Deutsche Beteiligungs AG Stock

Yes. Hello, and a warm welcome on our side. Jumping straight into what was already an active start to the year. Obviously, there's a lot of volatility out there, and we'll come to that later. But despite all the fog and mist, we were able to sell Kraft & Bauer, a company which we have accompanied for 7 years. The company has transitioned from being mainly a supplier to the automotive industry to become mainly a supplier to the medtech company.

And one thing leads to another. Mr. Bauer from Kraft & Bauer was one of the very close friends over time from Markus Hipp of Hipp Technology. And so he introduced us to Markus Hipp, and that led to a very nice investment in the medtech space. We feel very comfortable. The investment is off to a flying start, and this just shows how it pays off to be a good citizen to have a good reputation and to have a long-standing brand.

Because here, there were more than 50 private equity companies trying to get into submitting even a bid for Hipp, but we were able to close it on a very -- on a basis of mutual trust with Hipp by not paying the highest price even there. So very, very pleasant development there. Overall, over the last 8 months, it has been really, really active with 7 transactions.

There are 4 acquisitions and 3 exits. And I must say, together with Hipp and Mait, we deployed more than EUR 500 million of enterprise value in bilateral transactions that is really a testimonial in times of high volatility that people trust to go bilateral with us, and it's also testimonial how strong our brand resonates in the market, which is proving quite difficult.

We are also very happy that some of our larger disposals next to Kraft & Bauer, signing and closing took place on the same date. Our transaction with duagon has closed in the beginning of January. And thus, we are now in a very comfortable liquidity position and are able to take advantage of the volatility we're going to see.

We have confirmed our guidance despite what I would call quite a weak quarter, but it's early days and mainly the quarter was impacted by the volatility we've seen on the stock market and especially for us, given the way we mark our companies, the 13th of March was obviously a less than ideal cutoff date. So all in all, we restate our guidance. We have been able to sell one company and hopefully more to come along the way.

Coming to key highlights. Nothing special to report there. NAV mainly stable. Fund Investment Service, we have been able to come in nearly where we want to be. It's impacted by -- temporary by placement agent fee cost for the Continuation Fund of Solvares. But otherwise, the Continuation Fund of Solvares also helps us to keep the Fund Investment Service profitability high despite a delayed Fund IX, which we deemed on the back of some more exits to come. There could be a chance that we would start going in the market later this year with Fund IX. Group income is negative EUR 20 million or minus EUR 1 per share. As I said, that's mostly driven by the fluctuations in peer group.

Coming over next slide, you see that with Mait being closed and Solvares Continuation Fund doubling up, our IT software and service base has grown to 30%, that's obviously raising these days some questions. Rest assured, we have been sort of going through our portfolio, and we see very substantial growth. And as of now, so speaking of April numbers, that's the latest figures I have for my portfolio companies.

Mait, Akquinet, Solvares and Freiheit who are in that bracket, all trade comfortably above their budgets. So it obviously depends also on the multiple you get, but we see that AI for our companies right now is more a driver of growth than a destroyer of wealth. Otherwise, you see that our concentration in the top 5 is quite high with 37%, but we have higher than CPL marked for exit. Itelyum is obviously profiting also from the significant increase in oil prices given that they are in the business of upgrading used cooking oil. So it's no wonder it's showing up as a top 5 portfolio company. Otherwise, we continue to run a very diversified portfolio.

Kraft & Bauer, as I said, a very nice transaction. This was marked at around 1.2x 12 months ago. We were able to get roughly 2x depending also on a small earn-out, which we will get -- hopefully get by the end of the year. So there might be some -- a bit more upside depending on how Kraft & Bauer continues to trade. It was also -- what was very nice is that we were able to do that together with the Grohe family. This has helped us to establish links to what is viewed as a very entrepreneurial family. And we are also looking at one smaller acquisition together, given that there's a mutual trust between the 2 organizations.

Moving over to Hipp. As I said, we have been able to preempt the process. We bought out the secondary transaction, but we bought out basically a family office who entered Hipp some years ago when he -- Markus Hipp was in need of some more money for his capacity expansion. These were mainly individual family investors from Switzerland. And given that they did a good deal and they were not willing to significantly invest going forward, but wanted to derisk more of their investment.

We stepped in after we have been introduced by Klaus Bauer, as I said, and we're able to preempt a structured sales process where the bank, which was mandated got inquiries of more than 50 interested parties just to give you -- show you how crowded the field can be. Otherwise, the investment is off to a flying start, trading very strongly, and I hope that we will be able to keep up the good news going forward.

It's worth noting that it's not only in the medical space, but also 15% to 20% is defense and robotics, which are also 2 very nice growth sectors. And depending on the path going forward, this gives us optionality for this investment. NAV per share, nothing special there. Our net income -- negative net income was a bit helped by our continued buyback -- mitigated by our continued buyback. Nevertheless, it's obviously not what we strive to be. We have extended our buyback program so as to make sure that we fully deploy the money we said we would deploy. And it goes without saying that with a persistent high discount to NAV, this is one of the more attractive ways to invest money, but also to reward our shareholders.

On the next slide, you see that our portfolio has come down a bit, mainly because of disposals and then also the change in value has driven that a bit lower. The disposals are obviously reflected on the other side by the cash income.

On Page 11, you see that pretty much 90% -- 99% of our income is due to multiple and valuation changes as we've seen -- as I said before, on the page with our sector exposure with now 30% -- nearly 30% in IT software and services. Obviously, with [indiscernible] being out there, there was -- this was obviously not very helpful given how this traded in the first quarter. Nevertheless, we've seen quite a nice jump back since late March, which was cutoff date.

It was -- maybe it's also worth mentioning here a few words on private credit. We roughly have EUR 75 million invested in private credit, which is performing very, very nicely. No software exposure there, very persistent growth in the underlying portfolio companies and our lines of credit have also been significantly derisked since the start of the year. So we think that we will get redeemed on par with every single investment, and then these will be very, very nice investments, I must say. I'm pretty happy about that.

Coming over to Fund Investment Services. As I said, we would have been able to pretty much hold our earnings base, save for the placement agent fees was about Continuation Fund. This is quite an achievement given that probably Fund IX is running now 2 years late from what we had expected 2 years ago.

On Page 13, you see our increased financial capabilities. Obviously, velocity helps. And so we are also -- this will come down a bit with the dividend going forward, continued share buyback and also the deployment of Hipp. Nevertheless, we still have very strong capital base. We plan some exits and I try to keep the velocity which we have increased in our portfolio, I try to keep that high so as to turn out also consequentially companies which are no longer compounding in a positive way, free up capital and deploy it into much more interesting companies like, for example, Hipp.

On the next slide, nothing exciting there. We continue to reiterate our guidance and outlook despite obviously, what I would still say as a miss in the first quarter -- or first quarter coming in below our expectations. We feel comfortable with our guidance as of now.

That would conclude my conference call. As I said, quite a weak quarter, mainly, I don't want to use the stock market as an excuse, but I think it's fair to say that here, 99% of our earnings, which is driven by the cutoff date, which was less than ideal for this quarter. We reiterate our guidance, and we work quite diligently to keep the investment and also divestment activity quite high to rotate our portfolio consequentially to where also growth will happen in Germany even in such a subdued environment there.

Thanks, and goodbye.

Hi. Good morning, and welcome to our annual results conference call. I'm here sitting with Brigitte, and we are happy to share our latest results with you. We have met our latest guidance, but I'll come to that later, yes.

So key highlights this year was obviously the acquisition of Totalmobile by our portfolio company, Solvares. We're highlighting it here not because we are singling it out as a transaction, but the transaction itself allows us to double the size of the Solvares Continuation Fund and thus double fee income to now a really, really meaningful position here. So that's a very beautiful transaction where we -- and it's ideally also a blueprint for some other structurally growing transactions given that the economics are quite attractive for the shareholders.

We have continued our very -- despite our subdued results, we have continued our friendly shareholder policy. Indeed, with -- on a group net income of EUR 24.7 million, we distributed EUR 36 million to shareholders via a mix of dividends, a steady dividend and share buybacks.

It was an incredibly busy year on the investment front. I think with EUR 149 million invested, it is one of the most active years of DBAG ever. It was split roughly 2/3 between private equity and 1/3 private debt investments. And we continue to see a promising outlook for this year. Our guidance is on the cautious side, and a lot will depend -- we can move over to the next slide. A lot will depend on the outcome of some sales process we are currently launching.

On Page 6, you see our portfolio. And I would highlight here that on the top 5 position, you know that I want to have a granular portfolio, no big risks inside. The concentration looks high on the top 5 position with 38%. But duagon alone, where the transaction has only closed in January and also the cash has only received in January, is 12.2% out of this. Taking that out of the equation would significantly alter that.

And if you are reading the German, [indiscernible], you know that we will follow up, hopefully, the sale of duagon with potentially the sale of freiheit, where we are in the market, von Poll and also Green Datahub, which are all among the top 10 positions.

Our diversification by sectors, and I said that already in the last conference call, we have hit peak IT service and software exposure, give or take, 5%, but we're pretty much there. And with all what's happening out there, we are mindful there. We also saw that -- and I alluded that with the transaction we have made in the last conference call, our sector exposure was achieved basically. Where we are concentrating right now is we're actively looking a bit more to add more on the health care space and are following up on some opportunities there.

I will also -- I'm happy to report that we will report later today a small sale -- a successful sale of another portfolio company. You will hear more about that during the course of this day.

Key transaction highlights 2025. Obviously, if I want to single out the largest items, the transformational add-on we did with acquiring JUMPtec from Kontron, a transaction which was a win-win for both sides. And it's a transaction which also continues to please us very, very much. We are super happy about the transaction. And also, we are reaping some significant synergies north of EUR 10 million EBITA for both companies, and they are coming in quite nicely, which is not always the case, if I may say so, yes.

On the LTI program, we did a high-profile transaction with the acquisition of minority acquisition of stake in FinMatch. And obviously, on the buyout segment, the large transaction of MAIT, which we acquired in the bilateral situation with 3i over summer before any process began was a very strong highlight for us and also a transaction given the sheer size of it, which was very well noted and [ recepted ] in the market.

Obviously, the biggest item of the year was the sale of duagon to Knorr-Bremse, and that will -- I will come to that later, also significantly change our net liquidity position. Combined with the sale, which will hopefully happen today, we are in a more than comfortable position right now.

If I come to the next slide, that's just a bridge in terms of how we see our net asset value development per share would have developed if we add back the dividend and the buybacks. You see that we continue to be very, very generous with our shareholders. But the way Jannick and myself, we see it is that the first 5% return on NAV should go to the shareholders anyway. And that's what we're continuing to do. So even if the results are not up to our standards, but we hope that this is only a transitionary year. And I don't see any reason why we should change that for now.

Going forward, we will also -- given that it's more stringent, we will probably change the KPI -- will not probably the KPI has been changed to NAV per share. as a guidance because NAV as such, is always impacted by buybacks and we would be in a position where we would need to go talk if we have not planned a larger buyback that we would miss our gross NAV metric because we do a large buyback. And so that we think that for shareholders, NAV per share matters much more than gross NAV.

In terms of gross portfolio, you see that our portfolio has increased quite a lot given the frenzied investment pace. As I said, roughly 2/3 in private equity, 1/3 in private debt. Disposals was only a minor part, again, because duagon only closed in January and is not in these figures here.

With that, I would move over to the next slide. There you see that our change in earnings is driven negatively by the change in net debt of our portfolio companies. One of the largest items in here is also the acquisition of JUMPtec, which we were able to do barely without any additional equity. As a matter of fact, we didn't use any equity last year. So -- and we think that's a very, very accretive acquisition. So it's not because the company's situation is deteriorating. Quite the contrary. It's because we used debt available for add-ons in congatec mostly, but also Avrio and operasan to a lesser extent.

