Fiera Capital (FSZ.TO), a global asset management firm, reported a strong third quarter in 2024 with significant growth in assets under management (AUM) and revenues.
The company's AUM increased to $165.5 billion, a 4% rise from the previous quarter, while total revenues climbed by 8% year-over-year to $172 million. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) saw an 18% increase to $51.7 million.
Net earnings attributable to shareholders were up, reaching $13 million from $11 million in the same quarter the previous year. Fiera Capital also announced a quarterly dividend of $0.216 per share.
Key Takeaways
- Fiera Capital's AUM rose by 4% to $165.5 billion, driven by positive market performance and net organic growth.
- Total (EPA:TTEF) revenues for Q3 2024 reached $172 million, an 8% increase year-over-year, with private markets revenue up by 17%.
- Adjusted EBITDA grew by 18% year-over-year to $51.7 million, with net earnings attributable to shareholders increasing to $13 million.
- The company reported strong performance in private credit and Canadian infrastructure strategies.
- Fiera Capital declared a quarterly dividend of $0.216 per share, payable in December 2024.
Company Outlook
- Continued growth anticipated in both public and private markets, with a promising pipeline for future mandates.
- Executives expect performance fees, particularly from the agriculture fund, to increase in the coming years.
- The private markets segment is projected to grow with a target of reaching $20 billion in AUM, supported by a favorable macroeconomic environment.
- The company is optimistic about maintaining strong margins and free cash flow above dividend payouts.
Bearish Highlights
- The company experienced net outflows of $400 million in public markets, excluding PineStone.
- Executives expressed limited concern regarding potential PineStone outflows in Q4 due to year-end rebalancing.
- Visibility on net contributions or mandate losses remains uncertain, influenced by client decisions and recent U.S. elections.
Bullish Highlights
- Strong interest from EMEA clients in emerging market strategies, particularly frontier markets.
- Significant activity from new offices in Switzerland and the Middle East.
- A shift towards less traditional fixed income strategies is gaining traction.
Misses
- SG&A expenses rose by 4.4% to just over $123 million for the quarter, attributed to higher travel, marketing, and compensation costs.
Q&A Highlights
- Free cash flow is expected to remain above the dividend payout for the upcoming quarter.
- The dilution effect of the 8.25% hybrids will be clearer after Q4 numbers are released.
- There are no plans to change the Dividend Reinvestment Plan (DRIP), despite its modest uptake.
Fiera Capital's earnings call highlighted a solid quarter with growth in AUM and revenues, driven by strong performance in private markets and strategic shifts in investment strategies.
The company's focus on debt repayment over share buybacks, despite the nearing $10 stock price, and confidence in maintaining strong margins and cash flow, underscored its prudent financial management.
While there are concerns about potential volatility in net contributions and mandate losses, the overall sentiment remains positive for Fiera Capital's future growth and performance.
Full transcript - None (FRRPF) Q3 2024:
Operator: Good morning. My name is Joel, and I will be your conference operator today. At this time, I would like to welcome everyone to Fiera Capital’s Earnings Call to discuss Financial Results for the Third Quarter of 2024. [Operator Instructions] I will now turn the conference over to Ms. Marie-France Guay, Senior Vice President, Treasury and Investor Relations. Ms. Guay, you may begin your conference.
Marie-France Guay: Thank you. Good morning, everyone. [Foreign Language] Welcome to the Fiera Capital conference call to discuss our financial results for the third quarter of 2024. Note that today’s call will be held in English. Before we begin, I invite you to download a copy of today’s presentation, which can be found in the Investor Relations section of our website at ir.fieracapital.com. Also note that comments made on today’s call, including replies to certain questions, may deal with forward-looking statements, which are subject to risks and uncertainties that may cause actual results to differ from expectations. I would ask you to take a moment to read the forward-looking statements on Page 2 of the presentation. On today’s call, we would discuss our Q3, 2024 results, starting with an update on our AUM flows, followed by highlights of our public and private markets platforms as well as our private wealth business. We will then review our financial performance. Our speakers today are Mr. Jean-Guy Desjardins, Chairman of the Board and Global CEO; and Mr. Lucas Pontillo, Executive Director and Global CFO. Also available to answer questions following the prepared remarks will be Jean-Michel, President and CIO, Public Markets; John Valentini, President and CEO, Private Markets; and Maxime Ménard, President and CEO of Fiera Canada and Global Private Wealth. With that, I will now turn the call over to Jean-Guy.
