Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Antin's Full Year 2023 Results Conference Call. [Operator Instructions] Please note that today's conference is being recorded.
I would now like to hand the conference over to Ludmilla Binet. Please go ahead, madam.
Good morning, everyone, and thank you very much for joining the call today. I'm Ludmilla Binet, Head of Shareholder Relations, and it is with great pleasure that I welcome you to our full year 2023 conference call. Earlier this morning we issued a press release announcing our results. A copy of this release and the slide presentation are available on our website. For today's presentation, I'm joined by Alain Rauscher, Chairman and Chief Executive Officer; Melanie Biessy, Managing Partner and Chief Operating Officer; and Patrice Schuetz, Partner and Chief Financial Officer. They will present the highlights of the year, provide an update on the business activity and review the financial results of 2023. The presentation will be followed by a Q&A session.
Let me now hand over to Alain.
Thank you, Ludmilla, and good morning, everybody. It is a pleasure to welcome you on the call to talk about our solid level of activity and strong financial performance in 2023. As you are well aware, the broad market industry had a challenging 2023 and we're overall very pleased with the performance we have achieved in this environment. First, our AUM continued to grow last year to reach more than EUR 31 billion, of which more than EUR 20 billion were fee-paying. These levels were achieved as we reached significant fundraising milestones. We had the final close of our next generation Fund I at slightly above target and we ended the year at EUR 9 billion commitment for Flagship Fund V, which represents more than 90% of its target size. We remain disciplined with our capital deployment and announced 4 high quality investments. All of our funds continue to perform on or above plan demonstrating the resilience of our portfolio companies and of our asset class.
Our financial performance was very strong driven by revenue growth and controlled cost increases. Underlying EBITDA grew by 48%. Underlying net income grew by over 60% resulting in the most profitable year in Antin's history. As the last point, you will note that we continue to have a strong balance sheet with substantial cash holdings. Our business is highly cash flow generative, which allows us to distribute almost all of our underlying net income to shareholders resulting in a payout ratio of close to 100%. On Fund V, activity levels across fundraising and capital deployment were solid last year despite volatile markets and macroeconomic and geopolitical headwinds. Fundraising advanced and we reached important milestones. Commitments raised for Flagship Fund V and NexGen Fund I amounted to EUR 1.8 billion in 2023.
While that number is lower than 2022, we are at a different point in the fundraising cycle, which makes the year-on-year comparison somewhat less relevant. Flagship Fund V exceeded EUR 9 billion in commitment at the end of the year, an increase of EUR 1.6 billion compared to year-end 2022. 90% of the fund's target size is secured. This already represents a 40% upsizing from Fund IV and of course fundraising continues in 2024. As for NextGen, we are proud to have successfully held the final close of Fund I slightly above target in November. All of this was achieved in difficult market conditions as private infrastructure saw the biggest decline in global fund raising since the GFC in 2008, 2009.This has obviously impacted everyone in the market including Antin. This is mainly driven by investor liquidity constraints as realization has slowed down across the industry over the past 12 to 18 months.
I will quote an example of 1 of our investors literally from Fund 1, which has been very loyal and reinvested the same amount year after year, vintage after vintage and for Fund V today at least, their allocation has been reduced nearly by 5. It illustrates the pressure on liquidity that some of the biggest LPs may face. While we expect to see an improvement in those conditions in 2024, we believe that the deal activity across the industry needs to pick up before we see a significant acceleration of fundraising and we expect these improvements to be gradual. With respect to capital deployments, we remain disciplined in a rapidly changing market environment and this has served us well. We have made 4 exciting investments in 2023 for a total of EUR 2 billion.
Flagship Fund V announced 2 investments in 2023. To take private OPDEnergy, a renewable energy platform, for which we received recently approval from the Spanish regulator to take the company private and we expect to close this transaction at the end of March. Second acquisition by the Flagship Fund V is Consilium Safety, a specialist in infrastructure safety, which we acquired from Scandinavia. NextGen Fund I also announced 2 investments in 2023, both demonstrating our strong commitment to the energy transition and circular economy. The first investment was in PearlX, a smart grid operator in the U.S. The second is a tyre recycling joint venture with Enviro, a Swedish listed company backed by Michelin. The construction of the first plant has now started in Uddevalla in Sweden.
With respect to exits, we will always assess the right timing for a value maximizing exit and volatile or uncertain market environments are typically not conducive to that. We therefore did 1 exit in '23 namely Hesley, which was well flagged. As we look forward to 2024, we expect to exit 1 or possibly 2 portfolio companies that year. I would now like to take a moment to talk about our clients and the global buildup of our Investor Relations platform on Slide 6. Our first priority at Antin is to serve our clients well, which means focus on delivering good investment returns and good service. This has served us well and allows us to build long-standing client relationships over time. Many of our fund investors are invested in several fund vintages and since we launched Mid Cap and NextGen in multiple investment strategies. It's therefore no surprise that we raised more than 60% of Flagship Fund V from existing investors.
