Hello, and welcome to the Eurazeo Financial Information Q3 2022 results call. My name is Laura, and I will be your coordinator for today's event. Please note this call is being recorded, and for the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star one on your telephone keypad to register your questions. If you require assistance at any point, please press star zero and you will be connected to an operator. I will now hand you over to your host, William Kadouch-Chassaing, the Member of the Executive Board General Manager, Finance and Strategy, to begin today's conference. Thank you. Many thanks, Laura. Good morning to all. Thanks for joining this call. I am pleased to welcome you all to our Q3 2022 and nine months trading update. I will take a few minutes to walk you through the performance and development we recorded in the quarter. In a nutshell, we continue to make progress in our developments and post good growth in spite of an obviously more complex and uncertain economic and geopolitical background. Let me start first with the asset management activity. We continue to grow our asset management revenues at a strong pace. In fact, we post double-digit growth. Management fees are up 22% in the period, and management fees from third party grew 25%. We also recorded EUR 73 million in performance fees in Q3, thanks to the exits which we have realized, and there will be more to come later. In total, revenue from asset management for the first nine months of 2022 amount to EUR 383 million, up 16% from the same period of last year. Turning to AUM. Obviously, the revenue growth is linked to the growth in our AUM. AUM are up 20% year-on-year in the past 12 months. As a reminder, we do not revaluate portfolio assets in the NAV. So this is only due to the fundraising, the past increase in the AUM. Fee-Paying AUM are up 23% thanks to total fundraising and the fast deployment in private debt particularly. Focusing on fundraising for the quarter. We raised EUR 2.1 billion from third parties in the first nine months of the year. Let me stress that all the strategies that are in the process of fundraising benefit from a good reception, good traction from investors in spite of an obviously more challenging environment. This is something you will have heard from others in the street. In private equity, we achieved successfully the fundraising for our small buyouts strategy, more than EUR 1 billion. Smaller funds which we have in the market, in ventures and biotech, in digital and smart city, enjoy a satisfactory reception. They are still in the process of fundraising. And the flagship fund, Private Debt Six, continues to enjoy strong momentum. This is, as you know, a fund which is focusing on direct lending in euro-denominated, and we are confident it shall reach EUR 2 billion in total towards the beginning of 2023. An important element in the fundraising, as we mentioned in the previous quarters, is the strong flows we enjoy from retail. Inflows from retail for the first nine months of the year are up 61%. They stand at EUR 600 million. The total of the money we've collected from retail investors stands at EUR 3.2 billion at the end of September, which is 14%, one-fourth, of our total AUM. We struck additional partnerships over the quarter, some of which you may have seen with the leading online bank, for example, Insurance. Overall, given the current pipeline, this is a very important point because fundraising is not a linear thing. Fundraising is a combination of market appetite and the pipeline we have on the road. Based on the current pipeline we have on the road, we expect our total fundraising for 2022 to reach around EUR 3 billion. Importantly, we will launch towards the end of the year, the marketing of several of our large flagship funds. Mid-large buyouts, growth, secondaries. On top of the marketing of our sustainable infrastructure fund, Article 9, which is now starting its marketing. All this marketing effort should yield in full in 2023. Let me turn to the second key point in these results, which is a good execution of the exit program. Obviously, I will start with the exits, as this is an area under legitimate scrutiny by the market. We continue to realize exits at the pace that we had anticipated. Overall, we realized $2.4 billion of exits in the first nine months, which is an amount equivalent to what we did in the first nine months, 2021. Clearly, this is very satisfactory when combined with the multiples we are achieving through these sales, given the more challenging context I was referring to at the beginning of this call. As a case in point, you may have seen that we announced yesterday an additional sale. The exit of our consumer growth brand strategy asset, NEST New York, which was valued $200 million and is consistent with the cash on cash multiple of 2.7. Focusing only on balance sheet investments. We have now quasi completed our planned exit program. Together with NEST and Data Protect, we announced also in the previous quarter, which we'll close both, are expected to close both towards the end of the year. Adding to it the already closed transaction, we should have completed by the end of the year around $1.3 billion of sales from the balance sheet, which is roughly 18% of the NAV of the portfolio based on end of year 2021, and very consistent with what we had said to you, in terms of the amount we wanted to sell. Let me stress again the good terms at which we made those balance sheet exits. These were done at an average of 3.5 times cash on cash, consistent with roughly 33% IRR. This balance sheet exit will translate, are expected to translate, into capital gains for an amount of about $800 million net, which will be