Schroders Stock

Good morning, everyone. It's great to see so many familiar faces at our annual results 2025. Thanks for investing your time with us this morning. Not really a normal annual results presentation. But importantly, I hope you have all read the results that we put out because I am really proud of the amazing results that we delivered for the first year of a 3-year transformation program. We've shown we can do what we told you we would do and deliver against the plan, and we've got conviction in what we're doing.

It's been pleasing to see the momentum that we can see in our building being reflected in our share price. So thank you, everyone, for buying the shares and driving them up 12% so far this year. But I think that's a real reinforcement that actually the business is coming from a position of strength. But of course, you've also seen the quite seismic news of the announcement this morning in relation to the all-cash offer by Nuveen.

But let's start off by talking about what that really means for our shareholders. So the Schroders Board unanimously is recommending the offer to shareholders. And after a series of approaches by Nuveen, we've reached a point where the terms being offered up to GBP 6.12 in cash and dividends represents attractive and importantly, certain value for shareholders. This reflects the combined acceleration in the value that we would otherwise have delivered from the transformation plan. That was what I was thinking about, transformation plan as a stand-alone company as we execute on that strategy. But importantly, it also reflects the benefits that we expect to get from this combination with Nuveen over the longer term. The terms, of course, are comprised of GBP 5. 90 in cash consideration and up to GBP 0.22 in permitted dividends. And that implies a really attractive multiple on earnings of 17x the 2025 fully diluted adjusted operating EPS.

Now the companies -- the other companies who have done transactions, this compares really favorably. And the premium is 34% above yesterday's closing share price of GBP 4.56, 47% over the last 3 months VWAP and 61% over the 12-month VWAP. So it might be compelling for shareholders, but I also wanted to explain why I think this is an exciting opportunity for Schroders. It accelerates our plans for this group, and it passes the 3 tests that I hope I've been consistent with you on since I've been CEO. It's good for our clients. It's good for our people. And as I outlined, it's really good for our shareholders.

Now while I'm sure you're all focused on the deal, I am going to dive into the detail in more of a second. I want to spend some time after that on the results. And that's because of an important context to the announcement that we made this morning. So going back to the deal, Nuveen is a scaled international asset manager with over GBP 1 trillion of assets under management and operations in 26 countries with deep expertise in a range of public to private investments. TIAA, Nuveen's parent, is the sixth largest insurer in the U.S., providing secure retirements to millions of people and thousands of institutions. So together with Schroders, the combined business will have assets under management in excess of $1.8 trillion.

So I want quickly to run through why this combination makes so much sense to us and why putting our 2 businesses together delivers more than either of us could do on our own. In my view, these really are 2 jigsaw pieces that fit together, not just in terms of industrial logic, but also in terms of culture and values. We're creating a global active asset and Wealth Management powerhouse, operating a comprehensive public to private platform with global reach and distribution. Nuveen's excellence in fixed income complements Schroders' history in Public Markets. And importantly, we have a combined Private Markets capability of GBP 307 billion, which will have growth supported by the patient capital provided by TIAA.

Now geographically, Nuveen's footprint is in the U.S. and Middle East and ours is in the U.K., Europe and Asia. Together, we actually create a business with a footprint that is very well matched to the global asset pools that we seek to serve. And we're evenly balanced across both institutional and wealth channels. And our own wealth business is going to benefit from being part of a group with a wider range of products and with an organization with such a strong U.S. wealth platform.

So our businesses both have strong heritages and really long histories with Schroders, Nuveen and TIAA being founded in 1804, 1898 and 1918, respectively. When you put all of that together, we've all been around for a very long time. And thanks to the long-standing commitment of the Schroders family, we've always had the ability here to take a long-term view. And Nuveen's history means they share that long-term thinking. We've got a strong commitment to investment performance, client service excellence, leadership in sustainability and innovation. Now shared values are important because they are the things that make families work. And those shared values are why I'm absolutely convinced this combination is going to work. And as part of the offer, Nuveen has made several important commitments to our brand, our people and importantly, the U.K.

So during this year, we retained our place as the fifth most recognized brand in Asset Management globally. I'm really proud of that given the amount of change that we put through the business. There's clearly a very strong intention in this offer to retain the brand, reflecting its value, its heritage and the history. Together, the combined organization has a really important role to play here in the U.K., and we remain committed to being a critical provider of long-term capital into the U.K. economy. London is going to be the non-U.S. headquarters of the combined business and the opportunities for our people will be enhanced by being part of a larger, more global organization. Nuveen intends to maintain Schroders' existing investment and client teams across both asset and Wealth Management, and that's right the way across the world. And that's going to enable clients to benefit from continuity and best-in-class client service.

So this combination has clear and compelling strategic rationale. It's going to provide scale, not really just for scale's sake, but with resources that come with a GBP 1.8 trillion asset manager, we can invest in those areas that are really important to our future. So AI, broader technology, data and the combined business has true global reach being in more than 40 markets globally. And it's a business that has exceptional capabilities with a GBP 1.3 trillion in Public Markets, and I said, GBP 307 billion in Private Markets. And that's supported by a AAA-rated insurance parent company that has a GBP 239 billion general account.

So members of the Principal Shareholder Group have provided an irrevocable undertaking regarding the acquisition and the details of that, you can all read in the 2.7. And from here, the transaction is subject to the normal conditions you'd expect of regulatory and legal approvals, and we expect the deal to complete in the fourth quarter of this year.

Now no doubt you all have questions for me. I'm very glad I've got my General Counsel in the front of me. So he will tell me I can only respond to things that are in the 2.7, but I'm very happy to take those questions. But before I do that, I'm going to turn to our 2025 results.

As we've done a trading update recently, I think you all had the punchlines before we came in here. But with operating profit up 25%, it's pretty clear that we've had a really strong year, and our strategic progress is reflected in these financials. But rather than just focusing on the numbers, I'm going to tell you the 3 things that I take away and I'm proud of when I think about what the management team here have done with all of our employees in 2025.

The first thing, we got our assets back into growth. AUM reached a record high of GBP 824 billion. That's up 6%. Now of course, that growth is partly driven by markets and investment performance, but it also reflects really strong positive flows that we generated. Gross inflows were up 9% to GBP 142 billion, resulting in GBP 11.2 billion of net inflows. And I'm really proud of all of our investors because they have delivered excellent investment performance with over 70% of our assets outperforming over 1, 3 and 5 years. And thirdly, we have significantly improved our operating leverage. We're delivering on our cost savings early, making GBP 75 million of our in-year savings, that's net of reinvestments just in year 1. This, together with the strong growth we saw this year, has enabled the business to increase EPS by 29%. It's a great start. But look, I also know there's a lot more that needs to happen to deliver growth on a sustainable basis.

So I mentioned client investment performance. And the last time you saw a chart like this, by the way, was at the end of 2021. In an unpredictable and volatile environment, I cannot think of a better advertisement as to why active matters than this chart. And importantly, in a year where we have delivered real change in our business, I hope it shows that we've been absolutely focused on what is most important, our investment franchise, driving performance so that we can deliver the standards that our clients demand.

So on to net new business. So we focus this year on strengthening client relationships, and our engagement has actually increased by 30%, and that's translated directly into both gross and net flows. So if we start in Public Markets, our 9 leading capabilities generated GBP 8.1 billion of net new inflows. We saw strongest demand in global equities, credit and in core solutions, and these were partially offset by outflows that we saw in regional equity strategies and Asian bonds, and that resulted in that net GBP 3.7 billion of net new business. So insurers capital, net new business was actually GBP 4.1 billion, plus we had GBP 0.5 billion for the first contribution from future growth capital, which you see coming through the joint ventures line. We had positive flows across all of the pillars, except real estate, where we were broadly flat.

In Wealth Management, our inflows were GBP 3.4 billion with a good performance from the U.K. private wealth clients, and I'll come back in a little while to unpack that. And in joint ventures, we saw an outflow of GBP 5 billion, and that was principally driven by our Chinese joint venture fund management company. So let's just spend a bit of time because it's important to understand the dynamics of the business on how the dynamics on region and channel turned out.

So if you look on this left-hand chart, you can see the improvement in our intermediary flows. They're up actually from less than GBP 3 billion in 2024 to more than GBP 4.5 billion in 2025. And that really picked up in the fourth quarter when we saw the strongest intermediary flows that we've actually seen since the beginning of 2021, and that gives us a good tailwind as we go into 2026. That improvement was predominantly driven in EMEA and in Asia Pacific, which are typically higher-margin regions for us.

Now I'm really delighted actually by the Asia performance, where our focus and renewed leadership has completely changed the momentum in the business. And in EMEA, this is a brilliant example, client meeting activity actually increased by 40%. And that helped drive an additional GBP 6 billion of gross sales last year, and that gave a GBP 9.2 billion of net inflows. Now that to me is a very clear illustration of how deeper client engagement is directly drives momentum, commercial momentum in our business.

And on the institutional side, net new business was up across all of the regions. We saw the strongest improvement in the U.K. The GBP 4.5 billion includes a large OCIO mandate win from E.ON and the St. James Place win from the first half. And that actually is still net of GBP 7 billion of outflows that we experienced from Scottish Widows. In EMEA, the GBP 3.5 billion of net flows included the sustainable equity solutions mandate we told you about from PGGM.

So we're 1 year into our 3-year program to return to organic earnings growth. Now you are very familiar with this slide and the targets. So I'm just going to quickly run through progress. So on Public Markets, our priority was really clear, to stabilize revenues. We anticipated revenues would come down before we got them back up to the 2024 levels. But of course, I'm really pleased to say that actually we grew operating revenue by 5%. Of course, markets played their part, but this result is actually really driven by that return to organic growth. And it's also partly because of the resources, the focus and the commitment that we put behind those 9 leading capabilities we talked about last March.

And in Schroders Capital, where we said net new business would accelerate as we go through our 3-year plan, look, our net new business performance in 2025 was a little softer than we would have liked, but we have successfully delivered on our commitment to have a team of 40 specialist salespeople who are going to drive the demand -- sorry, drive increased momentum in fundraising as we go through '26 and '27.

Now in wealth, net new business run rate was at 2.7% below our target. So let's unpack that a little bit. As I mentioned earlier, I'm really pleased that our U.K. private client business has performed really strongly, and it was running at a 5.2% growth rate. That was within our target range. However, total net new business was impacted by other aspects of the portfolio. So while our charities team actually saw increased gross inflows, we told you in the third quarter that they were also experiencing drawdowns on reserve portfolios as charities adjusted to a difficult fundraising environment.

We also, in the fourth quarter, unusually saw some low-margin outflows that offset the strength of those gross sales. Pleasingly, that charities team, they're a brilliant team, actually maintained market share in excess of 14%. While in Benchmark, where macro and policy uncertainties probably most felt, the net new business rate actually dropped to 2.9%, and we also saw some outflows in our international business. But if you take all of that together, what you've seen is a 6% growth in the top line with our control of costs really delivering that increase in adjusted operating earnings per share of 29%.

But I'm going to quickly run through the milestones that drove that performance. And you've seen this slide from the half year, and I'm not, therefore, going to repeat all the things we've shown you before about how we are simplifying, how we are scaling and how we're delivering against the commitments we gave you. But what I do hope you're taking away is that we haven't slowed down, and we have kept the pace of change and momentum through the second half.

So in July, we said that we needed to simplify the business, and that requires some tough and disciplined choices. Since then, we've announced the exit from 2 more markets. We are carefully transitioning our businesses in Brazil and Indonesia to local partners, and that allows us to redeploy capital, both financial and frankly, management time into areas where we can deliver better long-term strategic outcomes. And we've also been thoughtful about how we reshape some really important parts of our portfolio. We strengthened our wealth business by taking full control of Cazenove Capital in exchange for our stake in Schroders Personal Wealth.

We're also, as part of that deal, going to continue to manage the SPW assets, Scottish Widows assets and importantly, keep referrals coming into Cazenove Capital. And we're scaling our investment capabilities by increasing access as well as launching new strategies where client demand is pretty clear. Take the launch of our active ETFs in Europe in 4 months, we are now in excess of USD 1 billion of active UCITS ETF assets. And look, we have got more launches to come in 2026. We're also driving innovation, particularly in evergreen products where we've got a great leading position, whether that's our recently announced partnership with Apollo or our LTAFs that we launched in collaboration with Hargreaves Lansdown for a wider audience of investors.

Finally, a central feature of positioning the group for future growth has been reinvesting in the people and capabilities that actually make it all happen. We continue to attract great talent to Schroders with 15% of our leadership teams now being new to our business in the last year, a further 26% are internal promotions into new roles. So we have more than 40% of our leadership teams are brand new in role, and these appointments have strengthened our ability to deliver across the group. And throughout all of that, we've been focused on maintaining a really strong culture and remaining the home of exceptional talent. So the statistic I am definitely most proud of is that we've retained over 95% of employees who received our highest performance rating this year.

