Azimut Holding SpA

MIL:AZM

Q1-2025 Earnings Call

[Operator]

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Azimut Holding First Quarter 2025 Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Giorgio Medda, CEO of Azimut. Please go ahead, sir.

[Giorgio Medda, executive]

Good afternoon, everyone, and thank you for joining us today for Azimut's First Quarter 2025 Results Presentation. I'm Giorgio Medda, CEO of the group, and I'm pleased to be here with Alessandro Zambotti, our Group CFO; and Alex Soppera, Head of Investor Relations. We had a very strong start to the year. And today, we will walk you through our key developments, financial performance and the strategic progress we have made in positioning Azimut for long-term growth and value creation. So let's get started and move to Slide 3, please.





So let me begin, first of all, with the key highlights from the first quarter of 2025, which marked a strong start to the year from a strategic, financial and operational perspective. We recorded the best first 4 months in our history in terms of managed net inflows, raising EUR 5.5 billion out of EUR 5.7 billion in total, almost 3x higher than the same period last year. This performance underlines the strength of our diversified business model and global platform. Secondly, recurring net income increased by 13%, confirming the resilience and the quality of our core business even as overall profitability was affected by lower variable fees compared to last year. From a strategic standpoint, we have strengthened our senior leadership team through the appointment of a renewed Board of Directors, reinforcing our governance as we prepare for the next chapter of growth, which I will expand on shortly.





As many of you will have seen in the news recently, it has been a particularly busy period for us. We made 2 strategic acquisitions in the U.S., entered the Moroccan market and just a couple of days ago, announced that we are preparing to launch operations in our 20th country, the Kingdom of Saudi Arabia. Lastly, we made progress on the TMB transaction, which remain a strategic priority for the group, and this will be discussed in more detail later by Alessandro. I'm also proud and pleased to share that in the first quarter, we surpassed 1 million clients globally, another important milestone in Azimut journey as a leading multigenerational financial advisory platform. Turning to the numbers in more detail on Page 4.





Our diversified business model continues to deliver solid results. Total assets have reached EUR 107 billion at the end of April with EUR 73.3 billion in managed assets, up 4.4% since the beginning of the year, supported by strong net inflows and positive asset dynamics across all geographies. It's worth noting though that at the group level, we have faced some FX headwinds, in particular from the U.S. dollar as well as certain emerging market currencies that have softened our total assets growth. Revenues in the first quarter came in at EUR 321 million, driven by an 8% increase in recurring fees across all core markets with particular strong contribution from Italy, Turkey, Brazil, Singapore and the U.S. On the profitability side, our EBIT stood at EUR 141 million. And if you look at the recurring component, excluding performance fees, we posted a 6% increase driven by higher volumes and discipline in cost management. Net profit reached EUR 115 million. And on a recurring basis, we recorded a 13% increase versus the same period last year. And this is a clear indication of our view of the strength of our core earnings.





Finally, we continue to generate robust cash flow with a cash flow to market cap ratio in excess of 13% is an annualized yield. This underscores our capacity to fund both growth and shareholder returns, still maintaining the possibility and the capability to entertain investments into future opportunities. Yet, we believe that the strength is not fully reflected in our current market valuation, offering in our view, a clear disconnect and an opportunity for long-term investors. Turning now to governance on Page 5.





I'm pleased to present the composition of our new Board of Directors for the 2025 and 2027 term. This renewal reflects both continuity and evolution, providing a strengthened foundation to guide Azimut through its next chapter of growth. I would like also to briefly introduce myself as well as my colleague, Alessandro Zambotti. I joined Azimut in 2007, following over a decade in sell-side roles. Within the group, I've served as a portfolio manager and later led business development initiatives for our international operations, starting in Turkey and Dubai. I've also led our global asset management business from Luxembourg. And 3 years ago, I moved to New York, U.S. to support our global strategic expansion around the world.





