Eurazeo Paris Ord

Good morning. Thank you for joining this call. Christophe and I are pleased to welcome you to our 2024 full year results presentation. Our presentation will be in three parts. First, I will share with you the financial and non-financial highlights for the year. Second, Christophe will focus on fundraising, commercial dynamic and asset rotation. Third and last, I will detail our financial results. We will then be available to take questions. 2024 marks the first year of execution of the mid-term plan we have presented to investors back in November 2023. We have made progress in the key pillars of the plan. First, asset management is growing dynamically. Fundraising is up 23% relative to 2023 at 4.3 billion euros, which is above our guidance of 4 billion euros. Fee-paying AUM from third parties are up 12%, and management fees from third parties are up 14%. Second, we continue to improve operational efficiency as our FRE margin gained 110 basis points to reach 35.5%. We are already within our 35% to 40% medium-term guidance. As a result, contribution from the asset management activity is up 20%. Third, asset rotation has picked up as we announced. Asset management exits volumes overall tripled, and more specifically, balance sheet realizations doubled to reach 17% of the prior year net asset value, with an average upside of 10% compared to our last mark. Combined with a strict discipline in balance sheet allocation to the funds, as you can see in our numbers, this means that we are moving ahead towards transforming our business model. Fourth, our portfolio remains robust. We recorded another year of strong underlying performance of portfolio companies, which led to broad-based value creation in 2024. This has been nevertheless offset by the write-off of a limited number of legacy assets in buyout and further cleanup of the smaller lines in the gross equity portfolio. We should see an improving trend in balance sheet value creation going forward. As announced during our Capital Markets Day, we are committed to increase return to our shareholders through dividends and share buybacks. This is consistent with our commitment made back in November 2023. In 2024, we increased our ordinary dividend by 10% to 2.42 euros per share and significantly increased our share buyback program that has reached 210 million euros. In 2025, we propose another 10% increase in the ordinary dividend, and we double today our share buyback program, which is set at 400 million euros for the year. All in all, returns to shareholders will increase by 50% in 2025 relative to 2024, and will represent twice the amount we returned in 2023. As you know, we follow a two-pronged strategy in sustainability, aiming at top rankings in sustainability and striving for leadership in impact investing. Eurazeo continues to be recognized as best in class on sustainability, maintaining top rankings in major benchmarks, MSCI ESG, UN PRI and Sustainalytics. In 2024, Eurasio also strengthened its line of impact funds with the final closing of Eurasio's transition infrastructure fund, 40% above its initial targets. the first closing of its fourth vintage in biotech at 140 million euros, and the launch of our eighth impact fund, Eurasio Planetary Boundaries Fund, EPBF, in buyout. EPBF had a first closing last week at 300 million euros and closed its first deal in biocontrol for crops.

Thank you, William. I invite you now to focus on operational performance of our asset management, starting with fundraising. As we have mentioned, we raised 4.3 billion euros from clients in 2024, above our guidance of about 4 billion euros. This represents another 23% increase year on year after a 21% increase in 2023. So this strong performance is very encouraging given a gradually improving but still challenging environment for fundraising in 2024. No doubt, this highlights the quality of our franchises as well as the relevance of Eurazeus positioning as a European mid-market growth and impact focused investment firm. This is also broad-based. Let me give you a few examples of this. First, Our private debt fund recorded high inflows thanks to the attractive risk reward profile for clients. We have demonstrated this with already six successful vintages in direct lending. In 2024, we nearly doubled our inflows in this asset class with, notably, the successful first closing of our new direct lending flagship, EPD7, Eurazeo Private Debt 7. Second, in private equity, we announced the successful closing of the mid-large buyout program at more than 3 billion euros. Above expectation, this success is led by a new management team and it underlined the quality of our franchise and the appeal. of our mean market positioning in an otherwise complex market for buyout. Still in PE, we have a good momentum in our GP-led secondary programs and we continue to raise funds in our venture digital program. Finally, in real assets, Our Sustainable Infrastructure Fund, you remember, announced a final closing of 700 million euros, 40% above its initial target of 500 million euros, which is remarkable for a first-time fund and showcasing how impact can be a strong business driver. To start off 2025, we have announced this week a very encouraging first closing for our Impact Buyout Fund, EPBF, for 300 million euros. A few words on our debt franchise, which now represents 9 billion euros of AUM and is a major growth driver for the group, Our new vintage of direct lending, the PD7, was off to a good start in 2024, with 2.5 billion euros of third-party money collected, attracting more international LPs, notably from Southeast Asia. What are the key pillars for continued success? These key pillars for direct lending franchises are very clear. First, the differentiating positioning on the lower mid-market, which is a deep and attractive market with lower competition from banks and higher returns for investors. Second, it's a true pan-European footprint with an international team based in five key geographies, which is deploying across