Good morning to everybody. Bonjour à toutes et tous. Thank you for all those that are online, and thank you for all those who have made the efforts to come here. For the full year result of 2022, I'm very happy to be with you. It's the first time I'm making a presentation of Wendel results, so please be indulgent. I'm here for last three months only, but I will try to be able to answer. We will do this presentation with David Darmon, who is the other member of the executive board, and with Jérôme Michiels, who is the CFO of Wendel. We will try the three of us to answer all the question that you may have.
What can we take away from the. Sorry, I think I have to pass the Slide. Yes. What do we have to take away from the year 2022? First, and it's the most important, I think the performance of our portfolio companies has been very good during the year. You see that on the. We will go into detail of each of them during the presentation. You see that the consolidated sales of the company that were here at the beginning of the. It exclude Cromology that has been sold. If you take the company that were here at the beginning and there at the end, we have an increase of 16% of the consolidated sales.
That shows that this company has been able to navigate well through a complex environment in 2022, an environment with all the issues linked to the Ukraine crisis, but also to the inflation. All of them have been able to do very well. The increase is there's price elements, but there's organic growth. There's Forex element, there's element of scope, but most of it is driven by organic growth, close to 11% growth from our portfolio company. This has been achieved with a high level of margins across the board to all our companies, which then result in the fact that the restated total contribution from those subsidiaries to our earnings has been a significant increase, 15.5%.
You will see the detail, but a very strong increase of the contribution of CPI in the U.S.. A very strong increase also of Constantia during the year, and a very good increase of the performance also of Bureau Veritas during the year. We will come back. That is important because this growth is really the basis of the value creation of the portfolio company. That mean that our companies are developing well, developing their business, having good margin, and able to generate significant cash throughout the year. We have deployed EUR 355 million during the year by the investment done in ACAMS, but you know that well.
start of Wendel Growth, where EUR 51 million have been committed in 2022 globally. The year is, I think, you've seen we have a very sound company with a very sound balance sheet. We have significant financial flexibility with an important level of liquidity, loan to value position of debt of 5.8%, which is really on the low side of what we can have. We have also low leverage across the board within our portfolio companies. All of that is matched with an appropriate maturity of debt, which has been well managed there.
The year, the NAV is down 9% compared to last year, EUR 167.9 per share. It's always disappointing to have a NAV which is down. It's slightly better than the STOXX Europe 600, which is down 10.6%. It's above the level we were in September, 8% above that. Nevertheless, it's down. Most of it is coming from the performance of the listed company. The unlisted company had a value that have grown by over 10% during the period. If we go through... Sorry. I have changed. Here you see the illustration of what I mentioned, which I think is very important.
This, the increase in consolidated sales, where you see, if we take away Cromology that was sold, you start by EUR 7.5 billion of revenues going to EUR 8.7 billion of revenues, with organic growth of 10.7%, scope 2.2%, and forex 4.6%, a little bit of IFRS impact. For the existing portfolio, you know, during the year we've had accounts for EUR 66 million. If you look to the gross for only the existing portfolio, this is the 15.7% I mentioned. It's EUR 1 billion, a little bit more than EUR 1 billion additional revenue during the year. In terms of adjusted contribution from subsidiary, last year it was EUR 747 million.
If you take away Cromology and IHS, which is not consolidated anymore in the account. It was consolidated as mise en équivalence last year. You start from EUR 649, you see the growth of BV, you see the growth of Constantia, you see the growth of CPI and Stahl, and a little bit of the negative contribution of Tarkett. A significant value added by our portfolio company. Again, this is the illustration of value creation through the year of the investment we've made in these companies. The year has also the start of the year has started well. We had strong M&A activity at portfolio company.
You've seen that Stahl have made an acquisition in the U.S. in the specialty coating ISG acquisition. It was closed yesterday and announced months ago, but closed yesterday. You've seen that Constantia Flexibles have done two thing, have created a joint venture in India, which was a difficult situation. Yeah, we're very happy about this. Made a small acquisition in Poland, and I will not try to tell the name, but it's.
Drukpol.
Drukpol, Flexo. It's a good acquisition. Wendel Growth has accelerated with three new direct investment. I'm saying that because I'm insisting on the direct, because we're going to put more emphasis on direct investment than on the fund of fund activity in the Wendel Growth business. We've conducted a strategic update which have been discussed both with the teams, conduct with the teams, and with the supervisory board of Wendel. The new strategic direction, I'm going to go through the main item. This is direction, it's not a plan, and I want to be clear about it.
