Good afternoon. Thank you for joining Tetragon's Investor Call. [Operator Instructions]. The call will be accompanied by a live presentation, which can be viewed online by registering at the link provided in the company's conference call press release. The press release can be found on the homepage of the company's website, www.tetragoninv.com. [Operator Instructions]. As a reminder, this conference call is being recorded. I will now turn the call over to Paddy Dear. Please begin.

Thanks very much. As one of the principals and founders as the investment manager at Tetragon Financial Group, I'd like to welcome you to our investor call. We're going to focus on the company's 2018 full year results. Paul Gannon, our CFO, will review the company's financial performance for the period; Steve Prince and I will talk through some of the detail of the portfolio and performance; and Steve will spend some time discussing the outlook. As usual, we'll conclude with questions, both taken electronically via our web-based system at the end of the presentation as well as those received since the last update. The PDF of slides are now available to download on our website and if you're on the webcast, directly from the webcast portal. I would like to remind everyone that the following may contain forward-looking comments, including statements regarding the intentions, beliefs or current expectations concerning performance and financial condition on the products and markets in which Tetragon invests, and our performance may change materially as a result of various possible events or factors. So with that, I'll pass over to Paul.

Thanks, Paddy. So as a reminder, Tetragon continues to focus on three main metrics: firstly, with how value is being created via NAV per share total return; secondly, we also look at investment returns measured as a return on equity; and finally, we monitor how value is being returned to shareholders through distributions, which is mainly in the form of dividends. The fully diluted NAV per share or NAV per share was $22.48 at the end of 2018. After adjusting for dividends reinvested at the NAV, the NAV per share total return for the year was 10.3%, which compares to 9% for the full year in 2017. For monitoring investment returns, we continue to use an ROE or return on equity calculation and for 2018, this has been - this was recorded at 12.1%, which is net of all fees and expenses. And of course, I'm pleased to say that this is within the target 10% to 15% return range. With reference to that target, the average ROE achieved since IPO remains at 12.4%.Later on the call, we'll give more color as to how these specific asset classes contributed to the return this year. Finally, moving onto the last key metric, Tetragon declared a dividend of $18.25 for the fourth quarter, which represents a full year payout of $0.72 per share. This is in line with the progressive dividend policy, which targets a payout ratio of 30% to 50% of normalized earnings. And based on the year-end share price of $11.65, this represents a yield of approximately 6.2%. So now onto what we call the NAV bridge. This breaks down into its component parts of the growth of Tetragon's fully diluted NAV per share, which grew from $21.08 in the end of 2017 to $22.48 per share at the end of 2018. First we can see investment income contributed $3.43 per share. Then there are operating expenses and management fees, which reduced NAV per share by $0.88, with a further $0.04 per share reduction due to interest expense on the revolver. On the capital side, gross dividends reduced NAV per share by $0.72. Finally, there was a net dilution of $0.39 per share, which is labeled in the bridge as other share dilution. This bucket primarily reflects the impact of dilution from stock dividends, plus the additional recognition of equity-based compensation shares. It's important to note that the impact of the $50 million share buyback which was launched in 2018 that did not close until January 2019, has not been included here. But to note, this did result in a $0.52 of NAV accretion per share, and that will be recognized in the January NAV per share, which was released today. I will now hand over to Paddy.