Multiples and valuation change was a big driver. But here also, I know that this is the least comfortable number for you in terms of earnings quality, but the multiple change was mainly driven because we were able to earn a significant multiple uplift on duagon. And hence, that definitely changed the nature and quality of the earnings on that KPI.

Moving over to the next slide. We were able to come in better than expected on our income from fund services, and also on the cost base was controlled. The main reason I must say so is that we are a bit behind in terms of exits and realizations because sometimes we are below -- past the investment period and any disposals will lower the management fee base.

So -- and that's why we are guiding this metric quite cautiously this year because we plan to do some significant exits, and that would have a negative effect on these earnings, but obviously, hopefully show up as earnings and also liquidity on the balance sheet.

As I said on the next slide, we have and continue to have a very good financial basis. The situation on December 31 is actually the very low point given that, again, the transaction in duagon closed only in January. And right now, also with the transaction closing, that will have significantly improved. On the other hand, the beauty of it is that we are or were until December 31, fully invested, and that should bode well for NAV accretion going forward.

With that, we come to our guidance going forward. As I said, this is the last time we will guide net asset value. It's just here for comparison purposes. Going forward, we will go to NAV per share. We aim to come in at between EUR 35 to EUR 38. I will not withhold that over the last couple of years. Our earnings guidance came in on the lower end. And personally, I was also disappointed by the lack of traction in the earnings guide. So I think this guidance is done with a pinch of caution so as to at least come in at the higher end of the guidance or maybe even have a chance to exceed it.

But it's still very early days. And you also have to keep in mind, we have 24% software allocation, which obviously, on a look-through basis, at least February didn't look too good. But we are -- this guidance was done with that already factored in. And so we still -- despite the situation currently out there in the market, we feel comfortable with that guidance. But it's still early days.

Going forward on the next slide, you see also our guidance for 2028, which has also been taken down a bit. But we think that the guidance, which is quite achievable. And pardon, I was misguided before because I thought that the EUR 35 to EUR 38 were our guidance for this year, my mistake. So obviously, our guidance is EUR 36 to EUR 40 per share this year.

You will have also noticed that we have extended our old share buyback because we still had some leeway under our former program. And obviously, we want to -- the money which we tell our investors, which we want to spend and give them back, we just intend to give it back to them, yes. In the name of Brigitte and myself, thank you, and we will conclude this call. Goodbye, and have a nice day.

Very warm welcome also from our side. Actually, today, I'm joined not only by Matthias Doll, whom you know quite well, but also by Brigitte Friedrich-Haack. Brigitte is new on the Board. She's Chief of Staff to our Executive Board and also will take over shareholder relations from Matthias going on forward. Do you want to say hello, Brigitte?

Hi, everyone. Looking forward to work with you.

Jumping straight away to Page 3. We are happy to provide quite an eventful quarter in terms of realizations and also deals. Obviously, the sale of duagon is a significant highlight for us given the importance for the portfolio and also the valuation uplift we achieved. I'll come to that with a bit more granularity later.

And the other big news is another highly attractive or at least we deem it a very high attractive investment in the IT service space, which it might. We've been early on, and we've been able to do that on a strictly bilateral basis, working relentlessly through August. And so we were able to buy this asset before any process could have started, which is also a great testimonial in terms of how aggressive this team can move forward in an environment which is still characterized by a lot of fights for trophy assets, and this undoubtedly is a trophy asset.

So overall, we invested EUR 148 million in private equity and private debt over the last 9 months. That's an unusually high amount. And we are pleased to say that we see, at least in terms of deal pipeline and still looking at bilateral situations, and that's also where we focus on. We see that the deal flow is not abating, and we see that people want to engage with us in bilateral situations, a bit more complex situations. And so we are still able to pick and choose in the market, which is a bit frozen for most of our -- especially external competitors who have flocked into Germany over the last couple of years.

