Jan Philipp Schmitz, Executive Vice-President at Ardian – Scaling Global Growth in Private Markets

[MUSIC] Leading Corporate Transformation. The podcast by VHAU AutoBysine School of Management, powered by PWC. On the transformation of companies and their culture, from decision makers for decision makers or from entrepreneurs for entrepreneurs. [MUSIC] So hello everybody, welcome to another episode of Leading Corporate Transformation. Anyhow, podcast, powered by PWC. Today we are in Frankfurt. My name is Sad and Elzjan. I'm your co-host. As always, I'm joined by PWC's Gory. I've got it. How's it going? Yeah, and thank you. Thank you very much. It's going very well. Happy to be here and also warm welcome from my side. So my name is Gory von Hirschhausen. I'm the co-host of this podcast, as hopefully most of you know. And I'm the Corporate Transformation guy in this round. But at the same time, and that's why I'm very happy and proud that we have this talk today is that I'm just recently became the Amir Private Business Leader of PWC. So I love this sector we will speak about today, because let me introduce our guest. It's a great honor actually to introduce Jan Phillips-Schmitz. His role is executive vice president. But to put it into context, he is one of the five people in the general management team of Ardjan. He's also a member of the executive committee. He's the head of Ardjan, Germany and Asia. He's the head of investor relations and also holds senior management role in the primaries and secondaries. So he's all over the place. And that's good to speak with Jan today. And Jan, thank you for having us. Well, thank you very much for having me that I'm part of this podcast today. It's a great honor and it's a look forward to this session. Yeah, I'm Jan Phillips-Schmitz. He introduced me with Ardjan for almost 20 years now. And I look forward to speaking about Ardjan, about my role, describing these different roles that you just mentioned, because indeed they're quite diverse. But therefore, very interesting because you get insights into different parts of the business. So that's very nice. And before we speak about your roles and all your responsibilities, everybody who's close to the industry, of course, knows Ardjan as one of the giant players in this space. But maybe you can tell us a little bit about Ardjan because you have a very interesting history, coming as a management buy-out from AXA. So can you talk briefly about who Ardjan is, where you come from, and what's the main business areas you're focusing on today? Sure, with pleasure. So indeed, we spun off roughly 12 years ago in 2013, before that we were called AXA Private Equity, and we rebranded into Ardjan. So the roots, the origins really date back to 1996. That's when AXA Private Equity was created as part of the insurance group, and what was different than most other insurance private equity alternative houses was that we had always raised or invested capital from outside the insurance group. And that's why when we spun off in 2013 on very emicable terms, we had the opportunity to do so because we had this third-party business already. And since then, we've grown strongly. Today we manage roughly $192 billion US dollars, and we manage that in many different fields. We see ourselves as one of the largest alternative investment houses, and roughly half of the assets under management are in private equity. And private equity we divide into, on one hand, secondaries, where we are one of the largest, maybe the largest player. And globally, we've raised a $30 billion fund earlier this year, where we closed it, say this again. $30 billion, that's the $30 million fund. It's a nice big, grout number there. And at the same time, you know, we have on the private equity side, a different funds, let's say, from small cab, to mid cab, to even lower large cab, let's say, where we invest in direct companies predominantly in Europe, but also to some extent in the Americas. And then also the second very large pillar is real assets. Your sizable player in infrastructure, and we will soon announce a new large fundraising that we did on the direct side. So infrastructure direct, but also real estate. And then the third pillar is private credit, where we also active since 2005. So it gives you the whole range, let's say, of alternatives. And therefore, it's a very interesting space to be in and having all that oversight. Yeah. Very good. So let's pick one and start from there. Where do you see the biggest opportunities? And let's start from that domain. I think we're lucky in a way that that's a bit market view also that there should be a lot of growth going forward in secondaries and in infrastructure. And these are our two largest pillars. And we see a lot of growth in secondaries because I mean, currently there's a bit less liquidity in the underlying private equity world. As we all know, you know, the M&A volume or IPO volume was a little lower than before. And that helps, of course, the secondaries business because many large investors are saying, well, I have my allocation to private equity. I'm at my target rate or my target allocation. And then they rather sell 10 or 20% on block, let's say, in the secondary space. So there's a lot of growth there. Infrastructure, I think, you know, we maybe especially in Germany, you know, where there's a huge multi hundred billion program where infrastructure should be renewed. We're sensitive to it, but it's of course a global phenomenon where there's a lot of capital needed for infrastructure. And we have this direct infrastructure fund, which is going to be sizable. We announced in October. But we're also active in the clean energy space, but also in hydrogen and other sub sectors of it. So we want to be part of that whole energy transition. So that's a lot of growth. Let's say for the industry and therefore there should also be a lot of growth for Ardian. If we look at Ardian itself, and that's a bit also the role that I have, looking at the whole company, how can we grow? It is very much saying, grow all your current flagship funds. The ones that I just mentioned, but also direct private equity buyout, also direct private credit that we do, and make sure that you're really strong in those. And deliver good returns and grow these funds every four or five years by 30, 50, 70 percent or so. So that's one area of growth for the firm. The other is adjacencies. We call them adjacencies. I give an example. In