Fiera Capital Corporation (FRRPF) Q4 2022 Earnings Call Transcript

Fiera Capital Corporation (OTCPK:FRRPF) Q4 2022 Earnings Conference Call February 24, 2023 9:00 AM ET

Company Participants

Marie-France Guay - SVP, Treasury and IR

Jean-Guy Desjardins - Chairman and CEO

Lucas Pontillo - Executive Director and Global CFO

John Valentini - Executive Director and CEO, Private Market

Conference Call Participants

Étienne Ricard - BMO Capital Markets

Gary Ho - Desjardins Capital Markets

Jaeme Gloyn - National Bank Financial

Operator

Good morning. My sanction is Sylvie and I will beryllium your convention usability today. At this time, I would for illustration to invited everyone to Fiera Capital's Earnings Call to Discuss Financial Results for nan Fourth Quarter of 2022. All lines person been placed connected shut up to forestall immoderate inheritance noise. After nan speakers' prepared remarks, location will beryllium a question-and-answer period. As a reminder, this convention telephone is being recorded. [Operator Instructions]

Thank you. And I would for illustration to move nan convention complete to Ms. Marie-France Guay, Senior Vice President, Treasury and Investor Relations. Please spell ahead.

Marie-France Guay

Thank you, Sylvie. Good morning, everyone. [Foreign Language]

Welcome to nan Fiera Capital Conference Call to talk nan financial results for nan 4th fourth of 2022. Before we begin, I induce you to download a transcript of today's position which tin beryllium recovered successful nan Investor Relations conception of our website astatine ir.fieracapital.com. Note that, today's telephone will beryllium held successful English.

Also statement that comments made connected today's call, including replies to definite questions, whitethorn woody pinch forward-looking statements which are taxable to risks and uncertainties that whitethorn origin existent results to disagree from expectations. I would inquire you to return a infinitesimal to publication nan forward-looking statements connected page 2 of nan presentation.

Our speakers coming are Mr. Jean-Guy Desjardins, Chairman of nan Board and Chief Executive Officer; and Mr. Lucas Pontillo, Executive Director and Global Chief Financial Officer; John Valentini, Executive Director and Chief Executive Officer of Private Market; and Jean Michel, Executive Director and Chief Investment Officer of Public Markets are besides connected manus to reply question.

On today's call, we will talk our Q4 2022 results, starting pinch an update connected our AUM, followed by our distribution and finance performance. We will past reappraisal our financial performance. Following nan prepared remarks, we will return your questions.

With that, I will now move nan telephone complete to Mr. Desjardins.

Jean-Guy Desjardins

Thank you, Marie-France and bully greeting everyone and convey you for joining us. First of all, fto maine show you that I'm very happy and rather excited to beryllium backmost astatine nan helm arsenic we proceed to prosecute Fiera's maturation ambitions and execute against our strategical plan.

Last twelvemonth was a difficult twelvemonth successful world markets pinch declines successful equity and fixed income markets further impacting investor outflows and nan equilibrium sheet. While 2023 has started connected a affirmative note, we stay vigilant arsenic we proceed to navigate done a threatening macroeconomic environment.

Notwithstanding this, Fiera's strategical privilege of increasing our backstage markets level arsenic good arsenic nan beardown comparative returns of our nationalist markets finance strategy positions america good to upwind immoderate further marketplace volatility successful 2023.

I'll move successful to our 4th fourth results. We reported assets nether guidance of $158.5 cardinal for nan 4th fourth of 2022. Although we benefited from nan marketplace rally successful equities successful nan 4th quarter, outflows from a fewer financial and intermediary clients. Due to nan effect of nan equity rebound connected our nationalist markets AUM, resulting successful AUM being fundamentally level versus nan anterior quarter.

Assets nether guidance successful backstage markets was besides level successful nan quarter. We proceed to spot a bully gait of caller subscriptions crossed our replacement strategies pinch decreases successful AUM being driven by return connected superior to investors alternatively than past minute.

Overall, assets nether guidance were down $29.8 cardinal aliases astir 16% complete nan past 12 months arsenic we, for illustration nan remainder of nan industry, were impacted by nan equity and fixed income marketplace downturn. This further precipitated outflows from clients rebalancing pursuing peculiarly beardown finance returns successful 2021.

The continued volatility successful financial markets successful nan mostly of 2022, intensified withdrawals from progressive equities done nan 2nd and 3rd quarters arsenic clients effort to set their portfolios to maneuver done nan precocious inflationary environment.

On a affirmative note, nan gait of nan balancing we saw done astir of 2022 did slow successful nan 4th fourth and we knowledgeable immoderate affirmative momentum successful nan shape of caller fixed income allocations. We are assured that our proven way grounds of semipermanent capacity crossed our strategies will position america good erstwhile investors statesman to reallocate towards nationalist markets strategy.

We saw continued maturation successful backstage markets successful 2022, which ended nan twelvemonth astatine $18.2 billion, resulting successful year-on-year maturation of 14%. We returned $1.4 cardinal to our clients done superior and income distributions, while raising $3.3 cardinal successful caller subscriptions complete nan aforesaid period.

Our backstage markets level is simply a cardinal differentiator to investors who looking to diversify done this play of nationalist marketplace volatility. We are uniquely positioned arsenic we person been building this level since 2005 and person established a diversified and beardown performing offering crossed our backstage marketplace strategies, which is unsocial successful nan Canadian market.

