Wendel (MF) Earnings Call Transcript
October 27, 2023
Earnings Call Speaker Segments
Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Q3 2023 trading update conference call and webcast. [Operator Instructions] You can also ask questions on the webcast. Olivier Allot, the Director of Financial Communication and Data Intelligence, will read them. I must advise you that this conference is being recorded today. I would now like to hand the conference over to your speaker, Mr. Jerome Michiels, Wendel's Executive Vice President and Director of Wendel's Growth. Please go ahead, sir.
Thank you, and good afternoon, everyone. Thank you for joining this call on the Q3 2023 trading update. I am here today with Benoit Drillaud, our CFO; as well as Olivier Allot; and Lucile Roch from our IR team. Moving to Slide #2, I would like to highlight the following: first, a solid set of consolidated sales at EUR 5.164 million, up 3.9% overall and 5.7% organically over the 9 months. Net asset value was EUR 162 per share. This is slightly down by 1.6% when adjusted for the dividend versus the end of 2022. And this is slightly up versus the end of June, again, adjusted for the dividend. The drivers of this evolution are the appreciation of the value of the unlisted assets over the third quarter with, as you know, the upcoming disposal of Constantia at a level which is above the latest net asset value as well as the positive multiple effects on other unlisted assets, although this has been mitigated by the decrease in the share prices of some of our listed assets. The discount today stands at 51.3%, a high level. We also announced today the signing of the acquisition of IK Partners. You remember that we announced on October 17 that we had entered into exclusivity. This is now an agreement which has been signed, and we expect the closing to occur in Q2 2024. Taking into account the disposal of Constantia as well as the acquisition of the 51% of IK Partners and the share buyback, we are looking at a loan-to-value of 10.4% as of the end of September, and that's pro forma. We have also announced a share buyback that we are implementing as of today for EUR 100 million to take advantage of the high discount level as well as to give us the option to finance potential future strategic acquisitions, which could include the second tranche of the IK Partners transaction that we could finance using some of these shares. The agenda for today will be to give you a little bit more detail on the trading update, then on the net asset value. And afterwards, I will talk a little bit about financing and all of our debt. And lastly, I will wrap up and I'd be happy to take your questions. So let's start with the organic growth of the portfolio on Page 3, which, as I said, has been quite solid, both over the 9 months and over Q3. We are looking at 5.7% organic growth consolidated over the 9 months and 5% organic growth over Q3. Over the third quarter, we've seen an increasing negative impact of the foreign exchange as one might have expected at 7.6% negative, whereas for the 9 months, it's 4.2%. This is the result of the appreciation of the euro against large currencies everywhere on the portfolio. If we look at the company-by-company level, as you can see on this chart, which is pretty usual, we've seen an improvement at Stahl with Q3 coming in at 3.4% negative compared to 10.8% over the 9 months. You remember the first 2 quarters of Stahl were close to 15%, 14.2% actually organically in terms of decrease, reflecting a muted market overall and a slow start of the year. We are seeing the first signs of improvement over Q3. ACAMS has accelerated over Q3 with some, as usual, one-off items distorting a little bit the comparison. But when we adjust for this one-off, we are looking at a 5.9% organic growth over the third quarter, which is pretty healthy. Tarkett also registered some good growth at 6%, which is a slight acceleration versus the first 2 quarters, which were close to 3.5%. Bureau Veritas has posted a 5.8% organic growth and 8.1% for the first 9 months, which shows the resilience and the fast growth of large businesses within the portfolio and a more difficult quarter at building & infra and CPS, although we see there some improvements in terms of comparison over Q3. The company, as you know, has confirmed their outlook for this year in terms of organic growth, adjusted operating margin as well as cash flow generation. CPI has seen a strong acceleration over Q3 with 26.1%, very good news there in terms of new business. This compares to 11.2% at the end of H1, making the 9-months 17% growth that we are looking at on this chart. At Scalian, we've seen a 13% growth over Q3 and about 18% over the 9 months. So quite a good level of activity, slightly less so over Q3, but still double-digit as can be expected from this company. Let's now turn to the net asset value on the following page, which is at EUR 7,182 million as of the end of September, or EUR 162 per share. When looking at listed investments, Bureau Veritas represents EUR 3.8 billion. It's versus the end of June, flat when adjusting for the dividend. So there is no significant change there, again, if we adjust for the dividend. However, we've seen the share price of IHS drop over the period. It was at $8.7 in June, and it's now at $5.6 as of the end of