So when you take a step all the way back, the work we've done in 2025 has shown good progress in creating a simpler, more focused and a better positioned business. We've seen a fast start to delivering on what we committed to you, and I'm really pleased with the progress, albeit I know we've got more to do when we look at Schroders Capital and Wealth Management.

But with that, Meagen, why don't you unpack the numbers in a bit more detail?

Thank you, Richard, and good morning, everyone. When I spoke to you last year, I set out 3 priorities: improving the transparency in our financial reporting, tightening our cost control and improving on our capital discipline so we could deliver change at scale. And I'm really pleased to share the results and the focus of how that's coming through the numbers today.

So let's start with the numbers. Starting with income. Our adjusted operating income was up 6%, driven primarily by markets, mix and strong investment performance, which together delivered GBP 146 million. This was partially offset by FX, particularly the weaker U.S. dollar, which reduced our net operating income by GBP 28 million. The net new business was slightly negative, largely reflecting the headwinds for 2024 and the timing of this year's inflows. Our annualized net new revenue for the year was positive, weighted towards the end of the year, providing good momentum as we enter 2026. Our performance fees and net carried interest came in higher than expected and increased by GBP 16 million. And finally, gains on seed investments and seed and co-investment were up GBP 14 million, a reflection of the improved market conditions. So overall, this bridge reflects strong underlying performance.

Now let me talk you through the performance of our operating segments, starting with Asset Management, which performed particularly well. On the top chart, you can see that the net operating revenue of the segment increased 4%, that was partially supported by markets and investment performance, but we also benefited from positive mix shift towards the end of the year. On the bottom left, you can see that the as markets improved, outflows moderated and equities increased as a proportion of the total assets by 1.5%. Given equities are a higher-margin business, that had a positive impact on our management fees.

Now turning to annualized net new revenue on the right. This is a really important metric for us as it assesses the true commercial value of our business in a business where both margins and scale dynamics are good indicators of sustainable, profitable growth. So during the year, we saw really encouraging improvement in our Public Markets. This was driven by a stronger demand from the intermediary channel and particularly in the fourth quarter. In Schroders Capital, the annualized net new revenue was slightly lower, and this reflects the lower net sales over the year. However, if we look at Asset Management as a whole, you can see a clear shift in momentum. We moved from minus GBP 46 million in 2024 to a positive GBP 15 million in 2025. So while this momentum is encouraging, we know we can't be complacent.

So turning to Public Markets. The net operating revenues were up 5% year-on-year, driven by markets and investment performance. In total, Public Markets net new business shifted from negative GBP 21 billion last year to GBP 3.7 billion this year. And in terms of margins, the equity margin was up 1 basis point as we continue to see the rotation from regional to global products. Equity margins for the year exited at 44 basis points.

In fixed income, we were broadly flat. The intermediary channel was strong, but this was offset by the loss of some low-margin mandates. The increase in the intermediary flows also contributed to the improvement in net operating margin from an exit rate of 33 basis points at the half year to 36 at the year-end. For multi-asset, net outflows reduced through the year, reflecting the absence of the several large mandate losses we've seen in 2024. There was a reduction in the December exit rates as a result of the transfer of the lower-margin assets we continue to manage on behalf of SPW.

Now up until the sale of that business, those assets were included in our Wealth Management segment. And finally, core solutions had another strong year in net flows. But as you know, this is a lumpy and lower-margin business. So our best guidance for margins continues to be the exit rates that you can see on the table on the bottom right.

Moving on to Schroders Capital. The net operating revenue was up 3% for the year, a modest improvement. On the bottom left, you can see that the gross fundraising for the year was at GBP 10.9 billion, flat on the prior year and the equivalent of 16% on our opening AUM. The margin at the end of the year was 57 basis points, which is 1 basis point higher than the half year, and that improvement reflects a favorable mix shift where we saw in the second half of the year flows into our private equity business, which has higher margin. And finally, fee (sic) [ non-fee ] earning dry powder increased by GBP 0.7 billion to GBP 4.9 billion. Now while this gives us flexibility, it also underlines the importance of accelerating deployment and improving the conversion of our fundraising to net new business as we want to scale this business further.

Now moving on to wealth. As Richard has already said, this was a tougher year for our Wealth Management business in terms of net new business growth. That said, the business continues to deliver and remains highly accretive to the group. The net operating revenue was up 10% and adjusted operating revenue 12% with a 3-year CAGR of 15%, which really demonstrates the strength of the underlying franchise. And you can see an improvement in the exit margins this year. That's really driven by 2 factors. Firstly, the transfer of the lower-margin SPW assets into Public Markets that I just mentioned; and secondly, because of the lower margin outflows from our charities business, which Richard just mentioned.

So overall, while the year was more challenging from a flow perspective, Wealth Management continues to deliver strong profitability, improving margins and attractive returns for the group. Moving on to operating expenses. Now our adjusted operating expenses were flat year-on-year, but there are several moving parts that deserve a mention. Firstly, our gross transformational savings for the year was GBP 94 million. This was offset by GBP 19 million that we reinvested back into growth. Inflation, FX and AUM-related items increased the base by GBP 54 million. And finally, unanticipated building repairs in our non-compensation pushed that up by GBP 20 million.

Now let me unpack our cost-to-income ratio. This is a key metric for us. The bridge here shows you how we're using a combination of cost control, transformation and revenue growth to build operating leverage, which will enable us to grow profitably. We set out actions at the start of the year, which would take 1% out of the cost-to-income ratio. Further management actions to accelerate our transformation drove even greater improvement and the favorable market conditions enabled us to generate higher revenue, which also supported an improvement in the ratio. Some of this gets used to reward our people through a higher variable compensation. But the net result due to the measures we have taken to improve operating leverage means that the majority dropped to the bottom line, and we ended with a 71% ratio.

So hopefully, this is -- sorry, hopefully, this is clear on how we're improving the operating leverage in our business. There will be upside in times of favorable market conditions and of course, the reverse during times of falling markets. So for 2026, we expect further reduction in the ratio as we head towards 70% as we continue to focus on the transformation savings and cost control, and this is subject to normal market conditions. Now as you know, our target remains below 70% for the full year 2027.

Now moving on to capital. Our capital surplus at the end of the year was GBP 865 million. This after allowing for the effect of an estimate of GBP 250 million for the impact of Basel 3.1. Now we are in discussions with the PRA on how the specifics of these requirements will impact us, but this is our best estimate today of a full implementation based on our current balance sheet position. We will continue to allocate surplus capital in line with our guidance on our capital management framework that I outlined last year. Now finally, given its importance to this year's outcome and to our targets, let me take a moment on transformation. We were clear that this was a program that was not about blunt cost out. It was about reshaping the operating model, reducing cost and complexity with precision and building a sustainable operating leverage for our business.

So in 2025, we accelerated our delivery and outperformed our targets, delivering GBP 75 million of in-year savings and around GBP 100 million annualized of our net savings target. Our decisions to redesign our outsourcing contract approach, accelerate service model changes across client service, operations and technology meant these savings materialized earlier. Together, these all contributed to a headcount reduction of 10%. Now alongside this, we delivered non-compensation savings across research, data and global technology. We focused on supplier rationalization, which meant we reduced our supplier base by 12% year-on-year.

So what next? The focus now shifts from accelerating cost savings to disciplined execution of transformation for modernization and growth. In terms of savings, we're targeting GBP 25 million reduction out of our operating expenses net of investments. And while this seems lower than the GBP 75 million in the plan this year, the plan was always to deliver the initial targets with efficiency upfront and the harder transition of new operating models, technology platform implementations take longer to implement.

So overall, transformation in 2026 is about building progress on what we've done in 2025, embedding the cost discipline and delivering our net savings target while investing for growth. This will ensure that we exit the year with a full line of sight of achieving our GBP 150 million net annualized savings by 2027.

So looking forward, we're only 1 year into our transformation program, and I'm really pleased with where we've ended. Ultimately, we're here with one purpose, to be the best active manager for our clients. So to do that, we are going to continue to do exactly what we said we would, and we will be laser-focused on delivery. So what does that mean in terms of actions for 2026 aside from the transaction?

We will be activating our sales teams that we've built in Schroders Capital to turn client engagement into sustained net new business delivery. We'll continue to innovate, expanding on our ETF suite across Europe this year. And in wealth, we're investing in technology and our people to ensure that, that business can deliver to its full potential. What happens to markets and FX and geopolitics out of our control. But what we can control is we will continue to deliver against our strategic plans.

So in summary, great progress this year, which has given us a strong platform to be able to increase the value and delivery to our shareholders.

So with that, I'll ask Richard to return for some Q&A.

Thanks, Meagen. And what's really clear to me, I hope clear to you that we're not taking our foot of the gas, and we're absolutely focused on delivering the transformation plan that we outlined. But I just wanted to leave you with a thought on the transaction before we get to Q&A.

Through the proposed transaction that you have seen with Nuveen that we talked about this morning, we're going to significantly accelerate our growth plans to create the leading public to private platform with enhanced geographic reach and importantly, a strengthened balance sheet, while remaining relentlessly focused on what matters to our business, delivering strong active investment returns for our clients. And look, given this audience, I can't underscore the importance that this transaction is going to deliver an attractive premium in cash to our shareholders, reflecting the value of the delivery of our strategy that we've outlined pretty clearly today and our future prospects together. It creates certainty and it creates value for shareholders.

So with that, let's go over to you for Q&A. As usual, we'll start in the room. If you can start by telling us your name and where you're from, as usual, that would be really helpful.

It's Isobel Hettrick from Autonomous Research. So I have 2, please. First, you touched on the improving flow trends and momentum in the fourth quarter of last year. Can you provide us any color if these have continued so far in 2026? And then second, you touched on the need to increase the pace of deployment and conversion of dry powder within Schroders Capital. And what is needed here? Is it just a lack of attractive targets in the area? Or do you need to deepen and maybe broaden your origination pipeline from teams?

So Isobel, I'm going to answer this question with a big caveat that we're on at February 12, and 6 weeks does not present a forecast what might happen in the future. But look, the positive momentum we saw in the fourth quarter was definitely carried into January. I also think on the Schroders Capital point, we do need to increase the pace, and that is about how we, for example, in our private equity business, put more people into that business so that we can get more of our clients' money deployed. It's a great area, by the way, that I'm super proud of the team for taking AI and embedding it in their processes so they can get through more opportunities more quickly. But that's the sort of thing we need to do to accelerate deployment.

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Thank you for helping me out.

It's Hubert Lam, from Bank of America. Two questions. Firstly, on Wealth Management. I guess in the last few days, you've seen some of sell-off across the Asset Management space -- sorry, the Wealth Management space on fears around AI, the risk of disruption within Wealth Management. Just wondering what your thoughts of that are, how much you're investing in AI, how much your wealth managers are using AI and how much you're spending within Wealth Management for AI tools?

Well, in a second, I'll let Meagen talk about the details on the AI. But first of all, AI is going to transform everything. So not just Wealth Management. And the only people that seem to have not worked out, it was going to impact Wealth and Asset Management or the investors. So we've known that for a long time, and that's why over the last 4 years, we have been active in deploying different technology solutions using AI. And by the way what I've said internally is AI is the hammer. What we actually need to do is think about the blueprint of how we're reconfiguring the business. And we'll use lots of different tools, be that DLT, be that using data in a different way and tokenization, be that AI.

So I think we have been hard at that for a number of years. We are using it in how we show up to clients. We are using it in how we change operations. We are using it in how we think about research. We are using it in terms of how we think about portfolios and products that we can sell. So it doesn't matter whether it's Wealth Management or Asset Management. This industry is going to look super difficult -- sorry, not difficult, different going forward. It might get difficult as well, by the way, but it's going to be very different. But one of the reasons why we like this transaction so much is because it actually gives us a bigger balance sheet, it gives us more firepower to invest in this transformation as we go forward.

Do you want to just touch on...

Yes. I'll just add a bit of context. I think firstly, you mentioned it in the context of wealth, and Oliver is with us in the room. And since the day he stepped into our business, he's been very front-footed in terms of AI and the benefits that can bring us. And if you look at it in our transformation program, a huge portion of that in the second part -- the second 2 years is around really accelerating that wealth program, investing in modernization of our client interfaces and making sure that we can leverage it.

So as Richard says, it's a combination of AI, data and DLT. We see the 3 coming together and absolutely transforming not only the wealth business, but how the business operates together.

In terms of investments, how much are you putting into technology into AI specifically?

We're not specifically only investing in AI. There's a huge portion of our remaining transformation cost that is associated with technology, the data platforms that underpin all that. So we have a remaining plan.

And the other question is around your partnership with Apollo. Maybe just talk a little bit about it, in terms of expectations, like, why Apollo, the products that you have. I think you mentioned the products that you're launching there, expectations in terms of...