secondaries, private equity secondaries, we'd grow into a 30 billion fund. Infrastructure secondaries is something younger, where you're buying secondaries in infrastructure space. We had started eight, nine years ago with a 500 million fund, and then tripled that to 1.7 billion and again tripled to 5 billion in two generations. And it shows you there can be a lot of growth if you go into a certain adjacencies. It's something that you know already how to do in secondaries. And these adjacencies we could also have in private credit or in real estate, where we're in one or two sectors, but it can be expanded. So that's your question on growth. Focus on your key products, make sure that they're really good and strong, but at the same time look at new growth areas. They will not all grow and they will not all scale as you hope, but that's an interesting way to grow, we think. Very good. So I have one more question. I know Gory has lined up probably with 10 different questions. So you have French origins, but you're a global company. Totally. Tell us a bit about your global operations. Sure. So indeed, I mean, the majority of employees now is outside of France. And we have 20 offices today and a truly global house, especially if you look at where there's the capital come from, who are our investors, who support us. And that is also the majority today outside of Europe. Yes, Europe, the European investors are still between 1450% because that's where we came from. And in Europe, you would have insurance groups from Germany, from France, from the Nordic, from England, from etc. But more than 50% of the capital today comes from investors in the Americas, North America, Latin America. The huge growth we are seeing from investors in, let's say, newer regions like Asia and the Middle East, really, really huge. And that's, let's say, on the fundraising side, client side. But also on the investing side, of course, that's important. Where are we? Yes, on the direct side. That means direct buyout, direct infrastructure, direct private credit. It is still more Europe than rest of the world. But for example, in secondaries where we are a very large player, as we said before, the majority of investments is outside of Europe and mostly North America, which makes sense because it is the biggest market, for finance, the biggest capital market, also the biggest alternative market. And we are in predominantly the United States, a bit of other North America. We, of course, private equity and investment as an industry has its own language. So not all of our listeners are familiar with all these wordings. So maybe very quick, what is the primary and what is the secondary? That's a good, that's a good question. And you know, it took me some time 20 years ago to exactly know what's the difference between secondary, primary and direct. Yes. So the second reason primaries is when you're in a way, one level above the direct fund. So most of our capital is in secondaries and secondaries, you're buying stakes in funds, usually, more portfolio companies in the secondary market. So an investor will sell that to you. Okay. So it's more like fund a fund in a way. Yeah. Primary and secondaries. Primary is if you give capital to a fund that is at the beginning of its fundraising. There's doesn't so funds out there. Many of our peers, we work with them. You know, the big US private equity fund managers, the big European fund managers. We give them capital when they raise a fund. So give them primary capital. Yeah. So primary and secondary is really more a fund of fund business. Yeah. And then we would differentiate to the direct business where, you know, you raise capital and you invest into the company or into an infrastructure company or an infrastructure asset or you do the private credit. But there you really go directly into the company and we do both. I think that's that's a big part of the interesting perspective in the job that you see that you see almost everything. I mean, you really sometimes go very deep into one company, you majority own it. Yep. The same time through our secondaries and primaries business, we see the industry, you know, we're invested in more than 1,600 companies. There's more than 10,000 portfolio companies in our database. I would say there's very few parties globally that have that kind of oversight. Yeah. Because in an overall view, we know that it is round about 180 billion US dollar of transaction volume and secondaries. So it's an amazing large market, right? Right. And you are, as you said, in the beginning, you're basically the market leader in this base. So I think it's a very interesting topic because there's also some controversial discussion around secondaries. So let's talk a little bit more about this secondary business. Sure. Can you give us an overview of how you operate in this of course, of course. And you know, you stated a number on volume the last two years, 23 and 24 and almost all the years before had constant record volumes. Most other industries in the alternative space has had one or two or three years of less volume. Yep. You know, so it just shows you indeed that interest for the asset class. But it's still only two or two and a half percent of secondary volume is trading of what is on the books on the balance sheets of big institutional clients like penny to fund someone while the funds and transcripts. So it is tiny. The secondary market, of course, on the stock market is more than 100% of the primary market. It's a multiple of it. Yeah. And it shows you just that I feel we're still only scratching the surface. And there will be much, much, much more growth. I think it could go to three, four, five percent or 10 percent. That's one factor. The other factor is, of course, there's still money being raised. So the volume, the paper, let's say, or the normal amount of volume on the balance sheet is growing. So if these two numbers, the percentage and that grow, there's much more growth in the future. And I think it is, you know, we're providing liquidity in a market that normally is illiquid. You know, you always said, well, they're, you know, private equity or private infrastructure or, you know, you invest, but you're tied in that fund for 10, 12 years. And the industry started in the 1990s. Our first fund, I think it was 220 million. See the growth to 30. Wow. Yeah. It was in 1998. Quantum lab. Yeah. You know, so it shows you, you know, how the industry grows. So I really feel the industry values it a lot. Both the clients who've invested into it, the limited partners, because they say, hey, there is liquidity. Yes, there's going to be some kind of discount, but they've still still done pretty good decent returns over the, you know, years that they've invested into it. But also the general partners, the private equity fund managers like it, because there is liquidity. It means sometimes they can raise new funds afterwards. And one other definition, due to make that clear, the 180 billion historically, it was mostly LP portfolios. There's a differentiation between LP portfolios and GP lead transactions. So the LP portfolios are classic when the LP, the limited partner, the investor selling, let's say insurance A or pension fund B has 10 billion of private equity on its balance. She didn't say, hey, I'm going to sell 1 billion. 