September, which has had a slightly negative impact in terms of the whole value of our listed investments, whereas Tarkett is mostly stable. In terms of unlisted assets, we have seen an increase in terms of absolute value as we have closed the investment in Scalian at the end of July of EUR 556 million. And we have taken into account the value of Constantia as per the agreement that we have signed to dispose of this asset, which is slightly higher than the latest net asset value. And we also have had some positive multiple effects on our unlisted portfolio company as well as some help from foreign exchange over the period, which makes the difference that you see from the end of June to the end of September. We are talking of a EUR 740 million appreciation, EUR 550 million roughly for Scalian, the rest being related to the appreciation of our unlisted assets. What is also important for you to note is what is in the footnotes. For once, I encourage you to look at these footnotes where you will see 3 informations. First one, as I said, we've taken into account the value that we have achieved for the upcoming disposal of Constantia Flexibles. Second information, ACAMS is now weighted 100% based on listed multiples as per our methodology. We have now switched entirely to listed multiples, whereas for Scalian as this is the first net asset value that followed the acquisition, we are 100% weighted on acquisition multiples, and we will gradually transition over the next 18 months to 100% listed peers as per our methodology. The loan-to-value and the -- the cash level, sorry, is at 1.2%. The debt is at minus 2.4%. So the loan-to-value is at 13.8%. But when adjusting at pro forma of all the operations, it's 10.4%. The discount is pretty high at 51.3%, as I said, which has encouraged us to accelerate our share buyback program to EUR 100 million currently being implemented. Let's now move to the bridge from the beginning of the year on Slide 5. We -- you remember that we had a slight decrease of 2.8% as of the end of June compared to the end of 2022 whereas we've seen a slight increase over Q3 when adjusting for the EUR 3.2 dividend of plus 1.2%. So all in all, we are down 1.6% year-to-date when adjusting for the dividend, which is a result of a net decrease of listed asset value, mostly driven by IHS. You can see that over Q3 whereas we had a positive contribution from listed assets over H1. The decrease has been slightly higher over Q3, mostly due, as I said, to IHS. Unlisted assets on average are -- in total, sorry, are up by EUR 1.4 per share, an acceleration over Q3 related to the disposal of Constantia as well as the multiple effects that we have seen on our unlisted assets. So Q3 is slightly up at 1.2%. When adjusting for the dividend, we are looking at EUR 165.2 compared to EUR 163.2 at the end of June and EUR 167.9, so a slight decrease of 1.6% year-to-date. In terms of financing and debt now on the next slide, we've been, as always, pretty active this year on the management of the liability side of the balance sheet. As we have -- as you remember, issued an exchangeable bond into Bureau Veritas' shares of EUR 750 million in March. We have also bought back about EUR 90 million of the 2026 bonds, taking the outstanding amount down to shy of EUR 200 million, whilst we have issued a new maturity for EUR 230 million of EUR 300 million. The result of that is that we are financed at 2.4% average, which is pretty cheap in the current market environment. We have no maturity until 2026, and we are looking at a 4.9 average -- 4.9 year average maturity. On top of that, as you know, we have upsized our credit facility, which is now at EUR 875 million, and extended the maturity to July 2028, which provides us with a EUR 2.4 billion liquidity when taking into account the cash available, again, adjusted for the upcoming acquisition of 51% of IK, the share buyback and the disposal of Constantia. So EUR 2.4 billion liquidity financed at a low cost and with a long maturity, which will help us and enable us actually to pursue our capital deployment of EUR 2 billion that we have announced in March. So let me now wrap up on the first 9 months where we've seen a solid level of performance from the portfolio. And where we have made significant progress on the new strategic directions that we announced in March with portfolio rotation, acquisition of Scalian, disposal of Constantia above the net asset value level, the acquisition of IK Partners that we have signed on October 26 and which represents the foundation of the private asset management division of Wendel, which will accelerate the diversification of Wendel, boost the cash flow generation and in return enhance the attractiveness of Wendel as an investor as well as a listed company. We aim to continue for the next few months to grow the asset management activity through both organic growth as well as through selective external growth as well as with direct investment from our permanent capital, and this will create value for our shareholders through the increase of the net asset value as well as through the dividend whilst we are preserving a very strong financial profile based on our low level of LTV, and our long-dated maturities, and our strong investment-grade ratings. I am done with the presentation, and I will be happy to take your questions now.
