€319m of net profit in 2021 Strong growth from top to bottom line

Regulatory News:

Tikehau Capital (Paris:TKO) has been reaping the benefits of its differentiating business model and delivered strong financial results in 2021 across its businesses. The Group’s asset management business delivered robust growth on all fronts from AuM to revenue while further improving its profitability. Tikehau Capital’s balance sheet portfolio returns increased sharply during the year thanks to an active and relevant portfolio rotation as well as the strong ramp-up from the investments made by the Group in its own funds.

As a result of these strong performances, Tikehau Capital will propose the payment of a dividend of €1 per share for 2021, which includes a €0.60 reference dividend and €0.40 of special dividend.

Thanks to its strong balance sheet, which has been further reinforced in 2021, Tikehau Capital is well positioned to navigate current market conditions. The Group will hold its Capital Markets Day on 22 March 2022 and will outline on that occasion the key drivers supporting its next phase of profitable growth.

KEY FIGURES OF THE YEAR

+33%

€95m

+49%

Management fees1 growth

Fee-related earnings (FRE2)

Asset Management EBIT3 growth

 

 

 

€387m

€319m

€1.0

Investment portfolio revenues

Net result, Group share

Dividend per share x2 vs 2020 distribution

 

 

 

€3.0bn

€1.1bn

43%

Shareholders’ equity at 31.12.21

Consolidated cash position at 31.12.21

Gearing ratio4

Antoine Flamarion and Mathieu Chabran, co-founders of Tikehau Capital, said: "2021 has been a pivotal year for Tikehau Capital. We have delivered robust growth and solid results thanks to our unique business model. Our asset management platform delivered strong performance across businesses in terms of fundraising, deployment, as well as recurring revenue and profit generation. Our investment portfolio also delivered strong returns, thanks to an active and value-creating asset rotation as well as the strong performance of our own funds in which we are increasingly investing. Tikehau Capital has built solid foundations with a future-facing organization as well as a strong and liquid balance sheet, which allows us to contend with the uncertainties linked to the current geopolitical situation. We also strongly believe that Tikehau Capital operates on structurally growing markets, and that we are in a strong position to further improve our financial performance in the years to come.”

"Tikehau Capital has built solid foundations with a future-facing organization as well as a strong and liquid balance sheet, which allows us to contend with the uncertainties linked to the current geopolitical situation”

The Tikehau Capital Supervisory Board met on 8 March 2022 to review the consolidated and statutory financial statements5 at 31 December 2021.

OPERATING REVIEW

In 2021, Tikehau Capital has stepped up on multiple fronts of its operating model.