At the same time, we also raised more than EUR 3.4 billion from new fund investors, which is the result of having built out significantly our global Investor Relations platform including the expansion of our office in New York and the launch of our offices in Singapore and Seoul. As a result, our fund investor base has been growing rapidly. The number of fund investors increased by almost 60% since our IPO in September 2021 from around 200 LPs to more than 320 LPs. This growth was also accompanied by a globalization of our investor base. In about 3 years from Fund IV to Fund V, capital raise from North America has more than tripled and capital raise from Asia Pacific has almost doubled. Today, more than half of Fund V has been raised in the Americas and Asia versus 30% for Fund IV.
Let me now talk about the performance of our portfolio companies, which continues to be strong in 2023 on Slide 7. The revenue and EBITDA of our portfolio companies grew by an average of 4% and 11%, respectively. If we exclude energy companies for whom revenues are more volatile due to the pass-through of energy cost, the numbers are even stronger at plus 14% revenue growth and plus 17% EBITDA growth. Well, these numbers demonstrated that the inflation protection that we seek in our portfolio companies work, that the value creation initiatives are delivering results and that our portfolio companies continue to perform very well in adverse times. While growth initiatives are both organic and inorganic, our portfolio companies have made more than 180 add-on acquisitions in 2023 as part of buy and build platform strategy.
A large number of add-on acquisitions actually relates to pharmacy acquisitions for Hippocrates, about 100, which is building one of the largest pharmacy networks in Italy. Also we continued to have access to financing as infrastructure debt market remained open. More than EUR 8 billion of debt were raised or refinanced in 2023 on top of the EUR 10 billion we have raised or refinanced in 2022. We have no debt that will mature in 2024 and debt maturity across the portfolio are well staggered over many years with limited near-term refinancing needs, which of course is an enormous comfort in today's markets. The strong performance of our portfolio companies resulted in all of our funds remaining on plan or ahead of plan on Slide 8. It also demonstrates the strength of our investment framework and the resilience of the infrastructure asset class. As a reminder, our funds stand at different points in the investment cycle.
While the graphs are useful to see the evolution of a particular fund over the last couple of quarters, a comparison over vintages doesn't make sense as they stand at different points in the value creation cycle. To put the evolution of our fund performance into perspective, please look at the chart on the left hand side of the Slide #9. As you can see, Fund III and Fund IV performance is developing in a similar manner as Fund I and Fund II did. In addition, we have a strong track record of delivering a value uplift at exit. About 90% of all portfolio companies were sold at a price, which was higher than the carrying value price required to exit, namely the NAV, net asset value, before the exit; which demonstrates the prudence of our assessment of values. On a realized basis, this has driven performance well above our target. Our realized gross multiple stands at 2.6x versus 2.0x target. Our realized gross IRR stands at 22% versus 15% target. So overall, we are happy with our funds performance and confident that our more recent vintages are on a good path.
I will now hand over to Melanie to talk about the evolution of our operating platform.
Thank you, Alain. I'm now on Slide 10. 2023 was an important year for Antin in the evolution of our leadership and organization. In addition to the continued growth of the team and the ongoing buildout of our platform, we welcomed a new generation of managing partners, all of whom have been with the firm for a long period and are significant shareholders. This is the natural evolution of the leadership and consistent with what we've always said for many years, which is that any change to the leadership of the firm will be ratable. As such, Mark Crosbie, who cofounded Antin together with Alain, will now focus on co-chairing the Investment Committee meaning overseeing the investment activity across the 3 strategies; Flagship, Mid Cap, NexGen. It was Mark's desire to step back from the Executive Committee after a long and distinguished career. Of course he remains an important part of Antin in this role and he also remains a committed shareholder and Vice Chairman of the Board of Directors.
At the same time, Stephane Ifker, Angelika Schochlin, Kevin Genieser and I were promoted to Managing Partner and the Executive Committee was expanded from 3 to 5 members. Stephane has been with Antin since inception of the firm. He's led many of our most successful investments, in particular in the energy and digital infrastructure sectors, and he's also globe sponsor for those sectors across the 3 strategies. Angelica has been with Antin since 2010. She led our investments in the transportation and social infrastructure sectors and she is also global sponsor for those sectors. Kevin joined us in 2017 in London. He's American and therefore relocated to New York and started building our U.S. presence in 2018, presence which has since grown to more than 50 employees and we've done to-date 6 investments in North America.
As you see, we're an experienced team and the promotions are also testimony to our commitment to fostering talent internally. We have a long track record of promoting people within Antin and that's true at all levels of the organization. Moving now to Slide 11 on sustainability. We are very much a leader in this domain and continued to make significant progress in 2023. First, climate change. This is and it remains at the top of our sustainability agenda. To align our climate change mitigation efforts with the objective of the Paris agreement, we began implementing science based carbon reduction targets at portfolio level. 12% of our capital is now invested in companies with SBT and we aim to reach 100% before 2040. This is not all. A significant portion of our efforts to counter climate change lies in investing in sustainable businesses.
