French Investment House Eurazeo to Buy Stake in Rhône
Move builds closer ties between two firms seeking to expand reach on both sides of the Atlantic
French investment house Eurazeo is buying a stake in New York private-equity shop Rhône Group, in a move that knits closer ties between two firms seeking to expand their presence across Europe and the U.S.
Eurazeo, a Euronext-listed investment firm with ambitions to grow its international presence, will pay $270 million for a 30% interest in Rhône, according to a press release. Eurazeo plans to finance the purchase with $100 million in cash as well as by issuing 2 million shares to Rhône, the release stated.
The purchase gives Eurazeo a slice of a firm with more than €5 billion ($5.92 billion) in assets and a portfolio of businesses with European and transatlantic reach. Rhône will bolster Eurazeo’s deal-sourcing networks in the U.S. and also will receive a 3% stake in the listed firm, which manages some €7 billion.
As part of the deal, both firms will operate independently and each firm will have full control over its own investments.
The transaction is expected to close in the first half of next year. Eurazeo shares posted a 1.26% gain at the close of trading on Nov. 28.
Eurazeo this week named Virginie Morgon as its new chief executive and earlier this year brought in a deep-pocketed shareholder: the family that built its wealth from outdoor advertising firm JCDecaux SA .
Eurazeo has taken steps to help its portfolio companies access the U.S. market and to source deals for U.S. companies. The firm set up a U.S office in 2016 and teamed with Goldman Sachs Group Inc . to back its first U.S. deal in June with the purchase of online marketplace Dominion Web Solutions. Earlier this year, Eurazeo also launched a new division to invest in American and European consumer brands.
Rhône, meanwhile, launched a joint venture alongside New York office-space provider WeWork Companies Inc. that will partner with Canadian department store chain Hudson’s Bay Co. to reposition and add shared working spaces to retail properties.
The joint venture likely makes Rhône a more attractive target for minority backers, who typically look to invest in asset managers with multiple business lines. The firm, which has invested in companies that include private-jet operator VistaJet Group Holding Ltd., Californian surfwear company Quiksilver Inc. and beauty products brand Elizabeth Arden Spas Inc., had previously only managed its flagship buyout funds.
Co-founded in 1996 by Robert Agostinelli and Steven Langman, Rhône is investing from its fifth private-equity fund, which raised €2.6 billion in 2015. Both founders will remain fully involved in the running of Rhône.
Rhône, which had held talks with potential investors this year to explore a stake sale, according to people familiar with the process, ultimately turned to a group that it knew well. The senior executives leading Rhône and Eurazeo have known each other since the 1990s, when they all worked at investment bank Lazard Ltd.
Investors say they expect to see more private-equity firms sell stakes in themselves as their firms mature and founders age. Groups at Goldman Sachs Group Inc. , Neuberger Berman Group LLC, Hycroft LLC and Aberdeen Standard Investments all are interested in buying stakes in alternative asset management firms. Teams within Blackstone Group LP and Carlyle Group LP have also been pursuing the strategy