The surge in prices is “dangerous” in the current economic downturn, said the founder of Weinberg Capital and chairman of the board of directors of Sanofi in an interview with “Echoes”.
“Price inflation is dangerous at a time when the economy is slowing”. When, on the eve of the financial crisis, Serge Weinberg left François Pinault’s group to create his investment company in 2005, he made the choice not to invest for almost two years, at the peak of the LBO bubble. Ten years after the financial debacle, the one who also presides over the destinies of the pharmaceutical giant Sanofi, once again warns: “Low rates, even negative, lead to an overvaluation of assets inconsistent with the deceleration of the economy. In a world where nationalisms are exacerbating, politics needs levers. However, budgetary and monetary stimuli are already fully utilized ”, he said in an interview with “Echos”. Therefore, he asks, ” What reserve remains in the event of an exogenous shock, which cannot be ruled out given the geopolitical tensions? “.
“A cure worse than disease”
The leader says he has trouble understanding the choices of the European Central Bank, which continues to inject liquidity at negative rates. “How much worse is the cure than the disease?” This is a legitimate question. “
The unlisted, hyper profitable, certainly takes advantage of low rates to attract masses of capital. But these rates, combined with solvency constraints, penalize key players in private equity in France, life insurers, he laments. “We are in a paradoxical situation: France does not have a pension fund unlike other countries, and the deficit of French investors in equity is automatically increased by the fall in rates! “.
Serge Weinberg therefore calls for austerity. And this, especially since ” the mass of capital that funds must invest does not have as a corollary the growth of transactions. You have to be extremely selective when buying ”.
This requires diversifying, instead of being drawn into the race for size where funds are now rushing. In fourteen years, Weinberg Capital has passed the billion euro mark in “debt-free” development capital and real estate. Ahead of his peers looking for new opportunities on the stock market – the number of delisting attempts is at a peak in Europe, according to Goldman Sachs – he has embarked on the acquisition of minority stakes in listed companies from 2015.
Will he go as far as the takeovers? “Exits from the listing in France remain difficult given the mandatory withdrawal thresholds. But when the liquidity of securities becomes insufficient, it becomes a potentially interesting question ”, believes Serge Weinberg.
Weinberg opens its door to other teams
The manager says he is ready to also welcome other complementary strategy teams: “We have already looked at such projects and we remain interested”. In the meantime, it is gaining a foothold in impact funds (with a social dimension). “This is not a fad, it is an expectation of consumers and employees completely compatible with performance”says the executive who has delivered double-digit annual net rates of return in recent years.
The important thing, he emphasizes, is to adhere to extremely precise extra-financial objectives to avoid the announcement effects. Thus, more than 50% of the added value of the management teams will depend on compliance with these criteria.