Group AuM of
€29.4bn at 31 March 2021, up 15.5% yoy
Tikehau Capital
prepares its next growth chapter with a simplified organisation, an
improved financial profile and a revised dividend policy
Regulatory News:
Tikehau Capital (Paris:TKO), the global alternative asset
management group, releases today its assets under management at 31
March 2021, which amounted to €29.4bn, up 15.5% or €3.9bn year over
year. The firm also announces its plan to simplify its
organisation, which shall result in a materially improved financial
profile, allowing for a revised dividend policy to increase
shareholder value. Through this operational reorganisation, Tikehau
Capital will meet the highest standards of the global listed
alternative asset management industry, on top of a second-to-none
alignment of interest in the sector. The main benefits of the
planned reorganisation are the following:
- Central corporate functions and related expertiseto be
regrouped under the listed company;
- More than €40m annual post-tax cash flow improvement for
Tikehau Capital from 1 January 2021 onwards thanks to its
simplified organisation;
- Operating costs reduction through the replacement of a
2% management fee of Tikehau Capital’s consolidated equity by (i)
an annual fixed compensation of €2.5m and (ii) the corporate
functions’ costs to be transferred to Tikehau Capital
(c.€20m);
- A significant reduction in the preferred dividend to the
General Partner from 12.5% to 1% of Tikehau Capital’s statutory net
result;
- A c.39m new Tikehau Capital shares issuance for the benefit of
Tikehau Capital Advisors, in exchange for its contributions as part
of the proposed reorganisation, raising founders and management
ownership from 44%1 to 56%;
- A high-single digit accretion estimated on 2021 adjusted
earnings per share2;
- A revised and improved dividend policy with a minimum of 80%
of FRE and PRE3 to be distributed through ordinary dividend
(with a floor at €0.50 per share for 2021);
- The planned reorganisation has already received support from
shareholders representing 85% of Tikehau Capital’s share
capital, and will be submitted to an Extraordinary General
Meeting to take place on 15 July 2021;
- Tikehau Capital confirms its 2022 targets of reaching
over €35bn of assets under management and generating over €100m in
fee-related earnings (FRE).
Tikehau Capital is organising a conference
call today at 6.15 p.m. (CEST) accessible on its website at
www.tikehaucapital.com
Antoine Flamarion and Mathieu Chabran, co-founders of
Tikehau Capital, said:
“Since its inception in 2004, Tikehau Capital has transformed
from a founder-operated investment company to a global alternative
asset manager with close to €30bn of AuM. This tremendous growth
trajectory is first and foremost the result of an entrepreneurial
journey, driven by a strong corporate culture and the commitment of
our teams. As we continue to build momentum across our businesses,
simplifying our organisation is the natural next step to establish
a stronger foundation for future earnings growth. These changes not
only make Tikehau Capital simpler to understand but also strengthen
its financial profile and create an even more compelling investment
proposition for shareholders: it reinforces financial performance,
streamlines shareholders’ alignment and makes Tikehau Capital’s
equity profile more appealing. As the firm continues to evolve, we
look forward to unlocking more value and generating long-term
returns for our shareholders.”
1. A NEW CHAPTER FOR TIKEHAU CAPITAL
Since its inception in 2004, Tikehau Capital’s
entrepreneurial journey has relied on a strong corporate
culture and a differentiated growth model. From an externally
managed, founder-operated private investment company, Tikehau
Capital has transformed into an integrated, listed and diversified
global alternative asset manager, supported by a strong balance
sheet.
Over the last 17 years, Tikehau Capital’s organisation and
corporate structure have provided strong foundations on which it
has pursued its development and achieved strong results. In
particular, Tikehau Capital’s assets under management have
grown on average by +30% per year since IPO in early 2017.
At the same time, the average management fee rate has moved
up from 0.71% to 0.92% and asset management revenues
and Fee-Related Earnings (FRE) have grown on average by
+51% and +126% respectively between 2016 and
2020.
Looking ahead, given Tikehau Capital’s size, scale, and
favourable outlook, the time is now right to simplify the
Group’s organisation in order to put Tikehau Capital on the
strongest footing to drive growth in the years to come, while
keeping its strong entrepreneurial DNA.
This planned reorganisation has already gathered the support
from Tikehau Capital shareholders owning a total of 85% of
the firm’s share capital.