20 funds, 200 companies just say, okay, then we would buy into that. That's a classic LP portfolio. In recent years, the GP lead a side of the market has definitely grown quite strongly. And maybe they're wanting to controversy, controversies because of continuation vehicle or so, if you're referring to that. Although I also think that just offers liquidity, nobody has to sell if you want to stay, you roll over. That's fine. But just to give you these two definitions, these 180 billion almost are now 50/50 between LP portfolios and GP lead portfolios. But it's really like in every other industry, every asset class, even the car industry, there is a second-year market for everything and it just provides liquidity. Nobody's forced to sell, but it offers a way out if you want. I like the reference to a second market for cars. I'm an operations guy, and I'm working a lot on the performance of companies. My question is, where is the magic trick here with the second-year risk? Is it because somebody needs to sell and you get it for a good price? Is it that you see something that is in this investment that is later to come? So, what's the magic trick? The magic trick, I think, is really understanding what you're buying into. Yes, discount is nice. And at all. Just buy a portfolio. Everything's the same. I'd rather buy it for a bigger discount than not. But having said that, I prefer to buy top-quality portfolio at book value. Or even a premium, although we don't buy that. But just to give you the mentality behind it, our job is, and we have a team of 120 professionals, 30 managing directors, senior managers, this partners who have seen cycles, who know the industry very well, who know the underlying portfolio companies. And our job is to really dig deep into these private assets and you need to be invested into those assets. You cannot buy the information like in a private, sorry, in a public market, Bloomberg or Reuters or whatever, you cannot get the data. That is our job. What's the magic trick? Having an intimate knowledge about these hundreds and hundreds of funds, thousands and thousands of companies, we have a team as I said, which is huge. And we do the job every quarter. You get a report from the underlying private equity fund manager. And then it is the job of the team that covers this fund from senior person partner, managing director to analyst to understand, okay, this is the value today. I meet the general partner. I meet this underlying fund manager and he tells me, company ABCD and so on. This is our current expectation. This is sales EBITDA, net debt. This is the exit value that we think it will have, the enterprise value, the EBITDA multiple. And that's our assumption. And then we need to, when portfolio lets say hits our desk from the seller or in a intermediary, we've done the work already. And we then can very quickly in one, two, three days assemble, let's say the fund composition that we're offered, we have that in our database. And then we put a price. Is it 5%? Is it 10%? Is it 15% discount? But just to say, the magic trick is, I mean, ultimately there are three value creation drivers. It is the book value, or we call it NAV net asset value, that you're buying. And what's your NAV, the net asset value that you expect over the next five, six, seven years, your hundreds of companies, what will it be? And here is really to make sure we buy, we cherry pick good quality portfolios, by the way, often we, often almost always, we don't take the portfolio that's offered, but we say we take fund A, we take fund C, we only take 50% of fund D, but we still make it a big portfolio. So that's the predominant value driver, the magic trick as you call it. And then yes, discount is of course nice, but that's maybe 10, 20, 25% of the value creation that's saying. And the third is some kind of structuring. Sometimes we negotiate vendor loans or deferred payments. So the seller is saying, "Hey, this is my portfolio instead of paying the purchase price now. All of it, maybe you pay me 50% now and 50% in two years or so, that helps returns, of course, to narrow the gap." So that's quite interesting there. But it's very important to have all the data and to understand your portfolio. And one other thing I would add, where art and different shades versus most of our peers, we do very large transactions, we're a solution provider. I've seen, if there's portfolios of one, two, three, four hundred million in the market, there's huge competition. There could be 30 buyers. If it's a one, two, three, four, five billion portfolio, which we've done, there's only two or three. So that eliminates competition. And that really helps us also. Okay, great. So I have a question that's more about the general business model. Yeah. So because I'm just trying to think about alternative investment house as a conglomerate. Conglomerates have a ton of advantages, but also disadvantages. What would you say some of the challenges of running such a diversified investment house? That's a good question because we constantly think about that ourselves. How do we make sure that we stay agile, that we stay entrepreneurial, that we move quickly. But yeah, at the same time need to install some kind of guardrails, let's say, controls. With $192 billion assets on a management, we are amongst the two, three largest European rooted houses and amongst the top 10 globally. So we are sizeable. At the same time, comparing that to some other asset managers or banking institutions, we're still small. We're 1,100 people. I think when I started, it was less than 100. So yes, we've grown a lot, but still compared to many other