Stability and Responsiveness in Times of Crisis & Where We Go Next

The Covid-19 crisis has tested business leaders in every sector around the world. The challenges that I have faced this year as CEO of Eurazeo, a publicly traded global investment manager based in Paris, are not unique. At the same time, Eurazeo's responsive and dynamic actions in the face of this crisis enabled us to limit its impact on our company. We believe the steps we took at the onset of the pandemic, combined with our later initiatives, have decreased the negative effect on our employees, stakeholders, and operations, stabilizing our business and allowing us to accelerate our business priorities to thrive post-crisis.

How We Got Here

I would like to commend my fellow Eurazeo leaders and employees on their poise, stability, and continued focus on the important work we do. In the first half of 2020, Eurazeo has worked hard to help stabilize our investment companies and continue to accelerate growth in key regions. 

Diversification has given us the ability to contain the impact on our portfolio and has reduced our risk exposure. Eurazeo’s strong balance sheet, steady earnings stream, and diversified investment approach have served us well, enabling us to defend our existing companies while keeping our investment activities on track. Our mission to keep business running smoothly has had a trickle-down effect, minimizing the crisis' impact on our companies’ employees, shareholders, customers, and the communities where they businesses operate.

We entered the crisis with €500 million of cash on hand and no structural debt. At the outset, we froze recruitment, suspended our dividend and drew €400 million from our €1.5 billion credit facility. Eurazeo ended the first half with €587 million of cash on hand, total assets under management of €18.5 billion, and €4 billion in dry powder. Since the start of the year, we have deployed more than €908 million in more than 74 deals, including follow-on investments in Back Market, ManoMano, Vestiaire Collective, and Planet. 

Protecting our businesses and their people has been our abiding focus. Going beyond financial support, we stayed in close contact with our investment companies in order to help them emerge from the crisis with minimal scrapes: this included internal support on HR issues like teleworking and ensuring employee safety, addressing any issues that arose with our deep knowledge and network, and broadly supporting their efforts to successfully pivot to digital channels for business continuity’s sake. 

I am especially proud that, with our shareholders' backing, we have harnessed our portfolio companies' resources to help France and other nations combat the effects and spread of Covid-19. Some examples:

• Seqens, France's leading producer of hydroalcoholic gels, stepped up production and is working on developing a treatment for the virus
• C2S, our group of private clinics, has been on the front line of the fight from day one
• Linvosges restarted operations at its Gerardmer plant to make protective masks for hospitals and retirement homes
• Doctolib began offering free remote health consultations and boosted the number of medics providing consultations from 3,500 to 63,000
• Grandir-Les Petits Chaperons Rouges, a daycare center operator, maintained basic services for children of essential workers in healthcare and security
• Europcar provided free use of 200 rental cars to medical personnel
• Grape Hospitality, our hotel group, offered rooms free-of-charge to workers involved in fighting Covid-19

I'm convinced that corporate society must play a role in bettering the current environment, and that private equity could be at the forefront of this. We make up a sizable portion of the European and US GDPs, and we have the ability to increase the focus on ESG at a company level.

Our 15-year strong commitment to ESG has also protected us. ESG is a major driver for value creation in any market cycle and is a competitive differentiator both for Eurazeo and for our companies. We demonstrated our continued focus throughout the crisis: in early April, we created a €10 million solidarity fund to support employees of Eurazeo and its subsidiaries who are in urgent medical and financial need, and to buy and donate equipment and other resources to the effort to battle the disease. Our executive team donated 10% of their 2019 bonuses to help fund the initiative.

In the coming years, Eurazeo plans to amplify our efforts dedicated towards governance commitments—this crisis has only underscored its importance.

Where We Go Next

Eurazeo has built a handsome track record across Europe in digital investments. Our group is proud of this fact—we have invested €4 billion in tech over 20 years, seen 17 IPOs in the U.S., combined forces with one of the largest European venture funds with 20 years of experience, and maintain our position of being a strong backer of French tech with 27 Next 40 companies financed and supported by Eurazeo. Today, technology companies represent a quarter of our assets and there is tremendous opportunity ahead in this sector.

We continue to press ahead with strategic initiatives, including the recent launch of the Eurazeo China Acceleration Fund (ECAF), a €400 million pool whose aim is to invest alongside Eurazeo in French and European companies active in sectors with high growth potential in China. Over the summer, we announced the first investment by the Eurazeo China Acceleration Fund (ECAF) in DORC (Dutch Ophthalmic Research Center), one of the world’s leading specialists in vitreoretinal surgery. 

Beyond the steps cited above, we could not have withstood the crisis as successfully as we have without the talent and hard work of our employees, the support of our investors, our resilient financial structure, and our diversified investment model. Amid the disruptions of the pandemic, our investment discipline hasn't wavered. Leveraging all of our strengths, we can accelerate and seize opportunities in a recovery economy.

We remain dedicated to providing capital for promising businesses across geographies and sectors, to investing in a prudent and socially responsible manner, and to delivering attractive returns to our LPs. 

I believe that Eurazeo is well positioned to achieve these goals for years to come.