You may say, "Well, what's new in some area?" Well, I think what's new is that this has been very much well discussed, we want to execute on it. It's very important about what we're going to say. First, we're going to implement a very active portfolio management investment policy. This is important. Our business number one is to invest money, to have an active management of our portfolio companies in order to generate long-term value. That's gonna be the number one priority that we're going to put. We want to invest globally around EUR 2 billion within the next 2 years, mostly in size of, let's say, around EUR 500 million.
EUR 300 million-EUR 600 million, but around EUR 500 million, which we're not changing the geography or target of Western Europe and North America. We want to be active on that, and we will be active on that. That is important because probably we've been not enough active in the past on that. Number two is what type of investment do we want to make? We want to be a significant hands-on investor with active role in the portfolio value creation. That is very important. This is true for the companies where we are today shareholders. It's really what is going to drive the new investment we want to make. Which mean that we're going to invest in unlisted company with a strong priority given to majority stakes.
If we're not majority stakes, it mean that we have a significant influence in the way the company is managed. We do think that this is how we can create long-term value, and that being an active investor, which doesn't mean that we are running the company. We want to have great CEOs, management of companies and so on. We want to be a strong, a strong shareholder alongside the management of those company in order to make sure that we create long-term value.
This mean that, for example, on the portfolio company, we will have an active involvement with Bureau Veritas management team, which is changing, as you know, because Didier Michaud-Daniel is stepping down at the next AGM. Hinda Gharbi is going to be, she's transitioning now, but she will take the lead at that time. We think that we can be on the side of Bureau Veritas in order to continue to create value. We do view Bureau Veritas as being a very good company, and we view that, and we'll discuss about their performance later. We think that the TIC business has some strong tailwind today.
That Bureau Veritas is very well positioned in order to take the benefit of that. Specifically, if you look to the sustainability and climate change thesis, they can create significant value in the future, which is really what is important to us. To us, our view is really be a shareholder of companies because we believe that there are significant value to be created in the future. This is true for Bureau Veritas like for the other companies on the portfolio. A new thing is that we have the ambition to develop a third-party asset management business. This is new because we've never made that as a strategy.
It is not something that is going to be done from one day to the other. This is a journey. We are going to leverage the Wendel platform, and we have a very good platform of investment teams, structures, fund structures, and so on, that exist. We are ready to further invest in order to create that platform, in talents, in order to make sure that we will have the ability to raise third-party money. This is not something that will be done in one day. It will take some time, but it's a clear direction that we're taking. Financial policy, you will see that we propose a dividend which is of...
We will propose to the AGM a dividend of EUR 3.2 per share, which is 1.9% return to NAV. We view that as on average, we want to have dividend that represent around 2% of the NAV. Which is, you will see that, a significant increase to compare to what was the average return on NAV over the last 10 years. We do think that we can optimize also the balance sheet of Wendel today. As I mentioned, we've got a very low LTV for the time being. We view to be investment grade as being an asset, an important asset, we will do everything to preserve that. We will be optimized in the investment grade rating framework.
Our final goal of that is to have, obviously, double-digit average TSR for our shareholders. We move to the dividend part, you see that our dividend at EUR 3.2 per share is up 6.7% compared to last year. It's a yield of 3.3% compared to the recent price of Wendel. If I compare it to the NAV, which is really where it's, I think it has the most meaning to be compared, it's, as I said, 1.9%. Our objective is around 2% on the as an average. The average return on NAV over the last 10 years have been 1.6%, 1.61%.
It's a significant increase in the dividend policy that we're expressing implicitly through that. That's it for the main presentation about the different highlights of the year. Now we're going to go into the performance of the investment we've made of the companies of our portfolio. We're going to share that with David. I'm gonna start with Bureau Veritas. Bureau Veritas, well, as you've seen, the performance of Bureau Veritas in 2022 has been very good, and I think that Bureau Veritas' performance compare very favorably to its peers.
First of all, they had significant growth in revenues, 13.4% increase with organic revenue growth of 7.8%, which is a very good performance during the year with some of the businesses that has done very well with 11.4% in industry, marine and offshore 9.4%, agri-food and commodities 9.3%, and so on. I'm not gonna go through all of them. You have probably seen the presentation of Bureau Veritas, 3 weeks ago, if I recall well. It has been a very good performance.
At the same time, we've seen that the Green Line, the BV Green Line, which really addressed the issue of sustainability, is representing today 55% of the total sales of BV. I think this is really a tailwind for BV. This is really a tailwind for BV. The operating profit has been in line with the guidance, so 16% margin, ups 12.5% compared to last year. Again, I think it's a very good performance because it has been achieved despite the fact that we had the Chinese lockdown in 2022.