As for the Board structure, we have confirmed the composition that reflects the balance of experience and independence in line with the best practices, 5 independent directors, 50% female representation and 2 representatives from our new Italian commercial organization, highlighting once again the central role of our distribution network. Alongside Alessandro and myself, both reconfirmed as Board members under the continued leadership of our founder, Pietro Giuliani, as Chairman, we are committed to driving Azimut forward with discipline, innovation and a long-term strategic vision. And let me tell you that we are thankful for the trust of our shareholders and very excited for what lays ahead for us. Let me now walk you through an important evolution in the way we represent the Azimut business, starting on Slide 6.





This new structure is not just about simplifying a presentation. It reflects a fundamental shift in how we operate and communicate. And together with Alessandro, we commit to disclose our financials and business proposition in a clear way going forward. Azimut is a global multigenerational financial advisory platform that we will continue to scale across geographies, asset classes and digital channels. Our Asset Management as a Service proposition puts investment performance for the benefit of our clients and product solutions across public and private markets at the center, enabled by technology and our global distribution networks. This new structure helps address market complexity, improves transparency and allows us to better highlight the strength of our long-term fundamentals.





We believe our model is particularly well positioned to respond to the structural industry shifts thanks to our scale, geographic diversification and alignment between performance and distribution. With this new presentation format, we aim to reposition investor perception and demonstrate that Azimut is not a collection of silos that is reliant on a single market by single high-performing platform with multiple levers of growth. Let's turn now to Page 7.





How does this all translate in practice? What you see here is the blueprint of how we intend to represent the group going forward and organizational metrics that mirrors how we actually run the business. On this slide, we present the total assets as of the end of April, structured by product lines across the top from investment funds to digital asset management and by key distribution channels along the left. This is more than a new reporting layout. It's a transparent and aligned view of how our platform creates value. And over the coming quarters, we will also reflect the structure in our financial disclosure, giving investors greater clarity on growth, scale and profitability across our core pillars.





Moving on to Slide 8. This slide gives you the geographic breakdown of our total assets as of April 2025. What's new is that alongside our traditional regional reporting, we are now showing separately the perimeter of our strategic affiliates, namely Sanctuary in the U.S. and AZ&GA in Australia. These are businesses where we are not longer exercising direct control, but where we remain a strategic shareholder. By separating them, we reflect their distinct business models and highlight the long-term value potential. As you have seen, by the way, with the recent partial sale of AZ&GA, these platforms offer a very meaningful room to scale and create upside over time together with our local partners.





Turning to Page 9. Let me walk you through an important change in how we will report our assets and inflows going forward. We have introduced a simplified structure that better reflects how we actually run the business, cleaner, more intuitive and free of double counting, giving investors a clear view of where growth is being generated. Going forward, our reporting will focus on 5 product categories: mutual funds, alternative funds, discretionary and advisory, life and pension and strategic affiliates. As mentioned on the previous slide, we have carved out our strategic affiliates, Sanctuary and AZ&GA to reflect the distinct business dynamics and fundamentals. And at the same time, assets previously reported under custody and advised are now consolidated into the discretionary and advisory line.





Lastly, pension funds assets previously included in funds will now be reported under Life and Pension to ensure a clear attribution also consistent with our financial planning product offering. Let me be clear and repeat this once again. This is more than a technical update. It's part of a broader push to enhance transparency and ensure our disclosures are fully aligned with how we manage capital, allocate risk across our business platform and deliver long-term value.





Let's now move to Page 10 to dive quickly into the year-to-date performance in terms of assets and inflows. On this page, you will see how our total assets have evolved since the start of the year under the new reporting method. I won't go too much into the detail here as we have already published and commented these figures in our press releases, but I want just to highlight the strong demand for mutual fund solutions since the start of the year, supported by our networks and partners in Italy and Turkey. We recorded EUR 5.7 billion of net inflows in the first 4 months, of which EUR 3.4 billion were organic. This is the best performance in the group's history for this period. This underscores the strength and appeal of our offering across both mature and growth markets. And on the asset side, also, I'd like to mention that we closed April just shy of EUR 107 billion.





