MPC Muenchmeyer Petersen Capital AG

XETRA:MPCK

Earnings Call Analysis

MPC Capital Reports Strong Growth and Strategic Developments in Q3 2024

MPC Capital's third quarter revealed robust performance, with a 33% increase in EBT, reaching €20.4 million. They achieved a 16% rise in recurring management fees, bolstered by integrating Zeaborn Ship Management. The company confirmed its 2024 guidance, aiming for revenues around €40 million and EBT between €23 to €25 million. Transitioning into offshore wind services, they secured investments totaling €130 million for new service vessels. The total assets under management are expected to grow by at least 10% annually, with substantial opportunities in renewable energy, projected to grow between 30% to 40% per year.

Strategic Growth in Maritime and Energy Sectors

MPC Capital has a clear strategic focus on enhancing its operations within maritime and energy infrastructure. The company has successfully launched an investment platform for offshore service vessels, further diversifying its business. This approach taps into significant growth opportunities as both sectors are poised for expansion, particularly in light of the rising demand for sustainable energy solutions.

Strong Financial Performance and Resilient Business Model

For the first nine months of 2024, MPC Capital reported impressive operating and financial results. Recurring management fees increased by 16% year-on-year, driven primarily by the successful integration of Zeaborn Ship Management. This resulted in management fees now constituting about 80% of total revenue, indicating a strong and stable revenue base. Additionally, pretax profits surged by 33%, reaching EUR 20.4 million, supported by a robust co-investment portfolio, which saw income rise by over 50% compared to the previous year.

Guidance and Future Expectations

MPC Capital has reaffirmed its revenue guidance for 2024, expecting total revenues to be around EUR 40 million, with earnings before taxes (EBT) projected between EUR 23 million and EUR 25 million. This strong performance is bolstered by a promising outlook for 2025, driven by the high visibility of earnings thanks to the recurring nature of its business model and a solid pipeline of co-investment opportunities.

Healthy Financial Position

As of September 2024, MPC Capital boasts a strong balance sheet, with a net cash position of approximately EUR 30 million and zero financial debt. The equity ratio stands above 80%, providing substantial flexibility for further growth and strategic maneuvers, including potential returns to shareholders. The co-investment portfolio, valued near EUR 90 million, forms an essential aspect of MP Capital's financial strategy.

Investments in Renewable Energy and Future Trends

MPC Capital’s focus on renewable energy is evident, with expectations for rapid growth in assets under management (AUM) related to energy transition projects anticipated to outpace overall AUM growth of 10% per annum. The company aims for a 30% to 40% annual increase in energy-related AUM, showcasing its commitment to sustainability and strategic foresight.

Integration Costs and Future Cost Efficiency

While 2024 has seen elevated costs due to the integration of Zeaborn Ship Management, it's anticipated that these one-off expenses will recede by 2025. This will likely lead to a significant decrease in overall cash costs in the coming year, ultimately aligning higher levels of recurring management fees with operational costs.

Dividend Strategy and Shareholder Value Enhancement

MPC Capital plans to maintain a sustainable dividend payout policy, currently expected at around 50% of net earnings. Although there might be a minor reduction in the payout ratio due to higher profitability expectations, the overall dividends per share are expected to remain strong.

Market Potential for Offshore Wind Services

The company's venture into offshore wind services through its new platform is well-timed, given the growing market demand. With European offshore wind capacity projected to grow by over 20% in the next decade and increasing regulatory requirements, MPC Capital is well-positioned to capitalize on these trends, indicating a greater market opportunity for the newly established offshore service vessels.

Conclusion: A Bright Outlook Ahead

MPC Capital's strategic initiatives, enhanced financial performance, and strong market positioning signify a trajectory aimed at sustained profitable growth. Supported by a resilient business model and an emphasis on renewable energy, the company is poised for continued success, demonstrating confidence even amid geopolitical uncertainties. The outlook for 2025 and beyond remains positive, reinforcing the potential for strong returns to investors.

Earnings Call Transcript 2024-Q3

[Operator]

Good morning, ladies and gentlemen, and a warm welcome to today's earnings call of the MPC Capital AG following the publication of the third quarter figures of 2024. I am delighted to welcome the CEO, Constantin Baack; CFO, Dr. Philipp Lauenstein; as well as Head of Investor Relations and Corporate Communications, Stefan Zenker, who will speak in a moment and guide us through the presentation and the results. [Operator Instructions]

And with this, I hand it over to you, Stefan.