Jean-Guy Desjardins: Thank you very much, Marie-France. Good morning, everyone, and thank you for joining us today. We are very pleased with our results for the third quarter, which showed continued improvement in our distribution, operational and financial performance. The shift by central banks towards easing policies created a favorable environment for global markets in the third quarter. Equity markets benefited from the soft lending narrative with major indices hitting new highs. Our fixed income markets have responded positively to the dovish shifts in monetary policy with yield curves steepening and short-end yields falling more sharply than long-term yields. Against this favorable backdrop, we reported assets under management of $165.5 billion, which increased 4% in the quarter, reflecting rising equity and fixed income markets, along with positive net organic growth in both public markets, excluding PineStone and private markets. Our private markets platform saw assets under management maintain its growth trend, driven by new subscriptions of $400 million, supporting positive net organic growth and by market appreciation. Public markets assets under management increased by $6.3 billion or 4.5% as positive market impact was partly offset by net outflows of approximately $400 million. Excluding PineStone, our public markets platform saw a 5.1% increase in assets under management and reported net inflows of approximately $200 million. With respect to assets under management sub-advised by PineStone, we saw significant moderation in outflows in the quarter with net negative flows of $500 million related to ongoing client rebalancings. Also, it is important to note that on a year-over-year basis, assets under management in strategies sub-advised by PineStone have remained essentially flat as favorable markets have offset outflows. I will now turn to highlights of our commercial and investment performance across our asset classes. So, starting with our public market’s platform. We were pleased to be awarded $500 million of gross mandates in the third quarter, primarily from Canadian and U.S. clients investing in our fixed income mandates, along with new mandates from private wealth clients in Canada. We are also pleased to report that public markets, excluding assets under management sub-advised by PineStone, returned to positive net organic growth in the quarter. We believe the improvement in flows, along with an increase in new mandate momentum that we have been seeing post quarter end, are early testaments of the benefit of our regionalized distribution model. Turning to investment performance in public markets. It was a strong quarter for fixed income with our flagship Canadian fixed income strategies all adding value. In particular, the active core strategy outperformed by more than 70 basis points and strategic core beat its benchmark by more than 80 basis points. All three flagship strategies have outperformed their benchmark over the one, three and five year periods. Our global multi-sector income strategy also performed well, generating over 140 basis points of added value in the third quarter due to strong security selection as well as active duration and curve positioning. The strategy continues to outperform by over 300 basis points year-to-date. Our equity strategies had mixed relative performance in the third quarter. For Canadian strategies, it is worth noting that the TSX rose 10% in the quarter, marking only the third time this has happened in the last 14 years. Our absolute performance in equities was solid, but it was a challenging quarter to outperform. Despite this, the majority of our equity strategies continue to generate top quartile returns for investors, outpacing their benchmark by healthy margins over 1, 3 and 5 years. We were pleased with the performance of our Atlas (NYSE:ATCO) Global Equity strategy, which added 110 basis points of value in the third quarter helped by security selection in the information technology and financial sectors and no allocation to energy. Since its inception in 2017, this strategy ranks well relative to peers and has outperformed its benchmark by over 400 basis points. Lastly, despite our emerging markets strategies having a challenging quarter due to significant upswings in Chinese markets late in the third quarter, our Frontier market strategy still managed to outperform its benchmark on the back of strong security selection in Vietnam and Kazakhstan. Now turning to our private markets platform. Private markets delivered positive net organic growth of approximately $200 million during the quarter after returning capital of $170 million to investors. Growth was driven by new mandates of $400 million, primarily from Canadian clients into private credit mandates and European clients into real estate. In addition to the $400 million in new mandates in the quarter, more than $500 million was deployed, and we maintain a pipeline with $1.4 billion of commitments available for deployment into future opportunities. With respect to investment performance, our private market strategies performed really well in the quarter. Nearly all of our private credit strategies generated positive returns, benefiting from favorable lending conditions from lower interest rates and central banks signaling further rate reductions. Our infrastructure debt fund, in particular, posted strong results in the third quarter and a 14% return over 1 year. Private equity also performed well, contributing to a 1-year return of 19%. Our approach here remains focused on selective investment in mid-market, high-growth sectors. Within our global agriculture and timber strategies, key partnerships have performed well, and the team continues to actively pursue strategic acquisitions and exposure to new partnerships to capitalize on global market opportunities, especially in the Middle East. Our Canadian infrastructure strategy has generated very strong returns this quarter at 2.6%, showing resilience amid variable macroeconomic conditions. Lastly, in real estate, performance of the Canadian and U.K. strategies suggests recovery as property valuations benefit from recent interest rate cuts and improved liquidity. This improvement is most notable in the multi-residential and industrial sectors, where Fiera’s strategies are more heavily concentrated. Now moving on to private wealth. Private wealth assets under management increased by $200 million in the third quarter to close at $14.3 billion. We secured new mandates of close to $90 million, of which approximately half was from First Nations relationships. We continue to deepen and strengthen these relationships and have seen good mandate activity in this space post quarter. With that, I will now turn it over to Lucas for a review of our financial performance.