booked in H2 2023. We obviously continue, because this is the core of our business, to do selective investments. As you can see, we completed $3.8 billion of investments in the first nine months, 2022. This is a tad lower than the 4.1 we had in 2021. We are having a slightly different mix. As you can see, we have more investment in private debt, a little less in private equity and for the period, which is very consistent with dynamics that we see in the market. Very good traction for private debt overall in the market. I mentioned it in fundraising. This is obviously true in deployment and returns. On private equity and real assets, as we said, we are very focused investors. We pick leaders in very specific sectors. We mentioned it a few times. Healthcare, tech-enabled services, energy transition. This is what you see on the page and in the press release with investments such as Ikaros Solar photovoltaic farms, IMAPRO, which is in the healthcare or in the wealth management, some build-up with a good premium for our small and mid-strategy. A point on the portfolio, which is obviously a very important element. This is a key factor behind the performance of our funds, and hence our capacity to fundraise going forward. This is also a very important element in the computation of our NAV and value creation going forward. Focusing on consolidated portfolio companies. As you can see on the chart, at constant scope and exchange rate, the economic revenue for the companies we consolidate is up 38%, roughly 40% year-over-year. This growth is visible across all strategies. You can see that in the press release. We provided you with the details. That is quite satisfactory because this is very broad-based. Focusing on the growth companies. You know that these companies are not consolidated, but we like to give you figures. This is a very important element for you to gauge the quality of the portfolio. The performance is strong. Revenues for growth companies are up 42%. Last, let me stress, particularly in this more challenging context, the importance of having a robust financial structure and flexibility to gauge opportunities in the future. The Eurazeo net cash position is positive at EUR 164 million at the end of September. You know that we have a credit line undrawn for about EUR 1.5 billion maturing 2026. We have also a significant level of dry powder, close to EUR 5 billion, which stems from the money we collect with LPs. This in total gives us ample flexibility to weather potential challenges in the market, but more importantly, grasp opportunities in the next quarters. There will be opportunities, as I'm sure you've all already heard, in the street. I'd like to stop there and leave the floor to you for questions. Thank you very much. Thank you. Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. We'll now take our first question from Patrick of Société Générale. Your line is open. Please go ahead. Hello. Good morning, William. Can you hear me? Very well. Hello, Patrick. Okay, perfect. Hello. First question is about the NAV. The NAV has not changed materially since mid-June, which is, let's say, a given, because you have not updated the valuation. Do you think that this NAV valuation of EUR 116.5 reflects the current reality? What have you done with the contingency buffer? My second question is assuming that NAV reflects reality and there is currently a 50% discount to NAV, more or less. Do you intend to accelerate share buybacks based on that? Could you explain a bit what is your philosophy or your strategy regarding share buybacks? Finally, on NEST, could you please help us with the percentage you had before, your percentage you have now? To what extent the cash-on-cash multiple has been impacted by US dollar strength? That's it. Thank you. Okay. Well, thank you. As you know, we don't update NAV on a quarterly basis. We do a few adjustments for cash position, obviously also taking into consideration the change in foreign exchange. You see a rather stable NAV as you would expect. I'll go straight to your point with regards to the so-called provision or the buffer. We haven't done anything with this buffer. We will see if we write it back or if we use it line by line when we compute the NAV at the end of the year. However, without going into the detail, as you know, we do value markup of companies and assets we own in through the funds. What I can say is that we feel good about our valuation given the strong growth in the underlying of the portfolio, combined with the fact that as you know, this is something we commented a lot during the half-year results, we continue to have what we consider is a rather conservative approach to multiples. You may remember that in H1 we had said we don't have, except maybe for a very few number of items, companies which we value at multiples which are above the spot multiples. I mean, not even using spot multiples, we continue to check where we stand when we do valuations. The combination of the strong underlying growth in the portfolio and fairly conservative approach make us feel that so far it should be okay without obviously giving you more indication as to what it will be at the end of the year. On NEST, we add 80% of the company. We will be above 15% after with a rolling up of close to $35 million of equity in the company. The multiple is 2.7 of which 20 basis points, 0.2, is associated with foreign exchange. It's 2.5, still a very good multiple. On the share buyback, we continue to execute our share buyback program, as you've seen. We consider it is a rational thing to do in the context, given what you said in terms of discount. It translates immediately into accretion for our shareholders. We don't intend to