Eurazeo SE ($RF)

Welcome to the Eurazeo Q1 2026 Trading Update Presentation. Today's conference will be hosted by William Kadouch-Chassaing, Co-CEO. [Operator Instructions] Now I will hand the conference over to the speaker. Please go ahead.

Thank you. Good morning, and thanks to all for joining this call. I'm pleased to welcome you all to our Q1 2026 trading update. And as usual, let me walk through the key highlights for the quarter pertaining to first, fundraising, AUM and management fees; second, asset rotation; and third, the underlying performance of the on-balance sheet portfolio. We will then be available to take questions. Let's start with our fundraising activity. We had a strong quarter in Q1 2026 with EUR 1.1 billion raised during the period, an increase of 11% versus last year. This performance was driven by, first, strong inflows in private debt with more than EUR 850 million raised in Q1, nearly twice as much as Q1 2025. This strong performance comes on the back of a top quartile track record of our direct lending funds and our leading position in the mid-market category. Second, the continued momentum in the secondary strategy, which makes up for the majority of the EUR 200 million raised in equity during Q1. Our wealth solutions channel continues to grow nicely with AUM up 16% year-on-year to reach EUR 5.7 billion. Inflows were similar in Q1 2026 as in the same period last year. Our evergreen funds, EPVE3 enjoys positive net inflows with redemptions in Q1 well below 1% and in line with historical average, in fact, a tad lower. We are still in the rollout period for our new evergreen funds in the prime line, which should contribute more significantly in the coming years. As we highlighted with Christophe during our first year -- full year results, sorry, our pipeline of fundraising for 2026 is solid and diversified, both on the institutional side as well as on the Wealth Solutions segment. Let me give you an update on where we stand based on Q1. First, as we highlighted, we have 4 flagships, which are expected to fundraise in 2026. We continue to benefit from the ongoing momentum in our direct lending fund, which will shortly be announcing a final close. We should shortly be announcing a first close of PME V, the lower mid-market buyout fund managed by the Elevate team. We confirm that this fund has good traction, benefiting from the strong performance of previous vintages. In equities, we continue to have good inflows in secondaries, as highlighted before, and we are on the road with our growth equity fund on the back of a successful first closing and strong performance overall. Second, we are on the road with 5 thematic funds. In equity, EPBF, an impact Article 9 fund, which already had a successful first closing, as you know, as well as Eurazeo Future of Industries in Venture, which is currently fundraising. In debt, also an Article 9 fund focused on decarbonization financing. And in real assets, 2 funds, is already in operational real estate is already on the road, and we are launching a second vintage in sustainable infrastructure after a successful first vintage. In Wealth Solutions, as we announced, we are rolling out our new evergreen products, and we are initiating another growth fund for wealth investors. As we continue to fundraise dynamically, we posted the increase in both our AUM and fee-paying AUM. Total AUM stood at EUR 39 billion as of 31st of March '26, up 7% year-on-year with AUM from third party up double digit at plus 14%. Fee-paying AUM were up 5% year-on-year with fee-paying AUM from third parties double digit -- growing double digit at plus 13%. Third-party recurring revenues from asset management posted solid growth logically, while we continue to voluntarily decrease the contribution pertaining to our balance sheet. Hence, management fees from third parties are up 10%, excluding catch-up fees and ForEx. Management fees from third parties in private markets specifically are up 14% year-on-year, in line with fee-paying AUM. IMGP revenues were down 1%, excluding ForEx pro forma of the sale of the wealth management activity at the end of 2025. IMGP had a positive momentum from most of its partners and from its own funds, especially managed ETFs, but was impacted by market effects and some outflows of its managers specializing growth equities in the U.S. Management fees related to Eurazeo's balance sheet came at EUR 25 million. They are down 16% due to disposals and lower balance sheet commitments in fund, in line with the strategy announced at the end of 2023. Regarding asset rotation, group deployments were up 17% in Q1 2026 relative to last year, totaling EUR 915 million. Group realizations in Q1 2026 amounted to EUR 550 million, a doubling from EUR 220 million in Q1 '25. We were active both in private debt and in private equity. Of note, our dry powder from third parties continues to grow. It is up 9%, and we think we are well placed to grasp investment opportunities. Let's now focus on the current trading of our underlying investment. As a reminder, we recently hosted a workshop on our balance sheet portfolio commenting on its key characteristics, its performance and the main lines. Both the link to the webcast and the presentation can be found on our website. In the first quarter, the companies in the balance sheet portfolio continued to perform well operationally in spite of an arguably more uncertain environment. Companies in the buyout portfolios grew 6% year-on-year with a broad-based revenue growth across geographies and sectors. Companies in the growth portfolio posted a plus 22% average growth, an acceleration from previous quarters with the largest lines in the portfolio performing particularly well. The most recent investments in Growth IV fund have seen average sales growth also accelerate at over plus 60%, 6-0, confirming the very good momentum. In real assets, hospitality revenues were up 6% in the first quarter sales of companies in the sustainable infrastructure portfolio are also up dynamically by 36% on average. At March 31, 2026, investment portfolio carried on the balance sheet was valued at EUR 6.8 billion net and as usual, is not valued during the quarter. The portfolio value per share was EUR 102 at end of March 2026 consequently. We are now available for your questions. Thanks for attending this call again.

