Wendel

Good morning to everybody. Thank you for having made the time for this conference. I will make the presentation together with David Darmon. Jérôme Michel will be there also to make the presentation, Cyrille Marie on the asset management part, and Benoît Riau, our CFO. And we will all be there to answer your question after the presentation. Today, announcements is an important milestone for Vandel business model and I think value creation profile for the future. In development, two key things. We are entering into exclusive negotiation to acquire a committed advisor, a specialist of the mid-market secondary business, which will, I think, is an important element for Our platform, which is Vandel Investment Manager, which will have now three verticals, over 46 billion of private assets under management, a little bit more than 200 million of FRE expended in 26, pro forma 100% of the acquisition of a committed advisor, and also, but it's very important, This is a platform that has strong organic growth potential together with external growth potential. Vandale Investment Manager now would represent 30% of our GAV, excluding cash, performer of the acquisition of committed advisor. On the second element is we're making an evolution of our Vandale business model and the principal investment by leveraging the IK partner knowledge, experience, and platform to enhance what we call Vandel Principal Investment Performance. We'll come back on that. And also, we are simplifying our structure by the launch of IronWave and the sale of our portfolio in the venture business. Since 2023, we have made a sharp transformation of Vandel business models And today, announcements mark a key milestone in this transformation. And I think it is done in order to generate more regular revenues, more real fees. We have, in fact, now 30%, if you compare it to January 23, we were 40%, 44% was unlisted assets, 56% was listed assets. We were a pure holding company. Today, we still have a holding company activity, which is with the unlisted asset, which would still represent 40% of our asset. And we've said it is something we want to continue investing in and we'll come back on how we want to do it. And the listed asset that has reduced to 30% of the global market asset value and we have a business which we are managing which is different from being an investor it is a business which is the asset management business now it's Vandel investment manager represents 30% of the global value of the firm and excluding cash and as I mentioned it's I think now one of the significant European manager on the mid-market private asset. We have moved from 0 to 46 billion of asset under management with a global footprint in terms of investment and client base. We have three verticals which are highly complementary which offer significant organic growth potential through fundraising and product diversification and we've moved from 0 to 200 million FRE expected in 26 pro forma of the acquisition of committed advisors. So this is a business that is our business, which generates strong, predictable cash flow, and this cash flow will be returned to shareholders, which is very different from owning a company to sell it. So it's a separate business by itself, as I mentioned, and I don't think it should be valued the same way. Now we're working on enhancing our private investment business by leveraging what we've acquired, which is the platform of IK. And I think the IK partner's expertise will help us doing that. We'll do so through an advisor's contract between Vandel and IK partner for all existing and future private investments. and we'll come back onto that. But this will also generate a simplification of our structure. In the simplification part, the Vandel grows. We have incubated that activity. They will take their independence by creating Iron Wave. We will help that company to grow, and we will move away from the investment in venture funds, which we've largely started to do since a few months. That will help a simplification of our business, will help us generate higher performance, and that will reduce our cost. So it will improve our cost efficiency roughly by 15%. And then we've got a portfolio which is managed for value. This is largely composed of a listed asset, which is a Bureau Veritas in large. We have a very successful start of LIV28. we have generated 2.4 billion of proceeds throughout the reduction of our exposure to Bureau Veritas in the past, which we have reallocated in the development of our Vandel Investment Managers platform. And as you know, for Target, the squeeze-out is in process. So it's an active management of those listed assets. So clear change over there. Now, let's move a little bit on the biggest news of this quarter, which is the exclusive negotiations with committed advisors. First of all, this is really something we've been working on for some years. We've been creating some discussion and intimacy with the management of committed advisors. It's not like it was a process organized and so on. It's a one-to-one discussion based on trust, based on... the fact that we think that the quality of the team there is of very high quality. We've been having that one-on-one discussion for some years and we intensified that on the few last months in order to come to that exclusive negotiation situation that we announced today. Committed Advisor is absolutely a great specialist which is uniquely positioned on the mid-market with the potential targeting of secondary transactions which range from 20 to 200 million euros. This is a company that was created back in 2010. Today, it's a team of 50 people. Out of it, 36 are in Paris, 10 people are in London. Four in Singapore because they are covering globally, they are investing in the global world. 