Eurazeo Paris Ord

Welcome to the Eurazeo 9 Months 2025 Trading Update presentation. Today's conference will be hosted by William Kadush Shahsong, co-CEO. For the first part of the conference, the participants will be on listen-only mode. During the questions and answers session, you may ask in two ways, by submitting a written question in the box below the player, or by joining the conference call and dial pound key 5 on your telephone keypad to enter the queue. Now I will hand the conference over to the speaker. Please go ahead.

Thank you very much. Good morning.

Thank you all for joining this call. I'm pleased to welcome you to our trading update for the first nine months of 2025. To remind everyone, for the trading update, we don't update the NAV. That will be done at the end of the year. But I'm, of course, ready for questions you may have on the topic. In a nutshell, Euraseo continues to gain market share in asset management. We had another quarter of dynamic fundraising and AUM growth outperforming the market. Second, we continue to outperform the market in realizations and distributions, which is, as you know, a key differentiating factor in the current market environment. And third, The quality of our balance sheet portfolio remains strong, with healthy operational metrics across the board and realizations confirming our ability to monetize our balance sheet above its carrying value. Let me start with fundraising. We raised 3.2 billion euros from our clients in the first nine months of 2025, which is 4% above last year and well above market. As global fundraising is estimated to be down this year at about 10%, according to PitchBook, you may find as well other sources that will go in the same direction. This confirms our ability to gain market share in a more and more competitive and polarized market. This also highlights the quality of our investment franchises, the relevance of Eurasio positioning as a focused European mean market investment platform, as well as the strengths of our distribution capacities. Indeed, we make progress both with institutional and with individual clients. In terms of asset classes, whilst private debt continues to perform strongly, our private equity franchises have collected wealth. Private equity fundraising in Q3 was fueled by our secondaries and mandates franchise on top of our earlier successes in H1 in buyout, growth and impact. Our PE fundraising is up 38% year to date. Private debt, as I said, had a very good quarter with 800 million raised in Q3 alone, mainly in DAI funding. Our flagship EPD7 has already raised around 3 billion euros in total. On Wealth Solutions, we raised close to 700 million euros in the first nine months, which is 7% more than last year. We just announced that we have received a regulatory approval from the launch of our new evergreen funds in the prime line. EPIC in private debt and EPSO in secondaries. They will support our growth ambitions in Europe. Given our current momentum and pipeline for the rest of the year, we are confident, I should say very confident, that fundraising in 2025 will exceed 4 billion euros. We continue to expand and internationalize our client franchise, which is a key strategic objective that we had articulated in our Capital Market Day back in November 2023. We added 29 new institutional clients since the beginning of the year on a base of 440. This is a significant number. 74% of inflows came from international LPs in the first nine months of the year, a share that continues to grow year after year, as you can see on the chart, with notable successes in Asia, Middle East, and the rest of Europe. Our wealth solution franchise also continues to grow at a steady pace, with new distribution partners onboarded, already close to 10% of flows outside of our home market for the first 9 months of 2025. Overall AUM growth and particularly fee-paying AUM growth illustrate the dynamism of our asset management business. Total assets under management were up 5% in the first nine months, reaching 37.4 billion euros. Third-party AUM only, which is a key focus of our strategic plan, are up 11%. Fee-paying AUM were up 7% and nearly 28 billion euros. We saw party fee paying AUM growing at also 11%. Let me stress that we believe this is a growth market growth. The decrease in balance sheet related AUM reflects the successful implementation of our capital allocation strategy. Management fees stood at 316 million for the first nine months. Fees from third parties are up 5% overall, excluding catch-up fees and forex impact, and fees from the balance sheet are down 3% year-to-date due to recent exits and reduced commitments in the funds as per the plan. On private market, we experience strong inflows, which I just referred to, as shown by the rise in fee-paying AUM. It was partly offset by planned rate step-downs in older vintages that have been venture, growth and buyout. We also have a slight mixed effect with strong fundraising from private debt and second reason mandates in recent quarters which carry a lower yet healthy fee level. IAM Global Partners fees are up 4% at constant Forex. Management fees from the balance sheet are logically down year on year. They are down 3% due to exits and reduced commitments in the fund asset. Let me now turn to deployments and realizations. As a group, Eurasio deployments reached 3.9 billion over nine months, which is up 20% from the same period of last year, with transactions reflecting and expanding pan-European investment approach, and our focus on structurally growing sectors. We deployed 800 million in Q3 in private equity to support category leaders such as OMAX, a digital and AI strategy consulting firm in Baal, based in Germany, Filigran, an AI-based cybersecurity firm, and Dexory, a UK leader in logistics, robotics, and growth. At Citrix, a developer of innovative oncology, treatments and proteo, a leader in orthotics and prosthetics in healthcare and in real assets, we invested with MPCAOZ in offshore wind farm services. Private debt continues to be very active with 900 million deployed in Q3 in a dynamic lower mid-market segment. We are well-placed to continue to grasp opportunities with 7.2 billion euros of firepower, of which 7.2 billion euros of third-party dry powder. Realizations for the first nine months stood at 2.2 billion euros. Over the third quarter, we notably announced two important exits in buyouts. We