You know that BV has a significant Chinese business in China, which is also for 2023 a good tailwind for BV, because we see that the end of the Chinese lockdown is offering opportunities. Cash flow generation has been very good, 9% growth. The adjusted net debt EBITDA has further reduced during the year. It's now below one turn to EBITDA. The proposed dividend of BV is EUR 0.77 per share, which is up 45% compared to last year and represents 65% payout ratio, which represent the ability of BV both to pay significant dividend to shareholders and to have financial flexibility to grow.
I think it's really the two main element that we have to take away. Good performance, good cash generation, ability to pay significant dividend, and ability to have ambitious growth strategy. That's it maybe for Bureau Veritas, I hand over to David for Stahl.
Thank you, Laurent. Good morning, everyone. Stahl did post some very good 2022 results. This is a sentence that you're going to hear a lot this morning. With a double-digit growth driven by a lot of price increases, the company saw some raw material increases and was able to pass through those increase to their customers. And on the top of this organic growth, the company did benefit some from positive FX impact. The company also enjoys some good deleverage. As you know, the cash conversion is very strong at Stahl with limited working capital and limited CapEx. We will see in a moment that the leverage of Stahl did continue up to 2022 to decrease.
In the meantime, we had the closing of the ISG acquisition that Laurent just mentioned. We actually releveraged the company, and we also closed yesterday the refinancing of the company. We pushed the maturity for another 5 years. We actually got some very good terms for this new financing. The leverage is back up to close to 1.5x EBITDA as of today. In terms of ESG, in 2022, Stahl also announced some ambitious goals, which are in line with the SBTi framework, with a clear roadmap to achieve them. We are very pleased with the 2022 results of Stahl. Regarding Constantia, I'm going to repeat a bit myself, but they did post a very solid performance in 2022.
As you can see, very strong organic growth, driven by volume, prices, and mix, and on all of the divisions. All across the board, a very good performance. In terms of margin, the company also improved its margin across the board. It did had the impact of very strong raw material impact, and it did had a very strong pass-through as well, showing that their products are in demand, and they have a very strong market position. Despite this pressure on the raw material side, they managed to increase their margins. The cash conversion at Constantia was also quite good, despite the fact that the company did invest in some significant CapEx for the future. We were very pleased with that.
Again, the leverage stayed at a very low level despite the fact that we saw some active M&A for Constantia. The full integration of Propak, which was made the year before, and the company that we acquired did perform very well. In 2022, the company also closed the acquisition of FFP in the UK, and most recently, the Drukpol acquisition that Laurent mentioned and the joint venture in India, which is very exciting because the company there was not making a lot of profits, and the combined entity is a very strong local player now with a local good player, a local good manager, and now they have a critical mass. This was quite a very good development for Constantia.
Regarding the beginning of the year, we see the same good trends in terms of volumes and prices. We are quite confident about the next development. CPI did also post some good results, very good organic growth on prices, on volumes, driven by the launch of new contents, some developments outside the U.S., including Europe, and the opening of an office in the Middle East. We also saw a growth in the content, in the digital content, the linoleum material that we sell. There is a share which is books and a share which is online material, and we see this part growing year over year, which is a very positive development.
In terms of margin, you can see an increase in the margin. This is partially due to the fact that we did postpone some costs, the 52% EBITDA margin is a bit.
On the high side, we, it took us some time to hire some people to do some IT development that we had planned. We did not spend the money. We had a very strong 2022 EBITDA margin that we don't think is sustainable. It's going to remain at very high level. This is clearly quite exceptional. In terms of the leverage, we can see the company has been performing very well. Again, very limited CapEx, limited working capital. The strong growth in EBITDA did help to reduce the leverage to less than 5 x, which is very satisfactory as well. ACAMS, this is the latest joining the family. We closed this acquisition last March.
For the last 9 months, we've been building the company because as you remember, this was a carve-out, and it was a subsidiary of Adtalem, a U.S.-listed company. I'm pleased to say that after 9 months, the company is almost fully autonomous. We had 100 contracts of service agreements with the former parent company. I think today we have less than a handful, and they are not very material. We have hired the full management team to run this company. We have a standalone company after 9 months. We are, we are on plan. In terms of numbers, you can see the company is delivering double-digit growth.
We are close to the 20% EBITDA margin that we are targeting, and we are quite confident that we will get there. We can see a growth in number of subscribers, and a very strong leverage as well in only 9 months. You remember that we closed the acquisition at, close to 7 x leverage, and we are below 6 x at the end of the year. A very strong start for ACAMS. In terms of leverage, you can see the trend here for the portfolio companies, obviously going down, with including the acquisitions I just mentioned. We are also focusing on the maturity of this debt. We have refinanced Stahl very recently. You can see that, for the portfolio companies, we have long-term maturities.
