GOOD EXECUTION OF STRATEGIC PLAN: DYNAMIC ASSET MANAGEMENT GROWTH AND PICK-UP IN REALIZATIONS IN H1 2024

GOOD EXECUTION OF STRATEGIC PLAN: DYNAMIC ASSET MANAGEMENT GROWTH AND PICK-UP IN REALIZATIONS IN H1 2024

Paris, July 25, 2024

Solid asset management momentum 

•       Third-party fundraising: €2,105m (+63%), of which €453m from private clients

•       Fee Paying Assets Under Management (FPAUM): +10% to €25.8bn, +14% from third parties

•       Management fees: +8% to €204m, +13% from third parties

•       Fee-Related Earnings (FRE): +21% to €71m  

Pick-up in realizations and selective deployments

•       Realizations: €1.6bn, a threefold increase on H1 2023 (€0.5bn)

•       Deployments: €1.6bn (€1.7bn in H1 2023)

•       Balance sheet rotation (c.9% of portfolio realized and announced, versus 3% in H1 2023)

Stable portfolio value  

•       Portfolio fair value loss on the balance sheet: -0.6% (+0.1% per share)

•       Robust portfolio company performance, offset by market effects

•       Average premium on balance sheet divestments of 15% compared to the previous recorded value, reflecting the portfolio’s quality

•       Portfolio net value: €8.0bn (i.e. €106.9 per share)

Financial results, balance sheet and shareholder return

•       Net loss group share: -€105m (vs. -€145m excluding IFRS 10 impact in H1 2023)

•      

•       Improved shareholder return (dividends of €179m and share buybacks of c.€100m)

Strengthened leadership in ESG and impact funds offer

•       Eurazeo was ranked #81 in the World’s 500 Most Sustainable Companies by Time Magazine and Statista

•       Eurazeo was ranked #2 worldwide for its “Diversity, Equality and Inclusion” performance in the Honordex Private Equity 2024 ranking

•       Final closing of the sustainable infrastructures fund at 40% above its initial target •     Launch of the “article 9” Eurazeo Planet Boundaries fund  

Christophe Bavière and William Kadouch-Chassaing, Co-CEOs, declared: “Eurazeo achieved further successes in the execution of its roadmap, in a gradually improving context. In the first half of the year, the Group continued its positive momentum in fundraising, recorded a surge in realizations, increased shareholder return, made further progress in ESG and extended its impact fund line-up. These results confirm that we are on track to achieve the medium-term objectives presented to the market in

November 2023.”                                                                 

EURAZEO 

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

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        I.          ANALYTICAL P&L

A.           ASSET MANAGEMENT ACTIVITY

1. ASSETS UNDER MANAGEMENT

As of June 30, 2024, Eurazeo Group Assets Under Management (AUM) totaled €35.4bn, up 9% over 12 months:

-        third-party AUM (Limited Partners and private clients) stood at €25.0bn (+13% over 12 months), including drypowder of €5.7bn,

-        balance sheet AUM include the investment portfolio on the Group’s balance sheet (€8.0bn) and Eurazeo balance sheet commitments in Group funds (€2.3bn).

Fee Paying Assets Under Management totaled €25.8bn, up +10% in total and +14% for third parties over 12 months.  

2. FUNDRAISING

In H1 2024, Eurazeo raised €2,105m from its clients, up 63% compared to H1 2023:

-             momentum was strong in the Private Debt activity, with €1.6bn raised during the half-year. The Direct Lending strategy benefited from the successful initial closing of the EPD VII fund;

-             the transition infrastructure fund completed its final closing at €706m (including €89m in H1 2024 and €40m to be registered in Q3 2024), surpassing its initial target of €500m by 40%;

-             Private Equity fundraising amounted to €424m in H1 2024, primarily driven by the Secondary strategy, the initial closing of the Kurma IV fund (biotech) and the buyout.

The Group continued to expand its institutional LP client base internationally, with 70% of funds raised abroad in H1 2024, particularly Asia and Continental Europe.

Wealth Solutions fundraising from private clients totaled €453m (+30% compared to H1 2023). This activity reaped the first rewards of its expansion outside of France with some first significant commercial successes in Belgium and distribution partnerships signed with leading institutions in Germany, Switzerland and Italy. The evergreen fund EPVE 3 confirmed its success by exceeding €2.2bn in AUM. Wealth Solutions activity represented €4.8bn or more than 19% of third-party AUM.

including Wealth Solutions                                         348                                           453                                  +30%

Furthermore, the Eurazeo balance sheet contracted additional commitments of €162m in the Group’s funds during the half-year, mainly in Private Debt (first closing of EPD VII) and in the new Kurma biotech fund.

