Inside evergreens with Luc Maruenda, Eurazeo

Speaker A: Foreign.

Speaker B: Hello everybody and welcome to the latest episode of the Great Convergence. This is my latest series focusing on evergreen fund developments, trends and challenges, actually, as the uh, evergreen space evolves at uh, uh, lightning speed. Delighted to be joined today by Luke Maruenda. Luke is the head of wealth solutions at Eurasio Eurasio, one of Europe's leading private markets firms. Very well established and real pleasure to have Luke join today to share his um, long track record and um, his insights. So Luke, great to see you today and thanks a lot for joining.

Speaker A: Hello James, great to see you too.

Speaker B: So Luke, let's kick it off by going back to the beginning. It's always a good place to start in any conversation. Go back to 1999 and I think some people might not realize actually that even that far back, you know, private wealth was already starting to evolve. And really, really even private market groups like Eurasio had their own private wealth business, albeit very early stage. Can you just take us back to that period and um, what the private wealth landscape was like when you joined Eurasio in 1999?

Speaker A: Yeah, it's a long time ago. It's about 26 years ago. And uh, it was very different from today actually myself and the team who is today, um, at Eurazero, we were in a separate, for a much smaller company. It was not like an institutional platform and we were depending on, we were a captive company of a large insurance group. And basically uh, the trigger was um, a tax incentive that was given to private individuals in order to promote venture capital in France. So we had ah, the opportunity to Launch Small Funds, 1 Annual Vintage Funds dedicated only to small innovative companies in venture capital. And in return investors will get a 25% tax reduction. And that was a trigger. So we had this and uh, parallel because we were working with uh, this large insurance company. There was a network of uh, close to 2,000, uh, uh, they were financial advisors covering a few hundreds of thousands of clients all across France. And that was how we were able to start. And it was very small at the beginning. We were. The first fund I launched was I think 30 million. And then I was congrat for the next, uh, six to seven years. If I was reaching 50 million raised in, in one year for one fund, you know, I was congratulated. So it was very different from today.

Speaker B: Very different. Yeah. What was it? Um, how did you approach just in those first, let's just say the first few years, how did you approach relationship building and that relationship that you had with the insurance group, did that help you Know, at least initiate the way that you thought about developing and building out the network.

Speaker A: Yes. The most important was building trust. Building trust among, uh, all the people who are going to advise individual clients to invest into our funds. You have to understand, we never sold direct. We always used a uh, distribution network to help. So it was relentless. Every day, every week it was uh, taking a train, traveling to some small places in France, uh, talking to people. You know, like, if you do, like if you want to be successful in politics, you know, you have to cover the ground. We had to cover the ground. We had to go everywhere campaigning again and again and again, uh, to meet people, to tell the same stories all the time. And uh, this is how it started.

Speaker B: Yeah. On the campaign trail, as it were.

Speaker A: Absolutely. This is essential.

Speaker B: Yeah. Did you. When do you. When did you first start to get an inkling, the signal that you were getting validation for the strategy? How early on did that.

Speaker A: Well, you see, uh, um, the first years, the first more than 10 years actually, we were mono strategy. We were only uh, targeting those specific funds. We were providing tax incentive in venture capital and covering uh, uh, only the French market. You know, venture capital is high risk, high return. Uh, we had uh, uh, some uh, difficult time. Especially uh, when you remember the Internet burst of the bubble in 2001, uh, uh, and the difficulty we could get in 2002-2003-2004. But then after we had some great successes, uh, especially in vintage of 2006 and 2007 because we were the first investors in Kriteo, this um, Internet, uh, marketing and um, advertising platform which we uh, invested in 2005 at uh, um, uh 2006 at 5 million euro value and which exited at uh, over 1 billion in 2013. Uh, we had some great successes. We were able to return uh, for some funds, uh, three, four times the fund amount to our clients. So that built a reputation as us being one of the great. Actually uh, the great venture capital, uh, players in France and Europe. And that was really the beginning of the. When we started to raise more money at that time.

Speaker B: Yeah. So it started off very, very focused, just looking at venture cap, just looking at.

