Wendel (MF) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Wendel's Strategic and Q3 Update Conference Call and Webcast. [Operator Instructions] Olivier Allot, the Director of Financial Communications and Data Intelligence, will read them. I must advise you that this conference is being recorded today. I would now like to turn the conference over to your first speaker today, Mr. Laurent Mignon, Group CEO. Please go ahead, sir.

Well, thank you very much, and good morning to everybody. Thank you for having made the time for this conference. I will make the presentation together with David Darmon; Jérôme Michiels will be there also to make the presentation; Cyril Marie on the asset management part; and Benoit Drillaud, our CFO; and we will all be there to answer your questions after the presentation. Today's announcement is an important milestone for Wendel business model and I think value creation profile for the future. In development, 2 key things. We are entering into exclusive negotiation to acquire Committed Advisors, a specialist of the mid-market secondary business, which will, I think, is an important element for our platform, which we -- is Wendel Investment Manager, which will have now 3 verticals, over EUR 46 billion of private assets under management, a little bit more than EUR 200 million of FRE expected in '26, pro forma 100% of the acquisition of Committed Advisors. And also, but it's very important, this is a platform that has strong organic growth potential together with external growth potential. Wendel Investment Manager now would represent 30% of our GAV, excluding cash pro forma of the acquisition of Committed Advisors. On the second element is, we have -- we're making an evolution of our Wendel business model and the principal investment by leveraging the IK Partners knowledge, experience and platform to enhance what we call Wendel Principal Investments performance. I will come back on that. And also, we are simplifying our structure by the launch of Iron Wave and the sale of our portfolio in the venture business. Since 2023, we have made a sharp transformation of Wendel business model. And today, announcements mark a key milestone in this transformation. And I think it is done in order to generate more regular revenues, more 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 assets. 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 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 Wendel 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 EUR 46 billion of assets under management with a global footprint in terms of investment and client base. We have 3 verticals, which are highly complementary, which offers significant organic growth potential through fundraising and product diversification. And we've moved from 0 to EUR 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. So -- 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 are working on enhancing our private investment business by leveraging what we've acquired, which is the platform of IK. And I think the IK Partners expertise will help us doing that. We'll do so through an adviser's contract between Wendel and IK Partners for all existing and future private investment, and we'll come back on to that. But this will also generate a simplification of our structure. In the simplification part, the Wendel Growth, 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 we 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 the listed asset, which is Bureau Veritas in large. We have a very successful start of LEAP28. We have a 2.4 -- we have generated EUR 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 Wendel Investment Managers platform. And as you know, for Tarkett, the squeeze out in process. So it's an active management of those listed assets. We -- and -- so clear change over there. Now let's move a little bit on the biggest news of this quarter, which is the exclusive negotiation with Committed Advisors. First of all, this is really something we've been working on for some years. We have -- it's -- 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 last -- the few last months in order to come to that exclusive negotiation situation that we announced today. Committed Advisors is absolutely a great specialist, which is uniquely positioned on the mid-market with a potential targeting of secondary transaction, which range from EUR 20 million to EUR 200 million. 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, 4 in Singapore because they are covering globally, they're investing in the global world. 51 (sic) 50, you'll see that later on, but a large part of it is in the U.S., Europe, and Asia. EUR 6 billion is under asset management and a very strong 24% growth of their accumulated fundraising since 2010. The FRE expected for '26 is EUR 45 million. But more importantly, I would say, the return for the LPs has been over 19% gross IRR consistently since the creation of Committed Advisors, which is a great illustration of the performance of the team. They have realized more than 220 transactions over the past 15 years. And they have 2 strategy, which is rather balanced, which is the traditional one for the secondary, which is LP-led, which is really when an LP want 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 GP in continuation vehicles. This is -- Committed Advisors will really well position itself within our platform. You know on this page, you see our traditional layout of the operating model of Wendel Investment Managers. And the fit between IK, Monroe, and Committed Advisors, I think, is absolutely great. It fit in terms of product line, diversification, ability to enhance the discussion with LPs and growth potential. So I think we are 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 are deploying our models. Maybe then I will hand over to Cyril. No, no, it's still -- maybe I will -- because this model is based on 4 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 and invest 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 interest 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 strategy diversification to be launched over the next 3 years will be supported by our model. We have -- we're developing also a full range of wealth management product to be distributed because none of those -- or at least 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 can have -- and we have an active management of our 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 Advisors, they bring to us a large chunk of LPs that are family -- large family offices, which were less present in terms of Monroe or IK, but not only. And I think it's a key benefit to that. And we're working on strategic coverage, and we're creating a centralized sales team for specific markets, which are not the home market of this company so that we can enlarge and accelerate the growth. We 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 IK and Monroe. Since we made the acquisition, we had organic growth of 20% of their assets under management and 16% of their FRE. We're adding to that now Committed Advisors with a EUR 6 billion of assets under management and EUR 45 million of FRE. That leads to a global platform, which is over EUR 46 billion and EUR 200 million -- over EUR 200 million of FRE, which rank us, if we go to the next page now, as being one of the main European listed -- when we compare ourselves to main European listed peers, to be really well positioned into it. We've not included a very large company like EQT, CVC or Partners Group. But otherwise, we've put the European listed asset managers, and you see that now Wendel is really part of the club and its -- and rank very well to that. We are getting to be an asset manager, not only because we still have a holding activity, but please look at us as being an asset manager together with the 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 it really was our strategic objective a few years ago. And now I pass the floor to Cyril Marie, who will go more in the specific of Committed Advisors. Sorry, [ ACH ] is a code name in the project.