Today, 1/3 of our capital is invested in companies actively working towards the energy transition and another 23% of capital is invested in companies with low carbon emissions. In total, that makes more than EUR 11 billion invested across Flagship, Mid Cap, NexGen for companies that contribute to a sustainable and greener future. On the social front, we maintained a strong focus on the well-being of our employees and our ability to integrate people with diverse backgrounds and origins. We are happy to report that the share of women in our total workforce stood at 44% overall including 25% in the investment team, significantly above the industry average, and of course we continue to grow this further. We've also continued to be involved in our communities and maintain existing academic partnerships with [indiscernible], Bocconi University, Cornell University and the London School of Economics where we're supporting academic initiatives.
In the area of ethics and governance, we maintained an effective Board and continued rolling out our compliance program, which has been recognized as best-in-class by most rating agencies. To ensure the continued progress of our ESG initiative at portfolio level, we successfully integrated our ESG investment program across 100% of our investments. Cumulatively, we've now secured over EUR 5 billion in ESG linked financing for our portfolio companies. We also continue to receive outstanding scores from rating agencies that position us well within our sector. Finally, we are delighted to report that in addition to the awards we received in 2022 for our sustainability efforts, we were also awarded the 2023 sustainability prize by Private Equity Magazine.
I now hand over to Patrice.
Thank you, Melanie. I will now talk about our 2023 financial results. Moving to Page 13. As you see on this page, we delivered significant growth across all key financial metrics. Our fee-paying AUM increased to more than EUR 20 billion and was up 5.8%. Revenues grew by 32%, driven entirely by higher management fees, which are long-term contracted revenues that provide significant P&L predictability. As a result of our revenue growth and controlled cost increases, we substantially grew our underlying EBITDA and our underlying net income. EBITDA was up 48% with margins expanding by 7 percentage points and net income was up more than 60% as a result of those effects. Now given our strong cash flow generation and our significant cash position, we expected to distribute nearly 100% of our earnings to shareholders, proposing a full year dividend per share of EUR 0.71, which is close to a 70% increase in year-on-year dividends per share.
Moving to the next slide, I will talk about the components of our 32% revenue increase. So first, a majority of the increase comes from higher management fees related to our Flagship strategies. This includes a EUR 91 million increase in fees related to Flagship Fund V, which benefited from a 12-month contribution to revenue in 2023 compared to a 5-month contribution in 2022. In addition, we continue fundraising for Fund V, which added additional revenues. Now this was partly offset by lower management fees on more mature Flagship strategies; which includes Fund IV, Fund II and Fund III. As for NextGen, management fees increased as we completed fundraising for that strategy slightly above the EUR 1.2 billion target.
With respect to the investment income and carried interest, we were slightly negative in 2023 mainly due to the ordinary J curve effects for Fund V and NextGen Fund I, which means early in the fund's life we're accruing expenses for the assessment of investment opportunities while the assets in the funds haven't been substantially revalued. And finally, we've also increased our administration fees related to fund admin services provided by the group in Luxembourg. So overall, this has increased revenues to EUR 283 million, up 32%. Now that we looked at revenue growth in 2023, I would also like to take a moment to talk about our carried interest. Now while carried interest is not a material component of our P&L today, the future revenue potential could be very material.
At the year end of '23, the carried interest commitments of Antin could have generated about EUR 460 million in total revenue assuming that our funds achieve at 2x gross money multiple and perform above the 8% return hurdle. So just as a reminder, our funds delivered historically a gross multiple of 2.6x, which is substantially above the 2x gross multiple target and substantially above the assumptions that you see on this slide. Based on Fund V's target size of EUR 10 billion, this carried interest potential would increase to about EUR 500 million in potential revenues. Now while it will take a moment for carried interest revenues to be recognized and to build up, the most near-term potential comes from Fund III-B where the timing of any carried interest revenue recognition will depend on the exit timing of the portfolio companies in that fund and of course on the continued value creation of that fund.
So overall, you see very significant potential associated with the carried interest, which is not reflected in our P&L today. Moving to the next slide, I'll take a moment to talk about our cost base. You see that we've increased our expenses in a controlled manner in 2023. Personnel expenses increased by 15.1% to EUR 74.2 million and this increase is primarily driven by headcount growth of 10.9%. The remainder is linked to wage increases, which is a combination of both promotions and inflation-linked compensation adjustments. With respect to the headcount growth, we grew primarily the investment team and certain key functions and operations. This includes hires in our New York office as we continue to grow our presence in North America and it also includes hires across functions such as technology and sustainability where we continue to add specialized expertise.
Operating expenses on the right hand side of the page increased by 6.2% to EUR 33.2 million. The most significant share of the increase relates to higher fund administration expenses that moved from EUR 2.8 million to EUR 5.7 million. That's a neutral impact on Antin's EBITDA as we have an offsetting revenue item. The increase in fund admin is linked to the growth of the funds and also to investments we have made in the buildout of the technology, which ultimately allows us to better serve our clients and enhance the scalability of the fund administration platform. In addition, no placement fees were expensed in 2023 compared to EUR 2.7 million in 2022 and as you know, these are periodic expenses that occur in connection with particular fundraising events. So if we exclude admin fees and the periodic placement fees, the operating expenses increased by about 6.9%.