Lucas Pontillo: Thank you, Jean-Guy, and good morning, everyone. We are pleased with our strong financial performance during the third quarter of 2024, with both year-over-year and quarter-over-quarter improvements across many of our key financial metrics. Improvements in both our public and private market platforms, which were supported by an increase in our average management fee rate as a result of new mandates generating higher fees. The diversity of our revenue streams also improved during the quarter with performance fees and share of earnings in joint ventures. Starting with total revenues. Across our investment platforms, total revenues of $172 million in the third quarter increased by $13 million or 8% year-over-year, fueled by strong growth in private markets revenues of 17% and 4% growth in revenues from public markets. On a year-to-date basis, total revenues increased to just under $505 million, representing a 6% increase compared to the first 9 months of 2023. This was largely thanks to the growth in private markets. Base management fees rose to just over $154 million during the quarter, an increase of 5% year-over-year, reflecting growth both in public and private markets AUM. On a year-to-date basis, base management fees were $455 million, up 2% year-over-year and driven by higher fees in private markets and change in asset mix. This resulted in an improved average fee rate of 37.3 basis points compared to an average of 36.4 basis points over the same period last year. Turning to public market revenues. Base management fees increased by $4 million or 4% year-over-year to end the quarter close to $107 million, primarily due to higher revenues from financial intermediary clients in the U.S. and the private wealth channel in Canada as a result of our fee optimization initiative. This was partly offset by lost PineStone equity mandates. On a year-to-date basis, fees remained flat year-over-year at $316 million despite the large PineStone outflows experienced during the first half of the year. Other revenues of $4 million in the third quarter increased by $1 million year-over-year. And on a year-to-date basis, other revenues of $11 million increased by $6 million. The increased other revenues includes insurance related to a prior year claim. Turning to private market revenues. Base management fees increased by $3 million or 7% year-over-year to $47.5 million for the quarter, mostly driven by higher institutional assets under management and mainly from new subscriptions into our agriculture strategies. On a year-to-date basis, base management fees increased by $10 million or 8% year-over-year to reach almost $139 million for the 9-month period. This was thanks to new subscription in our agriculture, real estate and our diversified private market solution strategies, which form part of our competitive feeder fund offering. Performance fees were $5 million during the quarter and almost $9 million on a year-to-date basis, which were $3 million higher than last year on both a quarterly and on a year-to-date basis. This increase is largely related to the recognition of performance fees in our agriculture strategies. Year-over-year, commitment and transaction fees increased by $1 million for the quarter to $3.6 million, reflecting higher transaction fees from our EMEA clients, while year-to-date commitment and transaction fees were just over $9 million were down $2 million year-over-year, largely driven by lower deal activity from our private debt and infrastructure platforms in Canada. Share of earnings in joint ventures related to our UK real estate business were up slightly in the third quarter on a year-over-year basis to $1.7 million and reached $10.7 million on a year-to-date basis, increasing by over $8 million. In summary, on a year-to-date basis, our private markets platform has contributed revenues of over $173 million, up $23 million or 16% from the same period last year. Private market revenues comprised 34% of total revenues despite accounting for only 12% of total assets under management. Not only does our private markets platform remain an outsized contributor to our revenue growth, it also provides us with greater revenue diversification, providing stability and growth during times of financial markets volatility. Turning to SG&A in the quarter. SG&A expenses were just over $123 million for the quarter compared to $118 million for the same period last year, representing an increase of just 4.4%. On a year-to-date basis, SG&A expenses of $374 million were up 4.7% from the same period last year. The increase in expenses was largely due to higher travel and marketing related to our ongoing regional expansion, some higher vendor and data costs and some increased compensation. SG&A growth for both the quarter and year-to-date was lower than revenue growth, allowing us to deliver solid growth in our adjusted EBITDA. Turning to adjusted EBITDA and adjusted EBITDA