So I think I've been pretty clear with people over the year that actually are at partnering in this industry is important. You've seen a lots of people enter into partnership. It is important to us, so that we can be innovative, we can fill capability gaps where we think those are demands in the market place. What is exciting about this proposition is actually to see within the UK wealth channel, whether we can create an interesting public to private credit product, and that's what we are pushing on further. Of course, we've also talked about the ability to launch some income retirement solutions for DC channels in the UK. So it's a good example of how we are using that partnership to try and drive innovation more broadly.

It's David McCann from Deutsche Bank. A couple from me, please. So I think you touched on in the remarks that Nuveen approached you more than once during this process. Can you touch on, did others approach you? Was this the only person that was interested in the business? I guess that's the first question.

Second one, just to be clear on the comments on shareholder value that you made, if you had fully executed on the plans that you outlined a year ago, do you think this deal represents more value for shareholders than you would have achieved kind of normally?

And the third one, we've obviously seen a bit more detail in the numbers today than you gave us in the trading update a few weeks ago. We wouldn't have been aware of the numbers that obviously, quite a lot of the beat versus consensus at the time was from performance fees and carried interest. Were you sort of conscious of that when they made the ultimate offer?

Well, let me answer the first one -- last one first, David. Nuveen has not been party to the insider information on our financials at any point during this process. So they were not aware of our trading update or anything since then. I think that would have been inappropriate. But I think it would be normal by the way that you would expect in a transaction of this nature there should be multiple conversations, that's how we get to what the best value price is for our shareholders.

But I want to be really clear that this business has never been up for sale. We are confident in the plan that we discussed with the Board. We were confident in our execution capability. We remain, by the way, pretty confident in our execution capability. So it's never been up for sale.

What emerged as we had conversations with Nuveen was that we felt this was a very complementary business that could accelerate our aspirations by, candidly, I think, a decade. And that's why when we had the conversation, it became clear that we could create something pretty unique in the industry. And that's how we came to receiving an offer, I think, in the earlier part of this year. And the Board thought quite carefully about value through multiple lenses. Of course, the lenses that I talked about today, obviously, when we think about the premium to the earnings that we announced for 2025, whether it's relative to spot or whether it's relative to the VWAP. We've looked at all of those, and we also, as you would have expected, took the Board through our 5 year plans with a clear aim of demonstrating the value that we could create to the shareholders.

So I'm not going to take you through the details of that plan, but rest assured in the Board making their unanimous recommendation, they concluded that this was the best option for all shareholders, and that's really how we've ended up here, and that's why I think you're going to get certainty, you're going to get cash, and you're going get paid not just for the delivery of the plans that we've got, but actually for some upside that this transaction will undoubtedly give us through growth.

Right if -- are any other questions in the room? If not, we will go to online. No. Do we have any questions online?

Yes, we have one question online from Nick.

It's Nicholas Herman from Citi. Can you hear me all right?

Yes. Perfect, Nick.

Great. So firstly, I guess, congrats on a storming 2025, clearly helped by markets, but also still very strong execution. And I'll probably say this, it is an opportunity to say that, I'll be sorry to lose traders as a listed company, but I can appreciate that this is also a very attractive deal for shareholders.

Two questions from my side. Firstly, on Asset Management margins. You've given us the exit margins. Can I ask just for the Public Markets business, is there any difference in the exit margins to the margins on your inflows? And perhaps you could help us understand the difference there in the margins on your inflows versus the margins on your outflows there?

And then the second question was -- sorry, if I missed this before, my connection was a bit questionable, but you said that it allows you to accelerate your growth ambitions by a decade. Would you able to flesh that out a bit, please?

Shall I comment on the last one, and then come to you. So a couple of reflections, Nick. I understand that people will be sorry to see Schroders shares not listed on the London Stock Exchange. But I think about this in a different way. Actually, our commitment to London is actually enhanced through this transaction. There's clear commitment about maintaining the headquarters here. There is clear commitment about our investment capabilities here and retaining jobs through this deal, we should be able to channel more money into the U.K. economy. We will continue to play as we have done for the last 200 years, an important part in bringing people to market and actually creating U.K. wealth. So I actually think we are better as a result of this or create a better impact for London at the end of this because of our increased size and ability to influence the market.

So whilst people may be sorry about the listing, I think our commitment to London is undiminished, and we're excited about actually the increased growth delivering more and better outcomes. So if you think about what we've done, as I said, when you bring these 2 organizations together, you're really bringing together Nuveen's really broad Private Markets capability, which has a very supportive parent that brings private capital and a U.S. distribution. Now here at Schroders, we don't have patient capital. We have a smaller -- much smaller distribution capability in the U.S. We don't have some products that you would want in the total Private Market suite.

But you're combining that with this phenomenal heritage here at Schroders of a Public Markets business with great distribution across pretty much the rest of the world outside of the U.S. And we have amazing capabilities in discrete parts of Private Markets. So when you stick these 2 things together, what we do is create better products that we can actually put down all of the pipes to actually support our clients and make us relevant to them.

So that's why this isn't about a cost out. There aren't big cost savings in this deal. It's about growth because we can actually give more of our combined products to our respective clients. And that's the excitement. That's why this, I think, should be seen as a great opportunity for our people and our clients. It would have taken us a long time for us to buy that capability in Private Markets, build that distribution capability in the U.S. And that's why I think it accelerates our plans that we had outlined last year by at least a decade.

But maybe, Meagen, you want to pick up on the...

Yes. Thanks, Nick. I'll pick up on the Public Markets margin point. As we mentioned, this is really around channel and the specific product that is going down that channel. So really, our margins are driven by where the client demand is. And I think 2 great examples of that are really looking at our fixed income, where we exited 4 basis points higher. That's because we're selling that product on the intermediary channel in Europe versus more in the institutional channel. Likewise, on equities, we saw that drop down by 1 basis point. We do expect a general -- there's a general market trend in terms of the sticker price there, but we're also seeing dynamics between the global product and the regional product where investors are moving more out of regional and into global.

Do we have any other questions, Katie, online?

No more questions at the moment. [Operator Instructions].

Brilliant. Well, we've got no more questions. I just wanted to draw it to a close and say thank you very much for coming this morning. We'll be around for a little bit longer. So if you've got any other questions, don't hesitate to doorstep us or any member of the Group Executive Committee. And please join us for coffee. That would be great. Thank you.

Good morning, everybody. It's great to see so many familiar faces and a few new ones, and a particular warm welcome to everyone joining us online. I hope we're coming through loud and clear. So you'll see Schroders Capital today. I'm trying to fit in with my private markets colleagues, no tie today. They're way too trendy. So I'm doing my bit. But I just want to start by saying a huge thank you for investing your time with us this morning. Today is important because I get to not talk about results, which is what you normally see Meagen and I doing. I get to talk about the thing that I'm focused on, which is how we're building this organization and what the long-term growth story of Schroders really is.

So I think back in March, for those who were here, I stood right here, and I told you that I believe Schroders was a tomorrow company. And being a tomorrow company means we're building a public to private platform for our clients; leading, adapting and innovating in what is still a really uncertain world. And the growth of Schroders Capital sits right at the heart of our growth story. Today, we're not going to tell you lots of new information. What we're really going to explain is why we think we've got an awesome business, how we're meeting client demand for private markets and how the engine of Schroders Capital is actually powering earnings for the whole group.

So before we dive in, let's look at today's agenda. So we'll kick off in a second with Georg, who's the CEO of Schroders Capital. And he's going to talk about the evolution of how we got to where we are, where we're winning and importantly, what we think the opportunities are in the future. And then you're going to hear about our 4 capabilities, importantly, from the people who know them best, the leaders of each of those 4 pillars. And I've asked them to focus on what really differentiates us and how that helps our clients.

So I think it's a great lineup, and you get to see the depth of leadership capability that we have here at Schroders Capital, and you get to see on stage the team that's driving this business forward for the growth opportunities that we can see for the whole group.

I'm nothing if not predictable. And I think you are probably getting used to seeing this slide. So let me start by reminding you how Schroders Capital fits into the group's overall plan to simplify, scale and deliver for you. Because across the whole group, what we're doing is focusing on areas where we can differentiate ourselves. And for Schroders Capital, the areas of competitive advantage are really threefold. Firstly, we need to scale our differentiated propositions.

Now we're pretty clear and proud that we are a mid-market specialist across 4 pillars. And importantly, in subsegments of those pillars, where we can see strong client demand and importantly, attractive margins. Secondly, we've been busy building out a specialist sales force, dedicated individuals who can engage with Institutional and Wealth clients much more effectively. We are transforming how this team works with client group, and you'll also see we now have Matt Oomen driving our client group forward. And working together with the specialist sales force, we're actually going to maximize success from a sales perspective. And thirdly, we're expanding our reach through partnerships and, of course, the Wealth channel. And this is one of our biggest opportunities.

We benefit insurance capital from this great Wealth footprint across the group, but we're only just starting to actually capitalize on the potential that, that gives us globally. And importantly, all of these things help deliver that GBP 20 billion of cumulative net new business. And we're going to do that by the end of 2027, I should say. We're going to do that whilst maintaining strong margins and operational flexibility. This growth is profitable and it's scalable.

So Schroders Capital today makes a significant contribution to the group revenues. And as the group achieves its cost efficiency goals, the platform effect of Schroders Capital becomes even more powerful. So you can see from this chart how Schroders Capital has actually grown. It's nearly doubled in size from GBP 236 million to GBP 427 million, that over 5 years is a compound growth rate of 16%. And importantly, that growth has arrived. If you look at the margins we told you, at the end of last year, we closed at 57 basis points. That's actually up to 62 if you include performance fees and carry.

Now if I look at this chart, the left-hand side tells a really important story about Schroders Capital. It's the longevity of the assets, which stands at almost 12 years. Now that's important because the long-dated commitments gives us real visibility on revenue and it gives us predictable cash flow. And for the group, that's building resilience. These are earnings that are less exposed to market noise, but they create stability. They allow us to invest for growth, and they give clients confidence that we're with them all the way through the cycle.

Now on the right-hand side, margins have remained consistently strong and Schroders Capital continues to operate in the mid-50s. And across the business, margins have held really boringly consistent. To put these 2 charts together, longevity times high margin gives you a business that makes an important contribution to the group today, but importantly, it is building predictable profitability in earnings for years to come.

So with that, I'm actually going to hand over to Georg. Again, thank you very much for joining us. But Georg, why don't you come up and explain how we're going to grow this business?

Thank you, Richard. Good morning, everyone. It's a real pleasure to be here today, and it's a great opportunity to do a Capital Markets Day about Schroders Capital. It's an opportunity to talk to you not just about the numbers, it's also an opportunity to talk to you about our vision and strategy and to introduce to you some of the key people behind this business who are with me in this room. So the focus -- what we are focusing on is scaling Schroders Capital. What I would like you to take away from this presentation is really 3 things. First of all, what makes us different? Secondly, why we are now at an inflection point and able to drive growth from here and accelerate from here. And thirdly, what it does to you as our shareholders.

So let me take you through those one by one. What makes us different? How are we positioned? We are a mid-market specialist in high-growth thematics. And this is really critical because it allows us to deliver consistent performance to our clients. Secondly, we are characterized by our Solutions DNA. We are a solutions player in private markets, which is really critical, because it allows us to build long-term client relationships, and you can see it in the 12-year average longevity. And we're an innovator in Wealth and DC, 2 of the most important and fastest-growing client segments in private markets.

We're at an inflection point, and there are 3 catalysts which allow us to scale from here. First of all, we've crossed critical size thresholds. And as you all know, in our industry, size begets size. Secondly, we have built a fundraising engine, and Richard mentioned this in the beginning, which allows us to accelerate from here. And thirdly, there is a unique set of group advantages, which we can capitalize on from this point. This will allow us to grow from GBP 73 billion AUM today by adding GBP 20 billion of net new business by the end of 2027, plus a standard assumption for market performance to approximately GBP 100 billion in AUM by the end of 2027.

Richard said in the beginning of his presentation that we are a tomorrow company. Our journey into being a tomorrow company started 10 years ago. And let me take you back to 2015, where we had the vision and made the decision to build a leading private markets business. And we wanted to do this and operate it across the 4 asset classes, and you can see this in the colors on this chart. So in the first phase, roughly from 2015 to 2021, we developed the capabilities, and we did so by making strategic acquisitions and by building capabilities organically. And then in the second phase, roughly from 2019 to 2024, we created a platform across it to drive consistency and ultimately, network effects between those asset classes. We were done by the beginning of 2024. And from this point on, our journey was about scaling Schroders Capital.

