Status Update

Jul 15, 2021

Slides

Good afternoon, everyone, and thank you for being here. This is a combined general meeting and we are meeting to announce the reorganization of TKL Capital as was announced on May 2021. As you may know, we have to abide by social distancing, barrier gestures, wearing masks and so on and so forth throughout meeting. So we'll be looking at transactions that will contribute to the simplification of the group's organization, which will should result in a significant improvement in its financial profile and allow a new dividend distribution policy in order to increase value creation for shareholders. This meeting has been convened by at the behest of top management. You've had all the information on the website. And in keeping with regulations, all the documents we've made available. We have here with me Mr. Mathieu Chabron representing the Supervisory Board Mr. Marcou, who is the Deputy CEO of Tichello Capital and Geoffrey Renard, who is Secretary General. And I should like to apologize on behalf of Mr. Antoine Flammarion, who couldn't make it this afternoon. I have Mr. Simon Belvaer, who is a statutory auditor representing Mazars is present and represents the College of Statutory Auditors. We have to establish the bureau, the shareholders representing the largest number of votes will be appointed to be scrutineers. So the representative of the Societe Generale, Mrs. Florence Belon, representing Ticco Capital Advisor, she said she would accept to be the scrutineer for this meeting. The 2nd largest shareholder in his own capacity or by proxy is the company MASCFA Partner Rotret and they said they would be happy to act as scrutineers in the person of Mr. Roger Cana and we'd like to welcome him and thank him for being with us. So I suggest you appoint Geoffroy Renard as Secretary of this meeting. Jaffa. Do we have a provisional quorum? Yes. Based on the indications that we have received from Societe Generale, which is the body that centralizes this information. We have run about 93% representation. So we do have a quorum. And so we can have both the ordinary and the extraordinary part of this meeting. We'll give you the final quorum. It's being worked out as we speak. But of course, before we move on to the resolutions, you will have the exact numbers. Right then, now moving on to now that we do have bureau. I believe you have received the agenda. It is part of the invitation letter. Let's not I don't propose to read out the entire agenda. The documents were made available on the website, but of course, I don't propose to read them out again. We do not need to. So the documents and information were made available to shareholders within the defined timetable. Thank you, Jean Francois. So this is how I propose to go about this meeting. In the first part of this meeting, we'll go over the assets under management at end March 2021. And of course, we will consider the proposed new organization. We have not received any proposed draft resolutions or indeed additional items on the agenda or indeed written questions from shareholders. And so we can move on two questions from the audience right after the presentations and then you will be given a chance to vote on the draft resolutions. Now then let us start with assets under management at the end of Q1. At end of Q1, assets under management reached €29,400,000,000 up 15.5 percent on an annual basis that is compared with March 2020 and they were up about 3.3% compared to December 20 20. We'll get back to this, but there's some seasonality in fund raising. Regarding asset management proper, the assets stand at €27,700,000,000 up 18% over the past 12 months. Since March 2020, Teco was able to raise as much as €4,200,000,000 which is a significant amount, reflecting dynamic approach of the group and of course, the attractiveness of the asset classes that we offer to our investors throughout the Q1. Net inflow reached €500,000,000 it's comparable to previous months, but you have to recognize that Q1 tends to be slower than the other quarters usually well, of course, this is coming on the heels of Q4 of last year, which was very active indeed. And in Q1 again, we were able to strengthen our financial position. We issued our very first sustainable bond €500,000,000 with an 8 year maturity and a coupon of 1.625%. That's the lowest coupon rate ever achieved by TECOM Capital, which goes to show that of course creditors hold us in extremely good esteem indeed. This is the very first public sustainable bond ever issued by an issuer of alternative investment vehicles. Christian? Mathieu. Thank you, Christian, and thank you for inviting us. And if we can move on to slide number 4, let's look at 2 key stages that were announced at the end of Q1. The first announcement the first significant announcement on the strength of our energy transition fund in Europe. Because of its successful launch, we decided to have private equity strategy in North America looking at low carbon economy, investing €300,000,000 from our own balance sheet. And this is, well, the American equivalent of something we've been doing in Europe for the past 2 years. We also announced the launch of 2 innovative strategies for life insurance products, unit linked products for individual investors, one in private debt with MACSF, which is the largest insurer of health care professionals and another one in private equity with the C&P Assurance. They are a key player in the French market of private insurance. So these, of course, initiatives reflect Teco's strong position and its ability to appeal to private markets and offer alternative asset classes. Thank you, Matthew. Well, let's now look at the main item of the agenda that key items of Teco Capital's new organization. So as to fully understand what it is we are discussing today, maybe we should take a step back and give you some background. As you may remember, TICO Capital was founded in 2004 by Antoine Flamario and Mathieu Chabrand. The idea was to become a key player in alternative asset management. 