Eurazeo Se · EURONEXT:RF
Eurazeo — Investor Day (November 2023)
64 slides from Eurazeo's investor day presentation, Nov 30, 2023
Slide 1: Capital Markets Day
CAPITAL MARKETS DAY November 30, 2023
Slide 2: Today's Speakers
TODAY’S SPEAKERS 2 Members of the Executive Board Edouard Guigou Luc Maruenda Christophe Bavière Managing Director Head of co-Chief Executive Officer MLBO Wealth Solutions Solomon Moos Agathe Bubbe William Kadouch-Chassaing Director Director, Asia co-Chief Executive Officer Wealth Solutions Investme
Slide 3: Introduction
3 INTRODUCTION 1 William Kadouch-Chassaing co-Chief Executive Officer CAPITAL MARKETS DAY 2023
Slide 4: 50 years of value creation: unique heritage is a springboard for future growth
50 YEARS 4 OF VALUE CREATION OUR UNIQUE Building European champions HERITAGE with global ambitions IS A SPRINGBOARD FOR FUTURE Enjoying trust GROWTH from landmark entrepreneurs, clients & long-term shareholders Track record of successful transformations CAPITAL MARKETS DAY 2023
Slide 5: Successful transformation into a 3rd party asset manager
EURAZEO HAS SUCCESSFULLY EXECUTED ITS 5 TRANSFORMATION INTO A 3 RD PARTY ASSET MANAGER €34bn €16bn €6bn €2bn OWN CAPITAL 3RD PARTY CAPITAL 2001 2010 2018 2023 CAPITAL MARKETS DAY 2023
Slide 6: Four essential enablers to scale our model
FOUR ESSENTIAL ENABLERS TO SCALE OUR MODEL 6 Our strengths Enablers of scale-up Robust foundations (AUM size, client franchises, brand, talents) Client Operational Proven ability to grow centricity excellence 3rd party asset management Diversification (asset class & geographies) Ready to embrace gro
Slide 7: Alternative asset management supported by strong long-term fundamentals
ALTERNATIVE ASSET MANAGEMENT IS SUPPORTED 7 BY STRONG LONG-TERM FUNDAMENTALS Global AUM by asset type ($tn) Near-term headwinds — Uncertainties on rates — Muted exit activity & distribution 17 +11% — Slower fundraising in some asset class pa Strong long-term 10 fundamentals +15% pa — Superior long-t
Slide 8: Fundamental changes will shape the future of private markets
FUNDAMENTAL CHANGES WILL SHAPE THE FUTURE 8 OF PRIVATE MARKETS Clients to concentrate “Higher for longer” interest Strong rise of private on fewer platforms rates to favour PE players debt, impact and offering scale and a focused on transformational Wealth channel clear value proposition earnings gr
Slide 9: Our ambition
9 OUR BUILD THE LEADING ALTERNATIVE ASSET MANAGER ACROSS EUROPEAN AMBITION MID-MARKET, GROWTH & IMPACT CAPITAL MARKETS DAY 2023
Slide 10: Mid-term objectives
10 Focus our value proposition Accelerate shift towards an asset light model 4 Expand & scale up our client franchises Improve operational efficiency MID TERM OBJECTIVES Deliver steady Enhance Close the earnings shareholder valuation gap growth returns CAPITAL MARKETS DAY 2023
Slide 11: Focus our value proposition