[Operator Instructions] We are now going to proceed with our first question. And the questions come from the line of Arnaud Palliez from CIC Market Solutions.
I have 3 questions more on details. First of all, I would like to know when you will get the cash from the Constantia disposal. That was the first one. And on the opposite side, when are you going to start to integrate Scalian in your numbers? And the last question is regarding ACAMS. I would like to know if you provide a list of the peers that are used for the valuation of ACAMS.
Regarding the closing of Constantia, we expect that to happen this time of the year in 2023. So this is an ongoing process that we expect to close this in 2023. When do we integrate Scalian in our numbers, Benoit, do you want to take this one?
Yes. We are going to integrate Scalian in our consolidation with 1 quarter delay until they are able to provide a final number in the timeline of our consolidation process. So for the first period, we'll have a 1 quarter delay and that's why Scalian is not included in the 9 months numbers of 2023.
And regarding your last question on ACAMS, we typically don't provide a list of peers for our unlisted assets. But what we are looking at is a broad set of comparable companies in various sectors, both from training as well as what we call -- what is called the governance, risk and compliance or this type of players. So we have quite a broad range of comparable. But it's always difficult to find, as you know better than I do, to find good comparables given the growth profile and the profitability of our company. You never really find the pure comparable company.
And the multiple you're looking at is EBITDA or it's more a range of different multiples?
We used to -- we actually…
Sorry.
No. We are using both EBITDA and EBIT for all of our companies. And we are using previous year as well as current year. So as we speak, we are using 2022 actuals, 2023 outlook, which we have a pretty good view on given this time of the year, and we are using EBITDA and EBIT multiples and basically, divide that by 4 as we have 4 different data points.
We are now going to proceed with our next question. And the questions come from the line of David Cerdan from Kepler.
I have a few questions for you, if I may. The first one is just to understand and to get all the different events regarding the change in the cash position, which was at EUR 1.7 billion at the end of June. And now on a pro forma basis, you get EUR 1.50 billion. So can we provide the different elements just to check? Second question is regarding Scalian. So you have given some few numbers. But can you give us maybe some words on the performance of the company for Q3 and what we could expect in terms of revenues for 2023? Third question is related to Stahl. So how do you expect the end of the year to be compared with the better trend in Q3? And what about the profitability? And how do you expect 2024 to be?
Regarding the change in cash, you're right. We were at EUR 1.7 billion at the end of June. We are at the end of September at EUR 1.2 billion. Well, we have the big moving items in there are the dividend that we received from Bureau Veritas, plus EUR 125 million, and the investment in Scalian, EUR 560 million. So that's -- the difference mostly relates to that. The rest is pretty benign in terms of financing cost, SG&A, some pluses and minus here and there, some interest that we've made on the cash, but basically, the bridge from EUR 1.7 billion to EUR 1.2 billion is the Scalian net of the dividend that we received from Bureau Veritas. How do we come to the EUR 100.5 billion (sic) [ EUR 1.5 billion ] pro forma? When we add up the EUR 1.1 billion of proceeds that we expect to receive from Constantia, we include the acquisition of the 51% of IK Partners, which is EUR 383 million plus the sponsor money that we intend to put in island X -- IK X, sorry, and we also include the EUR 100 million buyback. So the net of that is approximately EUR 300 million, which brings the EUR 1.2 billion to EUR 1.5 billion. Your second question on Scalian. Yes?
