Sodexo Ventures. Investment principles and process

Transcription

1 Sodexo Ventures Investment principles and process September 2017

2 Supporting innovative start-ups and bringing value to Sodexo 50M Strategic Venture Capital Fund Opening links with an external and open ecosystem to accelerate Sodexo s transformation. We believe start-ups are good partners for us to enhance our quality of life services for our consumers, clients and employees Creating value for clients and consumers by combining the agility and creativity of start-ups with the Group s investment capacity, expertise and international footprint Investing in a minority share and accompanying innovative start-ups, that are non core business

3 Each investment is bound with a Partnership agreement Sodexo Ventures key principles Bring value to Sodexo New innovative revenues / EBITDA Develop new and innovative products & services Create new business models Develop new capabilities Improve Sodexo s efficiency Market Knowledge (Market / techno watch) Time Gain Time-To-Market / agility to test innovative offers Spread innovation into Sodexo s teams Start-ups Scalability Leverage Sodexo s international footprint Leverage Sodexo s 425K employees Leverage Sodexo s 75M daily clients Finance Leverage Sodexo s investment capacity Expertise Leverage Sodexo s expertise Brand attractiveness (indirect impact) Improve brand awareness & image

4 Supporting agility and development of start-up while attracting co-investors Support agility and development of the start-up Support agility: we invest up to 20% and ask for a Board Member without voting rights in order to let the start-up as agile as possible. He / she is considered as a business partner, to advise and share his / her expertise, and connect with Sodexo s operational teams No exclusivity: we want the start-up to remain free to work with all relevant clients example: Wynd is currently working with Elior Minimize risk of execution: we prefer to test through a pilot first our partnership: investment decision follows the results of the pilots Attract co-investors to combine complementary skills Attract co-investors: to align interests between co-investors, Sodexo Ventures will ensure re-investment capacity, propose liquidity clauses and always refuse exclusivity Combine complementary expertise: Sodexo will bring its market expertise and skills while other financial co-investors will support the start-up growth (go to market, HR, organization, )

5 Focus on investments in noncore businesses aligned with segments needs First areas of interest* 1. Enlarge our offer Food tech FM and smart buildings Health & wellness Mobility Data Other innovative services related to the Quality of Life of the people we serve 2. Improve processes/ operational efficiency *Other innovative areas of investment are being defined following segments needs collection

6 Delegation received to Investment Committee under four financial conditions Financial conditions for delegation 1 Maximum ticket of 1.5m, mainly Series A 2 Maximum 3 Maximum 4 No pre-money Equity Value of 6.0m shareholding of 20% of Target s fully diluted share capital consolidation on Sodexo P&L (limited control, influence, ) Sodexo Ventures will not limit the scope of opportunities with these delegation criteria to remain as flexible as possible

7 Governance: Investment Committee Investment decisions are made by six Committee members M&A: David Newman Digital: Belen Moscoso Del Prado Strategy: Maria Outters BRS & PHS: Sébastien de Tramasure Service Operations: Jean-Marc Haut Innovation: Eric Texier Monthly meeting with the following agenda Pipe / dealflow review Decide on single investment Portfolio performance review Decide on exit (when needed) Other topics (VivaTech, Sparklife contests, ) NB: 5 approvals out of 6 votes needed for investment decisions (+GIC validation if needed)

8 How to work with Sodexo Ventures

9 5-step approach with strong involvement of local teams Pilot (if possible) Sodexo Ventures Investment Committee GO / NO GO Sodexo Ventures Investment Committee GO (LOI) / NO GO Sodexo Ventures Investment Committee GO / NO GO SOURCE SELECT TARGETS ENGAGE FURTHER LAUNCH M&A PROCESS PORTFOLIO MONITORING Criteria / key actions N/A Alignment with segments needs Compatibility with Sodexo Ease of execution Scalability of the partnership Local team involvement (Segment ExCom sponsorship) Partnership & Investment agreements assessment Founder appreciation Financial and partnership reportings to Sodexo Ventures (KPIs, ) Presentation of results to the Investment Committee (1x / year) Valuation Financial Due Diligence Partnership agreement Investment agreement Shareholders agreement Finance & Legal Teams Communication Local business involvement Medium (Selected) to High (Opportunistic) Medium High High High