11 FOCUS OUR VALUE 2 PROPOSITION Christophe Bavière co-Chief Executive Officer CAPITAL MARKETS DAY 2023
Slide 12: Diversified platform across private asset classes
WE HAVE BUILT A DIVERSIFIED PLATFORM 12 ACROSS PRIVATE ASSET CLASSES Secondaries 14% 21% 74% Venture & Growth PRIVATE DEBT 25% PRIVATE EQUITY €33.5bn AUM1 Buyout 5% REAL ASSETS 34% 1 Assets under management as of September 30, 2023 CAPITAL MARKETS DAY 2023
Slide 13: Leadership in 3 attractive categories
13 .1 Mid-market We address the European mid-market with a diversified product suite and leverage a unique local presence across the continent WE STRIVE FOR LEADERSHIP IN 3 ATTRACTIVE .2 Growth CATEGORIES We focus on sectors and companies with structural growth, and we create value through active ma
Slide 14: European mid-market is a deep and attractive category
.1 Mid-Market EUROPEAN MID-MARKET IS A DEEP & ATTRACTIVE 14 CATEGORY European mid-market offers attractive returns (net IRR of LBO funds, by size and geography, 1987-2022) Europe is a deep market 16.6% 15.1% Mid-market offers 13.4% an attractive return profile 11.2% Fragmented GP landscape offers op
Slide 15: Most attractive categories within mid-market
.1 Mid-Market WE CONCENTRATE ON THE MOST ATTRACTIVE 15 CATEGORIES WITHIN MID-MARKET BUYOUT SECONDARIES PRIVATE DEBT REAL ASSETS AUM as of 30/09/2023 € 11.3bn 2 € 4.7bn 3 €7.0bn €1.8bn Recent vintages EC IV: 21% ESF IV: 29% EPD V : 10% EERE I: 24% (gross IRR1) PME III: 22% ESIA : 15% ETIF : N/A Ticke
Slide 16: Focused value creation playbook
.1 Mid-Market A FOCUSED VALUE CREATION PLAYBOOK : 16 BUILDING EUROPEAN CHAMPIONS WITH GLOBAL AMBITIONS .1 Unique know-how .2 Transforming .3 Unlocking .4 Future-proofing in detecting business strategic growth opportunities models potential ─ High selectivity ─ Scale-up ─ Buy & build strategies ─ Enh
Slide 17: Value creation playbook adapted to higher for longer rates
.1 Mid-Market VALUE CREATION PLAYBOOK ADAPTED TO 17 A ”HIGHER FOR LONGER” RATES ENVIRONMENT Part of fund value creation in buyout stemming from earnings growth ‒ 2/3rd of value creation in buyout stems from EBITDA development 67% ‒ Multiple expansion thanks to 62% repositioning and scaling ‒ Low dep
Slide 18: Example: Planet's strategic journey
.1 Mid-Market EXAMPLE : PLANET’S STRATEGIC JOURNEY 2019 2023e VAT Refund + Payments Integrated Payments — Organic Growth: 10% — Organic Growth: ~25% Key Value — Travel Related: ~80% of rev. — Travel Related: ~50% of rev. Creation drivers — EBITDA margin: >40% — EBITDA margin: >40% — Strategy to inte
Slide 19: Focus on sectors with strong underlying growth trends
.2 Growth WE FOCUS ON SECTORS WITH STRONG UNDERLYING 19 GROWTH TRENDS % of AUM1 Revenue CAGR 2018 -2023 (%)2 Tech enabled B2B services 20% 38% Healthcare 20% Specialty financial services 18% 10% New consumer trends 15% Climate Transition 9% Portfolio companies Growth equity (excluding Growth equity)
