Earnings Release • Nov 5, 2020
Earnings Release
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Paris, 05 November 2020
1 The Group's assets under management are not included in the audit process.
2 At constant assets under management in the capital market strategies business versus end-June 2020.
At 30 September 2020, Tikehau Capital had assets under management that totalled €27.2 billion, which represents an increase of 12.0%3 (€2.9 billion) on the year and 6.0% (€1.5 billion) in Q3 2020.
Antoine Flamarion, co-founder of Tikehau Capital, said: "The growth momentum in our business continued throughout the third quarter, demonstrating the resilience of our business model and sustained performance of our teams, who despite the extremely challenging times have been able to maintain a solid sales momentum and further prove the relevance of our investment strategies. Given the highly uncertain economic environment over the last quarter, we have remained cautious, disciplined and selective in our investments."
Mathieu Chabran, co-founder of Tikehau Capital, added: "The second wave of the Covid-19 pandemic and the various government measures put in place have encouraged us to continue along this path and adapt our organisation. That is why we have taken the necessary steps, as during the first wave, to maintain business continuity in the best possible conditions and protect the health of our employees and partners. During these challenging times, Tikehau Capital intends to remain a preferred partner to its clients and an active investor in its portfolio companies."
At end-September 2020, the asset management division accounted for €25.9 billion of the Group's total assets under management, while the investment business contributed €1.3 billion.
At 30 September 2020, the assets under management of the Group's asset management division totalled €25.9 billion, up an impressive 16.5% (€3.7 billion) on the previous year. Over the third quarter of 2020, assets under management grew 7.9% (€1.9 billion), which represents a total increase of 9.6% (€2.3 billion) for the first 9 months of the year. The performance in the third quarter arose from:
3 Figures have been rounded for presentation purposes, which in some cases may result in rounding differences.
worth €540 million in the third quarter.
At end-September 2020, Tikehau Capital had a record dry powder of €6.0 billion within the funds it manages, enabling them to take advantage of investment opportunities.
Assets under management in the private debt business totalled €8.9 billion at end-September 2020, compared with €8.6 billion at end-December 2019. In the third quarter of 2020, assets under management in this area rose 6.5%, boosted by net new money of around €700 million, which was offset slightly by paying out €185 million in distributions, related in particular to direct lending. Positive market effects in private debt amounted to around €40 million in the third quarter.
As previously announced4 , Tikehau Capital notched up a number of major achievements at the start of the third quarter, including being granted a €150 million evergreen management mandate by a French institutional investor to invest primarily in the Group's private debt strategies.
Tikehau Capital also raised an additional €55 million through the Novo 2020 fund sponsored by institutional investors, which the Group was charged with managing during the first half of the year.
Furthermore, Tikehau Capital successfully continued raising capital for its fifth-generation direct lending fund, following an initial closing in July 2020 of €220 million. A second closing for this fund is expected to take place during the fourth quarter of 2020, involving mainly international investors.
In September 2020, the Group launched its sixth Collateralized Loan Obligation (CLO) with €200 million in assets under management. The Group has maintained strong momentum in this business, issuing one CLO each year since 2015 for a cumulative amount of €2.2 billion at end-September 2020.
Tikehau Capital increased its assets under management in its real assets business by 11.2% (€1.0 billion) since the beginning of the year to reach €10.2 billion at end-September 2020. In Q3 alone, assets under management grew 6.7% (€0.6 billion)
On 29 July 2020, Tikehau Capital finalised the acquisition of Star America Infrastructure Partners, an independent US headquartered asset management firm operating to develop and manage mid-sized infrastructure projects in North America. This integration gave rise to €540 million in positive scope effects on the assets under management within the real assets business. Net new money reached €150 million over the quarter, primarily driven by Sofidy as well as commitments made from Tikehau Capital's balance sheet in the second generation of Star America' fund, after its integration. Distributions amounted to a negative €50m in Q3 while market effects did not have a material impact on assets under management growth over the third quarter.
