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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
Benchmarks Current multiplesWeightValues (€)Upside 
NAV/SOTP per share   55%87.730%
Dividend Yield Peers 4.6% 20%13499%
DCF (Edit and simulate)  10%61.4-9%
P/E Peers 7.9 x 10%67.0-1%
P/Book Peers 0.6 x 5%73.18%
Target Price  100%91.636% 
Valuation matters

The basis of our valuation starts with the NAV, which is estimated as an aggregate of the individual valuation of the 16 participations (as of September 2021) in the portfolio, segmented in IDI’s two operating pillars, Private Equity Europe and Private Equity Emergents. Compared to IDI’s understandably conservative valuation, we see substantial upside potential from its diversified roster of assets, as shown by the over 50% discount to our estimated NAV.

Being a pure-play investment company with no consolidated activities outside the parent, the DCF is not particularly elucidating when it comes to valuing this type of holding company structure. As a result, the DCF solely reflects the dividend flows from investee companies, since trying to estimate cash entries from potential disposals seems too vague of an exercise given IDI’s investment profile, which is not subject to fund liquidation schedules like the majority of its private equity peers do. This was the case in 2020, where due to an unfavourable market environment brought by the COVID-19 pandemic, management held back on disposals, having just carried out the sale of HEA Expertise in April 2020 on conditions agreed before the sanitary and economic crisis (and realising a solid 35% IRR on its investment).

Regarding the peer metrics valuation, the approach is much more clear-cut. We base it on a group of family-type holding companies with a control/hands-on style in the management of the underlying assets. With many having assets in their respective portfolios that follow a service-based focus, which supports added value ambitions and recurring revenue generation, setting them apart from more commoditised and, hence, cyclical peers. The yield-based valuation jumps out, presenting a 2x upside potential, justified by IDI’s solid 5.1% dividend yield expected for FY21, compared to a modest 2.0% for its peers.

Please also read section ‘Worth Knowing’ about the impact of the SCA status on valuation

Comparison Based Valuation
Computed on 18 month forecastsMcap (€M]P/E (x)P/Book (x)Yield(%)
Peers ratios 11.7 0.68 2.31
IDI's ratios 7.89 0.62 4.62
Premium -33.0% 0.00% 0.00%
Default comparison based valuation (€) 67.0 73.1 134
Bolloré 16,468 7.260.631.20
GBL 9,998 51.90.644.04
Ackermans & van Haaren 5,584 11.21.042.00
Wendel 3,764 17.60.935.58
Corporacion Financiera Alba 3,087 13.20.601.87
Kinnevik Investment 2,237 ns0.510.00
DCF Valuation Per Share Help View DCF history
WACC % 8.91
PV of cashflow FY1-FY11 €th -114,5...
FY11CF €th -20,901
Normalised long-term growth"g" % 2.00
Sustainability "g" % 1.60
Terminal value €th -285,8...
PV terminal value €th -121,7...
PV terminal value in % of total... % 51.5
Total PV €th -236,2...
Avg net debt (cash) at book v... €th -233,6...
Provisions €th 3,649
Unrecognised actuarial losses... €th 0.00
Financial assets at market price €th 450,700
Minorities interests (fair value) €th 8.00
Equity value €th 444,440
Number of shares Th 7,242
Implied equity value per share 61.4
Sustainability impact on DCF % 1.61
Assessing The Cost Of Capital Help
Synthetic default risk free rate % 3.50
Target equity risk premium % 5.00
Tax advantage of debt financ... % 25.0
Average debt maturity Year 5
Sector asset beta x 1.08
Debt beta x 0.00
Market capitalisation €th 488,111
Net debt (cash) at book value €th -243,4...
Net debt (cash) at market value €th -243,4...
Company debt spread bp 0.00
Marginal Company cost of debt % 3.50
Company beta (leveraged) x 0.68
Company gearing at market v... % -49.9
Company market gearing % -99.5
Required return on geared eq... % 6.89
Cost of debt % 2.63
Cost of ungeared equity % 8.91
WACC % 8.91
DCF Calculation Help
  12/22A 12/23E 12/24E 12/25E Growth 12/26E
Sales €th   9,798 24,679 30,780 31,284 2.00% 31,910   
EBITDA €th   -6,739 4,632 4,330 2,693 2.00% 2,746   
EBITDA Margin %   -68.8 18.8 14.1 8.61 8.61   
Change in WCR €th   -17,319 3,555 4,002 1,750 2.00% 1,785   
Total operating cash flows (pre tax) €th   -25,235 8,187 8,332 4,443 4,532   
Corporate tax €th   3,992 -22,262 -19,729 -21,319 2.00% -21,745   
Net tax shield €th   -392 -613 -613 -613 2.00% -625   
Capital expenditure €th   0.00 0.00 0.00 0.00 2.00% 0.00   
Capex/Sales %   0.00 0.00 0.00 0.00 0.00   
Pre financing costs FCF (for DCF purposes) €th   -21,635 -14,687 -12,010 -17,489 -17,839   
Various add backs (incl. R&D, etc.) for DCF... €th     
Free cash flow adjusted €th   -21,635 -14,687 -12,010 -17,489 -17,839   
Discounted free cash flows €th   -21,635 -14,687 -11,027 -14,744 -13,808   
Invested capital   636 569 579 592 604   
NAV/SOTP Calculation
 % ownedValuation technique Multiple used Valuation at 100%
(€th)
Stake
valuation
(€th)
In currency per share
(€)
% of gross assets
Private Equity Europe 100% AlphaValue valuation 270,600 270,600 37.4 69.2%
Private Equity Emergents 100% NAV 40,300 40,300 5.56 10.3%
Other 80,400 11.1 20.5%
Total gross assets 391,300 54.0 100%
Net cash/(debt) by year end 243,491 33.6 62.2%
Commitments to pay
Commitments received
NAV/SOTP 634,791 87.7 162%
Number of shares net of treasury shares - year end (Th) 7,242
NAV/SOTP per share (€) 87.7
Current discount to NAV/SOTP (%) 23.1 View history

Changes to Story : 26/10/2023, Changes to Forecasts : 26/10/2023.