Wendel announces a transformational transaction in line with its
strategic roadmap
PRESS RELEASE - OCTOBER 22, 2024
Wendel announces a transformational
transaction
in line with its strategic roadmap
- Acquisition of Monroe Capital LLC
dramatically expands Wendel’s Asset Management platform and
rebalances its business model towards more recurring cash flows and
growth
- Wendel’s Asset Management platform
will represent c.€31 billion1 of AuM in private assets
and is expected to generate c.€160 million2 of Fee
Related Earnings and c.€185 million of total pre-tax profit in
2025
Wendel (MF-FP) today announced that it has
entered into a definitive partnership agreement including the
acquisition of 75% of Monroe Capital LLC (“Monroe Capital” or “the
Company”), and a sponsoring program of $800 million to accelerate
Monroe Capital’s growth, and will invest in GP commitment for up to
$200 million.
For Wendel, the acquisition of a controlling
stake in Monroe Capital, a private credit market leader focused on
the U.S. lower middle market that has established an outstanding
track record, would represent a significant and transformational
advancement of the strategy it announced in March 2023 to develop
its third-party asset management platform to complement its
longstanding principal investments business.
This transaction follows Wendel’s recent
acquisition of IK Partners, a European leader in middle market
private equity, as it seeks to build a scaled third-party asset
management platform, based on strong performing General Partners
with distinctive and focused expertise, an entrepreneurial mindset
and an emphasis on the middle market. The embedded organic growth
of those acquisitions will be complemented by Wendel’s unique value
proposition which includes:
- Capital to sponsor new strategies
and fund organic and inorganic initiatives ($800 million in the
sponsoring program and up to $200m of GP commitment for Monroe
Capital)
- Wendel’s network to develop long
term strategic partnerships with highly regarded LPs (Wendel and
Monroe Capital intend for AXA-IM Prime to participate in the
transaction)
- Cross selling opportunities by
combining the expertise and client bases of GPs
- Development of centralized
fundraising platform to address new markets
The transaction is subject to the satisfaction
of closing conditions and receipt of regulatory approvals. It is
expected to be completed in the first half of 2025.
A private credit leader in the U.S.
middle market with a demonstrated strong track record across market
cycles
Founded in 2004 by Ted Koenig, Monroe Capital
provides private credit solutions to borrowers in the U.S. and
Canada, managing $19.53 billion of assets across 45+
investment vehicles. Monroe Capital’s strategic verticals are Lower
Middle Market Direct Lending, Alternative Credit, Software &
Technology, Real Estate, Venture Debt, Independent Sponsor and
Middle Market CLOs. Each vertical has demonstrated strong
investment performance and offers potential for significant organic
growth.
Through July 1, 2024, Monroe Capital has
directly originated over 700 transactions, has invested over $44
billion and has earned c.10% gross unlevered IRR4 for
its directly originated transactions. Monroe Capital’s LP base is
very broad and diversified, including public pensions, insurance
companies, family offices and high net worth individuals from
across the globe.
The firm, which is headquartered in Chicago,
maintains eleven offices, of which nine are in the U.S., one in Abu
Dhabi, UAE and one in Seoul, South Korea. Monroe Capital has grown
to a team of over 270 employees, including 110 investment
professionals.
A transaction aligning strategic
interests of all stakeholders over the long-term
The envisaged transaction is a strategic
partnership in which Monroe Capital’s teams — who remain committed
for the long term — will continue to operate independently and
autonomously in day-to-day management of current markets and
strategies, under the same brand. Monroe Capital's Investment
Committee also would remain fully independent.
A key feature of the planned partnership will be
the commitment of significant capital by Wendel to support Monroe
Capital’s present and future funds, as well as the development of
new strategies. The contemplated transaction would lead to the full
acquisition by Wendel of Monroe Capital over time, with subsequent
transactions structured to ensure alignment of interests of all
stakeholders:
(i) Initial
transaction
As part of the initial transaction, which is
expected to be finalized in the first half of 2025, Wendel shall
invest $1.13 billion, to acquire 75% of Monroe Capital’s shares
(50% from Monroe management and 25% from Bonaccord Capital Partners
who is a minority interest owner of Monroe) together with rights to
c.20% of the carried interest generated on past and future funds.
