EURAZEO (+) : Q1-26 trading update

Research evidence excerpt

EURAZEO (+) : Q1-26 trading update

Investment case, valuation and risks

Eurazeo (Outperform, Target Price EUR67)

Investment case

Eurazeo's shift to a dual business model reduces its risk profile in our view and should

be a catalyst for a re-rating and a reduction in the discount to NAV. Growth in third-

party asset management is rapid and should remain strong over the next 6 years. But

reaching the aim of having >50% of the EV tied to asset management will be a long

process given the current split is 25% in asset management and 75% from the

investment portfolio. However, support from management and the main shareholders

to accelerate this transition could be major catalysts in the short to medium term.

Indeed, the company intends to accelerate the rotation of its balance sheet along with

reducing the re-investment needs. This would free up a significant amount of cash to

reinvest in asset management through M&A and do sizeable share buybacks. Both

moves could trigger a re-rating.

Overall, the investment portfolio is of good quality in buyout but 25% of Eurazeo's

portfolio is invested in venture and growth where many companies are not profitable.

This warrants caution.

Valuation methodology

Our TP is based on an SOTP where we value the fund management company separately

with FRE post tax 2027 valued on 12x for the private assets, 6x for FRE coming from IM

Global and PRE at 40% discount to the private assets FRE multiple. We apply a 40%

discount to the investment portfolio ex growth and venture for which we use a 50%

discount.

Risks

To the upside:

Eurazeo delivers on its portfolio exit programme and uses the cash for M&A to grow in

asset management and increase share buybacks. The third-party asset management

business scales faster than expected.

To the downside: