the end of next year. Underlying FRE was GBP 76 million, and FRE margin of 37%. ECP VI started paying fees from May, and this will drive a step-up in income and margin for the full year. EBITDA was GBP 128 million with a margin of 48%, and in line with our guidance for the split of PRE in year to be weighted towards the second half. We have recognized carried interest from BE VI for the first time this half year and have a good pipeline of exits for the next 18 months.

Lastly, we are all well aware that the low level of trading liquidity in our shares is an issue for some investors. We are very focused on this and are exploring options to increase the free float and therefore, trading liquidity of our shares. We intend to engage with our major shareholder groups to discuss how best to achieve this, which could include measures such as a secondary offering of shares. There can be, however, no certainty as to whether any action will be taken in this regard.

So, my summary for the first half is that we have delivered performance entirely consistent with our full-year guidance despite concerns in some quarters about the delivery of PRE. Assets under management grew to $86.6 billion. Over the last 12 months, we raised a total of EUR 7.2 billion across our strategies and delivered EUR 8.6 billion of divestments. Valuation gains in our funds added a further EUR 9.9 billion. Finally, FX was a headwind of $2.1 billion. And consequently, AUM finished 10% ahead of half 1 '24 at EUR 73.7 billion.

Turning to fee-paying AUM. In the last year, we raised EUR 4.3 billion and deployed EUR 3.3 billion of new fee-paying capital across our credit strategies. Set against this, reductions in fee-paying assets from the sale of investments and return of capital totaled EUR 5.9 billion, and FX represented a headwind of a further EUR 1 billion. So by the end of June, fee-paying AUM had increased by 2% to EUR 37.5 billion.

We've included constant currency reporting in the interim accounts for the first time so that you can track the underlying performance of the business, excluding the impact of currency swings. We enjoyed good deployment across all investment strategies since year-end. BE VII has committed 70% of its capital across 14 investments. 12 of these have been off-market or bilateral processes, drawing on our network of sector teams and local offices to identify and convert opportunities.

The most recent investment was Safe Life, the global leader in the distribution of defibrillators based in Stockholm. BDC V started investing in Q4 2024 and is now 25% deployed, having bought 2 platform companies, Finzzle Groupe, a leading wealth management consultancy in France; and NMi Group, a pan-European provider of independent advisory, testing, inspection certification and calibration services. Credit has continued to deploy well, with EUR 2 billion deployed across direct lending, credit opportunities and the CLOs. With BDL III over 90% committed, we have now started to deploy and charge fees for BDL IV, where fundraising continues with good momentum.

And lastly, in infrastructure, ECP V is now 75% deployed, the level which allowed ECP VI to become fee-paying in May 2025. As well as strong deployment, we have continued to return significant amounts of capital to our fund investors. In PE, we received competition clearance for the sale of Dorna and also agreed the sale of Kereis. EUR 1.1 billion was returned to BE VI investors by the half year and combined with a further distribution shortly, capital returned to them will be over EUR 2 billion so far this year. These returns of capital clearly position us well as we embark on the next cycle of fundraising in BE after the summer.

ECP returned EUR 1 billion to its fund investors, while credit returned EUR 0.5 billion. The Calpine transaction remains subject to regulatory approval and is not included in these figures. Calpine would add a further $1.4 billion on completion and then an additional roughly $6 billion once the shares are out of lock-up and sold, subject, of course, to the share price at that time.

Ultimately, fund performance underpins our business model and allows us to raise successor funds. And across our 3 verticals, our funds continue to perform strongly. Valuation uplifts in our private equity funds were trading driven, with 92% of unrealized valuation multiples either flat or reduced over the period, which really does underscore the strength of the earnings performance within our portfolio.

Our management fees are stable. They're contracted locked-in revenues and our current portfolio has an average fee of 1.18% charged on funds with an average life of over 9 years. We currently have visibility over around 85% of fee income in '25 from funds already raised. Excluding catch-up fees, which were material at GBP 30.4 million in the first half of 2024, total management fees and other income increased by 11% and exceeded GBP 200 million in the half year for the first time.

The exits and associated capital returns and fund performance I've just talked about, drove PRE of GBP 57.6 million. This positions us well to deliver our PRE guidance for the full year of around 25% of total income, subject, as always, to the recognition of further carry in BE VI and the closing of the Calpine exit. As Raoul mentioned earlier, given that we have not yet received all regulatory approvals, we have held the value of the Constellation shares at around the $255 per share level they were at, at the announcement of the transaction.

Turning now to EBITDA. We are on track to deliver full-year EBITDA margin in line with our guidance of the lower end of the range of 52% to 55%, as we continue to expect PRE to be around 2/3 weighted to the second half of the year. Capital allocation for us is relatively straightforward. We support organic growth. We co-invest in our funds. M&A is on the agenda, and then there are capital distributions to shareholders. In the chart on the right-hand side, you can see how our dividend policy has resulted in a growing dividend per share each year. And in the table below, you can see the increase in the aggregate amount of capital returned to shareholders, with the increase in fully diluted share count when the ECP transaction closed in 2024.

You will have seen that we have put a further buyback program in place last month. We continue to feel that the balance between attractive growth opportunities for that capital versus buybacks has moved in favor of growth opportunities. However, we want to have the flexibility to buy stock in the event of significant market dislocation as we saw with Liberation Day.

Lastly, I've included a chart of the lock-up expiries relating to both pre-IPO shares and OP units issued as part of the ECP transaction. This assumes the maximum possible number of ECP-related restricted share units is issued and that the maximum possible earn-out is achieved at ECP, neither of which is yet certain. So, this is the fully diluted picture. As you can see, a further 81.3 million shares will unlock on the 26th of this month and then a further 250.2 million shares and share equivalents next year. This will, of course, be reflected in index weightings and in time as and when colleagues choose to sell in the free float. And by the end of 2029, the great majority of our share capital will be freely tradable.

Finally, let me talk you through the guidance. We are increasingly confident in raising EUR 24 billion by the end of 2026. That will be split roughly evenly between strategies. And where previously, we had thought there might be slightly less in credit, recent fundraising experience suggests credit will play its full part. While we expect BE VIII to become fee paying in mid-'26, we expect fundraising for it to continue into 2027.

So as Raoul said at the outset, the full amount for BE VIII will not count towards the EUR 24 billion target. Continued investment in the platform capabilities necessary for growth will result in expenses growing at a high single-digit percentage each year. We continue to expect PRE to be around 25% of total income in both '25 and '26. As always, this is a matter of timing, and there are exits, which may fall into Q4 of this year or Q1 next year, notably Calpine as well as the timing of further carry recognition for BE VI. We expect our EBITDA margin to be in the range of 52% to 55% in '25 and '26 before increasing to 55% to 60%, in line with industry peers by the time that we reach GBP 200 billion of AUM.

And with that, let me hand you back to Raoul to conclude before we take questions.

Great. Thank you very much, Ruth.

Briefly then to wrap up, the business has continued to deliver strong financial performance in the first half, achieving what we said we would do, a trend we expect to continue. As we speak to you today, we expect investment activity to continue to be robust across deployment, realizations and PRE in the second half of the year. And in an uncertain world, our fundraising is on track, and this reinforces our confidence in achieving the target of EUR 24 billion by the end of '26. Our product set, market-leading European PE, credit and value-added U.S. energy transition positions us well to benefit from the opportunities in the middle market as we continue on our journey to the $200 billion of AUM I've outlined in the past.

And now with that, we'll go to Q&A.

[Operator Instructions] We'll take our first question from Arnaud Giblat of BNP Paribas Exane.

Great. I've got 3 quick questions, please. If you could start with the exit of Kereis. I was wondering, given you're quite far up the process, what should we be thinking in terms of uplifts on carrying value? And generally, if you could expand that question to your broader exit pipeline. Are you expecting to see some decent uplifts as you have had in the past?

My second question is on value creation. So, MOICs are up 0.1, 0.2x over the period. I heard you on the -- on new holding multiples flat, I was just wondering if you could quantify the value creation in percentage terms of the portfolios and how the EBITDA growth in the underlying portfolio companies are moving?

