Georges Zahlen, CEO at Axiomatic, and Gauthier Gosselin, his co-partner, decided in 2019 to pool their growing number of companies in a non-regulated special limited partnership (SCSP) named Axiomatic. The fund enables its 50 mostly domestic shareholders, or limited partners, to play a passive role, manage capital increases through priority rights and easily transfer shares between shareholders, “while maintaining stability on the business front,” argued Zahlen. The two founding partners are also shareholders in the fund, but none of the shareholders holds a majority shareholding.
“We are not a traditional PE fund,” said Zahlen. “We are not operating as a closed-end fund but rather as an evergreen--an open-end--fund” that has grown into “a very usual structure.” He does not describe his fund as VC or private growth, but rather as a leveraged buyout (LBO) fund, a somehow surprising description given that LBOs tend to use significant gearing.
Indeed, Zahlen stressed that the financing of its acquisition is conservative with a debt load that stays below 50% of the total outlays on any acquisition. “We are very, very careful by not over leveraging [the fund].”
Axiomatic: a buy and build approach
“We never wanted to buy companies to flip them,” stated Zahlen. He explained that Axiomatic wants to create a broad portfolio of companies “that are well performing…paying a regular dividend to the SCSP and then to the LPs.” Accounting for the debt that needs to be serviced, Axiomatic acts as a pass-through between the operating companies and the LPs. “A very classic LBO structure.” The SCSP is very illiquid but Zahlen has no plan to have it listed, an option that is possible if they wish to go that route.
We do not want to make marketing for anything… we want to stay private and discrete
Questioned by Paperjam on their perspective upon receiving a high offer on any of the holding, Zahlen promptly answered: “We are a long-term investor, but we are not stupid.” He commented that Axiomatic would nevertheless investigate the storyline behind the offer. “We will always prefer long-term results to short-term gains… If we lose our reputation, we will lose our deals.”
Secretive on performance
Not focused on quarterly but rather on long-term performance, Zahlen thinks that all Axiomatic’s shareholders are driven by an “entrepreneurial spirit,” have a very strong link to Luxembourg and aim at creating value “over five to ten years.” On such a timeframe, he is convinced that Axiomatic will outperform a typical European midcap index as two-thirds of the companies in the portfolio have “very, very high potential of growth.” Despite a difficult 2023 from which it recovered in the earlier part of 2024, he stated that the performance of the fund has always been positive since inception in 2019 without going into more details.
Despite going through covid, Zahlen proudly stated that Axiomatic has seen growth in the fund and has not experienced any bankruptcy in its portfolio after 20 acquisitions. He thinks that their conservative financial approach has helped when going through these troubled waters.
“We do not want to make marketing for anything… we want to stay private and discrete,” Zahlen stressed several times during the interview. He also explained that many sellers are also looking for such a level of privacy.
Where do you see Axiomatic in ten years?
“We not investing to satisfy an empire-building drive… it must make sense. And if, in 10 years, it makes sense to wind Axiomatic down… then so be it.”