COMMUNIQUÉ RÉGLEMENTÉ

par EURAZEO (EPA:RF)

2023 3rd Quarter revenue

SOLID GROWTH IN THE FIRST NINE MONTHS OF 2023: FEE PAYING AUM UP 19% AND STRONG PORTFOLIO COMPANY PERFORMANCE

Paris, November 8, 2023 

 

Dynamic asset management growth over the first 9-months of 2023

•       Assets Under Management (AUM): +11% pro forma1 in one year to €33.5bn  

•       Fee Paying Assets Under Management (FPAUM): +19% pro forma1 to €24.2bn

•       Third-party fundraising: €1,723m, including €566m raised from private clients 

•       Management fees: +10% pro forma1 to €305m

Solid portfolio companies performance  

•       Sustained revenue growth across all segments excluding Growth (+11%)

•       Good momentum in the Growth segment (+17%)

Selective deployment; increase in realizations expected in H1 2024  

•       Realizations down over 12M: €0.8bn compared to €2.4bn over 9M 2022; the Group expects realizations volumes to pick-up in H1 2024

•       Selective deployment: €3.0bn (€3.8bn over 9M 2022)

•       Significant leeway: dry powder2 of €4.0bn and undrawn balance sheet commitments in the funds of €2.2bn

New impact strategy developments

•      

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Final closing of Eurazeo Smart City II fund above its initial target

•       Strong fundraising momentum in the transition infrastructure fund (ETIF) which should soon close above its initial target 

2023 perspectives

• For 2023, the Group anticipates a fundraising of around €3.0bn and confirms it is targeting strong growth in Fee Related Earnings

Christophe Bavière and William Kadouch-Chassaing, Co-CEOs, stated: “Eurazeo reports a solid growth in the first nine months of the year, despite a complex and uncertain environment. This reflects the quality of our client franchises and the solid underlying performance of investments. We are confident in Eurazeo ability to achieve €3bn of fundraising and grow steadily the asset management operating income. The Group will present its medium-term strategy and outlook during a Capital Markets Day on November 30.”

 

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Pro forma of Rhône which represented €2.4bn of AUM and €1.3bn of FPAUM before its sale

Rhône drypowder totaled €0.6bn

EURAZEO 

1, rue Georges Berger – 75017 Paris www.eurazeo.com

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ASSET MANAGEMENT ACTIVITY

 

A. ASSETS UNDER MANAGEMENT

As of September 30, 2023, Eurazeo Assets Under Management (AUM) totaled €33.5bn, up 11% over 12 months pro forma of the Rhône divestment

-        third-party                AUM      (Limited               Partners              and        private clients) totaled €22.8bn  

(+10% over 12 months at constant scope), including dry powder of €4.0bn. Following the sale of the stake, AUM no longer include Rhône which accounted for €2.4bn of third party AUM, including drypowder of €0.6bn prior to its sale.

-        balance sheet AUM include the investment portfolio on the Group’s balance sheet (€8.5bn, up €0.5bn due to the investments completed during the quarter) and Eurazeo balance sheet commitments in Group funds (€2.2bn).

Assets under management (€bn)[1]

09/30 2022 excl.

Rhône

09/30

2023

% change

LTM

AUM

Private Equity

22,470

24,647

9.7%

74%

Private Debt

6,485

7,024

8.3%

21%

Real Assets

1,294

1,798

38.9%

5%

Total AUM

30,249

33,468

10.6%

100%

of which third-party AUM

20,758

22,772

9.7%

68%

of which balance sheet AUM4

 9,491

10,696

12.7%

32%

 

Fee Paying AUM amounted to €24.2bn, up 19% over 12 months pro forma of Rhône. Rhône FPAUM totaled €1.3bn prior to its sale.

 

09/30/2023

Eurazeo third parties[2]

Eurazeo balance sheet

Total

Total LTM growth (%)

Private Equity

          10,934 

6,248

           17,182 

+20%

Private Debt

            5,349 

192

             5,541 

+12%

Real Assets

               432 

1,009

             1,441 

+35%

Total 

            16,715 

7,449

          24,164  

+19%

LTM growth

+13%

+34%

+19%

 

 

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B. FUNDRAISING

In a wait-and-see market that has contracted compared to last year, Eurazeo raised €1.7bn from its clients in the first nine months of 2023:

-             Private Debt fundraising remained strong, exceeding €900m in 9M 2023, up more than 30% compared to 9M 2022;

-             the transition infrastructure fund maintained its robust fundraising momentum, collecting over €200m over the period. Considering the commitments received, the fund will soon exceed its initial target of €500m;

-             Private Equity inflows totaled €625m over 9M 2023, driven by current fundraising in the Secondary segment and the final closing of the smart city and climate technologies program at €400 million, exceeding the initial target.