Now as a result of our strong revenue growth and controlled cost increases, we significantly increased our earnings. Our underlying EBITDA increased by 48.2% to more than EUR 175 million, our margin expanded by 7 percentage points and our underlying net income increased by 60% to EUR 128 million resulting in an underlying earnings per share after dilution of EUR 0.73 per share compared to EUR 0.44 per share in 2022. Now given our strong cash generation and significant cash holdings, we continue to distribute most of our earnings to shareholders. We still hold more than EUR 420 million in cash. We don't have a need to retain further cash at this point, which means we're paying out nearly all of our 2023 underlying net income as a dividend. We proposed at the AGM a full year dividend distribution of EUR 0.71 per share, that's a 69% increase from last year.
EUR 0.32 per share has been paid already as an interim dividend in November of 23 and the remaining EUR 0.39 per share will be distributed in June 2023 and that's subject to shareholder approval. In total, this will result in a full year dividend distribution of EUR 127 million. The ex-dividend date is the 17th of June and the payment date is the 19th of June so shortly after our AGM. I'll now take a moment to talk about our outlook and I'm sure you're all focused on that. I'll start on the left hand side with the growth. It has always been our objective to grow faster than the private infrastructure market overall. That's what we delivered over the past 15 years and that's what we expect to deliver in the future. With respect to Flagship Fund V, the target and hard cap remain unchanged at EUR 10 billion and EUR 12 billion.
However, based on what we're seeing in the market today, fund investor liquidity constraints are still there and to some extent allocation constraints too. So our expectation is that Fund V will exceed its EUR 10 billion target and will be significantly larger than its predecessor Fund IV. Of course we're aligning our outlook with the current market dynamics. We'll continue to work hard to deliver an outcome that's as strong as possible and that's our focus. With respect to the EBITDA, the outcome for 2024 is very much dependent on the fundraising outcome for Flagship Fund V. So these 2 things are closely linked. It's our expectation to deliver an EBITDA in '24 that is either at or above the prior year level. With respect to the dividends, it's our objective to continue to distribute a majority of our cash earnings as a dividend and our intention to continue to grow our dividends per share going forward.
I will now hand back to Alain for some closing remarks.
Thank you, Patrice. To conclude this presentation, I would like to reiterate that we delivered a strong financial performance in 2023 with significant growth and operating leverage. We increased revenues by 32%, EBITDA by 48% and net income by more than 60%. For shareholders, it resulted in a significant increase in distribution. Dividends growing by 69% year-on-year and the payout ratio is now close to 100% delivering a more than 5% yield at today's price. Our business is highly cash flow generative and cash by design. With more than EUR 420 million in cash, we do not need to retain earnings. Fundraising conditions were difficult in 2023 with fund investors facing tough liquidity constraints. Nevertheless, 4 important milestones for us were reached with NexGen closing at target and Fund V nearing its target size.
Consistent with our performance first mindset, we remain disciplined with our capital deployment. We have made 4 investments in 2023 and have a strong pipeline of investment opportunities ahead of us. Our robust performance demonstrates the resilience of our portfolio companies, of our infrastructure way of investing and of the infrastructure asset class at large. Moving forward, we believe the medium-term prospects for infrastructure at Antin are better than ever. The development of digitalization, energy transition, rail transportation will require massive amounts of capital and public money will not be enough. We have a key role to play to support these mega trends as an experienced owner of private companies in these sectors by doing what we do best, which is seeing potential and delivering value.
I would now like to open up to questions that Melanie, Patrice and myself will be delighted to answer to.
[Operator Instructions] The first question is from Nicholas Herman of Citi.
Can you hear me okay?
Yes.
So I have 3 questions, please; 1 on fundraising, 1 on M&A and 1 on new strategies. Just on fundraising. You talked about exceeding the EUR 10 billion target. I get it also seems like reaching the EUR 12 billion hard cap is no longer the base case. If that is correct, can you talk about what has changed since Q2, Q3 and why you no longer expect to hit the hard cap? Question 2, can you just talk about how the hiring of the team for your new strategy has evolved since we last spoke in August? I think in the past you said that you wanted to wait for the right environment before launching a new strategy. Markets seem a little bit more -- they kind of have a better line of sight to growth for the industry. Do you have a better line of sight for the environment needed in order to launch that new strategy? And then finally, we have seen consolidation clearly accelerating with LPs consolidating their relationships and also some material developments in private wealth channels for private equity and infrastructure solutions. the question is do these developments change for you the relative merits of partnering with other managers, operating other asset classes and that can be bigger or smaller managers in order to accelerate your growth by appealing to a broader number of LPs and to potentially even better targeting the private wealth channel?
Nicholas, I will answer question 1 and probably 3 and Melanie will answer question 2. Concerning the fundraising, I think we have to be basically realistic about the market situation. I mentioned earlier an example where we had a very loyal and longstanding investor who was so cash constraint that he has to divide by 5 his commitment. So we have to take stock of this reality because when I said that or when Patrice mentioned that our clients are very constrained for liquidity, it is a real fact and it's really the result of 2 things. The first one, which is that there are hardly any distributions, completed very few sell-off of assets and therefore, return of capital to LPs, which limit of course their ability to continue investing for the same amount. And the second thing is that for the first time in many years the bond stream start to give risk-free returns which are decent and rather appealing for the first time in many years. So quite naturally we are faced with those 2 trends among our clients, which means that we have to take stock of that.
