Coverage Initiation: D’Ieteren Group

Target PriceCredit RiskFundamental StrengthSustainability ScoreIndependent Board
173BBB8/104.9/10No

We are excited to initiate coverage of D’Ieteren Group, a successful Belgian holding company with six subsidiaries and a total market cap of €10bn. D’Ieteren is a Belgian family holding company which is mainly active in the distribution of vehicles, their spare parts and the fixing of broken windshields. The headquarters are in Brussels. The company employs a total of 30,000 people for a combined revenue of €8.4bn (2021). It is now a part of our holding equity research universe with 22 other European holding companies.

D’Ieteren is a family-holding company that focuses on a limited number of companies, irrespective of sector. Naturally, the holding company looks for activities with good long-term growth prospects and preferably operating in a large market, driven by emerging trends. 

The Head of M&A investigates a hundred opportunities a year. The company claims to be willing to invest €100 million to €1 billion (previously: €300 million to €1 billion) in mergers and acquisitions, which explains why it had €1.5 billion (2020) in cash on its balance sheet which it did not want to pay out to the shareholder, which was ultimately used to acquire TVH Parts (2021) and now also PHE (2022). 

This excitement is down to the stock’s performance in the last three years, driven by its subsidiary Belron (50.01% owned) which has generated an enormous amount of cash since 2019.  

 
Active in vehicle distribution and parts 

The D’Ieteren family, which still owns 67% of the company, has a long history in the automotive industry and almost all the current external growth relates to that legacy. It all started with D’Ieteren Auto, which has been the exclusive distributor of the Volkswagen brand in Belgium for the past 70 years, with a total market share of 23.5%. 

It was however the acquisition in 1999 of Belron, which owns brands like Carglass, Autoglass and Lebeau, and is the world’s largest player in vehicle glass repair and replacement, that was to prove the holding company’s best investment. Shareholders have been reaping the benefits of this move for some years, with the holding company’s ROCE now in the 15% plus or even 20% plus territory. 

In 2021 and 2022 the large cash pile was put to use with the acquisitions of TVH Parts (40%) and PHE (100%), both active in the distribution of spare parts for vehicles albeit complementary businesses. Pretty soon they will both be contributing to driving the group’s revenue above the €10bn mark. 

IPO for Belron in the next few years? 

Belron’s performance has exploded since a private equity company purchased 40% of the shares in 2018 although we believe that the business would have performed equally well without these investors. Nonetheless, it has been a game-changer and since the beginning of 2023, it is none other than Carlos Brito (ex-CEO of AB-Inbev) who has been at the helm of Belron. In our view, he has been given the job of taking the company to the stock market. This again would be extremely rewarding for the D’Ieteren holding company and its shareholders. 

Our Outlook for D’Ieteren

We believe this to be a great company with a very decent ROCE and outlook. However, the past few years have shown that the stock market has been willing to pay a high price for the holding company. For a holding company, its dividend yield is low. We prefer to get to know the company a bit more and are excited to see what it holds.  

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