We did spend a lot of time to also hedge our financing, and most of our debt today is enjoying a fixed rate, which in the current environment is clearly an asset.
Jérôme.
Thank you. Good morning, everybody. I am going to cover the value growth activity for this year, where we have been quite busy, as you can see. As Laurent said, we are focused on the direct side. We have looked at over 50 direct opportunities in 2022, and we have been able to close three of them, Tadaweb, Brigad, and Preligens. We are very excited by the prospects of these companies. They bring game-changing technologies to open source intelligence, flexible work and defense, respectively. They are led by very talented entrepreneurs. They are very committed to their company and have chosen Wendel as a shareholder for their journey, and we are very pleased with that.
On the fund side, the activity has been more muted, as you can imagine. We committed EUR 50 million of additional capital to this strategy. We've seen a marked slowdown in terms of capital calls, which is fine by us given that we are more focusing on the direct side, as I said. Today our total exposure is EUR 164 million in funds commitments, 62% of which have already been called, and about EUR 40 million invested in direct opportunities this year. We are underway with regards to a midterm target of EUR 500 million at roughly EUR 200 million today. Let's now cover the financial and ESG performance for 2022. Thank you.
We'll start by the net asset value, which ended 2022 at 167.9 euros per share. To be compared to 188.1 at the end of 2021. If we readjust for the dividend which has been paid in 2022, 3 euros per share, we are looking at a 9.2% decline in 2022. When looking at the drivers of the evolution, as you can see, we have seen some decrease on the listed assets side with Bureau Veritas, IHS, and Tarkett contributing all together for 22 EUR about in terms of negative change. We've seen the share price of these companies decreasing during the year.
They are slightly up versus the levels that we registered at the end of 2022. Bureau Veritas is about EUR 2 higher at EUR 26.7 at yesterday's close. IHS is at around $7 and Tarkett slightly above EUR 20.
12.
12 EUR, sorry. 12 EUR. On the unlisted assets side, we've seen an increase in the value of these assets, which is the result of higher than expected 2022 results and a solid outlook for 2023. This has contributed positively, although it has been reduced by the impact of multiples that we also have within the unlisted assets. But, net, we are looking at a 6.9 EUR per share effect. We also had a small uplift of 1.5 EUR related to the sale of our headquarters, and it was slightly higher than what we have in the net asset value. As you can see, 9.2% decrease when adjusting for dividend. Now, let's look at the net debt and leverage.
While we have a very robust picture, we have both a low LTV at 5.8% and a low net debt at EUR 469 million. This provides us with a lot of flexibility for doing new investments. This, as David detailed it previously, comes on top of a low leverage generally at the portfolio companies. In terms of financing, we have about EUR 1 billion of cash available, complemented by our EUR 750 million undrawn credit facility. We have a long-term and cheap debt. As you can see, the next upcoming maturity is in 2026.
Given the work that has been done on the liability management side, we have low coupons throughout the curve, and we have benefited, obviously, from the benign interest rate environment that was prevailing up until 2021. We are 100% financed with fixed coupons at 1.7% on average, and the average maturity of the debt is 6.4%. Our strong credit ratings and ratios put us in a position to invest the EUR 2 billion that has been mentioned for the next 2 years. Lastly, in terms of ESG performance, we have very good results, as you can see on this Slide. I will just highlight a couple of them.
Wendel is included in the Dow Jones Sustainability Indices for both World and Europe for the third year in a row. We are also included in the Sustainalytics ESG Global 50 Top Rated Companies list. Lastly, we are very happy to have been able to increase our CDP score from B - to B this year. Laurent, over to you for closing remarks.
Well, yeah. Key takeaways. Again, very good performance of our control company. This is the driver number one of the performance and the value. High flexibility both at holding level and portfolio company, which provide capacity to really invest, which is, I think, important. We're going to, as we mentioned, commit to really invest in the money. You've seen that, and I think it's pretty spectacular, the regulable, regular and measurable effect and progress that we've made on ESG. It is, as you know, a strong element of our companies, and I think you can measure that very easily on the Slide that was presented by Jérôme.
We do believe that we can create more value for shareholders and to sustain a double-digit TSR in the future by deploying our capital. I mentioned EUR 2 billion that we want to deploy within the next 2 years, and we think we can invest this capital in growing companies that can create value with the support of the team and helping the management of those companies to create more value in the future. It's for us, number one priority. We have the ambition, because I think we have both the legitimacy and competencies and talent to create a third-party private assets asset manager business, which will generate value long-term for the company.