  • Investment momentum was very dynamic, and funds managed by Tikehau Capital deployed a total of €5.5bn in the year while remaining highly selective
    • This represents an 83% increase compared to the average yearly deployment level achieved over the past 3 years.
    • Investment teams remained laser-focused on selectivity, as evidenced by an exclusion rate of 97%, maintained at a high level although the volume of opportunities analysed in 2021 rose by 29% compared to 2020.
    • This strong investment discipline stems from Tikehau Capital’s multilocal platform, a critical asset to originate relevant investment opportunities, coupled with the high level of capital the firm has committed in its own funds, generating significant skin in the game.
  • Performance of Tikehau Capital funds has remained strong in 2021
    • Realizations within Tikehau Capital funds reached €1.5bn in 2021, which compares to €1.4bn in 2020, driven by realizations on the Group’s private debt and real assets strategies.
    • Performance across Tikehau Capital funds remained strong, which bodes well for future fundraising and enables to generate growing returns for the Group’s investment portfolio.
    • Performance-related revenues were multiplied by 3 in 2021 compared to 2020, reaching €19.2m primarily reflecting the strong performance generated by Tikehau Capital’s UCITS.
    • The revenues from the investments of Tikehau Capital in its own funds more than doubled to €156m in 2021, representing 40% of total the Group's total investment portfolio revenues.
  • Fundraising accelerated sharply in 2021, validating Tikehau Capital’s growth strategy
    • Net new money for the Group’s asset management activities amounted to €6.4bn in 2021, representing a 53% increase compared to the €4.2bn average yearly fundraising achieved over the past 3 years.
    • Net new money breakdown by asset class in 2021 reflects the mix of strategies that were raising capital during the year. As such, Private Debt accounted for 50% of 2021 net new money, driven by the firm’s flagship strategy in direct lending as well as its newly launched impact lending and secondary private debt strategies.
    • The Group continued to internationalize its client base with AuM from international clients reaching €12.1bn, a 30.6% increase yoy, growing faster than asset management AuM.
    • In addition, Tikehau Capital further expanded its client base, adding over €1.3bn of AuM in strategies dedicated to private investors. In that spirit, in September 2021, Tikehau Capital launched a Private Wealth Solutions Group within its sales and marketing team, aiming at enhancing direct access to Group funds for family offices and high net worth individuals globally. This is a new step forward in addressing a growing client category, which is becoming increasingly sophisticated and willing to raise its exposure to alternative assets. This direct initiative complements the existing intermediated private clients coverage through Private Banks, IFAs and unit-linked insurance contracts.
    • The strong client demand across asset classes validates the relevance of the Tikehau Capital’s model, with high alignment of interests and constant innovation at its core.
  • Investment portfolio amounted to €2.7bn at 31 December 2021, with continued investment in Tikehau Capital funds as well as value-creating asset rotation.
    • Tikehau Capital’s investment portfolio is primarily composed of investments in the asset management strategies developed and managed by the firm for €2.0bn (75% of total portfolio), generating high alignment of interests with its clients.
    • 25% of the portfolio, i.e €0.7bn, is invested in ecosystem and direct investments, notably direct private equity investments, co-investments or investments in third party funds, all of which aim at serving Tikehau Capital’s asset management franchise globally.
    • Portfolio movements during the year are reflective of Tikehau Capital’s capital allocation policy and serve its growth strategy:
  • €0.7bnof investments were carried out over the full year, mainly into the Group’s own asset management strategies, alongside its clients
  • €(0.6)bnof exits were realized, reflecting the active and value-creating rotation of the Group’s investment portfolio, with in particular the disposal of a number of listed investments
  • €0.2bn of positive fair value changes, reflecting the value appreciation across portfolio assets, mainly driven by the performance of Tikehau Capital funds as well as listed investments.
  • Tikehau Capital will continue to use its balance sheet, a differentiating factor and enabler of growth, to strengthen its platform by launching new families of products and vehicles, and also maintain a high level of alignment of interests with its shareholders and investor-clients.

FINANCIAL REVIEW

  • Asset management revenues grew by a strong 38% in 2021 to €283m

- Management fees6 reached €264m, a 33% increase thanks to the combination of:

  • 20% growth in AuM, reaching €33.0bn at 31 December 2021. 86% of that amount are fee-paying AuM, representing €28.4bn (up 22% in 2021). The compelling growth in fee-paying AuM is driven by record net new money in 2021, coupled with sustained deployment momentum across strategies.
  • +10 bps improvement in the average management fee rate, reaching 1.02% in 2021, compared to 92 bps in 2020.

- Performance-related revenues amounted to €19m, 3 times the amount recorded in 2020, primarily driven by the strong performance of UCITS managed by the Group.

  • EBIT for the asset management7 activity posted a significant 49% increase in 2021, reaching €114m for the full year. Asset management EBIT margin increased to 40.3%, up 3 percentage points compared to 2020

- Fee-related earnings (FRE) have improved by 35% in 2021 reaching €95m, with a FRE margin of 36%, up 65bps over the year. This reflects the strong operating leverage sustaining Tikehau Capital’s growth model in the alternative asset management space.

- Performance-related earnings (PRE) of €19m. This amount is equal to performance-related revenues and thus reflects the 100% conversion of such revenues into profit.

