AlphaValue Corporate Services
This research has been commissioned and paid for by the company and does therefore not constitute an inducement caught by the prohibition under MiFID II

IDI

CR
Bloomberg   IDIP FP
Holding Companies  /  France  Web Site   |   Investors Relation
Private equity players buffeted by macro-economic headwinds
Target
Upside 35.9%
Price (€) 67.4
Market Cap (€M) 488
Perf. 1W: -0.30%
Perf. 1M: -5.34%
Perf. 3M: -3.79%
Perf Ytd: 7.06%
10 day relative perf. to stoxx600: -2.52%
20 day relative perf. to stoxx600: -6.27%
Earnings/sales releases15/03/2024 12:48

FY23: IDI rewards its shareholders

After 2 successive years of solid results, IDI delivered another set of impressive earnings in FY-23, marked by an 11% increase in NAV. The positive developments were driven by the robust operating performance of the Private Equity Europe portfolio and brilliant divestments in spite of the unfavourable environment. IDI is spoiling its shareholders with a dividend of €5 per share (incl. €2.25 extraordinary) and confirms that it is uniquely aligned with their interests by paying off handsomely thanks to successful investments not marred by time constraints.


Fact

Key FY-23 figures
  • IDI ended the year with an NAV of €732.4m in 2023, corresponding to a NAV per share of €96.86, representing growth of 11.4% yoy, corresponding to a c.30% discount to NAV.
  • IDI recorded a net profit of €70.8m, down 12% yoy, but above our expectations.
  • 2023 was a dynamic year for IDI, which completed 21 transactions, including 4 new acquisitions, 6 disposals, 1 disposal/reinvestment and 10 build-ups in its portfolio.
  • IDI ended the year with a considerable investment capacity (net of debt) of €382.6m or about 50% of its NAV.
  • Based on its strong results, IDI will propose, in addition to its ordinary dividend of €2.75 per share (+10% yoy), an extraordinary dividend of €2.25, bringing the total dividend to €5. The ordinary dividend is in-line with IDI’s policy of 3% of its NAV and 4.57% of its average share price in 2023.

Analysis

IDI ended 2023 with solid NAV growth of 11.4% yoy to €732.4m or €96.86 per share, bringing the discount to NAV to 30%. This increase was achieved thanks to the good performance of the Private Equity Europe portfolio and to significant disposals carried out under attractive terms in spite of the unfavourable environment.

In 2023, IDI’s most notable disposal was the sale of Flex Composite Group to Michelin for an EV of €700m, i.e. 12x its initial investment and an IRR of 38%, completed on 27 September 2023. Another noteworthy transaction was the sale of Ateliers de France last December for 2.1x IDI’s initial investment and an IRR of 13%. Total sale proceeds for Private Equity Europe amounted to more than €380m and achieved a cumulative return of 4.3x, a solid execution magnifying shareholder returns, as was the case in 2018 and 2021. The €5 dividend highlights this point.

The excellent 2023 delivery vindicates, if it were needed, the quality and uniqueness of IDI’s business model which is to offer access to private equity riches at a very low entry cost (just buy a share) and with superior odds of profits as IDI is not time constrained. Where PE is in most cases a leverage exercise imposed to investees, IDI puts up its equity with no time constraint and an ammunition to keep on investing in the growth plans of investees. This is compounded by the fact that the whole investment team has skin in the game, just like ordinary minority shareholders. The proof is in the return pudding at 16% per annum since 2011.

Solid financial standing to keep on sailing

The liquidity position at the close of 2023 gives IDI the financial flexibility to pursue new investment opportunities in 2024. In fact, IDI ended the year with a record investment capacity (net of debt) of €382.6m (vs. €123.8m in 2022) to which is added a €30m investment loan of which €16m has been drawn down, an undrawn €30m revolving loan and a €5m overdraft facility. IDI concentrates on €25m to €60m investments with less than €25m ones being managed by idiCo which deploys third-party money (€1bn AuM to date). The outcome is that little of what goes on in the mid- to small-cap segments in France escapes IDI’s eye. It is thanks to its 33 years of existence uniquely well-positioned to assess timing and valuation and above all IDI is in no need to rush, as would be the case for traditional PE funds with burning pockets.

Making progress on the ESG front

On the ESG front, IDI continues to make impressive progress on its commitments. In particular, the HoldCo produced its first ESG report in 2023, with reporting on all the holdings of its portfolio, as well as a carbon footprint for IDI and most of its holdings based on 2022 data. It is quite remarkable that all investee companies abided to IDI’s request.

IDI’s management also stated clearly that they would no longer invest in a company which was not willing to come clean on ESG data.

In addition, the vast majority of IDI’s employees are shareholders in IDI, with 7% of the capital, which reinforces employees’ commitment to the company’s results and performance.


Impact

We will revalue the underlying companies to estimate our net asset value with revised peer group multiples. We will incorporate the FY23 figures into our model and carry forward our estimates to 2026. The strong FY23 results, together with IDI’s substantial investment capacity and strong investment activity, underpin our positive view of the stock as an attractive long-term investment.


Updates

15 Mar 24 Earnings/sales releases
FY23: IDI rewards its shareholders

28 Nov 23 Earnings/sales releases
Ending Q3 with firepower at its peak

28 Sep 23 M&A /Corp. Action
Masters the value creation playbook

26 Sep 23 Earnings/sales releases
Shielded against macro-economic turmoil

13 Apr 23 Earnings/sales releases
FY22: IDI in a solid stand amidst an adverse en...

14 Sep 22 Earnings/sales releases
H1 22: a new milestone for IDI

12Next
.