Thanks, Paul. As on previous calls, just before we drill down into the detail, I just want to put the 2018 performance in the context of the long term. And by way of reminder, Tetragon began trading in 2005 and became a publicly listed company in April 2007. This chart shows the NAV per share total return with that thick line, and the share price total return, which is the dash line beneath it, and they go back to the IPO date. The chart also includes two equity indices, the MSCI and the FT All-Share, and lastly, Tetragon hurdle rate of LIBOR plus 2.65. And as you can see, Tetragon has returned 247% since IPO on a NAV total return basis. Continuing the theme of looking at the long term, here are some more long-term performance data. Our return on equity or investment return target, as Paul mentioned, is 10% to 15% over the cycle. The average return since IPO is 12.3%. As Paul has shown that Tetragon's ROE for 2018 was 12.1%, so well within that range. So we're pleased with the 2018 performance in the broader historical context, but I think particularly pleased given that 2018 was such a tough year for many investable assets. You'll also see on this slide or chart here that the NAV per share total return we now report the one year performance, the five year performance, the 10-year performance since IPO, and that's a slight change for we previously had 1, 3 and 5 years since IPO, and the reason for that is now we have 10-year performance, and we are obviously focused on the long term, and would like to continue to show that figure. The last figure on this table that I highlight is bottom right-hand side, where it says that 26% of public shares are owned by principals of the investment manager and TFG Asset Management employees. We continue to believe that this is a very important number as it demonstrates the strong alignment of interest between the manager, TFG Asset Management employees and obviously, Tetragon shareholders. At the year-end, Tetragon announced three new independent directors whose biographies are featured in the annual report and on the website. The independent directors bring extensive private equity and asset management expertise as well as considerable operational and administrative experience. And these backgrounds and experiences, as well as the overall composition of the Board of Directors, should be valuable as Tetragon continues to diversify its alternative asset portfolio and looks to continue to grow TFG Asset Management. This next slide shows the composition of Tetragon's assets by looking at the breakdown of the $2.2 billion of NAV and indeed, the colored disks show the percentage breakdown of our asset classes and strategies as at year-end 2018, on the right-hand side, and compares them with year-end 2017 on the left. The noticeable changes year-on-year are: First, an increase in TFG Asset Management, which is our private equity positions in our asset management companies, where this has risen from 22% to 30% over the year, and this is primarily the result of strong organic growth, particularly GreenOak and Equitix; second, you'll see a growth in private equity from 4% to 7%, a deliberate result of making new investments; and third, pretty much pro rata decline for all the other strategies and asset classes, in line with increase of those two that I've mentioned. Thus all of these movements and allocation are as to be expected, the first is that TFG Asset Management should be the fastest-growing asset, all other things being equal; and secondly, the private equity allocations to external managers was a conscious plan, as discussed last year, in the annual report and in some details at our annual investor meeting. So now I'd like to move on to discuss the full year performance. The NAV bridge that Paul showed is a high-level overview of NAV per share. What this table shows is a breakdown of the composition of Tetragon's NAV as of the 31st of December, 2017 on the left, and as at December 2018 on the right. And it breaks it down by high level asset classes and shows the factors contributing to the changes in NAV. Thus it shows the investment performance plus capital flows and hence, turn back to the change in NAV. So focusing on that line that says gains and losses, you can see from the bottom row of the table that the investment performance, labeled gains and losses, generated $331 million of gross returns for the year. TFG Asset Management, our private equity holdings in asset management, generated $230.9 million of that, as I've already said driven by GreenOak and Equitix, and we'll talk about those in more detail. The second line that encompasses the hedge fund strategies, lost an aggregate of $16.8 million, but that does incorporate among other things the $12 million loss in Q1 and the now closed distressed fund. So excluding that, the hedge fund investments were broadly flat for the year. Bank loans generated $40.5 million of gross returns, and the year was characterized by, I would say a stabilization of credit spread, relatively low default and of course, the sharp observed sell off in loans at the end of December, albeit most of that recovered in January. Just continuing down the list, real estate generated $37.1 million as buildings were sold primarily in Japan and Europe. Private equity generated $16.7 million, and that was dominated by a single position. And lastly, other equities generated $14.9 million, with very broad-based gains. So now what I'd like to do is we'll take each of those categories and drill down into a little more detail. And to start with, I'll hand over to Steve to discuss TFG Asset Management.

