Every day counts - Deutsche Beteiligungs AG

We build on an established network of contacts
In completing more than 300 transactions over the years in Germany’s mid-market
segment, a unique network of contacts has evolved. Our good relationships to the top
managements of enterprises, M&A consultants, and investment banks warrant access to
lucrative investment offers and potential vendors – to a large degree, outside costly auction
processes. Of the 24 transactions that we completed from 1996 to 2003 in Germany
and Austria, 19 – or almost four fifths – stem from sources that were open to us
preferentially. This network of contacts is one of the pillars of our performance.
Co-investment funds enable larger transactions
Management buyouts in the mid-market segment – or transactions valued from 50
million to 250 million euros – are attractive investments: they constitute more favorable
expense/income ratios than smaller transactions. Investing in larger, established enterprises
generally also reduces the risk exposure.
To operate in this attractive market segment, Deutsche Beteiligungs AG has entered
investments jointly with co-investment funds since its flotation – a strategy that many
comparable Anglo-Saxon private equity firms successfully follow. This gives us access to
the greater part of the private equity market: more than 90 percent of the capital channeled
to private equity investments worldwide is traditionally not invested in quoted
corporations, but rather in closed-end funds.
After Fund III had been completely invested, we launched a new fund in 2002. This
fund’s final closing was held in September 2003. A total of 20 investors – banks, insurance
companies, funds-of-funds investors, and family asset managements in Germany, western
Europe and the United States – committed the sum of 228 million euros. That raises
the total assets under management to more than 651 million euros.
80 percent of the new capital was committed by investors outside the group of shareholders
of Deutsche Beteiligungs AG. Three fourths of the capital came from Germany.
Considering the fact that the total investment sum channeled to buyouts in Germany in
2002 and the first half of 2003 was barely 500 million euros and that Deutsche Beteiligungs
AG addressed external investors for the first time, this fundraising performance
merits recognition for the investment team of Deutsche Beteiligungs AG.
Our shareholders also benefit from the success of our fund-raising activities: firstly,
our co-investment funds allows Deutsche Beteiligungs AG to make investments that it
would not be able to finance alone. Secondly, co-investment funds generate income
from fund management activity, from annual management fees and transaction structuring
fees. The fund business is thus a significant contributor towards covering current
costs at Deutsche Beteiligungs AG. This past financial year, the net amount from other
operating income from these sources less operating expenses and personnel costs
improved by seven million euros. For the mid-term, we plan to cover all current costs of
Deutsche Beteiligungs AG through income from management fees.
Deutsche Beteiligungs AG · Annual Report 2002/2003
Corporate Review – Market and Strategy
Premise 6
For more information on
investment management
expenses see Management’s
Report page 64
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