This certainly represents a marginal decline since year-end, but is entirely and mostly due, in fact, to FX headwinds, particularly due to the U.S. dollar and some emerging market currency developments. These results, in our view, confirm the resilience of our core business and the effectiveness of our diversified model, delivering growth across channels, geographies and client segments.





Turning now on to Page 11. Here, we introduced a new visual representation of what is driving our profitability in a more intuitive and transparent way. While Alessandro will go into the details shortly, I'd like to highlight a few points. First, our recurring operating business after all costs grew by a solid 6%, a strong signal of the health of our platform. Secondly, we received a solid contribution from our strategic participations, including dividends from our GP staking business that I will also elaborate more into details shortly with the transaction that we have announced just yesterday with Post Capital. Finally, while the headline net profit shows a modest year-on-year decline, this is entirely due to lower performance fees. When we look at recurring net profit, so after stripping out the variable component and other nonrecurring items, we actually saw an increase of 13% to EUR 112 million.





Let's move now on to Slide 12. This slide, along with the next one, marks another important evolution in how we present the business. What you see here is the current P&L breakdown by business verticals, a structure that we introduced with our full year results in 2022. While this representation helps illustrate the underlying dynamics of our platform at that time, we continue to scale across geographies and solutions. We have though now recognized the need for a clear, more actionable format, one that speaks to both our internal performance drivers and external investor expectations. Therefore, starting from this quarter, we are transitioning to a new framework, simpler in structure, yet more granular. And I'll show you this updated view on the next slide.





On Slide 13, you see a simplified overview of our Q1 '25 performance versus the same period last year, applying our new reporting structure. As mentioned earlier, we now present a more detailed geographic breakdown of the international business while also separating out our strategic affiliate perimeter. And let me briefly highlight a couple of takeaways without going into the numbers. In Italy, we saw a 15% increase in total assets, which translated into higher recurring revenues. However, the bottom line was affected by lower performance fees compared to a very strong Q1 in 2024. Internationally, we have achieved a meaningful uplift in profitability, thanks to asset growth, strong recurring revenues and the contribution from dividends received on our GP stake. The results underscore the strength and the scalability of our diversified business model. And let me now turn to the next slide where I will highlight the product pipeline that is expected to support further growth in the coming quarters.





So on Slide 14, you see how we are scaling innovation across asset classes, geographies and digital channels. On the public side, we are launching 7 new us strategies, rolling out a refreshed suite of private insurance solutions under the name of Azimut Life Collection, and we are accelerating onboarding with wholesale distributors across key hubs like Dubai, Hong Kong and Singapore. And notably, we're also launching the China UAE ETF link with China Universal Asset Management, one of the largest independent managers in China. It is a very bold move that reinforces our capability to leverage cross-border partnerships.





On the alternative side, we continue to deepen our capabilities with new vintages for our flagship private equity infrastructure portfolios and strategies, the debut of our capital solution suite, the launch of a corporate venture capital initiative and the revamped offering in Turkey and Brazil, where we are already managing over EUR 550 million in niche private market strategies. This pipeline reflects the breadth of our platform and certainly our ability to innovate and deliver value across all client segments along the market cycle.





And on the following slide, we also showcased the different initiatives that we have undertaken across digital business developments. Last month, we launched in Italy MetAdvisor, a new tool allowing clients to engage with the Gentic AI and have a relationship with their financial advisers for everything being related to their portfolio. Last month, we also launched Azimut next Generation advisory, an AI-driven portfolio construction that will constitute a very significant part of our offering in the coming months. In February, we launched Azify, a digital wallet in Brazil that also includes a stablecoin offering. And we also continued since the beginning of the year to expand the product offering of the AZ Invest, a digital fund distribution platform in Egypt that now captures almost 20% of all the new clients in the country. And also following the end of the summer, we'll be expanding the offering of Beewise in Belgium and Luxembourg after the success that we had in Italy.