  • Strong portfolio performance compounding value creation
    • Group portfolio revenuereached €387m compared to €85m in 2020. The increase was driven by both realized revenue, reaching €243m, up €109m compared to 2020, as well as unrealized revenue, amounting to €144m, resulting from value-creation across Group portfolio.
    • Tikehau Capital’s asset management strategies’ contribution to Group portfolio revenue more than doubled year-over-year and amounted to €156m, representing 40% of total portfolio revenue. Those revenue streams will continue to grow as the Group’s balance sheet invests in its own strategies.
    • The contribution of ecosystem and direct investments to Group portfolio revenue reached €231m, mainly driven by the disposal of the Group’s investments in several listed assets as well as positive unrealized changes in fair value.
  • Net result group share reached €319m
    • Group corporate expenses for 2021 amounted to €44m. These expenses have been reduced by €55m (i.e 56%) compared to the €98.5m costs published in 2020, as a consequence of the Group’s reorganisation, which became effective as of 15 July 2021 and was retroactive to 1 January 2021.
    • Financial interest expense decreased to -€24m (-33% yoy) in 2021, compared to -€36m in 2020, reflecting the Group’s relevant debt management policy.
    • Net profit Group share for 2021 was €319m, a significant improvement compared to 2020 reflecting the strong momentum across the business lines.
  • Strong and liquid balance sheet, further reinforced in 2021
    • At 31 December 2021, consolidated shareholders’ equity, Group share came at €3.0bn and consolidated cash position reached €1.1bn, compared to €845m at end December 2020. The Group also benefits from an undrawn revolving credit facility, which has been increased to €725m on 15 July 2021.
    • Financial debt at end-December 2021 amounted to €1.3bn, with a gearing ratio of 43%. Following the successful issuance of a €500m inaugural sustainable bond in March 2021 and the launch of an inaugural sustainable US Private Placement in February 2022, ESG-linked debt will account for 63% of the Group’s total debt.
  • Dividend proposition of €1 per share, twice the amount distributed in 2020
    • A dividend pay-out of €1 per share for 2021 will be submitted to the General Shareholders’ Meeting due to take place on 18 May 2022, which is twice the €0.50 distributed for 2020.
    • The total dividend includes a €0.60 reference dividend, a 20% increase compared to the 2020 distribution. This represents 92% of Tikehau Capital’s asset management EBIT, in line with the Group’s guidance to distribute more than 80% of that metric to shareholders.
    • The €1 per share proposed dividend also includes €0.40 of special dividend, linked to the strong value creation in 2021 coming from the active rotation of Tikehau Capital’s investment portfolio.
    • The ex-date will be 20 May 2022, and the payment will take place on 24 May 2022.
  • Share buy-back
    • Tikehau Capital extended the share buy-back mandate, which was signed and announced on 19 March 2020 and extended on 15 September 2021 until today, under the same conditions until 21 April 2022 (included), date of the Group’s Q1 2022 AuM release.
    • As of 8 March 2022, 3,317,091 shares were repurchased under the share buy-back mandate. The description of the share buy-back program (published in paragraph 8.3.4 of the Tikehau Capital Universal Registration Document filed with the French Financial Markets Authority on 1 April 2021 under number D. 21-0246) is available on the company’s website in the Regulated Information section (https://www.tikehaucapital.com/en/finance/regulatory-information).

