Wendel

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to Vendel's Q1 2026 Trading Update Conference Call and Webcast. At this time, all participants are in listen-only mode. There will be presentations followed by the question and answer session. If you wish to ask a question, you need to press star 1 1 on your telephone and wait for a name to be announced. You can also ask your questions on webcast. Olivier Allot, Director of Financial Communication and Data Intelligence, will read them. I must advise you that this conference has been recorded today. I would now like to hand the conference over to a speaker today, Mr. Jerome Michels, Vandell Executive Vice President. Please go ahead, sir.

Good afternoon, everyone, and welcome to Vandell's Q1 2026 Trading Update. Thank you for joining us today. Over the next 15 minutes or so, Cyril and I will walk you through our key financial highlights for the quarter. the major strategic developments that occurred and what they imply for the rest of 2026. We will then take as many questions as you have, and Benoit, our CFO, will help us answer them. At a high level, this quarter reflects continued momentum in our asset management platform and steady operating trends in principal investments, while valuations were impacted by market multiples at the end of the period, which was a low point. Let's turn now to the quarter's headline figures. This slide summarizes Vandel's Q1 2026 key financials across asset management and principal investments, as well as the net asset value. On the asset management side, Vandel Investment Managers continues to scale with assets under management of 41.8 billion euros, and fee-paying assets under management of $32 billion. The acquisition and integration of committed advisors closed yesterday further expands the platform to close to $50 billion of AUM. Management fees and other revenues came in at $106 million over Q1, reflecting a very strong growth of 130%, driven by both organic growth, 8%, and scope effect. On the principal investment side, the only items to report are the inclusion of the price of the offer on IHS and, as I said, the impact of valuation multiples as of the end of the quarter. On the net asset value now, the end of March figure stands at €158.4 per share. This level reflects the impact of multiples compression in public markets at the end of the quarter which mechanically flows through to our NAV, as you know. Importantly, share buybacks have resulted in a strong accretive effect over the quarter and have helped cushion per share metrics at the end of March, with a sequential decrease of our NAV limited to 3.6%. Let's now look more specifically to the driver of the evolution of our net asset value as of the end of March on slide five. As you can see, fully diluted NAF per share was impacted by market multiples at the end of the quarter. The total adds up to 9 euros per share across Vandal investment managers and principal investments. That's partially compensated by the positive impact, as I said, of close to 4 euros per share from share buybacks. Pursuant to our capital allocation strategy announcement, we bought back 4.7% of our share capital over the quarter, which is the highest level for any member company of the SBF 120 index. Coming back to the valuation impact, as you have seen, public markets were strongly depressed at the end of March following the situation in the Middle East, which has translated into a negative impact as of the date of calculation of our Q1 now. But what I want to emphasize is that the market rebound that has taken place since then is not reflected in the valuation marks shown here. So the NAV movement in the quarter should be interpreted in the context of timing. Our valuation updates are anchored to quarter end assumptions, while public markets have moved quickly afterward. So if we were to redo a net asset value calculation as of today, we would be looking at about five euros more close to €164 per share. In a nutshell, the message is certainly not a deterioration in the underlying portfolio quality or trends, but rather a mechanical effect of the timing of valuation multiples on our NAV at the end of the quarter. Let me now double-click on capital allocation, which is, as you know, foundational to our strategy and transformation journey. As you know, we have already made significant progress against the €7 billion strategy announced in December 2025. Two major transactions have enabled this. The sale of STAL, which will be generating €1.2 billion in proceeds to Vendel, and the sale of IHS, generating $535 million in proceeds. These represented meaningful steps forward in our asset rotation plan and support both balance sheet flexibility and shareholder return with a strong acceleration in terms of dividend distribution and share buybacks. Adjusting for these announced disposals, the acquisition of committed advisors, and the $340 million share buyback in full, our pro forma loan-to-value is at 7.8%. reflecting a conservative leverage position. And importantly, more than 27% of the asset rotation expected by 2030 will already have been achieved on the back of the transaction announced. Combined with this strong financial position, this positions us well to execute the remainder of the capital allocation roadmap with discipline. I now hand it over to Cyril for the update on WIM.