Thanks, Paddy. Our private equity investments in asset management companies, through TFG Asset Management, as Paddy mentioned, represented the largest asset class gains in the portfolio at the end of 2018. They produced $231 million of gains. The primary driver was GreenOak, which increased in value by $149 million. The performance gains in GreenOak were predominantly from the announcement in December of the merger of GreenOak with Bentall Kennedy, Sun Life's leading North American real estate and property management firm, which ultimately will form Bentall GreenOak. I'll spend more time on the GreenOak merger in a moment. Equitix was the second highest contributor in the segment, with a positive contribution of over $66 million. One of the larger contributors to Equitix's increasing value in 2018 was its successful take private of the John Laing Infrastructure Fund, which I'll refer to as JLIF, with Dalmore Capital in 2018 as our partner. We believe that taking JLIF private was an attractive opportunity for Equitix and Tetragon, both through TFG Asset Management and directly through its balance sheet. JLIF's depressed share price was influenced by a slight strategy shift as well as political and construction risk. However, Equitix believed that most of the assets were highly attractive and were trading even at the ultimate takeover premium at a more attractive valuation than single asset secondary deals. From Equitix's perspective, acquiring JLIF is enabling an earlier deployment of its investors capital, providing co-investment opportunities for Equitix investors and offering the opportunity for attractive returns through improved management of the JLIF assets. From TFG Asset Management's perspective, acquiring the JLIF assets is accelerating Equitix's business plan, which has already resulted in a positive impact on Equitix's fair value. We believe that this deal highlights some of the strength of the TFG Asset Management structure coupled with Tetragon's balance sheet. LCM recorded a gain of over $12 million, which is nearly all valuation gains. The business continued to perform well as LCM continues to issue deals and raise capital with a lower than market average default rate. LCM's EBITDA for the period was ahead of forecast. Other gains and losses within TFG Asset Management were nominal, but I would like to mention the $3 million gain in TCIP. During the year, TFG Asset Management added to the senior ranks of its structured credit team, with the expectation of offering additional investment products in 2019. Tetragon Credit Income Fund III had a close in December 2018, which brought its AUM to $400 million, and an additional capital raise and final close which brought the AUM to just about $430 million. As a reminder, Tetragon Credit Income II raised just under $350 million through its final close in 2017. So as of today, TCIP as a business is managing just under $1 billion. At the end of the year, TFG Asset Management managed over $28 billion of client capital compared to $23 billion at the end of 2017. AUM growth was mainly driven by LCM and GreenOak. In 2018, TFG Asset Management's EBITDA was $39 million, compared to over $50 million in the same periods in 2017 and 2016. The decline was largely due to lower performance fees in 2018. Additionally, while expenses at TFG Asset Management are higher in 2018, the bulk of the increases are within Equitix and TCIP, where we increased headcount in advance of expected higher assets under management. In spite of the reduction in EBITDA, the quality of income on both on an absolute and relative basis continued to improve, with management fees growing to 61% of total income compared to 51% in 2017. I'm now going to spend a little bit more time on the GreenOak and Bentall Kennedy merger, providing details as to the valuation. In the third quarter of 2018, TFG Asset Management's 23% interest in GreenOak was valued at $110 million. The valuation was based on the following: maintainable EBITDA for the business of $32 million; expected carry interest up $11.3 million; and a market multiple of 11.1. Going into the merger, GreenOak was valued at $560 million on a standalone basis. This excluded the carried interest from existing funds and was based on a multiple of 13.2x the projected 2018 EBITDA of $42.4 million. So that implied a valuation of $157.7 million including carried interest for Tetragon's 23% original share in the business and a 43% increase in value compared to the third quarter valuation. As part of a pre-merger restructuring of our non-dilutable 23% interest in the joint venture, TFG Asset Management will hold a 29% interest in GreenOak going into the merger with Bentall Kennedy. Allow me to give a little bit more detail into the seven components of the valuation. First, there will be an upfront cash payment. Sun Life will pay an initial payment of $146 million to the GreenOak owners in order for Sun Life to have a majority equity interest of 56% in Bentall GreenOak. Tetragon's share of the upfront payment net of tax is estimated to be $33 million. The second piece of the valuation will be fixed quarterly distributions. Sun Life will acquire from the GreenOak owners their respective rights to 75% of the distributions of operating income from Bentall GreenOak, based on the business plan of the combined entity prepared by Sun Life and GreenOak. In return, Sun Life will make a series of equal quarterly fixed payments to the GreenOak founders and Tetragon for the next seven years commencing the first quarter post the closing of the transaction. These payments will be obligations of Sun Life, and they've been discounted at 5% on a post-tax basis by our third party valuation agent. The third component of the valuation are the variable distributions. Tetragon will be entitled to a share of 25% of Bentall GreenOak's cumulative distributable earnings on a quarterly basis, whilst the remaining 75% has been exchanged for fixed payments as I just described. These post-tax distributions are based on the Bentall GreenOak business plan, and they've been discounted at 11%. The fourth component of the valuation is the carried interest from the existing GreenOak funds. Tetragon's share of carried interest in the existing funds has been valued at $28.7 million. The fifth component of the valuation is the carried interest from future funds. This covers Tetragon's projected share of estimated carried interest payments, accruing on funds launched by the new merged entity. The discount rate of 25% has been applied to those post-tax cash flows. The sixth component is the option pay out. As previously disclosed, Sun Life will have the option to buy out the GreenOak founders and Tetragon's equity interest in Bentall GreenOak after the finalization of the financial statements of Bentall GreenOak for the calendar year December 2025. If Sun Life does not exercise the call in 2026, the GreenOak founders and Tetragon will be option to sell their equity interest in Bentall GreenOak to Sun Life the following financial year. For the purposes of valuation, the post-tax receipts have been discounted at 11%. Lastly, the holding has been discounted for 15%, applied to the fact that the interests in Bentall GreenOak are not as easily tradable as those in a publicly-listed company. One other way, lastly, to look at the GreenOak Bentall merger and the valuation impact to us is the bridge. As mentioned at the end of the third quarter, GreenOak is valued at $110 million. There are a number of drivers to bridge between the third quarter valuation and the fourth quarter valuation. First, the merger transaction involves a higher multiple and EBITDA level than the third quarter valuation. That's captured in the first two bars of the chart. Second, as part of the transaction, Tetragon increased its ownership from its 23% non-dilutable stake to a 29% stake. Third, the deal premium bar captures the aspects of the deal which involve fixed quarterly payments and the option buyout. And lastly, as I previously discussed, there's of 15% discount applied to the valuation for a lack of liquidity. Paddy will now go over our hedge fund investments.

