Fabienne Saugier, director and former partner coach at VISCONTI, today welcomes François-Xavier Oliveau, Operating Partner of the Tomorrow investment fund within Initiative & Finance.

François-Xavier Oliveau's career

A central engineer by training, a graduate of Sciences Po Paris, a graduate of Sciences Po Paris, an MBA from Harvard Business School, François-Xavier initially advised and supported companies, particularly at BCG. He has also managed companies or branches of activity, in industry, health, LED lighting and the Internet of Things. Finally, since 2015, he has been operating in the private investment sector (private equity), first at the PAI investment fund and now at Initiative & Finance.

Throughout his career, François-Xavier has acquired a strong experience in environmental transition in multiple sectors impacted by it (building automation, LED lighting, energy conversion, fuel cells, industrial gases, industrial gases, organic materials, recycling, etc.). He is now putting this experience at the service of the companies in which the fund invests.
François-Xavier is an author of essays. He published Microcapitalism, towards a new social pact (PUF, 2017) and The crisis of abundance (Les Editions de l'Observatoire, 2021).

What is an Operating Partner in an investment fund? What does François-Xavier's mission consist of?

This is a mission that has been strongly developed in investment funds with sometimes different approaches from one fund to another. François-Xavier's vision for this role is that he is a partner of the manager. Having himself experienced the loneliness of the manager, the difficulty in taking a step back, in defining his priorities, he found, at that time, useful to rely on people allowing him to exchange ideas in a secure context, to make hypotheses, to think jointly about strategy, implementation, implementation, performance measurement, management... It is today this role of “sparring partner”, non-intrusive, that he plays with managers. Being able to listen, ideate, provide proposals...

In which company profile does Initiative & Finance invest?

Initiative & Finance is a historical player in the financing of SMEs. Since 1984, he has supported more than 300 SMEs, some of which have become ETIs, or even large companies such as Marionnaud or Cerba. Within Initiative & Finance, a fund called Tomorrow was set up in 2020, which invests tickets of 20 to 80 M€ in Midsize Companies, whose EBITDA is generally between 8 and 25 M€.

The fund has a particular angle: supporting the environmental transition of businesses.

Initially, businesses do not usually use the fund for this subject. They come with more traditional projects of transmission, internationalization, search for financing and support for external growth. However, Initiative & Finance always wants to include this concept of environmental transition. This dimension is truly designed as a lever for creating value for the company.

François-Xavier is convinced that in 5 or 10 years, the companies that will be the most efficient and the best valued will be those that have understood this need to mutate their model to adapt to environmental constraints and those of stakeholders (customers, employees, funders, etc.). And who will have made their environmental transition a differentiating factor, a competitive advantage, and thus a lever for creating value.

Once the fund has acquired a stake in the company or group, how does François-Xavier work on the environmental aspect with the manager?

François-Xavier adapts: to the sector of activity, to the manager, to his desires and needs. The objective is to draw up the right road map for each company.

This always starts with an impact measurement, and a 3 Scopes carbon footprint. The aim is to understand how a company's activity has an impact on the environment and vice versa. Then, the manager and François-Xavier work on levers for improving impact that create value.

How does the environmental transition impact customer demand? Whether in B2B or B2C, customers are increasingly demanding on products and services. So how do we serve their needs? How are we going to work on the purchasing dimension, product design, and the transport and logistics dimension? And thus improve the company's environmental footprint while responding to customer demand.

François-Xavier puts himself at the disposal of the manager, who despite his real desire to “go for it” is sometimes a bit helpless to act in the face of the magnitude of the challenge. François-Xavier has an ultra-pragmatic approach, in order to help the manager set up indicators and an action plan. And to do this, identify the levers, in particular on eco-design, decarbonization, and the reduction of the footprint on biodiversity — but always in connection with business.

The environmental transition for companies: constraint and/or opportunity?

For François-Xavier, the environmental transition can start with a constraint. The CSRD regulation, which will apply from 2025, will require companies to take more measures and make more declarations, in particular on the carbon footprint and on the analysis of the risks that the company undergoes.

