Wendel

Good afternoon or good morning, everyone. Thank you for joining for this nine-month update. I am here in the room with Olivier Hallot and Lucille Roque from our IR team, and Benoit Drillot, our CFO, is also with us. So let's start directly with the key highlights on slide two of the first nine months. Well, we've had, as you know, a lot of things going on. And I will start with the principal investment, that is the portfolio of companies that we have on our balance sheet, where we posted consolidated net sales growth of 8.9% organically. So as you can see, quite a strong performance on these principal investment companies. whilst we've also registered a strong performance on the asset management, which is at the moment only IK Partners that grew their fee-paying assets under management by 19% year-to-date and raised 1.8 billion euros. That's quite an amount for just the first nine months of 2024. Following the announcement of the acquisition of Monroe Capital, Vandel represents now 40 billion of assets managed when we include this transaction that we expect to complete during the first half of 2025. In terms of net asset value, the fully diluted net asset value at the end of September stands at €184.5 per share, which is 13.7% more than at the end of december 2023 our loan to value that we present here pro forma which means that we have adjusted our loan to value to take into account the acquisition of global educate that closed after september 30 as well as the various commitments that we will take with Monroe and the ones that we already have at least part of it with IK Partners and taking it into account the acquisition of Monroe, the loan-to-value ratio is at 18.9%. As we announced on October 22, the acquisition of Monroe, which is really the big event of this quarter, will dramatically expand our asset management platform and and will further rebalance our business model towards more recurring cash flows and growth. So this is a very positive and transformational development for Vendel. Moving on to a little bit of detail on our net asset value, as I said, €184.5 per share as of September 2024. When you divide it, you can see the first bucket of listed assets at 3.8 billion euros, within which Bureau Veritas represents 3.6 billion euros, with a share price shy of 30 euros at the end of September. Very good performance. I will come back to that. Then in terms of unlisted assets, 3.15 billion euros. And on the asset management, 450 million. This is an important point I want to make. This 450 million is only our shareholding in IK Partners. It does not include any sponsor money at the moment. As you know, we will commit sponsor money to IK Partners, but at this point in time, We haven't been called on this sponsor money, so the value that you can see here is solely our 51% shareholding in IK. We have a very large pile of cash available on the balance sheet of around 3 billion at the end of September, but bear in mind that this was before the acquisition of Globe Educate that closed since then, and this is before the acquisition of Monroe that will take place, as I said, during the first half of 2025. So in terms of net asset value, when you adjust for the bonds outstanding of 2.4 billion and various smaller items, the total net asset value is at 8 billion or €180.3 of net asset value. And again, when you adjust for the full dilution, you're looking at a NAV of €184.5 per share. which is up 13.7% versus the end of last year. But let's break down this growth over the period on page 5 of 26.2 euros per share in terms of fully diluted net asset value. This is actually largely the result of the principal investment with roughly 25 euros within the total. This is driven by the performance of Bureau Veritas share price, plus 34.3% over the period, with only a slight decrease for non-listed assets at 1.2 euros per share. The asset management, which is again only IK partners over the first nine months, has been increasing in terms of value, and this has been driven by the positive evolution of the market multiples that we use to value our shareholding in IK. And this is only over a quarter since the first inclusion of IK partners in our net asset value dates back to the end of June. So plus 1.5 euros on this line. We've had the cash operating cost and net financing results representing a minus 1.2 euros per share. Bear in mind that we have positive carry in there. Given the balance of cash of 3 billion that we currently carry and where we get some very decent yield higher than the average cost of our debt, this has enabled us to take down our own costs that are limited to 1.2 euros per share over the first nine months. We've had some positive impact from the share buybacks over the period. At plus 1.4, this is the accretion related to the cash that we invested to buy back Vandel's shares over the first nine months. So in total, 26.2. When you adjust for the dividend that we paid in May this year, you're looking at a 16.1% increase of net asset value, so 13.7%. unadjusted for dividend. When you reintegrate the dividend, it's 16.1 to 184.5. What has happened in terms of performance at our portfolio companies on page six? It has been quite a strong nine months, actually, with consolidated sales up roughly 15%. But more interestingly, when you look at the organic growth for the period where we exclude any effect related to foreign exchange or scope, the total is at 8.9%. This is largely driven by the very positive performance of Bureau Veritas over the first nine months. I'm sure that you have seen the results that Bureau Veritas announced This week, they have even upgraded their guidance for the second time for 2024. The first nine months have been very positive with 10.5% organic growth. Across the board, when you look at each operating group of Bureau Veritas, there is a strong performance in most of them with double-digit performance and sometimes well above to 10% this first nine months. STAAL has had a more muted performance with minus 0.4%, so I would say stable performance over the first nine months. They've had a good first half. Fair to say that Q3 has been softer and more quiet than previous years. but they are still holding up in terms of organic growth with a slightly negative amount. Scallion, which is consolidated within ourselves, but with one quarter of lag given the different closing period, has registered a minus 2.5% organic growth over the first nine months. I'm sure you have seen that the the market for engineering services and digital services is difficult given the slowdown in terms of large projects and the more difficult conditions that customers are facing. So we are seeing that as well at Scalion, but we have had some very positive contribution in terms of external growth at plus 2.3% with