In nan quarter, caller customer mandates into our backstage marketplace strategies proceed to thrust apical statement growth, pinch caller mandates representing 30% of nan caller AUM maturation successful nan quarter, which are expected to make 70% of nan associated annualized guidelines guidance fees. Though it was a difficult twelvemonth for nett flows, we are encouraged by nan $8.2 cardinal gross caller mandates generated crossed our platforms complete nan twelvemonth and look guardant to building connected that momentum successful 2023 arsenic we proceed to grow our distribution capabilities globally.

We'll now move to our commercialized capacity crossed our channels and regions for nan 4th quarter. So, successful Canada, we secured awesome wins this 4th pinch fixed income mandates won from ample alteration successful institutions resulting successful $400 cardinal of affirmative nett integrated maturation successful nan organization channel.

While flows successful nan Canadian Financial intermediaries transmission was challenged this quarter, pinch nan mostly of nan outflows driven by nan nonaccomplishment of definite fixed income mandates. Our differentiated Private Wealth level successful Canada allows america to connection our precocious nett worthy clients entree to our backstage marketplace finance strategies via our 2 costs fig structures, 2 money saw important maturation successful 2022, increasing from $4.5 cardinal to $5.7 cardinal pinch $1 cardinal of that summation attributable to integrated growth.

In Europe and Asia contempt nan continued accent marketplace conditions successful that region, we saw humble affirmative nett integrated maturation successful nan 4th quarter. In nationalist markets, we secured a awesome LDI instruction from a ample organization customer successful Europe, which drove nan mostly nan affirmative nett integrated maturation this quarter.

We proceed to summation momentum successful nan financial intermediary transmission crossed that region pinch nan support of caller partners for some our Atlas Global Equity and OAKS emerging marketplace strategies.

In nan US, gross mandates of astir $2 cardinal were driven by outflows of equity mandates, including a instruction summarized by StonePine. We proceed to spot charismatic opportunities successful nan US for our wide suite of finance capabilities However, we still person much activity to do connected building retired our distribution capabilities to penetrate nan US marketplace much effectively, peculiarly pinch our backstage marketplace strategies.

As we move forward, we admit that customer needs and marketplace dynamics are different crossed nan regions that we run in. Therefore, it becomes important. To person a decentralized attack to our distribution model, make judge that we are efficaciously positioning our beardown suite of backstage markets capabilities and proceed to leverage nan robust finance capacity of our nationalist marketplace strategy.

So, I will now talk our finance level for nan 4th quarter. Starting pinch our backstage marketplace platform. We proceed to present beardown capacity successful nan 4th fourth pinch affirmative returns successful nan mostly of our backstage marketplace strategies.

Our Canadian and UK existent property strategies capacity this 4th continued to bespeak nan downward spot valuation unit is being knowledgeable crossed each sectors wrong nan industry. Asset volumes person decreased because of rising capitalization rates; however, these are owed much arsenic a reflection of nan unfavorable macro situation alternatively than connected nan underlying fundamentals of our existent property strategies.

Our existent property portfolio is astatine an advantage owed to its waiting successful business and multi-residential will request pinch these sectors outpacing proviso and driving rental complaint growth, which partially offsets nan headdress complaint increases. Our infrastructure strategies remained resilient astatine nan gait of a challenged macroeconomic situation and generated affirmative returns successful nan 4th fourth and for each of 2022.

The inflationary hedging and fixed complaint indebtedness characteristics of nan underlying assets successful these strategies continuing to beryllium charismatic to investors. Our backstage in installments strategies generated beardown affirmative returns this 4th and ended nan twelvemonth successful affirmative territory, benefiting from diversification crossed sectors and geographies. The strongest capacity was strategies pinch vulnerability to existent property debt. Also, arsenic mentioned successful erstwhile quarters, galore of our in installments strategies are benefiting from floating complaint exposure, which has resulted successful an summation successful wide yield.

Turning to our agriculture platform. The strategy has delivered a beardown return successful 2022 of almost 8% pinch aggregate partnerships being completed bringing worth accretive acquisitions pinch a beardown pipeline of travel connected investments successful nan future, which continues to entreaty to investors. The AUM for this strategy has almost doubled this year, increasing from $1.1 cardinal to $1.9 billion.

So lastly, successful backstage equity, overmuch of this communicative remains nan aforesaid pinch marketplace volatility being tenth-third by nan affirmative capacity and resiliency of nan portfolio's underlying business. The squad continues to support a robust pipeline of transaction opportunities globally.

Overall, we raised $550 cardinal successful caller subscriptions and deployed $800 cardinal into caller investments successful nan 4th quarter. We person accumulated $1.9 cardinal of committed un-deployed capital, providing nan basal barren powerfulness to quickly deploy our clients' superior into charismatic finance opportunities. Year-over-year, our AUM for backstage markets had accrued $2.3 billion.

Over nan past 3 years, revenues from our backstage markets level has grown astatine a compounded yearly maturation complaint of 20% and continues to beryllium accretive to our apical statement pinch backstage markets driving 34% of revenues while representing 12% of assets nether guidance successful 4th four.

Moving connected to our nationalist equity platform. On nan backmost of a affirmative rally successful October and November, world equity markets ended nan 4th fourth successful affirmative territory. However, this was not capable to offset nan losses of nan erstwhile quarters. So arsenic a result, afloat twelvemonth marketplace capacity was antagonistic impacting nan returns crossed Moore's strategies.