Speaker A: And very humbling at the beginning because

Speaker B: of the tax benefits to investors. And um, that was an early proving ground really. And I think it's important to say this was years. I mean if I come to your next milestone, if I can call it that, you then launched your first private debt fund for private clients. But this was 2012, so you've already gone through a decade the noughties VC offering, you've gone through the dot com bust, uh, and subsequent boom as you've already alluded to. But I think it's important for people listening to this that are looking to think about how to develop their own private wealth. Business. Business and proposition is that this takes a lot of time. So we're at 2012 now. How did that happen and how was that received when you then moved to launch the uh, inaugural private debt fund, uh, at the firm?

Speaker A: Yeah, well what happened is there's a few factors. The first thing is we started um, the private debt practice in 2007 and the team was quite successful, working very well. And in 2012 we're starting to raise the third institutional funds. What you have to know also is that uh, at your, from the beginning we've always had this philosophy of saying all private clients, whoever they are, should be able to access the same strategies as we offer to institutional clients. So in venture, this is what we are doing. And uh, in private debt then, which was the second strategy we decided to offer to private clients, we had already an established institutional strategy which was working pretty well with good return. What you have to understand is that basically offering only venture capital to prior clients, this is not a scalable business.

Speaker B: Sure.

Speaker A: This is very specific. It was very focused on tax reduction. We're raising small funds. And uh, there was not a uh, possibility to really diversify, to raise more money, to really start to offer a range of different strategies. So private debt was a good start to diversify because it's really, it's not opposite but it's very complimentary. It's very different from venture capital. You know, in private debt it looks much more secure. It's a totally different strategy. It was done very well, uh, through our uh, distributors with a few private banks we started to do. And one important thing also in those milestones is in 2010 we became independent from the uh, insurance company, uh, who was owning companies. So we were owned by basically uh, entrepreneurs. And uh, we had uh, then much more uh, latitude to. And it uh, was much easier for us to discuss with different distributors once you're not a captive anymore. When you master your own destiny, you know you can do many more things. So we had this, I would say this entrepreneurship vibes which also helped much to develop uh, what we did. And private debt was a great launch. We started the first fund in 2012. Then we had a uh, second fund in 20 uh, 14. It was a time where the market was changing terribly dramatically. If you remember in 20, uh, 11, 12. It was a lot of, we're talking a lot about debt mezzanine. You know, uh, we've always this complicated uh schemes uh of you have when a buyout company, a company under buyout transaction was trying to raise money. There was the banks, they were senior secured. Then you had the debt mezzanine on top with probably more return but more risks. And we saw a complete shift in the market from 2012, 2013 when uh, uh, the whole concept of uh, senior uh secure from the, from the banks and uh, private and mezzanine debt was replaced by what we call the unitranch and direct lending senior secured which, which we do today. I don't want to get too technical but uh, basically we were covering the whole finance uh need in debt of a company that was really the start of the private debt market all across Europe. And we really surfed this wave. This wave, uh, starting in 2012, 2013.

Speaker B: Yeah. That's fascinating. And as you say that a great way to then start to diversify the offering to investors. And what that then led to was a pretty important partnership with BNP Paribas in 2016. And I think the reason I'm raising this point is that this marked your first 100 million euros, uh plus raise. Maybe just up until that point. What sort of fundraising were you looking at and how important was this, the collaboration with BNP Paribas in 2016?

Speaker A: It was very important if you just backtrack a second over. So for 12 years we do only venture capital. So then from 2012, 2014 we do. We launched two vintage in private debt. Close end funds focus only on private debt.

Speaker B: How big? How would you say how big?