I think it's certainly not something that you do in a row immediately, but it's a long journey, but I think it will be a profitable one, and it will create value long-term for our shareholders. We do all believe that in this business of investment, the more you are professional, the more you can have special ability to specialize yourself on sectors and so on, the better. In that field, size matter, and we think that asset management will provide to us size. That's it. Thank you very much for your attention. We open now the Q&A session, and we are all here able to answer your question.
I think there is question that will come from the, from here, from the room and, but there's also question that may come.
Yeah
Web
... the people that are on the web. Huh? We'll take both. Yes, please.
Okay, I will start. Thank you very much, and congratulations for those good sets of results. Geoffroy Michalet from ODDO BHF. First question, at the holding level, we've seen a slight increase in the OpEx. Maybe you could comment a bit on the reason for that. By the way, going further, while developing your asset management business, where can it go in the future? Then obviously, a question on asset management business. You have stated your ambitions. Can you put some maybe figures or timeline on it? Thank you very much.
Thank you, Geoffroy. Maybe I take the first one, and then, Laurent or David can take the second one. About this year, the increase in operating costs at the holding level, we've seen some increase which relates to, non-cash items. The first one of them being the rent of our new premises, which is under IFRS has to be, accounted for, although we have not, yet entered, nor paid the rent for this building. We have to recognize already that as a cost as per IFRS rules. The second item, relates to, the amortization of, a long-term incentive plan, which is, increasing versus, last year.
Apart from that, as you will have seen, we have a strong decrease in terms of financial expense, which is down this year about EUR 10 million. Overall, we've contained financial operating expenses and taxes. But right in saying that we've seen a small increase in terms of operating expenses.
Maybe on the part of the part of your question on OpEx was also what will be the impact of being a third-party asset manager on the OpEx? Well, at some stage, you need to continue investing in some capability that we don't have in-house in order to do it. The objective of the asset management is really to generate fees, so to reduce long-term the OpEx at the holding level. That is really one of the key item about doing, I mean, getting size, having the ability to create a business and create a business that create sustainable revenues. That's really what we're going to do. Do we have yet an objective in term of asset under management and so on? Not yet.
That's why I don't wanna give you a broad number or whatever. We have some ambitions, but we need to work more on that. We wanted to convey to you the objective that we have to work on it that we're working on. I think there's a lot of traction within the firm in order to do so. We already have start to organize ourself in order to prepare for that. We'll come back to you with more precise numbers and objective in due time. At this stage, it's more strategic intention. As I mentioned, it's not a plan, it's intention at this stage. You will see some action coming in the months to come.
For the time being, we're giving some key highlights of where we want to go. Again, the important element will be execution of that. We will come back to you on that. We're very determined on that.
Yeah. It will not happen overnight. It's a journey.
Yeah.
Yeah.
It's. Yeah. I think we are all very conscious of that. If you want a journey, you have to start one day, huh?
Yeah.
Yes. Then.
Good morning, Patrick. First question, could you remind us what does investment grade means in terms of LTV, please? Second question, you did not mention anything on Stahl outlook. Could you maybe give us some color on that? My third question is on BV.
Also.
My third question is on BV. BV is obviously a substantial dividend provider for you. It's also 50% of the net asset value, more or less. You can easily decide to make arbitrage between BV and Wendel. What is your view on that? Do you want to keep your stake in BV as it is? Thank you.
Thank you, Patrick. Yeah.
You talk about the LTV.
Investment grade.
Yeah.
Yeah.
At Stahl. Yeah.
Well, first, let me say that it's not a 100% clear link between investment grade and LTV because there are many other ratios that rating agencies take into consideration. It's fair to say that they consider 20%, 25% is probably a ceiling when it comes to investment grade rating. As you know, we are 2 notches above investment grade, above the junk status, sorry, at triple B, for instance, at S&P Ba2. I think if we get close to the 20%, 25%, we might want to take some action in order to avoid a double downgrade. We have plenty of room from today's point.
Well, Patrick, as you know, we don't give guidance, but I'm going to be constructive, let's say that, because I've mentioned that Constantia is having a very good start and CPI as well, and others. Regarding Stahl, I would say it's fair to say that the market is less constructive, and we see some pressure on volumes. We maintain a good discipline on pricing, but we do see some pain on volumes. We hope that the reopening of China will help the company. As you know, it's quite exposed there.
Yeah. On BV, I think, really BV is a great company. We do, after having look at it, carefully and discussed, that it has a great potential, in front of it, and I mentioned the tailwind, recently.
We you've seen that the performance that they have been delivering in 2022 were very good and they are very good and solid, and we think it's a good ground in order to build a significant value going forward. We will be a very supportive shareholder to the new management of BV. You know, Hinda Gharbi is, as I mentioned, taking the CEO ship at the next AGM. It's clear that for BV, like for all our companies, the value creation potential will be our driver in term of shareholding potential, huh, and situation.