First of all, EUR 12 billion has never been our target. EUR 12 billion has always been our hard cap and continues to be our hard cap by the way. But we think that more likely it is preferable to focus on the EUR 10 billion and frankly, there might be more. We will see in due course if there is any release of tension on interest rates. And as you probably know, the Fed is expecting to reduce according to some analysts interest rates in America, let's say, by a threshold of 25 bps over the next year or 18 months. We don't know. But if it were to happen, evidently it would have a material impact on fundraising because there will be some sell-offs. We still have in some cases some discrepancy between ask price and given price; in other words, sellers and buyers. I think the gap is nearing to be quite frank as debt financing remained and become again more abundant. Now we may have good surprises, but I think we don't want to over-promise to you. Maybe then you want to talk about hiring strategy?
Yes, sure. And hiring strategy is definitely interlinked with the needs that we have, with the existing strategies that we are deploying, but also with the plans that we could potentially deploy organically for the next chapter of the growth of the firm. On that front, our approach has always been to anticipate needs. Has always been to make sure that, first, we recruit from the most junior level to integrate our people, grow them, allow them to have visibility and to grow within the firm up to the highest level possible and making sure that we control the quality of the people that we recruit and then their development evolution within the firm. And this has always been the case since the early days of the firm and will continue to be the case. Hence, this level of recruitment that allows us to get the best talent possible and leave them time to develop and to grow.
Having also in mind that we always have to have buffer to make sure that we can cope with [indiscernible] because it happens also in the firm even if our retention rate is very high and also thinking about growth prospects. And on that, indeed if you look at what could be done organically, we've given a lot of thoughts on new strategies within the infraspectrum or adjacent to the infraspectrum, which could complement what we are currently deploying. And we have identified some opportunities of development, we've worked deeper on them and therefore, try to kind of anticipate the needs in terms of resources to potentially at some point when the time to market will be appropriate being able to potentially launch an organic strategy. So we have all the tools in our hands. We continue recruiting and reinforcing the team as and when needed to at some stage be able to launch this new organic strategy.
If I could just follow up on that quickly. So you've learned more on the strategy, but it sounds like if I'm correct, you're still not ready to provide more granularity to the market on kind of what that new strategy will be and a time frame. Is that fair?
I think that's correct. I mean for your modeling purpose also, I wouldn't bake in anything into 2024. We're going to have to see an improvement in the fundraising environment before we would be doing anything. But I think for recruitment purposes for your model, we got a basis of maybe somewhere around 20 to 30 people being hired for 2024.
We are clearly ready to launch an identified new strategy, but of course we will wait. We will first continue to recruit the right people to have initial setup which is sufficient and then we wait for the right time to go to market, which is not now. I think you can appreciate it. The third question you asked, Nicholas, concerning the consolidation of the industry. Would it help to raise more money, if I understand what you said, by joining forces? We are of course holding numerous discussions with our peers and people in adjustment strategies in [ right ] markets literally globally as the industry is questioning about models. We've also discussed actually and turned down some of the companies which have merged or been acquired by some of our peers. But I would just like to say one thing.
The question you ask is spot on. Does it help to raise more money to be merged or to be combined with another entity; which does for instance real estate or which does credit or which does buyout. I think the answer is not straight formula at all because we talk about different investors, different teams at the same investors. So are there some benefits? Maybe there is some benefit, it is very difficult to quantify and to be quite frank, I think it is not the answer to today's overwhelming liquidity constraints that we see in the market. And so I think today you merge with whoever, you will not raise 1 more dollar or 1 more euro from investors because the reason why people don't is because they are constrained in liquidity. But evidently we are looking at all opportunities of combination which may arise, it's part of our job. But I would not bet on -- I don't think it would make any change to anything we really tell you, but that's something real.
The next question is from Bruce Hamilton of Morgan Stanley.
I've got 3 questions. One, I'm afraid to follow-up on the sort of the fundraise guidance. I guess obviously one of your competitors hosted a Capital Markets Day yesterday speaking to infrastructure there. They gave a much more sort of positive take on the fundraising environment so far this year versus last year driven by obviously denominated construction having reversed and maybe some early signs of improved liquidity. So I just wondered whether you're just being very conservative or whether you're seeing an impact from the Hesley acquisition because I think new clients are obviously asking about that and so is this kind of perhaps slightly idiosyncratic to you? Point one. Secondly, on the uplift to carrying value, you said 90% of exits are at an uplift. What's the average uplift you're achieving? And then finally, on carry, I guess looking at that slide which is helpful with the potential carry if you hit your target, a lot of that looks to be sort of beyond 2026 I guess would be the case outside of Fund III-B. Is that the way to think about it or how quickly could that start to impact?