17 years down the road, time sure applies. Well, these ambitions actually happened. We were able to achieve profitable organic growth and targeted and accretive acquisitions. And now we have about €30,000,000,000 euros worth of assets under management. We're listed companies on the international market. And of course, we organization. Our structure made it possible for us to grow and become what we have become today. But in view of our present science, the time and in view of our future ambitions, the time has come for us to look forward to the future and get ready for the next stage of our development. So Tico Capital is preparing the next chapter of its own development with a simplified organization, strengthened financial profile, but of course, a new and reset dividend distribution policy. So there are a number of key items to look at here. A, the organization is made simpler and made it easier to understand. It strengthens again our financial profile, but of course, new commitments will be made in terms of dividends. Yes, Matthew. The present structure of TIKEO Capital, which goes back to the group's entrepreneurial DNA, as it were, will be replaced with a simplified structure, what we call regroup and reset. So we will be bringing together all our workers within the listed scope. It used to be that the support functions were with TCA, particularly with Capital Advisors. We want to reduce operational cost with the TTR capital and reduced the preferred dividend that was, of course, reserve to the general partner. Now of course, we will have our teams even more involved in the activities of the group. This has always been part of the company culture, but of course, we keep our entrepreneurial and innovative spirit. If we move on to the next stage, this new organization will strengthen TCO and provide many advantages to shareholders. Number 1, this simplified organization, which is easier to read, we have all our employees working within the listed company. Then there are 3 aspect that should be highlighted. Improvement in cash flows, up €40,000,000 after tax in 2021 and more in following years mechanically. We're looking at 1.4, upwards of 140 basis points improvement in the return on equity and a significant accretion based on adjusted EPS as of 2021. But we will take advantage of that to improve our dividend policy looking at the performance of our asset management activity. That is that business which is the recurring activity, the recurring business which has enjoyed significant growth and has become more and more profitable. Indeed, as of 2021, we're looking at more than 80% of the operating profit that is the no par of asset management. And as of 2021, ordinary dividend will not be less than €0.50 per share. On the next slide, as Christian indicated earlier on, this new organization means that TKU can start new chapter in its own growth. We have an improved financial profile and a new dividend policy we have just outlined. But before getting into the details of this new organization, where you bring together all the functions and expertise within the listed company and reset as it were the financial flows of the said listed company. Let's go back to our track record and see just how successful we've been in this entrepreneurial adventure that started 17 years ago. So this gives you a bit of a backdrop. If you like to look at slide 11, our journey has been one of significant growth combining sound financial performance, the recruitment of remarkable talent and constant geographic expansion and a diversification of our investment strategy. At the end of March 2021, at the end of Q1, we had €29,400,000,000 worth of assets under management, which was twice as much as what we had at end 2017, which was when your this company was IPO ed, but that's also 10 times the amount that was managed back in 2013. And our teams well, our headcount followed the same trend. We were headcount traveled between 2017 March 2021. That momentum is the reflection of, as I said, sound organic growth, but also external growth that is targeted and value creating acquisitions. And this success has made us a top range diversified player in asset in alternative asset management worldwide. So we used to have €4,000,000 under management. We have a few people and our headquarters was here in Paris back in 2005. Now we are an international player, 12 offices around the world's Europe, Asia and North America. I'll give the floor to Henri Marcou, who will tell you about our history of growth ever since we were listed. And go back to history of asset management, a few facts and figures. Thank you. Let's look at a few financial indicators then, in particular, the way in which these numbers have been developing ever since we have been listed, and it's, of course, a new trend since 2017. And you have 6 indicators up on the screen and you can see that well, they speak for themselves. On all indicators, TKL Capital has delivered. If you start at the bottom, at the top left corner, you have assets generating income. They grew more than 40% since 2016. If you look at assets from international investors, of course, this platform has become international and now upwards of €9,300,000,000 from international investors were left in our hands. Then if you look at the management, the fee rate, average fee