the entire European market. Third, last but not least, a strong and consistent track record over a long period of time with default rates close to zero. You will recall from our Capital Markets Day that we outlined our ambition to further expand our client franchise through the internationalization of our institutional LP base and through the development of our wealth channel in France and abroad. Well, we made progress in both directions in 2024. We signed 31 new institutional clients in 2024 for a total of 440 institutional clients at the end of 2024. These new clients represented a third of Eurazeo's annual fundraising. In two years, We doubled our inflows coming from international institutional LPs, which now represent more than 60% of our inflows, compared to less than 40% a few years ago. To support the extension of our reach, we've made senior appointments in our coverage team in key geographies such as the Nordic, the Middle East, the Dark Region, and in Japan with the opening of an office in Tokyo. Our wealth solution franchise is pretty unique in our industry. And it is the other key engine of fundraising with steady and growing flows. We collected more than 900 million euros or more than 20% of our total fundraising from wealth in 2024. we know, have more than 5 billion euros coming from individual clients, representing more than 19% of our third-party AUM. This success is notably supported by our blockbuster evergreen fund, EPV3, which has more than 2.6 billion euros in AUM, has won the award for the best mass affluent product at IPM just last month. EPV3 now ranks among the top three ever in private market funds in Europe. But we also have started to expand our wealth franchise outside of France with early success in key countries such as Belgium, where we already have significant flows. And we've signed agreements with distributors in Italy, Switzerland and Germany. To serve this market, this international better, we are launching two new evergreen funds dedicated to international distributors in what we will call the prime line, a prime product focused on private credit, a prime product focused on private equity, mainly through secondary transactions. So these initiatives will enable Eurazeo to accelerate in this very promising space. Turning now to 2025, as you can see, we have a solid and diversified pipeline of fundraising, both on the institutional side as well as on the wealth segment. Our funds are at different stages. In flagships, we will benefit from the ongoing momentum in our direct lending and secondaries program. We expect a first closing for EUR4 in H1. and the launch of our fifth program in the lower end of mid-market buyout, PME5, later this year. We have three Article 9 funds, which should be launched as well. We already talked about EPBF, which already has had a promising first closing. SME2 in shipping, decarbonisation financing, and a second vintage in sustainable infrastructure. We also expect the launch of Eurasia Operational Real Estate Fund, ESORI, and we will continue to raise in venture. On Wealth Solutions, I already talked about the launch of two new evergreen products, and we are initiating another growth fund for wealth investors. I've mentioned it before, you have perceived it's an obsession of William and I share. throughout Eurasia. Expected performance is a key driver for fundraising, the driver for fundraising. In this respect, our 2025 fundraising pipeline is underpinned by strong ongoing performance of our strategies. with all recent vintages in particular showing top-notch track records. We have a top quartile performance in direct lending with a best-in-class low default rate, again close to zero. Our secondary strategy can boost more than 20% growth IRR on its last two vintages. In growth, we have A very solid start for Eurazeo Growth 4 with the current investment position in AI and deep tech performing well. Our PME team, which focuses on the lower end of mid-market buyout, has an excellent track record. Its latest vintage delivers a 33% growth IRR and a top decile DPI of 50%. Real Estate Team. Launching its first third-party fund, Esore, can rely on a top-quartile performance for its first two balance sheet vintages on all metrics, TVPI, IRR, and DPI. And finally... The first vintage of sustainable infrastructure. So, still very long. As an IRR in excess of 15% and strong tailwings. So, let me now turn to deployments and realisation. As you know, 2023 was a low tide for M&A across the board with Eurasio faring better than the market overall. We were optimistic and we saw... A gradual improvement in 2024 in the market. There are more people willing to trade and funding is available. This is particularly true for the mid-market segment. So we've had a sharp pick-up in realisation which tripled year on year to reach 3.4 billion euros again recently. This highlights Eurazeo's ability to monetize its assets and generate distribution for its clients across all strategies. As you can see, Eurazeo's exits were executed in good terms, which reflects again the quality of our investment strategies, translating in strong returns for clients and our balance sheet. On average... The transactions have been concluded with high cash and cash multiples and good IRRs. With, on average, 2.3 times on buyout, 4 times intake and 1.6 times in hospitality. Deployment. We continue to deploy capital actively in our preferred sector across all asset categories. In total, we deployed 4.6 billion euros. It's a 19% increase year on year. Deployments continue to be healthy in private debt in line with the success of fundraising. And we've continued to grab interesting opportunities with companies like RS and Raidu in financial services, IMA1 and Pantera in healthcare, EquoVadis, Mistral and Conigy in the tech and AI space. And as we mentioned, new investment in environmental solutions. Of note, we have a historically high level of dry powder at 7.4 billion euros. I will now hand over to William, who will present financial results.

