Eurazeo co-CEOs seek to reassure market following key departures

The Paris-listed private markets firm reportedly saw the departure of four members in its growth fund, namely founder and Managing Partner Yann du Rusque, alongside Managing Directors Nathalie Kornhoff-Brüls, Zoé Fabian and Guillaume d'Audiffret.

"We have four people who have decided to leave the company in a team of 21 people at the growth equity Eurazeo team," said co-CEO William Kadouch-Chassaing on a conference call yesterday. "I may not like it, but it's rather common in the industry that people decide at some point to do something different. We know that some of the leavers have the intention to create their own entrepreneurial funds, and I'd say that's life."

"We had some divergence with the people who have left the firm and at some point, you know, people draw their conclusions on some divergences," he added. "You know that we want to be a best in class, private market asset manager."

To address the departures, Eurazeo appointed Hala Fadel as its new growth managing partner. She boasts 25 years of experience in asset management, "which was not the case with the previous managers", and he has "strong experience" in technology, "with a very deep international culture and contacts," said co-CEO Christophe Bavière

"Most of the people that will be with her are the real dealmakers on many of the acquisitions we've made in the portfolio," he said. "In addition, we may complete some hiring and we've already started the process, so we are confident that we have a strong team."

Eurazeo is currently raising its EGF IV fund with "blue chip LPs" currently conducting due diligence, said Bavière. Its 2019-vintage EGF III raised EUR 1.6bn in 2021, exceeding its EUR 1bn initial target.

Bavière has access to the financial resources and operational tools afforded by Eurazeo, which currently manages a total AUM of EUR 35.2bn, to support its portfolio companies, which has not changed with the "departure of some people," he said.

"Our LPs continue to look at Eurazeo as a clear leader," said Bavière. "In this specific area of growth equity, you need to have a decent size to be perceived by Europeans as a decent reasonable credible player."

Buyout ambitions
The latest departures follow the shakeup of the executive board earlier this year, following the departure of former CEO Virginie Morgon, alongside General Secretary Nicolas Huet and Marc Frappier, who headed the flagship mid-large buyout fund, as reported.

"We announced a new organisation of the buyout team a few months ago and it's important for you to perceive that our ambition in this strategy remains unchanged - the team has the positive track record," said Bavière.

"We want it to remain relevant to our clients," he said, adding that the firm received "clear marks of interest from our LPs" once the personnel changes were announced. Many investors are currently conducting due diligence and the GP expects commitments to materialise before the end of the year, he added.

Eurazeo is currently fundraising for its fifth flagship fund with a target of EUR 3bn, which will be slightly larger to the incumbent Eurazeo Capital IV, which held its final close in July 2019 on EUR 2.5bn after a year and half on the road.

The comments come as Eurazeo announced that it has raised EUR 1.3bn in 1H23, down 15% versus 1H22 on the back of a "more challenging" environment in the short term, said Bavière, noting that LPs are taking more time to allocate their funds given a slower pace in exits and distributions, alongside the impact of the denominator effect and caution on rate hikes.

The GP, however, is "cautiously optimistic" for the full year, Bavière said, citing continued interest from LPs, many of whom are repeat investors and whose commitments are expected to materialise before the end of the year.

Mature portfolio
On asset rotation, realisations slowed to EUR 0.5bn in 1H23 versus EUR 0.7bn in 1H22, while deployment totalled EUR 1.7bn in 1H23 versus EUR 2.9bn in 1H22, it said.

Eurazeo typically targets 15%-20% asset rotation every year on a normalised basis, said Kadouch-Chassaing.

"We expect that we will be rather at the lower end of the range, maybe a tad lower than the 15%, but this is where we are as it stands for 2023," said Kadouch-Chassaing. "Given the maturity of our portfolio, we have a strong backlog of exits for the years to come."

Separately, Eurazeo is considering taking full control or realising an exit from MCH, the Spanish small-mid market private equity firm, towards year-end, said Kadouch-Chassaing. Eurazeo acquired a minority stake in the Madrid-based platform in 2019, with a view then on the Europeanisation of its small mid buyout business, he added.

"We are in the process [of assessing] whether the taking over the full control of MCH Private Equity is interesting from a return standpoint, and from a strategic standpoint," he said.

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