Slide 20: Clear leader in the fast-growing European tech space
.2 Growth WE ARE A CLEAR LEADER IN THE FAST-GROWING 20 EUROPEAN TECH SPACE OUR TECH INVESTMENT FLYWHEEL VENTURE Digital & Smart Cities €3.3bn AUM 1 ─ 20% Gross IRR (Digital IV)2 ─ 26 dedicated professionals POWER GROWTH BETTER GROWTH €4.7bn AUM 1 ─ 21% Gross IRR (EGFIII)2 ─ 20 dedicated professional
Slide 21: European tech space offers significant growth opportunities
.2 Growth THE EUROPEAN TECH SPACE OFFERS SIGNIFICANT 21 GROWTH OPPORTUNITIES Total value of the Europe Number of European ─ Digitization is a long-term trend tech ecosystem ($tn) unicorns (#) ─ Europe Tech space is catching-up ─ Several tech hubs in Europe (London, Paris, Berlin…) 311 ─ Europe-wide
Slide 22: Strong sector capabilities from seed to buyout
.2 Growth STRONG SECTOR CAPABILITIES FROM SEED TO 22 BUYOUT VENTURE GROWTH BUYOUT 2023. Cloud 2018. Autonomus 2021. Data 2020. 2020. 2021. Graph 2021. Circular 2015-2021. 2019. IT services 2022. security vehicles protection Payments Fintech database economy Payments management Fintech IN PORTFOLIO 2
Slide 23: Eurazeo strongly positioned on impact
.3 Impact EURAZEO STRONGLY POSITIONED ON IMPACT 23 €4.8bn OF INVESTMENTS 7 INVESTMENT DEDICATED TO FUNDS DEDICATED IMPACT TO IMPACT 150+ portfolio companies Source: Eurazeo, data as of June 30 th, 2023. Corresponds to companies identified by Eurazeo as having a business, products or services that co
Slide 24: Impact: the growth wave of the next decade
.3 Impact IMPACT: THE GROWTH WAVE OF THE NEXT DECADE(S) 24 Huge investment Massive public fundings Growing client needs & regulations appetite $3,000bn ~ $1,500bn X10 Need of immediate IRA GREEN DEAL impact funds’ AUM investment1 $370bn €1,000bn since 2007 up to ~$320bn2 Regulations 85% SFDR, Taxono
Slide 25: Scale existing impact funds and diversify asset classes
.3 Impact SCALE EXISTING IMPACT FUNDS AND DIVERSIFY ASSET 25 CLASSES Impact Funds across expertise Private Equity IMPACT INVESTMENTS VENTURE GROWTH BUYOUT NEW SECONDARIES Private Debt €4.8bn ASSET-BASED DIRECT LENDING €2.3bn €1.1bn Real Assets INFRASTRUCTURE REAL ESTATE 2018 2020 2023 … 2027 CAPITAL
Slide 26: Accelerate shift towards an asset-light business model
26 ACCELERATE SHIFT 3 TOWARDS AN ASSET-LIGHT BUSINESS MODEL William Kadouch-Chassaing co-Chief Executive Officer CAPITAL MARKETS DAY 2023
Slide 27: Optimizing use of capital to accelerate business model shift
OPTIMIZING THE USE OF CAPITAL TO ACCELERATE 27 BUSINESS MODEL SHIFT AND IMPROVE RETURN TO SHAREHOLDERS .1 A strong capital base .2 We want to accelerate .3 Priority is to is a competitive the shift towards an improve return advantage asset light model to shareholders ─ Align interest with clients wh
Slide 28: Where do we stand?