increase the pace at which we execute the share buyback program for reasons we've already mentioned, which are due to the fact that we want to maintain good liquidity of the stock. That's obviously a balance between the economic benefit of completing a share buyback and the fact that we want to keep good liquidity in the trading of our stock. Thank you very much. Thank you. We'll now move on to our next question from Mourad Lahmidi of BNP Paribas. Your line is open. Please go ahead. Good morning, William. I have three questions, please. The first one is on the AUM evolution. If I look at it on a quarter-to-quarter basis, AUM in Q3 is EUR 300 million shy of the AUM in Q2. Maybe you can give us the three main moving parts on the quarter-by-quarter. You have fundraising of EUR 300 million. I guess you have change in value and distribution in between. Can you share with us these figures? The second point is on the exit program. Can you give us the NAV uplift of the asset sale that you've done since the beginning of the year? Finally, on the performance of portfolio companies. 38% in nine months, 42% for growth companies. Maybe you can share with us the number for Q3. Thank you very much. I'll start with the first question. Thank you very much, Mourad. Hello. I won't give you the exact numbers behind because we don't disclose it in details. Fundamentally, this is what you said. We have effectively EUR 300 million of collection. We have NAV stable, the rest stems from a redemption step down. That's what explained the evolution between the two quarters. On the exit program, let me add, because we provided you with a detailed page in H1, to which I would refer you to with regards to the NAV uplift for each asset that we've been talking about at the time, namely Reden Solar, Orolia, Trader, and Vitaprotech. Let me add that on Nest, the uplift is about 20%. On top of my head, because I don't have it all in front of me, Trader was zero because we had marked up Trader at the value of the call already in our NAV. Trader, obviously, cash on cash multiple in IRR was very strong. Reden Solar was roughly 250% something. Orolia 100%, and Vitaprotech, looking at Pierre, 60 something. Overall, a strong uplift in all cases relative to the last NAV. Q3, we don't provide the Q3 specific, but I would tell you that this is very consistent with the numbers I've given you. There is nothing specific to incur in Q3. If you look at H1, we were at 46% for growth. We were at 43% for consolidated portfolio company. We are telling you this is 42% for portfolio Sorry, 38% for portfolio companies, 42% for growth. Year-on-year, there's a bit of a slowing down, but it's a tad lower, as you can see. It remains very dynamic year-on-year. Okay. Thank you very much, William. Thank you. We'll take our next question of Jeron van Aken of Degroof Petercam. Your line is open. Please go ahead. Yes. Good morning, everyone. Just one remaining question from my side. Recently, we've been seeing some articles in the press criticizing continuation funds. On that topic, are you also shifting remaining assets from one vintage to the next vintage? As an example, can assets move from PME III to PME IV, which was raised recently? Thank you. Not exactly a thing we like to do. Thank you. Well, I'll take our next question from Alexandre Gerard from CIC. Your line is open. Please go ahead. Yes. Good morning, William. Good morning, Pierre. Three questions on my side, please. The first one is regarding asset rotation for 2023. For 2022, you are in line with your target with an asset rotation close to 18%. Can we expect maybe a lower asset rotation next year due to a slowdown in deal activity? Also maybe some comments regarding financing conditions, which might become more difficult. That's my first question. Second question, that's also the same thing. Maybe a forward-looking judgment on your side regarding fundraising for 2023. If we add up all the targets that you've set for the strategies which are about to be launched, mid-large buyouts, growth, secondaries, et cetera, what kind of fundraising can we expect, or do you have in mind for 2023? My last question is related to the profitability of your portfolio company. You comment on a dynamic which is still good for your companies in terms of revenues. But in terms of margins and their ability to pass on inflation, can we have maybe a comment on the average EBITDA, EBIT margin for your portfolio companies? Thank you. Well, thank you. Hello, Alexandre. Nice try. We don't provide guidance at this stage or at this point in time in the year. Maybe let me give you some qualitative elements behind some of your first two questions. Asset rotation. What we see is that for a company like us, position in small/mid buyout with quality and private debt, secondaries. With a mix of asset class which continue to enjoy liquidity, we should be able to continue rotating our portfolio. You know that in the market, there is a lot of talks about the difficulty of raising money for large-scale deals because of the stage, what's happening in the high-end market because of banks or lack of banks' appetite and so forth. What we see in the mid-market where we operate, whether this is private equity, direct lending, or secondaries, to name a few of our strategies, remains fairly active. Obviously, debt is repricing or has repriced, and this may have impact on valuation going forward. That would be potentially the only criteria that we will consider when potentially putting an asset on the block, which is whether or not we consider we will have the best valuation for our stakeholders in the funds. This would be fundamentally the criteria. There is liquidity for the assets we own. As