corporates, in the corporate classic world or banking financial industry, it's still manageable. But you're totally right that this is something you want to make sure that it's not too heroic. You want to make sure that you can take decisions quickly. I mean, if we do investments, for example, every Wednesday we have an investment committee in private equity, infrastructure, secundaries, private equity, secundaries and direct, for all the asset classes. So there we can be quick. And if something would have to be very urgent, we've done that also. In 24 hours, we send an email to everybody and we take a decision because it was discussed already, of course, before it's a file that maybe has been discussed two or three months. So we don't want to lose that agility and a pernural spirit, I think. But also, how do you grow? I think growth as in every industry and every company is important. We shortly touched it at the beginning, core flagship funds raised them, be successful in investing them and raising them, adjacencies. But also, we think where are fields that you still want to be in certain geographies, for example, that we're not yet that active as a European rooted house, but also many other asset classes, where we said adjacencies build them ourselves, but we could maybe also buy them. So that's also another way. And coming back to the root of your question, how do we make sure? I mean, you need to instill that also in the culture, you know, that there's quick decisions, there's trust amongst us, there is transparency, all of that. And then, then I think it works well. But it's kind of decentralized and empowered model. Totally. Absolutely. Yeah. All right. So since you are one of the top 10 globally, and I'm kind of curious about the benefits of going public, because you're still in private, right? Because some of the top 10 companies out there are actually public. What are your thoughts on that? Yeah, you're totally right. I think, you know, we're one of the few of the top 10 that is not yet public. So it's a fair question, let's say. And we, we, we discussed that, of course, also amongst us repeatedly. I think there are benefits to being public. I mean, liquidity, for example, for shareholders of the firm. And by the way, the majority of employees are shareholders. That's quite a nice model also, you know, to to staying into pernural, by the way, to the point before, you know, everybody has a common goal, common goal to grow the company to make sure that checks and balances are there. So there are definitely these benefits, you know, if you do an IPO, maybe that worked as a private company when you're relatively small. But now we've grown quite a bit. So that's an advantage. Another advantage could be that as you grow also in the private well space, your brand is a bit more known and public. And that's also reason why some of our peers have done that. At the same time, it could also have some more administrative burdens, as you very well know, you know, from very regular reporting. And you're public. I mean, just being there, it could have advantages and disadvantages being an acquireer or being acquired, you know. So so we balance these pros and cons. I mean, so far, I really feel that we we're perfect the way we are, i.e. as a private company. Also many of our large LPs, i.e. our large investors, limited partners, they they like the fact that we're that were private that we really focus on investing on portfolio work, on exiting the companies and being close to our to our investors, then maybe having too much focus on on all that public side over the world. So, you know, but but we see the pros and cons and, you know, let's see what the future will bring. It's nothing imminent. I can promise you that. But let's see, let's see. I mean, I wouldn't rule it out for the mid to long term. Yeah. There is one thing that we see coming from consulting is that, especially if you go public to keep this entrepreneurial spirit, right, this strong performance orientation in in this in this setup is very difficult. Yeah. So everybody's challenged by this. Some keep it very good. Like one of your, it's not a competitor. One of you of the others, EQT, they went public, right? And they have, of course, maintained this kind of mindset, but it's not that easy, right? For sure. I will totally agree with you. All right. So let's then talk about energy and infrastructure, because you mentioned that is an area of, of, you know, promise. Yeah. So in the beginning and so what are you doing there? Are you excited? Are you about that field? Yeah. And you mentioned the fund coming up as well. So we have been active in the direct infrastructure side since almost also 20 year, actually 2005. So it is 20 years and currently we're raising that sixth generation and we will announce the closing soon, but it's it's going to be sizable. I cannot say more at this stage because we're also just fine tuning. There's the final numbers, but it's going to be very sizable. And so one of the market leaders globally, certainly in Europe, but globally at the same time we've done investments and raised capital for, let's say, dedicated, clean energy funds. So you know, anything that's renewable from solar to wind to biomass and so on. We've also raised a dedicated hydrogen fund two, three years ago of two billion euros that was in the press, making it, I think, almost the largest, one of the largest dedicated pockets for hydrogen, just to show you, you know, we're trying to cover the whole range. The flagship fund here, and by this is this is one that's mostly focused in Europe. We also have a mid-sized fund for the, for the Americas, just yesterday we sold the company. So it wasn't the press in the energy production to one of our large US peers in Pennsylvania. So we're also active in the Americas, but in Europe, we really focus on energy transition. We focus on transport. We've been owners of some of the well-known airports, for example, where the largest shareholder in Heathrow. We had once owned the two Milano airports, my hands and leanato. We'd sold those recently. We also owned one of the airports around London. We're looking at another airport. I'm just saying that because people can relate to airports, you know, almost everybody has been in Heathrow. Even if the lines are a bit long sometimes, you know, I still have you to say in those lines too, by the way, you know. But that's maybe 10 or 15% of our investments. The majority, as I