Thanks, Steve. Tetragon invests in event-driven equities, convertible bonds and quantitative strategies through hedge funds. And as of the end of 2018, 4 of these 5 investments funds are through Polygon Managed Hedge Funds, with the fifth being through QT and external management. Investment in the Polygon European event-driven fund was profitable up $0.9 million for the year, and that's despite volatile and declining European equity markets and that was mainly due to its investments in M&A situations during the year. Our investment in the long biased share class of the same fund lost $9 million during the year, due to obviously market exposure and most obviously suffering in the last quarter. Our investment in the Polygon Global Equity Fund was positive to the tune of $1.8 million, and our investment in the Polygon Convertible Bonds Fund was also slightly profitable, up $1.5 million for the year. And lastly, as you can see our investment in the QT Fund was flat for the year. Now as you can see it the last line item was a $12 million loss in the Polygon Distressed Fund, and you may remember this was a Q1 event, and that fund has now returned all its capital to investors and it closed as it was in the first half of the year. In general, we view the hedge fund sector as somewhat saturated, with many strategies competing for increasingly diminishing opportunities for intrinsic alpha. And last, we believe that capacity-constrained niche and targeted approaches, such as the event driven equities and convertible bond strategies managed by Polygon are more likely to be the good investments. So now moving on to bank loans. This asset class, as I mentioned, generated $40.5 million of gains during 2018. In some cases, these gains were driven by CLO liquidation values, in above estimated fair value for the portfolio's holdings. In other cases, gains were driven by the active management of certain CLOs, where the team refinanced various debt tranches, taking advantage of low liability pricing in the market. As I've said before, the year was characterized by the stabilization of spread tightening and the year-end widening in the underlying bank loan assets. The average asset spread at the end of the year was 315 basis points over LIBOR, and that compares to 313 basis points over LIBOR at the end of 2017, so not much change. Credit losses remained relatively low as Tetragon's trailing 12-month loan default rate for its directly held CLO investments ending 2018 at 1.6%, and that's bang in line with the broader U.S. markets default rate of 1.6%. We feel the Tetragon CLO portfolio performed well in 2018 despite significant volatility in U.S. credit markets, especially towards the end of the year and actually, this proves to be an opportunity rather than a problem. Tetragon exercised optional redemption and refinance rights on certain CLO transactions during the year and also made new U.S. CLO investments both directly and by the TCIP platform. So moving onto the TCIP platform, there were two funds. The TCI II Investment Fund, so as of the end of last year, Tetragon's commitment to the TCI II fund was $70 million and that was fully funded. And then TCI III Investment Fund, at the end of December last year, TCIP, as Steve had mentioned had a close up $400 million, which is just in January had a final close of $430 million and Tetragon's commitment to that TCI III is approximately $85 million. Including the capital call measures that was delivered in January of this year, Tetragon has funded $7.4 million of that total commitment. And obviously, we expect further draw down from that commitment to be made in 2019. So overall, we continue to view CLOs as an attractive structure to gain long-term exposure to the bank loan asset class. Next is real estate. As a reminder, Tetragon holds most of its investments in real estate through GreenOak Managed Funds and co-investment vehicles. The majority of these GreenOak funds are private equity style funds concentrating on opportunistic investments, targeting middle-market opportunities in the U.S., Europe and Asia, where GreenOak believes it can increase value and produce positive unlevered returns by sourcing off market opportunities where it sees pricing discount and marketing efficiencies. The real estate investments overall generated $37.1 million of gains during 2018, and the main drivers of performance were the GreenOak Asia Fund and co-investments and GreenOak European Fund, and what in the table is called other real estate, which is what we've discussed in the past, is an investment in farmland in South America and the latter was based on a valuation by an independent valuation specialist that was done in Q1 of this year. I'll hand back to Steve to carry on with the portfolio.