This regulation will concern even companies of a fairly modest size. Those who meet at least 2 of the following 3 criteria: turnover of more than €40 million, balance sheet of more than €20 million or workforce of more than 250 employees.

The Tomorrow fund wishes to see this constraint as an opportunity:

- opportunity to develop turnover, by creating a competitive advantage vis-à-vis the customer, whether in B2C (customers increasingly committed to the environment) or in B2B (major customers who now need to decarbonize their Scope 3 upstream/suppliers)

- opportunity to reduce costs, especially production costs. For example, by reducing the weight or size of a product, we reduce the quantity of material consumed. Design a logistics chain that consumes less energy, etc.

By working together, the manager and François-Xavier almost always find levers that improve the strategic value of the company.

So there is more a logic of opportunities than of constraints.

François-Xavier mentioned decarbonization, are there other strong environmental topics for the company?

While decarbonization remains an important subject, the fund also works with the manager on the use of resources, as well as on the impact of the company's activity on the air or biodiversity.

This leads him, for example, to consider the circular economy, which can correspond to enormous customer expectations. Move from a sales model to a trade-in/reconditioning/resale model, with warranty services for the customer.

On biodiversity, with a childcare products company, work was carried out on the cotton sector, for example.

The market is moving very fast, so is the demand. When the company succeeds in offering real environmental added value, customer demand is there and there is a need to develop an offer quickly to meet it.

How not to find yourself overwhelmed in the face of the multiple facets of the environmental transition?

Determining priorities is part of François-Xavier's role with managers. You have to focus on what's really important. All the contradictory injunctions that can occur at the start of a project are often disturbing. Having a partner, who will help ask the right questions, will thus allow the manager to see more clearly and identify priorities more easily.

How are the approach that Initiative & Finance is deploying and the transition they support perceived within the company?

There is a strong demand from employees for a real commitment to the company. Moreover, if the shareholder and the management push in this direction, the feedback is extremely positive.

The environmental transition is a very strong driver of recruitment, commitment and loyalty, for all populations in the company. There is a desire to give meaning, to make your company sustainable, and employees are eager to be involved in this dimension.

In summary, what are the benefits of François-Xavier's approach and the fund?

Three points:

- improvement of the company's environmental impact: traceable and measurable impact, with a demanding system of indicators. Impact at several levels (carbon trajectory, biodiversity trajectory,...)

- value creation: as a financial investor, Initiative et Finance owes returns to its own funders and will naturally seek to increase the long-term value of the company. The fund is convinced that environmental transition is a lever for doing so.

- employee commitment: environmental transition is a real lever for employee engagement. Where possible, the fund includes a value-sharing dimension during its exit transaction.

So can company employees also benefit from the entry of a capital fund?

Employees are generally in favor of the entry of a fund into capital. A few years ago, a France Invest survey showed that more than 90% of Staff Representative Bodies gave a positive opinion to this type of operation.

The Tomorrow fund tries to apply the provisions of the Pacte law as often as possible, which now makes it possible to share with employees part of the added value generated at the end of the operation (exit from the fund) when it exceeds certain thresholds. This allows employees to be involved in the success of the operation.

Any last words to end this podcast?

Regardless of the shareholder and the fund, the most important message is that the environmental transition, as said before, creates value and is an opportunity for the company.

François-Xavier encourages all managers to ask themselves the question of what environmental transition means for their business. How can this absolutely major and sustainable environmental transition movement be used to create a competitive advantage? How to adapt your activity, develop your business model to make it a lever for creating value?

This reflection makes it possible to rethink its activity and to approach this environmental transition as a source of growth and a new collective project that involves all stakeholders, starting with employees.

The environmental transition is generating a profound transformation of businesses. The first driver of this transformation is the manager himself, who must take ownership of it with conviction, translate it into a vision and involve his teams in an innovative action plan.

The manager will therefore play a central role in driving the dynamics of this transformation and feeding it in a sustainable way...

This is a very important point. Indeed, it is above all the manager who will lead this transformation. “The company's main ESG manager is the manager.”

In this way, the Tomorrow Fund only engages with managers who share this conviction, or who “really want to go.”