~€8.5bn 28 Portfolio value, net of carried & taxes WHERE DO WE ~€6.6bn STAND? Invested Capital (at cost) ~30% of capital coming from the balance sheet in latest vintages CAPITAL MARKETS DAY 2023
Slide 29: Significantly reduce balance sheet commitments by 2027
OBJECTIVE TO SIGNIFICANTLY REDUCE 29 BALANCE SHEET COMMITMENTS INTO STRATEGIES BY 2027 Reduce balance sheet Implementation of a more agile Balance sheet “invested capital” commitments to a maximum use of the capital committed into to be downsized by 30% through of 20% in aggregate by 2027, the funds
Slide 30: ~25% of portfolio value to be realized on average over 2024-2027e
~25% OF PORTFOLIO VALUE TO BE REALIZED 30 ON AVERAGE OVER 2024-2027e % of (N-1) portfolio value realized in year N 3,000 10 years 52% average = 2,500 2,000 24 % 31% 28% 27% 27% 28% 1,500 23% 1,000 REALIZATIONS IN M€ 11% 18% 13% 11% 500 REALIZATIONS N/ PORTFOLIO VALUE (N-1) 2012 2013 2014 2015 2016 2
Slide 31: ~€4bn of excess capital to be generated over 2024-2027
~€4BN OF EXCESS CAPITAL TO BE GENERATED OVER 2024- 31 2027, WITH ~60% TO BE DISTRIBUTED TO SHAREHOLDERS Use of excess cap ~€7bn ~€3bn ~€4bn €2.3bn ~€1.7bn REALIZATIONS & OPERATING RE-INVESTMENTS EXCESS CAP SHAREHOLDER STRATEGIC CASH FLOWS 2027 REMUNERATION FLEXIBILITY (dividends & SBB) CAPITAL MARKE
Slide 32: ~€2.3bn capital to be distributed to shareholders
~€2.3BN CAPITAL TO BE DISTRIBUTED TO 32 SHAREHOLDERS IN NEXT FOUR YEARS Ordinary dividend Share buyback Steady increase Stepping-up c.€800M to be distributed to shareholders c.€1.5Bn to be allocated to share buyback over 2024-2027: for cancellation over 2024-2027: — +10% increase targeted for 2024 (
Slide 33: Expand and scale up our client franchises
33 EXPAND & SCALE UP 4 OUR CLIENT FRANCHISES Christophe Bavière co-Chief Executive Officer CAPITAL MARKETS DAY 2023
Slide 34: Our growth drivers
34 Expand Replicate international + wealth franchise OUR LP base success abroad GROWTH = DRIVERS Scale our funds CAPITAL MARKETS DAY 2023
Slide 35: Strong and growing client franchise
WE HAVE A STRONG AND GROWING CLIENT 35 FRANCHISE Institutional LP clients Wealth management franchise >350 >120,000 CLIENTS END CLIENTS IN B2B2C x2 25 # OF CLIENTS SINCE 2018 BLUE-CHIP PARTNERSHIPS ~9 funds >350 PER CLIENT (TOP 20) FAMILY OFFICES & WEALTH ADVISORS CAPITAL MARKETS DAY 2023
Slide 36: Potential to expand LP base
Institutional EURAZEO HAS THE POTENTIAL TO EXPAND ITS LP 36 BASE Institutional AUM Breakdown Institutional AUM Breakdown by client type by geography Banks Non-financial Others UNDER PENETRATED 3% 3% GEOGRAPHIES corporations Benelux 16% 4% Other financial institutions Southern 5% Europe 6% Pension In
Slide 37: International LPs represent majority of annual fundraising
Institutional INTERNATIONAL LPs REPRESENT THE MAJORITY OF 37 OUR ANNUAL FUNDRAISING 64% 59% 13% 37% 16% 10% 51% REST OF THE WORLD 39% EUROPE (EXCLUDING FRANCE) 27% 2018-2020 2021-2022 9M 2023 CAPITAL MARKETS DAY 2023
Slide 38: Asia
Institutional 38 VIDEO ON ASIA CAPITAL MARKETS DAY 2023
Slide 39: Expanding wealth franchise across Europe
Wealth EXPANDING OUR WEALTH FRANCHISE IN HIGHLY 39 ATTRACTIVE SAVINGS MARKETS ACROSS EUROPE Eurazeo’s fundraising from Wealth (€m) Bespoke offer across asset classes From mass-affluent to high-net-worth x7 Develop European distribution (Benelux, Germany, Italy): — Leverage existing relationships wit
