Deutsche Beteiligungs
Doubling down on investment opportunities
14 August 2024
Deutsche Beteiligungs (DBAG) reported a c 4% NAV total return in 9M24, supported primarily by higher valuation multiples on the back of more benign public markets and the successful realisation of in-tech. DBAG’s management has recently experienced a significant increase in deal flow, which we attribute to the first signs of a recovery in global M&A activity, reduced competition (as evidenced by two of its competitors no longer pursuing new investments), as well as cross-deal flow from the recently acquired ELF Capital Group. This has encouraged the company to issue a €100m convertible bond to further boost its dry powder. MORE »
Convertible bond issue
2 July 2024
Deutsche Beteiligungs (DBAG) completed an issue of €100m senior unsecured convertible bonds on 28 June, with proceeds to be used for co-investments alongside DBAG and ELF Capital funds, and for general corporate purposes. The bonds will bear interest at a fixed rate of 5.5% pa and mature in 2030. They are convertible into up to c 3.25m of new and/or existing DBAG shares, which is the equivalent of 17.3% of the currently outstanding number of shares. MORE »
Successful exits assist H124 performance
28 May 2024
Deutsche Beteiligungs (DBAG) reported an NAV total return of 3% in H124 (to March 2024) following the first-time recognition of 2024 portfolio company budgets and 2024 consensus forecasts for peers in Q124. Its H124 return includes a net €19m negative effect from the incorporation of additional portfolio valuation factors. DBAG’s H124 performance was supported by the successful sale of in-tech at a healthy 3.2x multiple on invested capital (MOIC). DBAG also closed the initial investment in a 51% stake in ELF Capital. Its shares now trade at a c 22% discount to NAV. MORE »
Strong firepower for new acquisitions
16 August 2021
Deutsche Beteiligungs (DBAG) posted a 24.5% NAV total return in 9M21, even after the dilutive impact of the recent €100m share issue. This was mainly a function of improved earnings expectations of portfolio companies, coupled with disposal gains on DNS:Net and Rheinhold & Mahla, as well as a €26.0m uplift upon the announced exit from blikk. Results were further supported by the profit from DBAG’s fund services (up to €13.9m in 9M21 vs €6.6m in 9M20) following the start of DBAG Fund VIII’s investment period. While DBAG closed only one acquisition in Q321 (R+S, its second long-term investment), the management underlines the continued strong pipeline of opportunities (up to 86 in Q321 vs 81 in Q221). MORE »
Targeting a high volume of new investments
21 May 2021
Deutsche Beteiligungs (DBAG) reported a 17.3% NAV total return in H121, which includes an €0.80 dividend paid in the period (implying a 2.4% yield). NAV growth was primarily driven by the improved earnings prospects of portfolio companies and gains on the disposals of Rheinhold & Mahla and DNS:NET. DBAG recently significantly increased its available cash resources through a €106m equity issue and is now well positioned to embark on its extensive investment agenda. Its funds in the investment phase (DBAG Fund VII and DBAG Fund VIII) are currently 79% and 14% invested respectively. DBAG will also make long-term investments entirely from its own balance sheet, with its second such deal closed in H121. MORE »
Improving earnings outlook across the portfolio
16 February 2021
Deutsche Beteiligungs (DBAG) reported a 5.9% NAV (defined as equity per share) increase in Q121 (ending December 2020) driven by the improved earnings prospects of its portfolio companies across sectors. Fee income improved markedly to €11.1m (Q120: €7.4m) as DBAG Fund VIII started investing in August 2020 and management’s guidance for FY21 remains €42–44m (vs €30.6m in FY20). DBAG sees a number of opportunities and is likely to be a net investor in FY21, including deals alongside its funds (it has €0.9bn of third-party capital ready to deploy) and long-term financing fully from its own balance sheet. MORE »
Minor negative NAV total return in FY20
8 December 2020
Deutsche Beteiligungs (DBAG) saw a mixed impact from the COVID-19 crisis on portfolio earnings in FY20, with its ‘growth’ sectors (broadband/telecom in particular) proving resilient, while its industrial portfolio was hit harder. Strong public equity markets drove an increase in the average EBITDA multiple used to value its portfolio (8.8x vs 7.8x in FY19). DBAG’s mid-term ambition to FY23 assumes a strong pickup in investments through the recently launched DBAG Fund VIII and long-term investments carried out solely from DBAG’s own balance sheet. Portfolio growth should be funded by a combination of debt and equity. MORE »
German private equity investor and manager
19 October 2020