Thank you, Christophe. I will now take you through the financial results for 2024. Let me start with the asset management activity. As a reminder, we decided to exit non-core GPs and sold our stake in Rhone Capital in 2023 and our stake in MCH in 2024. So the figures that have been presented to you are pro forma of both GPs. Overall, AUM growth and particularly fee-paying AUM growth illustrate the dynamism of our asset management business. Total assets under management were up 4% in 2024, reaching 36.1 billion euros, with third-party AUM up 10% and balance sheet-related AUM down 7% as we execute our plan towards an asset-lighter model. Fee-paying AUM were up 8% at 27 billion euros, with third-party fee-paying AUM growing 12%. Recurring revenues from asset management posted solid growth. Management fees stood at 421 million euros in 2024. up 7% from previous year on a comparable basis, with third-party management fees up 14%, excluding catch-up fees, in line with our long-term guidance, and balance sheet management fees down 3% as we voluntarily limit our new commitments. FRE-related earnings for 2024 are up strongly. 2024 FREs amounted to 150 million euros, up 11%. FRE margin is up 110 basis points and reached 35.5% in 2024, which is already in the 35 to 40% range we announced during our capital market day. We continue to benefit from a positive geo effect while investing in our future growth. Christophe highlighted earlier senior hires to strengthen our senior client coverage in key geographies. In addition, we also made some hires in specific investment teams, yet have remained very disciplined on costs overall. In a nutshell, the contribution of the asset management activity amounted to 153 million euros in 2024, which is up 20% year-on-year. As said, recurring operating income is up strongly with efforts up 11% at €150 million. Performance fees are up thanks to a higher level of realizations. As our funds are maturing and we return more capital to LPs, performance fees from third parties are due to increase significantly in the next years to represent up to 10% of our third-party revenues over the cycle. This is what we said during the capital market stays. Let's now turn to the investment activity starting with portfolio value creation. The main driver of the P&L of the investment activity is indeed the portfolio change in fair value. As you can see, the net value of our portfolio was 7.9 billion euros at the end of 2024, down 5%. We scope contributing minus 60 million euros, minus 1%, due to the completed exits combined with disciplined investments. And the change in fair value, contributing minus 323 million euros, or minus 4%. The per share value of the portfolio amounted to 107.8 euros at the end of 2024, down 2% only, given the positive offsetting impact of the execution of our share buyback program. 2024 value creation reflects two fundamental facts. First, solid value creation in buyout, private debt and real assets across the board for plus 9%, driven by strong performance across the portfolio of underlying assets, and exits realized at a premium to net asset value, yet offset by the write-down of a very limited number of legacy assets. Second, we continued to adjust valuations in gross equity. Let me stress again that value creation of any portfolio is not linear. There were significant marks-ups in 2021 and 2022, and value creation of the portfolio remains 10% per annum over the last 5 years, consistent with our 10-year average. Let me now run you through more details, starting with operational performance of underlying assets. Overall, 2024 was another illustration of the quality of the underlying assets in spite of still mixed macro environment. Let's start with buyout, which represents more than 60% of the total value of the portfolio, 61%. In fact, revenues and EBITDA were prospectively 9% and 27% in 2024. Second, companies in our growth portfolio, which represent roughly 21% of the total portfolio value, posted an aggregated revenue growth of 14%. Our top holdings like Doctolib or Backmarket continue to perform very strongly with revenues up 20% to 30% and are trending towards profitability. In addition, the five companies in our most recent vintage EGFO, that Christophe alluded to, have a strong growth pattern, above 50% revenue growth in 2024, and two out of five of these companies are already profitable, which reflects a new approach to investing in growth equity at our level. So in our real assets portfolio, which account for 12% of Eurazeo portfolio value, we recorded a strong year-on-year operational performance with an increase in EBITDA of 11% for our hospitality business. This performance reflects the specificities of our exposure in real assets. We are talking about operational real estate and hospitality represents more than 50% of the total with a diversified geographic exposure. Let's dive a little deeper into our buyout portfolio. Again, this represents 61% of the balance sheet which is invested. This 5 billion euros portfolio is very granular with 50 holdings and had an