Investment strategy

2021-2024 Wendel’s
strategic orientation

As a long-term partner to leading companies, the Wendel Group is confident that its success will only grow. To ensure this, Wendel will continue to partner with ambitious entrepreneurs, assisting them with their development, supporting them with innovation and in external growth transactions, and working with them on governance and drivers for value creation.

The Executive Board roadmap is focused on diversifying Wendel’s portfolio with balanced exposure to listed and unlisted companies by generally deploying capital towards higher-growth markets, while remaining opportunistic.

Investment target

Standalone equity investments should amount to c. €150 million to €500 million targeting majority/control/large minority investments in listed or unlisted companies. Wendel also will consider investments in small equity growth opportunities through Wendel Lab.

Growth and transformation

Wendel seeks market-leading businesses or companies in growing sectors with long-term growth prospects and pricing power. These companies must be driven by one or more major, long-term economic trends, enabling Wendel to plan to hold the investment over an extended period, going beyond 15 to 20 years in certain cases.

Governance

The Group will invest in companies led by high-quality, experienced management teams with which Wendel shares a common vision. Wendel will pursue its long-term shareholder approach, with the objective to be a top shareholder with board and critical committee seats, alongside like-minded partners.

Geographic targets

New investments will be focused on Western Europe, particularly France, and North America (United States and Canada).

Stability

Wendel generally does not invest in highly cyclical or capital-intensive assets and looks for companies with a demonstrated resilience through economic cycles (and during shocks such as the pandemic or armed
confl icts). Attractive sectors meeting these criteria include technology services and software, business services, healthcare and industry.

Responsible investor

Wendel will consider assets that have a positive impact on society, that embody Wendel’s ESG values and ethics, and which present improving ESG profiles.

Wendel Lab

In the context of the Wendel Lab initiative, Wendel expects to gain greater exposure to the growth of tomorrow, mainly by making commitments to several high-quality technology investment funds. This asset class should eventually represent 5 to 10% of net asset value. Wendel Lab has a multi-pronged objective. Not only does such investment diversify the portfolio by increasing exposure to high-growth assets, generally with a digital component or with disruptive business models, but it also improves its teams’ knowledge and that of its assets on technological innovations which could impact or enhance their value creation profiles.

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Investment profile

Wendel’s permanent capital enables it to invest for the long term as the majority or leading shareholder in unlisted companies that are leaders in their markets, in order to boost their growth and development.

In making its investments, the Wendel Group seeks companies exhibiting as many of the following characteristics as possible:

companies that embody Wendel’s ESG values and ethics and led by high-quality, experienced management teams with which Wendel shares a common vision;

companies that are related to one or more major, long-term economic trends, enabling Wendel to plan to hold the investment over the long term, even going beyond 15 to 20 years in certain cases;

companies that are located in countries that are well known to Wendel: in Europe, particularly in France, and North America (United States and Canada), with strong international exposure or an international growth strategy;

companies that ideally represent an initial investment generally between €150 million and €500 million. Smaller equity investments are also contemplated directly or indirectly, notably through Wendel Lab;

companies that are among the leaders in their markets, operating in sectors with high barriers to entry, with sound fundamentals and, in particular, recurrent and predictable cash flows;

companies that offer high potential for long-term profitable growth, through both organic growth and accretive acquisitions.

Wendel will pursue its long-term shareholder approach, with the goal of being a top shareholder with board and critical committee seats, alongside like-minded partners. Wendel particularly favors certain circumstances, such as:

control or joint control immediately or in phases;
a need for a long-term, reference shareholder;
opportunities for further reinvestment over time to accompany organic or external growth.

Acquisitions by Group companies

Growth by acquisition is an integral part of the development of Wendel Group companies. While external growth projects slowed down in 2020 primarily due to the Covid-19 crisis, the pipeline of opportunities has remained healthy. Wendel’s companies plan to achieve a portion of their growth through acquisitions, focusing on small- or medium-sized purchases that create the most value.

Wendel’s teams assist Group companies in their search for acquisitions that can create value, in deploying their external growth strategy, and in arranging the required financing.

An entrepreneurial model

Wendel believes in the power of giving management teams a personal financial interest in the value they help to create.

For listed subsidiaries and associates (Bureau Veritas), these mechanisms consist of stock-option and/or bonus share plans.

For unlisted subsidiaries (Cromology, Stahl, IHS Towers, Constantia Flexibles and CPI), the participation policy is based on a co-investment mechanism through which executives may make significant personal investments alongside Wendel.

Supporting

Success is teamwork

Wendel’s support is built around a relationship of trust whose ambition is to create sustainable leaders. The top management of our operating subsidiaries know that they can always count on Wendel’s advice and support in their projects.

André François-Poncet

Group CEO

ESG COMMITMENTS

Building sustainable companies

Wendel has made important commitments to ensure that its internal operations are conducted according to its values and the ESG goals defined within the portfolio companies.

David Darmon

Group Deputy CEO

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Investment phase

All investment opportunities are systematically assessed through a newly defined exclusion list and a business model resilience test. The ESG maturity of the companies is then assessed as part of an in-depth Sustainability due diligence.

Our ESG strategy and priorities

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Holding phase

An ESG transformation roadmap is defined for each portfolio company, based on ESG due diligence carried out in advance. This roadmap systematically includes items related to operational eco-efficiency with a strong focus on climate change issues as well as the ESG innovation of products and services. Investment teams at Wendel and portfolio companies’ management teams are also held accountable for progress against this roadmap with an alignment of variable remuneration with performance.

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Exit phase

The transformation achieved within the company will be highlighted and showcased through an exit memo and presented to the Supervisory Board. When circumstances allow it, Wendel ensures wherever possible, that it associates the teams of the divested company with the value created.

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