Thank you, Jerome. So let's start with a brief update on the strategy before we move to the Q1 update. So we have announced yesterday the acquisition of Committed Advisor. At the closing, you know, we have announced the signing four or five months ago. Closing is very important. It's not a detail because Between the announcement and now, we went through the client consent, and it went very well, and you will see that it's very important because it paved the way for future fundraising for committed advisors. So it's done now. It's behind us. We have now this platform announced in October, November, with close to 50 billion of assets and 200 million of FRE. Keep in mind that our business is mainly an FRE business, and more than 90% of our profitability is coming from FRE, which is very important when you value our business. The other important strategic element is the announcement of the reinforcement of the partnership with BNP Paribas Asset Management Alternative. In fact, behind this, you have two very important partners for us, BNP Paribas and AXA. They are really partners, meaning that they commit money in our funds and also they are distributors of our products. So for us, we do believe it's really a reinforcement of our ability to grow our business. So that's for the strategic part of the announcement today. Then let's move to the next page. Q1 activity. As Jerome said, the growth momentum has been maintained during this very specific quarter for private assets, let's say. Fee paying IUM, I think it's a good summary of the dynamic of our business. 13%, I've seen some announcement today, so 13% is well positioned compared to our peers. Over the quarter, the growth is 3%. Even during Q1 26, 3%, I think it's a strong achievement. If now we look at this in more detail, fundraising, new money coming from clients, 1.5 billion this quarter, 1.2 billion for secondary strategies for committed advisors. So, you know, we have announced the deal, we have closed the transaction, and clients trust us, trust our model, and they have invested 1.2 billion in the secondary transaction of committed advisors over the quarter during the transaction. I think it's a strong signal for us. The other strong signal is 0.5 billion of new money for private credit strategies for Monroe. It's less than what we saw in the previous quarter, but as we know, we went through a difficult quarter, and I think the 0.5 is a very strong signal. If now we move to the retail, the evergreen vehicles, what we call the BDCs, Monroe Capital Permanent Vehicles, so MCIPs, Its main non-tradable BDC, that's for 20% of the total AUM. We saw limited redemptions, well below our peers. And on top of that, the key message is that we have been in a position to satisfy all the requests with the cash flows. When I say cash flows, it's net flows plus the reinvestment of the coupon. So no impact on the structure of the BDC. I think it's a very important message. Then AUM. So close to 50 billion, including committed advisor. If we take out committed advisor, we look at IK and Just Monroe, 13% versus Q1 last year and 3% over the quarter. I think it's very interesting. And then revenues, for sure, the actual numbers are very high, but what is more interesting is the organic growth at 8% at constant dollar because, as you know, over the year, the dollar was negative for us. So that's the key. figures for the quarter it shows, even if it was a difficult quarter, we had less fundraising, but it was a good quarter globally in terms of growth. What you have on the following page, the same thing, and you see the bridge in terms of AUM for the quarter, from 41 to 42 billion in terms of AUM, you see the 3% in terms of FIPPING, Those numbers are excluding committed advisors. Now, if you add committed advisors, you have the scope effect and you have the fundraising over the quarter. And here, it's exactly in line with what we said in December during our Capital Market Day. With committed advisors, we add a new engine of growth, and this new engine of growth provides diversification. Because if you add the growth of fundraising into one, you see that we are above 13. And the more we add an engine of growth, the more we'll have a more resilient growth quarter after quarter, for this type of business. Then, what we wanted to do after this Q126 is to convey some messages around private credit. So, page 10, you have our view of what is direct senior lending for us and why we do believe that it's an attractive risk-adjusted investment for our clients. I will not comment on the pyramid because you know this, but I want to reiterate that What we do is direct senior lending. We are at the top of the capital stack for the financing of the economy. I think it's very important to reiterate this message. Monroe, they do only the light blue part of the pyramid at the top. Senior secured with first lien when they do loan. I think it's very important. Monroe Capital, they are a leader in a very specific segment. Private credit is a very large asset class. What they do is very specific. They do it in the U.S. I will come back to that. And they do it for the lower mid-market. We think it's a very interesting risk-reward solution for investors. Why? First, risk protection. They focus on the U.S. economy, which is the largest economy in the world. You know this. And if you look at the middle market, it's 200,000 companies. With