Let me now move on to our international expansion on Slide 16. And I'd like to start with Morocco. The transaction that at the end of March saw us acquiring 25% in RedMed Capital, one of the largest independent managers in the country, EUR 1.7 billion of assets under management, a 3% market share. Let me remind you that Morocco today is one of the most developed asset management industries across all emerging markets with a 33% growth annually over the last 3 years. And Morocco is also the African country with the highest million growth rate over the last 10 years. This is a strategic investment that plug and play for the group, consider that Morocco and Europe, they have a very well-established relationship this transaction will allow Azimut to expand its distribution capabilities into Morocco, leveraging its European product factories.





And 2 days ago, also, we have announced the obtainment of the in principle approval to operate as a fully-fledged onshore asset management company in Saudi Arabia. Operations will start in Q3 2025, unlocking significant new growth opportunities in the Kingdom. But let me tell you, Azimut has been already operating in the country since 2020 with the management of institutional mandates today in excess of $400 million, but we are looking really to expand to benefit from the very sizable retail opportunity with the local asset management industry in excess of $260 billion expected to grow by 50% over the next 50 years. And obviously, needless to say, the possibility operating from within the country to address and penetrate the very significant pool of institutional assets.





Also yesterday, we have announced a very exciting strategic development in the U.S. On Slide 17, we highlight the details of our increased investments in HC Capital. As announced, we raised our stake from 15% to 56%, taking a controlling interest in a business that we know well, and we have seen growing sixfold in AUM since our initial entry. With close to EUR 650 million in AUM and a strong track record in private equity and venture capital, HCO is not only a growth story, but a very powerful platform for us to further scale our presence in the U.S. alternative space. This transaction also deepens the alignment between our 2 firms. More importantly, marks a very important step in our partnership with David Moross and Mark Bezos, who will both increase their ownership in Azimut, further reinforcing our partnership.





David, in addition to his role as HighPost' CEO, will also serve as a senior adviser to ACP, supporting our broader GP stakes business. Meanwhile, Mark will become Head of Strategic Partnerships and a Board member of Azimut U.S. Holdings. Looking ahead, post is planning to launch 2 new funds by year-end, further expanding its product offering and opening new opportunities for value creation across our ecosystem. This concludes my part for now. And I now hand over to Alessandro, who will give you some insights into the progress of the new bank transaction. Thank you.

[Alessandro Zambotti, executive]

Thank you, Giorgio, and good afternoon to everyone. So from my side, let's move to Slide 18 slide. Again, here, we just simply reproposed the same slide that we already proposed in the last call, in the last few calls. The aim is just to underline again that the purpose of this transaction is not driven by a specific element or driven by specific condition, but we have 3 options on the table, and we are still running the project in this way. Therefore, the aim is still focused on real one objective that is to create more value for clients, shareholders, financial advisers and employees. and also capitalizing on assets that are currently outside the perimeter.





That is important to help me also on the following slide where we just give you an update on the exclusivity agreement that we still have with FSI. As you probably remember, there was a deadline within the end of April. This exclusivity has been extended to the 20th of May. On one side, the part of the due diligence is completed. But on the other side, we are still negotiating and finalizing the transaction. Therefore, at the moment, for the information that we can share following also the sensibility of the information, we're just able to give you a better view, but just related to the fact that we extended the exclusivity period. Then the other information are still the same. Therefore, we expect to obtain the banking license within the end of the year and the aim of the project is what I mentioned before. So moving to numbers.





