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Net asset value rises significantly, reflecting good capital markets developments

Net asset value rises significantly, reflecting good capital markets developments

  • Marked increase in net income from Fund Investment Services
  • Forecast raised
  • Board of Management examines options for debt and equity financing

Frankfurt/Main, 6 August 2020 – The net asset value of Deutsche Beteiligungs AG’s Private Equity Investments amounted to 405.1 million euros at the end of the third quarter 2019/2020 (30 June 2020) – up 46.1 million euros compared to the previous quarter. This improvement was predominantly attributable to exceptionally volatile capital market developments, caused by the COVID-19 pandemic: valuations of listed peer-group companies – which DBAG needs to use to value its investments – have markedly increased again over recent months. The Fund Investment Services segment achieved a result of 6.6 million euros before taxes, up from 1.6 million euros for the same period of the previous year. Earnings before taxes in the Private Equity Investments segment amounted to
-31.2 million euros for the first nine months of the financial year (9m 2018/2019: 11.0 million euros). Given the negative balance of net gains and losses on measurement and derecognition, as reported in advance, DBAG posted a net loss of 24.6 million for the first three quarters of the 2019/2020 financial year (9m 2018/2019: net income of 12.6 million euros).

Whilst DBAG anticipates positive net gains and losses on measurement and derecognition for the current fourth quarter of the 2019/2020 financial year, assuming stable conditions on the capital markets, this will not be sufficient to fully recoup the setback caused by the pandemic. Net asset value as at 30 September 2020 is expected to be in a range between 400 and 425 million euros, thus around nine per cent below the figure as at 30 September 2019 (adjusted for distributions). According to the Company’s most recent forecast, net income from Fund Investment Services will be significantly higher than in the previous year, between 8.0 and 9.0 million euros. Following the start of the investment period for the DBAG Fund VIII at the beginning of August, additional income from Fund Investment Services will contribute to this. Based on the quarterly results, DBAG now expects net income for the 2019/2020 financial year in a range between -25 and -5 million euros.

The portfolio of the listed private equity company comprises investments in 28 enterprises. In particular, investments in the industrial sector – which had already experienced weaker growth prior to the pandemic – have been hit by an even more significant drop in demand, with corresponding effects upon their earnings and debt situation. Likewise, companies offering consumer-related products and services were also negatively affected over recent months. The impact on companies in the IT services, software and broadband telecommunications sectors is still comparatively minor, if the crisis has affected them at all. “The pandemic continues to dominate our day-to-day business”, DBAG said in its quarterly statement published today – in which it also points towards a partial revival of the M&A market and the associated ongoing portfolio development. Specifically, four portfolio companies have expanded their product range or regional market presence through a total of nine acquisitions since the beginning of the year.

“In view of economic developments, we envisage rising demand for our products – equity capital for investment in mid-sized companies – over the coming months”, said Torsten Grede, Spokesman of DBAG’s Board of Management, today. He added: “To this end, we have also expanded our staff base during recent months, having grown our investment team.” DBAG will also invest with the recently closed DBAG Fund VIII going forward, having extended co-investment commitments of 255 million euros for this fund with an aggregate volume of 1.1 billion euros. “Looking at these co-investment commitments and further financing requirements from long-term equity investments, we are currently exploring various options for debt and equity financing”, DBAG’s CFO Susanne Zeidler said today.