Thank you, Laurent. Thank you. Now we can use Committed Advisors. So there is various ways to assess the quality of a strong GP, as Laurent said, that's the quality of Committed Advisors. And let me share a few with you today. So the first one, what you see on Page 12, it's the growth of AUM. The priority is not growth of AUM. The priority is the performance for our clients, as Laurent said. Here, you see, so the firm was created in 2010 with a first fund of EUR 250 million. Now after 15 years, they have raised their last fund at EUR 2.6 billion, Fund V, and it has been done with the development of a strong client base. Now they are 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 CA 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 4 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 growth on 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 a 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 Advisors. The third way to assess the quality of GP is the quality of the team for sure. And here, I think what you see here, for sure, you have 4 partners, founders. 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 structured 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 we will put in place what we have to do in order to incentivize them to build the next generation after the 4 founders. So a very strong team with a lot of experience, a very international team and able to support sustained 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 platform. And on top of that, they rely on a fast-growing market. The secondary market is a fast-growing market that rely 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 and large strategic allocation in private market, whether it's retail or institutional clients, the more you have the 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 is Committed Advisors with a global footprint and with a specific positioning because it's a broad market and the positioning of Committed Advisors on the mid-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 the performance. I will mention that quickly, but there is their positioning, their track record, the number of transactions they have done, et cetera, et cetera. But if we summarize, so what -- why Committed Advisors is the right partner for us. The first thing is the complementarity. 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, it's 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 above that 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 their positioning on the wealth management. To do so, as Laurent said, we have now a strong sponsoring program, and we'll 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. 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 a transaction where we take control and a 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 won 20% of all carried interest from future funds. That's the scope of the initial transaction. And for this, we will pay an upfront payment of EUR 258 million. And just for the initial transaction, we will pay an earnout between '28 and 2030 based on 2 criteria, the FRE growth and also the fundraising, and it could range from 0 to EUR 128 million. If you add the 2, it means that for the 76% and the 20% of the -- 56%, sorry, and the 20% of carried, we will pay between EUR 258 million and EUR 353 million, which if you compare it to what is the target for the FRE for next year, so EUR 45 million, the implied multiple on the pretax basis will range between 10x and 14x. And then just to highlight the long-term alignment of interest. First thing, as I said, the founder or the seller will reinvest all their proceeds net of tax for sure in the funds, which is a strong commitment. Two, for the remaining 44%, we will have put and call agreement over a long term. So as you can see, '29, 2030, 2035. 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. It's -- 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 the change in the operational implementation of our business model.