I am still ardently focused on also keeping distributions to our shareholders quite high. And so with the dividend and our continued pace of buybacks, especially in the light of what we at least deem an attractive share price level, we continue to distribute nearly EUR 1.8 so far this year to our shareholders, which is basically nearly all of our profits.

We explicitly reiterate our guidance. And on Page 4, you will see how that translates into numbers. Obviously, on the NAV per share has not moved a lot, but that's also marked by -- that's also marked -- impacted by our distributions in the magnitude of EUR 1.8 per share to our shareholders. Same holds true for the NAV in the absolute amount, which actually has come down given that EUR 33 million has left the company and which is about what we have been earning so far.

In terms of fund management service, we are on track, I think, to at least achieve our guidance and the guidance in that space looks conservative right now. We come to that later also with Solvares, where we have some news in that regard impacting our fund investment services space.

The group net income is a bit on the low end until now. Still, we are also here reiterating our guidance and expect quite an eventful Q4, I must say an air of caution or pinch of salt is needed because maybe one or another transaction might slip into Q1 next year. So it's difficult at this point in time to really have more visibility in that space here. But overall, I think in terms of what we want to achieve in terms of disposals and valuations uplift, we're quite confident that we will achieve our program over a 3-year period.

On Page 5, nothing excited here. You will see that we keep a very granular portfolio. And although the top 5, the concentration has increased, the increase is mostly driven by the uplift of the duagon valuation where duagon, we expect the transaction to close in Q4.

Coming over to MAIT. MAIT is another IT service company, a space we do quite well given our history of Cloudflight, the successful investment of Cloudflight, akquinet, but also now here. We signed the transaction in August. We bought it from 3i, a listed private equity investor. And with that, our IT service sector is now 20% of our portfolio.

MAIT is a top 10 German company. It has 25 locations, given that it is the result of an extensive buy-and-build strategy, which we want to pursue. And it has 900 employees in the DACH region. You see also the great stickiness of the customers is underlined by the fact that more than 60% of the customers have been with MAIT for over a decade. And that's really something we really liked together with still growing our underlying market trends. That was a key attraction point for us.

So we are in the process, and we are already in the midst of launching further add-on acquisitions. I think the company will do 1 to 2 more add-on acquisitions before the year closes. The transaction, MAIT is about to close for us in the next week. So -- but we have full access to management already because -- granted. And so we are already working very, very closely with the management team, which is also very significantly reinvested.

In terms of top line growth, we expect the company to grow on an organic basis in the high single-digit to low double-digit range going forward, at least until 2030.

Moving over to the next case study, our sale of duagon to Knorr-Bremse. We signed the transaction in September, as I said. Closing is expected for December this year. We achieved a money multiple north of 2.5x. You could also say a bit below 3x. But yes, very, very happy result. And also here, the valuation uplift was 100% on a year-on-year basis. So during a 12-month period, quite a very significant amount, and it shows what we always thought would be a very strategic asset. We also were able to sell it at a very strategic price.

It's -- for you, it's quite helpful to notice that when we bought duagon, duagon itself was a company with below EUR 30 million EBITDA in revenue. And so through quite a significant amount of add-on acquisitions, we were able to significantly strengthen the strategic profile of duagon and making it a must-have asset for Knorr-Bremse or Wabtec from the U.S.A. and also some other strategics were quite keen. So it was not the most complicated asset to sell, I must say. Very pleasant development here.

Coming over, that's out of the press, and we are going to announce it next week officially, but the transaction is signed. You may remember that we put one of our star asset, Solvares, into a Continuation Fund. And with that Continuation Fund, together with our -- the lead investor in the Continuation Fund, Five Arrows Principal Investments, we were able to acquire Totalmobile in the U.K., combining the 2 assets.

And just to give you an idea, the Totalmobile transaction is a transaction north of EUR 500 million enterprise value. So there's 2 things I would like to stress here. On the one hand, we have been able to do a very significant add-on, which will also increase the size of the Continuation Fund because we will raise new money for the Continuation Fund. The money is already underwritten. That, in turn, will increase the fees by, I would say, EUR 1.5 million roughly management fees per year for the Continuation Fund.

