Eurazeo

Company Update:
The Supervisory Board of Eurazeo announced the appointment of Christophe Bavière as sole CEO, effective immediately.

The current co-CEO William Kadouch-Chassaing seems to have been fired, as suggested by the Chaiman words, paying tribute to his commitment. We think this is a new demonstration of the Decaux family putting pressure to its management to improve the share price trajectory, still trading at c.45% discount to our very conservative NAV, with a limited transparency exercise that failed to revive momentum on the stock.

We may thus expect a slight positive reaction this morning as this executive change should put more pressure on the remaining CEO to deliver, even though the strategy is unlikely to change in the short term. We reiterate our positive stance on Eurazeo, which is still undervalued, although the lack of transparency still impedes a meaningful rerating in our view.

Expert Opinion:
This is a positive in my opinion. However, it doesn't change the issue. While the company has undeniable strengths in its assets and management, we don't see a clear strategy for what it aims to achieve.  This is probably why the discount to NAV stands at 45%, a very high level.  Valuation is attractive, and we believe there is more upside if (when?) the Decaux family becomes more actively involved in the governance. This decision on management could be the first step towards that.

We have a low-conviction positive stance on the name. A merger with another player to reach critical AUM could revive the equity story (the TKO battle that led to the Decaux's stake in the company wasn't that long ago).