Wendel Se · EURONEXT:MF
Wendel — Merger or Acquisition (October 2024)
29 slides from Wendel's merger presentation, Oct 22, 2024
Slide 1: Acquisition of Monroe Capital LLC: Wendel announces a transformational transaction
Acquisition of Monroe Capital LLC : Wendel announces a transformational transaction in line with its strategic roadmap October 22, 2024 2024 2021 1 Wendel to acquire Monroe Capital | October 2024
Slide 2: Acquisition of Monroe Capital: a transformational step in building Wendel's third-party AM platform
Acquisition of Monroe Capital : a transformational step in building Wendel’s third-party AM platform Monroe Capital LLC is a Wendel’s permanent capital Transformational milestone in Wendel’s transition towards a leader in the fast-growing will accelerate the the constitution of Wendel’s more cash ge
Slide 3: Monroe is a fast-growing $19.5bn AUM private credit manager focused on the US mid-market
Monroe is a fast-growing $19.5bn AUM private credit manager focused on the US mid-market A market leader in the large and growing US middle market targeting $5m-$40m EBITDA companies requiring $25m-$200m debt 11 offices (o/w 9 In the US) Inception: 2004 $19.5bn managed across Team: 270+ (o/w 110 IP)
Slide 4: Monroe has been increasing Assets Under Management at a 28% CAGR since 2013
Monroe has been increasing Assets Under Management at a 28% CAGR since 2013 +28% 18.4 $19.5bn CAGR 15.9 12.7 9.2 9.4 7.0 5.2 3.1 4.0 1.5 1.9 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 June 2024 2024 Joining the Wendel Platform will further enhance Monroe’s fundraising capacity: • The tra
Slide 5: A large and diversified LP base with noticeable exposure to the attractive retail segment
A large and diversified LP base with noticeable exposure to the attractive retail segment and a significant portion of permanent capital LP type & geographical breakdown AuM split by products Other Other Asia FoF Retail (mostly BDCs) Private Debt Funds Australia 8% 8% 4% Insurance 2% Private Pension
Slide 6: Monroe has a broad range of Investment Products for both Institutional and HNW / Retail clients
Monroe has a broad range of Investment Products for both Institutional and HNW / Retail clients Flagship Institutional Funds SMAs STARR STARR • Customized “fund of one” structures in partnership • Invests in companies whose value proposition is • Closed-end “PE style” fund structures in levered / wi
Slide 7: A seasoned Senior Management and Investment Committee
A seasoned Senior Management and Investment Committee THEODORE KOENIG ZIA UDDIN MICHAEL EGAN THOMAS ARONSON Chairman & CEO President & Co-PM, Vice Chairman, Chief Vice Chairman, Institutional Portfolios Credit Officer Head of Originations 7 Wendel to acquire Monroe Capital | October 2024
Slide 8: A Market Leader in the Lower-Middle-Market: A fragmented market with attractive risk returns
A Market Leader in the Lower-Middle-Market : A fragmented market with attractive risk returns A very fragmented lower-middle market results in Differentiated inefficiencies offering disciplined lenders the Exposure opportunity to earn attractive risk-adjusted returns Focus on Monroe- agented, sponso
Slide 9: US Private credit is a large and growing asset class
US Private credit is a large and growing asset class… Private credit is a large and growing asset class with $1.3tn of AUM, AUM has grown strongly in recent years. This is expected to continue $829bn is in North America at double-digit CAGRs $1,33tn 3000 Private credit AUM development ($bn) Private
Slide 10: Why Monroe is the right partner for Wendel to enter the debt segment?