Our ample headdress equity strategies posted mixed results comparative to their respective benchmarks for nan 4th quarter. The alteration successful equity size – uncharacteristically anemic 4th owed to information selection, however, nan strategy is continuing to beryllium classed successful nan first 4th crossed nan 1 twelvemonth and 3 twelvemonth clip horizon.

Additionally, our Atlas Global and International Equity Strategy some had a maturation tilt, whereas strategies pinch worth characteristics outperformed that quarter. Our US mini and mid-cap maturation strategy has delivered sustained beardown capacity comparative to its benchmarks, crossed nan short and agelong word pinch a way grounds that continues to beryllium charismatic to clients.

While comparative capacity was mixed crossed our equity strategies this quarter, nan agelong word way grounds is impervious of nan excellence of our finance teams. Over a 3 and 5 twelvemonth clip horizon, 96% and 98% of our equity strategies are beating their benchmark astatine nan extremity of nan 4th fourth respectively.

Now, moving to our nationalist fixed income platform. Our Canadian fixed income strategies continued to show resilient successful nan 4th fourth successful nan look of recession related risks. On an absolute basis, returns were modestly affirmative crossed nan committee and were besides affirmative connected a comparative ground to their respective venture.

In nan US, our fixed income taxation exemption halfway positive and high-grade halfway intermediate strategies had mixed results this quarter. The taxation businesslike halfway positive added worth for nan 4th quarter, chiefly owed to its agelong long positioning and continues to beryllium classed first quartile connected a 3 twelvemonth horizon.

The high-grade halfway intermediate strategy attracted worth owed to nan short long positioning of these strategies, which was detrimental arsenic nan markets began to value and a slowdown successful complaint hikes.

In statement pinch our equity strategies, nan semipermanent humanities capacity aliases fixed income level remains beardown pinch 85% and 94% of our strategies, leaving their benchmark complete 3 and 5 years respectively astatine nan extremity of nan 4th quarter.

Now finally, our tactical plus allocation squad which I'm very fond of continues to present affirmative returns comparative to its benchmark of 3.78% worth added complete nan 1 twelvemonth period, driven by an complete weighted position connected existent assets an underweighted position connected bonds arsenic good arsenic an underweighted position successful equities which person respectively been nan strongest and weakest performing plus classes complete this period.

The squad continues to presume a protect stance from an allocation position successful correct of a looming recessionary outlook pinch a continuation successful nan underweighted position successful world equities, which was nan main driver of nan antagonistic worth adhd successful 4th four.

So, pinch that, I will move it complete to Lucas for a reappraisal of our financial performance.

Lucas Pontillo

Thank you, Jean-Guy. Good morning, everyone. I will now reappraisal our financial results for nan 4th fourth and twelvemonth ended 2022. Across our finance platforms, we generated full revenues of astir $185 cardinal successful nan existent 4th compared to $242 cardinal successful nan 4th fourth of 2021. The alteration was driven by little capacity fees successful nationalist markets, which returned to normalized levels successful 2022, pursuing an outsized capacity twelvemonth successful 2021.

And little guidelines guidance fees successful nationalist markets arsenic a consequence of little mean AUM. Quarter-over-quarter, revenues accrued by $24 cardinal aliases 15%, chiefly because of capacity fees being recognized successful nan 4th quarter. Despite little mean AUM for nan quarter, guidelines guidance fees accrued quarter-over-quarter arsenic a consequence of our increasing stock of revenues from backstage marketplace strategies.

Additionally, our accrued weighting of AUM invested successful equity strategies benefited revenues this 4th compared to past quarter, owed to nan equity marketplace rally astatine nan extremity of nan year. While AUM decreased 16% year-over-year afloat twelvemonth revenues only decreased 7% aft excluding nan effect of dispositions successful 2021.

The mean interest complaint of our caller mandates were accretive to our existent mean interest rate, a testament to our continued diversified maturation successful our backstage marketplace strategies, which offset nan declines successful nationalist markets felt crossed equity and fixed income successful 2022.

Looking much intimately astatine backstage marketplace revenues for nan quarter. Private markets full revenues of $62 cardinal were down by 6% successful nan 4th fourth compared to $66 cardinal successful nan 4th fourth of past year. Due to little capacity fees and shared net connected associated task projects, successful our existent property business successful nan UK compared to past year, 2021 being a amended twelvemonth for nan UK Real property business.

By this, guidelines guidance fees successful backstage markets were up astir 22% compared to Q4 2021 driven by further superior deployment and sourcing crossed our organization and backstage wealthiness channels.

In addition, committedness and transaction fees of astir $9 cardinal successful Q4 from caller flows and superior deployment proceed to supply an further gross watercourse for this platform.

Quarter-over-quarter, full revenues were up astir 20% pinch further committedness successful transaction fees arsenic good arsenic capacity fees earned successful Q4. On a afloat twelvemonth basis, guidelines guidance fees successful backstage markets were up 28% compared to nan aforesaid 12 period play past year. We proceed to spot a increasing comparative stock of publication from backstage markets to our wide revenues, which accounted for 34% of nan revenues successful nan 4th fourth of 2022, up from 27% successful Q4 of past twelvemonth arsenic Jean-Guy antecedently mentioned.

Turning to a reappraisal of nationalist marketplace revenues. Compared to Q4 2021, nationalist marketplace revenues decreased 30% to astir $123 cardinal successful nan existent quarter, owed to nan aforementioned capacity fees successful 2021, arsenic good arsenic from little mean AUM owed to nan diminution successful financial markets, and customer rebalancing retired of equity mandates passim nan year.

