GP Profile: From family office origins, Eurazeo raises co-investment capital

Eurazeo is a private equity firm. But its DNA includes a family office background; It has permanent capital and its shares are traded on the NYSE Euronext’s Paris stock exchange.

In short, the Paris asset manager is a little bit of everything, with a flexible investment mandate to deploy capital worldwide.

“We are at the junction of PE firm, listed vehicle and family office, so it’s very easy for us to talk to family offices directly,” Managing Director Eric Schaefer told Buyouts. He said the firm evolved from being a family office for investment banking families into its current form, which contributed to the flexibility of its investment mandate.

“Our mandate is actually very, very broad. We can do minority, we can do majority, we can do pre-IPO,” he said. “It’s up to us where we want to put the money, and we want to put the money on good deals.”

In January, Eurazeo raised its second 500 million euro ($533 million) fund from family offices and institutional investors, bringing its total capital under management to 6 billion euros. The firm used the new co-investment fund to take stakes in seven privately held companies owned by Eurazeo Capital, its traditional PE business.

“One thing we have never done at our listed-company level is to take on debt,” Schaefer said. “So the one way for us to leverage on the size of the balance sheet, the way for us to leverage is to raise that type of co-investment money.”

The co-investment vehicle will invest alongside the firm’s permanent-capital vehicle, which Eurazeo used to buy European companies and help them expand into China, South America and the U.S. In addition to its headquarters in Paris, Eurazeo has offices in Shanghai and São Paulo. Last September, the firm opened an office in New York as well.

“We tend to look at a five-to-seven year horizon, whereas other firms may look at five years max when they’re talking about their business plan,” Schaefer said. “When you raise money from LPs, you essentially have a very clear mandate of what you can do and can’t do. Having a permanent vehicle [allows us to] have a few different strategies.”

A typical Eurazeo Capital investment has upward of 150 million euros in enterprise value. Schaefer said the firm likes companies with cross-border potential — thus the international presence. The new fund will enable Eurazeo to deepen its relationships with limited partners, including its growing network of family offices, as well as a larger, fee-generating pool of capital.

In addition to its Eurazeo Capital product, the firm also invests in smaller, growth deals, as well as real estate.

The firm is eyeing opportunities in business services, particularly tech-related services, “because technology has no barriers or frontiers on the borders. You can take a tech-enabled business and expand it across the world.”

Some of those cross-border strategies may be complicated by the ascendance of President Donald Trump, in addition to nationalist and economic protectionist movements gathering steam across Europe. As international relations strain within and among developed economies, “we see opportunity, but it may be more complicated,” Schaefer said.

“Brazil is more complicated than it was five years ago. China has always been complicated. Europe, people fear it will become more complicated,” Schaefer said. “The one way to deal with that is when you have a presence. So having people on the ground in Brazil, Europe and China is how we deal with those issues.”

Action Item: For more information: www.eurazeo.com/

Photo of Eric Schaefer courtesy of Eurazeo.