you can see, we realized NEST in this quarter in an obviously quite difficult environment for consumer companies. On fundraising, again, I won't give you a number, but you can hear from me, and you can read from the slide as well as the press release that we consider that from a supply standpoint, we have more larger funds on the road, on the block going forward than we had in 2022. You also heard from me that for the funds we had on the road on marketing for fundraising in 2022, they had good receptions. If I combine the two, that gives you an indication that we are quite confident that we will continue good pace of fundraising going forward without mentioning more, obviously. Can you remind us the targets that you've set for the funds which are on the road at the moment? Sorry, can you repeat that? Can you remind us the targets that you've set for the funds which are on the road at the moment? We don't disclose that. The target and the hard caps, et cetera. You don't disclose them? Well, we usually don't disclose that, certainly not at this stage. I mentioned that we had initially a target of EUR 1 billion, for example, for small buyouts. We have done more than EUR 1 billion. That was 2022. I mentioned because we are very well into the fundraising that EUR 2 billion was what we think we can achieve on private debt. We've done obviously more than half of that at this stage. You can expect, looking at previous firms, what could be the size. If I take our growth fund, the previous one was EUR 1.6 billion. You see that comparable funds in the market, one recent competitor closed one at around EUR 2 billion. Just to give you indications. We don't disclose at this stage for each and every fund a target. In a nutshell, as I said, expect that we will have more ambition in 2023, given the size of the funds we're talking about relative to 2022. We will be obviously very pragmatic depending upon the market context. That's sort of direction of travel. Profitability. I can just confirm that we only publish revenues on a quarterly basis. Without giving you the details, which we don't provide at this stage, I can confirm that the EBITDA growth for the portfolio, the consolidated portfolio, post a strong double-digit increase. To your point, which is more specific, are the companies able to pass through prices to consumers? Are they inflation-proof? As we said in the first half, I think we provided some details to you. Generally speaking, yes. We have a few companies. They may be able to pass through prices. They may be impacted, however, by a strong increase in input prices. It's only a few companies we have operating in sectors where it matters. We only have a few industrial companies in the portfolios. For the companies in the sectors where we operate, I'd say that generally speaking, revenues is a good gauge of profitability growth. Thank you, William. Thank you. Thank you. We'll now take our next question from Philip Middleton of Bank of America. Your line is open. Please go ahead. Yeah, good morning, William. Thank you very much for the update. You've been talking so far about what's happening at the moment. I think one of the things that investors are possibly even more concerned about is what may happen over the next couple of quarters. I wonder what conversations you've been having with your investee companies about how they see the environment developing and how that's affecting what you do and how you value companies. Thank you. Thank you very much. Again, another important question, which ties into the comment I just made on profitability. The company we invest into, clearly, we've asked them, and they've taken themself the initiative of reforecasting in this, I'd say, complex and uncertain rather than deteriorated environment. There are elements of deterioration, clearly we don't see that as of yet in the numbers, it's no doubt not going in the right direction as far as GDP is concerned or inflation, it's clearly more uncertain than ever. However, again, the main factor that stresses companies is inflation and the related impact on the cost of funding through the interest rates. As I said, most of our companies, they are not inflation neutral, but they are greatly inflation-proof. That's something we monitor company by company within the strategies. We get some help for that, including with sometimes, when appropriate, consultants. We do some hedging when appropriate for some inputs. That comes at a price that protects going forward the profitability. We revise price. That's where we are for inflation. On interest rates, we're usually very cautious as well. As we said in first half. We don't have a significant refinancing in the next quarters. We have a large stack of the portfolio using debt for which we hedge the interest rates. It's more than 60% in buyout globally and 90% in real estate. The sensitivity on the performance of the portfolio linked to an increase in interest rates is tamed through this hedging. That's how we monitor things. Okay, thank you very much. We'll now take our last question from Oliver Carruthers of Goldman Sachs. Your line is open. Please go ahead. Hi, it's Oliver Carruthers from Goldman Sachs. Morning, William and Philip, thank you very much for the presentation. Can I ask about the retail momentum, which has obviously been very strong for you this year? I think you called out private value, your strategic opportunities, and the Entrepreneurs Club funds as being a big source of this higher demand earlier this year. It looks like Eurazeo Private Value Europe 3 is a big chunk of this, which is both life insurance policyholders and direct investment. Obviously this is a vehicle which allows for quarterly investor