Quarter-over-quarter, nationalist marketplace revenues accrued 14% though ending AUM was somewhat higher successful Q4 mean AUM for nan 4th was really lower. That being said, nationalist marketplace based guidance fees remained unchangeable from nan erstwhile 4th and benefited from a favorable alteration successful plus operation weighted towards equities, which enjoyed a rallying capacity successful nan quarter.

On a afloat twelvemonth basis, nationalist marketplace revenues declined 16% to astir $471 cardinal compared to nan anterior year. Excluding dispositions successful 2021, nan gross alteration was only 14% year-over-year.

With regards to SG&A. SG&A, excluding share-based compensation totaled astir $172 cardinal successful nan 4th quarter, an summation of astir 14% from nan anterior quarter. This summation is aligned pinch our corresponding summation successful gross fixed nan adaptable quality of immoderate of our compensation structures and nationalist marketplace strategies.

On a afloat twelvemonth basis, full SG&A disbursal decreased by $25 cardinal aliases almost 5%. When excluding share-based compensation and dispositions, SG&A was efficaciously level year-over-year. As we proceed to navigate nan challenging economical environment, we are intimately monitoring operating expenses arsenic we set to an ever evolving marketplace volatility.

Turning to adjusted EBITDA and adjusted EBITDA margin. We generated adjusted EBITDA of $52.8 cardinal successful nan existent quarter, an summation of 16.8% from nan anterior quarter, driven mostly by higher revenues from capacity fees, which we typically crystallize successful nan 4th quarter. Year-over-year adjusted EBITDA decreased by 43% owed to nan extracurricular capacity fees successful 2021, which arsenic mentioned, returned to much normal levels successful 2022.

Our adjusted EBITDA separator accrued successful Q4 from nan anterior 4th to 28.6%, nan 12-month inclination successful adjusted EBITDA has remained unchangeable done fiscal 2022, a testament to our prudent attraction connected profitability, contempt nan volatile years nan markets person had and their corresponding effect connected nan apical line.

Looking astatine nett net and adjusted nett earnings, institution posted an eighth consecutive 4th of affirmative nett net pinch nett net attributable to shareholders of $2.5, $0.02 per stock during nan 4th fourth of 2022. Adjusted nett net were $33.1 million, aliases $0.32 per share. On a trailing 12 months basis, adjusted net per stock was $1.19.

With respect to free rate flow, past 12 months free rate travel was $58.9 for nan 4th fourth of 2022, while nan year-over-year alteration was evidently impacted by nan alteration successful adjusted EBITDA. It is besides important to statement that 2022 was besides impacted definite non-recurring outflows earlier this year.

Namely nan colony of share-based compensation plans related to nan StonePine transaction arsenic good arsenic nan acquisition of nan remaining 20% liking successful Fiera Real Estate UK, which together added complete a $40 cardinal resistance connected our past 12-month free rate flow, and we'll proceed to do truthful for nan adjacent fewer quarters.

Turning to our financial leverage. Our funded debt, arsenic defined by our in installments installation statement was fundamentally level year-over-year astatine $426 cardinal and decreased by $28 cardinal to $426 cardinal quarter-over-quarter, chiefly from higher rate flows from operations successful nan 4th and higher rate distributions from our existent property associated task projects successful nan United Kingdom.

Net indebtedness has decreased to $589 million, a alteration of $38 cardinal from past quarter, mostly driven by nan aforesaid factors arsenic our unfunded debt. However, nett indebtedness accrued $88 cardinal year-over-year. This was owed to nan acquisition of a information of shares from our Natixis liking waste done our stock buyback, nan colony of definite acquisition value obligations and put options and nan costs of accelerated stock based compensation related to StonePine. Combined, these 3 items unsocial were complete $75 cardinal for nan year.

In 2022, we took a number of actions to prudently negociate our leverage and heighten our financial flexibility, including nan refinancing of our in installments installation and convertible bond. We proceed to stay vigilant successful nan rising liking complaint environment, including evaluating opportunities to hedge our liking costs.

Overall, our financial ratios saw mean summation successful 2022, owed successful ample portion to nan non-recurring rate outflows antecedently mentioned. We stay well-positioned upwind further economical uncertainty and marketplace volatility pinch a funded indebtedness to EBITDA ratio of 2.37 times and a nett indebtedness ratio of 3.28 times, down 25% and 17% since their hike successful March of 2020. We stay committed to delivering worth to our shareholders arsenic a basal pillar of our strategy.

As such, we proceed to return superior to our shareholders done our dividends. The Board has declared a quarterly dividend of $0.215 per share, payable to holders of grounds connected March 8, 2023. This brings our trailing 12-month dividend to $0.86 per stock up from $0.845 per stock comparative play past year.

I'll now move nan telephone backmost to Jean-Guy for closing remarks.

Jean-Guy Desjardins

Thank you, Lucas. As we proceed to upwind nan volatility that has characterized 2022, we spot affirmative momentum from nan slowdown of nan customer consequence disconnected behavior. While nan financial intermediaries transmission was impacted this 4th by definite ample outflows. We are encouraged by nan measurement of mandates, we person won crossed our different channels done this difficult year.

Our backstage markets level continues to spot strong, unchangeable returns and remains a cardinal attraction of apical statement growth, generating an expanding stock of revenues done each 4th of 2022. The diversification provided by our nationalist and backstage marketplace level and our unsocial backstage wealthiness offering has allowed america to beryllium resilient successful nan turbulent macroeconomic environment. There's nary uncertainty that 2022 was a challenging twelvemonth for nan plus guidance manufacture and for Fiera. However, I proceed to beryllium inspired. The capabilities of our highly talented squad and I return arsenic CEO energized passionate astir navigating our business done this analyzable period.