Speaker A: First fund was 65 million, second fund was about 45. We got the bull warning and we had previous vintage so it's good. And then we decided to continue to diversify the strategy. In 2016 we decided to offer uh, to open the um, secondary equities. Secondary strategy in equities um through uh this fund which was called uh at the time Strategic Opportunities and it was 2016 got attention of BNP and BNP told us well this is a great strategy. We would like to offer it to the clients they knew already secondaries. But there was a twist that said okay, we like to do it but we want to do it in unit links in life insurance contract. And that was a new thing and say oh wow, that's great. Of course the insurance company, uh Cardiff didn't want that at all because this is not at the time you Know unitlink. Putting private market funds into unitlink was totally, was not possible in a sense. Uh, you cannot uh, you know um, the raison d' etre of the unitlink and life insurance is to provide liquidity anytime, to provide uh, a lot of security. And we're coming uh, with close end funds in private markets which was absolutely not prepared to meet all the operational complexity of life uh, insurance uh, of a life insurance company. But you know it was uh, we discovered that if you want to, to work and to be successful in life insurance, uh, in unit links with life insurance company then it's a free people game. We are building the product. We have a distributor which was BNP Paribas and you have the insurance company which is providing the toolbox, uh, which, which is, which uh, was Cardiff at the time. So the first attempt was uh, very much done by hand. Basically all the operational process from the insurance company were of course not used automatically. They were all done by hand and kind of degraded. If you look at the standpoint of the insurance company, they couldn't use the uh, traditional uh, automated process to process very large volumes. So this is why they didn't really want to do it. But uh, actually uh, it triggered a lot of interest from the public, from the distribution and this is how it came to this success and over 130 million euros. So that was a great uh, eye opener for us and for all the market because we're the first fan in France to be in unit links in private markets. And then we say wow, what we did was great. But there is a need to really accept that if you want to put private market. We've seen UnitLinks contract with insurance company. You need to totally rethink the structure of the fund. It's not the insurance company to adapt to the close end funds in private markets. It's a private equity managing company to build a fund which can be easily integrated within the operational tools of an insurance company. You know. And this is what triggers the whole thinking and huge evolution we had at the time.

Speaker B: Yeah, it was incumbent upon you to fit the product to the insurance market, not the other way around. Not them accommodating something that you might offer that. Yeah, it's um. And that was a real turning point and obviously yes, a key milestone. I suppose that then that was a moment where you realized okay, this is a real opportunity to scale now the wealth offering even further. I should say at this point you're still at this point but exclusively focused on France.

Speaker A: Yes.

Speaker B: Yeah.

Speaker A: And you see it's easy to say at the time. It was easy to see. It was a big opening. And we uh, didn't know actually. You know, when you create and you start something, you just. You try, you fail, you succeed. You fail sometime more than you succeed. But this is how it happens. But the most important is uh. We had this very special relationship with the Alliance Group from the beginning. And uh, they wanted um. We. This idea of building an evergreen fund came into our mind as early as uh. Uh 2013. We really wanted to do that. You know, France is a very. Is a heavily regulated market. Uh and uh, when we first had. When you had the first discussion with the authority Des marche financier in 2013, they told us we're not even in your dream. You can do that because uh, there is too many issues of um, valuation on evergreen vehicles, uh for private markets. So it's very complex. You will never be able to do it properly. So we had a closed door and of course if you want to be uh, in a product, uh, we were targeting mass affluent so not professional investors. So we need absolutely to get the regulatory um, uh agreement from the Autoret des Marchet financier in France. But thanks God, uh the mood and everything evolved. Um, it was a time when we were seeing. We're starting to see some private banks, you know, targeting funds made in Luxembourg because Luxembourg had this, you know, this appearance of being more friendly and more stable regulation. So um, uh, in. In the process of also trying to get Paris more attractive to uh. The financial place of Paris more attractive. We had uh. We were able to basically have the support of the regulator to say we understand what we want to do was in 2016. Well it was three years later but in 2016 start to. We came back to them and we say we think it will be very great. It, it will be great for the public, great for the market to be able to. To have a truly um. A true evergreen fund for private market. So they understand that it was uh. It could be beneficial if it was done properly. A very close relationship with them, uh for a year and a half of discussion of putting together the concept, how we will do the fund, explaining to them how we want it to work. And in parallel, uh, we had a very close work relationship with Allianz, uh asking the insurance company if you want to do a fund which works and integrates um, easily into your system. What do you require? What's the list that we need to tick and tick the box in order for us to be fully integrable. Uh into your system. So this is how came. So of course Evergreen first week cleanups, weak cleanups in the private market. You know this was totally unheard of. And then we had on our part, we said there is two major issues that we need to tackle. It's predictability and scalability. Because if we do a uh, never green fund, it's not to raise 100 million euro, it's to have an objective of course to raise much more. So we need to have large investment universe in which we can invest money. Uh, if you talk Evergreen, it's not closed and funds so people need to be able to get their money out. So you come to redemption mechanism to allow people after a certain period of time to get their money back. So you introduce so many complexity from um, a close end fund that uh, you really need to. We had to work a lot with the lawyers, with the insurance company, with the regulator to, to put together something which looks, you know uh, that it makes sense. And this is how we did. And we were able to get uh, approval from the regulatory. From the IMF in um. Uh March 2018. And the fund was launched in July 2018. Three months later.