said, you know, energy transition, but also digital infrastructure, cable. We've bought into, into telco towers. So yeah, we're in all that space, and we've, and the team has really done a good job delivering good returns and working with many either corporates or entrepreneurs, making us, yeah, one of the leaders globally, especially in Europe. Are you investing in data centers? Yes. We have invested in one company in Europe called Verne. Two years ago, it's also part of that newest infrastructure fund six. And the company is, has a data centers mostly northern Europe. So Nordics, England, which is inherently good in a way, because it's not that warm there. And data centers have a lot of, you know, create a lot of heat and energy. So, but yeah, it is, it is a great investment. It's done very well. But you know, it's, we don't have a dedicated, let's say, data center fund. Just for that, we want to diversify a little bit. In infrastructure, I think it's important to diversify both in terms of geography, but also in terms of sectors, because there could be changes in regulation. There could be changes in business models. And you want to make sure that you're not just too much focused into one thing, because then you could, you know, could end up badly. Yeah. Maybe one switch looking at your business into the geographic, right? So the world is in a difficult state. We are all sure about this. So my question is you have a European footprint when it comes to your investors, when it comes to your investments. And at the same time, you act very global, right? So my question is especially also looking at Asia, because it's also your responsibility. How do you look at Asia and how do you look at the world and the difficulties that we see? How is it affecting you in your business acting? Yeah. It's an important topic indeed. I mean, the world is definitely a different place than two, three, four years ago. And it's still moving. We're watching things changing. What we see is that quite a few investors like us as a European house, some Asian LPs, they're reducing a little bit the US exposure. So that I think helps us. What also helps us is that we are a player in the field that is multi-local. I mean, we have 20 offices, as I said before. So you really want to be in these different markets on the ground, speaking closely to your different stakeholders that could be investors, but it could be entrepreneurs that sell your company, the companies to you or in infrastructure assets, the regulator, all of that. So that definitely helps us. I would also say that given that we that we are so global, we can always adapt a little bit to the situation. Invest a little bit more there on the fundraising front. And I can speak about it quite well because I lead that. I think it's been the last three years were record volumes that we've always raised. And If you're just let's say fully focused on Europe or fully in the United States even I give an example in 2021-22 post-COVID Many US pension funds were over allocated and to private equity or private infrastructure because not much exits were happening and Stock markets went down a little bit we call it the denominator of fact and suddenly they were over allocated They couldn't invest so even if you're one of the two top two three global market leaders and 80% of the investor base was American You really had to pivot away quickly and and we always had that advantage that we said we have 20 offices, we raised capital from everywhere and and that's the fundraising side but also from the Investing side having these multiple local footprints has really helped us and I give you another example We have we have a fund in semiconductor in today's market. There are clients that see there is really Value added if you're a European player because everybody wants to be somewhat independent in today's market You know the US is of course formidable and strong the Chinese are similarly very very successful But saying hey, we need to do something here also in Europe so we've raised it capital by the way mostly outside of Europe capital Mm-hmm But to invest in the whole semiconductor Universe let's say it could be many different companies But in Europe where we have top-notch Research you know in Germany the Fraunhofer Institute, but many others in France in Belgium and so on and so it shows you It's not all bad with with the world that is definitely very much moving I think yeah, we've had three record years and there's advantages opportunities Let's say also to to have from that. That's good to hear that you still believe in Europe, right because there's a lot of talk about How far Europe is behind right especially when it comes to the technology sector is it or so? It's good to know that you see the investment opportunities in technology also in Europe No for sure. Yeah, totally totally maybe coming to the private equity business or Because our podcast is called corporate right transformation right leading corporate transformation So let me start with a quick quote from Henry Kravitz from K.K.R. He said private equity is making the corporate world more responsible and Management act like owners, right? That's what he said so and my question is what's your strategy on the private equity? also primaries and and direct investments and and where you say is the responsibility of the management of these companies. Yeah, there is definitely the management is automatically more of a shareholder because they they own a larger share than a classic CEO of a publicly traded company. Okay, so that's therefore I would agree to that to that saying and also the focus of a private equity firm that is owned by a private equity fund ownership Mm-hmm as you know usually the holding periods are on average five years could be three or four years But it could be six or seven let's say five years so in these five years You need to create value. Yeah, and usually there's a hundred day business plan. You know, you need to implement that now Does it always go perfectly well? No, but but the majority of transactions it does and and that shows in the numbers And of course it is different if you own 60 70 80% of a company and the management maybe owns 10% and we had already in by the way We've always if there was a successful exit we've even given More than what was initially agreed to the senior management but tried to give it to all the employees like an extra bonus Yeah, and you know if you will work with a new entrepreneur