redemptions. So the first question is, do all EUR 3.2 billion of your retail products allow for quarterly redemptions? The second question is, how do you expect this to evolve next year? How do you expect this could evolve next year given the uncertain macro backdrop you were highlighting in the beginning? Thank you. Thank you, Oliver. You're right to point out that EPV III, which is a mix of secondaries and private debt strategies with a kind of unique combination of performance/low volatility in the performance, has been very successful over the years. It continues to be very successful because it fits very well to what distributors, be it insurers who need lead product as you mentioned it, or banks, private banks in particular, like to offer. On top of it, as you mentioned, there is a liquidity feature which is fairly attractive to retail investors. To your question, EUR 3.2 billion, do we have 100% of funds behind that offer the same liquidity feature? No. For some funds, this is less applicable. They would be closed funds. We have a secondary fund in that case distributed by wealth managers, private bank. We now launch a mix of private equity with growth and buyout. We have a pure growth fund. You can't offer the same pattern. You need to have assets which rotate more rapidly to typically private debt, a yield from day one. Typically, the J curve is more attractive, so to speak, if you take this angle in consideration for post secondary. You can't do that for all products. That being said, these products are also very well suited to retail investors. I mentioned the secondary fund with the strategies we distribute through a private bank. Very, very effective. Although it is a totally closed fund, given the performance and the resilience in the performance. The traction we have for the growth fund is also important. The more you have people looking at their time horizon being driven by pension needs, for example, the more you see people accepting investing into a closed fund. You know that we enlarge distribution, and this is a key driver of growth going forward. We struck an agreement in the past quarter with a very important life insurer in France. We also struck an agreement with a leading online bank in France. And we think it's an important case in point because you have here two type of distributors which are very different in nature. More traditional and more new entrant-like, and it shows the traction of the product. Okay. Very helpful. Thank you. Do you disclose the split of that EUR 3.2 between closed vehicles and those that allow redemptions? The rough split? No. Okay. Thank you. I take your point that we may shed some color over time, but there is nothing to hide. We don't disclose it now. Understood. Very helpful. Thank you. Thank you. We'll take one last question once again from Alexandre Gerard of CIC. Your line is open. Please go ahead. Yes, William, just two remaining questions on my side. On the development side, firstly, at Eurazeo level, I mean on the corporate development side, I know that Eurazeo has always been on the lookout for acquisitions. Are there any interesting alternative asset managers up for grabs on the market? Are you on the lookout for such deals, firstly? Development, second question, in terms of new verticals and new strategies, you've developed an Infra strategy, a healthcare strategy. Can we expect in the coming years new strategies to be deployed? Thank you. Thank you. As you heard Virginie Morgon saying, and for the past six months, me saying, we are an ambitious company. We have ambitious targets in terms of AUM going forward. Logically, we consider that we can or should use the three levers at our disposal, at our hands. Organic fundraising, value creation through the portfolio, and potentially acquisitions. Obviously, we look very carefully at what's happening in the market. There's still movements, and there were some consolidation moves announced very recently, particularly in the debt sector. We monitor those, but we won't obviously elaborate more on that until we are sure about what we want to do. Expect from us that if we were talking about acquisition, this would be because we are on the verge of announcing an acquisition. I'll stop there in saying that it could be part of the equation in a cautious and responsible and pragmatic manner. Verticals. Yes, I think as we said from time now, we see that being a diversified multi-asset, multi-geographic operator in place which we like, goes in sync with sector focus and sector specialization of the teams. It is clearly of paramount importance if you want to generate synergies between the different stage of investments and differentiated capacities in the way you assess investments. You mentioned a few like healthcare. I'd say that going forward, because this is your question, we have obviously an important effort towards ESG sustainable infrastructure, as you mentioned, is an area where we invest a lot of efforts. Everything that goes into the sort of new wave of economic need linked to decarbonation in particular, is an area where you should expect that we invest more in the future. Thank you. Thank you. There are no further questions in the queue. I will now hand you back to your host. Well, if there are no more questions, I'd like to thank you very much for attending this call and for your questions, and looking forward to be talking to you in the next quarter. Should you have any questions, please feel free to call Pierre, Agathe, and myself. Have a good day. Thank you very much. Have a good day. Thank you very much. Thank you. Ladies and gentlemen, this concludes today's call. Thank you for your participation. Stay safe. You may now disconnect.