Yes. Thank you, Laurent. And thank you, Cyril. So with -- what we've seen over the last few years is really an evolution in the market of private investments. It has become very important to be at scale to be performing. And at scale means to have specialized large investment teams, operational teams, debt capital market teams and equity capital market teams. It is now crucial to have that to secure very good returns. We also believe, at Wendel, that we need to have a diversification in terms of sourcing of opportunities, and that means to have boots on the ground and have more local presence. And last, I will say that our capital is long term, but it's finite. And so from time to time, we had to slow down our investment, which can also limit the deal experience of our team. And we want to have a team, which is very experienced and to limit the churn. So with that in mind, the importance of being at scale, the importance of being local and the importance of being permanently in the market and not in and out, we realize that we need to revise our modus operandi. With our new business model, we have the chance to have in our group the state-of-the-art platform, i.e., IK Partners. And so considering those conclusions on the market and the fact that in the family, we have the benefit of having a partnership with IK, we have decided to change the way we're going to operate, and that's what I'm going to cover now on Slide 20. So from now on, Wendel Principal Investment is going to be advised by IK Partners for all existing and future private investments. Existing, meaning Stahl, Scalian, Globeducate, CPI and ACAMS. The investments will remain and control -- owned and controlled by Wendel, so there is no asset transfer, where Wendel will retain the decision-making power, both in the investment committees and on the Board of those companies. So from the asset point of view, there is no change. What will be different is that IK Partners will present to Wendel new investment opportunities with a similar profile to what we look today, so there is no change in terms of investment strategy. You can recognize the EUR 300 million of equity investment, which was where our sweet spot is today. The investments in itself could be higher because there could be the possibility of raising co-investments. So the equity investment globally could be EUR 300 million to EUR 600 million, but the share of Wendel will be around EUR 300 million. Those investments will remain control or co-controlled private investments and the holding horizon will typically be 4 or 6 years with the possibility of holding the assets longer on an ad hoc basis. So the same type of investment strategy, but the way we're going to operate is going to be different because we're going to benefit from the experience and ecosystem of IK. From our point of view, it's a simplification of our business model. We believe it's going to improve the performance of the principal investments portfolio. And on the top of it, it will bring some cost efficiencies. I'm turning now to Page 21. In conclusion, to summarize the benefits of this new framework, we will be at scale in a market where scale is really becoming very important. We'll have the full support of the IK platform, both in meaning on the ops team, the capital markets team, the ESG team, all the resources. We will be able to better leverage our balance sheet by potentially raising co-investments, which will make us capable of making larger investments. And last, we will leverage the IK Partners' track record to build a new market legitimacy. So in a nutshell, a clearer and more efficient model for Wendel.

Yes. Thank you, David. I will take it from here on Wendel Growth, for which we are also announcing a simplification, which is an important step for our investment model on Wendel Growth. On the indirect side, first, that is our fund of funds strategy, we have tapped the secondary market to generate liquidity and reduce our exposure. Given the quality of our portfolio, we've been able to generate EUR 75 million of cash at tight discounts. We are also transferring unfunded commitments in the process, which improves our liquidity profile going forward. We will continue to monitor the market for the remainder of our exposure and generate liquidity where possible, but on a selective basis. On the direct investment side, we are announcing the upcoming launch of Iron Wave. This is an initiative led by our direct growth team. Based on their track record, they will launch an independent GP that they will own at 70%, whilst Wendel will be a minority shareholder at 30% and a key sponsor of the first fund. The investment thesis, which is European B2B software growth companies makes a lot of sense and investors in the sector are all independent and led by their management teams. This is why Iron Wave has already received indications of interest from large institutional investors, and they are now awaiting regulatory approvals to formally launch. With these 2 initiatives, we are simplifying our model for Wendel Growth, and we are generating liquidity beyond what will be deployed in Iron Wave, which is positive. Moving now to Q3 key highlights on Slide 24, and I will start by Wendel Investment Managers, where you can see strong growth over the first 9 months. We are reporting total assets under management of EUR 40.3 billion at the end of September. In terms of fee-paying AUM, the total is EUR 29.2 billion, which is a 192% increase over the end of last year when adjusting for foreign exchange. This is the result of a strong fundraising at EUR 3.4 billion and good deployment. Year-to-date, Monroe and IK have added EUR 6.4 billion of new fee-paying AUM, driven by good deployment at Monroe, EUR 5.3 billion and about EUR 1 billion of new fundraising at IK Partners. Note that exits and payoffs have also been quite strong at EUR 3.6 billion over the 9 months. In terms of management fees, Wendel Investment Managers generated EUR 258 million over the first 9 months. This figure includes 9 months of IK Partners, but only 6 months of Monroe Capital as the acquisition closed end of March this year. When comparing to the same period last year, the growth is stellar, but we only had 5 months of IK and no revenues from Monroe back then. Nevertheless, when you strip out for those scope effects, we are looking at a very strong organic growth over the period, driven by the successful fundraisings. Let's move to principal investments on Slide 25, where most of our companies have reported good growth over the 9 months, starting with Bureau Veritas, which posted 6.6% organic growth with good momentum in Marine & Offshore, B&I, Industry and Certification. Based on this good performance, Bureau Veritas has reconfirmed its full year outlook. ACAMS and CPI have respectively reported 9.1% and 2.7% organic growth, the latter having been temporarily impaired by ongoing federal oversight and funding uncertainty within CPI end market in the U.S. This has, however, been offset by volume growth in terms of renewals and encouraging acceleration in activities across international markets that are up 14% year-to-date on an organic basis. As you know, Andee Harris become CEO of CPI, and she is replacing Tony Jace, and she's off to a good start. At ACAMS, 9-month sales were driven by double-digit growth in the Americas segment, whilst Asia Pacific reversed the negative trend from 2024 and was up 7% compared to last year. Stahl and Scalian are facing more challenging market conditions and have reported negative organic growth over the last 9 months. At Stahl, Q3 was characterized by the persistence of challenging market conditions experienced since the second half of '24, intensified by the unstable tariff landscape, which impacted performance and volumes in leather and particularly on the wet-end side. Organic growth for the 9 months was minus 5.2%, whilst scope contributed positively by 7.3%, thanks to the Weilburger acquisition. Scalian is still facing a slowdown across several sectors and geographies that is more pronounced in France and on the automotive market in Germany. This decline was partially offset by positive scope effect of 4.5%, driven by acquisitions realized that were accretive to both growth and margins. As announced in September, William Rozé has now taken office as CEO. His in-depth knowledge of the group business, combined with his unifying leadership will be key to driving Wendel's long-term development and strategic ambitions, and we can already tell you that things are moving fast. Lastly, Globeducate posted revenues of EUR 270 million, representing a total increase of 12% over last year, of which 7.2% organic growth, 4.1% scope with 3 acquisitions having been completed over the past 12 months and 0.8% from foreign exchange movements. Moving to net asset value on Slide 26. We are reporting for Q3 EUR 163 per share on a fully diluted basis. Sequentially, we have seen a modest decrease of 2.8% compared to June. This is the result of the appreciation by EUR 1.1 per share of the value of Wendel Investment Managers, driven by valuation multiples, but also the good performance in terms of revenue and fundraising that we just covered. The value of our principal investments has been slightly impacted notably by the evolution of market multiples and Bureau Veritas share price, which has impacted the value by EUR 5.3 per share. Note that based on this morning's price levels, we have already recovered more than EUR 3 per share compared to this level. Foreign exchange and other items have had a minor impact on the evolution of our net asset value. Lastly, our loan-to-value ratio is at 13.8% end of December and at about -- end of September, sorry, yes. And at about 20%, if we take into account the upcoming acquisition of Committed Advisors.