Deutsche Beteiligungs (DBAG) is a well-established private equity company investing primarily in mid-sized German companies. It also manages €2.1bn of third-party capital, which generates stable recurring fee income. DBAG invests in buyouts alongside its managed funds, with long-term investments made from its own balance sheet. This year, the company launched its new buyout fund (DBAG Fund VIII, with €1.1bn in commitments), which will translate into higher management fees. MORE »
Lower portfolio earnings but on higher multiples
20 August 2020
Deutsche Beteiligungs (DBAG) saw a partial rebound of its investment portfolio value in Q320 due to higher market multiples. While this had a €60.6m net positive impact in 9M20, it was more than offset by reduced earnings forecasts for DBAG’s portfolio companies, especially in its core sectors (eg automotive). As a result, DBAG’s NAV total return (TR) in 9M20 was a negative 4.8%. Meanwhile, the fund services business delivered a solid €6.6m profit in 9M20 (vs €1.6m in 9M19), which should improve further with the start of DBAG Fund VIII’s investment phase in August (it recently announced it first MBO). MORE »
New valuations look conservative
29 May 2020
Deutsche Beteiligungs (DBAG) has updated its portfolio values, which led to a considerable revaluation loss in Q220, and in turn a net loss for H120 at €76.7m (or €5.10/share). Unlike many of its listed private equity peers, DBAG has already reflected in its NAV both the reduced long-term earnings prospects of its companies and lower peer multiples. This contributed to DBAG’s relative underperformance with one-year NAV total return (to end-March) at -16.2% vs LPX Europe NAV at +8.7%. DBAG’s fund services posted a €3.5m profit in H120 covering 88% of other ongoing costs. The eighth PE fund was closed with €1.1bn in commitments, but is not expected to start investing and collecting fees in FY20. MORE »
Expanding the companies in broadband sector
3 March 2020
Deutsche Beteiligungs (DBAG) reported a marginal net loss in Q120, with income from the fund services segment offset by a more muted result from the private equity investments segment. The recent launch of DBAG Fund VIII should soon start to generate sizeable fee income. Macroeconomic and geopolitical headwinds continue to weigh on portfolio value growth (with c 50% of DBAG’s portfolio in German industrials). However, in the longer term, DBAG should benefit from its buy-and-build strategy in the better-performing broadband sector. MORE »
Guidance beat assisted by a successful exit
14 January 2020
Deutsche Beteiligungs (DBAG) posted net income of €45.9m in FY19, which is 20% above the upper end of its guidance range. This was supported by a €39.7m valuation uplift on the disposal of inexio, agreed in September 2019. For FY20, DBAG expects NAV to be up to 10% lower (vs the current €472.1m as defined by DBAG), but more than 20% higher income from the fund services segment (FY19: €3.0m). The latter should be driven by the recent launch of DBAG Fund VIII with a targeted size of €1.1bn including the top-up fund. It is worth noting that 75% of the third-party commitments made to the fund so far have been by returning investors. MORE »
A play on the German mid-market MBO space
11 November 2019
Deutsche Beteiligungs (DBAG) is a well-established private equity company investing primarily in mid-sized German companies. On top of achieving a return on its direct investments, it generates fee income from managing c €1.4bn in third-party funds. This year, DBAG has been steadily deploying its investment commitments, with DBAG Fund VII expected to complete its investment phase soon. The subsequent launch of its successor should drive fee income (as it is based on committed capital). Meanwhile, DBAG’s portfolio is affected by weaker economic and trading conditions in some industrial sectors. In this context, it is encouraging that DBAG continues diversifying its portfolio and performing successful exits. MORE »
Continued sector diversification
10 September 2019
Deutsche Beteiligungs (DBAG) is proceeding to deploy the capital commitments of DBAG Fund VII (€1,010m including top-up fund), with 71% of the main fund and 59% of the top-up fund already allocated. The fund should complete its investment phase soon and subsequently DBAG should launch its successor. This would considerably drive fees, as they are based on committed capital. Meanwhile, DBAG’s portfolio is influenced by weaker economic and trading conditions in some sectors (eg automotive). In this context, it is encouraging that DBAG continues diversifying its portfolio into other sectors, including TMT, which contributed positively to its NAV in 9M19. MORE »
Macro environment provides some headwinds
23 May 2019
Deutsche Beteiligungs (DBAG) agreed the seventh MBO of DBAG Fund VII (cloudflight.io), which as a result will reach 60% allocation of its investment commitments, reflecting solid portfolio ramp-up. The first months of 2019 witnessed a rebound in equity markets, allowing DBAG to post €29.0m net income for Q219 on the back of portfolio valuation. At the same time, however, the subdued outlook of the German economy coupled with some sector-specific challenges increase the risk of lower than expected growth prospects in portfolio companies and translated into an €8.4m negative valuation impact in Q219. MORE »