Speaker B: 2018. Yeah.

Speaker A: Yes.

Speaker B: And um, so this is Eurasio Private Value Europe 3 EPV3. So this is the, this is the. The flagship Evergreen that launched UH in 2020 18. And I just want to allow you uh, to spend a couple of minutes uh, Luke, just explaining that the way that you approached this was to create a hybrid strategy. So it's. It's both private. It makes sense given the story you've already given to this point with your heritage of launching private debt and secondary funds prior to this that you thought that there would be an opportunity to then create a hybrid fund. So could you just explain how that works?

Speaker A: Yeah, well we needed to do that for very good reasons. First of all, when. And I think this is the most important thing to understand once you launch an uh, Evergreen solution, this fund will last many years, lasting many years. It will encounter economic disturbance. There will be. And actually in fact we had the COVID We had interest rates hike and now we have the tariff issues. It's. It's never quiet. So. And you will have ups and downs. You need to be the more resilient possible. You know, if you having done a lot of venture capital, you know you can do a venture capital fund, you can do. You can return four times the funds to your clients. They're very happy. But this is a one shot. You know, you don't repeat that this is not scalable, you cannot repeat that all for every vintage of course, um, because this is a nature of, of the strategies. So if you want to have pure performance, high risk, you go to close end funds. If you want to have stable return long term views and to reach a large pool of mass affluent clients you need to provide predictability, you need to provide a story which is reassuring, which is not scary. This is not the objective of an evergreen fund. So that's what we did. And in order to do that you need to again uh, and I uh, will always repeat, you need to offer predictability. Predictability means stability, means solid construction and a solid construction will come through um, first. And when you want to stay only in private markets you need to focus on the strategy which seems to be, and I'm um, careful with what I'm saying, which seems to be the less risky and in which you can also you maintain a good performance. You need to be as diversified as possible. Uh and in this regard private debt and secondaries in private equity assemble very well together. Uh, private debt at least at Eura 0 is a very strong strategies. We have deployed as of today close to 10 billion uh into small uh companies uh all across continental Europe. It's a very solid, very uh, very very stable strategies. We're currently raising fund number seven for on institutional side which is a 3 billion fund. Basically we are senior secured, we are sole lenders, we have had very few default and, and basically we never lost any money so far on this strategy. Of course future can be different but so far it's a, it seems to be a very, a very good strategy. And most importantly it's a short cycle strategy because typically all transactions we do in private debts, uh, they get reimbursed between three to four years which is very important if you want to build an evergreen solution with redemption windows mechanism for the clients on the secondaries. You buy portfolios of companies from LPs, uh, uh, uh, from private equity firms, uh, which are uh, in the middle of a transaction. That means that you have immediate diverse exposure to a, to a portfolio. When you do transaction. It's diversified from the start. You see what you buy and you have a short cycle of investment because of course when you come into your three to four to third year after transaction has started, you will exit of course much quicker. So again the investment cycle we have in secondary is about three to four years. So it makes a lot of sense if you want to build an evergreen. When we build the evergreens ratio we have those two Strategies, uh, they are uh two different way to approach the mid market buyout universe that we're looking, that we're addressing a pay view free so you know min market buyout in Europe. This is where Eura zero has all its credibility, has all its history. So we have a lot of legitimacy on that first of all. Second, this is where most of the institutional money is going today. So this is what is regarded from institutional investors as the most secure uh strategies in private market where you can deploy a lot of money and get good return regularly year on year. So also this is very important and uh, we have short investment cycles. So basically you know those, it makes so much sense to build those two strategies into one fund. And we decided to on the cursor of which percentage of each strategy we decided to be majority in 60% in private debt and 40% private equity. Some people say we would like to see the reverse. But again for the financial, for, for the first product we do it. We wanted to have this, predict this sense of security. We felt it was more appealing if you were uh, majority in private debt and minority in private equity. And that's how it became a success.