[Operator Instructions] The next question comes from Nicolas Vaysselier from BNP Paribas.

Just 2 quick questions from my side. The first one is on the fee-paying AUM dynamics. The jump from one quarter to the previous is pretty big. And I wanted to know which asset class has been driving this. I suspect it's private debt. And then despite this increase in fee-paying AUM, the overall fee margin stood at 1.10 versus 1.2 on my calculation from the previous quarter. So yes, I'm definitely interested in understanding the mix dynamics for this quarter in the fee-paying AUM growth. And then my last question, you mentioned those new evergreen products that are about to hit the market. I'm curious to see what traction you expect from them in terms of fundraising in the near term, given that flows in wealth remain pretty consistent, but I suppose are quite skewed to your big evergreen fund.

Nicolas, I think we didn't hear fully the second question.

And also third question. Could you repeat, sorry?

Yes. Sorry, it's just you're about to hit the market with 2 new Evergreen products, right? I'd like just to have a bit of a color on what you expect in terms of fundraising traction for those in the near term? Because I suppose what you raised in wealth mandates so far remains heavily skewed to your large EUR 3.7 billion fund.

Okay. Yes. Thank you. Sorry because we had on our side, a bad connection. Let's start with fee-paying AUM. So what we can say, I mean, you're right to point out, it's fairly dynamic and above market growth, we think, as we commit to deliver. It is rather broad-based. So we have double-digit fee-paying AUM growth, both in private equity and in private debt. As you know, the dynamic is a little different for PE. It relates to commitments for private debt. It is linked to also the pace of deployment. But I mean, it's very consistent across the board between PE and private debt. Overall fee margin, just to remind -- and thanks again, Nicolas, for asking that question. To remind everyone, the 110 basis points, which is a healthy rate, is associated to the third-party management fees. At group level, we are 120. So for us, it's fairly stable. The difference between group level and third party stems from the fact that the balance sheet is rather skewed towards private equity and less so towards private debt. It also has within private equity, less exposure traditionally to secondaries. So as a result, there is a mix effect that makes up for a difference between the average balance sheet fees and the overall yield on third party. But it's fairly stable and the difference again stems from what I just explained. It may vary slightly within years or between years because of mix effects. But what we experienced, I guess this is the implicit question behind your question is that the fee rates hold well. Evergreen, we have a good traction as it relates to converting or onboarding distributors outside of France for this new Evergreen fund, which are LTIF funds, one pertaining to private debt, the other one pertaining to secondaries in different countries in Europe. And also, we have some traction in France. Now as we said with Christophe a few times already, it will take time before the machine works at full steam because, first of all, we had to shape the product, get the authorization. We are starting now to warehouse some assets in these funds. You don't market Evergreen funds to individual clients unless you have already some inventory. We are onboarding distributors. And so we don't expect, to your question, big flows in the short term. We expect some flows in '26, and then we expect the thing to grow gradually and accelerate in the years next. To your point on our EPVE 3 flagship, it continues to perform well in terms of gross collection. And as I said before, because we still have low redemption rates, in fact, as I said, a tad below the average of 25 for the first quarter, the net collection continues to be positive. Now we are also aware that this is a product that we have really to make sure that you educate well the public as to its features because there is a bit of noise stemming from the U.S.

The next question comes from Alexandre Gerard from CIC CIB.