Saïma Hussain from AlphaValue. Regarding your decision to develop a third-party management business, can you explain me the timing of such a decision? It seems that the environment is becoming increasingly difficult for private equity players with rates hike and the withdrawal of banks financing from the sectors. Also, I wanted to know what are your view on private equity universe in the coming years. My second question is regarding your decision to invest EUR 2 billion over the next 2 years. I wanted to know if you find attractive opportunities in this environment and if you see a mismatch between the expectation of buyers and sellers. Finally, you mentioned that you're more attracted to unlisted assets. Can you tell me what is your target in terms of shares of listed and non-listed assets?
Do you aim to have 100% exposure to unlisted assets in a long-term future?
Yeah. Three question. You will take the private equity.
Yes
side. We'll start with the, our aim. Is it a good moment to start a private equity? Well, it's never a good or bad moment. It's really a question of willingness to start. We think it's, we do believe that long term, we need to develop, a private, a third-party asset management business, and that if we want to reach the scale that you need in this business, you need to develop that business. We think also we have strong capabilities in order to do so, and that will help leverage our skills, expertise, talents, and structure.
Now, the moment is not so bad in order to be and to start because it's difficult to get third-party money yet, and we're not yet in the phase where we're getting third-party money. We're in the phase of preparing ourself in order to do so. And two, it's a period where potential, and this business is in a transition phase because of rates environment, but also because it has grown very, very fast during the last 10-12 years. This is creating some opportunities. Yeah, we believe it's at least the right moment to start the journey. How long it will take and what sort of how it will be done will depend on opportunities.
What thing is sure, we will leverage our competencies, our talent, our structure in order to be doing that. Private equity.
Regarding question on activity in the PE market, I think it's fair to say that volumes are pretty low right now. Our view, this is temporary and this is going to come back. On large transaction, the market is closed. It's very hard to find a EUR 1 billion plus of debt. We've seen some green shots recently. You probably saw, like, last week, a couple of deals above EUR 2 billion were announced. It's starting to come back, but this is really the beginning. We're really confident that it is going to come back. We are at a low point in terms of volumes for larger assets.
For small to mid caps, there is a certain activity. We do see some attractive situations. If your question regarding the buyers and sellers meeting together with is triggering lower valuation, I would say it's slightly more reasonable, but it's not like a massive correction. We see less EBITDA adjustment, for instance.
The at the end of the day, the price paid is not very different from previous before the slowdown. In terms of venture growth, the situation is slightly different. We do see some valuation contraction there.
Yeah, there's still competition for good companies. That's easy.
Yes.
Share of listed or non-listed? No. New investment will be unlisted. I think we've been very clear on that. Which mean that implicitly, the share of unlisted company will increase within the portfolio with time. There's not an objective per se, but we think that where we can add some value, and deploy what we think is our, our investment style, which is to be an active hands-on investor, will be on unlisted shares. Gradually, that will mean that unlisted shares will increase within the portfolio. Let's be clear about it.
Yes.
Good morning, Alexandre Gérard, CIC. Three questions on my side. Again, on the deal flow, just to get a better feel of what's your pipeline, the deal flow in the very short term, because you sound to be extremely, I would say, confident in deploying EUR 2 billion over the next two years. Do we have to understand are there are short-term opportunities that might be closed, let's say over the next six months? Second question, on Bureau Veritas, could you precise what you mean by value enhancing opportunities? Have you already discussed with the new management of the company? Can you give us examples?
Third question on your private assets and Constantia particularly which organic growth has been surprisingly high last year. Can we have an idea of the price, the volume, and the mix effect and what you go for into 2023? Even I know if you don't, I know you don't give any guidance, but a rough idea of what would be the metrics for Constantia in 2023. Thank you.
Yeah, on the deal flow, we discuss with attractive management teams and sellers right now. To have a clear view on what is going to be our hit rate and our ability to close is a bit presumptuous, so it's hard to say. There is a pipeline, but it's hard to say if this is going to be a 6-month thing or a 24-month thing. We gave like a midterm plan because it's hard to pace this deployment. There is a pipeline.
BV, again, it's not here that we're going to say what is the BV ability to create value. It's BV that will state what they're saying. What we're saying that our analysis, which is shared with BV management, is that there is. This company has strong potential and strong positions. We do believe that we can support the new CEO in order to create value in the future. That's really what we're saying. We will be a supportive shareholder to the CEO in order to create value in the next years. We do believe that there is a significant upside on BV.
