Wendel Family: A reinvention case of a successful investor family
Before being the important investment group that it is today, the Wendel Group (controlled by the Wendel Family) had to reinvent itself to overcome great adversities. In this process, their ability to preserve family culture and values is admirable. While at the same time changing their mentality and vision in relation to business and its organizational structure. At that time, the support of almost 400 relatives was needed.
The group currently has a Net Asset Value of almost € 7 billion (August 2016). With investments distributed across several sectors and including relevant holdings in well-known global companies such as Saint-Gobain and Bureau Veritas.
The Wendel Group is controlled by the Wendel family of France and began its history in 1704 in the Lorraine region. For almost 300 years, the family has been controlling several steel and mining assets. It began at the birth of the industrial revolution, going through the great development of the nineteenth century in Europe, succeeding in overcoming the French Revolution and two great wars. And finally arriving in 1975 as the controller of about 72% of steel production in France.
Wendel Family’s ability to reinvent
In 1977 the family faced a major challenge: in the context of the oil crisis that affected the European economies and various industry sectors, there was the threat of the French government nationalizing the steel assets of the family.
In this context, some members have proposed a major restructuring of family businesses, not settlement, as discussed. This restructuring involved the creation of a holding company separating all steel assets (threatened with nationalization) from other financial assets and holdings.
One condition, however, was that this process should be unanimously approved by the nearly 400 shareholders (the family members), to guarantee the long-term success and legitimacy of the new holding company. After discussions, all of them approved the restructuring.
It was then founded the Compagnie Générale d’Industrie et de Participations (CGIP), an investment holding company controlled by the Wendel Family with the philosophy of being an “entrepreneurial shareholder” in the investees. These have come to cover distinct sectors such as technology and services. This movement resulted in the Wendel Group as we know today and in the transformation of the family, who assumed the role of an investor family.
The successful transition from business family to investor family, and the way it was done – with transparency and unanimous approval – was very relevant. It allowed a family with a long industrial tradition (with a history that merges with the history of industrial development in Europe) to become an investor family, with diversified businesses while retaining its essence, values, goals, and unity.
Currently over 1,000 members of the Wendel family are represented at Wendel Participations, which owns part of the Wendel Group. The Wendel Group, on the other hand, is listed on the stock exchange and has strong transparency, and a well-developed governance structure as well.
The family has two members on the Supervisory Board including the Chairman, whose role is to oversee the activities of the Executive Committee and to approve, among other things, any transaction by the group that exceeds EUR 100 million, in addition to decisions that involve changes in strategy or may affect the image of the group. In response to the Supervisory Committee there are also the Audit Committee, and the Governance Committee.
There are no family members in the operational day-to-day operations of the investees, but they are represented on the Boards of Directors and Supervisory Boards. Annually, a family meeting is held to present the numbers and perspectives of the group, followed by a fraternization.
The reflection of Family Governance on the investment policy
Family values are clearly represented in the way that the Wendel Group positions itself as a long-term investor in companies. They encourage the search for cultures of excellence based on trust; open cultures that allow adaptations to the constant changes in the business environment; and respect for the cultures and values of investees – as part of the DNA of a family-owned company like the Wendel Group.
As “entrepreneurial shareholders”, they actively participate in strategic decisions, capital allocation, and the choice of key executives in investees, always focusing on long-term value generation. Successful investments include the Capgemini case, where the Wendel Group was an investor for 24 years helping the company become a global leader in IT consulting and services.
Reflecting its values, in the 1990s the family decided not to make an investment in Seita, a French cigarette maker that was being privatized. In addition, the Wendel Group strongly encourages social responsibility initiatives in all companies invested, assisting in the implementation and follow-up of these initiatives.
The family values are also reflected in the Wendel Group’s position as a major supporter of cultural and educational projects with a historical commitment to the community (social capital). Two recent examples are: (1) help in structuring the Centre Pompidou-Metz in 2010, with Wendel Group currently being its main sponsor; and (2) founding the Wendel International Center for Family Enterprise at INSEAD, one of the world’s leading business schools, in 1996.
In this example, we saw a typically entrepreneurial family that, in the 1970s, seeking to maintain its heritage, decided to reinvent itself starting to manage its business and assets with an investor family mindset, giving a clear unfolding of the history and family values in different successful initiatives until the present day.
- Website of the Group: http: //www.wendelgroup.com/en
- David S. Landes: Dynasties: Fortunes and Misfortunes of the World’s Great Family Businesses. New York, 2007.