Shareholder pressure is mounting on Peugeot Invest, the investment vehicle controlled by the billionaire Peugeot family. The company is facing criticism over its performance and deep trading discount from disgruntled minority investors. One of the main concerns is the company’s significant discount to the value of its assets, which is one of the largest among European investment holding companies. Dissident investors argue that paying out a larger chunk of cash in dividends would help close this gap, but Peugeot Invest rejects this idea and is likely to prevail at the upcoming annual meeting due to the family’s majority control.
The Association for the Defense of Minority Shareholders, along with investors Moneta Asset Management and Sycomore Asset Management, have teamed up to push for changes in Peugeot Invest’s operations. Colette Neuville, president of the association, highlights the misalignment of interests between minority and majority shareholders, stating that the company is ignoring minority investors.
This public criticism represents a significant challenge for the secretive Peugeot family, who have primarily focused on their eponymous car manufacturing business. However, they have diversified their holdings through Peugeot Invest, accumulating stakes in various companies and funds. While some investments have been successful, such as appliance maker SEB SA and investment firm Tikehau Capital SCA, others, like nursing-home operator Orpea and bankrupt property firm Signa, have resulted in losses.
Peugeot Invest recently announced the departure of its CEO, Bertrand Finet, and some shareholders are now pushing for further changes. They advocate for an annual dividend that reflects the value of the company’s assets and suggest that extracting a portion of the net asset value each year would help reduce the trading discount. The company attributes the discount to low stock liquidity and rejects tying the payout to asset value.
Joren Van Aken, an analyst at Degroof Petercam, supports Peugeot Invest’s approach to dividends. He argues that investment companies should prioritize investing instead of paying out dividends, as it implies a lack of belief in the company’s ability to create value. However, Van Aken suggests that the trading discount may also be influenced by communication, transparency, and negative sentiment surrounding recent investment losses.
The minority shareholder group has additional grievances, including a lack of oversight by independent directors, potential conflicts of interest among executives, and a lack of value creation since the end of 2017. They are calling for changes in executive compensation and greater transparency. Resolutions regarding the payout policy and tying executive compensation to the share price and trading discount will be proposed at the annual meeting, although the board opposes these proposals.
Peugeot Invest defends itself against these criticisms and asserts that all shareholders benefit from the company’s payments for using the Peugeot name. According to the company, being associated with the Peugeot brand opens doors, particularly internationally.
Overall, the pressure faced by Peugeot Invest highlights the challenges of managing a listed investment vehicle controlled by a wealthy family. The company will need to address shareholder concerns to maintain trust and preserve its reputation.