The company has made tremendous work in the past years in order to have a very good situation. Again, I think that the year 2022 has... In 2021, in fact, the last 2 years have shown that BV has done very well compared to its peers. This is not luck, yeah. This is really the result of a very hard work that has been done. I think the basis to grow from that is very attractive. Yes, we will be supportive to the management, but it's the management of BV that will decide and implement any sort of value creation plan. Our words is just to say that we will be very supportive to them in order to do so.
You wanted to say a word on Constantia, maybe.
Yeah. It's the same question, so with Patrick, so it's hard to say anything different. 2022 growth had a combination of again, of the three, like price, volume, and mix. We did sacrifice a bit of some volume tactically in some plans as we were running full capacity to run some products with higher margins. If you take individually some divisions, you see some volume decline, but it's on purpose because we thought we could produce products with higher margins. We are actively playing the mix, let's say, to increase the margin. In terms of early 2023, we see the same trends. Good ability to pass on price increases.
We are continuing to increase our mix. We see some volumes growth where we want it to grow.
It's a good start of the year.
Yes.
David Consalvo, Ostrum. I have two question. The first one on BV again. You mentioned several time in the presentation the ability of BV to pay dividends. This is implying that you will require a higher dividend on a regular basis or a dividend recap that will, by the way, reduce the BV weight in the NAV. Is there any change on that? Second question on Wendel Growth. Is there any adjustment in the investment policy in term of timing or by sector considering the moving pieces and the volatility in price, especially in tech?
On BV, no, I think the dividend policy, as you've seen, has been, I mean, the payout ratio has been increased on BV, they've moved from 50% - 65%. I think it's the sign from BV that it is confident in its ability to generate cash, to have significant growth in their earning, convert that in cash, pay dividend and still grow. No, we don't envisage any dividend recap. I think BV needs to have some ability to grow, both organically but potentially also through acquisitions. There is an ability of BV both to have a good payout ratio, 65% I think is a fair payout ratio.
Allowing BV to have a growth strategy, which is I think important. Yeah. Clear.
On your second question on Wendel Growth, there is no change in strategy. We are ramping up the direct side. 12 months ago, we had 1 person on the team, now we have 3. We've looked at 50 opportunities, made 3 investments, and we are, you know, increasing our effort there, just to bring back a sort of balance between the funds and the direct side, although it's going to be progressive and will take some time. There is no change in the strategy. We still have appetite and see opportunities actually in this sector, given the tech meltdown. We think there is a good entry point for this, these investments.
We continue to stay away from massive cash burners.
Yeah.
Those companies are not for us.
Yes. If there are no more questions from the room, we have four sets of questions coming from the web. The first one is from Johan von Achen from the Growth Platform. Two questions on asset management. Are you planning to focus on a specific segment, private equity, private debt, real assets, et cetera? Second question, is the goal to develop the asset management business organically, or should we expect that part of the 2 billion guided investments over the coming 2 years will be put to use for this segment?
The first question is.
Which segment? Which sectors?
Which segment? I mean, we want to, and that will answer part of the second question. The starting point of our asset management business will be our core competencies, our core talents, and our leveraging our platform. Our platform is built to create, to invest in private equity, and we think we can leverage it. If we take the private equity investment made over the last 10 years, in unlisted company, in the, what we view as our market, Western Europe and U.S., the TSR of these investment has been over 16% with a low leverage situation. We have the ability, we have a good platform in the U.S., we have a good platform in France in order to do that.
We have a fund management structure in Luxembourg. All of that exists today and is unleveraged. We can leverage that. There's that, the starting point. It's basically our strength is in the private equity area. It's not private debt, it's not private assets. It's really where we know to do business. Long term, I mean, private assets could be something unleveraged. First, the number one thing is going to be focusing on that. Do we, is there ability to capture M&A in this period? Yes. If opportunities arise, there's the opportunity to accelerate our journey in that business through M&A. Yes, it will.
The EUR 2 billion we're discussing is mostly EUR 2 billion that we want to invest in companies, which is in deploying our capital in investment in companies, which is doing our business of long-term short-term. We're gonna keep the two side of the business. One side, which is gonna be increasingly an asset manager, and we will have some targets about AUM coming to you soon. On the other side, we still want to invest our money long-term and create value through investing money. That will be mostly where the EUR 2 billion will invest. We don't exclude to have M&A to grow our asset management business.
Question from Alexandre Tissieres, Bank of America, on Constantia. How large is Constantia's Indian business as a share of top line? In terms of costs, what rough proportion of total costs did it represent?
Share of total costs. Pre-merger, it was, let's say breakeven. Today, the combined entities is making a double-digit EBITDA. And today has the scale to be successful. Pre-merger, our Constantia operations were less than EUR 100 million of sales, roughly EUR 100 million of sales. Today we have a sort of the company, so you can imagine the size of the new entity.