So moving to Slide 20. Here, we just try to give you the big picture of the consolidated results of the group for the first quarter '25. Then we will go in detail. And therefore, I will not spend additional time through the single line of the numbers here. But I just want to give you an update on the fact that in relation to the first quarter '24, we created a new column that is following the adjustment related to the consolidation of AZ-NGA that means that to have a better analysis of better comparison of the numbers, we take out the line-by-line contribution of AZ NGA through the first quarter '24. And also here, you will see at the end, the recurring net profit that has been introduced by Giorgio at the beginning is a new way to look to the numbers of the group focusing on the recurring business.





So in the other way, taking out the effect of the variable fees or nonrecurring effect like fair value option, nonoperating costs and as we always do also taking out the effect of the IFRS 17. So in this way, probably and I think we expect that in the future, you will have a better understanding of the evolution of the recurring business. So moving again to more details. Here, you have the slide related to the revenues. Total revenues, I mean, comparing the 2 quarters, the first quarter '25 with the first quarter '24, overall, you have a decrease of EUR 2 million. But then if you consider, let's say, the single variation, you can see that there is a solid growth in recurring fees, plus 8% that in absolute value, EUR 20 million more. This is thanks to the Italian, let's say, perimeter. So across to all the business lines, we benefit to a positive increase in terms of mutual fund recurring fees, plus EUR 6 million and alternative funds plus EUR 4 million, plus additional positive effect from the portfolio management or the advisory fee.





And also, we have a positive contribution, thanks to our international business led by Turkey, Brazil, Singapore, U.S. that provides and contributed for the growth of the recurring fees by EUR 8 million. In terms of performance fees, you can see that the Fulcrum was negative EUR 1.4 million in the first quarter '25 compared to the EUR 1 million positive of the first quarter '24. And also, if we look to the insurance revenue, it's true that we see a decrease of EUR 80 million. But again, last quarter, so the first quarter '24 was benefiting by EUR 28 million of performance fees that is not contributing at the same level this quarter because it's just EUR 5 million. Therefore, the real positive message here is again that despite the volatility of the market that we are facing, we are increasing our recurring revenue by 17% that is almost EUR 4 million compared to the first quarter '24.





And then just to conclude the other revenue, we are almost stable, thanks to the contribution of our corporate investment banking business. Moving to the next slide, we have details in relation to the cost. You can see an increase of EUR 6 million overall. We have EUR 9 million more in terms of distribution cost due to an increase of the recurring revenue, again, as I mentioned before, in Italy and abroad. of almost EUR 3 million and a higher provision for variable incentive to Italian FA of almost EUR 4 million. On personnel and SG&A, we have an increase of EUR 6 million, again, linked to the evolution, as you remember, as you always say, the international business is also it's impacting this line of the P&L. Therefore, linked to the evolution of the business, we have an increase of EUR 4 million around this line. And then we are flat on the amortization.





So then moving to the next slide. Here, we have the EBIT and the net profit. You see, again, a positive variation of 6% of the EBIT and 13% on the recurring net profit. is also thanks to the fact that at the level of the finance income, we have a positive contribution of almost EUR 14.5 million and is mainly explained by EUR 4 million dividends from GP stakes and affiliates, EUR 3 million realized and unrealized gain and losses on our own investment, EUR 3 million net interest earn, EUR 3 million fair value option, also EUR 1.5 million related to the IFRS 17. But again, I would like to underline once again the important result and the important increase of the recurring net profit by 13% year-on-year.





Following slide, net financial position. we have a positive and almost EUR 1 billion of net financial position. As you can see, we have an increase compared to December '24 of EUR 232 million. As we always do, we try to reconcile the variation starting from the net profit before tax, so EUR 145 million, plus EUR 58 million that is the cash that we received during the first quarter '25 related to the transaction of AZ-NGA, so linked to the first that we have seen during the quarter. We proceed I mean, we continue our investment activity. Therefore, we have less EUR 80 million through M&A and then a positive reimbursement of stamp duties by EUR 40 million. Therefore, these 3 amounts should reconcile the variation that I mentioned. Okay. I mean, I'm going to give back to Giorgio for the conclusion.