[Stefan Zenker, executive]

Yes. Thank you, Judith. Ladies and gentlemen, good morning. This is Stefan Zenker speaking, Head of IR at MPC Capital. A warm welcome to our interim financial results for the first 9 months of 2024. Please be reminded that certain information and statements shared in these presentations and the related documents may constitute forward-looking statements under the securities laws. So for that, please read the disclaimer attached to this presentation carefully.

With me today are CEO, Constantin Baack; our CFO, Philipp Lauenstein. Both will provide you with an update on our operating activities as well as our key financials for the first 9 months of this year. We will also share some additional information on our recently announced market entry of the offshore service sector as well as an outlook for the remainder of the year. After that, we are happy to take your questions.

I may now hand over to Constantin and Philipp, the floor is yours, Constantin.

[Constantin Baack, executive]

Thank you, Stefan, and good morning. This is Constantin Baack speaking. And I would like to also warmly welcome you to our Q3 2024 earnings call. Before I start with the presentation, I would like to briefly reflect on the third quarter and also provide a short backdrop on our refined strategy. With the release of our Q2 results, we have outlined our consistent evolution of MPC Capital's multi-asset approach in real assets towards an investment and asset manager, solidly focused on maritime and energy infrastructure projects.

In these 2 key areas, maritime and energy infrastructure, where we have been very active and successful for many years, we see significant growth opportunities ahead. And today, I'm pleased to say that we have already made good progress on executing on our refined strategy with the first tangible results. We're very satisfied with the financial performance in the third quarter on the back of which we reconfirm our guidance for the full year. And furthermore, we have succeeded in both expanding our established platforms, and creating the basis for future growth. Our strategic focus on maritime and energy infrastructure is starting to pay off. With the launch of an investment platform for offshore service vessels, we are combining both sectors and entering another highly attractive market segment.

Let me now move on to today's agenda. We will start with an executive summary, followed by some operational and financial highlights, and then we will conclude a wrap-up of today's call with an outlook section followed by Q&A.

Looking at the first 9 months of 2024, we are pleased to report strong operating and financial performance on the back of continuous growth across our businesses. The positive trend is also reflected when looking at our main KPIs.

On this slide, we have summarized some of the key highlights for the first 9 months of this year. Firstly, we have further expanded our existing platform, which has performed extremely well. Recurring management fees have increased by 16% year-on-year. In addition, we have significantly grown our co-investment portfolio and have generated sustained returns from our co-investments. On this basis, we are pleased to report a strong set of financials with EBT of just north of EUR 20 million for the first 9 months of this year. This reflects a 33% year-on-year increase in EBT. Most recently, and as mentioned by Stefan as well, we have announced our entry into the maritime offshore wind market, underscoring our strategy of focusing on maritime and energy infrastructure projects. The offshore wind sector attractively combines our expertise in both areas. More on the strategic expansion in the course of this presentation.

On the back of this and based on a very good performance during the first 9 months of 2024 and high earnings visibility ahead we are pleased to reconfirm our financial year 2024 guidance. At the same time, we continue to operate on a very healthy balance sheet with an equity ratio of 85%.

Let me now continue with some operational highlights on Slide 7. Our refined strategy bears fruits. As we have now grown our existing management platforms further, executed new business initiatives and have further generated attractive returns from our continuously expanding co-investment portfolio. Let's start from left to right with our existing platform. We have added 4 energy-efficient container vessels, representing around EUR 170 million in additional AUM to our commercial and technical management platform. These ships come with attractive midterm charter agreements with a top-tier liner company attached. They contribute to our objective of growing and expanding energy related -- energy transition-related AUM, and hence, growing our recurring revenue base.

As mentioned in our half-year presentation, the completion of the acquisition of Zeaborn Ship Management has been an important milestone for us as a company as it has significantly increased both our AUM and, at the same time, also our recurring management fee base. The integration of Zeaborn Ship Management into our management activities is well on track. As expected and planned, there are certain integration costs, which will lead to a temporary increase in personnel and other operating expenses in 2024. The target structure is expected to materialize as of early 2025.