Speaker B: I'm just making a quick note on what you were just saying on the. Just when we come to. I just want to draw attention to uh, a few of the attractions really that helped when you were approaching wealth allocators across not only France but Benelux and Switzerland that really helped the funds stand out. Was it linked to the heritage of the closed ended vehicles that you'd been running for many years in, in private day. The first fund as we spoke about earlier that you launched back in 2014, sorry 2016 with um, with that commitment from BNP Parabar.

Speaker A: Really James, what the trigger was that from the start we've always had population of investors. We had the main stream of business for Eurozero was from, was coming from institutional investors, large insurance companies who were investing into the strategies. And um, we have always uh decided to open our retail, I mean private client strategies, wealth solution strategies. Sometimes after an institutional, institutional investors came into the strategy. So the strategy has to be established and that was a huge factor in trust. Once we had uh, some few very large insurance company already investing for their own money, for their own balance sheet money into our institutional funds. When we, when we came to see them and we say we want, we like to replicate uh those strategy for private wealth. Uh clients they say well it makes sense because they wanted, Remember at the time you know you had negative interest rates.

Speaker B: Yeah.

Speaker A: So they had, they had a very big push, push to, to toward uh, unit links, to transfer the risks towards the clients and not towards uh, the balance sheet money. You know, this is a huge, a huge deal for insurance companies. So they wanted to do more unit links and they wanted to discover new universes. And we came at the right time with private market strategies, with something like Copery, which looked quite reasonable in terms of uh, uh, risk and which also looked appealing because it was scalable. And uh, we started to grow the fund pretty quickly. As I told you, four years later we were already at 450 million euro race. So it was pretty quick success very quickly. We had two or three insurance companies who came on board and it's because they had this trust into the investment strategies and this trust added to the right structuration of the product. This is what made the success.

Speaker B: Yeah, as you say, during that four year period. Yes, it went from 50 million to 450 million. And again it's a great story because last year the fund surpassed 3 billion euros. It's gone from launching in 2018. Still didn't quite know, you know, still very early. So 2018 raises 50 million. Here we are now, end of 2024 and it was at 3 billion, making it arguably one of the biggest evergreen funds in Europe. How do you feel about that? Um, how do you what from a personal and a professional perspective, how does that make you feel? Just the great success that the fund has enjoyed over the last six, seven years.

Speaker A: Of course we're very proud, we're very happy, we remain very humble. Because first of all this is a teamwork takes. You know, there's uh, tens of people working on it. Yeah, it's my strategies on the operation. Uh, we had to learn, um, as we uh, progressed the complexity of such product. Initially the most challenging issues was to get into the discipline of releasing a weekly nav, uh, which is totally uh, again against the uh, practice of private market, uh, based, which are run on a quarterly nav.

Speaker B: Yeah.