What's quite fascinating is you can see that over that 10-year period, we've increased our assets under management sevenfold, which translates into a compound annual growth rate of 13% just in the last 5 years. This is one of my favorite slides. I've got another one, but I really like this one. You can see that secretly and silently, without many of our famous competitors noticing, we've crept up to be the sixth largest private markets managers in Europe. And if I translate this and illustrated by a few key figures, we're managing GBP 83 billion in assets under management, including dry powder, 800 employees, 400 investment professionals sitting in 26 countries and Schroders offices worldwide, managing money for more than 1,500 clients. And together as a team, we have generated GBP 427 million of revenues at 62 basis points, including carry at whopping longevity of 12 years on average. That is significant locked-in value embedded in Schroders Capital.

Now we're not just the sixth largest private market managers, we're also the fifth largest in the evergreen space in Europe, as you can see in this industry ranking. What is actually quite important as well, we're proud to have one of the best recognized brands amongst wealth advisers, private banks and intermediaries, as you can see on the right-hand side. This is really critical because having scale and size and having a strong brand is critical to winning in Wealth.

Now let me get back to capabilities and what defines us. I said we are a mid-market specialist in high-growth thematics. Private markets are vast and specialization is key. You cannot be everything to everyone. In private equity, our focus is on lower mid-market buyouts and early-stage venture capital. And Rainer, who is here in this room and who's been building this business with his team since 2001, will be coming on stage after me to present the private equity business.

And infrastructure. In infrastructure, our focus is entirely on the energy transition space, which is one of a lifetime. It's a once-in-a-generation opportunity. Since the acquisition of Schroders Greencoat back in 2021, we have an energy specialist -- an energy transition specialist, one of the leaders in this industry in our ranks, and Minal, who's been with this business for more than 10 years, will be presenting to you this morning.

Then Real Estate. We've been in real estate since 1971, which gives us one of the longest track records in the industry. Nick, who's been with the business since 2012, will be coming on stage this morning to explain to you how we're delivering outperformance to our clients across all cycles.

Then private debt and credit alternatives. In this business, we've been a pioneer in exploring the continuum between public and private and delivering flexible solutions to clients. Michelle, who is co-heading PDCA, as we call it internally, will be explaining to you how we're delivering superior relative value to clients and strong growth for our shareholders.

I said we are a solutions player in private markets, and this really becomes apparent when you start to map out our capabilities along the risk and return spectrum from secure income on the left to opportunistic returns on the right. And it's really fascinating to see that we are covering a broad range of opportunities, which allows us to deliver solutions either horizontally within an asset class, which is a significant part of our business, or vertically in diversified multi-private asset portfolios across asset classes, and we can also do it across public and private when you take into account that we have a world-leading public markets business in our house as well. This is really something that only very few can do, and it's truly differentiating.

Being a solutions player is not just about creating bespoke portfolios, it's also about delivering in the formats most suitable to clients. So we've created a range of different access points most suitable to each different client type, and this ranges from closed-end funds on the top, to evergreens in the middle, and mandates or solutions below. Closed-end funds is really typically how institutions and large family offices want to consume private markets. And as you know, evergreens is the preferred format for Wealth investors. Our Solutions book is roughly half of what we do, and this is really critical. It's a win-win between institutional clients often and capabilities on our side. It allows us to create bespoke portfolios for clients in bespoke structures and it creates long-lasting relationships, which are really a win-win for both sides.

Why is this important in the context of where markets are going? Private markets are set to double within the next 5 years according to practically every industry forecast. But what's important that this growth is not going to come evenly to everyone. It's coming from Wealth, DC and Insurance, and it's going to fewer, more capable partners. We're one of them. We're a solutions-capable diversified platform, and we have specialist thematics sitting in some of the most important industry trends from the energy funding gap to the importance of secondaries to companies remaining private for longer. So it's a really unique opportunity for us.

I said at the beginning, we are at an inflection point, and there's an opportunity for us to accelerate from here. There are really 3 critical catalysts behind this. First of all, we've crossed critical size thresholds, and this is important because it allows us to win more business. Secondly, we've built a specialist fundraising engine. And thirdly, we're capitalizing on our unique strengths as a group. Now let me take you through those one by one and illustrate them. In this slide, you can see some of our largest funds. And we have quite a few funds which have crossed the GBP 2 billion mark and quite a few more, significant number more who are above GBP 1 billion now. And this is important because it allows us to win bigger tickets and to sell these funds more easily to global audiences.

On the right-hand side, you see some of the fantastic trophy wins we've had in the mandate space this year. And these are really some of the most important and most relevant opportunities which were available in this market in 2025. For example, we've won EUR 425 million from APG in Infrastructure Debt. We've won GBP 450 million from Lifesight to launch one of the largest energy transition LTAFs. We've won another GBP 500 million from NEST, which gives us GBP 1.5 billion in private equity, GBP 2 billion from WPP in Real Estate. And on the upper right is a really interesting one as well. Hargreaves Lansdown has picked us as their partner to launch evergreen funds for the self-invested pension plan space, which is a GBP 500 billion opportunity, and we are the first in the market.

Second catalyst. We've built a fundraising engine. In 2024, we brought on board Ingo Heinen, who is here in the room as well, to build the specialist fundraisers. And we've increased that team by the end of this year from 20 to 40. At the same time, and Richard mentioned that in the beginning, Matt Oomen has come on board to run and transform client group. Together, Ingo and Matt are working to maximize our access to the specialist buyers and increase the share of wallet in our existing client relationships, which makes us confident that we can increase our fundraising from GBP 35 billion in the previous 3-year period to GBP 40 billion to GBP 45 billion, which translates from GBP 16 billion to GBP 20 billion in net new business, which is about a 30% increase between the period from 2022 to 2024, then '25 to '27.

Third catalyst. We have a unique set of strengths as a group. First of all, we have a world-class Wealth footprint. We've been in this space for many decades, and it is in this area where many private markets managers are spending millions trying to replicate this. Secondly, we are delivering and operating across the public-private continuum. And you will hear from Michelle that this comes completely natural to us. We have a public markets business and a private markets business, and we've been there for many, many years. Thirdly, we have a fiduciary management business in our ranks, which allows us to win fantastic OCIO mandates and the Tesco Pension Fund win is probably one of the most prominent examples in this regard.

Then there is Cazenove Capital. Both on the Schroders Capital side as well as on the Cazenove Capital side, we're dealing with entrepreneurs. It's our job to make them rich. And it's the job of Cazenove Capital to keep them rich and let them manage their wealth. So there is a natural synergy and Oliver Gregson, who has come on board in the summer of this year, and I are fully committed to deliver on that opportunity. And then lastly, Richard and Meagen have spoken to you about applying GBP 500 million of balance sheet to increase our ability to seed, co-invest and warehouse, which is really critical for us to compete.

Now this is my second favorite slide. What you see on this chart is on the left-hand side that fundraising in our industry has decreased despite the long-term growth trends. It has decreased for 3 years in a row, including 2025. And on the right-hand side, you can see what happened on the Schroders Capital side, our fundraising has increased consistently every year. And if you translate that into the fundraising rate, you can see our fundraising rate stood at 15% to 17% of starting AUM in every year, which is one of the best in the industry.

Let me get to the investment thesis. I spoke about the GBP 40 billion to GBP 45 billion of fundraising, which we're planning to do in the period of 2025 to 2027, which is 30% more compared to the previous comparable period. Raising that amount of money means also increasing dry powder. Not all of that will get deployed instantly. So it will increase our dry powder, and you would expect us to return capital income and capital gains back to our investors, leading to GBP 20 billion of net new business. So now if you take the GBP 70 billion of starting AUM base at the beginning of this year, at GBP 20 billion of net new business, plus a standard assumption for market performance, we're arriving approximately at GBP 100 billion of AUM by the end of 2027.

Let me summarize. Our focus is on scaling Schroders Capital, and we're doing this based on a differentiated position as a specialist in mid-markets, on the basis of having a strong Solutions DNA, which means long-lasting client relationships, and as an innovator in Wealth and DC, which means we're sitting in some of the most attractive growth segments.

I said we're at an inflection point based on 3 catalysts we can accelerate from here. We've crossed critical size thresholds, we're activating our newly built fundraising engine, and we're capitalizing on our unique strengths as a group. This allows us to move from GBP 73 billion of AUM today by adding GBP 20 billion of net new business to GBP 100 billion by the end of 2027, and we will do that with stable margins at high longevity, which leads to significant increases in the locked-in revenues for the group plus carried interest on top. That's a significant value creation opportunity.

And I end my presentation here to pass it over to Rainer, Global Head of Private Equity. Rainer?

Good morning, everybody. It's a pleasure to be here. As mentioned, my name is Rainer Ender. I'm heading the Global Private Equity platform at Schroders Capital, and I'm based in Zurich. I've been with the firm since 2001, 24 years. And it's been a privilege to grow the business together with my long-standing leadership team to what it is today. Especially since 2017, when we became part of Schroders, we've gone from strength to strength, delivering strong results for our clients, but also for our shareholders. I'm really excited to give you more details about the platform and our perspective ahead.

We have a deep heritage in the middle market. This gives us a distinctive proposition to our clients, because we generate exclusive specialized deal flow that they cannot get and find themselves. And with this approach, we've generated strong performance across all our strategies in the long run and consistently. As a result of that, more client focused, our fundraising has been very strong, and we've grown our client base and fundraising on both sides with existing clients that have grown with us and deployed more money and re-upped with us, as well as with new clients and expanding our geographic reach of clients.

As mentioned by Georg already, Solutions is a very important pillar of what we do as a whole. And for private equity, more than 50% of our AUM is in solutions with institutional large clients, obviously. Secondly, also very important, we've been an early mover in the Wealth channel and with the evergreen funds. And this is a very strong proposition for us going forward. And mainly, thanks to being part of Schroders, we've been an early mover, and we're launching products very early on in that space. If we go to numbers, I'm a physicist by background, so all my life was about numbers. We are managing GBP 15.6 billion of financial -- fee-earning AUM. The last 3 years alone, we've raised GBP 7.2 billion, '22 to '24, that is. This year, we're already above GBP 3 billion, a new record year, again, on top of last year's record year. So really growing against the market trend, and you'll see that in the next slide.

We have strong margin and longevity, and with a revenue of GBP 119 million, which has grown 14% per annum CAGR over the last 3 years. And with our fundraising and dry powder we have, we are positioned to have this growth easily continue. On top of all that, we are underwriting contracts every year, which imply a GBP 40 million carried interest at work net for the group result straight to the bottom line if the products perform on the base case.

So what is our USP? Among the large private asset and private equity managers, we are the one that dives deepest into the lower mid-market. And that differentiates us a lot and is a unique proposition. This is illustrated here on the left-hand side. We're driving deeper, and we're driving deeper not to make small investments, but we're driving deeper because in the smaller investments, we see much more transformative growth opportunities and therefore, performance generation alpha potential that we want to capture. To cover this market is not easy. And that's also why we are the go-to partner for all investors who are seeking exposure to that space.

Again, with a few numbers, $3 billion we invest annually, but across 100 investments. So really relatively small individual tickets, and that's a proposition in itself because it diversifies and it has more equal weighted performance contributions. Importantly, only 1/3 of our investment volume is into primary fund commitments. 2/3 are investments directly into individual companies through direct co-investments as well as GP-led secondary transactions. That's shown here. And last, $323 million is the median enterprise value of our co-investment over the last 4 years. So imagine, our target investment company, $323 million enterprise value typically means $150 million revenue service business with $40 million EBITDA. And that really shows what we are investing in. We're investing in small hidden champions with high transformative growth opportunities. And that's how we build our portfolio.

To add one more thing on top, for the co-investments, we've already realized more than 70 direct co-investments in buyout and growth and 20% of them have delivered a money multiple bigger than 5x. That's generating the outperformance over the private equity industry.

So how does that compare to market dynamics? Georg already mentioned, he showed the short-term chart, 3 years, I show 25 years. While private equity fundraising, as per Preqin data, has had good long-term growth, and it was a pleasure to ride that wave, '21 was a peak and the market slowed since. As you heard before, we've done the opposite. We've continued to grow despite the headwind in the market. And why is that? The main argument is shown on the right-hand side, which is performance data over time. And you can see that the various private equity market segments have performed pretty similarly over the long term until 2021, when interest rates increased.

Since then, we see different outcomes and results. The red line, small buyouts has clearly outperformed mid-buyout and large buyout, and therefore, proven that it generates performance with different performance drivers than the large leverage buyouts do, less dependency on debt markets, especially. So as such, we are very positive about our positioning in the market. And if you look at the big picture again, especially the years in the history that had slow fundraising, so '22 to '24, but also 2010 to '12, and probably today have been, in hindsight, the years with the best performance generation. So overall, we see ourselves clearly in a buyer's market with attractive investment opportunities, especially in our space.