4 See press release dated 17 September 2020.
Furthermore, Tikehau Capital consolidated its asset management platform in Asia by launching a rights issue for IREIT Global, a real estate investment trust company listed in Singapore, which successfully raised €89 million. Finalised on 19 October 2020, the rights issue was oversubscribed at 166% and will enable IREIT Global to finance the acquisition of the remaining 60% stake held by Tikehau Capital in a real estate portfolio in Spain and repay the shareholder loan granted by City Developments Limited (CDL). IREIT Global's long-term shareholders, in particular Tikehau Capital, CDL and AT Investments, all reiterated their support for the company.
The Group continued to successfully expand its private equity business, a high-growth asset class in which assets under management have grown by over 59% in the last 12 months to reach €3 billion at end-September 2020. Assets under management increased by around €950 million compared with 31 December 2019 (47.6%) and €650 million in Q3 (29.5%).
Net new money rose significantly, by €700 million on the quarter, driven primarily by an initial closing at €630 million of the fund designed to support the aerospace industry and managed by Ace Management. The fund is currently being actively marketed.
In mid-October, the Group's private equity fund dedicated to energy transition and its growth equity fund were granted the "Relance" label. Put in place by the French government as part of the plan to kick-start the country's economic recovery, this label recognises the funds as investment vehicles that support equity capital funding for businesses in the current health crisis. The label bolsters Tikehau Capital's strong belief that the alternative financing solutions it develops are more essential than ever in funding the economic recovery and the energy transition.
Distributions and market effects did not have any material impact on the private equity business during Q3.
Assets under management in the capital markets strategies business totalled €3.9 billion at end-September 2020, compared with €3.8 billion at end-December 2019. They are up by 10.1% (€400m) year over year, of which 0.7% (€25 million) in the third quarter, as a result of well oriented fundraising in equity and diversified strategies, which was offset by outflows on certain credit funds.
Net new money was therefore down €50 million on the quarter, but remains considerably positive at €105 million over the first 9 months of the year. Market effects were positive, totalling €80 million for the quarter, following the distinct bounce back observed on financial markets since the second quarter.
Assets under management in the investment business totalled €1.3 billion at end-September 2020, compared with €2.2 billion at end-December 2019 and €1.7 billion at end-June 2020.
This change in the third quarter was primarily due to the commitments made by Tikehau Capital in its funds, in accordance with its strategy to align its interests, for close to €400 million.
Negative market effects impacting the Group's direct investment portfolio were limited to Q3 and totalled approximately €25 million for the period.
The hedging strategy put in place by the Group over the first half of the year as part of its risk management strategy had a €6 million positive impact on the assets under management in the investment business in Q3 2020. To date5 , these instruments generate a -€146 million impact on the Group's income statement (compared with -€165 million at end-June 2020).
The structurally positive tailwinds supporting the market segments where the Group is positioned remain unchanged, therefore confirming investor-clients' appetite and interest for the strategies developed by Tikehau Capital. The Group will therefore continue to actively market its funds currently being raised as well as work to enlarge its offering through new initiatives. In the short term, the environment remains uncertain, particularly with respect to the evolution of the health crisis, which could lead to cyclical effects on the pace of fundraising.
In spite of these uncertainties, Tikehau Capital reiterates its target of reaching over €27.5 billion in assets under management by end-20206 , and confirms its core objectives for 2022, aiming to reach over €35 billion of assets under management and generate over €100 million in operating income from asset management.