Okay. I will take the first point and Patrice will have the next 2 points. You referred to a Capital Day which happened yesterday. I want to confirm that we have been following very closely what has been said then and clearly the tone was more bullish than the one we present to you today. It's part of our nature. We always tend to be prudent in our assessment and what we don't want to do is to overpromise when we're not certain to deliver. When it comes to fundraising, we have been raising a lot of money over the last 15, 16 years and to be frank up to last year, we had a very efficient way of putting ratios on categories of clients or future clients which may invest and how much and will reach probability in the forthcoming fundraising and it has proven to be extremely reliable. We had, frankly, I wouldn't say 100%, but say 99% or 98% capability to assess how much LPs at all we finally give up.
We are today in a world where there are plenty of geopolitical uncertainties, which translates into de facto financial and fundraising uncertainties. So for the first time, we may of course take a bullish stand and to be quite frank, we are very optimistic on the fact that we can deliver varied returns for our investors, which to be quite frank is what matters most for our clients and I think they understand that. But we have to be in my view realistic about these financial constraints. People continue to invest in Antin. The same people continue. More people, I mentioned 120 new people compared to the previous number of investors of 200 so 320 people. All the new people continue to invest or start investing in Antin, but lower numbers because of the liquidity constraints. But again we take a very prudent approach. We may have good surprises, but we certainly cannot bet on them. I will pass over to Patrice for the next 2 points.
Bruce, on the exits I mean on average, it's been a double-digit percentage in the past the uplift. Leave it at that. We try to be realistic in valuations, prudently realistic is sort of the right way to put it. But historically, we had a double-digit percentage uplift upon exit. And with respect to your third question on the carried interest, I think the next fund that's going to produce carried interest revenue should be producing carried interest revenues Fund III-B. And Fund III-B is an annex fund, it holds 4 assets and because it holds 4 assets, the timing of carried interest realization is highly dependent on when we start to monetize those portfolio companies. We've partially sold one of them, [indiscernible], which means we sort of have 3.5 remaining so to speak and I think that could come as early as 2025, but it will really depend on when we sell. Then for the other funds; Mid Cap which we raised in 2021, we'll probably be a little bit up, it could be 26%, it could be 27%. We're going to have to see how the value creation of the funds develops and how realizations for the fund develop. But you're right, the ramp-up will be gradual and it won't be immediate.
The next question is from Greg Simpson of BNP Paribas.
I have 3 questions on my side too. The first one is a lot of larger private market firms have been talking about infrastructure. We've seen some deals like BlackRock-GIP. Can you talk through if you're seeing any changes in the kind of competitive backdrop of deployment? Is it becoming harder to buy the assets you want, more auctions, higher pricing and so on? Second question is on the midmarket strategy 47% committed, but can I check where that would be with the January deal and what is your latest thinking about the timing and structure of Fund II? And then thirdly, on the cost side, can I just check what you're budgeting for 2024 guidance? I think you said 20 to 30 for hiring and what about the kind of other cost growth? Is this 7% you saw last year a good guide?
The GIP-BlackRock combination evidently has been the most important combination affecting our industry. What is the consequences for the sector, for industry? What are the consequences for us going forward and for competitive structuring? I think we are faced with a market, which is in fact very much segmented. You have the mega large funds and among those ones you have people like BlackRock, you have KKR, Blackstone also is embarked now on the strategy. You have some people who are large caps like ourselves around say 10 to 12. You have several not many, but a few of them who are there or trying to get there. Please note that some of our peers who try to be in this kind of space are not even 50% raised to date, but I can show you it's not an easy thing to raise another EUR 5 billion at present.
And then you have some smaller players or more niche players in the region of the EUR 3 billion to EUR 4 billion or EUR 2 billion to EUR 4 billion I would say. What is the impact of the GIP-BlackRock combination? Frankly, I don't think it is meaningful for Antin. It is certainly a very important deal for BlackRock and you know that Larry Fink, BlackRock CEO, is a vibrant advocate of climate change policy and making sure that he uses all the power he has to try and influence companies in which BlackRock is a shareholder, which is virtually every company in the world, to implement best practice when it comes to climate change. Evidently, the GIP platform combined with the previous First Reserve platform, which was acquired by BlackRock about 10 years ago if I recollect correctly, is going to be 1 tool to achieve that.
But it's only 1 player and the infrastructure market is extremely diverse. So I do not anticipate any change in competition from this acquisition or other acquisitions. Will that [indiscernible], maybe although historically you can't really expect the BlackRock to be a big provider of infrastructure of capital to an affiliated fund manager. If you look at the amount of money which has been invested for the previous First Reserve, you can have an answer to this. So it's not like BlackRock is going to contribute $50 billion or $100 billion to the new GIP-First Reserve setup. So it will not be in my view a major change, but it certainly is very important for BlackRock to continue to pursue this ambitious climate change strategy. I leave it to Patrice to answer the next 2 questions.