Private client fundraising maintained the good momentum observed in 2022. With €566m raised in the first nine months of 2023, in line with the same period last year, it represented 33% of total fundraising during the period. Private clients account for €3.9bn, or over 17% of third-party AUM. The development of the offer for private clients continues to gain momentum with the signature of a partnership with iCapital. This partnership complements the one signed with the digital platform Moonfare. It will enable Eurazeo to extend its product distribution to Wealth Managers in Europe, and particularly in Germany, Belgium, Luxembourg, Italy, Switzerland and in the Netherlands.

Third-party fundraising (€m)

9M 2022

9M 2023

Private Equity

1,130

625

Private Debt

697

911

Real Assets

8

186

Total 

1,834[3]

1,723

Post-closing, the MLBO strategy realized a first closing of the Eurazeo Capital V fund (EC V) at €2.3bn, including c.€600m from third parties. The successful third-party capital fundraising of MLBO, historically supported by the balance-sheet, marks an important milestone in the Group’s shift towards third-party management.

For the full-year 2023, the Group anticipates fundraising of around €3.0bn, compared to €2.9bn excluding Rhône in 2022.  

 

             

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C. ASSET MANAGEMENT REVENUE

Management fees totaled €305m in 9M 2023, up +10% at constant scope and exchange rates (Rhône exit). Excluding the base effect of catch-up fees, they rose by +12% and break down as follows:

i) third-party asset management activity, up +4% to €214m at constant scope and exchange rates. Excluding catch-up fees, third-party management fees increased by

+7%; ii) Management fees on Eurazeo’s balance sheet of €92m, up +27% mainly due to commitments to the EC V fund.

Realized performance fees were negligible during the period due to the limited number of realizations. 

(€m)

9M 2022 PF

% chg.

9M 2023

Ifl

% chg. published

Management fees

277

305

+10%

+9%

  of which third parties

205

213

+4%

+2%

  of which balance sheet

73

92

+27%

+27%

Realized performance fees

73

1.5

-

-

  of which third parties

4

1

-

-

  of which balance sheet

69

1

-

-

Total fees

350

306

-13%

-13%

ASSET ROTATION

Realizations in the first nine months of the year totaled €0.8bn, down on realizations of €2.4bn in 9M 2022. In a less favorable market context, the Group chose to postpone some exits. The group initiated several divestment processes that should lead to an increase in realization volumes in the first half of 2024. 

Eurazeo remained selective in its investments: Group deployment totaled €3.0bn in the first nine months of 2023, compared to €3.8bn in 9M 2022. Deployments are mainly split between Private Debt, secondary and Buy-out with the acquisition of BMS. 

(€m)

Deployments

                                      9M 2022             9M 2023

Realizations

      9M 2022                  9M 2023

Private Equity

2,148

1,746

1,155

462

Private Debt

1,426

1,108

596

330

Real Assets

263

169

644

14

Other

9

15

4

1

Total 

3,847

3,038

2,398

807

of which balance sheet

1,038

713

1,059

164

Going forward, Eurazeo benefits from substantial leeway for its future deployments: dry powder of €4.0bn[4] and balance sheet commitments in the funds of €2.2bn.

 

PORTFOLIO COMPANIES 

The investment portfolio carried on the balance sheet is invested almost exclusively in Group funds and programs. This portfolio includes over 70 companies, none of which represent more than 6% of the total value. They are primarily positioned in structurally buoyant sectors, such as healthcare, business services, technologies and energy transition. 

In the first nine months of the year, these companies delivered a new increase in revenue growth[5]:

-        Mid-large buyout (+15% in 9M 2023): The portfolio reported strong organic growth in almost all segments. This performance reflects the Group’s positioning in high-quality assets in buoyant segments;

-        Small-mid buyout (+3%):  Business services and healthcare companies continued their strong growth. Companies in the consumer space experienced a slight slowdown;

-        Growth (+17%): Revenue growth remained dynamic, ranging between +20% and +45% for most of the portfolio. All companies are focusing on cost control and accelerating their path to profitability;

-        Brands (+11%): The portfolio reported further robust growth;

-        Real Assets (+10%): Robust growth in hotel activities and resilient performance of the real estate portfolio.

Since January 1, 2023, Eurazeo no longer consolidates its portfolio companies, in accordance with the consolidation exemption provided in IFRS 10 for “investment companies”. 