overall strong performance across the board in 2024, as you can see on the slide. This performance is nevertheless largely offset by the write-off of two legacy assets, which are WealthRides, a US-based company specialized in student travels, acquired in 2016, and TwoRide, a global player in sports equipment, acquired in 2017. The two combined have a negative impact of €320 million. We also adjusted down our Brent US portfolio for about 60 million euros across three assets. This portfolio has had a mixed performance since its inception in 2019, and we are in the process of exiting from this non-core strategy. Bar these three specific cases, value creation in the portfolio was a strong and broad-based plus 9%. And let me stress again that our most recent vintages, as Christophe mentioned, have strong performance, which is very encouraging looking forward. EC5 in mid-large had a 10% value creation in 2024. PME4 in lower mid-market had a 39% value creation. And ESF5 secondaries had a stunning 33% growth in value creation. Turning to gross equity, we made further adjustments in the gross equity portfolio, which is made of 33 investments and represents 21% of the unbalanced sheet portfolio value. On our top three lines, which represent close to 60% of our portfolio, we made only marginal changes. We are talking about strong companies such as Doctolib, Backmarket and ContentSquare. Overall, discount to last round of fundraising for these slides is about 27%. We have had a more drastic approach on our smaller legacy lines, with an average 70% discount now on their latest round financing. They are the small marginal in our portfolio. And some, indeed, present some upside potential in our view, such as United, which is now well capitalised and operates in a more favourable environment for consumer credit. Despite significant adjustments in 2023 and 2024 made to this portfolio, let me remind everyone that we still sit as an LP, as a balance sheet, on an average cash-on-cash multiple of 1.3 for the historical portfolio. In addition, we recorded a slight positive value creation in our most recent vintage, EGFO, reflecting the quality of the new investment made by our growth equity team, as I mentioned. Lastly, a word on real estate, which represents 16 lines and 12% of the value of the balance sheet portfolio. Real estate value creation is 1% in 2024. We continue to have a strong performance in our operational real estate, mostly hotels. We adjusted down valuation in other real estate assets, particularly in the office segment. Value creation in sustainable infrastructure is strong, with a 12% value creation recorded in 2024. Let me now comment on asset rotation pertaining to the balance sheet, which is a key driver, as you know, of the transformation of our business model towards an asset lighter business model. Realizations doubled in 2024 at more than 1 billion compared to 500 million euros in 2023. As Christophe highlighted already, realizations crystallized strong returns for the balance sheet as well as for LPs. For the balance sheet, it's 2.3 times in by out, 1.6 times in partial exits for hospitality. The aggregate upside to the net asset value we achieved in selling our portfolio was plus 10%. This is the best backtesting of how serious we are in valuing our portfolio, and it highlights a strong long-term track record in exiting in good conditions. Let me now turn to the percentage of asset rotation. We had a 17% pace of asset rotation in 2024, 13% realized, 4% in addition linked to announced deals such as Adbinger. Considering our rich pipeline of exits for the year, we expect to trend back towards our historical 20 to 25% of net asset value going forward, assuming the environment, of course, continues to improve gradually. Turning to the P&L of the investment activity overall, contribution of the investment company was a negative 544 million euros in 2024, with the following main drivers. A non-cash change in fair value of the portfolio for 323 million euros. Inter-company management fees and performance fees paid to the asset management amounted to 131 million euros. They are, as you know, considered as a cost for the investment company. And steering costs were down slightly year on year, which reflects our strong commitment to tight cost management at all levels. In a nutshell, at group level, net results group share for 2024 stood at minus 430 million euros for the year. This reflects again a strong contribution from the asset management activity and a non-cash negative contribution of the investment activity. To recap. We've made good progress towards our strategic goals in 2024, both on the growth and on the transformation pillars of our plan. We are building a leader in private markets with a clear and relevant positioning on European mean market, growth and impact. We are delivering steady earnings growth thanks to revenue growth and cost management. And finally, we are increasing capital return to shareholders, which we doubled over two years. Thank you for your attention. We can now open the Q&A session.