Speaker A: But it was a prerequisite from insurance companies. So we had to do it and we managed to do it properly. Um, uh, and uh, that was the first major steps to get into this discipline every week. So the operation they had to get, we had to put in place, uh, of course a lot of it because this was the only way to work with it. Then we had to do uh, I guess innovative into the reporting of the funds. Because in the Nevergreen fund today is 250 companies in the portfolio. It was very quickly up to one, uh, hundred companies. Uh, then we wanted to, uh, we said our best marketing. Basically this is our reporting, uh, the transparency with which we communicate to the distributors to show them what's in the fund, what exits we do, what investment we do. Basically at the end of the day, I think why we are successful and why generally private markets are successful among and more and more among people. They are very simple products. It's easy to understand. Either you shareholder in a company or you loan some money into a company. Uh, we just give them stories of companies. It's great stories, great companies, success, sometimes more failures, but at least people can relate to them. Uh, and that makes big difference, uh, from what you can see on public markets and with structured product. Very complex, uh, uh, vehicles, that is, they're very hard to understand. Yeah, our products are simple. The difficulty we have is the education because, um, we are perceived as higher risks. Not because the strategy is more risky than what you will have on the market, but it's perceived as higher risk simply because it's not necessarily liquid. Yeah, as the public market, you know, this is the only reason. But uh, if you can address those issues through education, uh, through transparency into the reporting, into being able to really provide solid, honest information and at the same time you have a great product who deliver every week in a small increment of performance, everybody is happy. The objective of the fund is not to deliver 12, 15%. Like everybody say in private equity. We are in objective of performance between 6 and 8% year on year. And that's what we've been delivering. And this is plenty enough for people to say, well, this is a good return basically, and maybe in the future we'll do some evergreen, which may be more racy, maybe a little more private equity with higher return that's in the pipe. And that will happen. But when you want to establish your reputation and your name into this evergreen solution, you don't want failure. And I think this product came at the right time, with the right structuration and it became a success. And we're very proud of it.

Speaker B: Completely. Absolutely. I think, again, I think you've been highlighting there, uh, there are just some critical factors that really play a part here in not only the fact that you've built over decades, you know, a very, very, very successful private wealth business, but it's the operational discipline, getting those daily navs and getting the operations team and the tech in place to make that happen that then drives the quality of the reporting. You've got the performance aspect, but critically, as well it's the trust that you are able to inculcate with your, Your advisors and with your, with your partners, your distribution parts. And these are all very, very vital um, factors that go into building a long term Evergreen offbrain, quite frankly.

Speaker A: And you see James, never forget that very basic stuff I said at the beginning. You know, cover the ground, meet people, explain. I mean this is totally the case today. I mean we're more and more. The team is bigger and the team is on the ground all the time. All the time. All the time to explain.

Speaker B: Yeah. Exactly as we was. Yes, the campaign um aspect. But what this does is illustrate the culture as well that you've built. And I think even though I didn't allude to it earlier for many years, Luke, it was just you. I think.

Speaker A: Yeah.

Speaker B: It wasn't until 2017 that Agath, uh, Buber joined uh, as your deputy. And obviously that was very important to again think about the future expansion of the team. So how many, how big is the team now, can I ask?

Speaker A: Today we eight people.

Speaker B: Um, quite small really.

Speaker A: Yeah, we're quite small. Basically what we used to do at the beginning, yes, I was alone but I was enlisting the help of the investment uh teams to cover the ground. So. So yeah, yeah, I was uh, directing uh. We had 10 people investment team in uh, venture capital. We had uh, close to 10 people investment team also in private debt and secondary. So I would send them to meet people. So it was a good exercise for them.

Speaker B: Yeah.

Speaker A: And of course I was traveling a lot to meet. But we. I was able to use those. The investment team to tell stories and to. And to explain. But after. When we started to. To To to to think about launching the Evergreen, I just couldn't do it alone. I got. Was in the marketing team. She wanted to, she wanted to. She reached out to me. She wanted to. To evolve her career. And um. And basically I said yes, let's do it. And we started the two uh, of us. It was so we had already close uh, to twice much uh power to work.

Speaker B: Yeah.

Speaker A: This is.

Speaker B: Yeah, yeah. You literally double the size of your team.

Speaker A: Exactly. Then uh, we got. We had. There was a young Trini, uh on the institutional side. His name was Adin. And um, uh. Mathieu, who know his head of uh investor relations at the time told me well you should look at this guy. He's smart. He doesn't, he doesn't uh. He's not afraid to talk to new people. So maybe uh, you should have him on board. So we got him on Board actually he's in the team and progressively we had of a lot we added people slowly make sure the team was a good spirit. Ah trying to good uh, spirit a good discipline, trade a good reach to people. It's about building relationships. And uh, basically at the beginning Agatha and I we started to really focus on the structuration of products and maintaining very uh, important relationships with the largest, with our largest partners and leaves the ground covering to the more junior um a member of the team.