So let me show my favorite slide. So pride of our whole team is really on the left-hand side here. It's the performance data for all our investments we've made since 2010. And the bars show the vintage year performance per all investments done in 1 calendar year. And what you see is every vintage has delivered roughly 15% to 20% IRR. And it's also very important to see how strong '23 and '24 have started, so showing that we are in a buyer's market. Again, reemphasizing what I said before, 45% of what we do are direct co-investments, 21% are GP-led secondary transactions, and only 1/3 is primary fund investments.

What you also see is that with our individual company investments in these 2 categories, we've achieved outstanding results with realized IRRs of 24% and 23%, respectively, clearly outperforming the primary fund investment activity and therefore, showing our extra value add by making the individual company investments with that strong result.

So with that, I go over to our example of early mover advantage in the Wealth channel. Thanks to being part of Schroders, we could early on change for private equity markets to be not only accessible to institutional investors through products, closed-end funds and mandates, but also offer private equity to the wealth sector and tap into the Schroders' organizational competencies of product design and client reach. And therefore, we already, in 2019, launched what today is our flagship fund, long complicated name, Schroders Capital Semi-Liquid Global Private Equity. It's just a global private equity fund in an evergreen solution.

This fund has had net positive flows ever since its beginning, 6 years in a row through volatile markets, inflows over inflows. And that combined with strong performance of 14.3% per annum net since the beginning, has led the fund to be $2.7 billion of NAV today. The fund is building on our unique investment strategy and therefore is also clearly differentiated from other semi-liquid funds and evergreen funds in the market. With a fee of typically 145 bps, this is a strong contributor to our revenue growth and margin, obviously.

So with that, I conclude with a summary of what makes us different. As mentioned, we have a deep heritage in the middle market, a proposition that cannot be easily replicated. We have very strong fundraising from growing client base and re-ups from existing clients, a nice portfolio of long-standing clients and new client wins. And thirdly, on top of strong revenue growth with good margins, the icing on the cake is the carried interest lineup that we are producing for straight to the bottom line outcomes for the group later on.

So where are we growing further? Very simple, same thing as Georg said, the wealth proposition where we've been an early mover, and we've already shown that. Beyond the fund that I showed you, we've launched 3 new products, new access vehicles for different geographies, U.S. fund, U.K. LTAF fund, and also an ELTIF for European retail markets, lineups for further acceleration and growth in the wealth spectrum. Second, growing more mandate business, especially bigger clients, also lining up behind Georg's slide with the 6 success stories from the news, larger clients and bigger mandates and new mandates. That's the second one. And third, just growing and further scaling our direct co-investment and GP-led investment activity.

With that, we are all excited about the future of our business opportunity, and I hand over to Minal for the Infrastructure topic.

Thanks, Rainer. Good morning, everyone. I'm Minal Patel and I look after Schroders Capital's Infrastructure business. I joined Schroders in November '22 when Schroders acquired Greencoat. Really pleased to be here today to be able to talk to you about the trajectory of our business to date and what the future looks like.

Our Infrastructure business is a true leader in the energy transition. We are the second largest specialist manager globally. We're also a scaled manager. We look after 450 assets generating about 8 gigawatts of clean electricity. And to put that into perspective, that's enough to power 6 million homes, 1/4 of the U.K., or all of Denmark. And how do we do this? We have a team of 130 dedicated professionals who live and breathe the energy transition. And it's this deep market knowledge and long track record that has enabled us to build long-term partnerships with each of the key utilities and developers, both big and small globally. We see the whole of the market. And financially, we are a strong and robust business. We manage just over GBP 10 billion of fee-paying AUM with an average longevity across funds and mandates of 20 years.

So before we look at how our business has grown and where it's going to go, I think it's worth just thinking about some of the market backdrop. We are operating in a segment of the market where the investment opportunity is vast. In Europe alone, there is a $1.5 trillion capital need in the energy transition by 2030. To state the obvious, that is only 5 years away. Where is that capital investment going to go? Well, you can see on the right-hand side that it's really going to go in the build-out of electricity generating capacity. So predominantly in traditional renewables, wind and solar, but also substantially in storage and grid infrastructure.

There are 3 main drivers behind this. Firstly, domestic energy security. Achieving this at the cheapest cost for consumers is at the forefront of many government minds. And in many countries, wind and solar today is the cheapest cost of electricity. Secondly, it's the decarbonization and electrification of the harder-to-abate sectors, transport, heating, heavy industry. And thirdly, I don't think you can talk about the energy transition without talking about hyperscalers. Hyperscalers are taking the place of utilities and governments in really supporting the build-out of generation capacity, and they're doing it to meet their own energy needs. A key determinant today in the growth of AI is access to power. The hyperscalers need power, they need it fast, and preferably clean. So our view is the story of infrastructure over the coming years really is the electrification of everything.

Turning now to just look at how our business has grown. We have been at the forefront of the energy transition market since its inception. We launched the U.K.'s first renewable energy investment trust back in 2013, and have since moved to expand and serve the U.K. DB client base. At that time, these investors were looking for long-term income inflation protection in a world where interest rates were low. This was very much a super-core, core investment approach, and it has enabled us to manage long duration, sticky AUM funds, happily also delivering a steady and stable revenue stream for our business. But the opportunity set is evolving. The market is evolving. And actually in the current interest rate environment, the needs of our clients are evolving. We are in market with high returning funds and strategies that really ensure that we are at the forefront of the market and delivering what our clients are looking for.

So you can see here how the change in our AUM mix has evolved from the core end of the market to much more in the core plus value add. That has 2 implications. One, it changes the trajectory of our fundraising. But two, it also has a very important revenue driver, as these strategies benefit from higher fees and carry.

Perhaps briefly to touch on our products. As you can see, we cover the full risk return spectrum, ensuring that we can meet the diverse needs of our clients, be that evergreen funds or traditional closed-end vehicles. And as Georg mentioned, we remain really flexible to the needs of our clients. About 30% of our AUM is in managed accounts, where we are building bespoke portfolios to really focus on the specific needs of our clients, be that technology preferences, geography preferences or return. Previously, our investor base was largely U.K. driven. Now, as part of Schroders, it is global and covers wealth.

Perhaps to give an example of how our funds have invested together. Earlier this year, we invested GBP 450 million in a large operational offshore wind farm, West of Duddon Sands, located just off Morecambe Bay. We secured this asset at double-digit returns, but we did not secure it purely on price. We secured it because the counterparty, a partner with whom we have transacted and have joint venture relationships, really had confidence in our ability to execute, execution confidence in a difficult M&A environment, delivered by a specialist. That is why we see the whole of the market, and that is why our clients invest with us.

Perhaps now to just give you an example of one such partnership. Willis Towers Watson. They have been a partner of ours since 2016, when they advised a U.K. corporate pension scheme on a managed account, GBP 135 million initially investing in U.K. operational solar. That mandate has since increased to over GBP 0.5 billion. And Towers have continued to support us and invest with us as we have expanded into broader technologies across the energy transition in pooled funds and dedicated accounts and across geographies into Europe and the U.S.

In 2024, we launched the U.K.'s first energy transition LTAF. And in the summer of this year, as Georg mentioned, Willis Towers Watson's Lifesight invested GBP 450 million into that strategy. Our partnership with them today stands at over GBP 2.2 billion. I was actually with them last week. And after 10 years of working together, a couple of things are really clear. One, the value that they see in the energy transition infrastructure asset class; and two, how much they enjoy working with us as a nimble specialist in the sector.

So just to summarize, we are already a global leader in the energy transition. We're going to drive growth in our business by scaling in higher returning strategies, really going where our clients want us to go. And how do we do this? We really do this because of the broad investment capabilities and deep technical expertise of our people. So our focus is clear. To capture what is the vast investment opportunity that the energy transition presents.

Thank you very much, and I'll pass to Nick.

Right. Good morning, everyone. So I am Nick Montgomery. I run the Real Estate business at Schroders. I joined Schroders 12 years ago, actually with 2 clients, who we still look after today. Now as Georg actually has briefly mentioned, Schroders has a long-standing heritage in real estate, launching our first open-ended fund in 1971. Recent headwinds in global real estate markets have occasionally left me feeling I've been here since 1971. Fortunately, however, I think we are moving to a new cycle and more of my reasons to be cheerful later in the presentation.

So over the last 12 years, we've grown assets from GBP 7 billion to over GBP 21 billion. We, therefore, really benefit from a large platform that combines institutional rigor in Schroders, but also we have specialist entrepreneurial, vertically integrated teams on the ground. Over the last 3 years, we've also raised GBP 9 billion of capital into our real estate strategies, and that makes us actually a top quartile player globally. Now despite rather those recent mandate wins and actually a pivot you'll hear of to higher returning strategies, 2026 will be a transition year. This is because of structural changes impacting some of our long-standing funds. As a result, we're also scaling back or closing some of our noncore or legacy operations. A good example you've heard of is our Munich operation closing. This allows us, obviously, to reduce costs, but really importantly, it is allowing us to focus on those sectors and strategies that will deliver more profitable growth.

Now as Georg has mentioned, we have a partnership mindset serving our investors, and we have a very diverse range of investors within the Real Estate business, everything from U.K. local government pension schemes through to European institutions, wealth and also private equity. As you've heard, we also benefit from accessing Schroders' broader Solutions capability. And this actually is now providing DC flow into some of our more specialist and tailored strategies. Finally, really importantly, we must remain a leader in sustainability and impact. We have a genuine conviction that there is a green premium in real estate. Tenants are paying higher rents for more sustainable buildings. And therefore, conversely, there is also a brown discount. And at Schroders, we have the specialist capabilities and the proprietary tools to extract this green premium as well as deliver measurable social value.

So moving on to the platform. Our boots on the ground in the U.K. and Europe are a genuine competitive advantage. It gives us a granular understanding of the markets that we are operating within. It means we can efficiently scale and actively manage these diversified core plus portfolios. We've also built and are building specialist teams within our key conviction areas. For example, we have a best-in-class team running 40 hotel assets across Europe. And here, we're adding value through rebranding, capital expenditure discipline and really close revenue management.

Now, the best example, and for some reason the one asset everybody wants to inspect on a Friday, is the St. Regis Hotel in Venice, bought for a client for GBP 150 million in 2017. It's a great example of where we've worked with Marriott to deliver a fantastic 5-star -- it's this side of the canal, deliver a 5-star transformation that has actually delivered a 100% increase in revenue per available room. No guest detail is overlooked. The team have recently introduced the first electric water taxi fleet in Venice.

Now in the less salubrious, but nonetheless structurally supported part of the market is the industrial and logistics sector, and we are overweight. This is an example of an asset our Manchester team bought actually in Manchester for GBP 17 million in 2020. Here, we've implemented an operational Net Zero carbon warehouse development, you can see here, which means the asset value is now GBP 45 million. That great performance contributed to our U.K. REIT winning the MSCI best risk-adjusted return for the whole of Europe for 2023 and 2024.

Now my reasons to be cheerful, Real Estate is at a cyclical turning point after a difficult few years. The left-hand chart here shows that European markets have seen prices fall about 15% since 2021, with, as most of you will know, the office sector leading the way down with a decline over that same period of 40%. Now that compares with the global financial crisis period, where average values across Europe fell about 23%. What's interesting is over the GFC period, nominal rents also fell by 15%, and that was obviously due to the more severe economic downturn. What's different this time, and that's illustrated by this white dotted line, is this time, nominal rents have gone up by 30%. And that's partly down to lack of supply, particularly in the more structurally supported parts of the market that I've been talking about, that actually also illustrates the attractive inflation hedging characteristics of the sector.

Now some of you will be reading this is leading to an improvement with the INREV investor consensus showing improvement in sentiment, that blue line there, from '23 through to 2025. And that's for a number of different reasons. You can see here, liquidity and financing conditions are improving, but also importantly, it's due to improving occupational market confidence, particularly in those prime markets where we are majority invested. Also really interesting from survey data, and actually, this is backed up with some direct client feedback, is that this cycle, we are expecting allocation to be more evenly spread across the risk and return spectrum. We expect to benefit from that because of our diverse product offering.

Now digging a little bit deeper into our platform. About GBP 9 billion of our assets under management are what we call diversified corpus. You've heard that term used earlier on. These are invested across the U.K. and Europe, typically benchmarked against an MSCI index or sometimes an absolute return target. The team has a great track record in this area, over 80% of our assets under management outperforming on a relative basis over the last 3 years. A really good example of a strategy that falls into this area is ImmoPLUS, our Swiss REIT. ImmoPLUS owns a GBP 2.3 billion, you saw earlier on, portfolio of high-quality real estate assets actively managed with a very good long-term track record. Now unlike other listed markets, the ultra-low interest rate environment in Switzerland means that Immo shares are trading at a 17% premium to NAV today, which has allowed us to raise capital. And we've raised CHF 300 million for that strategy over the last 3 years for what importantly is a high-margin product.