10 Opportunistic and selected approaches 1 SOURCE A. Selected approach Segments needs Opportunities identified by Sodexo Ventures in line with segments needs Market foresights Opportunities identified by Sodexo Ventures in line with market long-term transformation Local teams role Communicate segments needs to Sodexo Ventures (key sectors, services, geographies, ) Communicate market foresight study to better anticipating market long-term transformation Sodexo Ventures role Screening of potential partners for investment B. Opportunistic approach Opportunities identified by local segments and communicated to Sodexo Ventures Local teams role Communicate description of the opportunity to Sodexo Ventures Sodexo Ventures role Prioritize opportunities through specific criteria (partnership / business potential, financials, involvement of local Sodexo teams, quality of management, )

11 Getting inspiration 1 SOURCE Use our start-up incubators partners websites Access to CRM enovhub database: 150+ start ups pre selected (upload from different partnerships + BRS) Open Innovation request done by Innovation team Leverage presence on Vivatech (15-17 June, 2017) with 5,000 startups present, and Sodexo Booth Co-Venture Platform

12 An idea? Send your suggestions to: 1 SOURCE Sodexo-Ventures.Group@sodexo.com jean-sebastien.beaucamps@sodexo.com

13 SELECTED APPROACH OPPORTUNISTIC APPROACH Prioritizing first selection of potential targets 2 SELECT TARGETS Launch of pilot with the start-up will help Sodexo prioritize first selection of potential targets Local teams Sodexo Ventures assessment Local Team SV Strong relationship with the start-up First pilot already launched Deployment plan being defined Medium relationship with the start-up First discussions with the start-up Identification of a pilot Deployment plan not defined Scalability Ease of execution (based on the results of the pilot when possible) Compatibility with Sodexo (based on meeting with the founder(s) and feedbacks from local teams) Alignment with segments priorities (validated with local teams) Local Team SV The selection of the start-ups for further analysis will be validated by the Investment Committee of Sodexo Ventures

14 Assessing four different criteria 3 ENGAGE FURTHER Local team involvement Segment ExCom sponsorship Presentation of the opportunity from the operational team (details in the following pages) Partnership Agreement Implementation plan Objectives / KPIs to monitor the partnerships Other (details in the following slides) Assessment from the Investment Committee Quality of the management Presentation of the startup by the founder (+ Mgmt team if needed) Q&A session Financial agreement Shareholder agreement review Valuation / Price LOI validation

15 The rationale for investment 3 ENGAGE FURTHER Zoom on the presentation from Sodexo s operational team to the investment committee 1. Sodexo Project team: list of all people involved on the deal (Including notably Sodexo Business representatives who will work on the opportunity for Operations, Finance, Tax, Legal, IT and HR streams) 2. Company short presentation: i) Date of launch, key achievements,, ii) Business Model, iii) Strategy and iv) Bios of the topmanagement 3. Market Overview including i) a sizing and growth forecasts of the market, ii) a list of direct or indirect competitors, and iii) barriers to entry 4. Strategic Rationale a) Alignment with segment strategy b) Partnership / commercial agreement presentation: roadmap, KPIs, key achievements, - more details in the following slide 5. Financial rationale a) Business plan of the Target on a standalone basis (i.e. with no input received from Sodexo), with i) financing needs and ii) cash position evolution towards the BP period vs. Business plan with Sodexo b) Business plan for Sodexo, based on the business case presented in the Partnership agreement c) Past / Current / Future Cashburn split by category 6. Evolution of the Target s shareholding structure ( Cap table ) from the set-up of the Company to date, including the quantum and conditions of all the past fundraising performed 7. Target s Organization chart with all the relevant legal entities in the transaction scope, with the purpose of each entity 8. Last Target s accounts, consolidated and audited to the extent possible 9. End-Game for the Target and for Sodexo