that, what you get? You get growth. Last year, the EBDA growth was 10% for the underlying companies of Monroe. You have the ability to be very selective. You can get high diversification. It's very, by sector and by company, it's very important for the portfolio. Second thing, as we see it in the pyramid, you have equity protection. Monroe, they are very strict. The EBDA below for LTV, 40%. First, they are collateral. Very important. Third point, direct senior lending, 100% is floating rates. It means that you have embedded in the product protection against inflation, protection against rates fluctuation. It's very important. And last thing, which is also very important, when you do direct lending as Monroe Capital does, they are very active. They are adjunct in 80% of their deal, meaning that they are not buying BSL in the market. They are very active. They have access to information. They have access to management. They can be very reactive in case of difficulties. And I think it's a key element of differentiation. And in front of that, you have the reward. What is the reward? It's 500 basis points above the risk-free rate. And it's true in 5 years, 10 years, 20 years. I think it's very important. You have regular cash yield. Relatively short duration in terms of if you look at the the average duration of a loan, meaning that you have regular cash coming back in the vehicles. And lastly, you have diversification. So we do believe that this product is a very interesting risk-reward solution for investors. The second message I would like to convey today, it's client demand. We have seen a lot of questions around that. So the quarter, for sure, you have two different situations. On the institutional side, Q1-26, was a very good quarter. As you can see, it's the PDI survey here. It was one of the best Q1 quarter ever for the asset class. So I think it's very interesting to see that because, you know, it's a large part of our franchise, and also they are very sophisticated investors. So far, they have maintained their allocation, and we see no reduction of the allocation coming from client demand. And it's true for dollar product for U.S. clients, but also for international clients investing in dollars. And we see the same dynamic for Monroe. On the other side, as you know, it grabs the headlines. There was significant redemption for the evergreen vehicles. Here we use the non-tradable BDC as a proxy of the retail and wealth market. For sure, it's broader than that, but it's a good summary. There was a lot of demand. Monroe was less impacted than the industry. We have been in a position to meet all the redemption requests. And we are very cautious in the way we manage our vehicle. we are increasing the cash component in the vehicle in order to see and to manage the evolution of the demand of our investors. The last thing we would like to convey today, we talk about the private credit, the client demand, it's why we consider that Monroe Capital has an edge. The first thing is the experience in this type of environment. Monroe was created a long time ago, and if you look at this industry, which is for sure quite new, You will see that less than 5% of all the private credit managers have more than 20 years of experience. It's the case of Ponro. They went through different business cycles, and they have the experience to go through that. I think it's very important for the client. The second element, which is also very important, is the proprietary sourcing network. They manage the origination. They have eight offices in the U.S. They work with 200 sponsors everywhere in the U.S., and they have sector specialists. To do this business, to do it the right way, you need to have a deep asset management infrastructure. It's very expensive. We are 300 FT at Monroe, 115 investment professionals. It's very important. Security, second column. The way we manage the business, we are focused on performance. We are not chasing AUM. It's key. We have a dry powder of 6.5 billion. It was 6.7 billion at the end of December, meaning that we don't deploy money just to deploy money. We do it when it's a good risk-reward. I will not come back to the BDM multiple. They have also a very strong investment process. One of the key elements of their investment process is that you have the origination locally and you have the centralized underwriting and monitoring teams at the headquarter, and they are very independent, and it creates, I think, a good check and balance when you have to deploy capital. The last thing, consistency. They have a very strong workout team. The private credit business is not a risky business. You have a premium, 500 basis points, so you have to manage default, and you have to manage it well. They have a very seasoned workout team. It's very important in this type of environment. And the last two things that are also very important, and maybe it's part of some issues, they have a first-class LP base. It's not a pure retail business, meaning that they have on their back every day very sophisticated institutional investors from the U.S. and outside, and I think it's a very important part of the way they manage the business. And the last thing, which is also very important, is the alignment of interest between Monroe and the employees and the LPs. And with that, you gain something very strong in order to deliver the value proposition to clients. Thank you.