Rising Star in the City of Light

Eurazeo has become a feisty private equity player

Patrick Sayer was facing a tough career choice. It was late 2001, and the 44-year-old Paris native had just finished two frenetic years in New York as head of Lazard LLC's once-white-hot media and telecom business, cutting deals for clients such as Microsoft (MSFT ), Terra Lycos, and Publicis Groupe (PUB ). But the bubble had burst, business was down 80%, and the hyperkinetic Sayer was itching for action. While Sayer was weighing his options, Lazard Chairman Michel David-Weill made him a surprising offer: Would he take over Paris-based Eurazeo, a $3.5 billion holding company with close links to David-Weill and Lazard?

Sayer hesitated. Although Eurazeo was France's largest publicly quoted investment company, it was mostly a sleepy outpost where Lazard parked the stakes it held in traditional clients--blue chips such as Pearson (PSO ), Group Danone (DA ), and Italian insurance giant Assicurazioni Generali. It also was the biggest institutional shareholder in Lazard itself, with a 44% equity stake and rights to 16% of Lazard's profit stream. Sayer, however, knew that pressure was building from minority shareholders for a more arm's-length relationship between Lazard and Eurazeo, so he accepted on one condition: that he have as much independence as possible. "I didn't want to be head of Eurazeo and report to Lazard partners," says Sayer. David-Weill agreed.

Good move all around. Since Sayer came on board last July, Eurazeo has become one of France's most aggressive private equity players. Sayer got busy right away, jumping into the bidding war for the publishing arm of Vivendi Universal (V ) and the yellow-pages business of Dutch telecom Royal KPN (KPN ). Sayer's latest move: A Feb. 4 agreement to buy 23% of European satellite operator Eutelsat for $486 million. Eurazeo has also begun to unwind some of those old industrial stakes, selling down its piece of Danone and structuring options to lighten up on others. Investors like what they see: Since Sayer came aboard, the group's share price is up 7%, compared with a 26% slump in the overall Paris market.

Eurazeo's emergence as a power in its own right is part of a larger restructuring of the Lazard empire that saw the three quasi-independent Lazard banks in Paris, New York, and London merged. Lazard also reorganized a group of French holding companies through which its principal shareholders maintained control. The merging of two of those companies created Eurazeo in early 2001. Then, in late 2001, David-Weill agreed to sell a sizable stake in the bank to Bruce Wasserstein, then head of Dresdner Kleinwort Wasserstein, and cede management control.

The timing could not have been better for Eurazeo, in which David-Weill has a controlling interest. Europe is fast emerging as the new promised land for private equity groups. Telecom operators such as France Télécom (FTE ) and Deutsche Telekom (DT ) are selling off pieces of themselves to reduce their enormous debt, as are troubled conglomerates such as Swiss-Swedish ABB (ABB ) and France's Alsthom.

Much of the merger and restructuring action is being driven by U.S. outfits such as Carlyle Group and Kohlberg Kravis Roberts. U.S. firms, though, sometimes operate at a disadvantage, since they lack the contacts of local players. Eurazeo has those in spades, and Sayer and his 15 bankers have taken full advantage.

Take Eurazeo's recent purchase of Fraikin, the huge truck-rental unit of Italy's Fiat (FIA ). Thanks to the connections of Gerardo Braggiotti, a Lazard senior partner and member of Eurazeo's supervisory board, Sayer was first in the door, paying a cool $845 million for the group, which does $600 million in annual sales. Marcel Roulet, another Eurazeo board member and former chairman of France Telecom, opened doors for Sayer's move on Eutelsat. Eurazeo will now control the group along with partners Lehman Brothers Inc. (LEH ) and Italy's De Agostini publishing group.

The Lazard network undoubtedly gives Sayer an edge. But can he also shake free of his parent's embrace? Eurazeo's stake in Lazard tips the scale at more than $800 million, out of a total $3 billion in assets. "It's just another investment, though we think it's a good investment," says Sayer. And when he concludes it's no longer good, Sayer blithely adds, he won't hesitate to sell.

By John Rossant in Paris

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