OUTLOOK

  • Building on a strong set up and robust performances across its activities, Tikehau Capital achieved in 2021 over 95% of each of its 2022 guidance, which had been communicated in 2019:
    • Group AuM reached €34.3bn, representing 98% of 2022 target,
    • Fee-related earnings reached €95m, representing 95% of 2022 target,
    • The investment portfolio was 75% exposed to Tikehau Capital’s own strategies, achieving one year earlier, the high range of its 2022 target.
  • Tikehau Capital is closely monitoring how the current geopolitical situation unfolds, and highlights that across all business units, there are no portfolio companies domiciled in Ukraine or Russia, and total portfolio companies’ exposure to revenue generated from those countries has been reviewed in detail and is very limited. The risk assessment work continues as the political and now economic crisis evolves.
  • The current geopolitical crisis is set to undoubtedly accelerate some of the megatrends on which the Group has built a growing exposure over the recent years, with in particular:
    • investments in energy transition and cybersecurity, which are expected to increase sharply,
    • an increasing search for supply chain resilience from corporates, through re-onshoring and digitalisation,
    • anticipated growing needs for special financings and hybrid capital,
    • volatility and liquidity gaps that may trigger opportunities in private assets secondary as well as liquid credit and equities.
  • Tikehau Capital benefits from a strong balance sheetwith €3.0bn of shareholders’ equity and €1.1bn of cash at 31 December 2021, allowing the Group to navigate the current context with confidence. At 31 December 2021, Tikehau Capital had dry powder of € 6.2bn within the funds it manages, enabling investment opportunities provided by market dislocations to be seized upon.
  • Tikehau Capital will provide an updated mid-term outlook during its Capital Markets Day to take place on 22 March 2022 in London.

     

CALENDAR

22 March 2022

2022 Capital Markets Day

21 April 2022

Q1 2022 announcement (after market close)

28 July 2022

2022 first half results (after market close)

ABOUT TIKEHAU CAPITAL

Tikehau Capital is a global alternative asset management group with €34.3 billion of assets under management (at 31 December 2021).

Tikehau Capital has developed a wide range of expertise across four asset classes (private debt, real assets, private equity and capital markets strategies) as well as multi-asset and special opportunities strategies.

Tikehau Capital is a founder led team with a differentiated business model, a strong balance sheet, proprietary global deal flow and a track record of backing high quality companies and executives.

Deeply rooted in the real economy, Tikehau Capital provides bespoke and innovative alternative financing solutions to companies it invests in and seeks to create long-term value for its investors, while generating positive impacts on society. Leveraging its strong equity base (€3.0 billion of shareholders’ equity at 31 December 2021), the firm invests its own capital alongside its investor-clients within each of its strategies.

Controlled by its managers alongside leading institutional partners, Tikehau Capital is guided by a strong entrepreneurial spirit and DNA, shared by its 683 employees (at 31 December 2021) across its 12 offices in Europe, Asia and North America.

Tikehau Capital is listed in compartment A of the regulated Euronext Paris market (ISIN code: FR0013230612; Ticker: TKO.FP). For more information, please visit: www.tikehaucapital.com

DISCLAIMER:

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.

APPENDIX

Assets under management

 

AuM at 31-Dec-2021

YoY change

QoQ change

In €m

Amount (€m)

Weight (%)

In %

In €m

In %

In €m

Private debt

11,709

34%

+25%

+2,366

+15%

+1,526

Real assets

11,989

35%

+16%

+1,656

+7%

+735

Capital markets strategies

5,124

15%

+23%

+940

+1%

+34

Private equity

4,139

12%

+19%

+648

+4%

+144

Asset Management

32,961

96%

+21%

+5,610

+8%

+2,440

Direct investment

1,304

4%

+11%

+124

+2%

+28

Total AuM

34,265

100%

+20%

+5,734

+8%

+2,468

Q4 2021 (in €m)

AuM at 30-09-2021

Net new money

Distri- butions

Market effects

Change in scope

AuM at 31-12-2021

Private debt

10,182

+1,767

(249)

+8

-

11,709

Real assets

11,254

+641

(133)

+227

-

11,989

Capital markets strategies

5,090

+20

(1)

+16

-

5,124

Private equity

3,995

+165

(6)

(15)

-

4,139

Total Asset Management

30,521

+2,593

(389)

+236

-

32,961

 

Amount

YoY change

In €m

In %

In €m

Fee-paying AuM

28,366

+22%

+5,121

Future fee-paying AuM

2,821

(6)%

(191)

Non-fee-paying AuM

1,774

+62%

+679

Asset Management AuM

32,961

+21%

+5,610

Fee-paying assets under management

 

