EU CONSUMER CYCLICALS: Kering | A Note on Questions around Artémis
(KERFP; NR/BBB+)
So there seems to have been some investor focus (i.e. worry) around Artemis, the Pinault family holding company, which holds:
- 43% of Kering
- 29% of Puma
- 100% of Christie's - leading art auctioneer
- 96% of Ponant - cruise company with 14 ships
- 54% of CAA - talent recruitment firm
- 77% stake in various wine estates
- 49% of SCAR - helicopter charter company
- 100% of Stade Rennais football club and magazine Le Point
The concerns may have spawned from this Reuters article in late May.
Note the article refers to consolidated figures (you will need to strip out Kering numbers, which are fully consolidated to see Holdco debt/metrics) -> it is cleaner to look at Artémis’s unconsolidated accounts - which is what we use.
Concerns may be whether it can cover interest payments at the holdco level and, if not, whether that will influence Kering's financial policy (Pinault's are controlling shareholders of Kering). We see no signs of alarming governance thus far (targeting deleveraging with dividend at 56% payout - close to the targeted 50% ratio). We also see Holdco Artémis able to absorb the more than halving in dividends that it will receive this year but we do see that taking interest cover from 3x to mid 1x. We see the 6b in debt on an LTV of 60% when only including the owned % of Kering & Puma (at market prices). 5y credit risk embedded in the convert today is pricing around +175 for reference.
Re why the issuance today it is likely refi for maturing €500m convert. It will be issued by a SPV (Cara) that parent Artémis will likely guarantee. Importantly we see no cross-guarantee or cross-default provisions between Artémis and Kering/KERFP and hence see no fundamental link in Holdco vs. KERFP credit metrics outside dividend issues discussed above.
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JGB TECHS: (M5) Rallies off Lows
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