So, looking ahead, I do publication that our laser attraction of putting our clients first, each while producing innovative solutions tailored towards their circumstantial needs will springiness america a competitory advantage, arsenic we activity towards achieving our strategical imagination of being an businesslike allocator of superior and make worth and prolong prosperity for each our stakeholders.

So, I will now move nan telephone backmost to nan usability for nan mobility period.

Question-and-Answer Session

Thank you, sir. [Operator Instructions] And your first mobility will beryllium from Étienne Ricard astatine BMO Capital Markets.

Q - Étienne Ricard

Good morning. On backstage markets, could you please stock really constricted partners are reevaluating their allocation to alternatives successful this marketplace environment?

Jean-Guy Desjardins

Étienne, I’ll nonstop nan mobility to John connected that. But convey you and invited to nan first call. I cognize this is your first preamble to this twelvemonth accordingly. So, John?

John Valentini

The clients are -- sorry, I didn’t hear. Clients are…

Jean-Guy Desjardins

Perhaps, Étienne you tin repetition it.

John Valentini

Repeat nan question.

Étienne Ricard

Sure. So, my mobility is connected backstage markets. Could you please stock really constricted partners person been reevaluating their allocation to alternatives successful this marketplace environment?

John Valentini

When you spot they're reevaluating 1 of nan impacts that immoderate portfolios person had that person been afloat allocated are has been nan denominator effect that equities has had. So, immoderate costs person slowed nan gait of making further commissions conscionable because of that. So, they've been hitting their precocious limit to nan allocations. We've had immoderate cases of that. But again, that has a constricted effect because nan immense mostly of investors and peculiarly smaller organization investors successful nan marketplace we target are still nether allocated to backstage markets. So, we do still spot request that we'll spot flows.

So, to reply it, we don't – we still spot continued liking and accrued allocations of investors. Most investors are nether allocated aliases not moreover are conscionable starting to allocate to private. So, nan maturation will proceed successful this marketplace environment. Jean, you possibly want to add.

Jean-Guy Desjardins

And if I – truthful I mean, they had thing to Jean. I was looking astatine nan latest information year-to-date. And I was rather happy to spot that connected a monthly basis, we're generating a level of caller flows into our backstage marketplace strategies that much than good successful statement pinch our expectations for nan year. And location has been a tilt towards nan in installments strategies comparative to nan different strategies up to now, which mightiness beryllium an denotation of immoderate penchant shifting arsenic a consequence of nan – it's funny astir that.

As you know, nan marketplace psychology is gradually moving correct now towards expectations that rates will spell up again this year. And you spot numbers that Fed costs will beryllium shooting towards 6% now, which successful truth is accordant pinch our pinch our macro view, but that's different story. And our in installments strategies thin to beryllium rather a batch of them and astir of them thin to beryllium short word long strategies. That benefits from rising liking rates.

And if you return our diversified lending fund, for example, that uses our soul in installments strategies is simply a diversified portfolio concept, is moving astatine existent output of astir 8.4% and erstwhile rates spell up, nan return of that strategy goes up, because astir of nan loans are pruning complaint loans. And location mightiness beryllium thing possibly that's why we're noticing that – that nan investors, and nan constricted partners you're referring to aren't benignant of reacting to nan imaginable of rates going up, which is amended to lick for our in installments strategies.

John Valentini

Yes. That's indicated successful nan investor presentation. If you look astatine nan Q4, conscionable nan Q4 absolute return number is an denotation of nan returns going guardant of in installments successful nan lowest return we person Q4 is 2.2% connected nan astir elder in installments and you person strategies adjacent to 3% and complete 3% conscionable connected a Q4 connected a quarterly basis.

Étienne Ricard

Appreciate those details. John, conscionable to travel backmost to 1 of your comments, erstwhile you opportunity your constricted partners are mostly nether invested successful alternatives. Given nan denominator effect you talked about, really overmuch really overmuch do you measure your clients' portfolios are allocated to alternatives – pinch alternatives comparative to let's opportunity a twelvemonth ago?

John Valentini

Well, I won't person nonstop information to that, but I cognize arsenic we talk nan different channels we have, whether it's nan backstage well, intermediaries aliases moreover our organization clients we still are I'd say, nether allocated. I mean, nan phenomena that I explained connected definite situations wherever clients nan denominator effect is low. And we spot that. I mean, nan grounds of that is really into redemptions. And we person not had. I mean, it's been de minimis. The redemptions person been de minimis this year. And erstwhile we did get them, it's really because of that. So, clients are complete allocated and they're reducing their exposures.

So, we've seen that past twelvemonth because of what happened to nan nationalist equities. But that walk request arsenic compared to what we cognize connected our customer guidelines aliases still is simply a large void successful nether allocation of clients that aren't allocated. Lucas, spell ahead.

Lucas Pontillo

And our precocious hedge worthy customer base, we person a $10 cardinal of precocious nett worthy clients successful Canada. And based connected our optimize allocation positioning firm wise. We person identified that location is an further $1.5 cardinal of imaginable while immoderate of our precocious nett worthy customer base, to spell into alternatives and person those portfolios lined up to an absolute strategical allocation.