Moving to the right, really key growth area, high-growth thematics. We have CHF 6.6 billion of assets here where fees are generally higher, as you've heard from various of us, where there is this potential for carried interest. For example, we're currently raising global capital for our Gateway strategy, an EUR 850 million industrial strategy that is investing in the Netherlands and Northern Europe. In this area, we're also building out our capabilities in residential or living, a huge growth area. For example, in the U.K., we recently launched our first for-profit registered affordable housing provider, which also was the first fund in its peer group to obtain the sustainability impact label under the FCA's SDR regime. We've actually seen investment come through from the government agency, Homes England, amongst others.

Finally, importantly, we are evolving our 30-year track record managing indirect real estate strategies to a global solutions approach. We have just launched our first real estate semi-liquid strategy, where we hope to emulate the success of what we've seen in private equity. This is really exciting because these structures allow our wealth investors access into our highest conviction areas. So for example, our recently launched strategy has done the biggest data center deal ever. We've been investing into hotel co-investments as well as discounted secondaries. You would only expect those deals to be available for the largest institutions.

These recent wins illustrate, I guess, the strategic progress. And one of the key things Minal touched on this year was the team winning the Wales Pension Partnership, a GBP 2.2 billion U.K. real estate mandate. We were delighted to win this because the indirect team had run assets for 2 of those 8 wealth authorities since the early 2000s. The strategy here will invest in U.K. Direct Core+, but also Welsh Positive Impact. We've got some really interesting opportunities, again, using those decarbonization and social infrastructure activities that we have here aligned with the Mansion House Compact. This is also interesting because it's one of the funds where we're investing from a wholly indirect strategy into a combined direct and indirect strategy, therefore, using the full spectrum that we have across the U.K. platform.

So to conclude, what makes us different? We have a great track record of outperformance in the Core+ space, underpinned by that intellectual rigor, but also that specialist operational capabilities on the ground to drive performance. We are leaders in sustainability and impact, a really key area for real estate, and we're able to use our proprietary decarbonization tools, social value framework, which is a really key differentiator for our clients.

How are we driving growth? Well, as I mentioned, with WPP, we are winning large institutional mandates that gives us the scale we need. And we're also, as I touched on, launching semi-liquid strategies to take advantage of wealth demand as we see the markets improve. Finally, really importantly, as you've heard, we are expanding our higher-margin thematic strategies where there is that potential to earn higher fees, but also carry interest. So to conclude, we think we've got a great opportunity, particularly now looking forward as we see a returning in the market cycle.

So thank you. And with that, I'll hand over to Michelle.

Thanks, Nick, and thanks, everybody, so much for your time today to hear our story. I'm Michelle Russell-Dowe. I'm Co-Head of the Private Debt and Credit Alternatives team at Schroders Capital. And if the accent doesn't totally give it away, I'm an American. I've been in the business 26 years, privileged to work with the same strong team over that time period, and we've been with Schroders since our acquisition in 2016.

Richard mentioned that we're a tomorrow company. I think PDCA has been a tomorrow company since yesterday, and this positions us really well to benefit from the trends that are now in place. PDCA focuses on income. That's the today's story. But our core is really about diversifying income or alternative income, and that is the tomorrow story. So to introduce, PDCA combines 4 businesses into a single platform, generating consistent, stable growth. Those businesses were the original securitized credit and asset-based finance business, the insurance-linked securities business, our infrastructure debt business and our BlueOrchard Impact Finance business. This gives us GBP 26 billion in AUM, and we've raised GBP 16 billion in the last 3 years of fundraising.

Our foundation is the experience and strength of the specialist teams. We are pioneers in our markets. We have top quartile performance and a range of flagship strategies and building blocks that are important to delivering our solutions-oriented approach. Our business sits at the intersection of 3 really powerful trends today. The first is income allocations are growing. And with that, people need to diversify within that income allocation. Second, building off of the private equity expansion that everybody is coveting into the wealth-oriented vehicles, we're offering access now to a broader client base through new fund strategies and structures. And third, our broad toolkit is really a key to serving demand for bespoke solutions that want income partnered with other key characteristics like liquidity, diversification or sustainability. These today trends, combined with a sharpened sales force, underpins our growth ambitions for tomorrow and our contribution to group revenues and net new business.

This is my favorite slide. Why? Because it shows continued growth through all different types of market environments. This is the stability of our diverse product offering. Diversification across asset classes means the right tool at the right time. And as you can see here, we've grown through all environments. Between 2020 and 2021, our asset-based finance business launched critical funds following COVID and that opportunity. Moving to 2022 and 2023, an inflationary environment, Insurance-linked securities had tremendous growth in value there. And 2024 and 2025, with the demand for safe income and sustainable income, our infrastructure debt business has had very successful fundraising. Strong performance, of course, is the cornerstone of this platform, which since 2020 has delivered 13% compound annual AUM growth. We expect our momentum to continue capitalizing on this flow to income and to income alternatives. Our steady all-weather growth is the tailwind for PDCA's key contribution to that GBP 20 billion net new business number for Schroders.

My favorite saying, if it's not obvious, right tool at the right time. We have a tremendous business that we've built, securitized credit and asset-based finance being one of the core components, cat bonds and ILS offering uncorrelated income, infrastructure debt moving from senior to junior, offering stable income-oriented real asset cash flows, and impact-focused micro finance. Each of these strategies has a long-standing track record, flagship funds and a team of recognized specialists. But we don't use a hammer to put a screw in the wall. On the right hand of the slide are the examples of the types of combinations that we can create using this toolkit.

PDCA offers a continuum of income outcomes. Using single sector and multi-sector approaches, we can serve a range of needs. We can provide some liquidity using our liquid credit alternatives. We can offer liability matching to that important insurance channel. And we take advantage of opportunity by offering return-generating diversifying income or even opportunistic credit. This is a range of building blocks for us, and we have a range across liquidity, tenor, duration, all to lend stability to the platform for growth. This is the continuum, maybe a bit of a different way to look at it. And this range really facilitates a solutions-oriented approach. It's the main reason for some of our large mandate wins.

I may say outcome-oriented income a little too many times, but this is really who we are. If you look at this chart, across the horizontal, you'll see we cover different types of asset-based lending. And different types of contract-based finance is quite a large range, but you double it up when you look at the verticals moving from the more boring and stable return profiles to those that offer more opportunity to our strategies. This is really the unique capability of PDCA, right? This really leverages off of Schroders' solutions orientation. I can probably think of a song from a band in almost any region that covers solutions. So I'll do U.K. for you right now. This is the Spice Girls slide. Tell me what you want, what you really, really want.

Flexing across regions, capital structures, public and private markets, all of this makes us a really compelling partner not only for our clients, but as a consistent capital provider to our sourcing partners and to our borrowers. So private debt and credit alternatives, the name says it all and the and is really important. Schroders does the and really well. And the and is key here because our opportunity set is wider than the traditional private debt business, which you might call direct lending.

Our tomorrow business began one step ahead of that traditional core income allocation. Alternatives or diversifiers where the market has moved or is moving now, you might say we're finally on trend. We offer asset-based finance, pretty popular name these days, secured direct lending in infrastructure and real estate, and alternative or income alternatives offering uncorrelated income. These segments are 3x the size of traditional corporate markets. And with that size, they're underrepresented in most investors' portfolios. Today's focus, cash flow rich, collateralized, uncorrelated. For this, there is tremendous demand and growth. This income offers also a way to grow across channels, moving from institutions to insurance to wealth.

We have distinct investment footprints within our specialist platform. Key investment examples sitting on the bottom of this slide. I mentioned our real estate lending capabilities, leveraging off of our tremendous real estate footprint at Schroders Capital, both in Europe and in the U.S. And if you're thinking about income-oriented outcomes, the realizations here in the neighborhood of 16% to 20% really speak for themselves in terms of the opportunities that we can generate in a market with some structural opportunities to mine. As well, we have the largest or second largest UCITS cat bond fund. And we have a really nice impact lending platform and have done this actually through both our BlueOrchard joint venture and our asset-based finance side with a company called Prodigy, social and environmental impact lending, important across the Schroders Capital channel.

Access to specialty finance opportunities, though, through an expert with specialist appeal and a solutions toolkit means that we work really well as a long-term partner. These partnerships are key. That's on the top of the slide here. And I'll lean into the first one, which Georg mentioned, which was a mandate win very recently announced with APG, a long-term partner of ours, for an infrastructure debt mandate, delivering the income that they want with the sustainability needs that they require. So we get to serve 2 things. That's the end. We also have partnerships. I think I'm the longest running portfolio manager for one of our U.S. clients, and that's a pretty long time frame if you think about when the global financial crisis occurred. We partner with insurers across borders, making capital-efficient solutions due to the breadth of that toolkit. And we have semi-liquid offerings and partnerships with consultants across pensions as they derisk. Our solutions approach and our income-oriented outcomes offer attractive returns with a sidecar of something extra. Hopefully, you take that away from this chart, reinforcing that reputation as a trusted partner and a preferred capital provider.

So to sum up, growth, built on expertise in what is now the fastest-growing area within private credit, asset-based finance. We're established in other faster-growing areas of the debt markets, including specialty finance. And these are important directions of travel for most investors. Our building blocks, flexibility to deliver income providing for tomorrow's growth, and the flexibility to serve demand as it changes over time. Our expertise paired with the breadth of our toolkit allows us to meet clients where they are, delivering tailored solutions that balance the needs for yield, cash flow diversification or impact. We are part of a growing Schroders Solutions and multi-sector strategy delivery as well. And at our core, we're experienced, steady-handed investors, pioneers staying disciplined in underwriting, mitigating risk and enhancing returns.

I'm excited to say we're building and expanding from this core with the help of Ingo's specialty sales and contributing meaningfully to Schroders' long-term growth story. Thank you so much. And now I'll pass back to our host, Georg.

Thank you, Michelle. It's my pleasure to conclude now. And you've heard from Richard this morning how important it is to grow Schroders Capital and what contribution it can make to us as a group. You've seen this slide before. Our focus is on scaling Schroders Capital. And we're doing this on the basis of our differentiated positioning as a mid-market specialist in high-growth thematics, and you've heard this from all 4 asset classes this morning. We're doing it on the basis of our solutions DNA. We're operating on the basis of long-term client relationships. We're doing this across the entire business. And we're an innovator in Wealth and DC, which are 2 of the largest and fastest-growing client segments.

Having delivered consistently in terms of performance and service to our clients, we are now at an inflection point, and there are 3 catalysts allowing us to scale from here. We've leveraged -- we have crossed critical size thresholds, which allows us to scale further. We've built a shiny fundraising engine, and we're activating this now, and we're capitalizing on the unique strengths as a group. This allows us to grow from GBP 73 billion of assets under management by adding GBP 20 billion of net new business until the end of 2027 to GBP 100 billion by the end of that period. And we're doing that at stable margins of 56 basis points and average asset longevity of 12 years, and you can compute it, there is a significant locked-in revenue in this growing profit contributions to the group and carried interest on top of it. This is what we are convinced is a fantastic value creation opportunity by scaling Schroders Capital.

Thank you for your attention for the presentation bit. Give us a short moment to get us all set up on stage for the Q&A, and we'll be back in a minute.

Great. So let's move to the Q&A. lots of hands in here. I think we also have a couple of people dialed in as well. So we will do this by essentially first answering the questions in the room, and then move to people who've dialed in. So when you ask your questions, as usual procedure, please state your name, ask the questions and then we're happy to answer.

Hubert Lam from Bank of America. Thank you for the last hour. It's been very insightful. So I really appreciate the effort you guys put in. So 3 questions. Firstly, I think there's a view out there that it is difficult to marry a private markets manager within a public markets management company. Can you talk about the challenges of doing this and also the differences in terms of the comp structure? And also, I guess, tied to that is, how does the comp structure differ compared within Schroders Capital compared to like other larger peers, larger single asset -- private market manager peers out there. Is it comparable? Just wondering how you attract and maintain your investment professionals.

Second question is, I guess, one of the biggest trends out there is partnerships, both on manufacturing and distribution side. Just wondering if this is something you would consider? And I guess one thing is possibly distributing some of your products in the U.S. Is that one thing you would consider? And also within manufacturing, are there any gaps that you would fill with other partners out there? And last question is on the net new money target of GBP 20 billion. How much of that comes from Wealth? And how does it compare to the stock of assets within Wealth today?

Great. Thank you. So let me take those questions one by one. So first of all, you've been asking about building a private markets manager within a public markets group. I think this is very much a question of ultimately management structure and culture in the firm. In Schroders, we have had the luxury to be allowed to build a business essentially according to the standards of a leading private markets business. And you can see this in the ramp-up of our assets, right? I mean, otherwise, the success wouldn't have been possible.