Thanks, Paddy. Moving onto our private equity investments. They're split into two categories: direct, comprising investment on the balance sheet; and funds and co-investments, where Tetragon invests in a fund as a limited partner or in a special purpose vehicle as a co-investor. Investments generated net income of $16.7 million during 2018, of which $14 million were from the direct segment. Currently, direct investments comprise several investments in growth companies in North America, some of which have had positive developments in progressing their business strategies during 2018. One such investment drove most of the gains in that category. Within the second category, there's a number of investments, the second category being funds and co-investments. Excluding Hawke's Point, which is in the subcategory, roughly 85% of the capital is invested as co-investments with three managers. The remainder of the capital is invested as limited partners. Two of the external managers focus on the technology sector, while the third focuses on take privates in the U.K. and another on secondaries. Additionally, we started a new relationship with a growth-oriented manager and buyout firm during the year, neither of which are currently funded. One of the co-investments was successfully sold to a strategic acquirer at a 2x premium to our cost and slightly over a one year holding path to period. This category produced aggregate gains of $2.7 million in 2018. Moving onto other equities and credit and then our cash position. Our direct balance sheet investments in the other equities and credit category produced gains of approximately $15 million in 2018. Tetragon's investments, through externally managed vehicles and through managers within TFG Asset Management, often provide the investment manager with either discrete investment opportunities or unique investment insights. And we often can utilize those insights or opportunities to put on the balance sheet direct equity or credit positions. Within other equities, the segment generated gains of $23.7 million. These investments comprise European and U.S. listed public equities. Tetragon exited two such positions during the year, which drove $17 million of the gains in 2018. And it's worth noting over the life of those two investments, they generated $75 million of gains cumulatively. Within the other credit category, there's a loss of $8.8 million, with 1 of the 2 investments in that segment giving back all the gains it had made in 2017. This position of distressed credit trade has been sold. But now to our cash position. Tetragon's net cash balance at the end of the year was $271 million. Prospective cash commitments are about $250 million, and they comprise hard and soft investment commitments: GreenOak, about $97 million; Hawke's Point, roughly $55 million; TCI III, a $78 million commitment; and third party private equity funds of about $19 million. Tetragon does have a $150 million revolving credit facility in place, of which $38 million has currently been drawn. Moving on from our cash position, but related to the cash position, is our future investment expectations. I'm going to go through a few of our expectations, but it's always worth pointing out that one of our advantages is our ability to be opportunistic as it relates to investing in what we see as the most compelling investment opportunities. Starting with TFG Asset Management, we have no new businesses to report as of today. Notwithstanding that, this remains the largest unknown in terms of cash requirements. Although there are a number of businesses where over time, TFG Asset Management will have the opportunity to expand either geographically or with new product offerings, and in some cases both. In the event driven equities and convertible bond category, we expect our event-driven equity exposure to remain relatively stable and our exposure to our convertible strategy to increase somewhat over time. With bank loans, via CLO equity. In terms of the CLO 1.0, i.e. our pre-crisis CLOs, we expect them to continue to amortize. However, we do expect to continue to invest in CLOs via TCI III at the rate of $50 million to $100 million a year. Covenant deterioration in the leverage loan market, as well as increasing levels of debt generally should be of concern to long holders of corporate debt. However, CLO equity, we believe remains an attractive investment due to a number of factors, including that it may provide investors with optionality on spread widening. With fixed liabilities and floating-rate assets, CLO equity can often benefit from spread widening, provided loan defaults are well managed. In the real estate category, we've made commitments to GreenOak Funds, and we'll expect to be drawn on $25 million to $100 million of capital over the next 12 months. That range is wide because the timings of capital being drawn is uncertain. In addition, I should note the timing of capital returns are certainly less certain than that. Within the private equity credit category, we do expect this category to grow over time. There are a few small addition LP commitments we've yet to fund, as I previously talked about in our cash commitments. And additionally, within Hawke's Point we do expect that allocation to grow over time. Within the other equities and credit bucket, I'll give a similar point to the one I made with regard to TFG Asset Management. We do expect to continue to invest in these opportunities, but the timing of those investments is less certain. With that, we're going to move onto questions. A - Patrick Dear: Thanks, Steve and Paul. And as Steve said, we're going to move onto questions. And I'm going to start with collating a few different ones that are on the subject of fees. The first says how do you deal with the different fee layers as funds of TFG are managed by TFG's entities? And maybe just to broaden that question out a bit, there are obviously fees that Tetragon pays through its external manager. There are fees that Tetragon pays to third party external managers. There are fees that Tetragon pays through its subsidiary and owned asset managers in TFG Asset Management. And then