Frankfurt am Main, 21 May 2019. „"A hands-on view of private equity" – an opportunity for investors and analysts at Deutsche Beteiligungs AG’s first Capital Markets Day last Monday, in Frankfurt/Main. The three members of DBAG's Board of Management – Torsten Grede, Susanne Zeidler and Dr Rolf Scheffels – offered detailed insights into DBAG's investment process, investment strategy, and the resulting impact on the Company's capital market valuation. Practical examples were presented by managing directors of portfolio companies duagon, Gienanth and BTV Multimedia who joined Jannick Hunecke, Tom Alzin and Ragnar Geerdts from DBAG's investment team to showcase the companies and their development.
Torsten Grede: further development of investment strategy
Torsten Grede, Spokesman of DBAG's Board of Management, outlined the current challenges arising from a demanding market environment, combined with rising price expectations for transactions involving SMEs. He portrayed the strategic decisions DBAG has taken over recent years, alongside the continuous strengthening of internal processes and DBAG's team, as the foundation for future success: "If we want to keep our shareholders and investors satisfied, we must find an answer to the demanding valuation levels in the way we manage our investments", Grede said, adding: "Our objective must be to make portfolio companies so attractive, unique and indispensable that buyers are prepared to pay a strategic premium." Grede pointed out that all this needs to happen faster than in the past: "In a nutshell, private equity companies need to do the same as their portfolio companies – accept challenges and embrace change processes."
Dr Rolf Scheffels: support for portfolio companies
Taking the ProXES investment (sold in 2017) as an example, Dr Rolf Scheffels outlined how DBAG supports the strategic repositioning of its portfolio companies, explaining the levers for development and how exactly this potential can be realised: "In an ideal situation, we have multiple valuation levers in order to promote a company. But what this also requires is that we identify, prior to entering into an investment, what we want to achieve and what it takes to get there." He said that further acquisitions by portfolio companies are a proven method for significantly accelerating geographical market penetration, and for expanding the range of products and services offered. Concluding his comments, Dr Scheffels presented the successful track record of 31 completed management buyouts, where DBAG achieved an average multiple of 2.8 times invested capital in the past.
Susanne Zeidler: thoughts on DBAG's valuation multiples
DBAG keeps developing and fine-tuning its investment strategy – but what does that mean for the Company's own valuation on the capital markets? This was the topic of Susanne Zeidler's presentation, where she outlined the methodology and drivers of portfolio valuation, as well the outlook for DBAG’s share price.
Capital Markets Day meets with positive response
Analysts reacted positively to DBAG's first Capital Markets Day and the strategic insights it provided. Despite gloomy economic expectations, Eggert Kuls of Warburg Research sees "great opportunities for the coming years" in his recently published study and sticks to his "buy" recommendation. The analysts of Edison Research also emphasize the long-term perspective of the DBAG share in their study on the occasion of the Capital Markets Day.
A replay of the presentations of the three Members of DBAG's Board of Management is available at the following link: https://webcasts.eqs.com/dbag20190520 (only in German).