[Giorgio Medda, executive]

Yes. Thank you, Alessandro. So we said we had a solid start into the year that obviously makes us very comfortable in reconfirming our targets for the full year. We had a net profit target between EUR 400 million and EUR 1.25 billion depending on the completion of the TNB transaction. Obviously, we have achieved EUR 150 million as for Q1 2025, and that is approximately 30% of the overall target is measured at the bottom of our guidance. In terms of net inflows, EUR 10 billion was the target. As we said, we had the strongest start in the history of the group, EUR 5.7 billion achieved as of the end of April 2025, that makes a 57% achievement on the overall target. Let me tell you that the group will present its new strategic targets and dividend policy by Q3 2025 results, and this is to mark the next phase of value creation for our group. Now let me open the floor to questions.

[Operator]

[Operator Instructions]Thank you. The first question is from Hubert Lam from Bank of America.

[Hubert Lam, analyst]

I've got 3. Firstly, on the new bank, thank you for the update. I'm just wondering if you can maybe talk a bit more in terms of operationally, how things are progressing just in terms of maybe deposit growth, customer interest, adviser hires, et cetera. And like any changes in your expectations around the development? Second question is on your Highpost stake now. You have a majority stake. Just want to double check, is this more a financial investment in Highpost? Or do you see opportunities for possible cross-sell opportunities of your products into your client base? And lastly, a question on Nova. You continue to highlight it as a contributor to your inflows. Can you talk about how significant it's been to your inflows and maybe how the operating margin is doing compared to your target around it previously?

[Alessandro Zambotti, executive]

Okay. So in relation to TMB project, as I mentioned before. So in general, let's say, the transaction is still going on. That means that we are positive in terms of the evolution. This is the reason why we decide to extend the exclusivity. So at the end of the day, again, we are not still able to anticipate any element, but we see the possibility to conclude positively. But again, as I mentioned during the call, again, the message is that we are now close to only this option, but we still have possibility for us to generate value for the group, but also generate value for our all stakeholders. That means that also we are still working to create the value that we are going to transfer to the spin-off. So the activity through the deposits, obviously, it is still going on. This is an activity that we already started, but with a normal evolution of the activity itself.





Probably I'm going to take also related to Nova. I mean, Nova, again, is producing a positive effect and positive impact on our P&L. We are close to the net profit margin that we were expecting because obviously, we were missing at the beginning, the economic scale coming from the cost of the structure. And thanks to the evolution of the AUM, we are covering this part positively. Therefore, we are close to the 40, 45 basis points net that we announced at the beginning when we announced the partnership.

[Giorgio Medda, executive]

Yes. On Highpost Capital, let me say that this is an industrial investment, a strategic investment. The idea is certainly to leverage our majority stake to use Highpost Capital to launch new funds, new strategies Obviously, what we can do with David and Mark is to tap into an incredible network relationships, a great origination pipeline, a very solid LP base, and that obviously poses very well for the future of Highpost as well as for Azimut penetrating distribution opportunities across the country.

[Operator]

The next question is from Alberto Villa from Intermonte SIM.

[Alberto Villa, analyst]

Congratulations for the appointment. I have a few questions, mostly around the new organization. I'm sure it's going to simplify the understanding of the operating performance of the company of the group, and this is certainly positive. I was wondering if it's possible eventually to have a deck with also 2024 numbers under the new organization and the quarters for the past year. So we can try to start to model our own estimates based on this new organization. Going to the reorganization, just to make clear a few points that I'm not sure I got completely.





If we go to Slide 7 to your new metrics, I was wondering if you can help me understanding what does integrated solutions and global wealth means in practical terms. My simple question is, if we look at your, let's say, traditional Italian financial adviser distribution business, how is that fitting into this new metrics, what is within Integrated Solutions, what is within Global Wealth, that could be helpful for me to understand how it works.