lastly, there are fees coming into the entity through third parties paying fees to TFG Asset Management. So indeed, it is a complicated process. But the answer is relatively straightforward, and it's obviously what we are doing is concentrating on the net return to Tetragon shareholders. That is to say net of all fees paid across the structure, including to Tetragon's manager. But it's worth stressing that we're not afraid of paying fees to external managers if we think the expected net return to Tetragon versus the risk taken is an attractive one. So staying on fees, there's a question here that refers to both management fees and performance fees, and reads as follows. First, I can see that the 150 basis points management fee was reasonable when Tetragon was founded. However since then, fees have come down across the industry, so today, it looks high. And Tetragon had a huge discount, so the fee is nearly 3% of the market cap. It's higher still when you consider that Tetragon invests a large amount of its NAV in funds which also presumably charge a fee. Given this, can you comment on why the current management fee remains appropriate? Second, the performance fee also looks like it was reasonable when Tetragon was founded. Nearly all of the NAV was invested in CLOs, which were LIBOR plus. It's a sensible benchmark. But today much of the NAV invested in assets such as 2P stakes and equity funds, that aren't primarily driven by LIBOR and could have very different risk return profiles than CLOs. In addition, LIBOR has fallen. The combined result is arguably that you are taking more risk for a potentially higher return, yet have a lower hurdle. And this skews the risk-reward in your favor, versus shareholders. Given this, could you comment on why the performance fee structure remains appropriate? So I think there's quite a lot in there. My personal view is just on the math of comparing the fee to the market cap is a red herring given that the manager is managing assets and not the market cap. But tackling the sort of the meat of the question, I agree. The fees in our industry are a very sensitive issue and quite rightly so. But it's my belief that a lot of people spend too much time focused on the level of fees and not enough time on focusing on what you're getting for those fees. So we all know that fees vary and in some cases, are down to zero from ETS and index funds and they can be as high as 3 and 30 and sometimes even higher for some closed end - for some closed alternative funds. Then also there are entry fees, exit fees, acquisition fees and a whole bunch of other fees that can come in. So it is very complicated. But I think my point is that within the spectrum, it certainly doesn't mean that low fee funds are good investments or indeed, that high fee funds are bad investments. The answer is obviously much more complicated. So I think our view is that when you look to buy funds, be it either open ended or closed ended and whatever strategy it happens to be, you have to believe that the manager is adding more value than they're charging for managing the assets. And if you don't, then you shouldn't buy the fund. Tetragon's track record shows a 12.3% average net return over to 12 years since IPO. Thus I'd say over those 12 years, Tetragon's manager has more than justified the fees charged by value created net of fees. So are they appropriate? Well, I think historically, certainly, yes. But perhaps more importantly when discussing fees is to remember that through Tetragon's investment strategy and through TFG Asset Management, Tetragon is actually a large recipient of fee income. Tetragon has always invested with external managers and paid away fees accordingly. But over time, Tetragon has tried to enhance its asset level return, with both capital appreciation and income from building the asset management businesses within Tetragon. And they derive income from external investors. So to point you to a number in the annual report, TFG Asset Management actually received $123 million in fee income in 2018, and that excludes GreenOak, where we don't consolidate, being a minority investor. So I think the point I'd like to make is that on the fee side, absolutely important to take into account the fees coming into Tetragon and not just the fees going out. There's one more question on fees, reads as follows: By my math, assuming performance at the bottom end of your 10% to 15% range, the combined fee could easily come to 5% of the market cap, not counting fees on the underlying funds or the cost of staff share options. Do you agree? And if so, do you agree that the fee load is a major contributor to the discount? I'm not going to comment on the math and obviously, I've made my point about fees versus market cap. But I will tackle the fundamental issue is do fees in and of themselves create a discount to NAV? And notwithstanding my previous point about the manager needing to provide more value than the fees they're charging, I've actually done quite a lot of look on the empirical evidence, and the empirical evidence suggests not. Now there are plenty of examples of funds trading at discounts and indeed, some trading at premium. But I think the best example, just to pick one, is if you look at the U.K. closed-end market, look at the Rothschild investment trust, RIT. Now they've got a fantastic track record, not good as Tetragon’s, but fantastic nonetheless. And their KID will show you that their annual cost are - in their annual report was 4.17%. And yet their shares trade consistently at a premium to its NAV. So I think the empirical evidence, and there's many more than that single data point, is that the fees themselves don't create a discount to NAV. A question - moving on, on the Tetragon - on accounting matters. People will have noticed an amalgamation that - within Tetragon Financial Group Limited. So the question reads, where there used to be two sets of financial statements with the annual report, one for Tetragon Financial Group Limited and one for Tetragon Financial Group Master Fund, I now only see one set. Why is this? And I think obviously Paul is the right person to tackle that one.