in the future a new management team They will call the companies that you worked with in the past like how were they as owner? You know are they are they fair people? You know are they and You know it that helps and we were almost I think the I mean we did it more than 15 years ago already and that motivates the people But just Comparing the two business model if you own let's say you're one of the big asset managers or hedge fund You know you own two or three percent yes you consent letters and you can try to get 10 or 15% or 20% of the Votes behind you yeah, but just owning 60 70% 80% and management 10% or so that's a very different alignment and very different decision-making In good and in bad times by the way in good times you very clearly say these are the growth areas you want to go into Geography's products etc at the same time if things are not that great which can happen in difficult macro times But also if there's a disruption to your business model you can also quicker adapt You know sometimes that has to happen too unfortunately, but that's business life, you know, okay? So I want to bring up a nest the world namely bubble yeah Because I think you found the right person toss this question where do you see a bubble? Well, I don't see it that much in the private world. I might be a little bit biased here, but I know look I mean the majority of companies are in the private world the vast majority of companies So the field of investments is huge, you know, so private equity. I don't really see it I mean yes the industry currently has a bit of an overhang from lots of investments in maybe 2021 when they're or even before when the interest rates were of course very low and then a lot of capital flooded the market from central banks Government subsidies whatever during COVID, but overall I think you know that that will level each other out or level it out So that should be okay. Yes, some companies are very large, but they have to find their way out You know the IPO window was a little difficult in the past years, but we're seeing some Server linings let's say light at the end of the tunnel. There is a couple of large amount like 10 20 billion IPOs Just lined up in the United States. So so one thing is the deal side on private equity So, you know that I just mentioned more is more than the private space in the public space also if you speak to clients The majority of clients wants to rather increase their location alternatives because they say the returns have actually on average Been a little bit better than public markets, but there's less volatility and and so so on one hand I think there's still a lot of great opportunities to buy into but also capital from the institutional clients But also private wealth is going into it. So so I think that's important to understand and then you could discuss you know Infrastructure. I think there's still a lot of need private credit You know and some people speak about that But but I also think if you have a good manager that has done this since 20 years or 30 years even gone through cycles You should be should be in safe hands. So and last comment comparing it a little bit to the public market look at the S&P 500 That was driven as we all know by by handful, you know Magnificent seven was it five companies 10 that that sometimes switches a little bit But you have a large exposure or a big driver of the value has been these couple of companies. So Yes, AI has been great There's a lot of it spending, but you have a bit of risk there too. That's what I'm just trying to say you know So and to have a broad diversified private equity portfolio or private alternative and portfolio in general I think is very low risk and we've seen that doing it since the 1990s No fund has ever lost capital no Ardian fund ever and also you know for example in secondaries I think the industry has never been below 10 percent you will also not do three times cost, you know, but yeah But if you diversify well, it's it's a very low risk as a class for me. Great since you mentioned AI We have to ask a question about as well. Right. So of course, of course. Yeah. How is AI transforming your processes? And if you were to give an advice to next generation young philipsch mitz What would you say just back to AI? Yeah So AI is of course a big transformational force In in our everyday life as we all know in the financial world private equity world It's also starting to be seen what I mean with it is I mean any investment decision Will still be taken by humans and I think that's still going to be the case for the foreseeable future You know you have that certain knowledge, but where it helps as a lot is analyzing data summarizing a lot of a trove of data that we have and That's in fact the case for The one side of our business which is secondary is you know where we're more than 10,000 portfolio companies But also on the direct side, you know It could even help us in legal contracts SPAs, you know, of course they go through it I mean of course we have our law firms. We have in house legal team don't get me wrong here But also it helps them and it helps us, you know, so in negotiations in in preparing investment when we're under But very important to to to state the point that Every document or every investment decision would be overseen by by a human But it just helps us a lot to you know to do the groundwork, let's say of certain investment cases Also to to source transactions in certain sectors, you know, in certain geographies and so so so definitely it helps here and What is my recommendation? I mean I would say If you're young you want to go into the industry You know make yourself knowledgeable about AI, you know, it's it's a fast evolving market again. I believe that Humans will still take final decisions for for a long time, but to use them as tools is very very interesting So that basically means if Allow to summarize it if you look the entrepreneurial spirit This keeps human So which basically translates into AI is not going to replace you overall, but it's going to not but But it but it's like investors using AI very smart are going to be the winners in the market I would agree to that. Yes, absolutely and you know you have to use it I mean for example on the infrastructure side we have other software that shows how much emissions are used by a certain airport airlines And so there's a lot of tools that you can use to make to get better data and then based on this data Take certain