2. A SIMPLER ORGANISATION, A STRONGER FINANCIAL PROFILE
The planned reorganisation announced today aims at implementing
a simpler structure, as well as resetting financial
flows between Tikehau Capital and its related parties.
(i) First, the planned reorganisation aims at transferring
the Group’s central corporate functions and related expertise
(i.e. in particular General Management, Finance, Legal, IT,
Communication, Human Resources), into the listed entity, Tikehau
Capital. The corporate functions were until now gathered into
Tikehau Capital Advisors (the Group’s largest shareholder). This
would materially streamline the Group’s organisation as well as
significantly reduce its operating cost base. In that respect,
the cost incurred historically by Tikehau Capital, which was an
annual charge equivalent to 2% of the Group’s consolidated
shareholders’ equity, would be replaced by a total annual
compensation, in absolute amount, of €2.5m from 2021 onwards. In
addition, the Group’s corporate function costs would be transferred
to Tikehau Capital, representing a cost of around €20m from 2021
onwards. As an illustration, the 2% management fee represented a
€70.6m4 cost for Tikehau Capital. Pro forma the new organisation,
the cost in 2020 would be reduced to €20.8m, therefore generating
substantial savings.
(ii) Second, the preferred dividend due to the General
Partner would be drastically reduced, moving down from 12.5% to
1% of Tikehau Capital’s statutory net income.
Such changes in the economics between Tikehau Capital and its
related parties would reflect very positively on the Group’s
financials by generating:
- More than €40m annual post-tax cash-flow improvement for
Tikehau Capital5 from 2021 onwards;
- More than 140bps enhancement of Tikehau Capital’s return
on equity6 from 2021 onwards.
(iii) As a consequence of the planned reorganisation, and in
exchange of its contributions to Tikehau Capital, Tikehau Capital
Advisors would receivec.39 million newly issued Tikehau Capital
shares. This share issuance reflects a valuation of Tikehau
Capital Advisors’ contributions of €1,150.5m and a valuation of
Tikehau Capital of €29.5 per share. In connection with this
transaction, Tikehau Capital’s Supervisory Board appointed an ad
hoc committee comprising three independent members and which has
supervised the work of an independent expert (Finexsi) to submit a
fairness opinion on the terms of the transaction.
Following this planned share issuance:
- The management ownership in Tikehau Capital7 would increase
from 44% to 56%, therefore strengthening the alignment of
interests between management and shareholders.
- Given the strong positive impact of the reorganisation on
Tikehau Capital’s financials, the overall transaction would
generate a high single-digit accretion on the 2021 adjusted
earnings per share8.
3. A REVISED DIVIDEND POLICY
Conscious that the predictability of the distribution is key for
shareholders and building on the strong momentum of its asset
management profitability, Tikehau Capital plans to revise its
dividend policy by indexing it on the performance of this
fast-growing and increasingly profitable business. Starting 2021,
Tikehau Capital shall aim to distribute more than 80% of the net
operating profit from the asset management activity (defined as
the sum of Fee-Related Earnings and Performance-Related Earnings).
In addition, for the fiscal year 2021, the ordinary dividend shall
not be lower than €0.50 per share.
4. DETAILS OF THE PLANNED REORGANISATION
The main steps of the planned reorganisation, which is a global
transaction, are detailed below:
- Step 1 - Appointment of a new
General Partner (associé commandité) and two new
managers (gérants) of Tikehau Capital:
- Tikehau Capital Commandité (“TCC”), a wholly-owned
subsidiary of Tikehau Capital Advisors (“TCA”), would be
appointed as General Partner of Tikehau Capital with effect after
satisfaction of all conditions precedent to the Merger (as such
term is defined hereafter) and immediately prior to the completion
of the Merger.
- Two companies, respectively wholly-owned by AF&Co and MCH,
the two holding companies of the founders of Tikehau Capital, would
be appointed as managers of Tikehau Capital with effect after
satisfaction of all conditions precedent to the Merger and
immediately prior to the completion of the Merger. The total fixed
annual compensation of these two Managers would amount to €2.5m per
year.
- Step 2 - Merger: Tikehau
Capital would merge with Tikehau Capital General Partner
(“TCGP”), Tikehau Capital current General Partner (the
“Merger”). TCA would receive, in consideration of its shares
in TCGP, new shares in Tikehau Capital according to an exchange
ratio determined on the basis of the fair values of the two
companies. The Merger would be placed under a tax neutrality
regime. The General Partner’s rights held by TCGP and transferred
to Tikehau Capital as a result of the Merger would be cancelled
upon completion of the Merger. Upon completion of the Merger, TCC
would be the sole General Partner of Tikehau Capital, benefitting
from a preferred dividend of 1% of Tikehau Capital’s statutory net
income.
