Eurazeo Paris Ord

Hello and welcome to the Euro09 month 2024 trading update. Please note this conference is being recorded and for the durations of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star 1 on your telephone keypad to register your question. If you require assistance at any point, please press star 0 and you will be connected to an operator. I will now hand you over to your host, William Cato-Chachan, Co-CEO, to begin today's conference. Please go ahead, sir.

Thank you very much. Good morning. Thank you all for joining this call. We are aware it's a very busy day from a news standpoint. So pleased to see that you are here to listen to our nine months 2024 trading update. Overall, we published today a a strong set of results across the key metrics. So I will go through the key highlights for the quarter pertaining to, first, the asset management activity, second, the asset rotation, and third, the underlying performance of the on-balance sheet portfolio assets. So let me start with the key data relating to the asset management and, of course, with fundraising. Activity continues to be strong with 3 billion raised over the nine months year to date, which is up 76% compared to the same period of last year. More in detail, private debt continues to enjoy a strong momentum following the launch earlier this year of our seventh vintage in direct lending. Private debt now represents 25% of our AUM. Private equity is also significantly up. It's up. Fundraising pertaining to private equity is up 60% relative to the same period of last year, with additional closings on the fifth vintage of MLBO, i.e. our mid-large buyout franchise, and flows in secondaries as well as in venture, biotech, and digital. And as you know, we've commented that in the previous call, we have already announced the final close of our sustainable infrastructure fund, our impact-related sustainable infrastructure fund, at over 700 million, which was 40% above the initial target. Second, and this is key to our strategy, We continue to grow our international LP base. Flows from international LPs represented 70% of the total amount of institutional fundraising in the first nine months of 2024, with some key wins in Asia, in the rest of Europe, as well as North America. Third, wealth management continues to grow with 629 million raised over nine months, which is an 11% growth year on year. Now, as customary, we give you a guidance for the rest of the year. Looking forward, we now expect fundraising for the full year of 2024 to be around 40 billion euros. Remember, we were at 2.9 in 2022. We reached 3.5 in 2023. So that 4 billion would be another year of growth. in spite of a context that is only gradually improving. Turning to AUM. Let's start with the fee-paying AUM. Over the first nine months, we continue to enjoy a steady increase in our assets under management. Fee-paying AUM were up 9% year-on-year, with fee-paying AUM from third parties up again, double-digit, at plus 12%. Total AUM stand at the end of September at 35.5 billion euros, up 7% year-on-year, with AUM from third party also posting a 12% growth. As you can see, both for total AUM and fee-paying AUM, the balance sheet related AUM are stable to negative, which reflects our own strategy in terms of capital allocation as we highlighted it back in November of last year during our capital market day. Turning to management fees. Total management fees, including balance sheet, were up 9% for the first nine months. Here again, management fees from third parties are up double digit, plus 15%, with similar growth on IMG as in private markets. In line with our strategic plan, as I said, management fees from the balance sheet are down 3% as we are progressively limiting our reinvestments in our funds with the intention to generate excess cap through asset rotation, as we already mentioned. Additionally, because here we're talking about management fees, we generated 12 million of performance fees year to date, of which 3.4 million pertain to third parties. A word on realizations. Asset rotation is accelerating against the backdrop of a yet gradually, only gradually improving M&A market. Realizations were up three times compared to the same period of last year at 2.4 billion at group level. This figure reflects our ability to monetize assets and generate distributions for our clients. As you know, Euraseo fares pretty well relative to peers in terms of DPI as a case in point. Exits have been done in good terms, reflecting the quality of our investment strategies and translated in strong returns for our clients. Deployments also increased, also at a modest pace on the period, and totaled 3.2%. up 5% versus last year. We remain highly selective, but nevertheless see increasingly good opportunities to deploy in our preferred sectors and geographies. Focusing on asset rotation pertaining to the balance sheet, there again you see that the balance sheet rotation year-to-date is strongly up versus the same period of last year, over the nine the last nine months, we've been able to increase significantly our volumes of exits with realized amounts for the balance sheet at five times higher than the same period of last year. Including announced deals, asset rotation already represents 11% of our previous year's portfolio, around twice the level we had last year at the same period. The last example of exit, which is an announced deal, is eye tracing. a cybersecurity company from our lower mid-market fund PME4 through a continuation fund. The sale will generate a 64 million cash upstream for the balance sheet, consistent with a three-times cash-on-cash multiple and a gross IRR of 33%. As previously announced, we've launched several exit processes which are expected to materialize in the coming quarters. Last, Let me comment on the underlying performance of the portfolio companies. You're all aware that under IFRS 10, we don't consolidate the revenues of portfolio companies held by the banner sheet any longer, yet we give you indications of the health of the portfolio on a quarterly basis. This performance reflects still the good quality of this portfolio. In buyout, which represents 60% of our portfolio, at quantum scope, weighted average revenues were up 7%. In growth, that's 22% of our total portfolio value revenues were up 14%, with strong enemies still in SaaS companies and platforms dedicated to circular economy. In real assets, which accounts for 12% of your portfolio value. Revenues were up 21% in real estate, with a particularly strong dynamic in our hospitality segment and a rebound of the real estate development segment. This is an important segment for us. We have a very dedicated positioning as an operational real estate investor. That's why, for us, revenue and EBITDA metrics in that sector matter. We are now available to answer your questions. Thank you very much for your attention.

Thank you, William. As a reminder, if you would like to ask a question or make a contribution on today's call, please press star 1 on your telephone keypad. To withdraw your question, please press star 2. We will take our first questions from Nicholas Veselier from BNP Paribas. Your line is open. Please go ahead.