No, sorry, just regarding the commitments. So there are some commitments for IK X. Is it around EUR 300 million or something like that or…
Yes, yes. That's right. Yes.
And you have also some, if I'm right, some commitments for Wendel Growth. Can you remind us what is the level of commitment?
Yes, we do have some commitments on Wendel Growth. It's about EUR 40 million at this point in time. Fair to say that we are receiving a few capital calls as the activity is pretty low on the investment side of the funds we have within Wendel Growth. So we have EUR 40 million commitment outstanding. Your second question on the performance of Scalian, the performance has been fairly good at 13% in terms of growth, especially at the international level where we've seen quite a higher level of growth. But it's fair to say that we are seeing more selectivity from customers and some pressure actually on the budgets of these customers. So we are still very positively affected by the megatrends that this company is active on decarbonization, digitization, et cetera. But we also feel that customers are more looking into their budget and the cost of the services that they buy outside of their own group. But nothing major there. We are still growing by 13%. And bear in mind that Q3 for Scalian is a small quarter, as you can imagine, in a consulting or engineering business, July and August are fairly slow in terms of activity. So it's not a very important quarter for Stahl -- for Scalian. Your last question on Stahl -- yes. Go ahead.
No, I would like just to have a follow-up question, just to be clear, so it was plus 13% sales growth for Scalian in Q3, but you said that it was 18% like-for-like for 9 months, if I'm correct.
Yes.
So there is a significant slowdown in Q3 versus H1.
I would not say it's a significant slowdown again because, as I said, it's a small quarter, and we have had very good performance over Q1 with good wins at large contracts won at Scalian over the first half and especially in Q1. So we are still happy by the 13% growth. But you're right, it's at a lower level than the first 2 quarters, which were very, very good.
Okay. Well, thank you.
Regarding -- yes, sure. Regarding your question on Stahl, as I said, we see some form of improvement. We had a difficult first 2 quarters with a slow start of the year. And we've seen some improvements or first signs of improvement over Q3. Profitability is good. I will not comment on the outlook for the year because, as you know, we are not commenting on the outlook for the year for our unlisted companies. But in terms of profitability, as was already the case at the end of H1, we have a very good level of profitability. What I can say is that the company is progressing well on the integration of ISG, the business that they acquired. And in terms of synergies, amount, and speed of implementation, they are making some good progress. So overall, positive news in terms of profitability at Stahl. And I hope signs of recovery to be confirmed over the next quarter.
And have you given any number regarding the synergy?
No.
We are now going to proceed with our next question. And the questions come from the line of Alexandre Gerard from CIC.
A couple of questions on my side. Firstly, on IK, can you remind us how you intend to manage the conflicts of interest that you might have as you are more or less chasing the same companies, if I understand that well in terms of size, sectors, and geographies in Europe? Second question, can you -- on ACAMS, can you tell us what were the reasons behind the CEO of the company leaving the firm? The following question is, do you include in your EUR 2 billion of investment over the next 2 years, the EUR 300 million commitment to IK and the EUR 100 million in terms of share buyback? Are they included in the EUR 2 billion that you have? And lastly, in terms of loan-to-value, how would you see your LTV in 2 years' time once the EUR 2 billion would have been invested?
So on your first question regarding the management of our -- investment we need in IK, the investments we make, the line is very clear. IK is -- it has a priority on any transaction below EUR 1 billion in terms of enterprise value in Europe. That's what they do. That's what they are good at, and that's what their limited partners expect them to do. So we will not -- barring any exception, we will not look at transactions below EUR 1 billion in terms of enterprise value at the permanent capital side, and this is very clear. This does not apply to the United States as IK is not active in the United States. So there, we still have flexibility to go below EUR 1 billion with permanent capital, but this is pretty clear. In terms of reserves, the CEO at ACAMS, while the CEO has been replaced by the -- by Mariah Gause who has with the company for -- who has been with the company for a long time already. So she's interim CEO. The company is functioning properly. There is a CEO search out, and we expect that to be completed in the next few months, hopefully, but as you know, it takes time to get people to join and they have government provision typically with their former employer, et cetera, but we are in this process. Until then, as you have seen, the business is performing well and delivering good results and a good level of activity. Regarding the EUR 2 billion…
So it's his decision to leave…
Sorry?
