Asset management continues to grow in Q3 2022
- Management fees: €280m over 9 months, up +22% compared to 9 months 2021, and a +25% fees from third parties
- Assets Under Management (AUM): €32bn (+20% over 12 months)
- Fundraising from third party: €2.1bn over 9 months
- Fundraising anticipated by the Group of around €3bn for 2022
Execution of asset rotation in line with objectives
- Further exits (€2.4bn realized over 9 months, in line with 9 months 2021)
- Selective deployment (€3.8bn deployed over 9 months, vs. €4.1bn over 9 months 2021)
- Eurazeo balance sheet divestments totaling €1.1bn, reaching €1.3bn including announced but not closed divestments. This is equivalent to 18% of the portfolio’s NAV at the end of 2021, for capital gains estimated at €0.8bn
Robust portfolio performance
- Portfolio consolidated economic revenue up +38% over 9 months year-on-year at constant Eurazeo scope and exchange rates
- Growth companies’ revenue up c. 42% (not consolidated)
Solid balance sheet and significant financial leeway
- Net cash and cash equivalents as of September 30, 2022: €164m
- €1.5bn confirmed and undrawn revolving credit facility
- Dry Powder: €4.9bn
New ESG developments
- Our investments in climate and inclusion amount to €4.3bn, spread across all our strategies
- The first 3 investments by the Infrastructure strategy will contribute to avoid 1 million tons of CO2 emissions
Virginie Morgon, Chairwoman of the Executive Board, stated:
“In the first nine months of the year, Eurazeo delivered robust growth in a complex and uncertain economic and geopolitical context. Good execution of the fundraising program, a double-digit surge in management fees, a sustained asset rotation and the expansion of portfolio companies confirm the Group’s ongoing momentum, the relevance of its investment sectors, its discipline and solidity. In 2022, Eurazeo initiated promising flagships fundraising in several of its strategies which will fuel the Group’s growth in 2023.”
1. ASSET MANAGEMENT ACTIVITY
A. ASSETS UNDER MANAGEMENT
As of September 30, 2022, Eurazeo Group Assets Under Management (AUM) totaled €32.4bn, up 20% over 12 months.
Third Party AUM totaled €23.2bn, up 21% over 12 months.
Fee Paying AUM amounted to €21.5bn, up +23% over 12 months. FPAUM are detailed in Appendix 2.
B. FUNDRAISING
In the first 9 months of 2022, Eurazeo raised €2.1bn from third parties, reflecting the satisfactory execution of the funds currently raising. In Buyout, the PME IV fund exceeded its target, closing at over €1bn. The Venture and Growth strategies raised €0.6bn over 9 months (particularly in the Digital, Smart City and Kurma Growth Opportunity funds in Biotech).
Private Debt activity furthered its robust growth and its Direct Lending flagship program may reach €2bn in total in early 2023.
Retail collection maintained its excellent momentum, raising €0.6bn over 9 months (increase of approximatively +61% year-on-year) across all asset classes. Retail investor AUM totaled €3.2bn, or 14% of LP AUM.
For the full year 2022, the Group anticipates fundraising of around 3bn€.
At the end of 2022, the Group has initiated fundraising for several of its flagship strategies (Growth, Mid-Large Buyout, Secondaries) and launched an Infrastructure fund, classified Article 9. These fundraisings will spread across 2022 and 2023.
C. ASSET MANAGEMENT REVENUE
Management fees totaled €280.3m in the first 9 months of 2022, up +22% at constant scope and exchange rates:
i) management fees from third parties increased +25% to €207.6m, driven by the fundraising dynamic;
ii) management fees calculated on Eurazeo’s balance sheet totaled €72.7m (+15%);
Realized performance fees amounted to €73m over 9 months given completed exits. Performance fees from deals announced but not yet completed are estimated at around €8m.
2. INVESTMENTS AND EXITS
Group deployment totaled €3.8bn over 9 months 2022, compared with €4.1bn year-on-year. In Private Equity, the Group remains particularly selective in its deployment, favoring sectors driven by long-term structural trends in a complex and uncertain economic and geopolitical context. For example, the Group invested in Cranial Technologies (healthcare), Sevetys (pet care), or Wiismile (business services) and supported several of its portfolio companies in their build-ups. Private Debt activity deployed €1.4bn over 9 months, benefiting from a favorable risk profile combined with attractive returns.
