Eurazeo Paris Ord

Welcome to the Eurazeo Q1 2026 Trading Update presentation. Today's conference will be hosted by William Kadu-Shasong, 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. Good morning and thanks to all for joining this call. I am pleased to welcome you all to our Q1 2026 trading update. And as usual, let me walk through the key highlights for the quarter pertaining to first, fundraising, AUM and management fees, second, asset rotation, and third, the underlying performance of the on-balance sheet portfolio. be available to take questions. Let's start with our fundraising activity. We had a strong quarter in Q1, 2026 with 1.1 billion euros raised during the period, an increase of 11% versus last year. This performance was driven by first, strong inflows in private debt. It's more than 850 million raised in Q1. nearly twice as much as Q1 2025. This strong performance comes from the back of the top quarter track record of our direct lending funds and our leading position in the mid-market category. Second, a continued momentum in the secondary strategy, which makes up for the majority of the 200 million euros raised in equity during Q1. Our wealth solutions channel continues to grow nicely with AUM up 16% per annum to reach 5.7 billion euros. Inflows were similar in Q1, 2026, as in the same period last year. Our Evergreen Fund, EPVE3, enjoys positive net inflows with redemptions in Q1 well below 1%, and in line with historical average, in fact, a tad lower. We are still in the roll-out period for our new evergreen funds in the prime line, which should contribute more significantly in the coming years. As we highlighted with Christophe during our first year, full year results, sorry, our pipeline of fundraising for 2026 is solid and diversified, both on the institutional side as well as on the wealth solution segments. Let me give you an update on where we stand based on Q1. First, as we highlighted, we have four flagships which are expected to fundraise in 2026. We continue to benefit from the ongoing momentum in our direct lending fund, which will shortly be announcing a final close. We should shortly be announcing a first close of PME5, the lower mid market buyout fund managed by the Elevate team. We confirm that this fund has good traction, benefiting from the strong performance of previous vintages. In equities, we continue to have good inflows in secondaries, as highlighted before, and we are on the road with our gross equity fund on the back of a successful first closing and strong performance overall. Suddenly, we are on the road with five sematic funds. In equities and PBS, an impact Article 9 fund, which already had a successful first closing, as you know, as well as Eurasia's future of industries in venture, which is currently fundraising. In debt, also an Article 9 fund focused on decarbonization financing. And in real assets, two funds, Azoria in operational real estate is already on the road, and we are launching a second vintage in sustainable infrastructure after a successful first vintage. In Wealth Solutions, as we announced, we are rolling out our new evergreen products and we are initiating another growth fund for wealth investors. As we continue to fundraise dynamically, we post steady increase in both our AUM and fee-paying AUM. Total AUM stood at 39 billion as of 31st of March, 26, of 7% year-on-year, with AUM from third-party up double-digit at plus 1%. 14%. Fee-paying AUM were up 5% year-on-year, with fee-paying AUM from third parties growing double-digit at plus 13%. Third-party recurring revenues from asset management boosted solid growth logically, which we continue to voluntarily decrease the contribution pertaining to our balance sheet. Management fees from self-parties are up 10%, excluding catch-up fees and forex. Management fees from self-parties in private markets specifically are up 14% year-on-year, in line with fee-paying AOL. IMGP revenues were down 1%, excluding forex, performing the sales and wealth management activity at the end of 2025. IMGP had a positive momentum from most of its partners and from its own funds, especially in managed ETFs, but was impacted by market effects and some outflows of its managers specializing in gross equities in the U.S. Management fees related to EuroZero's balance sheet came at 25 million. They are down 16% due to disposals and lower balance sheet commitments and funds, in line with the strategy announced at the end of 2023. Regarding asset rotation, Group deployments were up 17% in Q1 2026 relative to last year, totally 915 million. Group realizations in Q1 2026 amounted to 550 million, a double from 220 million in Q1 2025. We were active both in private debt and in private equity. Of note, Our drive model from third parties continues to grow. It is up 9% and we think we are well placed to grasp investment opportunities. Let's now focus on the current trading of our underlying investment. As a reminder, we recently hosted a workshop on our balance sheet portfolio, commenting on its key characteristics, its performance, and the main lines. Both the link and the webcast to the webcast and the presentation can be found on our website. In the first quarter, the companies in the balance sheet portfolio continued to perform well operationally in spite of an arguably more uncertain environment. Companies in the buyout portfolios grew 6% year-on-year with a broad-based revenue growth across geographies and sectors. Companies in the growth portfolio boosted a plus 22% average growth, an acceleration from previous quarters, with the largest line in the portfolio performing particularly well. The most recent investments in growth for funds have seen average sales growth also accelerate at over plus 60%, 6-0, confirming their very good momentum. In real assets, hospitality revenues were up 6% in the first quarter sales, of companies in the sustainable infrastructure portfolio, also dynamically, by 36% on average. At March 31, 2026, the investment portfolio carried on the balance sheet was valued at 6.8 billion, and as usual, is not valued during the quarter. The portfolio value per share was 102 euros at the end of March 2026, consequently. We are now available for your questions. Thanks for attending this call again.