It was his decision to leave the company? It was your -- it was not your decision to replace him?
I didn't get what you said. It was mutual agreed. Yes. Mutually agreed. Regarding the EUR 2 billion you've inquired about whether the sponsor capital that we will put in IK is to be included in there, I confirm that it is to be included together with Scalian and together with the acquisition of the 51% of IK. And lastly, regarding your question on the LTV for the next 2 years, well, we are 10.4% pro forma of Constantia, IK, et cetera, which leaves us plenty of room with regards to our investment grade rating or with regards to the BBB, we estimate. The BBB ceiling is close to 20%. So we could go at 20% without putting our rating at risk. If ever we are downgraded, we are not expecting that, but if ever we're downgraded, we could still be BBB minus and still be investment-grade with a higher loan to value, but that's not what we are planning on at all. We feel we have enough firepower and the quality of our assets, the fact that we will now have access to more recurring cash flows through IK warrants, our rating and -- will help us stay within the 20% loan-to-value within the next 2 years.
Just one question. The share buyback is included in the EUR 2 billion or not?
No, it's not. No, no, it's…
We are now going to take our next question. And the questions come from the line of David Cerdan from Kepler.
My question is related to the higher financial -- financing conditions, sorry. Do you expect your financial charges to be impacted, notably for your unlisted asset? And regarding the leverage of account, do you think that the company need another cash injection just to maybe to reduce the leverage of financial charges, et cetera?
Benoit, you take this one.
Yes. Thank you. So a large part of the interest rate exposure of our company are hedged, so that we have a limited risk on that, but that's true that some of them have to pay higher interest than 2 years ago. Concerning Stahl -- sorry, accounts, we don't expect any equity needs from this company.
And when you say it's hedged, does it mean fixed or what do you mean by hedged?
It depends on the companies. Some of them have swap interest in place and other has cap. And some of them have put in place this cap a few years ago. So with a very low level of protection and others have put in place these instruments a year ago, so roughly between 3% and 4%, excluding margin, of course.
We have no further questions on the phone now. Please go ahead with the web question.
Thank you. We'll start with the question about strategy coming from [indiscernible]. The recent announcement, do these conclude the strategic review or are further actions being considered to address discounts, for example, the spin-off of Bureau Veritas, tender offers, et cetera. Thank you. Well, regarding the strategic direction, the deployment is ongoing. We've announced these new strategic directions in March, and we are making some progress, and it's ongoing. This is into your question, it's not the conclusion. And we clearly stated when we announced the IK Partners transaction that it was the first step. So even if we did a lot in the quite short period of time over the last 9 months or 6 months actually because we announced in March, we know we still have a lot to do. Regarding the -- your question in terms of spin-off or other actions being considered to address the discount, well, first, the spin-off, any spin-off is not on the table today. If you think of distributing Bureau Veritas to shareholders, for instance, bear in mind that Wendel has limited recurring cash inflows and loan-to-value, which is around 10%. So if we distribute an asset, it's by definition, reducing our liquidity and will increase our loan-to-value because we will have less assets, but no proceeds at the level of the company. So that's why, by the way, we are developing our private asset management activity to improve the recurrence and the predictability of the cash flows of Wendel. So IK Partners is -- has many, many benefits. One of them is to provide us with more recurring and predictable cash flows. So yes, that's really not on the table to do any spin-off or tender offer. We have, however, announced a share buyback of EUR 100 million, which is pretty sizable. Historically, we were more doing EUR 50 million on average per annum. So we've announced EUR 100 million, it's ongoing. And we hope that it will contribute to reducing the discount. Thank you. Regarding the buyback, given the size relative to the liquidity of the shares, are there alternatives to open market purchases such as a tender offer? Well, we are proceeding as we always do, we gave a mandate to a broker to buy back the shares on the market. It's active as we speak. As a reminder, maybe these shares will not be canceled and will be used to cover future acquisitions. It might be used as a currency to finance our external growth, including potentially the second tranche of IK Partners