And if that's nan acquisition that we person successful our base, I deliberation we tin extrapolate that crossed nan Canadian precocious nett worthy market, it's huge. The imaginable is huge. So, we are highly optimistic astir nan imaginable that Fiera has, to go a very, very important subordinate successful Canada. Just successful Canada, let's not talk astir nan US and Europe, but conscionable successful Canada to beryllium a very important subordinate down nan roadworthy successful this backstage marketplace industry. Because nary unit clients. No unit broadside of nan market, nan precocious nett activity tract of nan market, we cognize is very underrepresented correct now.

The organization marketplace is up of that, but we judge that nan smallest conception of nan organization marketplace to beryllium astatine nan $1 cardinal to $10 cardinal organization portfolio is presently nether weighted backstage marketplace strategy.

Étienne Ricard

Thank you very much.

Operator

Thank you. Next mobility will beryllium from Gary Ho astatine Desjardins Capital Markets. Please spell ahead.

Gary Ho

Great. Thanks, and bully morning. Maybe conscionable commencement disconnected connected nan outflows successful nan quarter. Performance, astatine slightest connected a 3 twelvemonth basis, seems beautiful solid. Shanghai, you're now backmost astatine nan helm, immoderate changes you mightiness make connected nan distribution side, possibly crippled scheme to move benignant of flows astir aliases do you really request a much constructive market? And also, did I drawback you correctly $2 cardinal of outflows from StonePine and astir apt astir that?

Jean-Guy Desjardins

Well, I tin talk astir distribution. I'll fto Lucas commencement astir nan outflows. Yes, distribution, we are moving nan distribution exemplary down into nan business units. We are operating 3 business units, backstage market, nationalist marketplace and precocious nett worth. High nett worthy was already into nan precocious web business unit, nan distribution portion is successful nan business unit. We are bringing down into nan nationalist marketplace division, into nan backstage marketplace division.

Distribution group that were each incorporated successful a world building and we want those group to beryllium operating adjacent to nan portfolio managers, to beryllium adjacent to nan finance strategies that they're representing and servicing to nan clients. And we're besides consenting to a much specialized distribution conception betwixt nationalist markets and backstage markets. So those changes are, I'd say, from I guess, conceptual constituent of position of nan distribution exemplary constituent of position meaningful.

This was specializing successful distribution and customer servicing group betwixt nationalist and backstage markets and we're pushing down nan distribution activities into nan business units truthful that nan group will beryllium person to nan portfolio managers and to nan civilization and nan constituent of that business portion that they person to represent. So, successful a way, it will beryllium that overmuch deeper into their humor because they're going to beryllium swimming into it.

Lucas Pontillo

And past nan 2nd portion of your mobility successful position of nan outflows related to StonePine. I'll springiness a broader elaboration connected that narration and benignant of what 2022 has looked like. Specifically, to nan outflow, it was 1 ample US Client astatine nan extremity of Q4. It was astir $1.5 billion, truthful that accounts for that. That was nan only customer nonaccomplishment during nan year. If we look astatine that benignant of our full customer guidelines comparative to nan StonePine strategies. They're down astir $12 cardinal year-over-year and you tin break that down into 3 categories. First class is conscionable efficaciously nan marketplace effect and pinch nan equity markets being down astir $4 cardinal of that $12 cardinal is explained by nan market, you had different $4 cardinal wherever we still person extended customer relationships pinch nan clients conscionable rebalanced and benignant of repositioned their wide vulnerability to equity.

So that explains nan second, third. And past nan last 3rd is betwixt 1 customer nonaccomplishment that we mentioned successful Q4, arsenic good arsenic you'll recall, nan Bel Air strategical benignant of rollover that we had astatine nan opening of nan year.

Gary Ho

Okay. So, I conjecture pinch StonePine now, we're astir successful that $50 cardinal that's really overmuch they manage?

Lucas Pontillo

Correct. Just 50 correct, astir 49.2.

Gary Ho

Okay. Great. Second question, John, bully to person you backmost connected nan call, seeing coagulated AUM to $18 cardinal successful gross maturation possibly a broader question. When you look retired let's telephone it 3 to 5 years. Where do you spot AUM increasing to? Or is location thing missing that you'd for illustration to inquire and past backstage markets now correspond 34% of consolidated revenue, wherever could you spot this operation increasing to complete time?

John Valentini

I deliberation nan complaint of maturation we've knowledgeable complete nan past mates of years Gary is benignant of suggestive of nan type of maturation we've knowledgeable complete nan adjacent 3 years. I mean, we proceed to spot – we've knowledgeable double digit maturation and we proceed to expect double digit maturation some connected an AUM level and gross level going forward.

Gary Ho

Okay. And thing missing successful nan strategy that you'd for illustration to add?

John Valentini

Sorry?

Gary Ho

Anything missing strategy of nan level that you for illustration that?

John Valentini

No. From a firm improvement standpoint, we've done a batch of that complete nan past five, 7 years. We really person a rather a complete database of strategies, I'd opportunity nan only area that's still from a firm improvement standpoint is US Real Estate some connected equity and debt. That is really nan only strategy, I'd say, missing from our operation different than that we're fundamentally reasonably good covered successful position of strategies.

Gary Ho

Okay. Makes sense. And past my past mobility is for Lucas. I mean much of a numbers mentation question. There was a $16 cardinal proviso related to definite claims, what was that related to? And past besides connected nan leverage side, didn't spot nan funded indebtedness ratio move overmuch sequentially, but nan LTM EBITDA dropped astir $14 million. Just wondering why and is it because nan calculation removes capacity fees?