the acquisition of Manarino. that Scallion completed just before summer, as well as smaller acquisitions that were completed over the nine months. And this is really in line with our investment thesis of buying and building up Scallion on a larger scale. CPI, very good momentum there, 8.1% organic growth. Same at ACAMS, 8.6%, but bear in mind that there has been a shift in terms of timing at ACAMS with a conference that took place in 2024 earlier than in 2023. And as you know, ACAMS revenues are pretty sensitive to that because these are big events and this can move the needle from one quarter to another. But despite this calendar effect, which is positive, there is good performance at ACAMS for the first nine months. IK is not consolidated over the full period, as I said, as we only started the consolidation at the end of June. So there's just one quarter of revenues in there, and we are not in a position to comment on the organic growth as it is not to be included in the 8.9% consolidated that you see there. I told you the headline on the first slide, the fee-paying AUMs are up 19%. Fundraising is at 1.8%, so a very, very positive performance, which translates as well in terms of revenues. Now, moving on to the financing and our liquidity on slide 7. At the moment, as I said, we have a very high level of liquidity, $3 billion in cash, supplemented by our committed credit facility, which is fully un-drawn at this stage of 875 million. This is again before the acquisition of Monroe and Global Decade. Monroe is a 1.13 billion transaction for the 75%. So this is yet to come. Global Decade has been closed post-September 30, So this has been a cash outlay of 625 million that you need to take out from this 3 billion. In terms of growth debt, you have the maturity profile on the right hand side of the slide, 2.4 billion in total with the exchangeable bond of Bureau Veritas being the earlier for 750 million, then 210 million in 2026 and the rest pretty well spread across the line in the next few years. Our cost is pretty low actually at 2.4% in terms of average coupon and you can see in there that we have pretty cheap financing and a very high level of liquidity over the long term with 3.9 years in total and as I said our cost of debt compares very favorably to the return that we've been able to make on our cash since the beginning of the year, which stands at 4%. The loan-to-value ratio, again, we present it for information purposes adjusted for the upcoming acquisitions, Monroe and for the acquisition that completed, which is Global Decade. It's at 18.9. If we strip out those two big events, Obviously, we are in a net cash position at minus 6.8%, but we felt it was more relevant for you to get the info on the pro forma LTV ratio at 18.9%. Quick reminder on the acquisition of Monroe, which is really transformational. For those of you who might have not had the time to follow our announcement earlier this week, we announced the acquisition of Monroe Capital, which is a leader in the fast-growing U.S. private mid-market credit category. It's a company based in Chicago with about $20 billion in AUM, one of the leaders in private credit. They have a nationwide coverage plus two offices overseas. This is... really a very high-performing GP and a transformational milestone for us. It actually unlocks the benefits of our platform that it will include cross-selling synergies and operational efficiencies which brings the total of assets under management within this asset management platform at 31 billion euros and the fee-related earnings at 160 million expected for 2025. This is for 100%. As you know, we have currently a shareholding of 51% in IK Partners, and we will acquire 75% of Monroe for a consideration of 1.13 billion. This will immediately give us rights to 20% of existing and future carried interest, as part of this initial consideration, which is, by the way, subject to an earn-out payment, and assuming this earn-out is paid, which we very much hope, because it would mean that the performance is good, our entry multiple would be between 14.7 times and 18.5 times in terms of 2025 pre-tax FRE, and 4.2 times on pre-tax PRI, that is carried interest revenue. So a very interesting transaction whereby Vandale will invest sponsor money as well to accelerate the growth of Monroe and to support new product launches and in the end, accelerate the generation of fee-related earnings and ultimately, obviously, cash flow streams to Vandale. This is really a transformational step for us with a strong potential in terms of value creation as well as diversification as we are expanding our operations in asset management in a new vertical in terms of asset class and which is a very interesting market fast growing in the US for mid-market credit and this enables us to enhance the profile of Vandel through the sponsor money and the return that we will make and the acceleration of monro growth to higher and recurring cash flows that will be distributed to us as well as an increase of performance-related earnings over time. And based on the above, we are strongly confident in actually exceeding our 2027 FRI target in terms of Vandale share that we had set at 150 million based on Monroe and IK partners' internal growth potential, we believe, and we have high confidence that we should be above this level in 2027. So let me now maybe conclude and comment on the key takeaways for these first nine months. I think what is really important is that transformation is on the way, and Vanel's asset management business is now a significant performance driver, thanks to the upcoming acquisition of Monroe. The performance of the portfolio has been quite strong, with net asset value up 13.7% year-to-date, plus dividends, of 4 euros, it's even higher, as I said. We've had some portfolio rotation, very much in line with our strategy, with the disposal of Constantia earlier this year, the partial sale of BV for 1.1 billion euros of proceeds, the acquisition of Global Decade for 625, and obviously the acquisition of Monroe the upcoming acquisition of Monroe that we expect to complete in the first half of 2025. Now, following this, our priorities for the next few months are really to create value on our assets to successfully build the private asset management platform with the acquisition of Monroe and IK Partners that is a very, very good start. And obviously to maintain a solid financial structure, you know, this is very important to us. So we are really focusing on that. And based on this, there will be opportunities to create more value for shareholders and ultimately sustain our double-digit TSR, which is the objective that we are pursuing. Thank you very much. And I would now open the room to questions.

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