Question from Samarth Agrawal from Citi. First one on asset management. Understand it's still early days, but wanted to understand the motivation for entering into this new vertical. What do you think about the unique selling proposition of Wendel, particularly given the current competitive environment? Any thoughts around flow targets, clients sourcing, et cetera?
Well, yes, we have thought about that, but yet it's too early to have the discussion publicly on it. We're, yeah, we have some thought, and we have some clear vision about what are the strengths of Wendel and what we can leverage. As I mentioned, we will come back with more detailed views on that in the future. That's why I mentioned it will be private equity, because we're going to leverage on what we will do today and we know to do. But there will be more. There is, you know, this period where you can add the boost being a permanent capital company and ability to leverage some third-party money is, I think, a plus.
It's a period where you need to be able to have some ability to seed third-party money to start, and that will be part of what we will do also. We will come back with more detail about that, but we will use and start with leveraging our core competencies and where we are legitimate vis-à-vis clients.
Samarth, I think I already answered your second question about the level of LTV, where we are comfortable with, for new investment. 20% is the investment grade. We are not going to go overnight from 6%- 20% or more. I think the issue there is to stay investment grade. Your third question is about the current outlook for input prices and client demand versus 2022. Do you expect the earnings growth easing into 2023, given the higher comps from 2022? Oh, wow. Well, that's a broad question. We do see some less pressure on raw material prices. I mean, last year was quite a peak in terms of the cost of some inputs.
This has gone down in terms of the cost of freight, the cost of some petrol-based products, obviously. At the same time, we do see the start of the inflation from the payroll or from the salary increases. There is still a strong growth of costs. It's a different nature. As we went through the presentation, you did see that the portfolio of Wendel, our companies have a very good pass- through. We do continue to see this cost increase, but we are not worried about our margins.
Yeah. That is true for all companies. True for those true for BV, as you've seen also. Yeah, it's the ability to pass the price discipline is very strong within the portfolio companies. Yeah.
Your last question, Samarth, very quickly. You inquired about the break-up of the factors within the EUR 6.9 per share increase in the value of unlisted portfolio between earnings growth and multiple effect. EUR 6.9 per share is about EUR 300 million of additional value. If you break that down, we're talking roughly EUR 700 million related to the trading of our companies, minus EUR 400 million of multiples effect. The net is about EUR 300 million. Questions from Alexandre Casas. We already, I think, answered all your questions, but there is your third question, which hasn't been covered about the geographic scope of our investment policy. Why only Europe and North America? Why not investing in Asia?
We have no competencies in Asia, so we will focus where we have legitimacy, talent, people, and ability to invest in companies we know and we understand. Yeah, we don't have that today in Asia.
Two last questions. Does the investment target of EUR 2 billion include bolt-ons at existing companies? I think the answer is no, because these bolt-ons are financed by portfolio companies and not by Wendel. Last question, can you be more precise on Wendel Growth target allocation between direct and funds? I think I already answered this one.
Yeah.
Great. Alexandre, question. Oh... A last thought.
Yes. Three additional questions on my side, if I may. Regarding the NAV calculations, that might be more for Jérôme. There is a 3 EUR per share negative impact in the bridge that you present on Slide 16. Can you tell us what this is exactly? Second question, what would be also the negative impact of the co-investment and long-term incentive plan programs if all conditions were to be met? Last question, since you started investing in Constantia and Stahl, would it be possible to have an idea of what would be today the cash-on-cash multiple or the internal rate of return on these two investments?
Thank you.
Okay, thank you for your questions. The first question on the NAV. The EUR 3 negative is actually the result of the cash burn over the period, which is the result of our operating and financial costs. That's EUR 300, yeah, EUR 3, sorry, per share for the year. Your second question about co-investment, the impact is included in the NAV. What you see in the NAV is actually a waterfall which takes into account all incentives that exist for these assets. We are really looking at the net asset, which is attributable to Wendel net of any co-investment scheme.
Your last question on Constantia and Stahl in terms of cash-on-cash multiple or IRR, I think is tricky because we're not giving, as you know, any indication of the individual value of the NAV components. You can say. Yeah. It's double-digit. Yeah. IRR. Exactly. For Stahl it's over like 17 years, so. Yeah. The cash on cash is very good. Yes. Well, if there's no more question, I know we're a little bit late to schedule, but it's fine. I think we have a for those who are here, a drink, and we'll have further discussion. We'll have further discussion. Then next meeting, I think, is for the half-year. Q1.
No, Q1, so it's...
28th of April.
28th of April. Great. Very good. Thank you very much. Thank you. Merci. Merci.