- Investment in international technology company for embedded computing products
- Founder shareholders sell a stake to DBAG Fund VIII
- Strong growth expected through diversified customer based and further internationalisation
- Second MBO of DBAG Fund VIII
Frankfurt/Main, 24 August 2020 – Deutsche Beteiligungs AG (DBAG) is investing in congatec Holding AG (congatec), a leading provider of computer modules for industrial applications. Within the scope of a management buyout (MBO), DBAG-advised DBAG Fund VIII will acquire a majority stake from the company’s founding shareholders. DBAG itself will co-invest around 23 million euros alongside the fund, which means that it will hold around 20 per cent of the shares in the company. congatec’s management team will also acquire a stake in the business. Consummation of the purchase agreement is subject to approval by the competent antitrust authorities; closing is expected in the fourth quarter of 2020. The parties have agreed not to disclose the terms of the sale.
The MBO of congatec Holding AG is the second investment of DBAG Fund VIII, which invests in mid-sized companies, predominantly in German-speaking countries. The fund’s investment period commenced on 1 August 2020; DBAG structured the fund’s first transaction in the middle of the month, which was the MBO of Multimon AG.
Global market leader in computer-on-modules
congatec Holding AG (www.congatec.com), based in Deggendorf, Bavaria, is a rapidly growing technology company focusing on high-performance embedded computing products, so-called computer-on-modules (CoMs) and industrial single-board computers (SBCs). congatec focuses on CoM hardware design, which accounts for approximately 80 per cent of revenues. CoMs are deployed for specific applications within a larger system – for example, in industrial robots, image processing, or ultrasonic devices. Typically, CoMs must fulfil special requirements such as a high level of reliability and longevity (even under adverse conditions), real time processing, zero error tolerance, or small unit size. CoMs are not complete computing units in their own right – they comprise a processor, memory and the processor’s periphery, and are optimised for specific applications. CoMs are a key prerequisite for ongoing digitalisation – for example, because they facilitate connecting physical and virtual objects, letting them interact through information and communication technology. Applications in the field of artificial intelligence also require CoMs.
Established in 2004, congatec is the global market leader in the computer-on-modules segment. The company has a wide-ranging customer base, from start-ups to international blue-chip enterprises. congatec has branches in the US, Taiwan, China, Japan and Australia, as well as in the United Kingdom, France and the Czech Republic. The company generated revenues of 126 million US dollars in 2019, with 270 employees. Revenues are spread across a wide range of applications: thanks to this, the company has hardly been affected by the COVID-19 pandemic so far.
Growth through internationalisation and new processor types
Two-thirds of congatec’s customers are located in the European Economic Area; the revenue share of customers in the US and in Asia is growing – and is set to accelerate over the years to come. Besides a higher degree of internationalisation, expansion of the product range to include CoMs for new processor types should also drive the company’s growth. A key factor for this development is rapidly growing demand for higher-performing computing solutions: examples include edge applications with CoMs delivering real-time computations in a decentralised network (as opposed to in the cloud). In addition, with the RTS Hypervisor, congatec provides an innovative software solution that can set new standards in terms of real-time performance – both as a stand-alone software solution and in connection with CoMs produced by congatec.
“We expect persistent strong growth in digitalisation”, said Dr Rolf Scheffels, member of DBAG’s Board of Management, to mark today’s signing of the contract. He added: “The pandemic has provided another strong push for the Internet of Things and the concept of ‘Industry 4.0’ – this will add momentum to demand for the requisite computer components.” Having looked at embedded electronics companies in depth over recent years, DBAG already invested in a similar business model, with its stake in duagon Holding AG. “This experience has now paid off for assessing this investment opportunity”, Dr Scheffels stated.
Jason Carlson, CEO of congatec, highlighted the manifold market potential: “With DBAG, we have found a partner for our company’s further development who is deeply familiar with our customers’ key target markets, and who brings financing competence and M&A expertise to the table. In company with DBAG and the DBAG Fund VIII, we are well-positioned to exploit the market opportunities.”