And my final question is on BDC V, a 25% deployment in the space of 6 months. I'm wondering how we should be thinking about the pace of deployment there? Is there a [ sourcing ] scenario where you could have a very fast deployment and come back quicker with the [ BDC V ]?

Okay. I think I got all of those. It wasn't the best sound. Let me just answer the third one first, BDC. I wouldn't assume that we invest that fund quicker than we have alluded to in the past. We're very careful in our sort of pace of deployment. I mean, it's reasonable to assume that the BDC V fundraise has got off to a very good start, but it's lumpy. Deployment in our industry is very lumpy. And I wouldn't assume that the fact we've committed 25% relatively quickly means that we want to accelerate the pace. I think that wouldn't be worth assuming.

Exits, if you take the 5-year view of the increase in multiple on exit versus latest holding valuation, the valuation is about -- it's in the 30% increase. Some assets are a lot higher than that. Some assets are lower, and that partly depends upon the nature of the exit. It also depends on how long it's taken to get through competition clearance and various other things. I don't think we would assume looking ahead, that sort of 30-odd percent increase will be maintained, but it depends on it. It's asset by asset.

Value creation, I think we've said historically that the material component of the return that we deliver in our fund comes through EBITDA growth as opposed to deleveraging and what have you. But we also do benefit on exits, as you've seen from the chart that I showed in elements of EBITDA multiple increases on exit. And that's a function, as I've said, of us taking a business and making that business better and more valuable during the time of our ownership.

If you look at the underlying valuations in our portfolio, we tend to be more conservative on multiples that we used to value in the portfolio as opposed to what we then end up achieving when we exit, and that's part of the reason for this sort of delta on exits of the 30-odd percent. So, I think the growth in valuation and value accretion tends to come from EBITDA or more than anything else within our sort of unrealized portfolio, but we do tend to get multiple increases on exit.

We'll take our next question from Nicholas Herman of Citi.

I hope you can hear me okay. It's better this time.

Yes.

Yes.

Three questions from my side as well, please. So the first question is on M&A. I guess, given you opened your comments on growing the platform, I'll start there as well. It sounds like you're incrementally more optimistic on doing deals now. And so I guess, is that true? Is that a correct interpretation? And which asset classes look most interesting at present?

Second question. You've been very comprehensive on the guidance, but I think there's one thing missing here from my perspective, which is partnerships. It's been almost a year since you announced the EUR 50 billion partnership with KKR. And I think you more recently announced a EUR 25 billion partnership with ADQ as well. So, can you please give us a sense now how you expect those partnerships to translate into fund deployment for ECP VI, as well as fee-paying SMAs, co-investments and the like, please, for the business?

And then finally, I guess, a related -- somewhat related question on ECP. I guess the perception in the market is that the $5 billion cover figure is conservative, especially given ECP is in clearly a very attractive spot and with prior funds performing very strongly. Equally, on the flip side, investors appear to be reducing their U.S. overweight positions as well. So, I guess in that context, how has fundraising progressed versus your expectations? And are you and Doug still as optimistic on ECP VI as you were previously? And I guess, finally, when do you expect to announce a hard cap?

Right. Shall I tackle the first and the third, and you do the partnership one in the middle?

Yes.

So, I'll do the third one. I mean, Doug is not here. So, I'm not going to get the exuberance. I think we feel very confident about ECP and where their fundraise is sitting. Within a world where there has been an element of shift with investors looking to deploy capital outside the U.S. I think that doesn't mean there isn't an awful lot of capital wanting to be deployed in the U.S. and ECP and in the energy space, in particular, and everything to do with electricity in the States in particular, it is still a very attractive space.

They've closed on or will relatively imminently have closed on half of the cover number. I think that is on track or perhaps slightly ahead of where we had anticipated being at this point in time on that fundraise. And there is a very strong pipeline of interest that they're talking to, which will be closed during the second half of 2025 and into 2026. So, this fundraising will go through until probably this time next year. As you'd expect, there is a varying degree of excess optimism around the organization about where it's going to land at the end. We are being relatively cautious within the business about where it ends up, but we are confident that it will be a very successful fundraising.

