DBAG's business model, which is geared towards increasing value for its shareholders, rests on two pillars – Private Equity Investments and Fund Investment Services. They are strongly interlinked through the DBAG funds. Because the DBAG funds are at the core of our business model, we refer to it as being integrated.
The Private Equity Investments business segment largely encompasses investments which are held through investment entity subsidiaries. DBAG co-invests via these companies on the same terms, in the same companies and in the same instruments as the DBAG funds. To that end, DBAG has concluded co-investment agreements with the DBAG funds that provide for a fixed investment ratio for the lifetime of a fund. These ratios also apply upon an investment’s disposal. Income is generated from the value appreciation and sale of these investments.
In addition, DBAG uses investment opportunities that exceed the terms of standard private equity funds (Long-Term Investments). DBAG makes these investments from its own resources, i.e. not as a co-investor alongside one of the DBAG funds, which is its usual strategy. The approach also generally opens up the scope for other investment scenarios that are not consistent with the investment strategies pursued by the existing DBAG funds.
The Fund Investment Services business line provides advisory services to DBAG funds. We steer this process with our own resources in tried-and-true workflows, primarily through the investment advisory team.
The advisory services provided to the funds can be split into three material processes:
- First, we identify and assess transaction opportunities (“invest”);
- second, we support the portfolio companies’ development process (“support”),
- before thirdly, we realise the value appreciation (“realise”) upon a portfolio company’s well-timed and well-structured disinvestment.
As is customary in the industry, DBAG receives volume-related fees for these investment services, which constitute a continual and readily forecastable source of income.
Core business objective: Sustainable increase in the Company’s value
The core business objective of Deutsche Beteiligungs AG’s activity remains is: we aim to increase the value of DBAG in the long-term.
This objective is to be achieved by increasing earnings in the two business segments, Private Equity Investments and Fund Investment Services, while taking ESG aspects into account – i.e. environmental and social aspects of our business activities, as well as the principles of good corporate governance. It is consistent with the long-term nature of our business that we take responsibility for the impact that our decisions have on others, both now and in the future.
We measure and manage value appreciation using one financial indicator for each of the two business segments. When it comes to achieving a sustainable increase in DBAG’s value, ESG aspects will be given even greater attention. Starting in the 2022/2023 financial year, they are reflected in our target system via the three non-financial indicators:
- Reduce or avoid greenhouse gas emissions
- Improve employee satisfaction
- Prevent compliance breaches