If you wish to ask a question, 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. The next question comes from Nicholas Veselier from BNP Paribas. Please go ahead.

Thank you. Good morning. I hope you're doing well. Just two quick questions on my side. The first one is on the fee-paying AUM dynamics. The jump from one quarter to the previous is pretty big. And I wanted to know which asset class has been driving this. I expect it's private debt. And then, despite this increase in fee-paying AUM, The overall fee margin stood at 1.10 versus 1.2 on my calculations in the previous quarter. So, yeah, I'm definitely interested in understanding the mix dynamics for this quarter in the CPAM group. And then my last question, you mentioned those new evergreen products that are about to hit the market. I'm curious to see what traction you expect from them in terms of fundraising in the near term, given that flows in wealth remain pretty consistent, but I suppose are quite skewed to your big evergreen fund.

Nicolas, I think we didn't hear fully the second question. No, the third question.

Could you repeat, sorry? Yeah, sorry. It's just you're about to hit the market with two new evergreen products, right? I'd like just to have a bit of a color on what you expect in terms of fundraising traction for those in the near term because I suppose what you raised in wealth mandate so far remains heavily skewed to your larger 3.7 billion fund. Okay.

Yes, thank you. Sorry, because we had on our side a bad connection. Let's start with CPI and AUM. So what we can say, I mean, you're right to point out it's fairly dynamic and the bull market grows, we think, as we commit to deliver. rather broad-based, so we have double-digit fee-paying growth, both in private equity and in private debt. As you know, the dynamic is a little different for PE. It relates to commitments for private debt. It is linked to also the pace of deployment. But, I mean, it's very consistent across the board between PE and private debt. Overall fee margin, just to remind, and thanks again, Nicolas, for asking that question, to remind everyone, the 110 basis point, which is a healthy rate, is associated to the third-party management fees. At group level, we are 120. So for us, it's fairly stable. The difference between group level And third-party stems from the fact that the balance sheet is rather skewed towards private equity and less so towards private debt. It also has, within private equity, less exposure traditionally to secondaries. So, as a result, there is a mixed effect that begs for a difference between the average fees and the overall yields but it's fairly stable and the difference again stems from what I just explained it may vary slightly within years or between years because of mixed effects but what we experience, I guess this is an implicit question behind your question is that the fee rates hold well Evergreen. We have a good traction as relates to converting or onboarding distributors outside of France for this new Evergreen fund, which are LTIF funds, one pertaining to private debt, the other one pertaining to second risk in different countries in Europe. And, you know, also we have some traction in France. Now, as we said with Christophe a few times already, it will take time before the machine works full steam because, first of all, we have to shape the product and the authorization. We are starting now to warehouse some assets. in these funds. You don't market evergreen funds to individual clients unless you have already some inventory. We are onboarding distributors and so we don't expect, to your question, big flows in the short term. We expect some flows in 26 and then we expect the thing to grow gradually and accelerate in the years next. To your point on our EPVE3 flagship. It continues to perform well in terms of gross collection. And as I said before, because we still have low redemption rates, in fact, as I said, a tad below the average of 25 for the first quarter, the net collection continues to be Now, we are also aware that this is a product that you have really to make sure that you educate well the public as to its features because there is a bit of noise extending from the US.

Okay, thank you.

The next question comes from Alexander Gerard from CICCIB. Please go ahead.