3. ASSET ROTATION

H1 2024 realizations totaled €1.6bn, more than three times the amount in H1 2023 (€0.5bn).

The Group announced several exits across a wide range of its asset classes, realized in good terms: 

-                      Amolyt Pharma (Biotech), Onfido (Venture) and Lumapps (Growth) recorded a cashon-cash multiple of around 4.0x;

-                      Efeso (completed in February), DORC (completed in April), Peters (completed in July), and iTracing (announced in June) in buyout generated an average CoC multiple of 2.4x;

-                      In real estate, the Group announced the sale of the “economy” segment in the Grape hotel portfolio with a CoC multiple of around 1.6x.

The Group recorded exits of €552m on its balance sheet as of June 30, 2024, up significantly compared to H1 2023 (€140m). Including realizations announced in H1 2024 that are soon to be completed (Peters Surgical, iTracing, Grape portfolio, etc.), balance sheet realizations to date amount to 9% of the portfolio value at the beginning of the year, compared to around 3% in

H1 2023. These exits generated an average premium of 15% compared to the previous value recorded for these portfolio assets. This confirms the quality of Eurazeo’s investments and the relevance of its asset valuation methods. 

Several divestment processes have been initiated and the Group has an exit pipeline which should result in a further increase in realization volumes during the year.  

Eurazeo was active and selective in its investments: Group deployments totaled €1.6bn in H1 2024 compared with €1.7bn in H1 2023. The balance sheet amount invested was slightly higher than in H1 2023 (€240m vs. €210m).

Eurazeo enjoys substantial leeway for its future investments: drypowder of around €5.7bn and balance sheet commitments in the funds of €2.4bn.

4. CONTRIBUTION OF THE ASSET MANAGEMENT ACTIVITY

Management fees totaled €204m in H1 2024, up 8% and break down as follows:

i)                     third-party asset management fees up +13% to €145m (negligible impact of catchup fees in H1 2024), including +14% for fees from IMG Partners (€41m);

ii)                   management fees on Eurazeo’s balance sheet of €59m, down -3% due to the exits completed in 2023 and the decline in balance sheet commitments in the funds, in line with the strategy announced at the end of 2023.

Group operating expenses totaled €133.2m, up slightly by +2%. The Group therefore continued to improve its operating leverage alongside furthering investment to develop its asset management platform.

Fee Related Earnings (FRE), which measure the asset management activity’s net recurring income, totaled €71.2m, up 21% compared to H1 2023. The FRE margin increased substantially compared with H1 2023 to 34.8%, i.e. 40 basis points higher than the 2023 margin, pro forma of the Rhône and MCH divestments.

Performance fees (PRE) were limited during the period (€2m). With the recent exits in the form of buyouts (DORC, Efeso, etc.), certain Group funds are getting closer to distribution levels that will enable higher performance fees to be recognized. PRE should gradually increase to represent around 10% of third-party revenues within an investment cycle at medium term. 

The contribution of the asset management activity in H1 2024 totaled €65.1m, up 16% compared to H1 2023.

B.          INVESTMENT ACTIVITY

1. EVOLUTION OF THE INVESTMENT PORTFOLIO

At the end of June 2024, the net value of the investment portfolio was €7,966m, down slightly by -4%. Portfolio value per share totaled €106.9, down only 2% considering the +2% positive impact from share buybacks.

Changes in the portfolio value were driven by:

-         the -€48m (-0.6%) decrease in the portfolio fair value, recognized in P&L;  -           a scope effect of -€312m (-3.7%) due to the exits (namely DORC).