where we have the ability to pay in shares. And it will also be used to cover long-term incentive plans at the company. This brings liquidity to the order book, and we have no intention to launch a tender offer, which will not bring liquidity to the order book, but take away liquidity at the end of the tender. So this buyback is now live, and we will come back to you on the progress that we will have made at the next quarter, and we will assess in due course if we do more. But bear in mind, that EUR 100 million is already twice the amount we were used to buy on a given year. Thank you. A question from Patrick Jousseaume. Could you please be a bit more precise about revenue growth acceleration in Q3 for CPI? What are the drivers? Should we expect the same level of growth in Q4? Thank you, Patrick. Well, CPI has seen a very good traction in terms of customer wins. They have signed Walmart as a new customer, which is, as you know, the largest employer in the U.S. and they have seen some good traction on most of their products, if not all, especially on the new generation of products that they have just launched. So it's pretty much across the board. It's a fast-growing company, as you know. And the growth was relatively consistent across geographies, obviously, in North America but also at the international level where we are seeing as well, double-digit growth on these markets. Thank you. From Patrick Jousseaume again. In others, in the NAV bridge, why is it the same amount in Q3 and H1? Benoit, do you have the -- I think we have 1 -- yes, we have EUR 1 for Q3 and EUR 1.1 for H1. I think we were maybe -- we have benefited from a good treasury gain over Q3, but this should have been the case as well for H1.
Yes, that's true.
But I guess, the interest we are getting on the money that we have at the bank is slightly higher, maybe in Q3 than in the first 2 quarters. This could be -- but we'll come back to you with a more precise explanation. A question from Shannon [indiscernible]. What baseline dividend yield or cash flow do you expect from IK Partners following the close of the deal, excluding performances? Well, typically, asset management companies will distribute 100% of their net income after tax. And we expect that to be the case. We are a 51% shareholder. So we will not get access to 100% of dividends, but 51% of dividends, and the intent is to distribute 100% of net income after tax. Thank you. We have 2 questions about IHS, one from [indiscernible]. What are you doing to realize value for your investment in IHS? Well, what we are doing is that we are engaging with the company on governance matter. As you know, we have a disagreement with the company over governance matters, and we are trying to resolve that through a constructive dialogue with them. We are making progress towards our goals of improving the governance, and we feel this is obviously very important in terms of value creation. That's what we are focusing on right now. The company is very focused on the execution, as you know, and especially on the reset of their contracts to take into account the valuation of the NERA that took place earlier this year. And that's what will ultimately deliver value to shareholders, improve governance, and the very good execution that the management of IHS has always been able to implement at the company. Last question. Could you shed more color on what you mean when you say you are making progress towards your goal of improving corporate governance at IHS? And what do you make of MTN Nigeria terminating their contracts with IHS? Would that not hurt the company? Sorry, I will not comment more on what we mean by making progress. IHS is a listed company. MTN is a listed company as well. So I cannot make further comments regarding that. We all have seen that the news that MTN Nigeria put out regarding the 2,500 sites of IHS has hurt pretty significantly the share price of IHS. But I think it's a question for MTN to ask. Thank you. We have no more questions on the web, but we have an additional question by phone, operator?
So we have another question from the phone lines. And the questions come from the line of Alexandre Gerard from CIC.
3 additional questions on my side, if I may. On the NAV bridge, can you give us some more granularity on the EUR 3.7 per share change of the valuation of the unlisted assets between the multiples impact and the forecast impact. First question. Second question, can you remind us what are your operating expenses at the holding company level for 2024 on a pro forma basis? And the last question regarding IK and your policy and strategy in terms of developing the group into the asset management world. If you were to come across, let's say, in 2024, if you were to come across another interesting, let's say, in our credit firm that you were to make an offer for that, how would you manage it alongside IK? Would you try to merge it with IK? Would you be obliged to manage it separately? How would you see that?