margin. Adjusted EBITDA of $51.7 million increased 18% year-over-year and on a year-to-date basis was up 11% to end the 9-month period at just over $142 million. On a last 12-month basis, our adjusted EBITDA is the highest it has been in 2 years, supported by continued growth in our private markets platform. This despite outflows related to strategies sub-advised by PineStone. Our adjusted EBITDA margin was 30.1% for the quarter, up from 27.7% in the same quarter last year. On a year-to-date basis, our margin was 28.2%, an increase of 120 basis points from the same period last year, demonstrating our commitment to cost management even after accounting for investments made in expanding our distribution model. Now looking at earnings. Net earnings attributable to the company’s shareholders of $13 million in the last quarter increased from net earnings of $11 million in the same quarter last year. On a year-to-date basis, net earnings of $25 million were up more than 32% compared to $19 million during the same period last year. It is also important to note that net earnings last year also included a onetime gain of over $5 million related to the sale of mutual funds to New York Life. On an adjusted basis, net earnings were $29 million or $0.25 per diluted share, up from $24 million or $0.18 per share in the same quarter last year. On a year-to-date basis, adjusted net earnings were close to $80 million, up 5% from the prior year or $0.73 per diluted share, up from $0.70 per share. Turning now to our financial leverage. Net debt was $655 million at the end of the third quarter, up $31 million from the same period last year, while our net debt ratio decreased to just below 3x in the current quarter, down from over 3.4x in the same period last year. Our funded debt as defined by our credit facility remained at 2.9x. Turning to free cash flow. Our last 12 months free cash flow of $95 million is down $3 million from the same period last year, but comfortably above the last 12 months dividend paid. The decrease reflects changes in our non-cash working capital, mainly from an increase in accounts receivable from higher revenues. This was largely offset by an increase of $33 million in cash generated by operating activities before the impact of working capital over the last 12 months. We remain committed to delivering value to our shareholders as a fundamental pillar of our strategy. In this regard, we repurchased approximately 650,000 shares under our normal course issuer bid in the third quarter for a total consideration of $5.2 million, representing a weighted average purchase price of $7.79. Lastly, I am pleased to announce that the Board has declared a quarterly dividend of $0.216 per share payable on December 19, 2024, to shareholders of record on November 19, 2024. Dividend represents an increase of $0.01 per share, allowing us to remain in the Canadian Dividend Aristocrats Index. I’ll now turn the call back to Jean-Guy for his closing remarks.
Jean-Guy Desjardins: Thank you, Lucas. Overall, we are very pleased with our third quarter results. Growth in both public and private markets assets under management has enabled us to achieve strong financial performance, resulting in an improvement across all of our key financial metrics. Momentum is quite positive as we have seen a marked improvement in our flows as we enter the last quarter of the year. Our pipeline remains promising with significant mandates expected to fund in the next few months. And as cash rates decline, we are seeing increased interest in our fixed income and alternative strategies as investors look to reallocate away from cash accounts. Our proactive adaptation to the monetary policies and economic developments observed this year have positioned us well to manage potential risks and seize growth opportunities ahead. We continue to build on providing our clients with multi-asset solutions from our diverse and broad range of strategies. The depth and breadth of our offering, along with strong performance and track record provides a unique opportunity for our clients as well as enables us to remain resilient in the face of uncertainty. I will now turn the call back to the operator for the question period. Thank you.
Operator: [Operator Instructions] Your first question comes from Nik Priebe with CIBC (TSX:CM) Capital Markets. Your line is now open.
Nik Priebe: Thanks. We have had a lot of market-related AUM growth this year. In the past, you have alluded to certain revenue sharing agreements with key PMs, which provides an automatic stabilizer to the cost base when markets decline. And then conversely, on the way up, you will see some associated inflation in your cost base, which is a net positive because earnings are growing. But what would you estimate your expense beta is, or I guess in other words, if AUM increases 1% because of market-related tailwinds, roughly speaking, how much would you expect SG&A to increase?
