A long-term investor
Wendel is a hands-on investor and shareholder that assists sector-leading companies in their long-term development. Wendel's business model combines the entrepreneurial passion born of a long family tradition with a culture of performance and accountability.
The calculation methodology is in compliance with the recommendations of the European Venture Capital Association
1. NAV reporting dates and reporting controls
A list of NAV valuation dates will be reported.
At each reporting date, the following verification and approval will be carried out on NAV:
• Statutory auditors verify compliance of NAV calculation methodology with the announced methodology and consistency with accounting
• Audit Committee reviews NAV, comparing Wendel’s valuation of its unlisted investments with an independent valuation of
2. Presentation of NAV
(published with this level of detail)
|Investment valuation date|
|+ Unlisted investments||Valuation based on market peer multiples based on the
last 20 closing prices.
|+ Listed investments, including:
> Legrand > Bureau Veritas
|The average of the last 20 market closing prices|
|INVESTMENTS||Gross value of investments|
|TOTAL CASH (*)||Free cash + pledged cash of Wendel and holding
|WENDEL’S BOND DEBT||Nominal value plus accrued interest|
|BANK DEBT RELATED TO SAINT-GOBAIN
|Nominal value plus accrued interest|
|VALUE OF SAINT-GOBAIN PUTS||Net market value of puts based on the prices used for
the Saint-Gobain shares
|NUMBER OF WENDEL SHARES|
|NAV / SHARE|
|(*): Amount of free cash: €[X] million; amount of pledged cash: €[Y] million|
3. Valuation of unlisted investments
Unlisted investments are valued by multiplying
- The value of the company’s shareholders’ equity by
- Wendel’s ownership percentage at the valuation date
The value of Shareholders’ Equity is determined by the difference between
- (+) The Enterprise Value of investments and
- (-) The net financial debt of investments (nominal gross financial debt – cash)
- (-) The estimated amounts owed to executives under the co-investment agreement (based on the assumption that the company were sold
at the valuation date and based on the value of the shareholders’ equity at that date)
When net debt exceeds Enterprise Value, the value of shareholders’ equity is held at zero if the debt is without
recourse to Wendel.
The ownership percentage of Wendel’s holding is determined on the basis of the initial breakdown in the investment between Wendel, the co-investors and the Executives.
Enterprise Value is obtained by multiplying
- measures of the company’s operating profit by
- market capitalization multiples of peer companies, and by transaction multiples if that produces a more relevant valuation.
The operating profit measures used in the calculation are:
• Maintainable (recurrent) EBITDA as calculated by Wendel
• Maintainable (recurrent, pre-goodwill) EBITA as calculated by Wendel
The enterprise value used is the average of EBITDA and EBITA for the current year and the year prior to valuation. The reference years become the current year and the following year, once the budget for the following year is known.
The market capitalization multiples of peers are obtained by dividing
- Their enterprise values by
- Their EBITA and EBITDA of the reference years
The enterprise value of peers is obtained by adding
- (+) Market capitalization (average of the last 20 market closing prices)
- (+) Net financial debt (nominal gross financial debt – cash)
Market peers are chosen on the basis:
- Of data and reviews carried out by external service providers,
- Of information available within the invested companies and
- Reviews done by the in-house investment team
The same sample is used over time and is adjusted only when a peer is no longer relevant (it is then taken out of the sample) or when a company is newly considered to be a peer of the investment in question. Non-representative multiples are taken out of the sample (e.g., during public offer periods or any other exceptional item affecting the various operating profit measures or the share price).
The data, analyses, forecasts or consensus values used are based on information available at each valuation date.
4. Listed shares and cash
Listed investments are valued on the basis of the average closing price of the 20 trading sessions prior to the valuation date.
Shares held in treasury that are earmarked for sale when stock options are exercised are valued at the strike price of the options or the market price, whichever is lower. Other treasury shares are valued at the average of the 20 most recent closing prices. If these shares are meant to be cancelled, NAV is used as the valuation basis.
Cash of Wendel and the Investments includes:
- Cash available at the valuation date, as well as
- Pledged cash
5. Financial debt
Financial debt (i.e., Wendel’s bond debt or bank debt incurred for Saint-Gobain financing) is valued
- at its nominal value
- plus accrued interest.
As financial debt is recognized at its nominal value, it is therefore not affected by changes in interest rates and credit ratings. Accordingly, the market value of interest-rate swaps embedded in the debt is not included.
6. Saint-Gobain protections (puts
The value of Saint-Gobain protections (puts) is calculated on the basis of a mathematical model normally used to value options; the Saint-Gobain price used for this calculation is the same as that used for valuing Saint-Gobain shares under listed investments
7. Other NAV components
New investments, i.e. unlisted subsidiaries and affiliates, are valued at their net purchase price during the first 12 months after acquisition. Thereafter they are valued in accordance with what is presented above.
Current assets and liabilities are considered at their net book value or their market value, depending on their nature (i.e., at nominal value, less any impairments, in the case of receivables, and at market value in the case of real estate or derivatives, with the exception of interest-rate swaps).
The number of Wendel shares is the total number of shares composing Wendel’s equity at the valuation date.
Net asset value does not reflect control premiums or illiquidity discounts. In addition, NAV is calculated prior to taking into account the tax impact of unrealized gains and losses.
Some aspects of the method described above may be modified if such a change produces a more faithful valuation. Any such changes would be announced in a special statement.