Speaker B: Yeah. Let's look at the platform expansion beyond EPV3. Um, you've launched, you've since launched a tech growth equity fund. You're also currently designing two new evergreen funds in Luxembourg. Maybe just how are you thinking about what will those look like? How important will Luxembourg play a role in the future expansion of the offering? And um, you know utilizing these different fund structures now for like the LTIF for retail UCI Part 2 that's maybe a little bit more suited to high net worth. Can you just speak about that?

Speaker A: Yeah, exactly. You know um, uh our current fund is a great success. However this is not the best uh structure to expand seamlessly in Europe. It cannot uh, our fund cannot uh receive the passport ltif simply because of the you know LTIF is a passport which require to invest mostly into the EU distribution. So this fund cannot really go seamlessly all over, all over Europe. Uh and uh also we want, but we want to replicate uh the success of this fund uh in different countries because we are convinced that this is, that will be a demand. And as you see the evergreen solutions are becoming mainstream today all over Europe with very large players coming in. So we decided not to impose a uh split of the E bridge strategies of private debt and secondary and equities in the same fund. So we decided to do two pure BRICs. One will be uh, pure 100% private debt evergreen and the other one will be uh, a pure 100% uh secondary equity uh evergreen as well. Meaning that that distributors private banks they can decide to do their own mix or take only one or the other. So that brings much more flexibility to the partners and to the private banks. And we feel it could be uh an accelerator, an acceleration for the success. That's one thing. Another thing is using Luxembourg. We are using what everybody use today with uh, success which UCI Part 2 structures which are regulated by the CSSF and on which we can apply for the LTIF 2 passport which on a regulatory framework is very useful to address non professional clients all over eu.

Speaker B: Yeah.

Speaker A: It also provides some facilities in Switzerland uh, which is not eu, um, so and in the UK as well. So I mean those funds are much easier basically to distribute across Europe and even further out. So we want to take advantage of this framework. So we are buying, we are going to announce uh, at late September the uh, launch of those funds. We will do it uh, probably uh, uh, out from out of France to show our intent to be truly European. And uh, we are discussing with some large uh, distributors to start those funds. So really for us this is really strategic because we are today most likely the leader in France in private market for mass affluent and high net worth individual investors. We are not very well in Europe. Europe also we have some great success in Belgium, in Luxembourg, a little bit more in Switzerland. We start to be recognized also in Italy. But uh, the really game changer will be able for us to offer those uh, new solutions uh, with a uh, more suitable situation to address uh, clients uh, all across Europe.

Speaker B: Right. So Luxembourg is a pretty uh, vital.

Speaker A: Yeah, we expect it to be a game changer in the next three to four years.

Speaker B: Right? Yeah, yeah, yeah, yeah, absolutely. And that this could really, really accelerate the wider awareness of Eurasio and um. Yeah, absolutely. It's um. Yeah. So the next few years are going to be. Will you look to build any of the team there in Luxembourg or how would you.

Speaker A: Well we already have people uh, all over Europe and we have people in uh, Frankfurt, in Munich, in Berlin, in Luxembourg, in Stockholm, Madrid, Milan, London of course, um, four hundred and fifty people in Eurasia and covering the ground.

Speaker B: But within the private wealth team, well

Speaker A: we have a pretty strong uh, industrial relations team coverage in other countries uh, than France. And basically we're using those people today to initiate discussion with uh, private banks and insurance companies. This is in their incentives. So they're really eager uh, to help us and as we move on and uh, as success will come we will have of course to hire dedicated wealth people in the. Into the geographies.

Speaker B: Sure.

Speaker A: We're actually looking at one person to help us on large geographies out of Paris, out of France. Um and uh, because this is a strategic market for us and we will, it will, it will grow as we expand. Basically I don't think it's necessary to put people on the ground uh, that cost a lot of money and uh, we know maybe strike immediately, you know, uh, large distribution, uh, we have to be cost efficient and nimble. Uh, our job today with the coverage team is to identify the low hanging fruits which we can address. We have appetite for solutions and from there, build the name, build the brand, build the trust and progress.