Why Monroe is the right partner for Wendel to enter the debt segment? A market leader in US lower • US Direct lending is large and growing with secular tailwinds middle-market direct • Mid Market (<$40m EBITDA) offers good risk reward with less competition lending… • Monroe is one of the leading pla
Slide 11: Our partnership with Monroe Capital: levers to accelerate growth
Our partnership with Monroe Capital: 4 levers to accelerate growth • Capital to sponsor new strategies and fund organic and inorganic initiatives Provide capital ($800m in the sponsoring program and up to $200m of GP commitment for Monroe to support growth Capital) • Wendel’s network to develop long
Slide 12: AXA IM Prime has entered into discussions to invest alongside Wendel in Monroe Capital
AXA IM Prime, through its GP stake fund, has entered into discussions to invest alongside Wendel in Monroe Capital with the aim to partner and support the next phase of growth of the platform ▪ Establishing virtuous strategic partnerships with renowned investors is part of Wendel AM strategy. ▪ As p
Slide 13: The transaction structure preserves Monroe's ability to deliver consistent performance for its LPs
The transaction structure preserves Monroe’s ability to deliver consistent performance for its LPs while maintaining strong alignment of interests between Management, LPs and Wendel Alignment of interests Post-transaction Monroe’s governance Significant management exposure to Autonomy future perform
Slide 14: Transaction summary
Transaction summary 100% of Monroe to be acquired from its shareholders • 75% acquired upfront at closing (50% from Monroe management, 25% from Bonaccord Capital Partners), + c.20% of legacy & future carried interest • Commitment to acquire the remaining 25% over time through put and call arrangemen
Slide 15: Details of the acquisition structure
Details of the acquisition structure Initial transaction Long-term alignment (Closing expected in H1 2025) (2028-2032) Complete scope 75% (2) c.20% Earn out mechanism for the of the transaction of the GP’s FRE of GP’s carried initial 75% based on 2027 FRE 100% of GP interest for past and A maximum a
Slide 16: Asset Management business is now a significant performance driver for Wendel
Asset Management business is now a significant performance driver for Wendel 16 Wendel to acquire Monroe Capital | October 2024
Slide 17: Wendel's target model in third-party asset management is scaling up
Wendel’s target model in third-party asset management is scaling up Creating a sizeable and comprehensive third-party private assets manager through both external and organic growth and generating significant value through regular cash-flow generation (management fees) and capital appreciation (carr
Slide 18: Wendel's Asset Management platform reaching critical mass in Private Assets
Wendel’s Asset Management platform reaching critical mass in Private Assets Wendel AM platform Private Equity Private Debt cumulated 2025E proforma figures From 0 one year ago to €30+bn today, a sizeable private asset manager €31bn • • In two fast growing verticals: Private Equity and Private Debt •
Slide 19: Wendel's 3rd Party Asset Management reaching meaningful scale
Wendel’s 3rd Party Asset Management reaching meaningful scale In m€ 2025 pf AuM 31bn(1) AuM split by Management fees & other 430 activity In bp c.140bp US Private Credit European Buyout 59% Carried interests (PRE) 25 41% Total revenues 455 Total expenses(2) 271 US Retail Pretax profit (PRE+FRE) 184
Slide 20: Wendel's Group now manages close to €40 billion of assets
Wendel’s Group now manages close to €40 billion of assets Principal Investment - €7.4bn 3rd Party AM platform – c.€31bn AuM(1) (Assets excl. €2.3bn of cash ) c.€160m FRE 2025E (c.€101m, Wendel share) Education & c.€31bn prof. training 26% AuM €13.1bn 59% in private assets Industrials €17.9bn 19% AuM
Slide 21: Key takeaways
Key takeaways 21 Wendel to acquire Monroe Capital | October 2024
Slide 22: Strong and Material Increase of Wendel Value Creation and Cash flow Generation Profile
Strong and Material Increase of Wendel Value Creation and Cash flow Generation Profile Stronger and Principal Investment Asset Management recurring return to shareholders • Tier 1 Asset Managers: IK & Monroe • Capital allocation towards more growth • Strong growth prospects: double digit growing Imm
Slide 23: Wrap-up
Wrap-up Alongside its historical Principal investment, Wendel is becoming a true sizeable Private Asset Manager with presence in US and Europe in both debt and equity, with highly regarded teams, delivering superior performance, proven fundraising capabilities and strong track record. A tipping poin
Slide 24: Appendices
Appendices 24 Wendel to acquire Monroe Capital | October 2024
Slide 25: Private credit growth is underpinned by structural factors
Private credit growth is underpinned by structural factors 1 2 ▪ Banks have retrenched from lending to ▪ Exponential growth of private equity has multiple parts of the US economy resulted in greater ownership of US middle- market firms by financial sponsors and in ▪ Primarily driven by changing regu
Slide 26: Value creation through Wendel's dual complementary model: double-digit TSR target
Value creation through Wendel’s dual complementary model: double-digit TSR target Acceleration of capital appreciation + dividend distribution increased to 2.5% of NAV in 2024, heading to 3.5% mid-term Stronger and « New » recurring return to shareholders Double-digit Principal Investment Third part
Slide 27: Glossary of Terms
Glossary of Terms Corresponding – for a given fund – to total investors’ commitment (during the fund’s investment period) or total invested AuM Assets under Management amount (post investment period) Structured as a closed-end fund to invest primarily in the debt of US small- and medium-sized privat
Slide 28: Disclaimer
Disclaimer • This document has been prepared by Wendel S.E. (“Wendel”) solely for use at the ”Acquisition of Monroe Capital” presentation, to be held on October 22, 2024. This document must be treated confidentially by attendees at such presentation and may not be reproduced or redistributed to any
Slide 29: For more information, please visit www.wendelgroup.com
For more information, please visit www.wendelgroup.com 29