Jean-Guy Desjardins: It’s a good question. I will have to get back to you on the calculus, but I can give you the range in terms of the revenue sharing, whether it would be on base management fees or performance fees can range anywhere between 20% to 50%, again, depending on the nature of revenue. So, as I say, it’s off the cuff, it’s a bit of a tougher answer to give you because I will say it depends on the type of revenue and where it’s flexing. And as you know, performance fees have a larger impact in our fourth quarter. So again, that’s on a much different revenue model or expense model than our base management fees would be.
Nik Priebe: And just on that topic, we are getting closer to year-end. It’s been an exceptionally strong year for global equity markets. Are you able to give us an update on how the performance fee outlook is shaping up as we approach the crystallization event at year-end? Like directionally speaking, all things equal, would you expect it to be higher than last year?
Lucas Pontillo: At this point, it’s been – just even within the last quarter, in fact the last month, we have seen a lot of volatility. I would say going into the third quarter, it was looking quite strong. The China rebound that we had in the month of October really had an impact on emerging markets returns. So, that kind of took us a step back. And with the latest election results that we just saw come through, you might see that go the other way again between now and the end of the year. So, as I say, it’s – like the election, it’s really too early to call at this point and I won’t make any comment in terms of where we end. But it’s been a strong first six months of the year, and we will see how the latter half treats us, particularly the last two months.
Nik Priebe: Okay. No, fair enough. And just last one for me. You made reference to an increase in new mandate activity subsequent to quarter end. Just wondering if you could elaborate on that a little bit, was that a reference to a particularly chunky mandate that was won, or just a broader comment on the build that you are seeing in RFI and RFP activity?
Maxime Ménard: It’s Max. So, for Canada, we have seen – we have actually been awarded a few chunky, like a few very large mandates that we can’t speak of for now and also have seen a significant pickup in two of our public market strategies, namely Canadian equities where we see a lot of attention. It’s a very high-rated top quartile mandate. So, we see a lot of activity on the consulting side, and we have been in many finals, and we are winning those finals. So – and we have also seen lots of success also with our Atlas mandate performance. So, great pipeline and also some good results in terms of won mandates and not yet funded, but coming through the pipeline.
Nik Priebe: Okay. That’s great. Thanks. I will turn it over.
Operator: Your next question comes from Étienne Ricard with BMO Capital Markets. Your line is now open.
Étienne Ricard: Thank you and good morning. If I circle back on your comment that new mandate activity is increasing, could you please share for what fixed income mandates are you seeing stronger demand?
Jean-Guy Desjardins: Yes. We have seen good activities across the board, but I would say that we are seeing activities in the midday that are less traditional, like the Core Plus mandate and multi-sector strategies have been – we have been some demand for that. It’s a bit across the board, but as the market is looking for things that are slightly less traditional from the fixed income side.
Étienne Ricard: Okay. And in terms of geographies, net flows from EMEA clients have been better for a few quarters now, so two questions on my end. The first is for what strategies in this geography you are seeing strong demand? And the second part of the question, what early results have you seen from the new office locations in Switzerland and the Middle East?
Jean-Guy Desjardins: Okay. On the EMEA side, the activity is on the emerging market strategies, especially the frontier ones. Also on the U.S. SMID strategy, there is quite a lot of activity there. And specifically on the intermediary side, which is the focus of our Switzerland office, the Zurich office, it’s on the U.S. SMID strategy that there is quite a bit of activity. And on the Middle East side, it’s a mix. We have activity on Middle East equity markets. Out of Abu Dhabi, we have activity on the real estate side. And out of Saudi Arabia, a lot of interest in our ag and timber strategies.
Étienne Ricard: Okay. Thank you, Jean-Guy. And Lucas, on capital allocation, with the stock at $10, how do you plan to balance paying down debt relative to share buybacks to the extent free cash flow exceeds the dividend?
Lucas Pontillo: I mean, obviously we were quite opportunistic when the share was below $8 and we took advantage of that. We will have to certainly reevaluate. We haven’t been back up at this level for a while. So, it’s a nice place to be. We still think there is more room to go, but we have money allocated for the buyback at this point, and we will continue to watch it. At this stage, debt would be the priority.