Meanwhile, there is also what everyone talks about a convergence between public and private, and it shows up in several asset classes. So maybe what used to be seen as a conflict a couple of years ago is something that is now becoming a real strength. And you can see public markets -- or private market managers sort of arriving or crossing towards the public market side as well as sort of what we have done over the last 10 years, originally public market managers tapping into private. So on the whole, it's a huge strength and it's a success story.

Then on comp structures, I think the key thing here is we've always essentially dealt with things differently and in the right way that they needed to be dealt with according to the standards in each of the asset classes where we are operating. And so that meant essentially compensating private equity professionals on the basis of industry standards and private equity, real estate investment professionals on the basis of real estate investment standards. So you wouldn't even find exactly the same comp levels and comp standards within Schroders Capital. And obviously, that's what we're doing as well as a group. So we are compensating the way that people need to be compensated in each of their areas, and we're measuring whether we are doing this correctly based on typical industry benchmarks, McLagan studies, et cetera. So it's not a problem. It's absolutely possible. It's also transparent.

And then you had a question on partnerships in terms of manufacturing and distribution. We've said since several investor days really and publicly that obviously, we are open for partnerships where they make sense for our clients and for us as a business. When we talk about partnerships, the most obvious and most important opportunities are some of those partnerships that we've mentioned throughout our presentations today, such as, for example, Minal has been speaking about our partnership with Willis Towers Watson, a consultant that has been with us and a close partner in infrastructure for 10 years now, supporting us over multiple vintages and multiple products and seeding and anchoring new strategies, which is really critical in our industry to accelerate.

So there are partnership opportunities. I should mention another one. We are a solutions business and being a solutions player sometimes means tapping into components which are not available to us. That's what we are doing and what others are doing as well. Where this has happened, we have actually used components provided by others. I said in the beginning, we cannot be everything to everyone. And this is sort of falling in the category of code sharing, as we would call it, and sort of as an analogy to the airline industry, and that's very natural. So I hope that answers your question.

Then on Wealth, you've asked about Wealth as a contributor. It's been significant. It's the faster-growing part of the market. In terms of our AUM base, roughly 20% is from Wealth, 80% is Institutional. But the Wealth bit is growing roughly twice as fast as the Institutional side.

It's Mike Werner from UBS. Two questions, please. As you grow from about GBP 70 billion, GBP 73 billion to GBP 100 billion over the next couple of years, you indicated you're building out the specialist sales force. But I was just wondering, in terms of your capacity on the investment side, where you sit? How much do you have to invest into that part of the business as you expand over the next couple of years? And then also just maybe a quick view as well separately on the competitive environment. How you've seen that evolve over the past couple of years, particularly as we saw interest rates rise and the dynamics within the market change?

Yes. Great questions. Thank you. So first of all, on the specialist sales side, yes, exactly, we said that we have built out the specialist sales team from 20 to now 40 by the end of the year. That gives us more capacity to reach out to specialist buyers and to activate many of the existing client relationships sitting in the firm to increase our share of wallet. So it's going in both directions. So it's really the 40 working with the 250 in the firm. So that delivers a scale.

You asked about capacity constraints. We are not capacity constrained, except in very few areas where we've already achieved such a high market share ultimately of the investment market that we are a little bit slower in terms of growth. The only area where we are capacity constrained is in the insurance-linked space, in cat bonds, because we are running the largest cat bond fund globally, the [indiscernible] fund. And this is the one area. Otherwise, we do not feel capacity constrained. What's constraining our growth is access to capital, and that's why it's so important to invest into the specialist sales team.

And then you've been asking about the competitive environment. And it's fascinating really because the competitive environment is changing. Over really 20 years, 2 decades, there has been growth coming to the industry really, let's say, universally and private markets have just exploded in terms of size. But what is very visible since 2022, since the interest rate change and various other developments, COVID and everything that came together more or less at that period, is that growth is really uneven. It's coming to the market in quite different ways and to different players in different ways.

So you see now essentially private markets managers on the wrong side or on the right side of the fence. What you can clearly see on our side is that we are on the right side of the fence with the growth that we are seeing and the acceleration in our development. And that's really based on our essentially ability to serve clients holistically across asset classes as a solutions player as well as in the thematics that we've introduced to you today, and that's really critical and a complete game changer in this industry.

It's Angeliki Bairaktari from JPMorgan. Three questions from my end as well, please. And thank you very much for the presentation. Very interesting. First of all, can you give us an indication with regards to the GBP 20 billion net new money that you target, how much are you expected to generate per asset class out of the 4 main asset classes that you manage? Then what is your penetration today of Schroders Capital products within the Cazenove business and the Schroders Wealth business? And thirdly, with regards to Real Estate, what is the current client appetite for Real Estate products? Because when I look at sort of sector-wide data, I see that returns have been really lacking in the past 2, 3 years, and fundraising also perhaps a little bit more challenging. So interested in hearing your thoughts.

Yes. Sorry, if I may maybe first ask Nick to answer the question on Real Estate, because I've been fighting with my pen here. Yes.

So, thank you. So look, as I said in my presentation, it has been a challenging fundraising environment. My professional low point 2 years ago was being asked to attend a panel called The Undateables, to give you an indication of how it's been. I think there are definitely signs of an improvement. And the consensus indicator I showed you there I think genuinely illustrates that.

In terms of what we've been doing, a key focus for us is creating these more specialist thematic strategies in the parts of the market where we are seeing still the demand because of the continued structural changes where investors are still a bit unsure about the market cycle. So I mentioned our Gateway strategy, for example, our Dutch Northern European industrial, great interest. We're in the process of bringing a new investor in there, global investor. So there are signs of it improving sort of more anecdotally. You would have read about some of the big Australian funds coming into the U.K., for example, and other global cities across Europe. So I would say, based on that sentiment indicator, based on what we are seeing, based on where we're creating these more specialist strategies, we are seeing and are expecting a pickup in demand.

Then you had a question about the composition of the GBP 20 billion, where is it coming from? So first of all, what's really important to note is we're diversified across the 4 asset classes. And as you've heard from my colleagues as well, we're diversified within them. So we're able to raise capital in any cycle. So in practice, that means we are expecting fundraising contributions to come from all 4 asset classes. In the most recent cycle and in the current development, we've seen slightly higher fundraising coming from private equity and private debt and credit alternatives, and short term, a bit less fundraising from the Real Estate and the Infrastructure space, which we're expecting to pick up as the cycle develops further.

Then you had a question on Cazenove Capital and cross-selling rates. While we don't have cross-selling rates, I can announce to you, it's a huge opportunity for us to work more closely together. And historically, we haven't done enough of that. It's really one of the initiatives which Richard has been pushed since taking over as CEO, to leverage the synergies and the potential that we have as a group, and I've named 5 of those. And both Oliver and I being sort of at the forefront of this development are absolutely enthusiastic about the development to leverage our relationships between the 2 sides of the business.

It's Arnaud Giblat from BNP Paribas. Three questions, please. Firstly, can I ask about secondaries. One of the greatest area of overlap perhaps between public and private or private and wealth is LP-led secondaries. I mean a lot of your peers seem to be on the public side, on the private side, focused on growing that piece. I'm just wondering what your thoughts are there? Is this an opportunity to grow that organically or inorganically?

My second question, expanding on that, I suppose, is with regards to M&A. I mean, clearly, over the years, you've built out capital inorganically, seeing a lot of consolidation in the private capital space. How are you approaching that? Are the opportunities out there? And my final question is on carry. You've talked a lot about carry potential. I was just wondering if you could quantify that over a 3-year or 5-year horizon. What's the carry potential for Schroders Capital if you deliver on plan?

Good. Perfect. So first question is on secondaries, which I'm happy to pass over to Rainer. Maybe to say this upfront, we have a significant secondaries franchise. And maybe you want to say something about it?

Yes. So basically, the secondaries market is split into 2, right, LP stake secondaries and [ cliquets ]. If we have maturing funds, we are an LP stake secondary seller at the end of our fund lives for our products. And we separate buyout and venture capital. In venture capital, we like LP stake secondaries, because ultimately, in an underlying fund, after 10 years, you would see strong companies in there that you want to own. And therefore, clients who need liquidity are selling, but you're buying a strong performing business.

On the buyout side, the more mature the fund is, the less appealing we find the funds, LP stake secondaries, to buy because the portfolio consists of the leftovers that have not been sold. So we are not very keen on the investment orientation side on LP stake secondaries on the buyout side. The more mature the worse.

On top of that, basically, the bidding process is fully auctioned. The bigger the portfolio transaction, the heavier, and leverage and cost of capital is the driving force to win the transaction, and that's not playing to the return expectations that we have.

Then you had a question on M&A. And as you can expect, I cannot speculate on M&A, so I'm sorry about that. Our focus here and the strategy that we've explained is focused on organic growth, which is a tremendous opportunity for us to grow this business from the GBP 72 billion where we are right now to the approximately GBP 100 billion by the end of 2027.

And then on carry potential. So just essentially also given what we've explained across all asset classes, there is significant opportunity for us to generate carry. That's number one based on increasing maturity of carry programs. And secondly, on the basis of new strategies we are creating such as, for example, the value-add-orientated strategies in Infrastructure or also the specialist thematic strategies in Real Estate as well as some of the higher returning opportunistic strategies in the PCA space to generate carry. But mind you, carry has a long lead time, and essentially, for carry to crystallize, it will take a number of years for new strategies, typically something between 5, 7 years, really depending on the duration of the underlying assets.

It's Nicholas Herman from Citi. Three from me, please. Just firstly, on products, I see lots of reference to Solutions. That's a clear growth area, clear strength of yours. I guess I haven't also seen any reference to hybrid products or to model portfolios. Is this something that you're also looking at as well?

Second question on your growth assumptions. Just curious if you could reconcile for us the 4% of annual AUM growth. If I look at the average performance over 2019 to 2024, it seemed pretty muted, and I appreciate there may have been some FX impacts in there as well, but nonetheless, it seems like quite a step change versus the past. So if you could just help us to understand how you get to that 4%.

And then finally, you made the point here today that you've got a very broad business that's well positioned. I guess the flip side there is that you also have a large number of businesses and some of those may be on the smaller side. My understanding is that Schroders Capital has long operated an operating margin well below the rest of the asset management business. So I guess, with an expected 30% to 40% growth in AUM and in net operating revenues, ex performance fees and carry over the next couple of years, and with the scaling effect of, I guess, scaling back as well as some of those noncore businesses that you referenced earlier, I guess, how do you see the operating margin for this segment expanding over the next couple of years, but also the operating margin potential in this business over the medium term?

Great. Thank you. So in terms of model portfolio solutions, it's not really a theme which is relevant for us in private markets, maybe to just briefly answer this upfront, if I understood your question correctly. So I jump over to the next one. So what are our growth assumptions? We've used a standard growth assumption that we use across the group, which is the 4% market growth rate. Mind you that the market growth rate really applies effectively only to that part of the book, which is priced on NAV, where fee models are based on NAV. There's also a part of the book which is based on commitment, and you don't see that represented in the 4%.

There are also other elements in here. For example, we are also taking into account FX developments in that part of the book, and it can, obviously, given the unpredictability of FX markets, be accretive or something it goes against us. So that's effectively all sitting in that 4%. And like I said, it's a standard assumption we use as a group, and we feel that we're confident about that over longer time periods.

Can I just clarify that? I mean, you referred to the portion of the business that charged on NAV. What proportion of your book is charged on NAV rather than uncommitted capital, please?

Yes. No, I'm sorry, I will not provide that information, but it's a combination of both really. So then your question on margins and operating leverage. So first of all, what's important, while we are not disclosing the profitability of Schroders Capital stand-alone, because it's part of the Asset Management segment, it's a highly profitable business. And it's got a lot of locked-in revenues and profitability within it, as we've laid out in the presentation. So maybe on your question on diversification, so while we are diversified and we're active across the 4 asset classes, we've got a specific set of strategies within each asset classes, and we are super disciplined to really run a few, which we think are really important and accretive and have the potential to grow. So we were creating funds, if that makes sense. And so we have created many access points. But what's really driving operating leverage is the number of strategies you're running as a firm, and we are super disciplined in that regard.

And just to give you an example, we are running effectively what we call the innovation cycle. So we're putting new strategies on the map, because obviously, the market is moving forward, and we're innovating, we're following demand, such as, for example, the value-add strategies in infrastructure, which Minal has been speaking to you about, or other areas such as, for example, a mezzanine strategy in Infrastructure Debt, which we've launched this year.

And we're also taking things off the map where we've lost conviction that we can grow, or where we're not seeing the opportunity to scale significantly further. In that regard, we have closed, for example, our Australian private debt team this year, and we've sold a stake in a real estate private debt business in Australia to our joint venture partner. And we've closed the real estate Munich office, which we feel is necessary because we can serve these clients from Frankfurt. So it's the discipline of ultimately making sure that we constantly think about cost allocation and cost reallocation to their most productive uses.