Monroe management will continue to own 25% of the Company
post-closing.
(ii) Long-term alignment
and subsequent transactions
This transaction aims to maintain a long term
and uncapped alignment of interests between Wendel and Monroe
Capital’s 23 partners and employees:
The initial transaction involving 75% of Monroe
Capital would be complemented by an earn-out mechanism in the
maximum amount of $255 million, subject to Fee Related Earnings
(“FRE”) performance thresholds (Max if CAGR above c.26%) in the
period, and if achieved would be paid in cash in 2028.
The total consideration for the 75% would
correspond to c. 14.7x to 18.5x 2025e pre-tax FRE depending on the
earn out effectively paid and a 4.2x 2025e pre-tax Performance
Related Earnings.
Wendel will have a path to purchase the
remaining 25% of Monroe Capital’s shares in subsequent transactions
(put / call mechanisms) that would take place in three instalments
over 2028 and 2032 and be payable in cash. The purchase of the
remaining 25% shares would be valued through variable purchase
multiples determined depending on realized FRE growth.
(iii) Capital
commitment
In addition, to accelerate Monroe Capital’s
growth, Wendel would seed future new initiatives launched by the
Company, with sponsor money, up to a maximum of $800 million
in total, thereby supporting Monroe’s growth and diversifying
Wendel’s investments in asset classes. In addition, Wendel will
fund GP commitment of c.1% of funds to be raised, up to a maximum
of $200 million. In total, Wendel will invest $1 billion into
Monroe Capital’s funds.
(iv) AXA
IM Prime’s investment alongside Wendel
In addition, Wendel and Monroe Capital intend
for AXA IM Prime to participate in the transaction. Wendel and AXA
IM Prime have longstanding relationship and have jointly worked
since inception on the current transaction. Both companies are now
in discussion to confirm AXA IM Prime investment (up to $50m) as a
minority shareholder, through its GP-stake fund “AXA IM Prime
Capital Partners I” (“PCP I”), alongside Wendel in Monroe Capital.
AXA Group (CS-FP) is the anchor investor of PCP I and already a
significant and historic Limited Partner in Monroe Capital’s
funds.
Wendel to become an Asset Manager
alongside its historical Principal Investment activity
Wendel's ambition is to build a sizeable Asset
Management platform managing investments in multiple private asset
classes, alongside its historical Principal Investment activity.
The development of the third-party Asset Management platform will
provide Wendel with recurring and growing cashflows as well as
exposure to multiple and high performing asset classes. As a
result, Wendel’s dual business model is expected to generate an
attractive and recurring return to shareholders.
With IK Partners and Monroe Capital, Wendel’s
third party private asset management platform will reach
c.€31 billion in AUM5, c.€ 455 million revenues,
c.€160 million pre-tax FRE (c.€101 million in pre-tax FRE (Wendel
share) by 2025 and is expected to reach €150 million (Wendel share)
in pre-tax FRE by 2027 through double-digit organic growth.
This evolution of Wendel's business model is
designed to enable the development, over time, of a value-creating
platform with the potential to generate operational synergies.
The third-party Asset Management platform will
be developed alongside Wendel’s Principal Investment strategy, with
the objective of generating double-digit Total Shareholder
Return.
Laurent Mignon, Wendel Group CEO,
commented:
“One year after announcing the acquisition
of 51% of IK Partners, we are proud to announce the acquisition of
75% of Monroe Capital LLC, creating a strong partnership with a
private credit leader in the U.S. lower midmarket. This acquisition
marks an important step forward for Wendel's asset management
platform, which we are committed to scaling. Wendel is becoming an
asset manager alongside our decades-long activity as a long-term
equity investor. Monroe Capital, founded by Ted Koenig in 2004, is
a terrific company that has consistently delivered strong
performance across various market cycles in North America,
bolstered by a surge in demand for private credit solutions and
with the scale to capitalize on the growing opportunity set we see
in private credit. Monroe Capital is strategically positioned to
capitalize on this increasing demand, attracting both institutional
and retail investors.