16 Partnership agreement 3 ENGAGE FURTHER List of clauses to be agreed with the target prior to LOI approval 1. Obligations of both parties 2. Duration: 3-5 years (recommended) 3. Implementation plan definition: key milestone, definition of KPIs to monitor the deployment, definition of KPIs to measure the impact (volume of businesses, revenues, EBITDA, ) these KPIs will be leveraged for the monitoring of the partnership opportunity 4. Ensure that there is no conflict of interests between the financial interests and the commercial interests. In particular when exclusivity rights are discussed (only when developing a jointasset): a) This should be subject to competition law and only if priority over competitors is relevant b) It can otherwise be dealt within IP clauses (commercial or technical joint developments) 5. Define governance structure to ensure proper deployment of initiatives: committees, representatives, frequency, objectives, 6. Data: a) Secure obligations of target on protection and privacy b) Ensure ownership and use of data 7. Other: termination clauses, liability and insurance, intellectual property, communication

17 M&A process starts after the LOI approval (1/3) 4 LAUNCH M&A PROCESS Zoom on Due Diligences Due Diligence information requests A list of information requests for all the relevant Due Diligence stream shall be prepared and shared with the Target s management and advisors, in order for them to prepare a dataroom External advisors fees in relation with Sodexo Ventures investment and Partnership agreement with the Target will be incurred at relevant Business or Segment entity Business entity will be the primary beneficiary of the Partnership agreement entered into with the Target from which the value creation will be derived It is a means to ensure Business representatives involvement on the investment process from Day 1 to Closing Note that if several segments or geographies are concerned by the investment and Partnership agreement, fees will be borne by the largest beneficiary (segment or country) Some flexibility around the above rules can be proposed from time to time if relevant

18 M&A process starts after the LOI approval (2/3) 4 LAUNCH M&A PROCESS Zoom on Group Finance & Legal Teams Approvals Each new investment should be discussed together between M&A, Tax, Legal and Accounting Methods, Consolidation in order to address the following issues Influence Sodexo wants to have over the investee, rights and obligations to be negotiated Accounting under IFRS Accounting under French or UK GAAP Tax optimization Determination of the Fund entity (France or UK) which will bear the investment The draft of Letter of Intent should be shared before being signed and sent to the Target, and a preliminary analysis shall be conducted The drafts of shareholder agreement, potential Partnership agreement and Business Plans should be shared when available, before Signing, to confirm the preliminary analysis

19 M&A process starts after the LOI approval (3/3) 4 LAUNCH M&A PROCESS Zoom on Communication For each new investment which is about to close, the M&A project manager together with the operational team shall reach out to Group Communications and Group Investors Relations to brief them so they can decide whether Sodexo will communicate or not on the deal, and if yes, prepare relevant announcement at Closing, or shortly after Group Communications: Laura Schalk Group Investors Relations: Virginia Jeansen Should there be a communication on the deal, it is up to Group Communications to Prepare the first draft of Press release Manage the required translations of the press release Obtain the approval of Sodexo top-management on the press release Choose the release date and publish it However, it is up to the M&A project manager and the operational leaders to ensure that The Target does not publish anything prior to Sodexo press release The approval from the Target on Sodexo press release is obtained Group Communication has validated the potential Target press release

20 EXAMPLE OF KPIS RATIONALE Communicating KPIs and presenting the performance 5 PORTFOLIO MONITORING After each Board Sodexo Ventures Sponsor (Board member) Start-Up Deployment KPIs Business KPIs Strategic KPIs Financial KPIs Ensure speed of implementation / focus on the partnership Commercial impact of the partnership Anticipation of market trends (disruption, innovation, ) Financial impact of the investment (value and P&L) Calendar listing all the key actions and responsibles on Sodexo & the start-up side Financial impact on Sodexo (revenues & EBITDA) Market watch Technological watch Revenues & EBITDA evolution (stand-alone) Frequency of reporting: Deployment & Financial KPIs after each Board Overall Status Update to the Investment Committee to be presented 1x / year to the IC (Founders + Sponsor) The Board Member will enable access of information as the business sponsor and should be A member of Sodexo Ventures or A business executive (Excom sponsor from the segment for instance) Definition and collection of KPIs should be defined in the: Partnership agreement for Deployment, Business and Strategic KPIs Shareholder agreement for the financial KPIs