The market is punishing the French investment company for being a private-assets business at a time when private assets have become fashionable to distrust.
The skepticism is understandable. Private markets thrive on opacity and have never been short of excesses. But it may also be obscuring the fact that one of the finest signatures in Paris’ financial circles has a fine record and just booked a pretty good year.
The numbers tell a consistent story. Its asset-management arm saw AUM rise 15% to €39 billion, including €30 billion managed for third parties and €28 billion generating management fees. Fundraising reached €5.5 billion, up 28% year on year, and the strongest showing since 2022.
More importantly, the mix has improved. Private equity, rather than private debt, is driving inflows. Eight years ago, roughly two-thirds of its clients were French. Today, two-thirds are international. This is a meaningful strengthening of the franchise.
Investment performance was admittedly disappointing recently, and that matters. But it does not yet overwhelm the broader picture. Alongside its own holdings, Eurazeo has spent years building what may be its most valuable asset: a diversified, increasingly international client base seeking exposure to Western Europe.
Asset realizations have also returned to something closer to historical levels, reaching roughly one-fifth of the portfolio and generating €2.8 billion of proceeds. And here the shareholder proposition becomes difficult to ignore.
In effect, a perennial dividend aristocrat now controlled by the Decaux and David-Weill families, behind urban advertising group JCDecaux and investment bank Lazard, respectively, Eurazeo is using those proceeds to return capital aggressively.
The dividend rose another 10%, while share buybacks have accelerated.Management says that, between early 2024 and the end of 2027, roughly a quarter of the shares outstanding will have been cancelled. That is, more than half the free float.
This is being done on striking terms, as Eurazeo puts its net asset value at €102 per share, against a market price of about €40. Even allowing for the usual uncertainties surrounding private-market valuations, that is a substantial gap — and a discount to net asset value unseen since the depths of the subprime crisis.
The €102 figure does not even include the value of Eurazeo’s asset-management platform.That, in essence, is what makes the investment case unusually simple. It is also why I bought the shares as the price dipped below €40, a level that now entails a very comfortable margin of safety.
With a dividend yield above 7%, shareholders are being well paid to wait for the discount to narrow.