New investments ahead
21 March 2019
Deutsche Beteiligungs (DBAG) is making steady progress on its investment agenda, with three new acquisitions and several follow-on funding rounds totalling €40.2m completed in Q119. DBAG’s Fund VII has so far been able to allocate 56% of its investment commitments in six transactions, reflecting solid portfolio ramp-up. DBAG expects to launch its successor fund by FY21. The current high proportion of relatively new investments in DBAG’s portfolio calls for a more medium-term perspective when examining the company’s future performance prospects. MORE »
Market sentiment weighing on portfolio value
15 February 2019
Deutsche Beteiligungs (DBAG) is making steady progress on its investment agenda, with three new acquisitions and several follow-on funding rounds totalling €40.2m completed in Q119. DBAG’s Fund VII has so far been able to allocate 56% of its investment commitments in seven transactions, reflecting solid portfolio ramp-up. Meanwhile, weaker market sentiment has burdened DBAG’s portfolio valuation by c €47.8m (or c 14%) vs Q418. Around 17% of the company’s current portfolio represents holdings acquired within the last 12 months and still valued at cost. MORE »
Building future potential
7 December 2018
Deutsche Beteiligungs (DBAG) reported FY18 net income of €33.6m, at the top of management’s guidance range, with a 7.8% dividend-adjusted NAV return for the financial year. While net income was lower than in FY17, a €1.45 per share FY18 dividend has been proposed, representing a 3.6% increase on the prior year. FY18 saw DBAG reinvesting and growing its investment portfolio, agreeing seven new investments and one disposal, following an exceptional FY17 during which six new investments and seven divestments were agreed. DBAG has broadened its expertise outside of its traditional core sectors and, at end-FY18, 31% of the portfolio was represented by consumer goods, information technology, media & telecoms, real estate and healthcare companies. Relatively immature investments (younger than two years) now account for over half of DBAG’s invested capital, and this contributes to a conservative outlook for FY19 while providing more promising medium-term prospects. MORE »
Private equity investor and fund manager
19 November 2018
Deutsche Beteiligungs (DBAG) is an experienced private equity investor focused on mid-sized German companies. It is distinguished from private equity peers by generating significant fee income from managing c €1.4bn in third-party funds. After an exceptional FY17, DBAG has delivered steady underlying NAV growth so far in FY18, but its shares have significantly derated. Portfolio company valuations were affected by the market decline in early 2018, and a change in accounting for carried interest provisions has had a smaller negative effect on FY18 performance. However, the majority of portfolio companies saw earnings expectations improve over the first nine months of FY18, and a brisk rate of new investment activity during the year is encouraging for DBAG’s medium-term prospects. MORE »
Positive underlying NAV progress continues
10 August 2018
Deutsche Beteiligungs (DBAG) reported an eighth consecutive quarter of positive underlying NAV progress in Q318, taking its dividend-adjusted NAV return for the first nine months of FY18 to 6.8%. This contrasts with the significant de-rating of DBAG’s shares during the period, which saw its share price premium to NAV decline from over 70% to below 20%. A change in accounting policy to bring forward the recognition of carried interest provision had a small negative impact on NAV and also on management’s earnings guidance for FY18, but arguably this has increased future upside. DBAG had a busy third quarter, agreeing three new investments alongside DBAG Fund VII and DBAG ECF I and II for a total €39.2m, with expressions of interest from potential buyers received for two portfolio companies. MORE »
Market decline weighs on H118 performance
25 May 2018
Deutsche Beteiligungs (DBAG) reported €19.3m net income for the first half of FY18, with a 4.5% dividend-adjusted NAV return. NAV per share declined slightly to €29.43 at end-March 2018, after payment of the €1.40 FY17 dividend. Management has lowered earnings guidance for FY18 due to a decline in market valuation multiples that also weighed on returns in the first half, while the underlying progress of portfolio companies remains broadly on track. The recent sharp decline in the share price premium to NAV to 19.6% suggests the market may now be applying an underlying discount to the NAV of the private equity investment portfolio. MORE »
Steady progress in the first quarter of FY18
13 February 2018
