Dialogue with investors

DBAG uses such conferences as opportunities to exchange views and opinions with investors on current macroeconomic developments and their impact on the performance of DBAG’s portfolio.

Investor conferences have always been a very welcome part of the annual round for Deutsche Beteiligungs AG: late summer this year provided two ideal opportunities for much-missed personal interaction. And given the current challenges, there was certainly no lack of topics to discuss. DBAG was pleased to answer questions from existing as well as potential investors at the SRC Forum Financials & Real Estate in Frankfurt/Main (13 September 2022) and the Baader Investment Conference in Munich (19 to 23 September 2022). As expected, participants were eager for information. In particular, investors were looking for input on matters such as the potential impact of inflation, interest rate hikes, supply chain issues, and the energy crisis upon DBAG’s investments and related valuation issues.

But they also asked fundamental questions regarding market developments and market positioning. DBAG seized the opportunity to showcase its leading position in the German market and its strong reputation for solutions concerning the succession issues that often preoccupy family-owned businesses.

Macro effects and potential risk factors
Torsten Grede, Spokesman of the Board of Management, drew participants’ attention to the fact that the war in Ukraine has little direct effect upon DBAG’s portfolio. He explained that revenues of investments which maintained trade relationships with Russia, Belarus or Ukraine prior to the war account for less than one per cent of aggregate revenues of all the portfolio companies. Overall, investments affected by the war only accounted for seven per cent of DBAG’s total portfolio value as at 30 June 2022. Mr Grede expressed his view that the potential risks posed by soaring energy prices upon performance are in fact manageable (for details, please refer to the article “Very few DBAG investments severely affected by the energy crisis”).

In his opinion, supply chain issues present a much stronger challenge to businesses: some companies are unable to process mounting order backlogs due to missing production components. In some cases, customers are actually refusing to take delivery because they themselves lack key parts required for downstream processing – as a result of which production is being run down. Referring to industrial companies (which accounted for 31 per cent of portfolio value as at 30 June 2022), this in fact is only affecting a few, Mr Grede said at the Baader Investment Conference in Munich.

A business model that offers sustainable value
The conferences once again demonstrated just how important it is to provide a differentiated presentation of the German private equity market to interested investors. During the discussions, we were able to clear up some misconceptions, and to explain DBAG’s business model in detail. For instance, DBAG offers an extremely wide range of equity finance options (for details, please refer to the article on Long-Term Investments) and is one of the market leaders for private equity in the German Mittelstand. Four out of five management buyouts executed by DBAG this year had a succession background related to family owners or founders. This is strong evidence that DBAG continues to be a trusted and popular partner for family-owned companies looking for external succession options. At the same time, it is obvious just how forward-looking these investments are: growth sectors such as IT services & software, broadband/telecommunications and healthcare accounted for close to half of the total portfolio value as at 30 June 2022.