Exits completed in 9 months 2022 totaled €2.4bn, in line with the amount achieved in 9 months 2021. In November, the Group also announced the divestment of Nest New York by the Brands strategy for a valuation of $200m, generating a cash-on-cash multiple of 2.7x.
Exits completed in 9 months 2022 on the Eurazeo balance sheet totaled €1.1bn and mainly included Reden Solar, Orolia and Trader Interactive. With the completion of Vitaprotech and Nest divestments expected in Q4 2022 for c.€0.2bn, the Group will meet its exit objectives for 2022, i.e. around 18% of the opening portfolio value. The average cash-on-cash multiple of completed divestments is attractive, amounting to 3.5x for an average IRR of 33%. The net capital gains from these deals should amount to around €0.8bn for the Group, including €0.7bn from already completed deals.
3. REVENUE FROM PORTFOLIO COMPANIES
Economic revenue from portfolio companies on the balance sheet increased 38% in 9 months 2022, at constant Eurazeo scope and exchange rates. All the Group’s strategies have reported growth since the beginning of the year. Travel and leisure companies are experiencing a strong rebound in activity; the rest of the portfolio delivered robust growth of 17%.
The Growth portfolio, not consolidated, reported weighted average revenue growth of around 42% for the nine-month period.
The good performance of the portfolio companies since the beginning of the year reflects the relevance of Eurazeo's sector choices. In a complex economic environment, the Group benefits from a diversified, high-quality portfolio positioned in structurally buoyant segments such as healthcare, business services, digital, strong consumer brands and the energy transition.
4. SHAREHOLDER RETURN
In May 2022, the Group launched a €100m share buyback program, with cancellation of the shares repurchased, in addition to share buybacks to cover the Long-Term Incentive Plans (LTIP).
As of September 30, 2022, the Group bought back 737,905 shares for €47m.
5. ESG COMMITMENT
An ESG (environmental, social and governance) pioneer for nearly 20 years, Eurazeo has placed ESG at the core of its platform and business model.
Eurazeo has incorporated ESG in each of its investment strategies. A total of €4.3bn has been deployed for the transition to a low carbon and more inclusive economy at the end of June 2022 and 89% of its rolled out or raised funds are now Article 8 or Article 9 classified within the meaning of the European Disclosure Regulation.
Among those funds is NovSanté, focused on enhancing the French healthcare sector, which in September invested in Imapole, a leading player in medical imaging and the Infrastructure strategy whose first 3 investments (Resource, Electra and Ikaros Solar) will contribute avoid 1 million tons of CO2 emissions.
6. LONG TERM OUTLOOK
Eurazeo delivered a sound performance in the first 9 months of 2022 across all aspects of its business: fundraising, management fees, asset rotation and portfolio growth in a complex and uncertain economic and geopolitical context. This performance confirms the Group's growth momentum, the relevance of its allocation choices and its solidity.
Strengthened by its position in the alternative investment sector which continues to be driven by favorable structural trends, Eurazeo confirms the outlook announced on March 10, 2022, upon presentation of its annual results and notably the doubling of assets under management, which could reach €60bn in 5 to 7 years, and an increase in the FRE margin in the medium-term to 35-40% from around 30% in 2021.
7. SUBSEQUENT EVENTS
In November, the Group announced that it had agreed to sell its majority stake in Nest New York, a leader in lifestyle fragrances, for a valuation of $200m. This divestment by the Brands strategy will generate a gross cash-on-cash multiple of 2.7x the initial investment.
APPENDIX 1: STRATEGIC PARTNERSHIPS
iM Global Partner (AUM not consolidated)
It is recalled that iM Global partners assets are not included in assets under management published by Eurazeo.
The Assets Under Management of iM Global Partner (IMG share) total US$31.9bn at the end of September 2022, down 14% from September 2021 in the current uncertain macro-economic environment. iM Global Partner nevertheless maintained its dynamic M&A strategy in 2022, notably through the acquisition by its partner, Polen Capital, of DDJ Capital.
Rhône Group (8% of AUM)
Rhone closed Fund VI with €2.1bn in total commitments, including €240m in committed co-investment capital.
MCH Private Equity (1% of AUM)
In H1 2022, MCH completed the final closing of MCH V at approximatively €400m.
APPENDIX 2: FEE PAYING AUM
APPENDIX 3: ASSETS UNDER MANAGEMENT
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(1) In quarters, NAV is only adjusted for cash and forex, Private assets are not revalued.
Eurazeo financial timetable
| 8 March 2023 | 2022 annual results |
| 16 May 2023 | Q1 2023 revenue |