I have 3 questions. The first one is related to fee-related earnings. I mean, to performance fees related to fee-related earnings as the rotation of the balance sheet normalizes within the historical range, 20%, 25%. And if we take normative assumptions regarding cash-on-cash multiples, what would be the size of the performance earnings? Can you remind us what we can expect in terms of performance fees compared to fee-related earnings? This is my first question. Second question is regarding the share buyback program. So you bought back 1% of the capital during the first quarter. Can we expect the same for the coming quarters? I mean, 1% per quarter? Or do you think that maybe accelerating the share buyback program given the fact that the share price is trading on a steep discount to its fair value might be interesting? And the last question is regarding fundraising. So I know that you don't give guidance for the year. But if we look at all the initiatives that you mentioned on Slide #, I think, 3 or 4, all the funds on the road, can we maybe not have a precise estimate of a very wide range in terms of fundraising for the year in terms of what you expect? Can we multiply by 4 what you raised during the first quarter? I mean, this is a rough and the vague estimate of the fundraising. So these are my 3 questions.

Thank you very much, Alexandre, for these questions. On the performance fees, I think things develop as we had said, but you invite me and thank you for that to reiterate the guidance we had given or at least the midterm objective we had given. So let's start with that. The midterm objective is that by 2027, I mean end of 2027, we should have converged given the maturity of funds and the pace of rotation towards performance fees representing roughly 10% of the third-party management fees -- the third-party revenues. So that's positive because that would translate into a nice increase in the cash flow, but also it's positive because it means that the company will remain very centered on predictable management fees in its revenue composition. Now to your point on what's happening more short term, clearly, we have a number of funds that are now approaching the hurdle when they can recognize the -- where we can recognize from an accounting standpoint, the performance fees. So we are on a positive trend consistent with what you've said -- you've seen in 2025, which is an increase, and then we should continue on that pace towards what I highlighted. Share buyback. The program is structured in order to enable us to be constantly in market. So assume that 1% each quarter is a basis. We always evaluate if we should accelerate or not in case of more weakness on the stock price. But fundamentally, if you take that assumption, you don't take too much risk. On the fundraising, I like the way you phrased your question in a very smart way, which is to say, we are aware that you don't give guidance, but please give me a number. So I won't give a number.

I mean a rough estimate or there is a wide range. You know, it would be a helpful one I think, yes.

What we can say is, as you say, we have a positive trend. Nevertheless, that quarterly fundraising is not even. It's not linear growth that you would expect. I mean there are quarters which are much more dynamic than others. But overall, what I'd like you to keep in mind that we are continuing our journey on a positive trend after a record year 2025. So we'll be more specific in the next quarters when we see also where the environment lead us. But just keep that positive message that we have a diversified product offering with a number of announcements we will do in the next weeks and months pertaining to either the final close of EPD VII on the debt side or the first close of PME V. We continue to fundraise also on the thematic funds and some of the other flagships. So that's all what I can say now. I don't want to qualify more the number, but we have a good start of the year. And I didn't mean to be frustrating, Alexandre, but I want to be cautious and keep to our guidance policy as we have it every year.

Do we have any more questions on the line? Maybe I can ask a question that I have on the chat then. A question on IMGP from Mathias. What is the expected trajectory on IMGP fees going forward?

So as we have seen in Q1, IMGP is fundamentally dependent on its ability to generate net new flows, net new money, but also market effect. Q1, we had positive inflows net of everything because we had strong inflows in the IGP proprietary products like managed ETFs that I said. We had strong inflows in many of the underlying partners and asset managers, and we had outflows in a few of them, particularly one I mentioned, which is specialized on growth equity in the U.S. So we should continue that trend of net positive flows for the rest of the year, absent, of course, major shocks or further major shocks. And then the market effect has started to improve in April. It was negative for the first quarter. So let me be a bit more cautious on that one. So all in all, as you can see, that's a platform that has some potential to do better than in Q1, pending, of course, market effects, ForEx and the environment. That's all what I can say now. I would add also one point, which is that IMGP has also a tradition to manage very well its costs. So Q1 is not a moment where we talk about profitability and cost. But I think there is some flexibility there to adjust and protect the profitability depending upon the revenue generation.

Thank you, William. I don't know if there's any more questions on the line, operator? So thank you very much for attending this call, and have a good day.

Have a good day, everyone.