Deutsche Beteiligungs (DBAG) reported a 2.7% NAV return for the three months ended 31 December 2017, with the period characterised by a high level of transaction activity at existing portfolio companies. Two new management buyout investments alongside the DBAG ECF fund were completed after the quarter end, with DBAG investing a total of up to €9.1m in specialist aluminium and steel component manufacturer, Sjølund, and fibre optic network services provider, netzkontor nord. Management guidance for FY18 is unchanged, with net income expected to be above the five-year average and NAV return below the five-year average. MORE »
FY17 confirmed as an exceptional year
19 October 2017
Deutsche Beteiligungs (DBAG) reported a 22.1% NAV return for the first nine months of FY17, and management guidance is for a further uplift in the final quarter, making it an exceptional year in terms of performance as well as portfolio activity. DBAG’s share price returns have significantly outperformed NAV returns over the last year, and the shares are currently trading at a substantial premium to NAV. In our view, this implies that the market is discounting strong future returns, arguably reflecting recent positive strategic developments that confirm DBAG’s ability to complete transactions successfully across a broader opportunity set. MORE »
Successful realisations confirm broader capability
7 August 2017
Deutsche Beteiligungs (DBAG) announced four divestments in May 2017, confirming FY17 as an exceptional year for portfolio activity, with five new investments and six realisations agreed. The sale of private tutoring services firm Schülerhilfe proved DBAG’s ability to complete deals successfully beyond its four traditional sectors of core expertise, while the investment in Vitronet Projekte was DBAG ECF’s first buyout transaction, and More than Meals Europe is the first investment that will use DBAG Fund VII’s top-up fund to finance add-on acquisitions. Recent realisation gains suggest that FY17’s NAV total return could exceed 22%, which would be the highest level since FY12. MORE »
Rapid start to DBAG Fund VII's investment period
21 April 2017
Deutsche Beteiligungs (DBAG) has continued into FY17 the strong pace of portfolio activity achieved in the previous two financial years, with c €63m of transactions in the year to date, representing the second highest annual level of new investment in more than 10 years. Following DBAG Fund VI’s investment period closing in January 2017, DBAG Fund VII has made a rapid start, with its first two transactions agreed in March and April 2017. The recent strength of transaction activity means that DBAG’s portfolio is relatively immature, but investments are well spread by vintage and the portfolio is not overly concentrated, with the top five holdings representing 41% of portfolio value at end-2016. MORE »
Increased scale offers greater opportunities
31 January 2017
FY16 proved to be a significant year for Deutsche Beteiligungs (DBAG). In addition to generating strong NAV returns and maintaining an elevated level of portfolio activity similar to FY15, the scale of the business was increased materially by the launch of DBAG Fund VII, with commitments of €1bn, and DBAG’s €38.6m capital increase. These developments have broadened the opportunity set for potential investments and position DBAG favourably to grow portfolio value over the medium term, while a new sustainable dividend policy aims to provide shareholders with greater visibility over future distributions. MORE »
Private equity investor and asset manager
9 November 2016
Deutsche Beteiligungs (DBAG) is a pioneer of private equity investment in mid-sized German companies, with more than five decades’ experience. Distinguished from peers by managing third-party funds, DBAG recently raised €1bn for the launch of DBAG Fund VII, which will bring funds under management to c €1.8bn and add significant fee income from FY17. DBAG has also completed a €38.6m capital increase to finance the growth of its own investment portfolio alongside its managed funds. From 2016, base and surplus dividends are replaced by a more consistent single dividend, which will not be driven by the size or timing of investment realisations. MORE »
New EUR1bn buyout fund launched
26 August 2016
Deutsche Beteiligungs (DBAG) reported a 9.1% dividend-adjusted NAV return for the first nine months of FY16, despite the sharp market drop following the Brexit vote, which reduced the valuation multiples applied to portfolio investments at the end of the third quarter. In July 2016, DBAG closed the fundraising for DBAG Fund VII with €1bn in commitments, which will significantly increase DBAG’s fee income from FY17. DBAG’s €200m commitment to this new fund provides scope for its investment portfolio to grow significantly over the medium term. These factors support the change in DBAG’s dividend policy to the payment of a stable or rising single annual dividend from FY16. MORE »
On track to meet FY16 guidance
24 May 2016