And then again, on Slide 12, you give us a few details about the single regions. It actually took my attention the fact that international business has got an increase in AUM of around 30% and a decrease of revenues of the mostly 30%, then EBIT is up. So there has been some moving parts for sure, but I wanted to check with you what was the reason beneath this different behaviors of AUM trends and revenues and margins? And finally, if I may, just another question to better understand how you calculated the recurring income. You are now communicating. The various items part of the financial income, are that considered stripped out what is in the recurring and what is not?

[Giorgio Medda, executive]

Okay. Alberto, let me speak your first question on the reorganization and the figures that we have shown in Slide 7. Indeed, Italy is part of the integrated solution distribution cohorts. With integrated solutions, we identify businesses where we have a clear competitive advantage built upon the integration of product factories with distribution teams. Obviously, Italy represents the benchmark. for this business proposition. But the figures that you see shown here also includes countries such as Mexico, Turkey and Taiwan. These are countries where we operate exactly on the same basis and also for similarities that are pretty obvious in the way we approach and cater to clients. Global Wealth, on the other hand, represents the global wealth management business that we conduct out of what are global marketplaces for wealth management, offshore wealth management, such as Singapore, Hong Kong, Dubai, Switzerland, Monte Carlo and Miami.





Obviously, you see the integrated solutions and global wealth distribution cohorts what is important for me to stress here is that both distribution efforts rely upon the ability of Azimut to deliver investment management solutions in different forms and product cohorts, that being investment funds, discretionary advisory mandates or life or welfare solutions.

[Alessandro Zambotti, executive]

So back to I mean, taking the other point, if I'm not wrong, first of all, looking to Slide 12, you mentioned the fact that you were seeing a EUR 66 million in revenues compared to the EUR 48 million of the first quarter '25. Here, as we didn't have mentioned already the fact that we created the first quarter '24 adjusted, we just keep the same level of revenues, so also considering the full contribution of AZ-NGA in the first quarter '24. That's what we did after in the presentation, we took out and we make the comparison more friendly and comparable itself. That means that the contribution is related in terms of revenue by AZ-GA first quarter '24 that is missing in '25. But as you can see through the evolution of the positive total assets, you have a positive net profit impact and also at the level of the EBIT, we have a positive increase.

[Alberto Villa, analyst]

Sorry, I'm not sure I understood. In the first quarter 2025, in the International segment, there is not obviously Australia.

[Alessandro Zambotti, executive]

But it has been deconsolidated. But it will provide a positive contribution in terms of revenue, it's in the first quarter '24.

[Alberto Villa, analyst]

Okay and the trend in assets that grew from EUR 41 million to EUR 53 million. What is the driver beneath that, if I may?

[Alessandro Zambotti, executive]

I mean it's linked to the evolution of the business, that means sanctuary, for example. So we are still representing the real value of total assets coming from the international business. But as I was trying to say, it's also linked to the fact that if you consider the impact of the Australian business in the first quarter '24 in terms of net profit, you can see in the slide of the P&L, I mean, the '20 that there was no significant contribution in terms of net profit. That in the other way around, you see that the positive increase in terms of AUM provide positive increase in EBIT and net profit in the first quarter '25.





And then if I'm not wrong, you mentioned also the calculation, I mean the way we fix the amount related to the recurring net profit that is EUR 112 million. So we do the results of the group. We take out the effect of the performance fee coming from the insurance, so EUR 5.3 million. We take out the effect of the fulcrum, so EUR 1.4 million in this case, negative and as well the contribution of the option, fair value option, so EUR 2.6 million. And in the opposite, let's say, the opposite way, the IFRS 17 that was impacting EUR 1.6 million more or less. So those are the elements that we are considering... Okay. So all the other elements in financial income are included in the current net income.

[Operator]

The next question is from Elena Perini from Intesa Sanpaolo.