M&A, I mean, I think we've always been pretty -- I've been pretty confident for a while. And I think I said this in the Capital Markets Day in October. I'm confident that if you take the medium-term view and you look at what's happening in our industry and you look at where our business is placed within that industry and the story that we have around being the sort of added value alternative player and with a very collaborative embracing culture, as evidenced by the ECP transaction, how those guys have come together with Bridgepoint and we're now as one. I think this is a very attractive home for other alternatives -- added value alternative platforms to want to join as our industry consolidates and grows.

So am I more confident than I was? I wouldn't have said so because I was pretty confident before. Where would we look? Well, there are areas around expanding the existing platform that we have. So we're in private equity and private debt and infrastructure, changing the geographies that we're in, infrastructure in Europe, whether we do anything in private equity in the U.S. at some point in the future. Our credit business has got plenty of scope. I mentioned, I think in my sort of introduction just now that asset-backed lending is an interesting place for us to go. So, I think there's plenty of places to both geographically and expanding the product within the existing 3 verticals. And as we said consistently, if we could find the right platform to go into real estate or secondaries, we'd be very keen to do it. So hopefully, that answers that one.

Partnerships, Ruth?

Partnerships, yes. So the way that we think of the 2 partnerships that have been announced are as origination vehicles really. So let's take the KKR example. KKR have experience around data centers. We have the infrastructure experience, and we go to market together to source really interesting large projects, particularly with the hyperscalers. We then fund those projects through a combination of KKR, ourselves and our part of the funding will be through, as you understand, the flagship fund and SMAs.

Now the reason it's not yet really clear in guidance is that I would call this the year of developing those partnerships, developing those projects. These are big, big projects. They're billions of pounds. They take time to put together. They take time to really understand the regulatory environment that they're in. So, I would imagine that by the end of next -- the next time we speak to you, we will be clearer, but it is -- we will fund them through the flagship with a number of SMAs.

I guess your question to me is when, how many and what size? And clearly, we will give you more as we get a little bit more clarity ourselves. Just to say or to note, the ECP team announced the early stage of a project. Tuesday, wasn't it in Pennsylvania? And the first sort of KKR-related project will be announced imminently. So, we will start to be able to give you more flavor around this shortly.

That's helpful. I mean just -- obviously, sorry, just to say on M&A, you talked about infrastructure in Europe, asset backed. I mean, some of this stuff, I guess, could also be done organically as well, whereas clearly, you're not in secondaries, you're not in real estate. It seems like the real estate cycle is starting to turn as well. So, does that make those -- I guess -- so presumably, some of the -- I guess, infrastructure in Europe could be more of an organic action. So is that fair? Is that kind of the right interpretation? And therefore, if you're going to be buying more the real estate or secondaries part with white space? Or is that the wrong interpretation of your comments?

I think your comments about ability to do things organically and inorganically is true. There's always an issue in our industry, we are doing something organically is the pace at which you can grow something. It tends to take longer. And it also -- but the inorganic becomes a function of the availability of really interesting platforms in which to partner with. And I think the way we look at it is we have an open mind about what's the best way to deliver. And it can range from an inorganic acquisition, if we find a really interesting platform through to a team lift through to just recruiting individuals and doing it organically. So, perhaps I wouldn't be quite as black and white as you've sort of alluded to in terms of which bit you do, which bit you could do either in anything.

We'll take our next question from Angeliki Bairaktari of JPMorgan.

Just 3 for me, please. So first of all, you sounded quite optimistic about the pre-marketing phase for Bridgepoint Europe VIII. With Bridgepoint Europe VII at EUR 7 billion last year, what is the aspiration for the size of BE VIII?

Then secondly, can you please quantify the extra carry you would recognize today if you were to account for Constellation's current share price, which I think is about $300. And lastly, with regards to BE VIII again, I noticed that one of your competitors, CVC in the large cap space, obviously, but they have repositioned their growth funds to now focus on European mid-market. Is that at all a concern for you in terms of sort of competition, both for fundraising and also in terms of origination opportunities?