- Step 3 - Contribution: TCA
would contribute the assets and liabilities relating to Tikehau
Capital’s central corporate functions housed within TCA (including
employment contracts, leasehold rights and physical assets) (the
“Contribution”) in consideration for new shares in Tikehau
Capital according to an exchange ratio determined on the basis of
the fair values of the two companies. As a result of the
Contribution, the service agreement between TCGP and TCA would be
extinguished. The Contribution would be placed under a tax
neutrality regime.
As a consequence of Steps 2 and 3 above, around 39 million
new Tikehau Capital shares would be issued for the benefit of
TCA.
Finexsi has been appointed by the Supervisory Board of Tikehau
Capital as independent expert to issue a fairness opinion on the
terms of the transaction. Ms. Sonia Bonnet-Bernard and Mr. Alain
Abergel have been appointed by the President of the Commercial
Court of Paris (Tribunal de Commerce de Paris) as external
statutory appraisers with regard to the terms of the Merger and the
Contribution (commissaires à la fusion et à la scission). The
reports of the independent expert and the external statutory
appraisers will be made public in the document to be published for
a prospectus exemption that will be made available to the market
mid-June 2021.
In connection with the proposed reorganisation, TCA’s holding in
Tikehau Capital would increase by more than 1% over a 12-month
period. As a result, TCA and the persons acting in concert with TCA
would have an obligation to file a mandatory tender offer. TCA will
request from the Autorité des marchés financiers an exemption to
file such mandatory tender offer pursuant to article 234-9, 3° of
the General Regulations of the Autorité des marchés financiers. The
proposed reorganisation is subject to this exemption.
If approved by the Extraordinary General Meeting to take place
on 15 July 2021, the transaction will be effective retroactively as
of 1 January 2021.
Tikehau Capital will keep the market informed of the next steps
and terms of this transaction.
5. +15.5% GROWTH IN GROUP AUM AT END-MARCH 2021
At end-March 2021, Group Assets under management (AuM)
reached €29.4bn9, representing a €3.9bn or
15.5% increase yoy. They are split between €27.7bn for the
asset management business and €1.7bn for the direct investment
business. During the first quarter of 2021, the change was a 2.9%
increase, with positive net new money for the Group of +€973
million, distributions of -€257 million (primarily within private
debt strategies) and positive market effects of €108 million.
AuM for the asset management business amounted to €27.7bn
at end-March, up 18.1% over the last twelve months and 1.2%
compared to 31 December 2020. Fundraising for the asset management
business amounted to €484m in the first quarter of 2021, which is
in line with the amount raised during the first quarters of 2019
and 2020 and with the Group’s fundraising seasonality. Over the
last twelve months, the asset management business raised €4.2bn of
net new money, a significant amount reflecting the solid sales
momentum for Group’s strategies. Fundraising in Q1 2021 was
primarily driven by private equity (with the final closing of the
energy transition fund as well as further fundraising for the
special opportunities strategy), and real assets, with Sofidy in
particular. Fundraising for private debt reflects calendar effects,
and significant progress on this asset class are expected in the
coming quarters in particular as the fundraising for the 5th
vintage of the Group’s direct lending flagship strategy ramps up.
Net new money for the capital markets strategies was neutral in the
quarter, with solid inflows in fixed income strategies offset by
outflows in the flexible and equity funds.
Over the first quarter of 2021, Tikehau Capital has also been
active in deploying capital from its funds, with 67
companies or assets financed across its strategies in the quarter,
which is more than twice what had been achieved during the same
period last year. As a consequence, the Group deployed a total of
€0.8bn in the first quarter (vs €0.5bn during Q1 2020). At
end-March 2021, Tikehau Capital had dry powder of €5.9bn within the
funds it manages, enabling them to take advantage of investment
opportunities. This amount compares to €6.2bn at the end of
December 2020, the change during the first quarter being linked to
the sustained pace of capital deployment over the period.