Good morning, William. Good morning, Pierre. Thank you for taking my questions. I have three questions. The first one is related to fee-related earnings, I mean to performance fees related to fee-related earnings as the rotation of the balance sheet normalizes within the historical range, 20-25%. And if we take normative assumptions regarding cash-on-cash multiples, What would be the size of the performance earnings? Can you even remind us what we can expect in terms of performance fees compared to T-related earnings? This is my first question. Second question. is regarding the share buyback program, so you bought back 1% of the capital during the first quarter. Can we expect the same for the coming quarters, I mean 1% per quarter, or do you think that maybe accelerating the share buyback program, given the fact that the share price is trading on a steep discount to its fair value, might be interesting? And the last question is regarding fundraising. So I know that you don't give guidance for the year, but if we look at all the initiatives that you mentioned on slide number, I think, three or four, all the firms on the road, can we... Maybe not have a precise estimate of the very wide range in terms of fundraising for the year, in terms of what you expect. Can we multiply by four what you raised during the first quarter? I mean, this is a rough, the lag estimate of the fundraising. So these are my three questions. Thank you, William.

Thank you very much, Alex. For these questions on the performance fees, I think things develop as we... had said, but you invite me, and thank you for that, to reiterate the guidance we have given, or at least the mid-term objective we have given. So let's start with that. The mid-term objective is that by 2027, and I mean end of 2027, we should have converged even the maturity of funds and the pace of rotation towards performance fees representing roughly 10% of the third-party management fees, the third-party revenues. So that's positive because that would translate into a nice increase in the cash flow. But also it's positive because it means that the company will remain very centered on predictable management fees. in its revenue composition. Now, to your point on what's happening in more short term, clearly, we have a number of funds that are now approaching the hurdle when they can recognize, where we can recognize from an accounting standpoint, the performance fees, so we are on positive trend, consistent with what you've said, you've seen in 2025, which is an increase, and then we should continue on that pace towards what I highlighted. Should I buy back? The program is structured in order to enable us to be constantly in market, to assume that 1% each quarter is the basis. We always evaluate if we should accelerate or not in case of more weakness on the stock price, but fundamentally, if you take that assumption, you don't take too much risk. On the fundraising, I like the way you phrase your question in a very smart way, which is to say, we are aware that you don't give guidance, but please give me a number.

I mean, the growth of DMA is always wise hands.

Well, we can say, you know, as you say, we have a positive trend. You know, nevertheless, quarterly fundraising is not even. It's not a linear growth that you would expect. I mean, there are quarters which are much more but overall what I'd like you to keep in mind that we are continuing our journey on a positive trend after a record year 2025 so we will be more specific in the next quarters when we see also where the environments lead us but just keep this positive message that we have a diversified product offering with a number of announcements we will do in the next weeks and months pertaining to either the final close of EPD7 on the dead side or the first close of P&E5. We continue to fundraise also on the thematic funds and some of the other flagships. So that's all that I can say now. I don't want to qualify more of the number, but we have a good start of the year.

Okay, thank you, William.

And I didn't mean to be frustrating, Alexandre, but I want to be cautious and keep to our guidance policy as we have it every year.

Understood, thank you. Do we have any more questions on the line? Maybe I can ask a question that I have on the chat then, a question on IMGP from . What is the expected trajectory on IMGP going forward?

So as we have seen in Q1, IMGP is fundamentally dependent on its ability to generate net new flows, net new money, but also market effect. Q1, we had positive inflows, net of everything, because we had strong inflows in the IGP proprietary products, like managed ETFs, as I said. We had strong inflows in many of the underlying partners, asset managers, and we had outflows in a few of them, particularly one mentioned, which is specialized on growth equity in the US. So, you know, we should continue that trend of Net positive flows for the rest of the year, absent, of course, major shocks or further major shocks. And then the market effect has started to improve in April. It was negative for the first quarter, so let me be a bit more cautious on that one. So all in all, as you can see, that's a platform that has some potential growth. to do better than in Q1, spending, of course, market effects for X and the environment. That's all I can say now. I would add also one point, which is that IMGP has also a tradition to manage very well its costs. So Q1 is not a moment where we talk about profitability and costs. But I think there is some flexibility there. to adjust and protect the profitability depending upon the revenue generation.

Thank you, William. I don't know if there are any more questions on the line. So, thank you very much for attending this call and have a good day. Have a good day, everyone.