51, you'll see that later on, but a large part of it is in the US, Europe and Asia. Six billion is under asset management and a very strong 24% growth of their cumulative fundraising since 2010. The FRA expected for 26 is 45 million. But more importantly, I would say the return for the LPs has been over 19% gross RR consistently since the creation of Committed Advisor, which is a great illustration of the performance of the team. They've realized more than 220 transactions over the past 15 years. And they have two strategies, which is rather balanced, which is the traditional one for the secondary, which is LP-led, which is really when an LP wants to have some liquidity on their investment in a private equity fund. But they have developed, and now it's roughly half of the activity, a GP-led activity, which is basically... largely doing continuation and helping GPs in continuation vehicles. Committed Advisor will really well position itself within our platform. You know on this page you see our traditional layout of the operating model of Vandel Investment Managers and the fit between IK, Monroe and Committed Advisor I think is absolutely great. It fits in terms of product line, diversification, ability to enhance the discussion with LPs and growth potential. I think we're creating something which is very consistent with great teams that have similar culture, and that's something we spend a lot of time on to make sure that we have culture and people that can go along well together. And we're deploying our models. Maybe then I will hand over to... Cyril? No, maybe I will. Because this model is based on four pillars, which is very important. First is a model that can allow to attract talent and deliver sustainable performance for the LP. Why do we do that? We do full autonomy for the investment management firm. This is very important because those teams are great teams that have all been able to deliver superior performance for their investors, and we want that to continue. The LPs are here because they have confidence and faith in those teams and their ability to generate performance. We are focused on sustainable performance for all stakeholders, so we do transactions where we align the interests of everybody on the long term, And this alignment of interest, I think, is the guarantee of having a sustainable business that will generate value for the long term. And one of the key elements to that is to work on the management transition and retention and secure long-term capacity to deliver that value to our clients, the LPs. We have also to support the growth and the innovation an active sponsoring program that will spur the organic growth of those companies. New strategies, diversification to be launched over the next three years will be supported by our model. We're developing also a full range of wealth management products to be distributed because none of those... Apart from Monroe, the others don't have any sort of direct channel to wealth management, which is a costly thing to develop, which we can for the global platform. We can do some small lift-out and bolt-on acquisition if we want to accelerate growth, and we have an active management of our strong-growing sponsoring program so that we can, on one side, help the growth of the company, but on the other one, make sure that we don't have too much of a heavy balance sheet onto it. We have a coordinated client coverage, which is important, complementary to the LP base, which has to keep being a relationship with the GP, We take specific initiative in order to develop cross-selling, and we've got a lot of complementarity between the different LPs of our companies, specifically if I take, for example, Committed Advisor, they bring to us a large chunk of LPs that are large family offices which were less present in terms of Monroe or IK, but not only, and I think it's a key element benefit to that and we're working on strategy coverage and we're creating a centralized sales team for specific market which are not the home market of this company so that we can enlarge and accelerate the growth can take the specific case of Japan for example which we have already started and the last point is we have a nimble holding with the right expertise to oversee the activities and put a few things together in order to reduce costs. But globally, we wanted to keep it very lean and nimble. The platform is a platform at scale now, which has significant organic growth. We've made the acquisition of ICANN Monroe. Since we made the acquisition, we had organic growth of 20% of their asset under management and 16% of their FRE. We're adding to that now a committed advisor with a 6 billion of asset under management and 45 million of FRE. That leads to a global platform which is over 46 billion of euros and over 200 million of FRE assets. which rank us, if we go to the next page now, as being one of the main European listed, when we compare ourselves to the main European listed peers, to be really well positioned into it. We've not included a very large company like XQT, CDC, or Partners Group. But otherwise, we've put the European listed asset managers, and you see that now Vandel is really part of the club and ranks very well to that. We are getting to be an asset manager, not only because we still have an holding activity, but please look at us as being an asset manager together with a holding company and not a pure holding company. I know it's not an easy message to convey to the market, but that's what we're trying to achieve, and this really was our strategic objective a few years ago. And now I pass the floor to Cyril, Marie, who will go more in the specifics of Committed Advisor. Sorry, Arc is a code name of the project.