Through this partnership with Monroe
Capital, we are thrilled to collaborate with Ted Koenig,
Chairman and CEO, Zia Uddin, President, and their talented
teams to support their success and their ability to deliver robust
financial performance over the coming years. It will be also a
great privilege for Wendel to partner with such a renowned investor
as AXA IM Prime.
Wendel is executing its strategic plan with
determination, rigor and financial discipline, as demonstrated by
this transformational acquisition, while also focusing on premium
assets in our principal investment activities, highlighted by the
recent acquisition of Globeducate. Our transformation to a
dual-strategy model is now well-grounded, with top partners in
asset management such as IK Partners in private equity and now
Monroe Capital in private credit. Our priority for the near future
will be to build our platform and to work on the rotation of our
Principal Investment assets.
I would like to express my gratitude to the
Wendel teams for their unwavering dedication and to the Supervisory
Board of Wendel for its constant support in driving this ambitious
strategy forward.”
Theodore L. Koenig, Chairman & CEO
of Monroe Capital commented:
“We are excited to partner with Wendel and
AXA IM on this next chapter of Monroe’s growth. Their commitment to
our business will provide meaningful and stable capital to
thoughtfully scale our platform and better capture the attractive
and expanding opportunity in middle market private credit.
Specifically, Wendel’s $1 billion commitment will accelerate our
client-centric growth strategy and deliver meaningful benefits to
our global investor base.”
UBS acted as exclusive financial advisor to
Wendel and Kirkland & Ellis LLP acted as legal counsel to
Wendel. Wendel was also assisted by Fenchurch Advisory for this
transaction. Goldman Sachs & Co. LLC acted as exclusive
financial advisor to Monroe Capital, and Fried, Frank, Harris,
Shriver & Jacobson LLP acted as legal counsel to Monroe
Capital.
About Monroe Capital
Monroe Capital LLC (“Monroe”) is a premier asset
management firm specializing in private credit markets across
various strategies, including direct lending, technology finance,
venture debt, alternative credit solutions, structured credit, real
estate and equity. Since 2004, the firm has been successfully
providing capital solutions to clients in the U.S. and Canada.
Monroe prides itself on being a value-added and user-friendly
partner to business owners, management, and both private equity and
independent sponsors. Monroe’s platform offers a wide variety of
investment products for both institutional and high net worth
investors with a focus on generating high quality “alpha” returns
irrespective of business or economic cycles. The firm is
headquartered in Chicago and maintains 11 offices throughout the
United States and Asia.
About Wendel
Wendel is one of Europe’s leading listed
investment firms. The Group historically has made long-term equity
investments in European and North American companies that are
leaders in their field, including its current investments ACAMS,
Bureau Veritas, Crisis Prevention Institute, Globeducate, IHS
Towers, Scalian, Stahl and Tarkett. With Wendel Growth, Wendel also
invests via funds or directly in innovative, high-growth companies.
In 2023, Wendel announced its intention to build out a third-party
private asset management platform to complement its principal
investment activities. In the first step in advancing this
dual-strategy model, Wendel in May 2024 finalized the acquisition
of a 51% stake in IK Partners.
Agenda
Thursday, October 24, 2024
Q3 2024 Trading
update – Publication of NAV as of September 30, 2024
(post-market release)
Friday, December 6, 2024,
2024 Investor Day.
Wednesday, February 26, 2025
Full-Year 2024
Results – Publication of NAV as of December 31, 2024, and
Full-Year consolidated financial statements (post-market
release)
Thursday, April 24, 2025
Q1 2025 Trading
update – Publication of NAV as of March 31, 2025
(post-market release)
Thursday, May 15, 2025
Annual General Meeting
Wednesday, July 30, 2025
H1 2025 results – Publication
of NAV as of June 30, 2025, and condensed Half-Year consolidated
financial statements (post-market release)
1 As of September 2024
2 c.€101m of FRE expected in 2025, Wendel
share.
3 committed and managed capital (as of July 1,
2024)
4 Across fully exited companies
5 As of September 2024
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