Étienne Ricard: Great. Thank you very much.
Operator: Your next question comes from Gary Ho with Desjardins Bank Capital Markets. Your line is now open.
Gary Ho: Thanks. Good morning. Maybe just going back to the performance fees question, Lucas, can you maybe identify a couple of strategies? I think I heard you say the emerging fund that could be accruing performance fees. Maybe just help us out so we can maybe dig into that a little bit, which are the strategies is currently accruing performance fees?
Lucas Pontillo: Yes. So, on the public market side, that would definitely be the one, and we have spoken about that historically. And that’s really one that, I mean unless we have a crystallization event during the year, it’s more traditionally always accrued for and reviewed in the fourth quarter, once it’s effectively earned. But what you are starting to see on the private market side, and I think I alluded to it in my comments in terms of agriculture in particular, that’s one strategy where by virtue of the vintages of the funds that we had, the – if you really look at when the agriculture platform started to expand between 2021 and 2022, we are starting to hit the strides of those vintages in terms of them giving off performance fees. So, as a result, you saw some come through this quarter. Historically, that platform probably generated about $4 million a year of performance fees. You saw that we have done that year-to-date already. And so we do expect a slight increase between now and the end of the year. But that is one platform that you can expect that going forward, assuming returns maintain, which again are quite stable in agriculture, but is a platform that performance fees could easily double in that category over the next 3 years.
Gary Ho: Okay. Great. And then while I have you, Lucas, just on the – I was wondering if you can help me triangulate this. So, your LTM free cash flow against dividends was roughly 96%, yet you repaid off some debt and bought back 600,000 shares and all of that, your leverage is down in the quarter, what am I missing there?
Lucas Pontillo: Yes. So, you should look at it on an LTM basis, because if you are comparing the LTM cash flow, you should look at the LTM change in the debt. And in which case, you will see that the net debt actually went up by $30 million year-over-year. And in fact, as you alluded to, there was closer to, when you look over the full year, there was closer to $10 million of buybacks. There was capital investment that we made, particularly in seed capital for the funds, which largely account for sort of that extra $30 million. So, if you take the fact that the LTM free cash flow at $95 million pretty well covered the dividend and then some. And as I say, then you have got the extra type of CapEx and capital allocation decisions that we made that account for that $30 million increase.
Gary Ho: Got it. Okay. Thanks for that. And then just last one. Margin is very strong this quarter. That’s great to see able to hit that 30% mark, and that’s despite ongoing investment in decentralizing your distribution team. Any one-time item there to note to call out, and how sustainable is that 30% looking out?
Lucas Pontillo: It’s certainly sustainable going into the fourth quarter. And then again, depending on how performance fees land, it could be much higher than that. There is nothing one-time in there. I would say that the performance fees for private markets that came in, in the quarter, going forward will be more systemic in that regard in terms of just, as I say, particularly the agriculture platform as it continues to mature and we start getting the carry on those funds. So, you will see that replicate more frequently going forward than it has historically, obviously adding to the margin expansion.
Gary Ho: Got it. Okay. That makes sense. Those are my questions. Thank you.
Operator: Your next question comes from Graham Ryding with TD Securities. Your line is now open.
Graham Ryding: Hi. Good morning. Just to follow on that, Lucas, the performance fees in the quarter, did they come from the agriculture fund, or where did they come from?
Lucas Pontillo: Yes, from the agriculture fund.
Graham Ryding: Okay. Great. Can you just talk about the alternatives business? This question is for Max or anybody. Just any noticeable change over the last sort of recent period versus maybe 6 months to 12 months ago in terms of your pipeline for new mandates and also investor interest in particular strategies?
Jean-Guy Desjardins: Why don’t I let John take that one, we had a good discussion around real estate opportunities going forward.
