EurobusinessMedia (EBM): Wendel, one of Europe's leading listed investment companies, just held its investor day. We are meeting now with Frederic Lemoine, welcome. You are the Chairman of the Executive Board of Wendel. What is your update today on Wendel and its portfolio of companies?
Frédéric Lemoine: Well, at the end of 2012, Wendel is doing perfectly well. We had a difficult year in terms of general environment; political and economic instability and in spite of that Wendel companies have grown, notably Bureau Veritas with strong organic growth of 8%, external growth as well with more than 12 acquisitions; Parcours or Stahl are other companies that have grown significantly. And for those companies that are more exposed to the construction market, clearly the year has been more difficult, but thanks to the quality of the their products, the quality of their efficiency, of their cost reduction plans, they have done pretty well and the end of the year shows the rebound with the situation of the construction market in the US notably.
EBM: What is your investment strategy today?
Frédéric Lemoine: Well, our financial situation is sound. We have more than €1 billion cash to invest and it’s true that we are very focused on looking for new investments, diversified investments in Europe of course, but also in North America, both in the US and Canada and for some more modest investment in other geographies as well, like recently in Africa.
EBM: Well precisely, you are about to close a deal to make your first acquisition in Africa in the Telecom sector. Why this foray into Africa?
Frédéric Lemoine: Well, we have looked at all the emerging countries, because it is our policy to push all our companies to go there more actively and clearly Africa struck us by the strength of its growth, more 5% every year over the past 10 years with a young population, a continent which is close to us, close to our companies, close to our languages and with Bureau Veritas, for instance, we have more than 3000 employees there and a lot of long-term contracts with governments. So we know Africa quite well and the problem was to find the right investment. But we believe that it will be a growing continent with strong demographics and a lot of successful stories to build.
EBM: What were the investment criteria that you relied on to make the investment in IHS?
Frédéric Lemoine: We had pretty strict criteria on top of our usual criteria of profitability. We wanted a company that was really in a sector core for the growth of the continent. Telecom is core. IHS, which you mentioned, is a Telecom tower company. They own and maintain Telecom towers for Telecom operators. Telephony is key for the development of Africa in the coming decades, so the first criteria was met. The second criteria was not to depend too much on a country, just because the political situation can be unstable. We were very pleased to see that IHS is exposed to 6 different countries, notably Nigeria where they come from, which is a big and promising country but also Cameroon and Cote d’Ivoire where they have just made a deal with MTN, the big South African Telecom operator. The third criteria, and the last one, was not to be alone, to do the investment with partners which were experienced in Africa and to work with International Finance Corporation, the World Bank subsidiary, as well as a Dutch development bank, with two major private investment companies very experienced in Africa was clearly the best situation we could find with IHS to make a first investment.
EBM: You reduced your debt by half in the last three years. What are your ambitions today regarding your debt?
Frédéric Lemoine: It’s true that we have completely changed our financial pattern, reducing by more than €4.2 billion the debt we have. Now our loan to value ratio is around 40% - below 40% - and with Bernard Gautier, we believe we can bring that down below 35% in the coming four years in a stable way, so that we can meet the 35% Standard & Poor’s criteria to be investment grade in the coming four years.
EBM: And finally, looking at your stock, it’s today trading at a discount of around 40% to net asset value. What is your opinion today of your share price?
Frédéric Lemoine: The first thing to mention is that our share price improved by more than 50% over the last twelve months, but it’s true that it’s traded with a huge discount of between 36 and 37% when we published our NAV for the last time. I don’t want to impose anything on the market, but when the discount is such my decision is clear; we should buy back some shares. That’s what we did. We cancelled 2% of our shareholding and we’ll continue to buy back shares if the conditions remain the same. That’s all.
EBM: Frédéric Lemoine, Chairman of the Executive Board of Wendel, thank you very much.
Frédéric Lemoine: Thank you.
