IDI

• IDI’s NAV rose by 4.7% in H1 22 compared to the December 2021 level to €622.5m. The NAV per share stood at €83.62 bringing the discount to the reported NAV (using current share price) at 42%.
• IDI’s investment capacity as of June 2022 stands at €153.6m. Since 5 July 2022, IDI has two credit lines of €30m each, one of which is dedicated to financing investments in the Private Equity Europe segment.
• Subject to conditions precedent, IDI will become a 45% shareholder in Omnes’ renewable energy, venture capital and co-investment activities.
• IDI will become an 80% majority shareholder of the private equity and private debt activities of Omnes alongside the 22 existing professionals. The structure consolidated under the name IdiCo will manage €900m.
• Omnes, the former private equity arm of Crédit Agricole, currently manages €4.2bn of AuM.

Despite a decline in net income from €84.1m in H1 21 to €30.1m in H1 22, IDI reported a resilient first half marked by a 4.7% ytd increase in its NAV to €622.5m or €83.6 per share from €612.4m at the end of 2021. This near 5% bump in NAV is an achievement in the context of fast-declining valuations across all markets. It is even more so with a view to a history of extreme caution on the part of management when it comes to putting a price on its stable of assets. As of June 2022, IDI has a strong balance sheet with equity of €622.5m. In terms of liquidity, since 5 July, the group has two credit lines of €30m each, one of which is dedicated to financing investments in the Private Equity Europe segment. Investment-wise, the group has a high investment capacity of €153.6m. IDI’s investment activity has been dynamic in the first half of the year with seven transactions completed, including one acquisition, five build-ups and a strategic transaction with Omnes and its partners (see below).

IDI is about to take another step forward. On 12 September 2022, IDI signed an agreement with Omnes, under which IDI would become a 45% minority shareholder in Omnes’ renewable energy, venture capital and co-investment activities and be an 80% majority shareholder in Omnes’ private equity and private debt activities. In doing so, IDI has taken grip of the former private equity arm of Crédit Agricole, which became independent in 2011 and now manages nearly €4.2bn of AuM with a team of c.70 people. The transaction, which is expected to close in Q4 22, will result in the creation of IdiCo (regrouping Omnes’ private equity and private debt activities). Alongside the €900m of assets managed by IdiCo, IDI will double in size with a total of c.€1.5bn of AuM. By strengthening its foothold in the universe of third-party asset management, IDI is following in the footsteps of its peers Eurazeo and GBL. It changes the firing power of IDI in future deals with both teams planned to work under the same roof.

This operation brings memories of similar moves with Idinvest. Back in 2018, IDI had multiplied the value of its stake by 10 when it sold Idinvest to Eurazeo. However, the transaction is more complex than the Idinvest deal. According to sources in Les Echos, Omnes has an enterprise value of around €120m. The motivations behind such a transaction are many. Thanks to this transaction, IDI should be able to: i) diversify its source of revenues, ii) expand its third-party management activities, iii) benefit from a size effect and thus increase deal flow, iv) share competences between IDI and Omnes’ managers, and v) create synergies in ESG. All in all, a deal more than promising on paper that should generate revenues for the holding. The value of the deal is unknown at pixel time and will only emerge in the 2022 accounts to be released by April 2023. This is a complete change of business structure for IDI as 2023 revenues may jump from €5m to €25m or so and the cost base jump due to the addition of c. 30 investment professionals. The NAV itself is not supposed to change for now as new assets are matched by net liquid assets attrition.

Despite a half year marked by geopolitical tensions with the war in Ukraine, macro-economic tensions with the rise in interest rates, the record-high inflation, and strong pressure on valuations, Christian Langlois-Meurinne remains confident in the resilience of IDI’s business model, its long-term vision and the quality of its results. Thus, the long-term outlook for the group remains more than attractive after this shift up in gear. We maintain our positive view on the stock and believe that the current discount to NAV of 42% is very attractive.

We will revise our NAV estimate in accordance with the results. We will also incorporate the impact of the acquisition of the 80% stake in Omnes’ private equity and private debt activities (IdiCo) and the 45% stake in the other activities on the financial statements.