decisions or all our renewable wind parks of solar. You know there. There's a lot of automated processes and AI Then summarizes that so so so there's a lot of help and obviously I believe you know much more to come there still Yeah, okay great I wish we had another hour Unfortunately we don't but I still want to know a bit more about your own background Yeah, and personality true and What do you think has made you successful in this business? What has made me successful? That's a good question and I sometimes look back You know in the past 20 years and I think one thing That was key is that I liked the business. I thought it was interesting and and that's also a key recommendation for any student or You know, not just in finance or for for VHU but For everyone try to choose a job that really interests you Because you will spend a lot of time in that job And yes, sometimes I wake up on the Monday morning. I think oh well. It's not like every day is shining it Rosie But you know, I still you know on most of the days the vast majority of days. I really love the job I love to you know work on a secondary transaction I love to work to see clients to win clients to work in a great team, you know and and reached Golds and and you know surpass challenges. So that's great. So I would say That was one key key point and otherwise sometimes you I mean you have to work hard. I think You know there is no way around it At the same time try to look at your work life balance to some extent you know in the weekends and you know see what makes you Grounded and and come at the same time, but yeah those those are those are important factors I would say I would also add a bit of luck sometimes helps being at the right place with the right people But always when I got these opportunities, you know, I I went for it confidently, but also asking for advice, you know, never be afraid of asking for advice I still ask for advice now in my position all the time you need to constantly keep learning in today's time more than ever So you know ask questions. They're almost almost never stupid questions, you know So so I think that's also I think an advice and what helped me You said working a lot is is part of the game But can you give us a little bit often like inside in your in your week because as we said in the beginning so your responsible Your responsibility sit in Europe and also in Asia. Yeah, what does it mean? How do you divide your time and and how often are you present? And I think you are going to open up an office in Hong Kong very soon So This for sure bring you there again. So yeah, let us have a little bit of an insight into your daily line Yeah, and you know on that I was in New York last week and in Singapore the week before now I'm for one weekend Frankfurt that's hardly ever happens Actually, no tomorrow travel to another city But to be in Germany for one week that's that doesn't happen often But you know on a classical day For me and I would divide it almost 50 50 being on the road I mean, I'm covering the global client relationship. So the clients want to see me My teams in Asia want to see me sometimes my colleagues in the United States want to see me But so I would I would divide it roughly 50 50 traveling and Being at the office when I travel of course be travel often far away or in Europe or you know you meet clients You have a couple of client meetings sometimes and can be very packed I've had five six meetings seven sometimes a day which then Starts to be heavy and you wonder what what did I say in the first meeting that I just say that yeah But usually let's say a couple of meetings a lunch or dinner. That's when I'm traveling When I'm here I come to the office you know it depends I mean it's a bit more flexible with all our digital devices that we have today But I try to be at the office let's say at nine o'clock I tried to do my a bit of sport in the morning that grounds me balances me I think that's in the last few years. I've really learned that as an important factor of well-being I have I have a big family many kids um, but you know how many six wow That keeps me busy too um, you know, but is that chose you then during the day here if I'm at the office You know in the first years so also for the younger generation. Yes, I've I've done long hours, you know 10 11 12 sometimes Um, but but I think we as an organization and certainly for me I try to then rather go home Still see the kids of the family have dinner with them sometimes you can still work of course afterwards You have your emails your iPad yeah your your iPhone You can do calls so so trying to to break that up a little bit So when I'm here I really try to to to to also take care for myself take care for the family take care You know for friends. I think that's important, but in a way You're almost always on but sometimes I will just turn off the The phone or something but but that works quite well. I can work quite well with this. Let's say duel Um, you know being at the office of course constantly on but also at home then sometimes more sometimes less in the evenings or even on the weekends But but it's it's okay. Yeah Great. Thank you. Um, then I have one more question and I'll hand over to Gory for closing and the question is Yes, where do you see the role of Frankfurt going forward because happened to be in Frankfurt? Intruded that I knew Of course big fan of Frankfurt's And then I'm always curious from a you know from a From an expert point of view, especially banking and finance, right bigger stands that's We discussed that in the organization. I mean Frankfurt for us at Arden were like 80 people here That's one of the two three largest representations of any firm Either international firm or German firm or European firm or whatever So for us the Frankfurt office has a really important role I would also add I mean it has an important role from two perspectives Investments and we've been investing here since 20 years or so in direct private equity direct credit we own a large infrastructure portfolio company EWE which is one of the big Fezaga, you know one of the big energy companies in Germany Real estate so we invest in every space But interestingly the German client base is amongst it one or two largest for Arden That's quite interesting, you know, so the majority of German insurance groups or pension funds or Hazolgangseck as we call them, you know liberal professions like the doctors and lawyers There's a big big Community of German LPs so