Slide 40: Wealth
Wealth 40 VIDEO ON Wealth CAPITAL MARKETS DAY 2023
Slide 41: Strengthening our commercial organization
STRENGTHENING OUR COMMERCIAL ORGANIZATION 41 ~50 PROFESSIONALS OUR PRIORITIES Sales Marketing Client Service Geographies Client types Instit Wealth ─ Nordics ─ Pension funds ─ DACH ─ Sovereign wealth funds 32 people 12 people 2 people 8 people ─ Middle East ─ Family offices ─ Asia ─ North America CA
Slide 42: Scaling funds through internationalization and wealth
SCALING OUR FUNDS THROUGH 42 INTERNATIONALIZATION AND WEALTH Example: Direct Lending funds by source of financing International: x4 €3.2bn €0.9bn ~70% international WEALTH MANAGEMENT €0.7bn LPS BALANCE SHEET ~60% international EPD IV EPD VI (2016 (2020 vintage) vintage) CAPITAL MARKETS DAY 2023
Slide 43: Improve operational efficiency
43 IMPROVE OPERATIONAL 5 EFFICIENCY William Kadouch-Chassaing co-Chief Executive Officer CAPITAL MARKETS DAY 2023
Slide 44: Being a platform provides synergies
BEING A PLATFORM PROVIDES 44 SYNERGIES Mutualized IT and Digital Mutualized support functions, operations and client service ~400 employees Shared local offices Coordinated client coverage, & international capabilities >25 nationalities marketing and client services 12 offices Shared sector expertis
Slide 45: AUM growing faster than headcount
AUM GROWING FASTER THAN HEADCOUNT 45 Fee-paying AUM (€bn) Full-time employees (#) 24.2 398 Investment, X2.2 X1.8 sales & marketing 225 teams 11.4 X1.6 Corporate & Support functions 2018 2023 9M 2018 2023 9M CAPITAL MARKETS DAY 2023
Slide 46: FRE margin gradually improving
FRE MARGIN GRADUALLY IMPROVING 46 FRE margin (%) 33.5% 31.6% 30.3% 29.7% 48 27.7% 25.8% 2018 2019 2020 2021 2022 H1 2023e CAPITAL MARKETS DAY 2023
Slide 47: 4 priorities to improve operational efficiency
4 PRIORITIES TO IMPROVE OPERATIONAL EFFICIENCY 47 Best in class Digitization Simplification Cost steering operations CAPITAL MARKETS DAY 2023
Slide 48: Improving productivity and client centricity through digital
IMPROVING PRODUCTIVITY & CLIENT CENTRICITY 48 THROUGH DIGITAL An advanced Our key projects in focus data-driven set-up Leverage advanced automation Full digitization of our client Strong value protection based on robotic process and investment processes automation and AI Leverage onbase ‒ 100% Cloud
Slide 49: Deliver steady earnings growth
49 DELIVER STEADY 6 EARNINGS GROWTH William Kadouch-Chassaing co-Chief Executive Officer CAPITAL MARKETS DAY 2023
Slide 50: Simplified P&L post implementation of IFRS 10
A SIMPLIFIED P&L POST IMPLEMENTATION OF IFRS 10 50 A. Management fees _ From 3rd party investors Asset _ From Eurazeo Investment Activity Management (Operating expenses) Fee Related Earnings (FRE) FRE margin (%) Performance fees (PRE) _ From 3rd party investors _ From Eurazeo Investment Activity AM
Slide 51: 3rd party AUM and FPAUM expected to grow ahead of the market
Asset Management 3RD PARTY AUM & FPAUM EXPECTED TO GROW AHEAD 51 OF THE MARKET AUM1 in €bn FPAUM1 in €bn AUM & FPAUM 3RD PARTY outlook to 2027 BALANCE SHEET 33.5 3rd party: 24 above market growth2 Share of wallet gain on international LPs X2.2 Growth of Wealth channel X2.2 15 11 Balance sheet: Volon
Slide 52: 3rd party management fees expected to grow ~15% pa