The presentation of assets under management in Q3 2020 will be available to watch on Thursday 05 November 2020 from 6:15 PM (CET) on the Group website www.tikehaucapital.com.
| 11 February 2021 | Assets under management at end-December 2020 |
|---|---|
| 18 March 2021 | 2020 annual results |
| 19 May 2021 | Assets under management at end-March 2020 Annual Shareholders' Meeting |
5 Closing at 4 November 2020
6 At constant assets under management in the capital market strategies business versus end-June 2020
| Q3 2020 (€m) | Net new money* |
Distributions | Market effects |
Scope effects |
Change in assets under management |
Assets under management at 30 September 2020 (€m) |
|---|---|---|---|---|---|---|
| Private debt | +691 | -186 | +38 | - | +543 | 8,873 |
| Real assets | +149 | -49 | +3 | +539 | +643 | 10,203 |
| Capital Market Strategies |
-48 | -1 | +76 | - | +27 | 3,862 |
| Private equity | +690 | -14 | +2 | - | +677 | 2,973 |
| Total asset management |
+1,482 | -250 | +119 | +539 | +1,891 | 25,912 |
* During Q3 2020, net new money by business line has not been affected by internal reallocations from multi-asset strategies, in particular funds raised through the partnership with Fideuram, which were initially recognised as private debt and have been gradually deployed across the Group's different asset classes.
| Assets under management at 30 September 2020 |
Change on 30 September 2019 |
Change on 31 December 2019 |
||||
|---|---|---|---|---|---|---|
| Amount (€bn) | Weight (%) |
In % | In € billions |
In % | In € billions |
|
| Private debt | 8.9 | 33% | +5% | +0.4 | +3% | +0.2 |
| Real assets | 10.2 | 37% | +22% | +1.8 | +11% | +1.0 |
| Capital Market Strategies | 3.9 | 14% | +10% | +0.4 | +1% | +0.1 |
| Private equity (a) | 3.0 | 11% | +59% | +1.1 | +48% | +1.0 |
| Asset management | 25.9 | 95% | +17% | +3.7 | +10% | +2.3 |
| Investment* (b) | 1.3 | 5% | -36% | -0.8 | -39% | -0.8 |
| Total assets under management |
27.2 | 100% | +12% | +2.9 | +6% | +1.4 |
| Total private equity (a+b) | 4.3 | 16% | +9% | +0.4 | +3% | +0.1 |
* For own account
7 The figures presented reflect the Group's best estimate at end-Sept. 2020 and may change slightly over time. They have been rounded for presentation purposes, which in some cases may result in rounding differences. 8 The figures presented reflect the Group's best estimate at end-Sept. 2020 and may change slightly over time. They have been
rounded for presentation purposes, which in some cases may result in rounding differences.
Tikehau Capital is an asset management and investment group with €27.2 billion of assets under management (at 30 September 2020) and shareholder equity of €2.8 billion (at 30 June 2020). The Group invests in various asset classes (private debt, real assets, private equity and capital markets strategies) including through its asset management subsidiaries that act on behalf of institutional and private investors. Controlled by its managers alongside leading institutional partners, Tikehau Capital employs more than 570 people (at 30 June 2020) in its offices based in Paris, London, Amsterdam, Brussels, Luxembourg, Madrid, Milan, New York, Seoul, Singapore and Tokyo.
Tikehau Capital is listed in compartment A of the regulated Euronext Paris market (ISIN code: FR0013230612; Ticker: TKO.FP)
Tikehau Capital: Valérie Sueur – +33 1 40 06 39 30 France – Image 7: Florence Coupry & Juliette Mouraret – +33 1 53 70 74 70 UK – Prosek Partners: Fiona Laffan – +44 7590 524 289 USA – Prosek Partners: Trevor Gibbons – +1 646 818 9238 [email protected]
Louis Igonet – +33 1 40 06 11 11 [email protected]
This document does not constitute an offer of securities for sale or investment advisory services. It contains general information only and is not intended to provide general or specific investment advice. Past performance is not a reliable indicator of future earnings and profit, and targets are not guaranteed.
Certain statements and forecasted data are based on current forecasts, prevailing market and economic conditions, estimates, projections and opinions of Tikehau Capital and/or its affiliates. Due to various risks and uncertainties. actual results may differ materially from those reflected or expected in such forward-looking statements or in any of the case studies or forecasts. All references to Tikehau Capital's advisory activities in the US or with respect to US persons relate to Tikehau Capital North America.
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