[Elena Perini, analyst]

First question is about an update on the new bank in terms of assets and financial advisers. You had the spin-off 1 year ago with approximately EUR 24 billion of assets and 1,000 financial advisers. So I was wondering where you are at the moment in terms of both those items, if you have started recruiting and how it is going? My second question is about private markets. I see that in your new breakdown by vertical, you did not mention any more the private markets. So I was wondering whether this is no more a strategic driver for you or if there is any other reason behind this?

[Giorgio Medda, executive]

Thank you very much. I'll actually start picking up your second question. So let me say, private markets remain a strategic priority for our product development. We are strong believers that diversification across illiquid alternative investments is of paramount importance for our ability to generate performance for clients. We do actually see this as a positive and necessary for value and performance for our clients' portfolios. Obviously, we have shown today a breakdown of earnings using a geographic breakdown. We have heard in the past, but that was something that was missing, particularly for those trying to analyze how we create value out of a very material investment base over the years. We said that over the coming quarters, we will be able to provide a breakdown also following the metrics in Slide 7. And within that breakdown by product line or distribution cohort, we will break down also the contribution of private markets.





For your reference today, when you look at Slide 12, you see what has been the contribution of private markets within that table where we wanted for transparency to outline the reporting of earnings according to the breakdown method that was used up until the end of last year.

[Alessandro Zambotti, executive]

In relation to your question of the TNB in terms of FA, let's say that we are broadly stable. On one way, someone left. But on the other way, the activity of the recruiting give us, let's say, the effect of people that is I mean, that are joining the project for sure, in the future, someone is coming. Therefore, all in all, we are almost stable. And in terms of assets, excluding the market effect, which I have in mind a number close to EUR 25.5 billion, EUR 26 billion. So we are growing compared to the level of the AUM where we start, obviously, again, underline the market effect that obviously is impacting during those days.

[Operator]

The next question is from Ian White from Autonomous Research.

[Unknown Analyst]

Two from my side, please. Firstly, just coming back to the new bank transaction. Can you just clarify for us what are the main talking points there that remain with respect to the terms? You said the due diligence is done, sort of financial terms seem to be within a definable range. So what's still left to be agreed there, please? What's the sticking point, if you like? And just secondly, any comment, please, on the outlook for exits within the private market business. some more downbeat comments maybe from some of the sort of private market specialist names, but has anything really changed there for your business with respect to the increased market uncertainty we've had in the last month or so?

[Giorgio Medda, executive]

Yes, actually, I'll start with your second question. yes, obviously, we see what's happening in the market is indeed the slowdown in exits is very obvious. I'd like to say that we are still operating with funds with relatively recent vintages. And so we are not really today focusing on exits, although on a very opportunistic basis, we have been able to exit in a few instances. An example I would like to bring to your attention is the recent exit from an Italian leader in the tiles industry, tiles manufacturing. That was the first investment of our Demos 1 fund launched in 2020. And well within the investment period, we were able to exit this investment with a 3x multiple. That has been done in a difficult market, has been done, obviously, with all the headwinds that we know very well. And I think on an opportunistic basis, we will consider where and when we are able to maximize our investors' value. But in general, we are not really that concerned for what the market will be in the future. We see all this as very cyclical.

[Alessandro Zambotti, executive]

And in relation to the first question, I mean, I'm going to answer in a simple way because at this stage, after the conclusion and the completion of the due diligence, we are obviously now working on the contract. And as you probably expect in terms of answer, you never know what is going to happen. It's even if you fixed the main element or the main KPI that you would expect to obtain. Therefore, we are working on it. But again, waiting to finalize everything, we cannot anticipate any further information.

[Operator]

Gentlemen, there are no more questions registered at this time.

[Giorgio Medda, executive]

So thank you, everyone, for attending this call. And obviously, we look forward to meeting with you in person or to hearing from you at the next earnings call at the end of July. Thank you very much.

[Operator]

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.