Sure. And as you've correctly pointed out, we are now only producing one set of financial statements, which is for Tetragon Financial Group Limited, the listed entity. And the reason for this is that on the 31st December 2018, an amalgamation or legal merger was effected between the listed entity and its subsidiary, the master funds. Having two separate fund entities is was an historical legacy which resulted in additional reporting and cost and therefore, by accepting the amalgamation we're now able to produce just a single set of financial statements, which hopefully you as shareholders will appreciate the fact that you've got 20 pages less to wade through each year-end. In notes to the financial statements, we give more details on this amalgamation and how it is being reflected on the reporting therein. And it's worth noting that in the front section of the annual, there is no change as we've always reported as if there was only a single fund entity anyways.

Thanks, Paul. A couple here, one on the dividend and the dividend where we have a shared alternative. And the question is why do you continue to give the option for shareholders to take the dividend as stock just to buy them back later, often at a higher price? So what we do is we provide a share alternative to the cash dividend. And the reason we do that is it's at the request of shareholders. I'm pretty sure I'm right, this is dominated by U.K. domicile shareholders, but we're told that they have a particular desire to be able to take shares in dividends. Now you're correct that these are, to the extent that people take shares rather than cash, it's dilutive to the NAV per share. But then historically, we've bought back those shares. And you're right, sometimes we buy them lower in the market, sometimes we buy them higher. But that's the reason for the share alternative. It's at the shareholder request. Question about the voting shares here. When is it likely that you will enfranchise the shares, i.e. make them all voting? The answer to that is there are no current plans to enfranchise shareholders. Question on CLOs. What is the current state of your CLO portfolio? And have recent CLO market developments affected your investment strategy? I think Mike Pang is probably the best - Mike, do you want to take that?

Sure. Thanks, Paddy. So our direct and indirect investments in CLO equity performed well, and we believe it will continue to perform well going forward. We believe that risks in the underlying loan portfolios are currently well contained. And as for the market generally, we continue to see significant interest in the loan and CLO asset class and as evidenced by the number of new managers we see looking to raise CLO funds. We believe that the new issuance market, however, has been somewhat hampered by technical factors, as certain influential CLO debt investors, particularly at that AAA level along with a reduction in the number of large new buyers have led to a widening of CLO debt spread over the last few months and especially after the new year. Leveraged loans, however, despite having a volatile end for 2018, have been fairly well bid. And this leads to a tougher than normal equity arbitrage environment. We continue to view CLOs as attractive vehicles for obtaining long-term exposure to leveraged loans. But because of the technical biases prevalent in the market currently, we're happy to take a patient approach in the near term. And we remain very selective when we deploy fresh capital in the space.

Thanks, Mike. And actually have a follow up one on CLOs. Why were loans up in Q4? Can you give us more color. Maybe, Paul, do you want to tackle that one?

Yes, thanks. So although CLOs invest in loans and therefore have direct risk exposure to loans, I think it's worth reiterating that CLOs are cash flow vehicles. So loan price volatility, both up and down, doesn't directly impact valuation. So therefore, loan price weakness in the fourth quarter wouldn't be expected to have a direct impact to valuation.

And given that you've mentioned valuation, I'm going to give you another valuation one. I'd like to thank management for the opportunity timing of the tender offer, allowing the company to repurchase shares near market lows. Also excellent NAV performance during the period of market volatility. Can you describe the model used for valuing the private equity in asset management companies? Are there any measures for that such as percentage of AUM or multiples expected asset management fees that could be invested in intuitive fields for the valuation? And secondly, how do you value the private equity holding in the management company? I think valuation has increased last year, but on the other side most, if not all listed asset management companies were falling. So Paul again, can I leave that one with you?

Yes. So as a reminder, the TFG Asset Management businesses are valued on a quarterly basis. And that valuation is carried out by third party valuation specialists and they provide a point valuation which has been included in our NAV calculation. The businesses are valued using either a discounted cash flow model or market multiple approach or, where appropriate, a combination of those two. In each case, the calculated enterprise value is then haircut by liquidity discounts of 15% to 20%, which reflect the fact that they're privately held. So in terms of finding out what the valuation methodologies are and other inputs, we've actually disclosed and outlined these in Figure 16 on Page 58 of the annual report. Historically, this same information has been provided, but tucked away in the financial statements. So hopefully, bringing this forward into the front section of the annual report will make it easier to locate. Equitix, GreenOak and to a lesser extent LCM TCIP, as noted, have all increased in value during 2018, generating constant P&L. In each of these businesses, increased AUM was a significant driver, with the Sun Life transaction being an additional factor in the case of GreenOak. Collectively assets under management for TFG Asset Management have grown 22% to reach $28.1 billion at the end of 2018. And specifically, GreenOak has grown from $7.6 billion to $10.6 billion, Equitix from $3.6 billion to $5 billion and LCM from $6.5 billion to $8.3 billion. So these businesses have all continued to grow significantly during the period, which is driving the valuation increase.