In terms of new business initiatives and transaction activity, we have seen a strong deal activity throughout the year, as we have executed several transactions, generating acquisition and exit fees in both the maritime and energy infrastructure space. In Q3, our transaction fee level was slightly above the levels of the previous quarters.

In addition and in line with our strategic focus, we have entered the offshore wind service vessel sector with the launch of a new investment platform. As a first step in building the platform dedicated to maritime offshore assets, we have successfully secured the construction of up to 6 offshore survey and service vessels, so-called OSSVs. And those are built for emission-free operation. Total investment volume is around EUR 130 million.

Looking at our co-investment portfolio, we will also co-invest in the new offshore wind service platform. And at the same time, during the third quarter, we have generated strong returns from some of our existing co-investments.

Moving on to Slide 8. I would like to talk a bit more about how our business model in terms of activities, meaning investment in asset management, and our integrated platform with a distinct focus on maritime and energy infrastructure provide interesting and attractive opportunities for us going forward. This is, of course, on the one hand, applicable to our well-established teams and activities such as, you can see that on the left-hand side here, commercial maritime transport, but also electricity generation and storage, where we have been active for many years, covering basically all relevant subsectors such as container vessels, tankers, dry bulk, and multipurpose vessels, on the maritime side, or solar PV, wind storage -- onshore wind storage or other matters on the energy side.

In addition, our maritime infrastructure platforms and expertise also enable us to provide add-on synergetic growth potential in the various new areas, for example, at the intersection of existing themes and activities. Our entry in the offshore service vessel sector is such an example that showcases our maritime and energy expertise, network, industry connections, and execution capabilities can provide us with the opportunity to create new attractive themes.

Based on our thorough assessment of the sector, we firmly believe that the area of offshore wind services represents a significant structural growth market, and we can bring both our maritime and energy expertise to this rapidly developing sector.

Now how do we approach the sector and with what kind of project? Slide 9, please, Philipp. In short, we see a market with growing demand that meets limited and over-edge supply. Offshore wind farms play a key role in advancing the global energy transition, with European countries being at the forefront, certainly of expanding some of the wind offshore capacity. European offshore wind capacity is expected to grow with more than 20% over the next decade, creating significant demand for advanced vessels to support offshore wind service in all phases of the life cycle of an offshore wind farm, from serving to construction, to maintenance and to decommissioning.

At the same time, regulatory and customer requirements are increasing for the technical and sustainability standards of these vessels over the roughly 30-year life cycle of an offshore wind farm. This is also the case for many of the existing wind farms already. And this trend triggers increased demand for OSSVs, whilst, at the same time, the actual fleet is overaged, hence, next-generation vessels with carbon-neutral operations match the enhancing and advancing requirements in the market.

Some more details on our initial project. The first project of our new investment platform is basically built around securing the construction of 6 OSSVs. That project with a total capacity of EUR 130 million are vessels that are constructed at Esbjerg Shipyard in Denmark, and they are expected to be delivered between 2026 and 2028. For the development and operation of the project, we have partnered with O.S. Energy, a German specialist in offshore projects and services, that has been active in the space for several decades. Debt financing for the vessels under construction comes at attractive terms and is in place, including support from a first-year class export credit agency.

What do OSSVs do? OSSVs will primarily be deployed in offshore wind farms in the North Sea and Baltic Sea, their technical specifications make them suitable for a wide range of services of applications throughout the life cycle of offshore wind farms as well as other offshore employment cases. The vessels will be equipped with highly efficient propulsion technology, dynamic positioning to amongst others, which can stabilize the ships in operation, and they are enabled to run CO2-neutral operations.

We will provide investment in commercial management services. We will co-invest, as I've mentioned, in the new investment platform, and the fee and return profile is in line with our strategy.

As you can hear, we are excited to launch our offshore wind service activities with this compelling OSSV project, and we look forward to growing this activity going forward.

And with that said, I would like to hand over to Philipp for the financial sector.

[Philipp Lauenstein, executive]

Thanks, Constantin, and good morning, everyone, also from my side. Turning to the financial updates. We are pleased to have announced today the results for what we think was an excellent third quarter and first 9 months of the year 2024, with significant improvements across all key financial metrics. This underlines that MPC Capital is firmly on track, both in terms of executing on our strategic agenda, but also in terms of overall profitability development and also, of course, in achieving our guidance for this financial year.