Look, on the mid-cap fund, we're about 55% invested including the latest announced transaction. Our base case is that we would be -- and this really depends on the pace of deployment. But our base case is that we will move to Mid Cap Fund II in the early part of 2025. When I say that is we probably have 2 more transactions at least in Mid Cap Fund I and that will really drive the pace of it. The good news here is that because investors face liquidity constraints on Flagship Fund V and they do want to invest with us, we see a lot of investors that are essentially eyeing Mid Cap II already. And so this is a product that's very sought after and has a very unique pace in the marketplace. So we feel there is going to be good momentum for Mid Cap based on where we stand today.
As it relates to cost, your third question, I think we're going to see a somewhat higher increase in personnel expense in '24 than what we saw in '23 and it's a combination of different things. First, we have an expectation that we're going to hire somewhere around 20 to 30 employees in 2024. A lot of this hiring will be in the U.S. where average compensation cost is somewhat higher. Probably from a mix perspective, also somewhat more senior hires in certain cases versus what we did in 2023. And then we have inflation-linked wage increases that we've put through earlier this year and also some promotions that have led to wage increases, which we put through earlier this year. So all in all, my expectation is that personnel expense is going to grow a little bit faster. On other operating expense, I think it's just going to be similar trajectory as we've seen it in the past.
The next question is from Arnaud Palliez of CIC Market Solutions.
The first one is regarding the environment for investment activity and exit activity. Can you give us some color about what are your expectations for 2024? Do you expect some recovery? Especially on the exit side, are you confident in your ability to exit more assets this year? So that's the first question. The second one is on your EBITDA guidance. Do we have also to consider that you are rather cautious when giving this guidance. Is it taking into account the fact that personnel costs are going to increase a bit more than last year. So I would like to understand what is your assumptions on this EBITDA guidance? That's the second question.
I will maybe answer the first one and Patrice will give you answer to the second one. I think the environment for investments actually is pretty good and as we told you, we have made 4 investments last year. So we have not stayed idle waiting till the fig falls from the tree. We basically went out and we made acquisitions. We were able to evidently fund those acquisitions with debt. We mentioned this EUR 8 billion of debt that we have utilized both in refinancing and financings of new projects. So the market is open and will remain open. I think what is important for 2024 and 2025 is that there is still a gap between seller expectations and buyer expectation.
And what we see and I think it's very consistent with what some of our peers indicated to the market broadly to you like yesterday or a few days before that the gap is narrowing and this is something which we observe. Deals get done, we have done 4. And we expect, as we said, that most likely we will sell 1 to 2 companies in 2024. That's our estimate. So we are optimistic that the gap is narrowing. But you see to have a material impact on fundraising and to ease liquidity constraints, it has to be an industry thing not just oneoff investment. It has to be something which we see and we observe in a very consistent manner both in infrastructure actually and in the wide industry. But we see a narrowing of the gap and we are confident that 2024 will be a year of a rebound of activity for both sellers and acquisitions. On guidance, are we cautious, Patrice?
Look, I think the guidance reflects that there can be a wide range of outcomes depending on where we end fundraising for Flagship Fund V. I mean just to give you a sensitivity around that. If we raise EUR 500 million more or less for Flagship Fund V, it would produce about EUR 17 million in revenues or EBITDA because there is no cost associated to that incremental revenue. And so of course if we raise EUR 500 million or EUR 1 billion more, then results on the EBITDA will be very different and I think what our guidance reflects is a cautious guidance. That's why we say at or above. Obviously we hope to be above, but we need to be -- we would be cautious in how we guide. So that guidance reflects that and it reflects the cost increases as well that I have mentioned before.
We've also received questions from the webcast so I'm going to read them to you all. So we've got a question about the 2024 EBITDA guidance and the question is what are the key assumptions behind the guidance in terms of target for Fund V cost base? I think Patrice, you just answered that question. Then also another question, which is about the launch of a new Mid Cap strategy. I think that is yours, Alain. So the question providing a bit of color on the timing of the next Mid Cap fund.
And also received a set of questions from Geoffroy Michalet from Oddo. The first question is on Fund V again and the question is why are you not extending a bit the fundraising period to get to the EUR 12 billion? The second question from Geoffroy is how do you see M&A activity on infrastructure in 2024? When you say gradual, can you be a bit more precise? Can you give a range of capital amounts you could reasonably think to invest? Third question, how will your reflection of use on the cash and balance sheet? Has your thinking evolved capital structure is currently not optimal? I think this part we've kind of answered it already on M&A, organic growth.
Yes, these are the questions that we received.
Okay. So 2024 guidance assumption, I think you answered it.
Maybe I can take the one on timing. I mean on Fund V, we can't really comment too much on how the timeline will evolve in detail. But I think our overall expectation is that at the end, we'll complete fundraising somewhere in sort of the second half of the year. Our best guess would be around 3Q, but to be seen. And with respect to the capital deployment and the fact that it is gradual, this is not something that we can really predict. I mean we do investments when we find an investment that really meets all of our criteria both return criteria, but also the Antin infrastructure test. And you will find moments in time when we have multiple investments that happen within a very short period of time and you'll find periods when we have a longer stretch with our investments. So we're not going to predict that, but we will always do the right thing in making sure we stick very truthful to our investment mandate, very diligent in how we secure returns and the Antin infrastructure test and when it leads to lots of investments in a short period of time, that's great; and if it takes time, it will take time. And just on the last one, the use of cash. I think Alain and Melanie spoke about M&A growth and again there is no particular timeline on that.