Oliver Carruthers from Goldman Sachs. I've got 3 questions left from my side. So the first question, I think you gave the AUM split for Schroders Capital being 20% Wealth, 80% Institutional. Can you give a rough split of how that 80% Institutional breaks out? I think you talked about how you're hitting critical mass in some areas. It would be great to know what the sovereign wealth funds, U.S. pension plans, et cetera, make up of that 80% or any kind of rough indication you can provide?

The second question, if I heard you correctly, I think you talked about, of the GBP 20 billion net new business, this was going to be, I guess, margin fee neutral at 56 basis points out to 28. Can you comment at all as to how wealth plays into that? I think you said it's growing twice as fast as your Institutional book. So I would be interested to know any fee implications on that.

And then a final comment, a final question, I think Schroders Group is allocating up to GBP 500 million of balance sheet capital to Schroders Capital to help grow this business. Could you just give us a sense of what exactly is going to be done here? Is it long-term GP commits? Are you going to kind of seed and syndicate? What asset classes is that going to be focused on? That would be very helpful.

Yes, of course. So first of all, you've asked the question about the AUM split in the Institutional side of the book, if I understood your question correctly. So it's roughly -- so the largest chunk of this is pension funds and insurance, equal, sort of -- I would be guessing now, but it should be around 40-40 roughly and the 20 is other institutional clients.

And then NNB, your question was what share is from Wealth. It's a significant and growing share without splitting this further, but we're expecting, given where the opportunity is and the growth in our industry, that a lot of future growth will come from Wealth and DC, slightly less from more mature EB books, which are starting to derisk and often not invest any more in private markets. And that's really where the opportunity is, where we expect most of the growth to come from.

Then on balance sheet, so the use of balance sheet and the GBP 500 million that we've been talking about really has 3 distinct uses. One is co-investments. And for our closed-end strategies, especially on the higher returning end of the spectrum, it's market standard to co-invest roughly 1% to 2%. It can be occasionally higher, but let's say, 1% to 2% is a good estimate. And these investments remain within the funds for the entire lifetime, time until liquidation, until the capital is returned. And then there is seed investment, and seed investments are important to unlock client capital typically. And the motivation here is to accelerate and derisk our fundraisings by being in the market earlier at more significant fund sizes.

So that capital typically stays in funds for up to 2 years, sometimes 3 years. And this is where we're trying to get to the significant first close thresholds. Again, to take the example of the value-add fund on the infrastructure equity side. There, we've committed GBP 100 million as a house, to unlock another GBP 200 million from an institutional investor to come to a GBP 300 million first close. And that capital would remain in the fund for an estimated 2 years until it slowly gets returned back and replaced by client capital.

It's Isobel Hettrick from Autonomous Research. I just have the one, please. So throughout the presentations today, you've referenced, across asset classes, looking to push into the Wealth opportunity. And we've seen headlines in recent days and in fact, the ILPA is also out with a paper looking at potential conflicts or tensions arising between the push into Wealth and for Institutional LPs who are concerned about reduced deal flow or there's co-investments between evergreen funds and traditional funds, the terms being more -- well, based on what's favorable to the evergreen fund, which typically has lower carry hurdles, you get remunerated on NAV rather than just capital commitments. So could you talk about how you might look to manage any conflicts, or if you don't see any conflicts arising in your business as you look to increase your Wealth penetration?

Sure. So I'm happy to give it a start and say a couple of sentences, and I would pass over to Rainer because we're running one of the largest evergreen funds in the private equity space. So first of all, I think the critical bit here is a question of how you manage these portfolios. I think when you're trying to create wealth funds, evergreen funds, and you have a very narrow portfolio and a very set of essentially deals you can pick from, it's very much harder essentially to create a diversified portfolio for clients. So not necessarily a cannibalization issue with the institutional clients, but it's sort of harder to achieve diversification and the right types of outcomes for clients. Then essentially, when you have a significant number of deals to pick from in a diversified book, you can cover up your investment opportunities quite well, and you can create funds without creating issues. And Rainer, maybe you want to explain how you do this on the private equity side?

Yes. So first of all, we are investing out of many vehicles, separate accounts, both-end funds and liquid evergreen funds. We have strict allocation policies. So that basically where there's an appetite, there's a demand and then demand must be served with the allocation policy. The questions that we're often getting obviously, from clients is show me that you don't have a bias in the allocation. And there, because we make typically our co-investments out of several funds and vehicles into the same underlying company, we show that we have full overlap of investments done from a carry-bearing product as well as from a non-carry-bearing product as an example, and therefore, can give evidence to clients that there's a fair process and basically, there's no bias. So the overlap of a product that has no carry on the underlying investments versus one that has carry is high in our case, because we are generating deal flow to serve multiple vehicles with the same investments.

Great. Do we have further questions? There's one. Yes?

It's David McCann here from Deutsche Bank. Two questions from me. Firstly, I just wanted to revisit this GBP 100 billion AUM target and the 4% embedded within that. I mean, if you start at GBP 70 billion and you're aiming to get to GBP 100 billion, of which GBP 20 billion is going to be the net new business, that obviously leaves GBP 10 billion. I mean that would seem to be like you're applying the 4% to the whole amount. And you did say earlier that the 4% would only apply to the funds that charge on NAV. So maybe you could just help us square that circle a bit more, because I think I'm still not really clear on that one.

Second point is, if I look at the revenue margins you've disclosed throughout the presentation, either at the group level or segmentally, they do appear to be lower than most of the peers would cite either on the segment or indeed the group level. So I guess help us understand why it is that you appear to be charging less than peers like-for-like? And is that a conscious decision to be a lower price provider? Or is there something else going on?

Yes. Great. I'm happy to take those questions. So first of all, on the GBP 100 billion, which I mentioned, I said approximately GBP 100 billion. It's not a target. It's important. The target is the GBP 20 billion of NNB. And that remains essentially the key aspect which we are reconfirming. So on the starting base of GBP 72 billion plus GBP 20 billion of net new business, and then the effect that we will get from market performance as well as FX effects is essentially what gets us to the GBP 100 billion. So focus on the GBP 20 billion, I think this is the key message for this presentation.

Then the second question on revenue margins, why are we operating at the margins at which we operate? There are different types of players in private markets, solutions players in private markets and very narrow typically historically large buyout houses, which run 1 or 2, 3 very significant funds, direct funds with obviously higher revenue margins, but a significantly less diversified book of business and also significantly lower average longevity of the book. So it's a different composition ultimately of return drivers in our case. And what we do is very much in line with essentially others playing in similar strategies and in a similar position in this industry.

You've also seen essentially in the presentations what the mix is of our book. And I think this is important. So you see the sort of slightly different in every asset class. In Real Estate, for example, going from left to right, it's a mixture of core assets which have margins which are slightly lower than the average, and then higher returning strategies in the value-add space. Or in the private debt and credit alternatives business, for example, we run liquid strategies, which run at lower margins, and then opportunistic strategies, which run at private equity type, if you want, returns and margins. And the same applies in the other areas as well. Private equity obviously is entirely in the higher returning space, and this is where the margins and the carry potential are the most significant in our book.

This is Charles Bendit from Rothschild & Co Redburn. A couple of questions, please, for Rainer on P/E. So you highlighted that the small buyout strategies industry-wide have outperformed mid and large buyouts over the past 5 years. Could you unpack the key drivers behind this? Are they primarily linked to entry multiples, operational value creation or sector specialization, or anything else? And given current market dynamics, higher financing costs, lower exit markets, how confident are you that this performance gap can persist over the next cycle? And maybe your thoughts on how fundraising for mid-market specialist strategies might evolve over the next cycle?

So first, the small buyout outperformance versus mid and large. Indeed, if you look back, 2021 was not only a fundraising record year, it was a peak euphoria year across the markets, not only private equity, but also private equity. And euphoria in '21 was the biggest in large leverage buyouts and in late-stage venture. Much less cyclicality in the smaller end of the market. Equally, the euphoria was bigger in the U.S. than in Europe. And so you see the biggest overpriced new investments made in '21, '22 in the heated spaces. And that has a ripple-through effect through the next years to come, right? And that's driving the outperformance is coming from lower procyclical overpriced investment activity and discipline over time.

And so we believe this persistence of noncyclical performance generation at the lower end of the market, less driven by debt market availability, not dependent on IPO windows to be a fundamental proposition for the overall segmentation of private equity. So small end of the market, I call it usually the boring space is never hot, but it's always steady, right? And that's creating the stability that we've shown on our track record.

So on fundraising for the smaller market, it's a very interesting question, because there's a concentration of capital behind the big names. which are easy to access, they have fundraising machines, et cetera, right? So that's happening. Smaller managers, they are below the radar. They have not easy fundraising. They only have 1 product every 4 years, closed-end fund. And therefore, they are not permanently present with clients. They need a business partner like us, and they need us to be their stability for fundraising, right? So we are their go-to partner, not only in fundraising, but also for investment execution, right? And the co-investments we do in this context are not co-investments that are syndicated co-investments. So the manager does the deal, turns around and offers the LPs to consider and within a month subscribe to the SPV.

Now we are doing co-underwriting, which means we are partnering in the due diligence to jointly take the decision to make a bid or an offer, right? And that partnership becomes stronger at the small end of the market, because the fundraising effort is so high for the individual manager relative to what they need, so that these partnerships are growing, and that's our USP to the GP, but also to the LPs.

We see other questions in the room. There's one more question here.

Just a couple of follow-ups, if I could, please. A question for Rainer. You talked about the 100 of annual investments. How does that split across the 3 business areas, between primaries, directs and secondaries, and why like that? And then the second question I had was, you've made the point about the high level of longevity, the very stable fee margins. Just in that chart earlier in the deck, I did notice that the fee margins did come down for infrastructure and for debt in recent years. And I was just wondering if you could clarify why that was. I assume that's just mix shift rather than anything else, but just if you could explain what that mix shift was?

Okay. I'll take the first question. So 100 investments for $3 billion of volume to be invested. That's what I showed. There's a range of typical investment size for each of the types. So for co-investments, this ranges from a few million tickets on the venture space that we also cover. We focus on the mid-market, which is 80% of our business activity, right, 75%, going to up to above $100 million in a single company investment. That's the bandwidth of our typical investment size. The number of co-investments we do per year, roughly 30 to 40, so 1 a week almost. And that also shows then the scalability of our platform, right? So we can do 10% bigger ticket and 10% more deals and that doesn't move the behavior -- that doesn't change the behavior as such. GP-led transactions, similarly, typical bite size, $50 million, sometimes a bit bigger, sometimes a bit smaller. And on primaries, also in that range, whereas some venture funds are so access restricted that you're begging to give them $12 million instead of $10 million, right? So that's the spectrum we have.

Just to comment on the fee margins for infrastructure. The reason why you see that change is actually the repricing of the investment trusts, where the basis on which the fee has been charged moved from net asset value to market price. Going forward, we expect the fee margin that you have seen to hold up.

And if you look at the debt dynamics, it's actually really interesting. It has a lot to do actually with interest rates, right? If you can get what I'll call more boring, more defensive riskless returns at 5%, that's what people made on their money markets, it's not that hard with just a little bit more to get investment-grade type risk and have high single-digit returns. So we saw a shift in mix, to your point, within our debt business because boring was the new sexy for a little while. As we see interest rates move around, that mix will change. And we do see the change in mix now favoring what I'll call more of the alternative strategies where people are looking for that end. So that tends to be a bit higher margin for us when people begin to combine things as opposed to looking more at a liquid alternative, which is where we do see some fee pressure.

Does that answer the question? Then I think if there are no further questions in the room, and there are no questions online, then let me quickly summarize the session. I think as you've heard from us today, we're sitting in a business here which has a fantastic positioning to scale from here. That's on the basis of the differentiated positions we have in each of the asset classes and the unique opportunity to serve the growing segments of demand, specifically Wealth, DC, Insurance across all asset classes, which is really a unique opportunity to scale Schroders Capital and to drive significant value creation for the group on the basis of stable margins, high asset longevity, the locked-in revenue that you can create for a group if you take the 12-year average asset longevity that we have across the book, the carry potential that comes on top. And as we said, that is growing as we move along, which is really an opportunity to contribute significantly to group earnings. And as I hope you will have seen by now as well, a significant value creation opportunity for Schroders Group.

Thank you for your attention. We're happy to have you with us for lunch outside and to continue the discussion there with us. You have the opportunity to speak to all of our colleagues directly and some further colleagues in the room. Stephan Ruoff, who's here on the left, is co-heading private debt and credit alternatives with Michelle; Ingo Heinen here in the front, who is heading the specialist sales team; Paul Chislett here, CFO of Schroders Capital. So I hope you enjoyed the morning with us. Thank you very much, and looking forward to seeing you outside. Thank you.