Now looking at the P&L in somewhat more detail. As reported this morning, in terms of revenue management fees are up 16% compared to the same period of last year, the first 9 months of the year. This increase is primarily driven by the integration of Zeaborn Ship Management, which contributed significantly to our higher AUM base. And the deal activity that Constantin mentioned in the operational update, that is the new fleet of eco vessels included, but also the offshore platform will then contribute to management fees as of Q4 this year and the following quarters.

So by now, recurring management fees represent about 80% of our total revenue, basically underlying the high quality and stability of our revenue base in the entire business model.

Reflecting the strong and resilient activity in terms of asset acquisitions and disposals, transaction fees of EUR 5.5 million on the solid level of the first 9 months of 2023, and indeed, the third quarter of this year has been the strongest quarter in terms of transaction activities when compared to the previous quarters of this year.

So next to overall AUM growth. The intense transaction activity demonstrates the ability of our platform to entrance act on deals even in phases of macro uncertainty. Therefore, complementing the strong recurring management fee base, our resilient transaction business adds to further robustness of the business model as shown and seen in the third quarter of this year.

In addition to the positive upward trends in terms of fee revenue, our core investment portfolio continued to deliver very strong returns in the third quarter and first 9 months of this year. Compared to the first 9 months of the previous year, income from our co-investment portfolio is up by more than 50%. And in Q3 2024, these returns were exclusively from running yields from our strategic co-investments mainly in the Maritime business. We did not realize profits from exits from co-investments in the past quarter, which is then upside basically going forward in terms of overall returns from co-investment portfolio if and when exits are also realized from our more short-term -- short-lived co-investment portfolio.

Turning to the bottom line. Pretax profits increased by 33% year-over-year reaching EUR 20.4 million for the first 9 months of 2024. This earnings growth is mainly fueled by higher management fees and increased co-investment income compared to 2023. And this disproportionate pretax profit growth has been achieved despite the fact that, as expected, we incurred one-off expenses from the integration of Zeaborn Ship Management, which still had a noticeable and sizable impact on our cost position throughout 2024. But this will be cleared basically as of 2025, where the transaction-related and integration-related costs will be digested.

In addition to strong operating performance in the first 9 months, we are also pleased to once again report on a rock-solid balance sheet as of end of September of this year. Net cash position stands at roughly EUR 30 million, 0 financial debt. There are secured credit facilities at very attractive terms and an equity ratio of above 80%. So all in all, our balance sheet provides us with ample firepower and flexibility to support the continued growth of our business. And as previously reported, we have this year made significant investments into our co-investment portfolio, bringing the book value of our co-investment portfolio to just under EUR 90 million by the end of September of this year.

But it's also important to note from our side that the strength of our balance sheet allows us not only to support organic growth through co-investments or inorganic growth through M&A as done with the Zeaborn acquisition, we are, at the same time, able to execute on returning cash and capital to our shareholders as in line with our dividend policy.

Then let's turn to the co-investment portfolio. As mentioned previously, the co-investment portfolio has by now grown into the largest position -- largest single position of our balance sheet and also representing a substantial and visible source of income and earnings for the group. Over the recent years, we have steadily expanded the portfolio. Also, we did this year, underpinning our commitment to co-investments as a strategic pillar of our business model. In Q3 of this year, we added one new co-investment in the container shipping project, bringing the total book value of the co-investment portfolio to EUR 88 million by now, which is diversified across 13 different investment structures. And through this co-investment portfolio, we invested about 50% of our EUR 4.8 billion in assets under management.

Something that we continue to highlight is the fact that under German accounting standards, which we account with, our co-investments are recorded at historic acquisition costs, nominal investments. When mark-to-market at market values, the net asset value of our co-investments stands at roughly EUR 160 million, representing almost a 90% markup on book values. This represents obviously a substantial hidden reserve and also a step-up in hidden reserves compared to our half-year financials, underlying both portfolio performance as well as obviously the future earnings potentials when hidden reserves turn into earnings from our co-investment portfolio.

To wrap up the financial update, let's look ahead a little bit for our expectations for the remaining part of 2024. Following the upgraded guidance as we provided in August, we expect revenues to come in at about EUR 40 million and EBT to be in the bracket of EUR 23 million to EUR 25 million. And on the back of a very strong performance in the first 9 months of this year and good strong earnings visibility for the last quarter of this year, we are firmly on track on delivering on our guidance and doing so at the upper end of the range of the guidance. This is basically underlying the very profitable underlying service business, dynamic business momentum, new business momentum, and continued strong returns from our co-investment portfolio.