Lucas Pontillo

So, I'll grip your 2nd mobility first. And past travel backmost to your first one. So, connected nan 2nd one, yes, nan measurement nan calculation useful that really amortizes nan capacity fees complete 3 years, truthful to region nan volatility retired of nan capacity fees. So, you're correct there.

On your first question, we had 2 descent incidents, which we are presently moving through. We felt it prudent to proviso for those amounts successful nan 4th quarter. These are types of activities, which we transportation security for. But astatine this constituent it's early days arsenic we activity done these items and we don't judge that will beryllium worldly successful nature. But by kindness of our normal operations, we usually travel crossed immoderate of these incidents and arsenic I say, we do person security sum that we're exploring astatine nan infinitesimal arsenic well.

Gary Ho

Sorry, Lucas, you said that's customer related?

Lucas Pontillo

To 2 trading correction issues, correct.

Gary Ho

Okay. Got it. Okay. Those are my questions. Thank you.

Operator

Thank you. Next mobility will beryllium from Jaeme Gloyn of National Bank Financial. Please spell ahead.

Jaeme Gloyn

Yes. Thanks. Good morning. First question, a mates of small ones here. On nan severance this quarter, does that see immoderate expenses tied to nan CEO transition? Or is that thing we'll spot successful Q1? And tin you quantify that number astatine this stage?

Jean-Guy Desjardins

Hey, Jaeme, convey you for your question. No, that does not see that was a Q1 event. So, you'll beryllium seeing that coming up successful Q1. We can't remark connected that correct now. Still successful discussions, but we'll person an update astatine nan extremity of nan first quarter.

Jaeme Gloyn

Okay, understood. Shifting to nan dividend six quarters now astatine nan aforesaid dividend level. Obviously, free rate travel took a small spot of a dip this year, but immoderate one-time items that you would possibly not expect to spot travel backmost adjacent year. So conscionable reasoning done what are your thoughts connected dividend maturation going guardant here? Is that thing you're expecting to support level for nan remainder of nan year? Or really should we beryllium reasoning astir that?

Jean-Guy Desjardins

Yes. At this point, we stay comfortable pinch nan existent level of nan dividend. As we ever mentioned, we continually accent trial our rate flow. As you good pointed out, we had immoderate anomalies successful 2022, which pushed immoderate unit connected nan existent twelvemonth free rate flow. But erstwhile we look backmost astatine a 5 twelvemonth humanities period, erstwhile we look forward, we're connected nan 2 twelvemonth play based connected projections and our expectations. We're still coming successful pinch a dividend astatine a free rate travel ratio of nether 100% and person to 95%. So, we're rather comfortable astatine that level astatine nan moment.

Jaeme Gloyn

Okay. Got it. We're seeing immoderate commentary aliases some, I guess, revaluations of UK Real Estate portfolios. Just wondering what are immoderate of nan imaginable impacts that could person successful Fiera's exposures and pinch that travel done income connection for Fiera, immoderate commentary astir that UK? And possibly different commercialized existent property exposures successful general?

Jean-Guy Desjardins

So location has been nan investor position you'll spot successful our halfway money of nan Q4 return was antagonistic 2.3. However, we were affirmative 0.7 successful our business fund. And nan 2.3 antagonistic is simply a very – is antagonistic but very beardown comparative to our peers. Our halfway money past twelvemonth had a affirmative return. A batch of halfway costs had antagonistic returns. So, we proceed to beryllium successful nan apical quartile capacity of nan scale successful Canada. And nan logic our money is besides sitting very powerfully that complete 50% of our money is successful industrial. We are -- nan different assemblage that we're exposed to is multi residential and we person very debased affinity vulnerability to adjacent past malls and office.

So that speaks to nan beardown capacity of our existent property strategies wherever it's accordant and each of our strategies are wide locations pinch industrial, multi residential and very small allocation to immoderate type agency and adjacent them retail. So, capacity remains beardown crossed nan board. So, we really spot that arsenic a affirmative continued flows successful existent estate, which past year, we raised good complete $ 1 cardinal successful our existent property strategies.

Jaeme Gloyn

Great, sewage it. Thank you for that. And conscionable nan past 1 possibly – possibly a spot much philosophical aliases moreover excessively early to beryllium reasoning about. But pinch nan spot of nan backstage markets business, what benignant of considerations aliases person you had aliases is it a anticipation wherever you mightiness look to rotation retired that franchise from nan nationalist marketplace franchise conscionable fixed nan valuations that are typically applied, much premium valuations applied to those aged platforms? Just wanted to get possibly immoderate precocious level thoughts from you astir imaginable measurement to aboveground immoderate worth successful nan Fiera franchise?

Jean-Guy Desjardins

Well, nan reply is no. And I deliberation that -- I deliberation it's important to admit nan grade to which we person tremendous synergies betwixt those 3 business units. And I deliberation astir group must underestimate nan grade to which nan interest of each other. Public marketplace is simply a root of important maturation to our precocious headwinds successful our Private Market Division. The Private Market Division is simply a root of maturation to nan different two. The High Net Worth Division is simply a root of maturation for nationalist markets and backstage markets, it's very, very difficult to spot nan value-added that would beryllium created for shareholders, if we were to see spinning, and you could return -- you could inquire nan aforesaid mobility astir it successful 1 of those 3 divisions. And moreover erstwhile you tin talk astir if you opportunity that nan backstage marketplace business has worked truthful much, it looks for illustration a large number erstwhile you look astatine it connected its own.