John Valentini: Yes. So, as Max was alluding to, the pipeline is quite strong in terms of we have been awarded mandates. But obviously, you have got to sign up the mandates on subscription agreements. We will reach with – I mean we are at $19.5 billion in AUM by – we do expect continued growth and expect to hit the $20 billion mark in our private markets based on the pipeline and deals we have been awarded. So, that gives you some good visibility on the short-term of new flows. And I would say in terms of flows or forecast even heading into 2025, the macroeconomic environment of decreasing interest rates and inflation is very favorable to our real assets platform, which is our biggest platform. It comprises over two-thirds of our private markets business. So, the macroeconomic environment bodes well for this asset base, which was a bit of an unfavorable environment over the last several years. If you just look at real estate, I mean growth in real estate was stagnant over the last several years. That has changed. The pipeline of real estate mandates we are being solicited for has picked up substantially, strongest it’s been over the last several years, and I expect that to continue into 2025. I think our Canadian real estate platform is going to hold very well for that. I mean we have got the number one and two performing funds this year over 1 year, 3 years and 5 years. So, we are very, very well positioned and feel very confident that we are going to basically get new capital into that platform over the next 12 months to 24 months. We are very well positioned relative to our peers. So, in general that’s, we feel very confident. The performance is there. Even we have been speaking about agriculture. I mean if you just take agriculture, the NCRI index is at zero. Our year-to-date performance is over close to 8% on a 12-month trailing, it’s over 10%. So, we are very well positioned and very confident.
Graham Ryding: Okay. Great. Yes. No, that’s helpful. That’s good color. And maybe just to build on that, though. So, for Q4 overall, it sounds like you have some mandates on the public market side that you expect to fund. John, you are talking about some decent activity here on the alternative.
John Valentini: Yes, I am talking about – yes, I was referring to private markets.
Graham Ryding: Yes. I mean I am just taking a step further and just saying overall for Fiera in Q4 here, if we include what you are talking about on the alternative side. And then I think you have got some public markets that might be, some mandates that might be funding. Like overall, is that enough to offset any potential redemptions from PineStone in Q4? Like are you setting up for a positive inflows overall in Q4, do you have that visibility?
Lucas Pontillo: Our sense is we are not as concerned about the PineStone outflows for the rest of the year, rebalancing that could happen at the end of the year across any strategies. That’s always the concern, right. And again, particularly with the change – the economic change that we are going into, that could have an impact. But it’s hard to have visibility on that, quite frankly.
Graham Ryding: Okay. Fair enough. And then my last one just, Lucas, on the free cash flow. Anything to call out in Q4, or would you expect this sort of last 12 months free cash flow trend to remain above the dividend payout?
Lucas Pontillo: No, we are comfortable that it should remain above the dividend payout.
Graham Ryding: Okay. That’s it for me. Thank you.
Operator: [Operator Instructions] Your next question comes from Jaeme Gloyn with National Bank Financial. Your line is now open.
Jaeme Gloyn: Yes. Thanks. A couple of, let’s say, housekeeping questions. If I look at the dilution impact of the 8.25% hybrids, would they – obviously, no dilution this quarter, but would they be dilutive in Q4?
Lucas Pontillo: That’s going to be hard to tell, Jaeme, until we actually see the numbers for the quarter. As you know, the accounting treatment for it is you have to retest it every quarter depending on the impact. So, without having modeled that out, I couldn’t tell you at this point.
Jaeme Gloyn: Okay. Got it. And then in terms of the DRIP, is that something, obviously we are buying back stock. Is the DRIP something that you will keep in? I know it’s not big, but just curious on that.
Lucas Pontillo: No intentions to change it, but it is quite modest in terms of its uptake.
Jaeme Gloyn: Okay. Great. And then I think I just wanted to confirm what I was hearing from Graham’s last question there just around obviously excited on the new mandate activity, but you don’t have any visibility whatsoever on, let’s say, net contributions or loss mandates or anything along those lines up to this point. That’s something that’s more of like a December decision for your clients, or is there anything you can share up to this point?
Lucas Pontillo: As I say, that’s usually the wildcard, right, to sort of whatever rebalancing happens before year-end when clients are repositioning portfolios. So, at this stage, it’s a bit early to tell. And as I say, I think a lot of it will be predicated on sort of the path forward from the latest U.S. election, which was just a couple of days ago at this stage, so hard to tell.
Jaeme Gloyn: Okay. It sounds good. Alright. Thank you.
Operator: There are no further questions at this time. I will now turn the call over to Marie-France for closing remarks.
Marie-France Guay: Thank you, Joel. That concludes today’s call. If you need for more information or any other details, do not hesitate to take advantage of our website at ir.fieracapital.com. Thank you for joining us.
Operator: Ladies and gentlemen, this concludes your conference call for today. Thank you for participating and ask that you please disconnect your lines.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.