Peugeot family faces shareholder discontent over Peugeot Invest's performance and strategy

The Peugeot family, renowned for its historic automotive legacy, faces significant pressure from minority shareholders over the performance of Peugeot Invest, its listed investment vehicle. The firm, controlled by the Peugeot clan and led by Robert Peugeot, has encountered backlash due to losses linked to its holdings in the collapsed European property empire Signa.

Shareholder grievances

At the upcoming annual meeting, minority investors, including Moneta Asset Management and Sycomore Asset Management, plan to voice their dissatisfaction. Their concerns include a deep trading discount, rising operating costs, governance issues, and the current investment strategy. Peugeot Invest's assets, valued at nearly €6 billion, contrast sharply with its market capitalisation of €2.8 billion, reflecting a 54% discount, one of the largest among European investment holding companies.

Calls for increased dividends

Dissident investors argue that increasing dividend payouts could help close this gap. However, Peugeot Invest, controlled by the family with almost 80% of shares and 89% of voting rights, rejects this notion. "The interests of minority and majority shareholders are not aligned," said Colette Neuville, president of the Association for the Defence of Minority Shareholders. She criticised the family for acting as if minority investors did not exist.

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Historical context and financial strategy

Peugeot Invest, trading since 1989, emerged from the Peugeot family's eponymous car manufacturing business, which merged with Fiat Chrysler three years ago to form Stellantis. The family holds a 7% stake in Stellantis, indirectly managed by Peugeot Invest. Over the years, the investment vehicle has diversified into various sectors, including stakes in Stellantis, Rothschild & Co., and a Bordeaux vineyard. Despite significant returns from investments in companies like SEB SA and Tikehau Capital SCA, the firm’s reputation has been marred by losses from the nursing-home operator Orpea and the now-bankrupt property firm Signa.

Leadership changes and future directions

In March, Peugeot Invest announced the departure of CEO Bertrand Finet, with Robert Peugeot remaining as chairman until 2025. The board features several next-generation heirs, reflecting ongoing leadership transitions within the family. Shareholders are pushing for further changes, particularly advocating for dividends that better reflect the company's asset value. "We’re not asking for the moon," said Gregoire Uettwiller of Moneta Asset Management, stressing the need to align dividends with the net asset value.

Company’s response to trading discount

Peugeot Invest attributes its trading discount to low stock liquidity and opposes linking dividend payouts directly to asset value. "We don’t want to inject the volatility of our net asset value into our dividend," said Deputy CEO Sebastien Coquard, emphasising a strategy of delivering regular and rising dividends. Despite the discount widening from about 30% in previous years, Coquard believes a narrower discount is possible, citing similar trends in other holding companies.

Performance and market sentiment

Peugeot Invest's stock, including reinvested dividends, has returned 5.5% annually over the past five years, compared to the CAC All-Tradable Index's double performance. Minority shareholders also criticise the company for losses related to Orpea and Signa, insufficient oversight by independent directors, and potential conflicts of interest involving executives with roles in other family firms. They call for halting diversification until leadership changes and better value creation are demonstrated. Additionally, they allege lack of transparency regarding royalties paid to the Peugeot family for using its name.

Resolutions and company stance

The disgruntled shareholders are proposing several resolutions at the annual meeting, including revising payout policies and linking executive compensation to share price and trading discount. The company's board opposes these proposals. Peugeot Invest defends its practices, asserting that all shareholders benefit from payments for the use of the family name. "Being called Peugeot opens doors," Coquard noted, highlighting its advantage, especially internationally.

The Peugeot family's investment strategy through Peugeot Invest is under intense scrutiny as minority shareholders demand better returns and transparency. The upcoming annual meeting will be a crucial moment for addressing these grievances and shaping the future direction of the company amidst evolving market dynamics.