Okay. We're glad you asked that one. So let's take the third one first. I mean, I think the mid-market is a very large part of the private equity market. I think, as I said 90% of transactions sit within that EV range that we cover. We've been doing it for 30 years plus. And one of the stats that Ruth also mentioned in her piece was that sort of 12 of the 16 transactions in the latest fund have been off-market. So, you can only achieve that if you've got deep expertise across Europe on the ground and expertise specifically in the middle market because it is a different origination structure than it would be in the larger buyout space. And that's why our industry tends to be structured with these differentials based on size.

The routes to market are different and the assessment of businesses is different. So, we've got the best origination platform across Europe, specializing in the space. And it's a very deep market, and we're an individual stock picker. So, I think I would look at it more the other way around that actually there is real investor appetite to want to invest in the European middle market, and we're the natural place to come.

The other thing I would say in our -- there have always been tourists entering our space. It's been going on for years and years and years, and they tend to come and go. The other interesting bit is although -- and I'll talk about BE VIII in a minute. We're feeling reasonably confident about where we sit and reasonably confident in our fundraising. But the fundraising world is still really difficult. There hasn't been a sudden turning on and off the tap. It is still a difficult market to raise capital. And whereas there may be people entering our market, there are also quite a few funds who are really struggling to raise capital. And so as well as people coming into the market, I think over the next year or 2 years, we are going to see various GPs coming out of the market because they're unable to raise capital. So it's not just a question of who comes in, it's also who comes out. But either way, we feel we're really well established as the go-to place in that market.

BE VIII, we're feeling confident, but I'm also -- the confidence also makes me slightly that we get overly confident in it. As I said, the fundraising market is still. We're exceptionally well placed. And there is a real feeling that -- and I think one of the other questions came out earlier about the move away from the U.S. We're definitely seeing appetite to invest across from sort of global LPs to want to commit capital into Europe and into the mid-market. So, we're feeling quietly confident about where we are in that fundraise. But we've got -- it's ahead of us, and we haven't started.

I'm not going to be drawn on at this point on where we think it's going to end up. It's too early. I don't want to create a sense of hubris in the organization, to be perfectly honest. As I said in my introduction earlier, we'll be in a much better place to talk to you about how it's going and where it is when we come back for the full-year results.

Third question, do you want to?

The third question?

The Constellation shares. That's definitely in your capital mind.

I might just expand a little bit rather than give a completely short answer. Just as a reminder for those listening that the Constellation deal was clearly huge, but the exposure of the PLC to Constellation, we were only exposed to 10% of the carry across Funds IV and Constellation co-invest. So it's not as big for us as -- I mean, it is big, but it's not as big as it could have been. But in terms of your direct question, how much more PRE, if we took the valuation up to $300 per share, it would be $20 million roughly.

[Operator Instructions] We'll take our next question from Nicholas Herman of Citi.

I just had 2 further questions, but I wanted to leave in late...

I thought you would sneak in before. Go on. Go on.

Two more technical questions, please. On Page 42 of your deck, it suggests that BE V is no longer fee paying. And I guess, can I just ask why? Because I appreciate every fund is on a case-by-case basis. But I noted that BE IV, I think, was fee paying until 2023, and that was a much earlier vintage. So, 10 years or thereabouts didn't seem like -- I guess, that seems it's a fund maturity, but I guess I would have thought that you would continue to charge fees a little bit longer with -- given some extensions and so on. So, just kind of curious about that and what we should read into future -- into other funds that also extend beyond 10 years?

And then the second question was, I was just looking at your MOIC progression across your strategies, and it looked like -- and if I got it right, that the strongest value creation came from the ECP funds. And I guess I was just kind of curious if you could elaborate what parts of the portfolios drove that, please? I mean, I guess I appreciate that things have not been as bad as feared in renewables. Clearly, ECP is not just renewables. But I guess it just seemed a bit -- I was a little bit surprised that given at the time that when U.S. valuations have been a little bit more under pressure. And so just kind of curious on your thoughts of why -- yes, what has driven such strong increases in MOICs there and the outlook, please?