Asset Management 3RD PARTY MANAGEMENT FEES EXPECTED TO GROW 52 BY ~15% PA ON AVERAGE OVER 2024-2027e Management fees1 in €m Management fees 3RD PARTY IMGP 380 outlook to 2027 3RD PARTY PRIVATE MARKETS BALANCE SHEET 317 76 3rd party: 243 ~15% annual growth 216 ─ FPAUM growth thanks to dynamic fundrai
Slide 53: Confirming 35-40% FRE margin through the cycle
Asset Management CONFIRMING 35-40% FRE MARGIN THROUGH 53 THE CYCLE 35-40% 31.6% 30.3% 29.7% 27.7% 25.8% 2018 2019 2020 2021 2022 2023e 2027e CAPITAL MARKETS DAY 2023
Slide 54: Performance fees >10% of 3rd party revenues through the cycle
Asset Management PERFORMANCE FEES SHOULD REPRESENT >10% 54 OF TOTAL 3RD PARTY REVENUES THROUGH THE CYCLE Revenue for a typical 1bn€ PE fund with MOIC of 2x (€m)1 Typical performance fee drivers 2 3 — 20% of capital gains for direct 6 Private Equity 10 10% for Direct Lending 13 — ~30%/70% split betwe
Slide 55: Expected portfolio value creation at c.12% per annum
Investment Co. EXPECTED PORTFOLIO VALUE CREATION AT C.12% 55 PER ANNUM IN LINE WITH HISTORICAL AVERAGE Balance sheet portfolio track record since 2012 2.1x ~12% gross MOIC net value creation realized per annum CAPITAL MARKETS DAY 2023
Slide 56: A prudent approach to portfolio valuation
Investment Co. A PRUDENT APPROACH TO PORTFOLIO VALUATION 56 Diversified portfolio Robust and prudent valuation approach ‒ Using LTM multiples ‒ in line or below market spot multiples Buyout ‒ Moderate leverage (~5x EBITDA), Real Assets ‒ Interest rates covered at ~70% 12% ‒ Discount on older financi
Slide 57: Strong and consistent value creation track record
Investment Co. A STRONG AND CONSISTENT VALUE CREATION 57 TRACK RECORD 2018 2019 2020 2021 2022 2023 Uplift +0% +21% +66% +1% +59% +74% +98% +15% +51% +56% +120% +35% +17% +11% +10% +70% +0% +33% +36% +66% +103% +256% +22% +60% +0% +10% at exit1 4.8x 4.4x 4.0x 4.1x 3.7x 3.2x 3.2x 3.3x 3.0x 3.0x 2.8x
Slide 58: Wrap-up: 2024-2027 outlook
Wrap-up 58 2024-2027 outlook Management fees — From 3rd party investors ~15% p.a. — From Eurazeo Investment Activity volontary decrease Earnings FRE Margin 35-40% margin rd 3rd party performance fees >10% of revenue from 3 party through the cycle Portfolio net value creation c. 12% pa on average, co
Slide 59: Conclusion
59 CONCLUSION 7 Christophe Bavière co-Chief Executive Officer CAPITAL MARKETS DAY 2023
Slide 60: Conclusion
60 CONCLUSION .1 We are building a leader in the attractive private markets industry .2 We will deliver steady earnings growth thanks to revenue uplift and disciplined cost management .3 We will return significant capital to shareholders, accelerating our shift towards an asset light business model
Slide 61: Q&A
61 Q&A CAPITAL MARKETS DAY 2023
Slide 62: About us
ABOUT US ANALYST COVERAGE 62 EURAZEO CONTACTS Bank of America Philip Middleton Berenberg Christoph Greulich CM-CIC Arnaud Palliez Degroof Petercam Joren Van Aken PIERRE BERNARDIN AGATHE CHANOINE Exane BNP Paribas Nicolas Vaysselier pbernardin@eurazeo.com achanoine@eurazeo.com Goldman Sachs Oliver Ca
Slide 63: Disclaimer
DISCLAIMER 63 CONFIDENTIALITY This presentation (the “Presentation”) has been prepared by Eurazeo. This presentation may not be distributed, published or reproduced, in full or in part, and the information contained herein must not be released by its recipients to third parties. The recipients of th
Slide 64: www.eurazeo.com
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