rate has improved over the years. We grew from 0.75% to 0.92% because, of course, we diversified to new asset classes where because of our know how, because of our teams, we were able to gain ground on these new asset classes and generate better fees. Then if you look at income that is from asset management, this has grown 50% since 2016. And then if you look at the key indicators, fee related earnings, we look at the fees less operating cost and that indicator has improved dramatically upwards of €70,000,000 last year and this is much better than the benchmark. And so these numbers show that we are in a position to deliver fast profitable growth ever since we became a listed company. If you move on to slide number 13 to see what is at stake, why it is we want a simplified organization. Well, there are many benefits indeed. First, we're looking at well, if we want to provide our own central services, we are in sourcing these services and that makes for a more readable organization, but we're also bringing down operating costs for TIKO Capital. Right now, these costs for well, because of services provided by Tico Capital Advisors. We'll now be taken back in for the support function, but we will be paying £2,500,000 to management to provide these services. But if we look at 2020 as a reference significant savings instead of €75,000,000 you're looking at €21,000,000 after the simplification. So we're looking at upwards of €50,000,000 saved right there. And then regarding the preferred dividend, that will be significantly reduced from 12.5% down to 1% of the net profit of TKL Capital. So that, of course, will significantly improve the financial profile of TKL Capital. Well, thank you, Henri. And now I think well, it's pretty obvious that this organization was introduced with a view to strengthening the position of Ticchio Capital. This remodeling of financial flows, as Henri has just said, is we're looking at contributions from Ticco Capital Advisor, the main shareholder of the company, which was the main recipient of the funds. As a trade off. TIKO Capital Advisors will receive 39,000,000 shares from TIKO Capital, new shares that is newly issued shares. Now this is worked out on the basis of the valuation of the contribution of Teco Capital, 1.1 €50,000,000,000 from Tyco Capital Advisors. And then Tyco Capital shares will work out at 29 point €5,000,000 per share, I beg your pardon. Now these valuations were reviewed by an independent expert and 2 M and A specialists. Now that valuation at 29.5 percent is at a premium of 19% compared to the share price on the day prior to the announcement, that is on the 19th May. But of course, it doesn't jeopardize the potential growth of the share price. In fact, we believe that because there will be more shares available, this will make it easier for investors to acquire Teco Capital Shares. I mean, we are in constant contact with our investors. And Louis Huguenet, our Investor Relations man, has discussed this with shareholders and investors and they asked us to work on this to improve to increase the liquidity of the our share and increasing the float. Now the founders and top management of TKL Capital will increase their stake in the company from 44% to 56%. And of course, there's an alignment of interest between management and shareholders. So in summary, to sum up, there are 3 takeaway messages. We are improving after tax cash flow upwards of €40,000,000 as of 2021 because if we agree on this today, this will be retroactive as January 1, 2021. So €40,000,000 and even more in following years. We're looking at 140 basis points improvement in return on equity starting in 2021 and a significant accretion, 1 figure single digit growth that is accretion on the share of Teco Capital. So that makes it even more attractive for you as shareholders, present or future shareholders. Regarding now the outlook and you have details on Page 16, we are on the right track to reach the defining objectives that were announced in 2019 that is prior to the COVID outbreak and now in a position to confirm these key items for 2022, namely assets under management upwards of 35 €1,000,000,000 compared to €29,400,000,000 at end March 2021. Profitability, that is fee related earnings. Now we just we are looking at upwards of €100,000,000 by 2022. Let me remind you that we've passed the €70,000,000 mark in 2021. And regarding our own portfolio. We invest in our own strategies and therefore in line with our customers. And we're in fact ahead of schedule because now we have 66% at end 2020. As you may remember, our objective was to have an alignment of anywhere between 65% 75% by end 2022. And then the return on Equatorial, we're looking at 10% to 15% in pro form a by 2022 and we are on track to reach these objectives by 2022. Thank you, Henri. Now a few words. If you look at Page 17, slide 17, our priorities in terms of capital allocation. We will keep investing in the group's own funds and instruments with a view to promote this asset management business. This is, of course, a key and differentiating factor that is the alignment of interest between management and the company. In terms of external growth, we'll look at new opportunities to broaden our client base, diversified towards new asset classes and diversified geographically looking at existing or indeed new territories as was the case in past years. As we said earlier, we will also review our dividend policy, aligning it with our asset management business. So upwards of 80% of NOPA will be allocated to dividend with a threshold of €0.50 per share in dividends as was announced earlier on. So Teco shareholders will be the first beneficiaries of value creation