Yes. I think on the fees, I think it's probably reasonable to assume that fees cease to be charged once a fund gets to its 10th anniversary of its final close. If you go back -- and these are all very long vehicles, aren't it, because they're obviously 10-year vehicles. They're all 10-year vehicles. You have extensions. You can run things into liquidation rather than extending them. If you roll back pre-GFC, funds had much more flexibility about the length of time they could charge. I'm not just talking about our funds, funds generally in our industry had much more flexibility around what you did and how you charged fees once you got to the end of the 10-year life of a fund.

As with all commercial negotiations, things change over time and ability to charge fees at the back end of a fund has become much more of a focus or became much more of a focus for LPs in the discussions and the negotiations post the GFC and as you look through the previous decade. So, I think it's a reasonable -- across the industry, it's a reasonable assumption that once you get beyond 10 years, the probability is that you won't be charging fees as a general principle.

What tends to happen when you get to that point as well, though, is that you are likely to have a fund if you've been successful at least, that is pregnant with carry and is exceptionally pregnant with carry. And therefore, there's still a real alignment and motivation on the part of the manager to continue to maximize the value of those funds and LPs realize that, and that tends to be what the commercial negotiation is.

And just to clarify, that's across your private equity funds, all the private equity funds, so from BE down to BDC and BG as well as ECP and...

It will depend on individual fund-by-fund negotiations and discussions. My comment is more aimed at the wider industry, to be perfectly honest, as well as us.

Okay.

Value creation in ECP.

In ECP.

I suspect the chunk of that is going to be the recognition of the Calpine exit as a sort of a material number within it. Where do they sit in their valuations? I think they are a diversified portfolio. Renewables is a part of it, but it's a reasonable part of it, but it's by no means the majority of what they do. There has been some element of valuation compression because of perceptions about renewables in the U.S. have brought multiples of renewables assets down a bit. And so within -- if you look within ECP, there will be an element of valuation multiples coming off in the part of their portfolio that's really part of renewables. It's interesting. And if you look at the -- now that the great big bill or whatever it's called, has actually been announced, the worries that people had about renewables have not quite manifested themselves in it. And there is -- and any -- the existing subsidies will be maintained for any project that is sort of started before some point in 2027.

So, there is a sort of quite a material off-ramp. And then once you get beyond that, I think the market will recalibrate in pricing. And our ECP friends feel that looking forward, there are real opportunities now to invest in the renewable space. So, I think there's been some element of -- there will be some element of multiples coming off of it in that, but it's been more than compensated by other bits. And what you'll also see what's happening in the U.S. and the valuation of electricity assets and power generation assets have gone up. And you talked to Doug about it. He said he spent 40 years in his career without any base growth in electricity. And all of a sudden, electricity demand is going through the roof in the U.S. and that's manifested itself in the investing opportunity. It also manifests itself in the pricing of energy assets, and they're benefiting from part of that in their portfolio, too.

There are no further questions on the Zoom webinar. We will now address the questions submitted via the webcast page.

I will now hand over to Adam Key to read out the written questions.

The question comes from Smaranda Morosanu of JPMorgan.

Can you provide some color on the potential avenues you're exploring to improve the liquidity of the shares?

Okay. Do you want to do that one, Ruth?

Yes. I think since IPO, we've consistently overdelivered what we said we were going to do. I think we look at our share price and we hear a number of concerns from our investors around the level of our share price and also the volatility in it, which is due to, we believe, the very thin free float that we've got. Clearly, as we unlock, there are more shares coming into the market. I think at the moment, we feel it would be a good time to talk to all of our shareholder groups to figure out what they would like us to do. And that's all that we're really announcing at this moment. We haven't got a particular plan. But over the next few months, we will talk to our shareholder groups about trying to resolve this particular issue.

Adam, anything else? No? That's it. Okay. Well, thank you very much, everybody, and we'll see you in a few months' time. Thanks.