And it's worth mentioning that there is already significant earnings visibility for 2025 at very, very pleasant levels. And finally, we would like to report on the fact that capital market activities have been stepping up by us, which bears fruits both in terms of share price development and trading liquidity in the stock. And as we will continue to work on the operational advancement of the company, we will also continue to intensify our interaction with the capital markets in the coming months.

And with that, I'll pass it back to Constantin for outlook and summary.

[Constantin Baack, executive]

Thanks, Philipp. Let me now continue with the outlook section on Slide 17. Looking forward, I would like to, first of all, run you through a selection of some of the ongoing new business initiatives. On the energy side, we continue to work on expanding our activities in the European energy market. The first asset is already in operation with further projects being in the pipeline. Fundraising activities are progressing as we are onboarding the initial investors. And at the same time, at least market sentiment is also gradually improving on the funding side.

Looking at the maritime activities, as I've mentioned on several occasions earlier in the call, following our entry into the rapidly growing offshore wind support vessel space, we are eager to grow the platform and are exploring additional opportunities in that sector. In terms of existing platforms, of course, there are a variety of projects in the pipeline when it comes to our existing investment management and service activities, which we are pursuing at present with a solid pipeline in the making. Now looking ahead on the next slide, we are determined to pursue and accelerate our profitable growth path based on 3 main ambitions and targets. And those we have also communicated over the last couple of months and quarters to the market.

In terms of growth, we have seen a, let's say, steady growth in assets under management of 10% per annum over the last couple of years. And as we have explained, the energy transition-related asset base has grown disproportionately stronger. We will continue our path with the ambition to further accelerate overall AUM growth based on, as we've explained, our redefined strategy. And furthermore, hand-in-hand with that, we intend and expect our co-investment portfolio to grow in line with our AUM development. Looking at the profitability of the platform over the past years. I mean, we have achieved a very solid EBT growth and have generated an IRR from exited co-investments just a shade below 30%. That is a great achievement, and we are well on track to continue on that path.

Going forward, we strive to continue our EBT growth path, firstly, by expanding our investment business and increasing recurring revenues from all our management activities.

Last but certainly not least, shareholder value. Based on our strong balance sheet, as Philipp has alluded to, in terms of cash position and equity ratio as well as our clear and stringent capital allocation policy, we seek to increase our capital market activity and certainly capitalize in the benefit of all shareholders on the inherent value of our business in order to reward everyone who is part of the MPC Capital World.

Before we move on to the Q&A, let me conclude today's session with a short summary and wrap-up. The world is obviously currently experiencing quite a high degree of also geopolitical uncertainty. Having said that and looking at MPC Capital, I firmly believe we are well positioned for what lies ahead. We operate a great platform in attractive markets that will continue to benefit from emerging megatrends, both in terms of investor requirements, meaning funding and asset or capital allocation of the investors; and secondly, investment needs in both maritime and energy infrastructure.

We will continue to build on our position as a leading infrastructure investment manager and operator for maritime transportation and energy assets. And we can do all of that from a position of financial strength and good earnings visibility. As we've explained over the last couple of months and quarters, the sustainable recurring income stream of our business as well as attractive co-investment returns offer substantial visibility and a high degree of resilience, which together with our rock-solid balance sheet will facilitate further growth.

This makes us look forward to the remainder of the year, but also well into 2025 and beyond with a high degree of confidence despite what we have around us, which is certainly a more uncertain geopolitical and macro environment. As such, we are excited and dedicated to accelerating this healthy trend together with our strong teams at MPC Capital. And on that note, I would like to hand back to you, Judith for the Q&A. Thank you.

[Operator]

[Operator Instructions] we have already received first hand up from Marius Fuhrberg.

[Marius Fuhrberg, analyst]

I hope you can hear me. I have a couple of questions. The first one would be with regard to Q4 and your EBT guidance. I think you should have a very high visibility for dividends, especially also for Q4. So -- and considering your EBT for Q3, is it fair to assume that you will probably end up at the upper end of your guidance range? And is there any kind of surprise potential for higher earnings, especially with regard to dividends?