But erstwhile you look astatine nan effect that it adds connected nan wide endeavor value, hide nan banal value and look astatine endeavor value, nan wide endeavor worth that's been aliases perchance tin beryllium created complete nan adjacent fewer years arsenic a consequence of that move that exists betwixt those 2 divisions we judge that for nan shareholders, it would not beryllium a bully point to do.

So, it's not thing that we are considering aliases that we deliberation and nan Board deliberation that is due to beryllium considered fixed those synergies that beryllium betwixt nan 3 divisions and really they provender into each other.

Unidentified Analyst

Great. Thank you for nan other color.

Operator

Thank you. [Operator Instructions] And your adjacent mobility will beryllium from [Indiscernible] astatine TD Securities. Please spell ahead.

Unidentified Analyst

Good morning. Thank you. I conjecture my first mobility would beryllium to you, Jean-Guy, invited back. Just wanted to ask, is location thing circumstantial successful nan broader marketplace aliases pinch Fiera that necessity that you return arsenic CEO?

And nan 2nd portion of that mobility was astir to beryllium connected if location immoderate changes that you would beryllium introducing this year? So, you said astir nan distribution model, but is location thing other that has been considered correct now?

Jean-Guy Desjardins

The first mobility wherever you made reference to nan wide macroeconomic and separator environment. I deliberation we did publically explicate why nan alteration took place. And I deliberation nan argumentation connection was a very, very clear connection that nan Board made nan determination and honestly, your constituent is benignant of right. The Board made nan determination to make nan alteration successful nan look of nan probability associated to having nan adjacent mates of years conscionable 2023, but nan adjacent mates of years, perchance facing a very difficult macroeconomic environment, which will bring astir important -- perchance important financial marketplace volatility and felt much comfortable having older, much knowledgeable I deliberation nan look much acquisition much than older, truthful you tin return distant nan older aspect, but much acquisition CEO and nan helm. So -- and that's it. I deliberation it's a group of circumstances that I deliberation explains that decision.

So, your 2nd mobility astir changes. Yes, I think, well, yes, if you look astatine we've announced and I deliberation I publically expressed what nan organizational building of nan patient would be. I deliberation you must person noticed that I person recreated, nan backstage marketplace group arsenic an independent division. I promoted Jean Michel to beryllium nan leader of that division.

And we will beryllium operating connected nan ground of 3 business units, nationalist markets, backstage markets, precocious nett worth, And I deliberation you tin spot that nan awesome is very clear that we will request to I deliberation I don't for illustration nan word, but I deliberation I person to usage it to person much decentralized building providing a higher grade of personality to each 1 of these units nether their leadership, wherever group will beryllium made intelligibly responsible, which pinch very circumstantial operating targets, pinch a very circumstantial group of responsibilities, which we judge starring nan Board believes that is conducive to a very entrepreneurial culture, wherever group person each nan state to definitive their creativity, and execute that productivity done their ain initiatives, because astatine nan end, they only will beryllium accountable, and I tin show you 200% accountable for delivering connected nan targets that will beryllium fixed to them.

And if you say, well, is that a change? I would opportunity that successful immoderate ways, yes. But different than that, I said -- I deliberation I've talked astir nan alteration successful nan world distribution exemplary that we have, which fundamentally is besides being pushed down into nan business unit. And astatine nan apical of nan structure, I fishy you must person noticed, I person reallocated exertion and cognition to Lucas nether nan CFO responsibility, and I person moved nan HR work nether Gabriel, and that fundamentally frees up Jean-Guy to beryllium overmuch much progressive and overmuch person to dealing pinch clients and to besides woody pinch imaginable clients, which is my publication to nan maturation of our business. And truthful those are, yes, our organizational changes that we deliberation will person a important effect connected nan early maturation of Fiera Capital. yes.

Unidentified Analyst

Okay. I admit that. That's really bully color. Just arsenic a follow-up here, would location beryllium immoderate restructuring aliases one-time charges pinch nan changes successful either nan world distribution exemplary aliases immoderate organizational changes?

Jean-Guy Desjardins

So, we are moving through. So arsenic portion of nan announcement earlier successful nan year, I mean, connected your quote, right, location are immoderate further repercussions. But again, we'll beryllium successful a amended position to remark connected those aft nan first quarter.

Unidentified Analyst

Okay. Understood. Sorry. Okay. And conscionable my past mobility connected nan 6 cardinal successful outflows nether Financial Intermediaries segment, specifically nationalist markets. I deliberation you mentioned location was much than 1 instruction that was past year, but could you springiness immoderate much colour connected this please? Thanks.

Jean-Guy Desjardins

Yes. As I mentioned, 1 of them was nan StonePine benignant of sub-advisory that we have. John, do you want to speak about.

John Valentini

Yes. So, commencement larger fixed income mandates, rather sizable pinch 1 of nan financial intermediaries. So little from an wide each position and effect connected revenue. But that 1 successful and itself was complete 3 billion. So, betwixt nan 2 of those, they efficaciously dress up that 6 cardinal that you're referring to.

Unidentified Analyst

Okay. That's a bully point from me. Thank you.

Operator

Thank you. And astatine this time, location are nary further questions. Please proceed pinch closing remarks.

Marie-France Guay

Thank you, Sylvie. Well, that concludes today's call. And for much information, do not hesitate to return advantage of our website astatine ir.fieracapital.com. Thank you for joining us. Thanks.

Operator

Thank you. Ladies and gentlemen, this does so reason your convention telephone for today. Once again, convey you for attending. And astatine this time, we inquire that you please disconnect your lines. Have a bully weekend.