Well, thank you very much, Jérôme. A little bit of a wrap-up, which is really the journey -- transformation journey that has been engaged since 2023. We have been, as you know, doing -- announcing significant strategic shift at that time, and we've put that in place in a consistent manner and a disciplined manner since then with the acquisition of IK in October, which was announced in October '23 and realized in -- closed in early '24. With the acquisition of Monroe Capital, which was announced in October '24 and closed in first half of '25. And now with the announcement of the exclusive negotiation with Committed Advisors in October '25. And we expect should everything goes smoothly to close in the first quarter of 2026. So October is the month of asset management development. We also have made a significant rotation in the asset portfolio. Remember, the sale of Constantia Flexible, the acquisition of Scalian, the sale of 3 blocks of BV and the acquisition of Globeducate. So a lot of activity. The asset management now is a significant part of our business and is becoming our business. It's not an investment. I want to re-insist on that. And we have simplified the framework, reduced the complexity, reduced globally the cost of doing our business and I think given us a chance to do better performance on the long run. So Wendel Investment Manager now is really a significant European mid-market private asset platform with -- and I think it's key, a good organic growth potential, thanks to successful fundraising and very positive underlying market. We've been very active on the M&A, obviously, I already mentioned. And the platform synergies are being accelerated, both in terms of distribution network and a wider range of products for our LPs. I think we've upgraded the framework now on the principal investment by building on IK Partners' unrivaled expertise. It's a new framework that will be created more value with lower cost. It enlarged our ability to accelerate value creation on existing assets. It's also enhance our expected to identify new targets and deploy capital in attractive investment opportunity, together with having the ability to attract co-investment because of the IK ecosystem. And I think that will generate shareholder return enhancements in terms of dividend. We've already done that, as you know, significantly in '24 and '25. We have moved now, as you know, to an interim dividend policy, the first one being paid in November '20 for EUR 1.5 per share. And this will consistently help us generating more cash flow for Wendel -- from Wendel Investment Manager and more value creation from Wendel Principal Investment and allow us to have this strong dividend policy. We have an Investor Day on December 12, and we'll specifically talk about the capital allocation strategy during that period. We will talk about the other things and some of the news of the portfolio, but we'll make a specific focus on our capital allocation strategy for the future. Great. Thank you very much. And now we are at your disposal to discuss -- to answer your questions.

[Operator Instructions] Olivier Allot, the Director of Financial Communication and Data Intelligence, will read them. We are now going to proceed with our first question. And the first questions come from the line of Isobel Hettrick from Autonomous Research.

