The billionaire Peugeot household is underneath unprecedented shareholder stress over the efficiency of its listed funding automobile following losses associated to its holdings within the collapsed European property empire Signa.
Peugeot Make investments, managed by the French clan and headed by eighth-generation scion Robert Peugeot, 74, is more likely to face a gaggle of disgruntled minority buyers at an annual assembly on Friday who’ve made public an extended listing of grievances together with its deep buying and selling low cost. In addition they criticize rising working prices, governance, remuneration insurance policies and funding technique.
Amongst their prime gripes: The corporate’s belongings — which embrace stakes in carmaker Stellantis NV, funding financial institution Rothschild & Co. and a winery in Bordeaux — are value nearly €6 billion ($6.5 billion), in contrast with its inventory market capitalization of €2.8 billion. That 54% low cost to the worth of its belongings is among the largest amongst European funding holding corporations.
One huge technique to shut that hole, dissident buyers say, can be to pay out an even bigger chunk of money in dividends. But Peugeot Make investments rejects the thought, and can prevail on the annual assembly: The household controls nearly 80% of the shares and 89% of voting rights.
“The pursuits of minority and majority shareholders usually are not aligned,” mentioned Colette Neuville, president of the Affiliation for the Protection of Minority Shareholders, which has teamed up with buyers Moneta Asset Administration and Sycomore Asset Administration to push for adjustments in the best way Peugeot Make investments operates. “They’re appearing like there aren’t any minority buyers.”
The barrage of public criticism is a primary for the secretive clan’s agency, which started buying and selling in 1989 on a now-defunct bourse within the jap metropolis of Nancy.
The sprawling household’s fortune facilities across the eponymous automotive producer that three years in the past merged with Fiat Chrysler. The clan emerged with a 7% stake within the mixed group, Stellantis, one of many world’s most worthwhile automakers with a market worth of about €64.6 billion.
The stake is not directly held by Peugeot Make investments, which has been helmed for the previous 22 years by Robert Peugeot and utilized by the household to diversify away from the auto trade. It has constructed up stakes in dozens of listed and unlisted corporations in addition to a portfolio of personal fairness and actual property funds.
Whereas it has extracted important worth from holdings like equipment maker SEB SA and funding agency Tikehau Capital SCA, Peugeot Make investments’s report has been tarnished by losses associated to Orpea, the nursing-home operator that was embroiled in one in all France’s largest corporate-governance scandals, and most just lately bankrupt property agency Signa.
In March, Peugeot Make investments introduced the departure of Chief Government Officer Bertrand Finet. He took the position in 2020 from Robert Peugeot, who stayed on as chairman however is scheduled to depart in 2025. The board contains plenty of next-generation heirs.
Now some shareholders need to see additional change. They’re pushing for the annual dividend to raised replicate the worth of the corporate’s belongings. Peugeot Make investments elevated the payout for 2023 by 14% in contrast with a 21% rise within the internet asset worth over the identical interval.
“We’re not asking for the moon,” mentioned Gregoire Uettwiller, a fund supervisor at Moneta Asset Administration, which along with Sycomore holds a mixed 6.4% in Peugeot Make investments. “The very best angle to cut back the low cost is to extract yearly a few of the internet asset worth.”
The corporate says an enormous cause for the buying and selling low cost is the inventory’s comparatively low liquidity and it rejects the thought of nearer hyperlinks between the payout and asset worth.
“We don’t need to inject the volatility of our internet asset worth into our dividend,” mentioned deputy CEO Sebastien Coquard, who oversees investments. “We goal to ship a dividend which is common and rising.”
Whereas Peugeot Make investments’s low cost has widened from about 30% a number of years in the past, he mentioned, that’s simply proof {that a} narrower low cost is feasible. Different holding corporations even have seen a widening, he mentioned.
The corporate’s view on the dividend is backed by Joren Van Aken, an analyst at Degroof Petercam, who printed a current report on buying and selling reductions of funding corporations together with Peugeot Make investments.
“We want funding corporations to do what’s of their identify, which is investing and never paying out,” he mentioned. “In the event you mainly pay out all your NAV to shareholders, you’re implying that you just don’t consider that the holding firm can create worth.”
But as an funding, Van Aken prefers Exor NV, the holding firm of Italy’s billionaire Agnelli heirs who management a 14% stake in Stellantis and have additionally moved to diversify. Exor has created extra worth outdoors of the auto firm, he mentioned.
At Peugeot Make investments, he mentioned, “past liquidity, I believe a few of the challenge in regards to the low cost has to do with communication and transparency and adverse sentiment about current investments going unhealthy like Orpea and Signa.”
Together with reinvested dividends, Peugeot Make investments’s inventory has returned 5.5% yearly over the previous 5 years, half the annual return of the CAC All-Tradable Index.
The minority shareholder group’s grievances additionally embrace the Orpea and Signa losses, an absence of oversight by impartial administrators and potential conflicts of curiosity amongst some executives with roles at Peugeot Make investments and different household corporations.
They’re additionally calling for a halt to diversification till the CEO and chairman are changed and the corporate demonstrates its potential to create worth, “which it hasn’t accomplished because the finish of 2017.” As well as, the buyers say the corporate has withheld details about the choice to pay royalties to the Peugeot household for the usage of the Peugeot identify.
The group is pushing for a sequence of resolutions on the annual assembly Friday together with on the payout coverage, and tying govt compensation to the share value and buying and selling low cost. The corporate’s board is against these proposals.
Peugeot Make investments rejects the criticisms, and says all shareholders profit from the corporate’s funds for the usage of the household identify.
“Being known as Peugeot opens doorways,” Coquard mentioned, including that that is notably the case overseas.