31-Dec-2019

31-Dec-2020

31-Dec-2021

In €m

Private debt

6,727

7,269

9,670

Real assets

7,775

8,925

10,188

Capital markets strategies

3,810

4,184

5,124

Private equity

1,637

2,296

3,383

Fee-paying AuM

19,949

23,245

28,366

Weighted average management fee rate

 

31-Dec-2019

31-Dec-2020

31-Dec-2021

In bps

Private debt

73

76

84

Real assets

110

96

111

Capital markets strategies

53

60

53

Private equity

>150

>150

>150

Management fees8

92

92

102

Performance-related fees

5

3

7

Total weighted average fee-rate9

97

95

108

Simplified consolidated P&L

 

FY2020

FY2021

In €m

Published

Proforma10

Published

Management fees & other revenues

198.6

198.6

263.6

Operating costs

(128.4)

(128.4)

(168.7)

Fee Related Earnings (FRE)

70.2

70.2

94.9

FRE margin

35.3%

35.3%

36.0%

Realized Performance-related earnings (PRE)

6.3

6.3

19.2

Asset Management EBIT

76.4

76.4

114.1

AM EBIT margin

37.3%

37.3%

40.3%

 

 

 

Group portfolio revenues11

84.9

84.9

386.9

of which Realized portfolio revenues

133.9

133.9

243.1

of which Unrealized portfolio revenues

(49.0)

(49.0)

143.8

 

 

 

Group corporate expenses

(98.5)

(48.9)

(43.6)

Financial interests

(36.1)

(36.2)

(24.4)

Non-recurring items and others12

(291.5)

(292.6)

(60.8)

 

 

 

Tax

58.6

48.3

(52.5)

Minority interests

(0.5)

(0.5)

(1.1)

Net result, Group share

(206.6)

(168.6)

318.7

Simplified consolidated balance sheet

 

31-Dec-2020

31-Dec-2021

In €m

Published

Proforma

Published

Investment portfolio

2,410

2,508

2,685

Cash & cash equivalents

845

845

1,117

Other current and non-current assets

764

672

811

Total assets

4,018

4,025

4,614

 

 

 

Shareholders’ equity, Group share

2,797

2,792

3,041

Minority interests

7

7

7

Financial debt

999

999

1,301

Other current and non-current liabilities

216

228

265

Total liabilities

4,018

4,025

4,614

 

 

 

 

Gearing13

36%

36%

43%

Undrawn credit facilities

500

500

725

1 Include management fees, subscription fees, arrangement fees and other revenues, net of distribution fees 2 Fee-Related Earnings, defined as management and other fees minus asset management operating costs. 3 EBIT for the asset management activity, previously referred to as NOPAM (Net operating profit for the asset management activity). 4 Gearing = Total financial debt / Group share shareholders’ equity. 5 The audit procedures have been carried out, the audit report relating to the certification is in the process of being issued. 6 Include management fees, subscription fees, arrangement fees and other revenues, net of distribution fees. 7 Previously referred to as NOPAM. 8 Corresponding to management fees, subscription fees and arrangement fees. 9 Implied fee rates are calculated based on average fee-paying AuM. 10 Financial information pro forma the reorganisation dated 15 July 2021 and retroactive to 1 January 2021. 11 Group portfolio revenues is broken down between €156m (€58m in 2020) generated from Tikehau Capital’s asset management strategies and €231m (€27m in 2020) from ecosystem and other investments. 12 Include net result from associates, derivatives portfolio result and non-recurring items, including the residual part of non-recurring share-based payments of 1 December 2017, including social security costs, put in place following the IPO. 13 Gearing = Total financial debt / Shareholders’ Equity, Group share.

PRESS CONTACTS: Tikehau Capital: Valérie Sueur – +33 1 40 06 39 30 Image 7: Florence Coupry & Juliette Mouraret – +33 1 53 70 74 70 press@tikehaucapital.com

SHAREHOLDER AND INVESTOR CONTACT: Louis Igonet – +33 1 40 06 11 11 Théodora Xu – +33 1 40 06 18 56 shareholders@tikehaucapital.com

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