sold CPK, a European champion in sugar and chocolate confectionery, to Ferrara Candy Group, a leading U.S. confectionery linked to the Ferrero Group. The transaction returned around 200 million of additional cash to our balance sheet and was concluded at a price above NAV. We also divested from Ultra Premium Direct, France's leading direct-to-consumer pet food brand, for approximately 140 million, generating a 2.1x gross cash-on-cash return for the balance sheet. These transactions announced this summer have been closed in October. We also stepped up realizations across the venture and growth funds, with two important new exits, the German company Cognigy and Incheck. Finally, in private debt, realizations stood at 600 million for the first nine months. Several deals are expected to unfold in Q4. These transactions illustrate the quality of our investments and our continued focus on generating liquidity and value for our investors and shareholders. At a time when the main focus of the industry, as you know, revolves around distributions, this is, we see, a key competitive advantage of mutual fund raising. So let me illustrate that point, starting with buyout. As you can see here, On the chart, the pace of distribution to LPs in the market has markedly slowed down in the past five years in a challenging and volatile macro environment. This is a topic for the industry. In this context, Eurazeo private equity franchises have been outperforming clearly. Here today, in 2025, Eurasio's buyer franchise have already returned 10% of the NAV compared to around 5% of the broader market in H1, according to industry estimates. Looking at the 21-24 time horizon, you'll find that the pace of Eurasio rotation was 5 points above markets and even 7 points focusing on the balance sheet portfolio only. As you know, the balance sheet, I'll come back to that, has already returned 14% of its NAV. Another positive catalyst, and we think this is a very important catalyst for future performance and the growth of our asset management activity, is our proven ability to complete successful exits across the biotech, venture, and growth franchises. After three landmark deals in 2024, Confido, Lemaps and Amolit have said we've completed two important exits in Q3 2025 in excellent conditions. In growth, Cognigy, a German AI-based customer management provider, was sold to NICE, an Israeli-American listed company, for nearly $1 billion, representing a 2.1 cash-on-cash return in a year. or our EGA4 fund. This is a remarkable outcome, which brings EGA4, which has only completed its first closing, already at 25% of DPI and 1.15 times TVPI or MYC. That's quite exceptional in the industry where DPI tends to be low. In biotech, our Kerma team sold Imcheck to Ipsen for up to $1 billion if certain milestones are met. These transactions would generate between 3 and 7 times cash-on-cash returns and create a substantial value for our BioFund vintages, which bodes well for the future fundraising. Let me highlight, as we know, added the performance of the biotech funds together with the performance of the rest of the funds. Performing this transaction, the DPI of Karma BioFund 3 now stands at 75%. Let's focus more specifically on our balance sheet rotation. As you know, this is an essential part of our strategy to build an asset lighter business model and execute on our promise to return more capital to our shareholders. With CPK and UPD which close in October, our balance sheet has realized 1.1 billion euros of disposals year-to-date, or 14% of last year's net portfolio value, already ahead of the total for the full year 2024. And as I said before, much above market pace of rotation. Since the beginning of 2024, we have sold around 2.2 billion of balance sheet assets since the beginning of the plan. This is around 27% of the net portfolio value at the end of 2023. We sold these assets at an average premium of 8% on our latest mark and a gross cash-on-cash multiple of 2.1 times. Several processes are ongoing and should lead to transactions announced and realized through the end of the year. As you can see, all the exits we've announced and completed in 2025, including the most recent transactions, they are on the green in the bar charts, demonstrate again our ability to sell assets at or above NAV. Let me stress again that we believe this is the best proof point to assess the quality of our portfolio valuation approach and processes. Let me stress also and this is a very important thing for us, that portfolio valuations only make sense if they are associated with a proven capability to generate liquidity. When you compare Eurazeo, always keep in mind that our DPIs are higher than the average market. Operational metrics of the companies in which our balance sheet is invested through the funds continue to be healthy. The average growth of our buyout companies was plus 6% over 9 months, continuing the trend seen in H1, in spite of a stiff, sluggish and volatile economic environment. In growth, activity remained solid across the portfolio with 15% top-line growth on average. Doctolib, the largest investment in this strategy, continues to grow strongly and announce it has already reached profitability in Q3 2025. The most recent investment in Eurasio Growth Fund 4 recorded an average revenue growth of around 37% over the first nine months of the year, confirming their strong momentum, together with the DPI of 25% and value creation in the fund. This bodes well for future fundraising. After years of strong growth, hospitality revenues logically have been stable in the first nine months, while our infrastructure businesses continue to grow at a double-digit pace. Finally, before we open the floor to questions, a word on shareholder remuneration. This is a key commitment we've made to shareholders, again, in the Plan 2427. By the end of 2025, we will have given back close to 1 billion euros to our shareholders, approximately 400 million in dividends and approximately 600 million in share buyback, the equivalent of roughly 12% of Eurazeo share capital. As you remember, we had bought back 200 million of shares in 2024, and doubled our program to 400 million in 2025. With the acceleration of the program this summer, we have already bought back 300 million and will buy the remaining 100 million before the end of the year. Thank you very much for listening to this call. We can now open to Q&A questions.