The next question is on costs. Looking at your raised or increased cost base, is there any potential for some cost savings for 2025? Or do you feel comfortable with the cost level that you're currently operating on? And should we think of this as a sustainable level? And the last question from my side with regards to European energy projects, do those have similar return profiles compared to the non-Europeans? Or is it slightly different? So any color on that would be great.

[Philipp Lauenstein, executive]

Yes. Thanks, Marius. I -- thanks for your question. I'll go through them in order basically. Yes, regarding the Q4 expected performance and outlook for the full year, you're right, based on expected performance for the last quarter of this year, our expectation is that looking at the guided EBT bracket, we are expecting to basically end up at the upper end of the range. Given the visibility of the business, we, however, do not expect that there will be sort of a surprise element in terms of outperforming the communicated guidance. And if I got the question correct, the sort of follow-up question was if there is also a surprise element in terms of dividends, and I expect you mean dividends to be paid out by MPC Capital, not by -- to be realized by the co-investments. And our expectation is that we pay out dividends basically in line with our dividend policy.

You are aware that we have been paying out significant dividend payout ratios over the past years between 60% and 70% on net income. This is something that we would expect to normalize to some degree. We are guiding sort of the dividend policy of dividend payout of 50% on net earnings. So my expectation would be in terms of dividend that we see sort of a slight decrease in dividend payout ratio, which obviously does not mean given the higher earnings level that the dividend in terms of dividends per share will decrease.

Regarding the cost level, there are 2 elements this year around that. The first element is that there are one-off costs that we incur in order to integrate Zeaborn Ship Management, which are mid-single-digit number, million digit number, which obviously will not reincur in 2025. And the second element is that those integration costs obviously also lead to lower recurring costs next year around. So my expectation is that there will be a significant decrease in cash costs for 2025 as compared to 2024. We've been discussing and communicating for a while that we are very, very close to covering our complete cash costs with recurring management fees. You will see from the Q3, but also from the first 9 months of this year that there is quite a gap between covering cash costs from recurring management fees. And basically to guide you, we expect this gap to be closed materially for 2025.

And then the last one on European energy activities. it's a question of the type of activities. Our first step into the European market, at least the first step for a number of years, is focused on the low-risk return part of the business, i.e., expected returns between 6% and 8%, 5% and 7% maybe, basically operating and owning operational renewable assets, wind and onshore wind and solar. This is expected to be expanded at some stage certainly into more, let's say, more high-yielding projects on the development side, but the first step into the activities will be more, yes, low-yielding, low-risk return part of the risk curve essentially.

[Operator]

And the next hand up is from Christoph Hoffmann.

[Christoph Hoffmann, analyst]

Congrats on your new investment platform and the good results. So just 2 quick questions from my side. I'm wondering if the OSSVs will be carbon-neutral from the start? Or are they simply compatible for that? And then it would be also nice to hear your thoughts on the general size of the market and the opportunity you see there.

And then I would also like to shift to the renewable energy market. So what should we expect here in the next 1 or 2 years in terms of AUM growth? Maybe you can share your general thoughts on this a bit more.

[Constantin Baack, executive]

Philipp, maybe I take -- first of all, thanks, Christoph. Maybe I take the first question regarding the propulsion aspects around the OSSVs, and then you can chip in on the renewable side. So first of all, these vessels are designed with battery hybrid propulsion, and they have 3 generators on board, one of which is able to run on green methanol as of delivery.

So overall, the ship can operate as of delivery on, let's say, carbon-neutral operations. Whether that will be the case remains to be seen and also obviously depends on availability of fuels, et cetera. However, the quantities of fuel that would be needed for operating these ships carbon neutral is not too significant. It's a smaller ship, right? So the vessel is prepared to operate carbon neutral as of commencement of operations, and that is obviously very positive. Having said that, it obviously depends. We also have, for example, a 400-kilowatt battery on board, which is also equipped with a very significant battery energy storage system, and that can be scaled up to 800 kilowatt hours. So it has a lot of features, I would say, that are unique, that are new, that are beneficial for carbon-neutral operations.

However, there are also 2 diesel generators on board because at the moment where maritime transport is or transportation in general, it's also about optionality and making sure you don't put all your eggs into one basket when it comes to future propulsion technology.