Thank you, Laurent. Thank you. Now we can use Committed Advisor. There are various ways to assess the quality of a strong GP, as Laurent said. That's the quality of a committed advisor. And let me share a few with you today. So the first one, what you see on page 12, is the growth of AUM. The priority is not growth of AUM. The priority is the performance for our client, as Laurent said. Here you see, so the firm was created in 2010 with a first fund of $250 million. Now, after 15 years, they have raised their last fund at 2.6 billion, fund five, and it has been done with the development of a strong client base. Now they have 300 LPs in 30 countries. We'll give you more detail later on. So you can see that they have built a strong relationship with their LPs. They get the trust of their LPs. They have been in a position to grow a very significant business and it's, I think, a key criteria, the trust of the client and the ability to raise money. It's a key criteria to show, to highlight the quality of this GP. The second following page, the second criteria is, I think, the diversification of their book of business and also the fact that it's really a global business. So you have four pie charts here. If we start by the bottom, you see where they invest money. And as you can see, they invest in North America, in Europe, and in Asia, because it's where you have the deal for the secondary transaction. It's why also they have offices in New York, in Paris, and in Singapore. So it's really an international business. What is also interesting in terms of diversification is that, as Laurent said, they are on the LP side and also on the GP side. So it means that they cover the full range and they can benefit of the the growth of the underlying market of the secondary market. They have the skill, the experience, and the track record to capture this. If we go now with the pie chart at the top of the slide, that's the client base. And you have 300 LPs. They are on the institutional side. They have also the family offices, which is new to us. It's very important. And on the other side, you see also 30 countries. So it's really also global business in terms of LP base. Europe is 85%, but France is 25%. So it's really a European business, and they have also a strong potential in terms of development in North America and in Asia. So diversification after growth is also a key element of committed advisor. The third way to assess the quality of a GP is the quality of the team, for sure. And here, I think what you see here, for sure, you have four partners, funders. They have a lot of experience. They have been part of... a very strong secondary firm in the past. They have built since then a very strong business. They are young, as you can see here. They are very committed, if I can say that, for this acquisition. And you will see in the structure transaction that they are there for the very long term. They are ready to reinvest all their proceeds in the funds, no cash out. I think it's a very strong message. And on top of that, below them, you have a new generation coming behind and and we will put in place what we have to do in order to incentivize them to build the next generation after the four founders. So a very strong team with a lot of experience, a very international team, and able to support, sustain a long-term development. Another criteria, if we move to the following page, is the underlying market. So we have a good team with the skills, with a strong team, And on top of that, they rely on a fast-growing market. The secondary market is a fast-growing market that relies first on the growth of the private market as a whole, for sure. And we know that it's a fast-growing market if we look at the asset management industry as a whole in terms of AUM and fees. And on top of that, the more the investor enlarges strategic allocation in private market, whether it's retail or institutional client, the more you have a need for secondary transaction in order to provide liquidity because you want to reallocate, because you want to adjust, you want to be agile in your portfolio, you need a secondary market. And that's really the underlying force behind the growth of this market. And you can see that it's very important to be on the LP-led side, but also on the GP-led side in order to have the full offer for your client. And it's exactly where he's a committed advisor with a global footprint and with a specific positioning. It's a broad market, and the positioning of committed advisors on the mean market, it's really an area where you can find value for your client. You can extract value, and you can maintain your fees, and I think it's key in their position. So to summarize, there is other criteria. We could talk during hours about the quality of their performance. I will mention that quickly, but there is their positioning, their track record, the number of transactions they have done, etc., etc. But if we summarize, so why committed advisor is the right partner for us? The first thing is the complementarity. You know, it's a new vertical after the buyout and after the private debt. It's consistent in terms of DNA, as Laurent said, in terms of culture and mid-market positioning. The second thing, and it's key, is the quality of their track record. So 19% consistent over time. And we know why they deliver performance because they have a very specific positioning and we understand how they generate performance, how they get the alpha over the long term for their clients. So that's the second criteria. The third one, I mentioned it, it's the underlying market, their positioning in the secondary market, so growth. The fourth one also is very important. So they have already a strong positioning on the buyout secondary. But with this team and this platform, we have both that, you know, a strong potential in terms of new product, new strategies. We'll do that carefully because it's very important to do this carefully. But we could also launch new strategies on infrastructure, private debt, because the need is the same in terms of secondary product. And also we can probably reinforce, you know, their positioning on the wealth management. To do so, as Laurent said, we have now a strong sponsoring program and we support them in order to accelerate their development with new engine of growth for the platform. And the last thing, I mentioned it quickly already, the quality of the team is very important and the cultural fit. We took the time to do it. It was not through a process. We had the time to discuss during due diligence, discussion with the team, and we have now a strong plan to grow this business. Let me finish with the transaction structure, totally in line with the previous transaction, in line with what we see as a key component of the long-term alignment. So the transaction where we take control and the transaction where we have long-term alignment of interest with the management team and with the LPs, which is key to us. So we initial transaction 56% of the investment management company, what we call the GP, And they want 20% of all carried interest from future funds. That's the scope of the initial transaction. And for this, we'll pay an upfront payment of 258 million. And just for the initial transaction, we will pay an earn-out between 2028 and 2030 based on two criterias. The FRE growth and also the fundraising, and it could range from 0 to 128 million. If you add the two, it means that for the 76% and the 20% of the... 56% sorry, and the 20% of CAID will pay between 258 million and 353 million, which if you compare it to what is the target for the FRE for next year, so 45 million, the implied multiple on the pre-tax basis will range between 10 times and 14 times. And then, just to highlight the long-term alignment of interest, first thing, as I said, the funder, the seller, will reinvest all their proceeds net of tax for sure in the funds, which is, you know, a strong commitment, to, for the remaining 44%, We will have put and call agreement over a long term. So as you can see, 29, 20, 30, 20, 35. And those multiple are not fixed, are based on the growth of the business, which is also, I think, very important for us. So with that, it's in line with what we did in the past. Now it's well known by all the stakeholders. I think it's clear for the LPs. They understand the way we structure the transaction. And I think it's good for the future of the company. Thank you Cyril.

Now David you'll take on the second important part which is a change in the operational implementation of our business model.