2. PORTFOLIO CHANGE IN FAIR VALUE

The change in the portfolio fair value, recognized through the P&L, totaled -€48m (-0.6% or +0.1% per share considering the buybacks):

-             Value creation in the Buyout segment (MLBO, SMBO, Brands, Secondaries and other investments as LP) totaled +€71m (+1%). Companies delivered a steady operating performance, with average increases of +8% and +15% in revenue and EBITDA, respectively. The multiples applied to several companies were nevertheless adjusted to reflect the decline in certain listed comparables;

-             Value creation in the Real Assets segment totaled +€25m (+3%), primarily driven by the excellent performance of hotel (EBITDA +38%) and transition infrastructure operations. Valuation methods, mainly based on valuations by experts, remained prudent;

-             Value creation in Private Debt amounted to +€5m (+2%) in a context of favorable interest rates and controlled cost of risk;

-             The value of Growth and Venture^[5] assets was adjusted by an additional amount of €149m (-7%). Growth companies maintained a solid momentum, (+15% average revenue growth, with many companies posting growth of over 20%), with greater focus on profitability. Additional adjustments were however made for certain historical financing rounds of Growth portfolio companies. The average discount applied to the most recent financing rounds is now -36%. The Kurma portfolio reported a +34% increase, mainly driven by the value of the Amolyt Pharma divestment.

The portfolio has expanded considerably in recent years, with +12% net average annual value creation over 10 years. Over three years, the average increase is 14%.

3. CONTRIBUTION OF THE INVESTMENT ACTIVITY

Investment activity costs were contained, with stable Group strategic management costs and higher financial expenses (recorded in “Other”), reflecting the moderate increase in leverage over the period.

B. Contribution of the investment activity                                                                             (69)                       (156)

C.          NON-RECURRING ITEMS

In H1 2024, Eurazeo announced the sale of its 25% stake in MCH Private Equity (MCH), an asset manager specialized in small cap private equity in Spain. Eurazeo retains an €80m investment in the MCH V fund. This sale is in line with the Group’s strategy of focusing its value proposition on its primary activities.

D.           SUMMARY INCOME STATEMENT

Asset management activity continued its dynamic growth, with a substantial increase in thirdparty management fees and fee-related earnings (FRE). The asset management contribution was €65m, up +16%.

The investment activity contribution during the half-year totaled -€156m. This mainly resulted from the decrease in the portfolio fair value recorded during the first semester while investment activity costs were contained.

In H1 2024, the net loss attributable to owners of the Company amounted to -€105m, a €40m increase compared to H1 2023, excluding the IFRS 10 impact.

The Group had recorded non-recurring income of €1,942m in H1 2023 arising from the difference between the fair value of the balance sheet investment portfolio and its carrying amount prior to January 1, 2023, reflecting the first-time adoption of the IFRS 10 consolidation exemption.          

        II.                CASH AND CASH EQUIVALENTS AND DEBT

As of June 30, 2024, Group net financial debt^[7] amounted to -€1,012m, i.e. a limited gearing of 13%.

Eurazeo has a confirmed revolving credit facility (RCF) of €1.5bn, maturing in 2026, drawn for €915m at the end of June 2024.

III. SHAREHOLDER RETURN

The Shareholders’ Meeting of May 17 validated the Executive Board’s proposed payment of a dividend of €2.42 per share, (i.e. a 10% increase compared to the 2022 ordinary dividend), representing a total distribution of c. €179m.  

In H1 2024, the Group purchased 1,399,518 Eurazeo shares for cancellation, representing the amount of €109m in line with the €200m share buyback program announced at the time of the annual results (a twofold increase compared to 2023).

At the end of June 2024, the Group held 3,862,491 treasury shares, i.e. 5.1% of total outstanding shares (76,081,874 shares). Excluding treasury shares held for cancellation, the number of shares outstanding is 74.5 million. 

IV. NEW ESG AND IMPACT DEVELOPMENTS

Strengthening of diversity leadership

Thanks to further progress in sustainability and impact, Eurazeo received new awards in various ESG classifications: 

-          Ranked # 81 in the World’s 500 Most Sustainable Companies by Time Magazine and

Statista,

-          Ranked # 2^nd out of 283 private equity companies by Honordex for its diversity, equality and inclusion (DEI) performance.

Signing of the Finance for Biodiversity Pledge: 

Eurazeo also confirmed its commitment to protecting and restoring biodiversity by signing the Finance for Biodiversity Pledge. The Group incorporates the protection of biodiversity into all stages of the investment cycle, with the aim of reversing biodiversity loss by 2030.