brought about by this asset management platform, which has been delivering sound performances and significant no power. Now by way of conclusion and before we give the floor to Christian. Let me just say in summary that we are here simplifying the structure. This will be financially beneficial. This will create value and this will strengthen TKL Capital. Well, Thank you, Matthew, and thank you, Henry. Before we have an exchange or before we can take your questions. I will ask Geoffroy Ronan to go through the draft resolutions for you to vote on. Yes. Thank you, that you sent to, Christian. So the draft resolutions that you have before you for this meeting, we have as many as 9 resolutions. Number 1, the appointment of well, one of the few statutory managers of the company, AF and Co. AF stands for Antoine Flammarion. So Mr. Flammarion is the Chairman of that company. And so he has 100% ownership of that company. So he would be the statutory manager. Draft Resolution Number 2, MCH Management. MC stands for Mathieu Chaban, who is the CEO of this company and has 100 percent ownership of MCH and so he would be the 2nd statutory manager of TIKEO Capital. So we are we have the 2 statutory managers appointed. Number 3, the appointment of a general partner, Tico Capital Commondite. This is a 100% subsidiary of Tico Capital Advisor, which of course is the main shareholder of TKO Capital. So these are the three stages of this newly well, revisited management structure. Draft resolution number 4 proposes to and as we said earlier on, to reduce the preferred dividend from 12.5 percent to 1% of the TIGO Capital's net profit. This company that is this company is jointly and liable and jointly and severally liable for the debts of the company, hence the remaining 1% preferred dividend. Then the compensation of the managers from €1,265,000,000 before tax, debt amount will have to be reviewed by shareholders under say and pay or more to the point, shareholders will have to decide on this compensation policy for the company's managers. And then in a more defining way, the two aspects of the reorganization. There will be a merger. One aspect of this operation is to merge the general partner within TIKAYO Capital. That's Resolution 6. And so if this happens, 14,000,000,000,353 new shares will be issued. In fact, if you look at the slide, you have the amount of this capital increase. And so you have the nominal, the premium and the total amount. And then the next resolution is partial contribution of assets under that operation, Tikeyo Capital Advisor will be providing the central functions of the group that has been set up in 4 business units. These are basically will be transferred to TKL Capital so that the employees find themselves within the listed company as a result of which about 24,000,000 new shares will be issued for that operation worth about €710,000,000 and so you have the stock capital and the premium that are added up. But of course, this the details, the numbers have been made available in the documents issued prior to this meeting. Thank you, Geoffroy. And Geoffroy will be talking about the very last resolution, draft resolution, which is the legal formalities. Well, we've not received any questions in writing from the shareholders. So now the shareholders who are with us and general management are here to answer your questions. Do you have any questions, ladies and gentlemen? No. So I think we can start and vote on the draft resolutions. We will do what we usually do. That is we want those against and abstentions to be expressed. We will take due note of the number of against and abstentions, and we will calculate the number of votes cast in favor. The final quorum now is almost 93%, 92 point 8%, 9%, 4%, which is a high percentage for a quorum. Suggest that we don't go through all the particulars of these draft resolutions that were presented to you just a little while ago, and all the shareholders have received copy of the draft resolutions. We'll have a show of hands to vote, and we'll ask you to wait until we've finished with each resolution so that we can move on to the following one. We're going to start in a second. Resolution number 1, appointment of AF and Co. Management as statutory manager Of Tico Capital. Anybody against? Abstentions? Yes, one person, so approved. Resolution number 2, appointment of MCH Management as statutory manager of TIKIO Capital. Anybody against? Any abstentions? One abstention resolution carried. Resolution number 3, appointment of TIKEO Capital Commodity as general partner to TIKEO Capital. Anybody against? Any abstentions? Carried. Draft Resolution number 4, modification of articles 14 and 15 of the articles of association of the company. Anybody against? Any abstentions? Resolution carried. Resolution number 5, modification of Article 83 of the articles of association. Anybody against? Any abstentions? Resolution carried. Resolution number 6, review and approval of the merger of TIKIO Capital General Partner by TIKIO Capital. Anybody against? Any abstentions? This resolution is approved. Resolution number 7, review and approval of the partial contribution of assets governed by the legal regime of spinoffs granted by TKEO Capital Advisor to TKEO Capital for the business line made up of corporate central functions. Anybody against? Any abstentions carried. Resolution number 8, approval of the components of the remuneration policy applicable to managers, say and pay. Anybody against? Any abstentions? This resolution is carried. And Resolution number 9, powers formal or legal rather formalities. Anybody against? Abstentions. Resolution carried. So this is the end of Our general meeting