Deutsche Beteiligungs (DBAG) reported a strong performance in the first half of FY16 with an 11.1% increase in NAV supporting management’s guidance for a c 14% return on NAV for the full year. While macroeconomic conditions are reported to have become more demanding, portfolio companies have diverse exposures to market and economic cycles and the majority continue to budget for higher revenues and earnings in 2016. DBAG invested €21m during the half year including €19m in two new companies and three divestments were agreed. Although it made a negative value contribution, the sale of Clyde Bergemann Power Group has brought DBAG Fund IV to a successful close. MORE »
Disposal adds to strong Q116 performance
16 February 2016
Deutsche Beteiligungs (DBAG) reported a strong performance in the first quarter of FY16 with a 10.6% increase in NAV underpinned by robust earnings and budgets across the carried portfolio. The combined c €10m contribution from the Spheros divestment and a buyout fund realisation roughly balanced the effect of declining market valuations. Investment activity continued at an elevated pace with €21m committed to two new investments. DBAG management has confirmed its FY16 guidance suggesting at least €40m net income, while we note that realised capital gains may provide scope for an increase in the FY16 surplus dividend. MORE »
Continuing high level of investment activity
18 January 2016
Deutsche Beteiligungs (DBAG) reported results ahead of guidance for FY15 with NAV per share increasing 10%, driven by strong valuation gains for the carried portfolio. New investment reached the highest level in 10 years and the pace of investment activity has continued into the current financial year. FY16 is expected to see a significant increase in net income and management projects NAV to grow at more than 10% pa over the next three years. Based on the proposed FY15 total dividend, the shares yield 3.7% and the disposal of Spheros Group provides scope for an increased total dividend in FY16. MORE »
New investments at highest level in 10 years
28 September 2015
Deutsche Beteiligungs (DBAG) achieved its FY15 financial targets during Q315, although recent market volatility and lower market valuation levels have led to full-year guidance being broadened. The high rate of new investment continued in the quarter, adding to medium-term value creation potential. Total new investment of €72m in FY15 has left financial resources at c €55m, which appears an appropriate level to maintain DBAG’s target €50m pa investment rate over the next 12 months. MORE »
Positive momentum continues in Q215
7 July 2015
Deutsche Beteiligungs (DBAG) saw strong valuation gains in Q215, helped by a positive market performance. Even after absorbing a €20m profit-sharing provision triggered by the strong performance of DBAG Fund V, NAV increased by 7.9% in H115, ahead of the 12.3% pa 10-year NAV growth rate. New investments totalling €51m in the half year add potential for value creation in the medium term and DBAG retains sufficient funds to maintain its target €50m pa investment rate over the next 12 months. MORE »
Increased rate of new investment in FY15
25 March 2015
Deutsche Beteiligungs (DBAG) has made a positive start to FY15, reporting a 5.0% increase in NAV in the first quarter and committing a total of €55.9m to five new investments. The portfolio additions are all engineering and industrial service companies, confirming DBAG’s focus on these sectors. The main contributor to earnings was €13.0m in valuation gains, driven by higher 2015 earnings forecasts for portfolio companies. DBAG management’s unchanged FY15 earnings guidance equates to c 9% pa NAV growth and new investments add potential for the medium term. MORE »
Private equity investment and asset management
6 February 2015
Now in its 50th year, Deutsche Beteiligungs (DBAG) is a seasoned private equity investor in mid-sized German companies. In FY14, it reported a 15.8% NAV return and over 10 years has achieved a 12.5% compound annual NAV total return. Following the sale of Homag, DBAG is cash-rich and, after a relatively quiet period, the pace of investment has picked up in the first quarter of FY15. The shares trade at a 26% premium to NAV but, like 3i in the UK, DBAG has developed its third-party asset management activity and, when considering DBAG’s two business segments separately, its valuation does not look demanding (see page 11). MORE »
Homag sale underpins raised guidance
26 September 2014
For the nine months to 31 July 2014, Deutsche Beteiligungs (DBAG) reported a 14.9% NAV total return and management has raised FY14 guidance. DBAG agreed the sale of its entire stake in quoted Homag in July 2014, adding 7.4% to NAV net of costs. Unquoted investments added 6.4% to NAV, primarily due to the revaluation of recent investments. One new investment has been made in the current year and management reports a strong pipeline of potential transactions, suggesting the pace of deals could pick up in due course. The total gain to be realised on the Homag sale provides scope for a substantial surplus dividend to be paid. MORE »