AuM for the investment activity amounted to €1.7bn at
end-March 2021. The €483m increase during the first quarter was
primarily due to the success of the Group’s inaugural sustainable
bond issuance for a total amount of €500 million maturing in March
2029. This issue of senior unsecured sustainable bond is associated
with a fixed annual coupon of 1.625%, the lowest ever achieved by
the Group, and is the first ever public sustainable benchmark bond
issued by an alternative asset manager in euros.
Since the beginning of second quarter of 2021, Tikehau
Capital remained active and launched promising new initiatives:
- First, leveraging on the successful fundraising for its private
equity fund dedicated to energy transition, Tikehau Capital
announced the launch of a North American private equity strategy
dedicated to transitioning to a low-carbon economy, with $300
million of capital already committed;
- The Group also announced the sequential launch of two
innovative strategies designed for retail investors through
unit-linked products, one in private debt with MACSF Group, the
leading insurer for health professionals, and the other in private
equity with CNP Assurances, leading player in the French personal
insurance market. These initiatives demonstrate Tikehau Capital’s
strong positioning in tackling the increasing demand from retail
clients to access alternative asset classes;
- In addition, IREIT Global announced the acquisition of a
high-quality 27-property portfolio from Decathlon, the world’s
largest sporting goods retailer;
- Tikehau Capital’s first SPAC10 (Pegasus Europe), which
was launched back in February alongside co-sponsors Financière
Agache, Jean-Pierre Mustier and Diego De Giorgi, announced on April
29th that it had successfully raised €500 million in a private
placement. Tikehau Capital has invested €25 million from its
balance sheet into the private placement and agreed on a €50
million Forward Purchase Agreement that may be called at the time
of a business combination;
- Finally, on May 12th, as part of the strategic alliance between
Tikehau Capital and DWS, both groups announced a growth initiative
to implement an investment strategy for small to medium-sized
defined benefit pension schemes in the United Kingdom. The launch
of this new strategy meets the objective of both groups to align
their respective expertise in alternative investing and offer
bespoke financing solutions to companies.
6. CONCLUSION AND NEXT STEPS
Through the planned reorganisation, which has already gathered
the support from shareholders owning a total of 85% of its share
capital, Tikehau Capital is opening a new growth chapter by
simplifying its organisation, improving its financial profile, and
implementing a revised dividend policy.
Tikehau Capital also confirms its 2022 objectives of reaching
over €35bn of assets under management and generating over €100m in
fee-related earnings (FRE)11 .
Tentative timetable of the planned reorganisation
20 May 2021
- Announcement of the reorganisation
Mid-June 2021
- Publication of documentation relating to the transaction,
including reports from independent expert and external appraisers
(commissaires à la fusion et à la scission)
15 July 2021
- Extraordinary General Meeting to approve the
reorganisation
Tikehau Capital’s financial calendar
29 July 2021
- Assets under management at 30 June 2021 (after market
close)
15 September 2021
- 2021 First half results (after market close)
9 November 2021
- Assets under management at 30 September 2021 (after market
close)
APPENDIX – CHANGE IN AUM DETAILS
AuM at 31-Mar-2021
YoY change
QoQ change
In €m
Amount (€m)
Weight (%)
In %
In €m
In %
In €m
Private debt
9,292
32%
+11.9%
+989
(0.5)%
(50)
Real assets
10,470
36%
+9.8%
+937
+1.3%
+137
Capital markets strategies
4,239
14%
+20.6%
+725
+1.3%
+55
Private equity
3,691
13%
+76.6%
+1,601
+5.7%
+200
Asset Management
27,692
94%
+18.1%
+4,252
+1.2%
+341
Direct investment
1,662
6%
(16.1)%
(319)
+40.9%
+483
Total AuM
29,354
100%
+15.5%
+3,933
+2.9%
+824
LTM evolution (in €m)
AuM at 31-03-2020
Net new money
Distri- butions
Market effects
Change in scope
AuM at 31-03-2021
Change
(%)
Change
(€m)
Private debt
8,303
1,518
(681)
152
-
9,292
+11.9%
+989
Real assets
9,533
644
(250)
4
539
10,470
+9.8%
+937
Capital markets strategies
3,514
342
(12)
396
-
4,239
+20.6%
+725
Private equity
2,089
1,658
(154)
97
-
3,691
+76.6%
+1,601
Total Asset Management
24,440
4,162
(1,098)
649
539
27,692
+18.1%
+4,252
Q1 2021 (in €m)
AuM at 31-12-2020
Net new money
Distri- butions
Market effects
Change in scope
AuM at 31-03-2021
Change
(%)
Change
(€m)
Private debt
9,342
120
(171)
1
-
9,292
(0.5)%
(50)
Real assets
10,334
178
(73)
32
-
10,470
+1.3%
+137
Capital markets strategies
4,184
6
(2)
51
-
4,239
+1.3%
+55
Private equity
3,491
181
(12)
31
-
3,691
+5.7%
+200
Total Asset Management
27,351
484
(257)
114
-
27,692
+1.2%
+341
ABOUT TIKEHAU CAPITAL
Tikehau Capital is a global alternative asset management group
with €29.4 billion of assets under management (at 31 March
2021).