 

NEW IMPACT STRATEGY DEVELOPMENTS

Drawing on its recognized expertise in sustainable investment, Eurazeo develops "return first" impact investment strategies with profitability profiles in line with the best standards in their asset classes.

The Group achieved the final closing of the fund Eurazeo Smart City II, exceeding its initial target.

It has received the support from tier-1 sovereign and institutional investors, and as of September 30, had already completed 11 investments, of which 57% in impact-driven companies. The program as a whole, should have the capacity to deploy €400 million.  

Eurazeo Transition Infrastructure Fund (ETIF), classified as an Article 9 fund under SFDR regulations, is continuing its fund-raising momentum and should soon exceed its target of €500 million. The fund is pursuing its deployment in the energy transition and digital sector, with an

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investment in 2BSI, a French leader in the recovery and management of infrastructure waste. ETIF also enabled Etix to acquire 5 additional data centers in France during the quarter, while continuing to support this new entity in its decarbonization trajectory, the acquisition having been partly financed by a sustainability linked bond.

REINFORCEMENT OF TALENTS 

The Group continues to strengthen its key areas of expertise in key growth areas, notably with the recruitment of a new Operating Partner for MLBO, a Private Debt Investment Director for the UK and the Nordic countries, a Managing Director in charge of fundraising in the Middle East, and new high-level senior advisors for the Growth and Impact strategies. During the first half of the year, the Group made a number of appointments to key positions (CFO, Group General Secretary, Compliance, Operations, and the leadership of MLBO and Growth strategies). Further senior appointments are expected in the coming quarters.

 

BALANCE SHEET AND CASH AND CASH EQUIVALENTS

As of September 30, 2023, the balance sheet investment portfolio was valued at net €8.5bn (€111.3 per share outstanding). As a reminder, the portfolio is not revalued quarterly. The change in value compared to end-June 2023 (€8.0bn or €103 per share) comes from acquisitions completed in the third quarter that are reflected in cash and cash equivalents.

As of September 30, 2023, net debt totaled €969m (€12.7 per share), including gross cash and cash equivalents of €16m. This debt represents a moderate gearing of around 12%. As of June 30, 2023, net debt totaled €426m (€5.5 per share).

Eurazeo has a revolving credit facility (RCF) of €1.5bn, maturing in 2026, and drawn €985m at the end of September 2023.

The Group held 5,150,783 treasury shares, i.e. 6.5% of total outstanding shares (79,224,529 shares) as of September 30, 2023. Excluding treasury shares held for cancellation, the number of shares outstanding is 76.4 million. The shares purchased will be canceled before the year end.

 

SHAREHOLDER RETURN

The Executive Board launched a new €100m share buyback program that came into effect at the end of March 2023. This program, which will be accretive for shareholders, reflects management’s confidence in the Group’s prospects and the value of its assets. The Group will also buy back shares to cover the Long Term Incentive Plans (LTIP).

As of September 30, 2023, the Group had used €71m of this amount. As of October 30, a total of €83m had been used.

 

 

 

OUTLOOK

For 2023, the Group anticipates fundraising of around €3.0bn (compared to €2.9bn excluding Rhône in 2022) and confirms it is targeting further robust growth in Fee-Related Earnings, which should be driven by higher management fees and disciplined costs.

The Group will present its medium-term strategy and outlook at a Capital Markets Day on the morning of November 30, 2023. This event will be presented as a webcast.

 

SUBSEQUENT EVENTS

On October 31, the MLBO strategy realized a first closing of the Eurazeo Capital V fund (EC V) at €2.3bn, including c.€600m from third parties. This closing will result in a partial syndication of the assets already acquired by the fund (Cranial, Scaled Agile, BMS and Sevetys).

ABOUT EURAZEO

•       Eurazeo is a leading European investment group with €33.5 billion in diversified assets under management, including €23 billion on behalf of institutional and retail clients through its private equity, private debt, real estate and infrastructure strategies. The Group supports more than 600 mid-market companies, leveraging the commitment of its 410-strong workforce, its in-depth sector expertise, its privileged access to global markets, and its responsible approach to value creation based on growth. Its institutional and family shareholding, and its solid financial structure, enable it to have a long term perspective. 

•       Eurazeo has offices in Paris, New York, London, Frankfurt, Berlin, Milan, Madrid, Luxembourg, Shanghai, Seoul, Singapore and Sao Paulo. 

•       Eurazeo is listed on Euronext Paris. 

•       ISIN: FR0000121121 - Bloomberg: RF FP - Reuters: EURA.PA.