It's Isobel Hettrick from Autonomous Research. I have 3 of them, please. So the first one is on Monroe Capital. And I was just wondering if you could provide any detail if the manager has exposure to First Brands or Tricolor at all? And then just further color on the detail of how the wider portfolio is performing at the moment given concerns over credit in the U.S. And then my second question is on the Committed Advisors acquisition. So a lot of your peers have talked about wanting to acquire secondaries managers to help with their existing private wealth offerings. So to have like a liquidity sleeve, for example, within their existing private equity strategy. I was just wondering if you could provide some color if you're thinking about that at all in the potential new funds you can build or how the manager can interact with your existing platform on your private wealth offering? And then my final question is sort of related, but could you just give a broader update, please, on where you are across the platform with building out your European private wealth offering?

Thank you very much. Okay. Monroe Capital and private credit, which is the headline of the flavor of the month. First of all, I mean, we're not here to comment any specific exposure, but I can say that because this is the investment of the LPs. But globally, Monroe has no exposure to Tricolor, has a small exposure to First Brands in a first lien situation, expect to recover a significant portion of it, but it's on its way. It's -- based on the assets of Monroe, it's a small part. And it's not the main -- it's a little bit of the -- they have made a small diversification in alternative credit strategy, which is a small portion of what they do. What Monroe is doing mostly is direct lending to corporate, and they do that to lower mid-market corporate. The global -- they're not in those big, structured things and so on. What they're doing, and that's one of the key elements why we bought Monroe, is that this is a company that is structured with origination on one side, underwriting on the other side. So we've got this double eye strategy, which means that they do mainly invest in loans that they originate themselves and loans where they have a secondary look to the quality of the credit. The reality of the portfolio of Monroe is that it is in good shape. They have lower, how would you call that, leverage ratio than the average. We tend to have around 4x leverage. They have always -- I mean, always mostly covenant credit, while the credit light has developed significantly in the U.S. So they are very restrictive in the way they do. So we see a very good performance of the funds and those keep on being very well. They have, by the way, had their meeting with all the LP last week that went very well. The LP were very happy about the thing, and they're keeping on collecting money, thanks to the strength of their model. They are very focusing themselves on sectors, which they think will be -- they think there's a very strong secular movement now of relocation of business within the U.S. and probably higher inflation because of that, which I think is a longer trend of what you see. And they are focusing on business that are sensitive -- positively sensitive to that, less exposed to tariff and -- so benefiting from the trend, less impact of tariff and that's it. And they are -- because I think it's important to be, they are always in floating rates, never in fixed rate. So the only thing that we need to maybe say that there is significant money that have come to that private credit market, so that has put some pressure on the margins. And it's true that the credit spread -- not the margin, but the spread, the credit spread over the floating rate has slightly reduced. And that's why we've been selective in deploying money. And you see that we've got a large chunk of -- how do you call that white powder or dry powder, dry powder than white -- sorry, in Monroe because we still want to be very selective in the way we deploy the money, and that's key to us. So no, we're very -- and I say they had this big meeting, which was a week ago that went very, very well in Chicago with all the LPs, and they've been very clear about where are the opportunities, the risk. And if you -- they have 20 years of navigating that market. They are not new in that market. There's a lot of newcomers. They are not new. They have a very strong infrastructure of managing that, local people on the ground, underwriting team. So they're very, very serious about managing the risk. And by the way, we look to the quality of the credit rating of their investment, and it's in a good situation. So it's something that is very highly monitored on a day-to-day basis. Now coming to adviser and private wealth and development. And maybe Cyril, do you want to say a word on that?

Yes. So your first question, each of our GPs remain totally autonomous in terms of investment management, and we don't have in mind to favor related transaction between GPs. So IK will remain IK and Committed, Committed, and they will act in the interest of their LPs. That -- and so it means that we don't have in mind to reinforce the -- in terms of investment management, the cross transaction, if it was your question. The other part of your question was on wealth management. And for this, for sure, we have in mind to create a platform because the sales process is different. As Laurent said, it's expensive to do so. We have already a significant presence with Monroe in the U.S. We have in mind to do the same in Europe. We'll do it carefully. The starting point is to create the products. So we are starting with IK, something will be announced soon, and we have in mind to do the same for Monroe and for Committed. And when we'll have the product, probably we'll have a centralized sales team with a coordinated marketing effort to manage the relationship with the distributor because on this, we believe that centralization makes sense.

Cyril is going -- we're going to announce. So we're going through the regulatory process now so that we can be live. You never know when you have the green light, but normally, final -- at the end of the year, we should be live to go on IK for retail. Yes.

We are now going to proceed with our next question. And the next questions come from the line of Hannah Leivdal from Citi.