for us therefore the Frankfurt Office has always been very important. It's not far from VHU and we do have some really good Talented employees, you know our head of real estate interestingly for example is also an ex-alumny from the VHU and some others too But now now the big question is what what what will be the future? I think and I've been speaking to politicians. I've been speaking to other people senior people in the financial world I mean there is a lot of Energy or you know their goals to to make the the the finance plates Frankfurt let's say bigger and more relevant I think a lot will also depend on more integration in Europe and then I think as largest economy Germany should always play in play an important role It's saying with you know a big Still middle shnant and a lot of corporate world and so so I'm you know While I think we all agree it does it's not the size of London or Paris for example. I think there is There a lot of things speak for Frankfurt and interestingly maybe it's the last comment I've been speaking to many people who came from abroad like like yourself also, but they said Once you're here. It's actually very nice, you know It is it is quite practical that the ways are not too far and and then people like it and therefore yeah I'm it's a good place to be I myself That's that's my last comment now on that point, but I myself of course have constantly been thinking You know do you maybe go to Paris or do you go to London? Oh, New York or we have a beautiful office in Zürich at the Ban of Strasse I mean there's there's many places you could or London would have gone but but I've I've seen all the advantages here and having one of the most senior positions in this organization You know, it hasn't been a negative for my career But also I can do the job from here easily like in any other of the big cities. So that's good Yeah, as you said you have one of the most important jobs in this company and of course coming from PWC There's a question I do ask before we really close and it's about you have a big-for background Starting off your career in the big-for industry. How important was it that you started there and would you recommend it to To the young listeners to start in in our industry before moving totally totally And that's also recommendation I give to Young talented people Despite what I said before you know that you choose a job that interesting and so on but we usually hire from three industries One is you know the big four or like accounting firms or in the transaction services business in there Ideally have also advised some private equity clients. It is nitty gritty. Yep, and you know, but but you learn the basics You know you learn what a balance sheet how it works you learn about the PNL of a company the cash flow and and so you get a good And education yep with a gun tanfak as we like to say in germany. So so that that's that's good The other two sectors as you won't be surprised are either investment banks yeah consulting firms You know strategy consultants or other consultants for certain sectors and that's what we like so also as a recommendation For any listener who wants to go into the industry try to Do internships either in these three industries? Mm-hmm or ideally already with a couple of private equity firms directly And then you see sometimes they take you right after university right after you did your studies, or sometimes they ask you, we've done both, an audience, sometimes they ask you to first do a two or three year, or the position is not open that moment, then you pivot into one of these industries and that you could come back. So, listeners, listen well, right? There is an important layer in consulting and in the big four business. Totally. Yes. So, we could speak for, I would say, another 10 hours. Very interesting. I enjoyed it. Adian is very interesting. Your own career is very interesting. But we need to come to an end, right? Then, like always, too bad. But we have a final question. And that's a classic. It's our classic question. Because we really like to get some ideas of what keeps you maybe awake at night. When it comes to, do you listen to certain podcasts? Do you read a book at the moment that really drives you? Is there a certain movie that had an impact on you? So, what do we have in sitting on your cupboard? Yeah. I mean, to the first part of the question, what keeps me awake at night, fortunately, I sleep pretty well. And as a firm, we're doing, we're doing really well, I would say. Of course, you constantly think, what could you maybe change, or accelerate growth, or the fundraising, or investing. But currently, I feel in a very good state of mind, and also with my colleagues in the senior management of Ardian. And that's great. Now, about my personal interest, there's something that I would recommend from a podcast. I mean, the podcast obviously helps me. It's so-so inspiration. That is like right up there, right under the top. That is obviously true. But I mean, I read a lot every day, mostly newspapers, from international to German, I have five or six that I have on my iPad, and I read them in ten minutes each every morning, so I have a good view. So I read a lot. Sometimes I don't manage to read too many books, because a couple of hundred pages, you get that done in a summer holiday, maybe, or so. But one book, or a couple of books from that author, really impressed me because I've always had interest for history. Initially, I wanted to study history. My father gave me that sort of interest in that field. But then I thought, okay, go into finance, maybe a little bit more boring, but in the end, maybe it pays a bit better. But just to say, I really enjoyed the first books of Harari, we all know him. And because he summarizes, on one hand, the first one was Sarpiens, and I think history, looking backwards, and he summarized it so well, I thought. And then also now he's looking more into the current market or the current world. And the future, right? And the future, you told you right. And so I found that always very, very interesting if I would have to pick one. But I also read fun books, or if I manage to read, or I sometimes watch movies, or series, and just sometimes to relax, and all that too. That's if I would have to pick one, that's something that really interested me. Thank you. Thank you very much again. Thanks, Gory. That was amazing. Seng Sian. Thank you, Gory. It was a big pleasure to be with you. Thank you for your time.