So that would be the answer to the first part. Philipp, do you want to take the second one?

[Philipp Lauenstein, executive]

Sure. Maybe taking a step back, the renewables activities make up roughly 15% of our total AUM today. And total AUM has been growing by 10% per annum over the past years, and we expect AUM to grow by -- total AUM to grow by at least 10% over the coming years.

Having said that, our clear expectation is that the portion of renewable assets in the total AUM pie will increase over time. So the relative proportion of renewable assets, basically, that means that we expect renewable projects to grow or related AUM to grow at a faster pace than 10% per annum. It's -- I mean, it's very difficult to nail down a number in terms of euros per year, et cetera, et cetera. But I guess that gives you a good idea, currently 15% of AUM, and we expect those -- that part of our business to grow faster than the overall cake.

Having said that, and that's also in our presentations, in general, the energy-related -- energy transition-related AUM have been growing at 30% to 40% per annum over the past years, that part of our business. So we do see a significant sort of upside in terms of growth momentum in renewables. However, and that's going to be sort of a last comment on that. I think that also the -- our initiative in the Maritime offshore vessel segment shows that we don't think about those types of projects in silos. It's about themes, and we see significant growth potential and investment requirements in energy transition-related AUM. Renewable assets, basically power generation will be part of that, but projects such as the offshore support vessels will also be part of that.

[Operator]

And we will move on to the chat questions from [ Werner Fugmann. ] What would be a reasonable expectation for a run rate of a co-investment done per year?

[Philipp Lauenstein, executive]

Maybe a general note is current book value roughly EUR 90 million, and we would expect the co-investment book to grow at the same pace basically as our total AUM. That means net growth of the co-investment book by 10% or slightly above per annum. And there are always obviously returns. So my expectation would be EUR 10 million to EUR 15 million on a sort of run rate basis for net new co-investments per annum.

[Operator]

And also concerning the co-investments, how should investors think about tax treatment and burdens when realizing the hidden reserves? And can you give your perspective on what to expect from MPC Energy going forward, like operating milestones, strategies and funding?

[Philipp Lauenstein, executive]

Sure. I hope I get the first part right. General note on tax treatment of co-investments is that the vast majority of our co-investments is structured in a highly tax-efficient manner, meaning that basically the tax rate on our co-investments blended between exit returns and running yield is below 10%, significantly below 10% and that's -- I hope that addresses the question. I mean, when hidden reserves realizes that's typically done via sales of projects. And those projects are, as I said, typically done structured in a very, very tax-efficient manner.

And on MPC Energy, I guess that relates to MPC Energy Solutions, the question, which is our listed platform investing in development and operational assets -- energy assets in Latin America, operating milestones strategy. The company has developed well over the past years -- months and years, bringing a large portion of the portfolio -- of the development portfolio into operations. The most significant milestone from our perspective is quite a sizable project, solar project, solar PV project in Guatemala that is being constructed as we speak, which is expected to enter into operations in the first half of next year. That is going to be a very significant operational milestone for MPC Energy Solutions in terms of operational development.

When it comes to strategy and funding, I think my main comment would be that funding is currently obtained mainly at the level of projects, not at the level at the corporate level, basically, meaning that we are seeking co-investors on a project level, as for example, for the Guatemala project where we're in discussions with parties and partners to potentially co-invest on a project level on the corporate level.

[Operator]

And in the meantime, we have received no further questions. [Operator Instructions] And this is not the case. We, therefore, come to the end of today's earnings call. Thank you for your interest in MPC Capital AG and all your questions. Should further questions arise at a later time, please feel free to contact Stefan Zenker from Investor Relations or us.

A big thank you also to Mr. Baack, Dr. Lauenstein, and to Mr. Zenker for your presentation and the time you took to answer the questions. It was a pleasure to be your host today. I wish you all a lovely Thursday and the beginning cold time of the year. And with this, I hand over to Constantin for some final remarks.

[Constantin Baack, executive]

Thank you, Judith, and thanks, everyone, for your interest and for participating in the discussion. At MPC, as I mentioned throughout the presentation, we are excited about what lies ahead. We think we are well positioned, and we look forward for the coming quarters, coming months, and coming years, we firmly believe we are well positioned and stay tuned looking forward to the next update. All the rest, take good care. Bye-bye.

[Philipp Lauenstein, executive]

Thank you.