Speaker B: M. It's amazing. It's been a brilliant success story over a long period and I think patience, it's certainly been a virtue. And um, you've remained very nimble. I mean, uh, you're still very nimble even. Uh, and here we are in 2025 and it's been, uh, it's been a 26 year story and um, you know, the rest of Europe awaits. So you certainly haven't uh, charged into this like a bull in a china shop. Luke, it's been a very considered and um, very, very careful strategy for how you've approached building this wealth business. It's been um, fascinating to hear you talk through the journey and then just briefly, just so that people can get a sense of what this means for the wider group. Last year, based on the fundraising private wealth, you are, your wealth clients accounted for 22% of Eurasio's overall fundraising, which is a, again, a very significant figure. Uh, do you expect that as you expand over wider geographies in Europe, that the wealth business will, will grow sort of in tandem with the wider group? What I mean is that, will that 22, 25% number be roughly sort of, um, sustainable is maybe what I'm getting at.

Speaker A: Well, the aim is to make this number much higher. We're a bit conservative, of course, but if you look at the large US uh players have all declared publicly that uh, in the next five years probably like 35 to 40% of the fundraising

Speaker B: will be through private wealth, 50% even.

Speaker A: Uh, they have different tools on that, especially with retirement schemes in the us which allows them to grow very quickly. I will be very happy. In five years we can progress, uh, you know, from 20% to 30% of the fundraise of Eurasio. That will be already a huge, a huge step because of course you also will not stay uh, idle on the, on the fundraising for the institutional. So it's going to grow. Yeah, I mean our shareholders, ourselves, we expect to grow a bit faster, uh, than the institutional investors. And uh, this is, this is the goal. We have stuff, uh, this is why we need absolutely, uh, into the strategic roadmap to expand in other, uh, geography in Europe and then after, maybe after five years, and then also geographies in Asia and the Middle east and we'll see. But basically we have a huge market next door, uh, from France, which we need to address and we need, we have to be successful in this market.

Speaker B: Absolutely. That's a very Good point. Yeah, no, it's a very good point because I should have just read briefly though just referring back to Luxembourg, of course. It's extremely important for European investors. They trust, it's highly regulated, it's a gold standard. But I think importantly investors in Asia, certainly in Asia Pacific are very, very favorable to Luxembourg products like ucits funds and so on. That is just another huge opportunity as you say. Yes, it is beyond Europe because it's so well known in markets like Asia Pacific.

Speaker A: And we have people there, we have, we have a very initial discussion with uh, some however we have to be careful. I mean if you want to stretch yourself to too many geographies too early, this is a recipe for disaster. So we're going to focus on couple of geographies, very large markets in Europe, you know, like Germany, the Benelux, like Italy, which is already a uh, solid uh, base of uh, investors Trusting your Azure and knowing your as they were. That's very important and we're going to capitalize on that. Build the brand, build the volumes. Because this is a, this is a volume business we need, we are in a fee business. So we have, we have to, we have to raise more money.

Speaker B: Yeah.

Speaker A: And we will raise more money if we have a long term partnership. Good uh, performance on the product.

Speaker B: Yeah.

Speaker A: A good return for the clients. If for clients and distributor and distributors are happy, we'll be successful. So never forget that. And then we will of course will expect expand gradually.

Speaker B: Amazing. Amazing. And congratulations as well on winning the IPEM award earlier this year. That was there, that was great. It was their inaugural awards. Uh, it's a great atmosphere there in Cannes and uh, Eurasio, you and the team there uh, won it for best private market product of 2024 for mass affluent. Um, congratulations. You know again from what you've been talking to me about today, it's highly deserved. Are you hoping for you have your eye on more rewards going forward, Luke?

Speaker A: We never know but we are working for it.

Speaker B: Excellent.

Speaker A: It's been hard to decide.

Speaker B: Yeah, you just um, let the product do the talking, you know, it's, let it shine. So it's been really brilliant having you on as a guest. I really valued the insights you've shared today, Luke. I think it's going to really inspire people listening to this that there may be very early in their own journey to developing a private wealth offering within their respective firm. And um, it's been brilliant to get your long term perspectives. You know the market has changed an awful lot in 25 years and um, uh, I just wish you the best for the remainder of the year and certainly for the next 25 years.

Speaker A: Great. Thanks a lot, James. It was a pleasure talking to you.