I just have 2, please, if I can. So the first one is on the third-party asset managers. What are some of the key funds here? And will you be providing more disclosure on these? It would be helpful to be able to track them more closely for modeling purposes. And the second is, is there scope to avoid selling down your listed stakes in order to fund co-invest buying out the minorities of your 3 third-party asset management businesses over the next 5 years? Or is it more likely that you will further reduce your listed asset portfolio to fund this growth?

Well, key funds, I think, no -- we can, in the future, for sure. In future financial communication, we can provide probably some detail regarding the fund, the size, the performance of each fund, at least the key fund of the 3 GPs, yes.

Yes. But the name of the fund is CA...

So for Committed Advisors, so they have one flagship, which is Committed Advisors Secondary Fund. And they have also now launched a new series of funds dedicated to GP-led called CA GPS Funds. So it's Vintage II. So that's the 2 main funds that you...

CASF V, which is the last flagship and the...

CA GPS II.

CA GPS II. This is obviously unlisted funds. The second question was on how do we -- the capital allocation. Well, we'll make a specific -- the objective is during the Investor Day to do a little bit work on the capital allocation. But globally, we're talking about buybacks of those puts and calls between 30 and 35. So it will be a mixture of the asset rotation of our portfolio that will be there. There's no specific being listed or unlisted. As we say, we are managing our listed assets based on value. We think that there is still value creation within our portfolio. We like the LEAP28 plan for Bureau Veritas, which we've been supported and we like what Hinda Gharbi and his (sic) [ her ] team is doing. I'm the Chairman of Bureau Veritas and making sure that we're going down the right way. And I think the team is doing a great job. But it's -- we'll go more specifically on the global capital allocation part during our Capital Market Day-Investor Day in December.

We are now going to proceed with our next question. And our next questions come from the line of Geoffroy Michalet from ODDO BHF.

Congratulations for this platform evolution and deal. Three questions for me. The first one is on the new setup for the balance sheet investment, the proprietary investment. How incentive and carried interest for teams will be organized now, including at Wendel level as part of Wendel's management and team used to be incentivized by carried interest. How is it going to evolve? The second question is also related to the new setup. I suppose that you will pay management fees to IK for the advisory work. What kind of level of fees will you pay since there will be no need to fund raise for IK, so we can suppose maybe lower management fees than a traditional one? And the third question is also on the balance sheet investment. IK is not a U.S. investor, whereas Wendel balance sheet is already exposed to the U.S., with CPI and ACAMS. Do you intend to remain an investor in the U.S., and how IK will advise you on those opportunities?

Thank you for those great questions. For carried, for the interest on long term, we have changed the system at Wendel level already, and it was announced at the last AGM. We have no more -- I mean, they've been carried interest in the past. Now we have no more carried interest. The full alignment of interest of the team is based on the share price through a system of pref shares. So -- and that will remain the same. So it is a global value for the firm rather than the individual value on each of that. In terms of management fee for IK, we will be around -- roughly around 0.8% of the value of the assets. And globally, when we take the reduction of needs in terms of -- at the Wendel level plus the payment of the fee that will generate a cost -- a lower cost for us to manage the asset overall, including the fees paid and the fact that a number of the teams will not be there anymore. Some of the teams will be, by the way, joining IK, which makes sense. But globally, it's a cost saving situation. For the U.S., obviously, the contribution to -- of IK will be more limited, while the operating partner and capital market team will bring the same sort of value. But we will -- a lot of relying on the existing team that was of Wendel in -- yes, but based on the same...

Yes. And so just remember that for ACAMS 50% of turnover is outside the U.S. So it's headquartered in Washington, but it has a lot of international operations where the ops team of IK can be helpful as well. Just on the incentivation, Laurent mentioned the Wendel team, but the IK team is going to be incentivized as well with the carried to be paid by Wendel to IK.

For the new investments?

Yes.

But again, it will be -- it won't drag to us more the value than it was in the past. It's a similar system, but it's for the Wendel team is fully on the share price, which I think is good. And for the specific advising firm, it will be for IK. And management fee, I think, will be clear.

And just to clarify, do you plan to continue to deploy your balance sheet in the U.S. in direct investment? Or will you limit yourself to Europe after the, let's say, IK transfer of people?

No. I think we've got opportunities in both sides of the Atlantic, and we'll do that. We told you that we tend to invest -- so we'll do potentially both. We've got a good team that has been successful with investment in the U.S. They will be supported by the IK infrastructure. So that's...

We are now going to proceed with our next question. And our next questions come from the line of Alexandre Gerard from CIC Market Solutions.