Great, thank you. There are, not surprisingly, a few questions here on the discount to NAV. So I'm going to try to sort of amalgamate them. The most straightforward maybe is why is the trust trading at such an enormous discount when its performance has been so good? Secondly, is the board considering further initiatives to attract new shareholders to Tetragon in view of the wide discount to net asset value? Why is your discount to NAV going up despite the buybacks? Any commentary or insight on thinking regarding the current significant discount to NAV? Can you please explain why there's such a large discount to the published NAV of Tetragon? So I think not surprisingly, a lot of questions why the discounted is so wide and what are we doing about it. One of the peculiarities, just addressing one of these specifically is if you look at the discount widened dramatically in Q4. And on the positive side, we've announced a buyback in December. And indeed, as we've seen from the final numbers for the year, Tetragon had a very strong fourth quarter in terms of NAV per share. But of course, markets partly weren't aware of that and partly didn't care in the fourth quarter. So in December, or November and December, the share price was falling, whilst at the same time, the NAV per share was rising and so therefore, the discount grew during that period. And then you've run into rather peculiar feedback where people are saying, why is the discount rising? What does the market know? And I think the answer is the market was just falling. And so Tetragon being a publicly-traded share was being traded long with everything else, and that's one of the peculiarities. But that's a very specific massive for Q4. Bigger issue, I think and the more generic one is that Tetragon has been at a - between a 40 and 50 discount essentially for the best part of 10 years. And it's ironic in a sense that when Tetragon was established and when we IPO'd the company, it was with a view that both for us as a manager and shareholders that it should trade at a premium to book value, not a discount. And that was based on the following premise. For a financial company, the price to book value or NAV should generally be determined by the long-term expected return divided by the risk-free return added to the equity risk premium. And on the time you could say the risk-free rates were about 6%, risk premium you could argue was about 2%. And thus, if Tetragon could produce repeat - a return on equity of 10% to 15%, it should trade at a premium to book or a premium to NAV of approximately 50%. So 1.5x its book value. Now as it happens, Tetragon's averaged 12.3% return over the best part of 14 years now and yet, the discussion is about the discount to NAV, not the premium to NAV. And I tell this story so that newer shareholders can understand that our goal is attempt to generate sustainable return on equity. And we believe that this goal in and of itself is the single best way to generate shareholder returns over the long run. And should, over the long run, if sustained, build at least NAV, if not a premium to NAV from the shares. But specifically to the question of the reason for the discount, it's worth noting that we've spent a lot of time talking to bankers, brokers, shareholders, multiple potential investors, and everyone has a different theory. A lot of it is about history. Well, you were on Euronext and then you're U.K., nobody knows who you are. Another is history, you've always been at a discount. It went to 50% discount in the crisis and it has remained there ever since. And a lot of U.K. investors trade discount relative to history. A lot of people complain about the complexity. Tetragon, as you know, owns illiquid assets. It owns private assets. Some people have an issue that it's not a pure play. It's complicated because asset management businesses are mixed with owning securities. Then there are nonvoting shares. There are fees. Some people have an issue with the fact a lot of U.S. hedge funds being shareholders, they think that's a big overhang. Where are the traditional U.K. fund buyers? And I could go on, but you get the point. And we believe that whilst most of these are probably relevant to some degree, the most important thing is there isn't a single solution. There is no magic bullet, if you will, that will solve the issue. But we believe a long-term focus on delivering good investment returns, as evidenced by the KPIs that we set out, trying to create an engine to make those returns as best as we can repeatable year in, year out, trying to be relatively lowly correlated to market, to pay a meaningful and growing dividend and to try to keep the story simple and get out and educate and communicate to the investing universe, we think that will build a broad awareness of what we do. And back to my starting point, if we do that and do it on a sustainable basis, then the market will eventually give us recognition for that. Just one last one here. One assumes the large balance sheet cash level depresses the ROE calculation, i.e. ex-cash ROE would be far higher. So yes, so this referring to we've had historically about between 10% and 20% cash on the balance sheet. And our ROE calculation is our total return divided by our beginning of year equity, which obviously includes that cash. So yes, if you were to look on the ROE excluding the cash, the ROE would be higher. But we like to keep a cash buffer. As Steve walked through, we have about $250 million of hard and soft loan commitments over the coming 12 to 24 months. Now that doesn't include inflows, where we have both sort of income-producing assets, but also we have some sales expected. But we do want to be cautious. We want to be cautious both because we think it's good from a risk management perspective, but also we want to be opportunistic. Crises happens on a fairly regular basis in financial markets, and we want to ensure that whatever crises come along, we have cash to deploy rather than being fighting too many fires. And so that bet we're making is that it makes sense to have cash to be able to deploy in crises and make hopefully super normal returns when those opportunities come along. So that's - yes, you're right, it reduces the ROE but that's why we do it.

Okay, I’m going to leave it there but thank you very much indeed for participating. And that's spot on the hour, so it's perfect. Thanks very much, everyone.