And the other thing is we have been able by swimming the exposure, we have -- we are not running into a concentration risk for DBAG, but still increase the amount of fees flowing to DBAG. So all in all, this is an asset which continues to make us very, very happy where we are also happy that we did the Continuation Fund because obviously, it increases the fee volume we're getting on the one hand, but also it helps us to keep winners for longer. And so that's why we think that this asset and also the transaction is really why Continuation Funds make tremendous sense at least from a sponsor perspective.

Moving over to the next page. You see the bridge in terms of our NAV per share, which is obviously heavily impacted by the dividend and buybacks program and negatively impacted by the valuation change. On that note, it is worth mentioning that -- and obviously, it's not something we highlight very highly, but it's actually quite a positive event. The sale of duagon has put the Fund VII firmly into carried interest territory. And the way we booked it now is that 80% -- there's a catch-up phase because the preferred return for our investors is earned. And when the fund is into carry, it's probably a very successful fund and thus also lays the basis for further fundraising.

But nevertheless, at some point, we also had to book the carried interest reservations. And given that the fund with this exit is into a catch-up phase, 80% of the proceeds go for now to the team and not to DBAG. It's -- for the time being, it's not a cash payout. The cash payout for duagon will be quite significant to DBAG in the order of nearly EUR 80 million, but it's more an accounting provision we are taking here. And with that, I think we have taken a cautious stance in terms of carry provisioning. But it somehow puts -- yes, it bends the uplift of the very successful duagon sale.

Moving over to the next slide. You see the portfolio development in terms of the change in value. You see that obviously, earnings have been a very positive development. Nevertheless, given also extensive buy-and-build acquisitions, especially with congatec and Avrio, the change in debt is also quite significant. And the operating performance on a whole is still challenging, I would say, for a large part of the portfolio. And then what saves us was the multiples and valuation changes.

Here, it's worth noting that normally, that's the worst kind of change in value because, obviously, you don't want to -- you want to have nice operating performance and low multiple and valuation changes. But here, most of the valuation changes is actually driven by the uplift of the duagon sale. So it's -- for once, it's mostly also it will turn into cash change, this multiple valuation change by Q4.

With that, I would move over to the EBITDA from Fund Investment service where nothing exciting is happening. We are firmly on track, as I said, to reach our guidance. And obviously, also once the Solvares Conti Fund will close with the new upsized facility that will help further.

On Page 13, you will see that our capital commitments have come down quite significantly given our -- capital commitments have come down quite significantly given our frenzied investment pace, but so have our financial resources and also our dry powder, but these are communicating basis.

Overall, we are ahead in terms of deploying money, and these figures will significantly change once the duagon transaction closes, as I said, adding up some EUR 80 million in cash going forward. And duagon, hopefully, will not be the last exit -- could be the last exit for this year. Let's see. But we are still in a very -- we have a very mature portfolio, and we're still in a harvesting mode. So I would say stay tuned for some more exits down the road from here on.

So moving over to our last slide. We firmly reiterate our guidance. The NAV per share is definitely reiterated where we might see some issues is the net asset value on a gross basis because if we don't see a further valuation uplift and we continue our frenzy pace of share buybacks, obviously, that could come in at the low end of the range here. But I think as investors, you should be more focused on the NAV per share, where obviously our share buybacks significantly below NAV are highly accretive here.

And also that going forward, we will no longer guide the gross or net asset value on a total amount, but our key KPI will be the NAV per share as a KPI and performance bonus for the management team going forward from here on, starting with next year.

Yes, thanks. I want to close with what was a very frantic quarter. I can assure you that the team is over busy -- more busy than normal, but I cannot promise anything for the year-end. We may see some slippage in Q1. So -- but nevertheless, we are in a very good -- we feel that we are in a very good spot to continue to produce meaningful events for our shareholders.

Thanks.