Tikehau Capital has developed a wide range of expertise across
four asset classes (private debt, real assets, private equity and
capital markets strategies) as well as multi-asset and special
opportunities strategies.
Tikehau Capital is a founder-led team with a differentiated
business model, a strong balance sheet, proprietary global deal
flow and a track record of backing high quality companies and
executives.
Deeply rooted in the real economy, Tikehau Capital provides
bespoke and innovative alternative financing solutions to companies
it invests in and seeks to create long-term value for its
investors. Leveraging its strong equity base (€2.8 billion of
shareholders’ equity at 31 December 2020), the firm invests its own
capital alongside its investor-clients within each of its
strategies.
Controlled by its managers alongside leading institutional
partners, Tikehau Capital is guided by a strong entrepreneurial
spirit and DNA, shared by its 607 employees (at 31 March 2021)
across its 12 offices in Europe, Asia and North America.
Tikehau Capital is listed in compartment A of the regulated
Euronext Paris market (ISIN code: FR0013230612; Ticker:
TKO.FP).
For more information, please visit: www.tikehaucapital.com
DISCLAIMER:
This document does not constitute an offer of securities for
sale or investment advisory services. It contains general
information only and is not intended to provide general or specific
investment advice. Past performance is not a reliable indicator of
future earnings and profit, and targets are not guaranteed.
Certain statements and forecasted data are based on current
forecasts, prevailing market and economic conditions, estimates,
projections and opinions of Tikehau Capital and/or its affiliates.
Due to various risks and uncertainties. Actual results may differ
materially from those reflected or expected in such forward-looking
statements or in any of the case studies or forecasts. All
references to Tikehau Capital’s advisory activities in the US or
with respect to US persons relate to Tikehau Capital North
America.
1 Defined as the combined ownership of Tikehau Capital Advisors
and Fakarava Capital 2 Calculated as net result less preferred
dividend, based on sell-side analysts’ forecasts for 2021, updated
post FY20 results release. Excluding any one-off and non-cash
potential accounting impact of the reorganisation (accounting
treatment being finalised) 3 Fee-Related Earnings (FRE) of the
asset management business are defined as management fees minus
operating costs. Performance-Related Earnings (PRE) are defined as
the sum of performance fees and carried interest. The sum of FRE
and PRE can be elsewhere defined as NOPAM (Net Operating Profit
from Asset Management). 4 Including VAT 5 Illustrative amount based
on sell-side analysts’ forecasts for 2021, updated post FY20
results release 6 Calculated as Adjusted net income (i.e less
preferred dividend) divided by consolidated Shareholders’ Equity,
based on 31 December 2020 Consolidated Shareholders’ Equity.
Excluding any one-off and non-cash potential accounting impact of
the reorganisation (accounting treatment being finalised) 7 Defined
as the cumulated ownership of Tikehau Capital Advisors and Fakarava
Capital 8 Calculated as net result less preferred dividend, based
on sell-side analysts’ forecasts for 2021, updated post FY20
results release. Excluding any one-off and non-cash potential
accounting impact of the reorganisation (accounting treatment being
finalised) 9 Figures have been rounded for presentation purposes,
which in some cases may result in rounding differences. 10 Special
Purpose Acquisition Company 11 Fee-Related Earnings (FRE)
correspond to net operating profit from asset management less
performance fees and carried interest.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210520005861/en/
PRESS CONTACTS:
Tikehau Capital: Valérie Sueur – +33 1 40 06 39 30 UK – Prosek
Partners: Henrietta Dehn – +44 7717 281 665 USA – Prosek Partners:
Trevor Gibbons – +1 646 818 9238 press@tikehaucapital.com
SHAREHOLDER AND INVESTOR CONTACT:
Louis Igonet – +33 1 40 06 11 11
shareholders@tikehaucapital.com
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