So the first question is the following. Can you please quantify a bit what you announced today in terms of, I would say, financial benefits of all these different initiatives? Are there any evolution of Wendel's OpEx base going forward in terms of headcount, maybe also at Wendel pro forma in 2026? So that's my first question. The second question is on the EUR 200 million of FREs that you expect for 2026. Could you remind us what would be Wendel's share of that amount? And maybe the last question is on Iron Wave. Can you also come back to the economics of the deal? Are you selling the entire portfolio? And on the EUR 75 million that you just sold, are you selling at a discount, at a premium? And how much are you maybe going to reinvest in Iron Wave?

To quantify the thing, let's -- I mentioned that the global cost will be down by 15%. So it means OpEx, including fees paid to IK will be down 15%. That's what I mentioned. In terms of number of people, it's always difficult to give a number precise. But globally, I can say that we have moved from -- we were close to 100 people in end of 2023, and we will be close to 65 people at the end of this year altogether. In terms of -- the second question was, what was...

FRE.

Oh yes, Wendel's share. It's -- so it depends really much of the dynamic between the 3, but because we don't have the thing, but it's over 135 million of Wendel shares in 2026. And you remember, our target for 2027 was 150 million, which, as I mentioned during the introductory words is that we are at -- we are very confident to be able to be over the 150 million in 2027.

And on your question on Iron Wave. So about the EUR 75 million we have been able to generate on the portfolio of funds. some lines were disposed at no discount. Other lines were disposed at very tight discounts.

Yes, 10 to 15.

Yes, 10 to 15. So all in all, this is -- I mean, the piece we sold altogether, we are talking of really a very tight discount. The money generated on this, which is EUR 75 million as we speak, might slightly increase if we find opportunities in the market. But as we explained, this is more than what we expect to commit as an anchor investor of Iron Wave. The size of our commitment will be so less than EUR 75 million. And in terms of economics, we will be a minority shareholder and for 30% of the management company. But other than that, there are no economics there that are involved. We will just be an anchor investor of Iron Wave fund.

Yes. Maybe we can say we're not selling the existing portfolio developed by Wendel Growth. It will be managed by Iron Wave, but it will stay on our balance sheet. So there's no transfer of portfolio on that. It's -- they are creating a new fund, and we'll help them develop that with -- as an anchor sponsor, but there's a lot of interest from institutional that has been, I mean, well-advanced discussion with many large institutional investors to support that. And we're still on the now regulatory work in order to make that live. And hopefully, that will be done by beginning of next year. This is the result of -- we're very proud to have made the ability to -- we have nurse -- I would say, incubated. We have incubated that team. They have made a good track record in their investment. And now from that, they can raise money on the third-party market and rule of the game on that market. When you talk about the venture market, really everybody is in a situation where the team has the majority position into it. And yes, I think it's a good team. They will have a successful fundraising, and it's good to be on their side to help them doing that. To be fair, the financial implication for Wendel is small because we're talking about a very small amount altogether.

So will you have to pay them also a management mandate for the part of the...

There will be an advisory -- yes, there will be a small advisory fee on the existing assets, but it's fairly small.

But again, it's -- the advisory fee is not going to be a cost to us because we don't have the team. So it's one hand to the other. So globally, it's a neutral element, but it gives them the ability now also to raise money and to generate fee out of that. I mean -- and I think, it's -- yes, it's a great team. They have, I think, the ability to create a successful venture, I mean, growth business out of it.

There are no further questions on the phone. I will now hand back to Olivier Allot for the webcast questions.

We have 2 questions from David Cerdan. what remains to do to complete the asset management platform? And what are the financial means to complete your plans?

Well, when you create a business, it's a permanent, say, it's -- I mean, it's -- again, I want that to be clear. We're not -- it's not a company that we own to sell back. This is our business. So business is made by organic and inorganic growth. We've made a lot of inorganic growth, but we've made some organic growth now already with the firm. The #1 priority now is to give face to the organic growth of our platform. We've got a structured platform. We can add new expertise, but the #1 priority is really make sure that we grow that. We develop the cross-selling. We developed the retail initiative. We help Committed Advisors to develop further through seeding their next fundraising. We help Monroe to develop their business, whether it is in the U.S. or in Europe, where we could launch an initiative with Monroe. I mean we are on developing, and we think we can have a fast-growing asset management going further. We have great team. Altogether, when we add up the thing, we have close to 600 people now doing asset management within the group. I think it's a very sizable platform of highly talented people with great success. So the #1 priority is now let's make an organic growth. Whenever we see an opportunity that makes sense that can add to the platform, create value for the platform, we can do. But I think now we have a sizable platform to grow.

For unlisted assets, can you give any indications on what to expect for 2025 in terms of revenues, EBITDA with leverage? And how do you see 2026 for them?