There was a final question on the exposure on energy companies, capital deployed, valuation trends. And I think there it's hard to comment precisely on performance per sector. It's not something that we disclose to the market, but no reason for concern. They are doing really well as well. The comment regarding the growth on revenue and EBITDA was more to reflect the fact that some of these companies benefit from very strong passthrough impact on energy costs and so as energy costs were really high in 2022, these companies reported higher sales. And as those energy costs normalized in 2023, they saw a decrease in revenue. So that's why we identified that sector when we analyzed the revenue and EBITDA trends.
These are all the questions that we received on the webcast. Do we have any other questions on the call?
Yes, we have a follow-up question from Nicholas Herman of Citi.
I just have 1 last question if I could, please. Could you please quantify the financing maturities in '25 and '26. I know that a lot of it is, as you pointed out, it's very different in '24 and then it's very staggered over '25 onwards. But if you could please quantify the financial maturities of '25 and '26, that would be very helpful.
Nicholas, I don't have the absolute numbers in my head. But if you look at the number of companies we have give or take 30 portfolio companies and I think it's even a bit more at the moment. And you're going to see maturities staggered out very well over a number of years and usually every year, we sort of see 4 to 5 companies that are doing the refinancing. So it's extremely well staggered out.
There's no resiliency expected in 2024 so this year and the refinancing will be staggered over the next following 5 years, 2026 to 2030.
That's understood. And in terms of kind of would it be reasonable therefore to assume there could potentially be some minor drag on your returns albeit is it minor?
No. I mean we typically tend to hedge the interest rate risk and so it's more about getting the refinancings done.
We received the additional questions from the webcast so I'm going to again with them to you. So we have a question from Javier de la Cruz from BESTINVER. What is your assumptions on carried interest for your 2024 EBITDA guidance? Perhaps Patrice?
Yes. I mean the '24 guidance doesn't reflect any carried interest revenue. In fact it's more likely that for Fund V, we will still be in the J curve and record a slightly negative investment income. Again I think that's a cautious guidance.
I thin again if you compare the contribution of carried to our EBITDA, you have to bear in mind that when we went public in September 2021, there was no carry contributed from past funds so from scratch, from 0. So it is no surprise that a couple of years later, we are still basically in a phase where the new carried relating to investments in performance shares is still extremely minor negligible. However, Patrice has indicated a long-term eventual, which gives you an idea of the amount of carry which can be gained from the funds which generate carry as of 20% for Antin going forward since IPO. So you cannot compare our performance fees to the ones computed by Blackstone or by equity or by partners because clearly we are at different stages of valuing the carry, which is extremely early stage in our case where value is nearly negligible.
A couple of additional questions from JPMorgan. First question is consensus is for 2024 at EUR 228 million. The guidance today implies an EBITDA that could be at EUR 176 million or higher. Do you see consensus expectations as attainable? What is the probability of reaching the EUR 12 billion hard cap? And finally, why did personnel cost decline in the second half of 2023 versus the first half of 2023? What level of personnel cost growth shall we expect for 2024? Patrice, you really sort of gave an answer on the last question, but perhaps on the other 2.
Yes. Look, on the guidance. I mean the guidance reflects I think around EUR 11.5 billion raised for Flagship Fund V. I think our guidance today is based on what we're seeing in the market is that will be north of EUR 10 billion. And so there is a gap to where consensus projections are today and how we would judge the situation at the moment. Of course there's a lot of upside to the EUR 10 billion, but we're going to have to see how that will develop. As for the personnel expense, yes, I think we covered it. I mean I think we're going to see an increase relative to 2023 and probably the percentage increase in '24 will be somewhat higher than the percentage increase we saw in this year.
Perhaps a final question again from the webcast. We got a question on private wealth and the use of [ sovereign funds ] and the question is can you give some details on how that is growing and if you see yourself growing that aspect of fundraising further in sovereign funds?
We obviously are working on this theme which, as you know, is an important time in the industry. What I can tell you is about 2 things. The first one is that we expect to raise about 10%. I think clearly we already raised more than 10% of retail and [indiscernible] and that's basically an assessment to be validated, but it's an assessment. Secondly, I think that the situation in the States is very different from the one that you see in Europe where access to retail investors is very important. Why? Because in the States, you have some pension fund schemes, which allow in a very efficient manner to tap capital to be deployed into wide markets, which is not the case in Europe where the systems are very, very different and you have to go into extremely different constituencies. And therefore, the market is less promising. So we are looking of course at what we can do and we actually are engaged with a number of people; private banks and also offices; but it's minor compared to what we achieve from the States for very structural reasons.
With that, I think we've answered all the questions from the webcast and also from the conference call.
So we have no further questions at this time. I will now hand back to Alain Roche for closing remarks.
Okay. Well, I think I said it all. So thank you very much for your attention and have a good day.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect. Have a good day.
