DBAG initiates another private equity fund

Jonathan Boyd
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DBAG initiates another private equity fund

Deutsche Beteiligungs, (DBAG) the listed private equity company, has initiated another private equity fund with commitments of more than €1bn.

The DBAG Fund VIII follows the VII fund, which closed in 2016. DBAG itself will co-invest some €225m, an increase of 25% compared with the co-investment in the VII fund.

Assets under management and advisory by DBAG Group amount to €1.7bn, but with the new DBAG Fund VIII, the figure is set to rise to around €2.5bn. Net income at DBAG in the 2018/19 year was €45.9m, up from €29.7m the previous year. It said the results were driven by the focus on sectors including broadband telecoms, IT services/software and healthcare.

The target level of the VIII fund is €1.1bn, including co-investments made by DBAG. The fund is expecteed to be completed by early 2020. It will focus investments in the size range €40-100m.

Consisting of two sub-funds, the main fund targets a volume of €900m, including €210m of co-investments by DBAG. A "top-up fund" will target volume of €200m, including €45m co-invested. DBAG states this will facilitate larger transactions, including investments of up to €220m per transaction.

The fund launch co-incides with the decisoin to focus the manager's activities on long-term minority stakes in owner-managed mid-market businesses.

Torsten Grede, spokesman of the Board of Management at DBAG, said: "It became evident during the financial year under review just how attractive such non-controlling shareholdings in family-owned enterprises can be, with the successful sales of Novopress and inexio. When presenting the consolidated financial statements 2018/2019...these two disposals account for more than half of net gains and losses on measurement and derecognition 2018/2019."

DBAG's previous strategy, initiated in 2013, saw it start to shift away from traditional core sectors including mechanical and plant engineering, automotive suppliers, industrial services and industrial components. But with a recession in the German industrial sector, there has been a weakening in the operating performance of some portfolio companies.

DBAG's group return on equity has averaged 11.5% over the past decade, the company states.

Susanne Zeidler, DBAG's chief financial officer, added: "Tanks to larger co-investments, net asset value will rise strongly over the medium term, whilst net income from Fund Investment Services will already show a marked increase in the new financial year. In this way, we will see strong momentum to increase DBAG's company value - our core objective."

Still, in the short term, the business is cautious in its outlook for 2019/2020.

Grede said of the board of management: "They feel the uncertainty - especially from structural changes in the automotive industry, but also from international trade conflicts."

 

Key financial indicators (IFRS)

2018/2019

2017/2018

Segment result - Private Equity Investments

€42.1 million

€24.2 million

Net asset value

€472.1 million

€470.7 million

Segment result - Fund Investment Services

€3.0 million

€5.6 million

Net income

€45.9 million

€29.7 million

Return on equity per share

9.1 %

6.9 %

Dividend per share (2018/2019 proposal)

€1.50

€1.45

 

 

 

Jonathan Boyd
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Jonathan Boyd

Editorial Director of Open Door Media Publishing Ltd, and Editor of InvestmentEurope.