I don't think we give any guidance for the year of the different companies. I think Jérôme gave you a fair description of where they are at the -- for the 9 months. I think we have some of them that are developing very well. We have one asset, which is more difficult, which is Scalian, as you know, but I think we've taken a very strong measure in order to take that into account. The new management team is doing an absolutely great job, and we're very confident that now we are on the right track in order to capture. We still have a headwind from the market, but the underlying business and the way it is done, the positioning that we have on defense, aerospace, is very strong. We have a lot of areas where we have a very good positive development. We've got a great team on the -- in Spain that with scale that we can develop further on the banking world. We've got a great team in Canada with MANNARINO team that we can export. So yes, there's a huge opportunity that we need to take, but it's the one that is the most difficult to be fair. The rest is pretty well ongoing. You want to add something, David, to that?

Just like a general comment that Q4 doesn't look very different from the year-to-date. So...

A question from Alexander Casas regarding the acquisition of Committed Advisors. If I do a back of the envelope calculation, the total value for 100% of Committed Advisors would be around $1 billion. Am I right?

I don't do the same math, but I don't know the envelope you use, but I don't write to the same value. You have the detail on Page 17. So again, it's very difficult to say what will be the value because it will depend on the earn-out structure and the earn-out will be. Today, we're -- again, we're paying for 56%, now EUR 258 million -- potential earn-out of 0 to EUR 128 million. Don't forget that this is both for 56%, but also the 20% of the carried. So you have to strip out the carried cost in order to get the value for 100%. So -- but it's -- I think it's -- what is important to us is that we're paying between 10 and 14x FRE '26 based on the company. So I've not made the calculation in dollar. So maybe -- but yes, I think it's a little bit high, your value. But it will depend. What is important is, we think this company is a great company, a growing company. If I pay a higher amount of money because they grow fast, I'm happy because they grow fast.

Second question from Alexander Casas regarding the organization with IK Partners, does it mean that you will cut headcount in your Paris headquarters?

Yes. I mentioned that by definition because the part of the job that was done by some Wendel people now will be done by the advisory business. So we do that in a good and intelligent way. But yes, but the work will be done and a large portion of the people that are -- will not be Wendel people, they will be IK people tomorrow. So it makes sense.

I have a question about Globeducate. Can you give some details on the organic growth? Is it pricing, number of students, new schools?

So it's all of the above. So we do have a growth in the enrollment that we see across the board. Obviously, there are some regions where demography is more helpful than in other places. We have price increases, which are usually around 200 bps above inflation. And as it is mentioned, we are also opening new campuses. And so with additional capacity, we can also increase the enrollment. So the growth we expect is high single digits in terms of revenues, and it's really a combination of those 3.

A question from Loco Douza regarding Stahl and Scalian, should we expect modest recovery before year-end or any improvement is unlikely before 2026?

I think I have already answered this question. I think we see Q4 similar to the year-to-date numbers.

I have no more questions on the web. I think we have questions by phone.

Yes, we have another question from the phone line. And the questions come from the line of Alexandre Gerard from CIC Market Solutions.

Yes, me again. One last question regarding the pipeline of opportunities for your private asset activity. Can you comment, are there any interesting things that you are studying on the investment side or divestment side? Or is it on hold, I would say, because of the IK deal?

The direct -- the principal investment, not the asset management. Yes, yes. We're constantly looking to the market. So nothing is -- but we will put that into the general and the new framework. Again, it's -- all of this business is about asset rotation. So it's looking to potential sell and looking to potential reinvestment. So that's what we're doing. And we -- it's not because we have this new structure that we're putting in place and that we're -- it's -- that we are stopping the day-to-day work. And we have a lot of activities looking to either selling assets or buying assets.

There are no further questions at this time. So I hand back to you for closing remarks.

Thank you. Well, I think I've done most of it. Thank you very much for your questions. You see it -- I think it's an important change in the model with a true creation of an investment platform, asset management platform on one side, which is really becoming one of our -- the 2 business we have. And on the other side, to be an investment company with much more -- with all the means to be more efficient in the way we do that business. And I think it's really positioning us well on to that and delivering value in the long term for clients -- for our customers, sorry, shareholders. And the translation of that should be within our dividend policy, as I mentioned, and we'll mention capital allocation in Investor Day, how we will allocate capital in the future being through return to shareholders, one way being dividend or share buyback or investment in our principal investment and investment in our asset management. That's, I think, we will tend to focus ourselves on the Capital Market -- I mean, the Investor Day of December. Thank you very much for having -- being with us and wish you a great end of day, great Friday. And next time we reconvene will be for the Investor Day on December 12, I think.

This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you, and have a good rest of your day.