EURAZEO FINANCIAL TIMETABLE

November 30, 2023                                                        Capital Markets Day

March 7, 2024                                                                   2023 annual results

May 16, 2024                                                                      Q1 2024 revenue

July 25, 2024                                                                       2024 half-year results

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Pierre BERNARDIN HEAD OF INVESTOR RELATIONS ir@eurazeo.com

+33 (0)1 44 15 16 76

Stéphanie MARIA-BAJARD DIRECTOR OF COMMUNICATIONS smaria-bajard@eurazeo.com

+33 (0)1 44 15 80 44

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David Sturken

H-ADVISORS MAITLAND David.sturken@hadvisors.global

+44 (0) 7990 595 913


APPENDIX 1: PARTNERSHIPS

iM Global Partner (AUM not consolidated)

As a reminder, iM Global Partners’ assets are not included in the Eurazeo Group's published AuM. Assets under management of iM Global Partners (in iMG's share of interest) stood at $37.1 billion at the end of September 2023, up 16% compared with the end of September 2022. This growth is notably due to the good performance of affiliates despite the current uncertain macro-economic environment, and to the continuation of iM Global Partner's dynamic M&A strategy, in particular through the acquisition of a 45% stake in Berkshire Asset Management, a US equity and yieldfocused asset management company, in December 2022, as well as through Litman Gregory Wealth Management's acquisition of Wedgewood Partners' private client business in August 2023 (AuM $275m).

 

APPENDIX 2: BREAKDOWN OF EURAZEO BALANCE SHEET AUM

 

€M – 09/30/2023

Portfolio

Drypowder

Total EZ AUM

Private Equity 

           7,243  

            1,780 

           9,023 

Mid-large buyout

            3,697

            1,211 

           4,908 

Small-mid buyout

               669 

              376 

           1,045 

Growth1

            2,007 

                 90 

           2,097 

Brands

               768 

                    -   

               768 

Healthcare (Nov, Santé)

                    -   

                    -   

                   -   

Venture 

                   55 

                 77 

               132 

Private Funds Group

                  47 

                 26 

                 73 

Private Debt

               186 

               105 

              290 

Real Assets

               971 

               193 

            1,164 

MCH PE (25%)

                66 

                30 

                95 

Kurma

                 16 

                 24 

                36 

                 47 

                52 

                72 

Other

Total

           8,505 

             2,191 

          10,696 


APPENDIX 3: ASSETS UNDER MANAGEMENT

 

€m  

12/31/2022 PF excl. Rhône

09/30/2023

 

Third-party AUM

Eurazeo balance sheet AUM

Total AUM

Third-party AUM

Eurazeo balance sheet AUM

Total AUM

Private Equity 

           13,841  2,165

 1,537

 2,566

                                   8,706

                                    22,547

                          14,633

                            2,272

                           9,023                       4,908                     1,045

                                         2,097

                             23,656

                               7,180

                               2,570

                               4,681

  Mid-large buyout 

  Small-mid buyout

  Growth1

                                     4,723

                                     1,103

                                     1,940

                                        6,888

                                        2,641

                                        4,506

                            1,525

                            2,584

  Brands 

 -

                                        739

                                           739

                                    -

                                            768

                                  768

  Healthcare (Nov Santé)

 418

                                              -

                                           418

                               418

                                                 -

                                  418

  Venture 

 3,270

                                        117

                                        3,387

                            3,180

                                           132

                               3,312

  Private Funds Group

 3,886

                                           83

                                        3,969

                            4,654

                                              73

                               4,726

Private Debt  

 6,604

                                        262

                                        6,865

                            6,733

                                            290

                                7,024

Real Assets  

 472

                                     1,142

                                        1,614

                                634

                                         1,164

                               1,798

MCH PE (25%) 

Kurma 

 325

 436

                                           88

                                           49

                                           413

                                           485

                                338

                                               95

                                               52

                                   433

                                   486

                                434

Other

 -

                                           69

                                              69

                                     -

                                              72

                                       72

Total 

 21,677

                                  10,316

                                     31,993

                          22,772

                                       10,696

                              33,468

 

 

 

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[1] Assets under management are not revalued quarterly. September 30, 2023 figures are pro forma. They include Eurazeo balance sheet commitments in Group funds and exclude the value of the asset management activity. 4 Including the balance sheet investment portfolio and balance sheet commitments in Group funds

[2] Including MCH for €200m in Private Equity, excluding Rhône sold in 2023

[3] Excluding Rhône fundraising for €270m

[4] Rhône accounted for drypowder of €0.6bn prior to divestment

[5] Portfolio company revenue, proportional to the percentage of assets held by the Eurazeo balance sheet. MLBO, SMBO, Growth, Brands and Real Assets represent c.95% of the balance sheet investment portfolio, see appendix 2.

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