Billionaire Peugeot Family Faces Shareholder Revolt Over 54% Trading Discount

Key Takeaway

• Peugeot Invest faces shareholder revolt over a 54% trading discount, governance issues, and losses from Signa and Orpea.
• Minority shareholders demand higher dividends and better alignment of interests; the family controls 80% of shares.
• CEO Bertrand Finet's departure in March adds to calls for changes in payout policy and executive compensation.

Shareholder Pressure on Peugeot Family

The Peugeot family, known for its control over the listed investment vehicle Peugeot Invest, is facing significant pressure from minority shareholders. This comes in the wake of losses tied to its holdings in the collapsed European property empire Signa. The family, led by Robert Peugeot, is expected to encounter a group of disgruntled investors at the annual meeting on Friday. These investors have voiced numerous grievances, including the company's deep trading discount, rising operating costs, governance issues, remuneration policies, and investment strategy.

Peugeot Invest's assets, which include stakes in Stellantis NV, Rothschild & Co., and a Bordeaux vineyard, are valued at nearly €6 billion ($6.5 billion). However, its market capitalization stands at €2.8 billion, reflecting a 54% discount to the value of its assets. This discount is one of the largest among European investment holding companies. Dissident investors argue that increasing dividend payouts could help close this gap, but Peugeot Invest has rejected this idea. The family controls almost 80% of the shares and 89% of the voting rights, ensuring their stance will prevail at the meeting.

Colette Neuville, president of the Association for the Defense of Minority Shareholders, stated, "The interests of minority and majority shareholders are not aligned. They are acting like there are no minority investors." This public criticism is unprecedented for the secretive clan's firm, which began trading in 1989.

Investment Strategy and Performance

Peugeot Invest has diversified its holdings away from the auto industry, building stakes in various listed and unlisted companies, as well as private equity and real estate funds. Despite extracting significant value from holdings like SEB SA and Tikehau Capital SCA, the company's record has been marred by losses related to Orpea and the bankrupt property firm Signa.

In March, Peugeot Invest announced the departure of CEO Bertrand Finet, who took the role in 2020. Robert Peugeot remains as chairman but is scheduled to depart in 2025. The board includes several next-generation heirs. Some shareholders are pushing for further changes, including a better reflection of the company's asset value in the annual dividend. Peugeot Invest increased the payout for 2023 by 14%, compared to a 21% rise in net asset value over the same period.

Gregoire Uettwiller, a fund manager at Moneta Asset Management, commented, "We’re not asking for the moon. The best angle to reduce the discount is to extract every year some of the net asset value." However, Peugeot Invest attributes the trading discount to the stock's low liquidity and rejects closer links between the payout and asset value. Deputy CEO Sebastien Coquard stated, "We don’t want to inject the volatility of our net asset value into our dividend. We aim to deliver a dividend which is regular and rising."

Governance and Transparency Issues

The minority shareholder group has also raised concerns about governance and transparency. They cite losses from Orpea and Signa, a lack of oversight by independent directors, and potential conflicts of interest among executives with roles at Peugeot Invest and other family firms. The group is calling for a halt to diversification until the CEO and chairman are replaced and the company demonstrates its ability to create value.

The investors are also pushing for resolutions at the annual meeting, including changes to the payout policy and tying executive compensation to the share price and trading discount. The company's board opposes these proposals. Peugeot Invest defends its practices, with Coquard stating, "Being called Peugeot opens doors," particularly abroad.

Joren Van Aken, an analyst at Degroof Petercam, supports Peugeot Invest's stance on dividends, saying, "We prefer investment companies to do what is in their name, which is investing and not paying out." However, he noted that Exor NV, the holding company of Italy’s Agnelli heirs, has created more value outside of the auto industry. Van Aken added, "Beyond liquidity, I think some of the issue about the discount has to do with communication and transparency and negative sentiment about recent investments going bad like Orpea and Signa."

Street Views

• Colette Neuville, Association for the Defense of Minority Shareholders (Bearish on Peugeot Invest):

  "The interests of minority and majority shareholders are not aligned. They are acting like there are no minority investors."

• Gregoire Uettwiller, Moneta Asset Management (Bearish on Peugeot Invest's dividend policy):

  "We’re not asking for the moon. The best angle to reduce the discount is to extract every year some of the net asset value."

• Joren Van Aken, Degroof Petercam (Neutral on investment companies' payout policies):

  "We prefer investment companies to do what is in their name, which is investing and not paying out. If you basically pay out all of your NAV to shareholders, you’re implying that you don’t believe that the holding company can create value."
  "Beyond liquidity, I think some of the issue about the discount has to do with communication and transparency and negative sentiment about recent investments going bad like Orpea and Signa."

Management Quotes

• Sebastien Coquard, Deputy CEO of Peugeot Invest:

  "We don’t want to inject the volatility of our net asset value into our dividend. We aim to deliver a dividend which is regular and rising."
  "Being called Peugeot opens doors... this is particularly the case abroad."