Acceleration of impact funds 

In the first half of 2024, Eurazeo enhanced its impact offering:

•       Final closing of Eurazeo’s Transition Infrastructure Fund (ETIF, article 9) at €706m, above its initial target of €500m,  

•       Launch of the 8th impact fund, Eurazeo Planetary Boundaries Fund1 (EPBF), a new generation buy-out fund with a target size of at least €750m. Its objective will be to build and support future leaders striving to reverse or adapt to the crossing of planetary boundaries,

•       Steady deployment of impact funds, with 6 investments in H1 2024, including SmartCity’s investment in Materrup, a committed start-up specializing in the deployment of circular low carbon cement plants or the funding by ESMI of 2 new-generation vessels for Njord and the retrofit of 4 vessels for Northern Offshore Services, all for offshore wind energy maintenance and development.

         V.             A STRENGTHENED ORGANIZATION

As of June 30, 2024, the Group (excluding IMGP) had a full-time workforce of 410 employees, up slightly on December 31, 2023 (403).

The Group hired several senior employees to support its growth:

-          ongoing development of international client coverage (recruitment of Investor Relations Managing Directors to cover the DACH, Middle East, Nordic & UK regions and Japan, with the opening of an office in Tokyo);

-          strengthening of the Growth team (recruitment of Managing Directors in investment, based in London and Madrid, new CFO)

-          strengthening of Corporate functions with new heads of Communication, Human Resources and Treasury.

VI. OUTLOOK

The Group presented its growth outlook at a Capital Markets Day on November 30, 2023, and its ambition to become the private asset management leader in Europe in the mid-market, growth and impact segments.

The objectives presented at this event are confirmed. 

VII. SUBSEQUENT EVENTS

In July, Eurazeo announced the final close of its first-time infrastructure program (comprising the Eurazeo Transition Infrastructure Fund - ETIF - and a co-investment vehicle) at €706 million in aggregate commitments from institutional investors across North America, EMEA and France. The final close amount exceeded the initial target of €500m by more than 40%, reflecting strong investor demand for the diversified strategy of this “Article 9” classified fund (SFDR).

ABOUT EURAZEO

•       Eurazeo is a leading European investment group with €35.4 billion in diversified assets under management, including €24 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 400-strong workforce, its in-depth sector expertise, its privileged access to global markets through 12 offices across Europe, Asia and the United States, and its responsible approach to value creation based on growth. The company's institutional and family shareholding structure, and its solid financial structure, ensure its long-term viability. 

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

•       Eurazeo is listed on Euronext Paris. 

•       ISIN: FR000121121 - Bloomberg: RF FP - Reuters: EURA.PA.

EURAZEO FINANCIAL TIMETABLE

November 6, 2024                                                          Q3 2024 revenue

EURAZEO CONTACT                                                               EURAZEO PRESS CONTACT

Pierre Bernardin                                                                                 Mael Evin (France)

HEAD OF INVESTOR RELATIONS HAVAS ir@eurazeo.com              MAEL.EVIN@HAVAS.COM

+33 (0)1 44 15 01 11                                                                             +33 (0)6 44 12 14 91

Coralie Savin                                                                                         David Sturken (UK)

GROUP CHIEF COMMUNICATIONS OFFICER    H/ADVISORS MAITLAND csavin@eurazeo.com               david.sturken@h-advisors.global

+33 (0)6 86 89 57 48                                                                             +44 (0) 7990 595 913

APPENDIX 1: IM GLOBAL PARTNER

iM Global Partner (no consolidated AUM)

It is recalled that iM Global Partner’s assets are not included in assets under management published by Eurazeo.

The assets under management of iM Global Partner (iMG share) total US$44.5 billion at the end of June 2024, up 18% compared to the end of June 2023. This growth is notably due to the good  performance of affiliates despite the current uncertain macro-economic environment, and iM  Global Partner’s dynamic M&A strategy, in particular through Litman Gregory Wealth

Management’s acquisition of Wedgewood Partners’ private client business in August 2023, and the 40% investment in Trinity Street Asset Management, a London-based company managing global and international equity portfolios using an opportunistic value approach, in April 2024.

APPENDIX 2: BREAKDOWN OF EURAZEO BALANCE SHEET AUM

APPENDIX 3: ASSETS UNDER MANAGEMENT

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APPENDIX 4: FUND PERFORMANCE¹

¹As of March 31, 2024

²EGF II: combination of Eurazeo Croissance (legacy Eurazeo Growth fund) & Idinvest Growth Fund II, including transactions completed by Idinvest Entrepreneurs Club   ³EERE I: combination of Patrimoine I and Patrimoine II

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