Regarding the bridge, it's entirely driven by multiples. The EUR 3.7 appreciation that you see on the unlisted assets there is -- or the multiple effect is 100% saved for the Constantia Flexibles impact. Again, as we are sitting slightly above the June net asset value, we have a little bit of appreciation there, which relates to that. But the rest of the bridge and that's most of it, that's really -- the high majority of it relates to market multiples with a little bit of foreign exchange, but mostly as the dollar has strengthened, we have a little bit of foreign exchange impact, which is positive. Regarding the question on operating cost, Benoit?
It should be in line with the previous -- with the current year, so probably around EUR 80 million. And by the way, coming back to your previous question about the comparison of other change between H1 and Q3, the difference comes from the depreciation of Wendel's share price that was significant between June and September. So it is -- it explains this difference because we have 900,000 shares on our balance sheet.
And your last question about what we would do with another asset management company, if we buy it, we will never merge it with IK. The strength of IK is to be an asset management firm with a very talented management team, a very talented investment committee, very effective investment processes, and we are not going to disturb that through merging with another firm. So yes, we are looking at other acquisitions as part of strategic directions announced. We've provided a chart when we announced the IK transaction, whereby we were thinking of other verticals, but certainly not merging those firms as limited partners would hate that and this would not be profitable or beneficial to the strategy. So potentially, other verticals but to be run separately, although we expect to have a sort of common backbone between those asset management companies. But this will take place when we find another company to acquire. I think we have questions from David Cerdan.
We're now going to proceed with the next question. And the questions come from the line of David Cerdan from Kepler.
Yes. Very quickly, please. On IK Partners, can you just explain us the reason why you will not maybe have to pay some taxes on the profits? First. And are you sure of that? Second question. And third question, regarding your -- the business, what are the key risks to see some lower-than-expected dividends and profit from IK Partners?
I will take the second one, and leave -- Benoit take the first one. What are the key risks of seeing less dividends? Well, the key risk, dividends in this business, our profitability is driven by funds managed. So the key risk would be that IK raises less than expected in the business plan. But they are on track in terms of fundraising. It's a very strong firm, as you know, with a very long-established experience. We are looking at the 10th generation of funds regarding their flagship strategy, which is Mid Cap. They have other strategies that have done extremely well and have developed over the past few years. So it's not a single strategy firm. They already are running several strategies and have a deep and very rich experience of being successful on their flagship strategy with the 10th generation of fund. We have taken into account the potential for variation. As you know, in any business, this risk always exists. But to sort of mitigate that, we have included a provision in the 49% puts and calls that we have on the remainder of the capital to be -- with the price to be adjusted based on the actual performance achieved against the business plan. But at this point in time, we have no reason to believe that they should not reach the business plan. They are well on track with regards to current fundraising. And they have a very long and demonstrated experience of being successful in their value strategy.
And concerning tax, as you know, we have operational expenses in France that are deductible. And part of the business of IK is made in France, and we have profit in France. So we could offset a part of their profit with our expense.
And so net-net, you're saying that it could be possible not to pay any profits, so meaning profit before tax is equal to the net profit.
This is not my answer.
We have no further questions at this time. I hand back to you for closing remarks. Thank you.
Well, thank you very much for having attended this call. Thank you. And we'll be delighted to see you at our Investor Day on December 12, which -- where we will have IK Partners' CEO, Chris Masek, so be there on December 12. Thank you very much.
This concludes today's conference call. Thank you for participating. You may now disconnect your lines. Thank you.
Read the full transcript via the API
You're viewing the first half of this call. Get the complete Wendel transcript - plus 251,000+ transcripts from 12,000+ companies, speaker segments and full-text search - through the EarningsAPI REST API or hosted MCP server.
Get an API key View API docs →For developers and AI pipelines
Programmatic access to Wendel earnings transcripts and 251,000+ others is available through the
EarningsAPI REST API and the hosted MCP server.
Quarterly plans from $105 - full transcripts, speaker segments, full-text search,
and the /api/v1/transcripts/recent polling endpoint for ETL pipelines.