IDI

With the exception of idiCo, which is consolidated in IDI’s accounts, IDI’s holdings are not consolidated, regardless of the size of the stake held (majority or co-controlled), hence the company’s accounts primarily reflect the activity at the holding company level. Based on its pure-play investment company structure, the P&L is not particularly elucidating and is thus of lesser importance compared to the NAV, which stands as the chief performance indicator for this type of structure.

Focusing on cash generation, as is the case for pure investment companies, the lion’s share of the cash stems from exits from investments and the capital gains realised from the sales. These capital gains are accounted for under ‘Changes in fair value of financial assets’, which comprises both realised and unrealised gains, which evidently carry very different cash implications. In 2023, changes to the fair value of assets amounted to €85.8m, representing c.96% of the result from investment activities.

In terms of recurring income, the main source comes from the dividend upstream from portfolio companies that pay out dividends, which is usually the case for the more mature larger assets. In 2023, IDI received €860k in dividend inflows, with €650k (c.75%) originating from investee companies within the Private Equity Europe segment.

Although marginal, the third-party capital management activity nesting in the IDI Emerging Markets Partners subsidiary also generates interest income from the invested AUMs, which, when combined with the carried interest earned from these funds, makes it the third — though quite minor — source of cash for the holding company. In 2023, interest income amounted to €2.8bn, with the PE Emergents segments representing 97% of the result (€2.7bn).

IDI’s flexible investment approach supports its ability to identify the best time for exits, allowing the company to achieve high IRRs (averaging 15-25% for its PE Europe activity) and realise sizeable capital gains. This, combined with a disciplined stance on maintaining an average share of 20% of liquid assets & cash in the portfolio, is translated into a robust dividend policy that is able to withstand a volatile market environment (to the benefit of the family-owners and minority shareholders alike); which was the case in 2020. Despite the impact of the global pandemic, IDI was able to distribute a dividend of €1.50 per share (modestly cut from a pre-pandemic proposal of €1.90), which represented a solid 5.0% dividend yield. This compared quite favourably to the 3.1% dividend yield averaged across holding companies under our coverage last year.

When market conditions improve, IDI is also keen to follow with more generous dividend pay-outs, which helps support IDI’s case as an alluring investment proposition for investors that value attractive and dependable dividends as part of improving shareholder returns. Backed by the strong 2023 results and a liquidity position of €382.4 million at the end of the year, the HoldCo decided to distribute a €5.00 dividend, consisting of €2.75 as an ordinary dividend (up 10% year-over-year) and €2.25 as a special dividend, corresponding to a 5% yield, well above the 2.5% yield of its peers. In 2024, despite a quieter year on the investment front, IDI distributed an interim dividend of €2.50 in December 2024, representing 90% of the 2023 ordinary dividend.